Integration of promotion and production decisions in sales and operations planning

This paper presents a new modelling framework for developing a sales and operations plan that integrates promotion and production planning decisions. We adopt a rich demand function that captures the dynamics and heterogeneity of consumer response to price promotions by simulating purchase incidence, consumer choice and quantity decisions, as well as household’s inventory level. Our numerical study reveals interesting findings on the benefits of developing an integrated sales and operations plan as well as the optimal timing and number of promotions, and more importantly, how these findings are influenced by the mutual dependence of marketing- and production-related factors.     

Dynamic mutual adjustment search for supply chain operations planning co-ordination

Operational planning is an activity carried out by all manufacturing and logistical companies. Its co-ordination with supply chain partners aims at synchronising resources utilisation in order to minimise inefficiencies, such as unnecessary inventory holding, or in order to improve revenue through better resource utilisation. It is a rather complex process as partners have different objectives and information asymmetry is part of any effort to find good co-ordination solutions. Furthermore, because supply chains evolve in a dynamic and uncertain environment, once a co-ordination of operations plans is achieved, input data, such as forecasts or resources’ status, can change and affect on hand plans. These dynamic changes not only require updating the plan that is directly affected by the changes, but it also requires the adjustment of all plans that are part of the same co-ordination solution (Stadtler, H. 2009. A framework for collaborative planning and state-of-the-art. OR Spectrum, 31 (1), 5–30). Therefore, the development of a practical co-ordination approach should be capable of dealing with these dynamic changes. This paper proposes a dynamic mutual adjustment search heuristic, which can be used to co-ordinate the operations plans of two independent supply chain partners, linked by material and non-strategic information flows. Computational analysis shows that the proposed approach produces a win-win strategy in the context of two supply chain partners, and improves the results of upstream planning in each planning cycle, and also improves the fairness of revenue sharing when compared to optimal centralised planning.     

The impact of sales and operations planning practices on manufacturing operational performance

There is a lack of rigorous empirical studies directly examining the impact of sales and operations planning (S&OP) practices on manufacturing operational performance. This paper aims to fill this gap by analysing a sample of 725 manufacturers from 34 countries. Hypotheses relate internal S&OP, integration with suppliers (IS) and integration with customers with manufacturing operational performance (delivery, quality and flexibility). The constructs were validated with structural equation modelling and the hypotheses were tested using multiple stepwise regression. Our findings showed a positive and moderate-to-large effect of internal S&OP on manufacturing performance, controlling for firm size, country economic development and market dynamics. There was no significant impact of supply chain integration on manufacturing performance. However, we found that IS positively moderated the relationship between internal S&OP and performance, suggesting that firms with mature IS amplify the effect of internal S&OP on performance. The study is among the first to empirically and rigorously establish the impacts of S&OP practices on manufacturing performance, using a large sample of manufacturers spanning different countries, markets and firm sizes. Results show that S&OP practices have a broad impact across several performance dimensions and are a powerful lever for generating manufacturing performance.     

Rolling horizon planning in supply chains: review,implications and directions for future research

Due to their complexity and extensive application in industry, rolling horizon planning systems have received considerable attention in the literature. Of particular interest is the impact of different lot-sizing rules and policy variables on replenishment schedule cost and stability. Past research indicates that exact lot-sizing approaches may not perform the best in rolling horizon environments and that a single algorithm seldom performs well on both schedule cost and stability. In addition, a rolling horizon policy that performs well in one operating environment may perform poorly under different conditions. While rolling horizon research typically assumes a single planner, or planning layer, recent trends in outsourcing and global operations call for the study of supply chains that are characterised by multiple planning layers with information sharing and coordination among them. This article reviews the rolling horizon planning literature and synthesises the findings, extends the research taxonomy to include emerging research on supply chain systems with multiple planning layers and joint inventory replenishment, and provides several promising future research directions. This survey provides a starting point for anyone conducting research in this important research area.     

An empirical study of impacts of production mix,product route efficiencies on operations performance and profitability: a reverse logistics approach

This research studies the impact of two reverse logistics business strategies on profitability of the firm through operations management (OM). The study is employed on scrap steel industry. The first strategy is production mix efficiency (PME), which is involved in the process of producing goods. The second strategy is product route efficiency (PRE), which engages in the transportation of goods. Our finding indicates that OM alone does not have a positive impact on profitability. However, the two strategies have a positive effect on profitability, which provides a potential answer to firms trying to improve profitability.     

