A framework for designing a supply chain distribution network

Based on the analysis of the pertinent literature, we propose a framework to serve as a guide in designing a distribution network as a component of a supply chain (SC). It consists of three steps that are common to goods and services SCs: position of the decoupling point, structure of the network, and product delivery. For each step, we take into account the peculiarities of both goods and services separately in order to establish a list of available options and evaluate their suitability in relation to the relevant factors that characterise the products and the markets.     

The impact of the customer order decoupling point on type and level of supply chain integration

Literature suggests that more supply chain (SC) integration increases of SC performance. However, recent research shows that contextual factors affect the effectiveness of SC integration efforts. Specifically, the location of the customer order decoupling point (CODP) might be such a factor, but there is limited empirical evidence. This study explores the impact of the location of the CODP on SC integration. It empirically investigates upstream, internal and downstream SC integration efforts in twelve metal parts producing Dutch companies to offer a comprehensive view of the effects of the location of the CODP on SC integration. Our results show a clear relationship between SC integration and the location of the CODP. Specifically, make-to-order (MTO), assemble-to-order (ATO) and make-to-stock (MTS) companies show relatively high levels in upstream, internal and downstream SC integration, respectively. Moreover, MTO companies mainly share forecast information and engage in joint R&D with their suppliers, ATO companies focus on internal SC integration using information systems and planning, while MTS companies interact with their customers intensively to exchange forecast information. Our study adds to the insight on the application of SC integration in different situations and offers initial evidence for the effects of the location of the CODP on SC integration.     

Fuzzy QFD for supply chain management with reliability consideration

Although many products are made through several tiers of supply chains, a systematic way of handling reliability issues in a various product planning stage has drawn attention, only recently, in the context of supply chain management (SCM). The main objective of this paper is to develop a fuzzy quality function deployment (QFD) model in order to convey fuzzy relationship between customers needs and design specification for reliability in the context of SCM. A fuzzy multi criteria decision-making procedure is proposed and is applied to find a set of optimal solution with respect to the performance of the reliability test needed in CRT design. It is expected that the proposed approach can make significant contributions on the following areas: effectively communicating with technical personnel and users; developing relatively error-free reliability review system; and creating consistent and complete documentation for design for reliability.     

Optimal pricing strategy for the perishable food supply chain

This research investigates the optimal pricing strategy for the perishable food supply chain. Using the setting of a two-echelon supply chain including a supplier and a retailer, we apply the game theory approach to derive the equilibriums for both a single pricing strategy and a two-stage pricing strategy. Through a comparison of the equilibriums, we explore how the two pricing strategies affect the supply chain’s decisions and supplier’s and retailer’s performance individually and collectively. The results of the analysis show that the optimal choice of pricing strategy depends on the price markdown cost and its relationship with the two critical thresholds that are determined by a combination of factors including the potential market size, the price and quality sensitivity factors, the initial quality, the unit product cost, and the quality deterioration rate.     

A strategic decision framework for a value added supply chain

Supply chains are becoming increasingly complex. The structure of the supply chain and the suppliers who participate in it are critical decisions for managers. The supply chain is no longer simply a source of inputs or services but an integral source of value added. It is clear that in some cases strategic supply chain objectives may require trade-offs, for example, between cost and innovation capability or between managing risk and maximising flexibility. These decisions balancing trade-offs between desirable partner characteristics are critical and can make a significant contribution to business performance. A framework is outlined, based on the foundation of extant literature, within which firms can make strategic decisions on supply chain structure by categorising the characteristics they prioritise in their supply chain strategy. There is also a strong foundation in the literature on developing mathematical models that provide insight into the decision-making process. A mixed integer programming model is specified that incorporates the opportunity for diversification and provides a demand allocation decision. The model is robust enough to allow for single or diversified supplier strategies based not only on capacity constraints but also on risk pooling and minimum performance requirements for key characteristics that form the basis of the strategy. A Lagrangian relaxation is proposed and satisfactory performance results are provided.     

Using a just-in-time selling strategy to strengthen supply chain linkages

A two-stage JIT-selling strategy is proposed as an alternative for strengthening buyer–seller linkages throughout the supply chain. The impact of implementation of such a strategy on organizational performance is investigated. Stage 1 of the JIT-selling strategy requires implementation and execution of selling tactics that build value during the selling process based on the organization's JIT related capabilities, such as zero-defect production, on-time delivery and quantity precision. Stage 2 requires development of single-source relationships with customers that result in the full integration of on-site sales representatives into customers’ purchasing processes. Data related to implementation of the JIT-selling strategy and organizational performance were collected from 175 manufacturers, and the relationship between the constructs was assessed using correlation and structural equation modelling techniques. Results support the proposition that implementation of a JIT-selling strategy to strengthen supply chain linkages will result in improved organizational performance.     

