Information distortion in a supply chain: the bullwhip effect
Management Science - Special issue on frontier research in manufacturing and logistics
The Value of Information Sharing in a Two-Level Supply Chain
Management Science
| Hi-index | 0.00 |
This paper describes a set of guiding principles designed to help supply chain practitioners define inventory and ordering policies collaboratively. An automotive case study illustrates the approach, which requires supplying and buying firms to model their supply chains together. The target is to optimise the chain by maximising the extent to which supply chain processes are synchronised to end customers' demand. The theoretical optimum synchronisation for any chain would be a 'sequenced one-piece flow'. This is often achieved between the Original Equipment Manufacturer (OEM) and Tier 1 through arrangements with co-located 'sequenced suppliers'. However, factors such as decreased proximity and uncertain demand means that this high level of synchronisation rarely extends beyond Tier 1. Therefore synchronisation applies to a relatively low percentage of value-added in the chain. The approach put forward in this paper gives a way to extend the principal of synchronisation upstream, defining the zones of synchronisation (delineated by the 'sequence boundary' and 'synchronisation boundary') that are both possible and beneficial. The findings from the case study show that adopting the guidelines would offer the opportunity to increase synchronisation significantly, thereby reducing inventory and supply chain cycle time.