On differences in how operations and supply chain managers approach quality management

In this research, we administered surveys to operations and supply chain managers from different companies to better understand how they approached quality management. The underlying research question was whether the increased emphasis in supply chain management in the workplace had implications for how quality management is practiced and how quality-related values are emphasised. We found that those who identified themselves as supply chain managers utilised and emphasised quality tools and values to a greater extent than those who identified themselves as operations managers. The tools emphasised by supply chain managers included benchmarking, complaint resolution, design for the environment, ERP, supplier development, focus groups, and supply chain management. The primary theoretical implication of this study is that there exists an emerging field that we can term ‘supply chain quality’. This study provides a preliminary outline of the domain of this field.     

An adaptive framework for aligning (re)planning decisions on supply chain strategy,design, tactics,and operations

Over the last decade, a wealth of valuable approaches to supply chain strategic, tactical, and operational planning has been extensively developed. However, conventionally the planning decisions at each of these levels have been considered in isolation from the other levels. Moreover, decisions on supply chain strategy, design, tactics, and operations are interlinked and dispersed over different supply chain structures (functional, organisational, informational, financial, etc.). This study develops a framework to increase the efficiency, consistency, implacability, and sustainability of decisions on how to design, plan, and run supply chains. In this paper it is proposed that comprehensive planning as an adaptive process encapsulates the planning decisions to be interrelated at all the decision-making levels. A conceptual model is described interlinking the supply chain strategy, design, planning, and operations on adaptation principles. Subsequently, a mathematical modelling complex and its realisation in a software environment is presented. This study contributes to developing methodical basics and practical tools to transit from simple open time slots incremental planning to dynamic, feedback-based adaptive supply chain planning. The elaborated framework serves to increase the efficiency, consistency, implacability, and sustainability of decisions on supply chain strategy, design, tactics, and operations. Decisions alignment can help to increase the wealth of organisations by producing demand-corresponding products in the most cost-effective manner through increasing agility, responsiveness, reaction speed to market changes, and continuous comprehensive improvements/adaptation of supply chains.     

Green supply chain contracts with eco-labels issued by the sales platform: profitability and environmental implications

Considering environmentally conscious consumers, a manufacturer, and a sales platform which provides eco-labels for qualified manufacturers, this paper develops a supply chain model to study how eco-labels affect green supply chain operations, from the profitability and environmental perspectives. The results show that the sales platform prefers the agency contract, but the manufacturer prefers the wholesale price contract. Considering the performance of the supply chain, the agency contract brings a higher profit while the wholesale price contract results in a bigger environmental improvement. An unexpected but interesting result is that when the agency contract is used and consumer green awareness increases, the sale price declines rather than increasing as it does under the wholesale price contract. This decline happens because the required marketing effort of the sales platform will be lower, which incentivises the platform to reduce the commission rate. Consequently, the manufacturer faces a lower commission rate and a higher margin when consumers display greater green awareness. Moreover, as the core and more powerful player of the supply chain, the sales platform can propose a platform-led revenue sharing contract to fully coordinate the supply chain, which improves the performance of the supply chain both in profitability and environmental perspectives.     

A survey of semiconductor supply chain models Part II: demand planning,inventory management,and capacity planning

Part I of this three-part series described semiconductor supply chains from the decision-making and functional perspectives, using this as a framework to review the industrial engineering and operations research literature on the problems arising in these supply chains. Part I then reviewed the literature on Strategic Network Design, supply chain coordination, sustainability and simulation-based decision support. This paper, Part II, reviews the areas of Demand Planning, Inventory Management and Capacity Planning in semiconductor supply chains. Part III concludes the series by discussing models to support Master Planning, Production Planning and Demand Fulfilment in this industry.     

The impact of delayed differentiation in make-to-order environments

To cope with the challenges of product proliferation, many firms are shifting their supply chain structures from make-to-stock (MTS) to make-to-order (MTO). An MTO strategy comes at a price however, as customers must wait longer for their configured products. Incorporating delayed differentiation (DD) in an MTO environment offers the potential of reducing the customer's waiting time, since the generic part/component of the products is made available before receiving customer orders. In this paper, we quantify the trade-offs involved in implementing DD in an MTO environment using both customer waiting time and system cost as performance metrics. We show that under common conditions, the introduction of DD results in shorter waiting times and higher cost over a pure MTO strategy. These results are as expected. However, we also derive conditions where DD results not only in shorter customer waiting time but also lower cost, thus dominating a pure MTO strategy. Through a simulation experiment, we test the robustness of our results for the case where the customer arrivals and production times are generally distributed. For firms with the capability of estimating the customer waiting cost, we derive the optimal base-stock level of the generic component to minimise the total cost.     