An inductive framework for enhancing supply chain integration

We report the inductive development of a framework for enhancing the integration of supply chains. The framework has been motivated by the need to enhance the participation of small and medium enterprise (SME) suppliers and resellers in the supply chain. Extant diagnostics are geared towards enabling enterprises to evaluate or benchmark themselves on a self-administered rating scale in relation to their peers. In contrast, the present framework aims to enable small-sized suppliers and resellers to systematically imbibe supply chain integration practices, to the extent applicable, from their more advanced trading partners, after possibly adapting them to their own business circumstances. The broad approach has been to first conduct in-depth case study research into enterprises that excel in one or more facets of integration (customer integration, supplier integration etc.) and then induce items pertaining to various themes and sub-themes of supply chain integration. The resulting framework is thus an empirically well-grounded and fine-grained, actionable complement to extant, broader-brushed mechanisms and diagnostics for supply chain integration.     

The design of an agent for modelling supply chain network dynamics

A useful insight into managerial decision making can be found from simulation of business systems, but existing work on simulation of supply chain behaviour has largely considered non-competitive chains. Where competitive agents have been examined, they have generally had a simple structure and been used for fundamental examination of stability and equilibria rather than providing practical guidance to managers. In this paper, a new agent for the study of competitive supply chain network dynamics is proposed. The novel features of the agent include the ability to select between competing vendors, distribute orders preferentially among many customers, manage production and inventory, and determine price based on competitive behaviour. The structure of the agent is related to existing business models and sufficient details are provided to allow implementation. The agent is tested to demonstrate that it recreates the main results of the existing modelling and management literature on supply chain dynamics. A brief exploration of competitive dynamics is given to confirm that the proposed agent can respond to competition. The results demonstrate that overall profitability for a supply chain network is maximised when businesses operate collectively. It is possible for an individual business to achieve higher profits by adopting a more competitive stance, but the consequence of this is that the overall profitability of the network is reduced. The agent will be of use for a broad range of studies on the long-run effect of management decisions on their network of suppliers and customers.     

Multiple decoupling point paradigms in a global supply chain syndrome: a relational analysis

A responsive and flexible supply chain in the global product value chain set-up links the manufacturer with various inter-company entities, such as suppliers, distributors, contract manufacturers and customers to deal with volatile demand. It is imperative and prudent to look at the overall product chain rather than focusing on any single supply chain entity. From a supply chain perspective, it is crucial that these individual entities are lean and agile (leagile) themselves, as well as the overall product value chain. As a result of the global nature of the product value chain, the concept of the decoupling point has undergone a paradigm shift. Through the literature review the authors establish three different types of decoupling point existing in product value chains, namely: (1) product structure decoupling point (PSDP), bill of materials decoupling; (2) supply structure decoupling point (SSDP), supply network decoupling; and (3) demand transfer decoupling point (DTDP), associated with information sharing. It is argued that such decoupling points are already an established and accepted phenomena, but have not been comprehensively discussed until now. It is proposed that, in the global supply chain, PSDP and SSDP are elemental decoupling points and DTDP is a logical decoupling, which is a function of PSDP and SSDP. It is proposed that DTDP swings between PSDP and SSDP and the swing direction is a critical piece of supply chain information that helps identify distortion. A multidimensional scaling (MDS) method is proposed to discover the relationship of DTDP with SSDP and PSDP using interpretation matrices and stress coefficients. Considering the supply chain as a fuzzy system, a combined effect of MDS over fuzzy applications has been used to determine the extent of swing of DTDP in the particular application of the supply chain.     

Impact analysis of customized demand information sharing on supply chain performance

In today's dynamic market environment, rapidly changing customer preferences increase the customization of products and the diversification of demand mix. Companies should understand how the demand mix influences supply chain performance and react properly to fulfil customer satisfaction as to what the customers want. This paper investigated the impact of information sharing of the demand mix on the supply chain performance, under increasing product customization, by changing customer demand pattern and production capacity. The results of simulation analysis demonstrated that a demand mix can be determined that produces the best supply chain performance. A real multi-echelon automotive supply chain was analysed for each of six performance measures and the demand mix information significantly influenced five of them. Demand variation and production capacity also resulted in significant impact on the performance measures.     