Rolling horizon,multi-product production planning with chance constraints and forecast evolution for wafer fabs

In this paper, we study production planning models for semiconductor wafer fabrication facilities (wafer fabs) that consider both safety stocks at the finished goods inventory level and workload-dependent lead times. The evolution of demand forecasts over time follows the multiplicative Martingale Model of Forecast Evolution (MMFE) for multiple products and is incorporated into the planning models via shortfall-based chance constraints, permitting the simultaneous determination of production quantities and safety stocks. We study two variants of this formulation, one that considers forecast updates and one that does not. A planning model with workload-dependent lead times that does not consider safety stocks is used for comparison. The performance of the planning models is assessed in a rolling horizon environment using a simulation model of a scaled-down wafer fab. We find that the chance-constrained model with forecast updates outperforms the one without forecast updates with respect to expected service level and profit. Both chance-constrained models outperform the model without safety stocks. These results indicate that considering forecast evolution in production planning models can lead to improved performance by exploiting the advance demand information provided by the forecast updates.     

A survey of semiconductor supply chain models part III: master planning,production planning,and demand fulfilment

Part I of this three-part series described semiconductor supply chains from the decision-making and functional perspectives, using this as a framework to review the industrial engineering (IE) and operations research (OR) literature on the problems arising in these supply chains. Part I then reviewed the literature on Strategic Network Design, Supply Chain Coordination, Sustainability and Semiconductor Supply Chain Simulation, while Part II reviewed Demand Planning, Inventory Management, and Capacity Planning. This paper concludes the series, discussing Master Planning, Production Planning, Demand Fulfilment, and Available to Promise (ATP) in semiconductor supply chains.     

An operations management perspective on adopting customer-relations management (CRM) software

Enterprise resource planning (ERP) systems are made up of software that chiefly support individual functional areas (e.g., operations management practices and policies), but seeks to share information to support organisation-wide integration goals. In this paper we examine the influences of operations management (OM) customer focus policies and practices, as well as software vendor capabilities in supporting OM, on ERP reasons for adoption of software and vendor selection of customer relations management (CRM) systems. An empirical study utilising structural equation modeling (SEM) is used to determine if an OM customer focus affects the adoption of CRM. The results show that collaboration between OM and marketing managers in the acquisition of CRM software improves business performance and supports the prior research that advocates the need for closer integration of these two functional areas. The results also show that OM reasons for adoption of CRM can have a moderating effect on business performance as well.     

Analysis of SCF under sales promotional schemes: an application of interpretive structural modelling approach

In the competitive market of today, supply chain flexibility (SCF) plays crucial way to address various supply chain uncertainties. But, in diverse situations, the supply chain needs different types of flexibilities. This paper analyses the flexibility of an automobile supply chain under sales promotional schemes (SPS) to meet the demand uncertainty. Taking the opinion of supply chain experts from automobile original equipment manufacturers (OEM’s), 14 SCF strategies have been identified and then using interpretive structural modelling (ISM) on the conducted survey, their interrelationships are established and a hierarchical model is developed. MICMAC analysis is done to classify the strategies into four categories viz. autonomous, dependent, linkage and independent strategies, which are based on their driving and dependence powers. Sensitivity analysis has been conducted to check the stability of the model. The thorough exposition of the model presents a handful of insights to supply chain managers to know the most important strategies affecting each other. The study helps in bridging the SCF with SPS, a huge gap existing in the literature.     

Applying performance measures to support decision-making in supply chain operations: a case of beverage industry

Performance measurement systems (PMS) have commonly been applied to evaluate and reward performances at managerial levels, especially in the context of supply chain management. However, evidence suggests that the effective use of PMS can also positively influence the behaviour and improve performance at an operational level. The motivation is to accomplish organisational goals, namely to increase supply chain flexibility by responding to evermore-varying customer demands in a timely manner. The purpose of the study described in this paper was to develop a conceptual framework that adopts performance measures for ex-ante decision-making at an operational level within the supply chain. To guide the research, five questions were asked and subsequently key gaps have been identified. In an attempt to fill the gaps, a case study at a major global brand beverage company has been carried out, and as a result, a conceptual framework of the PMS has been developed. Overall, the research offers a foundation of the applicability and impact of PMS in the supply chain and provides a framework that attends to some of the potential uses of PMS that so far have not been practically applied. The outcomes from the testing indicate that the initial gaps identified in the literature have been addressed and that the framework is judicious with scope for practical applicability. The framework is deemed worthy of further testing in different operational contexts of the supply chain.     

An integrated approach for production and distribution planning in supply chain management

Many firms have been trying to optimize their production and distribution systems separately, but using this approach limits any possible increase in profit. Thus, it is becoming more important to analyse these two systems simultaneously. This paper presents the solutions for integrated production and distribution planning and investigates the effectiveness of their integration through a computational study, in a multi-plant, multi-retailer, multi-item, and multi-period logistic environment where the objective is to maximize the total net profit. Computational results on test problems using the proposed heuristic confirm the substantial advantage of the integrated planning approach over the decoupled one. Sensitivity analysis on the input parameters indicates that, under the right conditions, the effectiveness of integrating production and distribution functions can be extremely high.     

The impact of contract parameters on the supply chain performance under different power constellations

Reporting forecast data is a common method used to improve the functioning of supply chains (SCs) and to reduce supply shortages. Customers tend to report the maximum possible demand as a forecast if restrictions are missing. Such a forecast is useless for suppliers. Hence, special contracts are needed to enhance the value of forecast data and therefore the cooperation between SC partners. In this paper, such a contract is presented. It encourages the customer to report a more realistic forecast. Deviations from the reported forecast are punished in different ways: If the customer reported too much and wants to release less than what was reported, he has to pay a penalty. On the other hand, the customer has the flexibility to purchase more than reported to meet the demand on his outlet but at the cost of an additional fee. This paper analyses how different contract parameters affect the performance of the SC, in particular when the bargaining power of customer and supplier is not equally distributed. Results show that the supplier and therefore the SC is better off if the supplier leaves the contractual cost parameters untouched but hides the true value of flexibility, especially when the customer is less powerful than the supplier.     

A network prototype for integrated production-distribution planning with non-multi-functional plants

This paper proposes a two-echelon network prototype for integrated production and distribution planning where non-multi-functional plants supply multiple types of products with limited quantities to the customers via capacitated warehouses. Four variations of the prototype, formulated as individual mixed integer programming models, are solved using the branch and bound algorithms by numerical experiments to examine the cost implications of production-distribution strategies involving single-sourcing constraints on different levels of the supply chain. Further discussions on the practicality and versatility of the proposed prototype (i.e. its ability to consider different facility locations, specialised capabilities of individual plants, safety stock levels and demand characteristics) illustrate the usefulness of the prototype to industry practitioners when making strategic and/or tactical decisions.     

Integrated planning in supply chains with buy-side and sell-side marketplaces

In this paper we develop a quadratic programming model for partner selection and planning in integrated supply chain networks embedded with both sell-side and buy-side electronic marketplaces. Such a scenario arises in several practical applications. In particular, we consider a contract manufacturer who procures components from suppliers through a component marketplace and sells its manufactured sub-assemblies to original equipment manufacturers (OEMs), through a sub-assembly marketplace. In these web-enabled supply chains, embedded with upstream and downstream electronic marketplaces, we need methods for online supply-chain partner selection based on pricing and delivery schedules. In this paper, we develop and present such a model that selects partners, synchronizes supply chain activities and optimizes the profit through optimal revenue pricing and cost minimization.     

Social media in operations and supply chain management: State-of-the-Art and research directions

Recently, industrial and academic communities in the operations and supply chain management (OSCM) field are paying increasing attention to social media. However, the value of social media in OSCM is quite unclear, and more investigations are still needed. To pave the way for directed future research, this paper systematically reviewed and synthesised 152 peer-review journal papers to identify research focus and gaps in this area, supported by an appropriate conceptual framework. The result reveals that the research interests in this area have increased dramatically within the last decade across various industries and regions. Different companies’ OSCM activities, such as sourcing and delivery, can benefit from employment of social media. This paper also indicates that future research can explore the value of social media in sourcing, delivery, product return and reverse logistics, forecasting and inventory management, and product development and production.