Modelling a complex supply chain: understanding the effect of simplified assumptions

The benefits of coordinating activities and consolidating distribution points in supply chains are well highlighted and intuitively logical. However, the impact of these decisions on the overall performance of a complex supply chain may not be as obvious as usually perceived. This study models a relatively complex supply chain and evaluates the impact of simplifying demand and lead time assumptions under various supply chain configurations. Of particular interest is the investigation of the effect of risk pooling and the synchronization of production cycles in a multi-level multi-retailer supply chain under the influence of various parameters such as batch size, delivery frequency and ordering cycle. This study highlights the extent of complicated interaction effects among various factors exist in a complex supply chain and shows that that the intricacy of these effects can be better understood with a simulation model.     

Proactive environmental strategy in a supply chain context: the mediating role of investments

There is a growing body of knowledge on the link between environmental management and supply chain management, but there is contradicting evidence on the impact of a proactive environmental strategy on environmental performance. Therefore, this paper investigates the impact of proactive environmental strategy on environmental performance as mediated by environmental investments. We also consider the antecedents of the adoption of proactive environmental strategy. We develop and test hypotheses, using data collected from 96 Turkish manufacturers through an online questionnaire. The model was tested using partial least squares (PLS), a structural equation modelling method. The results show that a proactive environmental strategy leads to higher environmental investments; both internally and externally in collaboration with suppliers. Our findings support our hypothesis that environmental investments act as a mediating variable between proactive environmental strategy and environmental performance. The results also show that customer pressure and, particularly, organisational commitment positively impact the extent to which firms adopt a proactive environmental strategy.     

Reconfigurable supply chain: the X-network

Research on supply chain (SC) digitalization, resilience, sustainability and leagility has remarkably progressed, most of it focused on the individual contributions of these four major frameworks. However, a lack of integration spanning these individual frameworks can be observed. In this conceptual paper, we hypothesize that reconfigurability can be considered such an integral perspective that consolidates the research in SC adaptation to ever changing environments. We theorize a new notion – a Reconfigurable SC or the X-network – that exhibits some crucial design and control characteristics for complex value-adding systems in highly vulnerable environments. We support our argumentation and conceptual viewpoints by a literature analysis along with tertiary studies to review and structure contextual factors of designing the X-networks. We propose respective frameworks and discuss the implementation principles and technologies at the macro and micro levels. Two novel concepts – dynamic SC meta-structures and dynamic autonomous services – are introduced. Distinctively, we go beyond the existing knowledge to predict proactively the future directions in the reconfigurable SCs. Our results can be of value for decision-makers to decipher chances and barriers in contemporary SC transformations.     

A technology selection framework for integrating manufacturing within a supply chain

This paper describes a structured analytical approach for selecting a manufacturing technology. A framework consisting of six integrated steps is proposed by considering the growing importance of supply chains in manufacturing organisations. The framework makes use of the analytical hierarchy process (AHP) approach combined with strategic assessment model (SAM) to evaluate and select the technologies appropriate for providing overall competitive advantage. The framework is intended to assist industrial managers in promoting manufacturing and supply chain collaboration and co-ordination by including intra-organisational perspective in their organisational technology selection decision making process.     

Agile supply chain strategy and supply chain performance: complementary roles of supply chain practices and information systems capability for agility

The paper examines the mediating effect of supply chain (SC) practices on the relationship between agile supply chain (ASC) strategy and SC performance. It further examines the moderating effect of information systems (IS) capability for agility on this mediated relationship. Using the theoretical lenses of complementarity and the information processing view of the supply chain, we hypothesise that strategic supplier partnership, customer relationship, postponement and lean practices, mediate the relationship between ASC strategy and SC performance. We further hypothesise that IS capability for agility moderates each of these mediated relationships. We empirically test the hypotheses using survey data from members of senior and executive management in the logistics/supply chain functions of 205 firms. The paper contributes to the literature on ASCs by theoretically explaining and empirically demonstrating how SC practices and IS capability for agility act together to effect a positive relationship between ASC strategy and supply chain performance.     

Product customisation: an empirical study of competitive advantage and repeat business

Empirical evidence is presented from 24 UK based manufacturing companies, all offering a degree of product customisation, with most having a significant pure customisation engineer-to-order (ETO) element. The evidence addresses the issue of competitive advantage, which has lacked empirical evidence in previous manufacturing strategy literature, and includes a detailed investigation of the strategic importance of repeat business. It contrasts its results with those previously found in the literature and concludes that there are significant differences in the competitive priorities theoretically associated with this sector. In particular, it is argued that cumulative capabilities are needed, with a low cost competence often included. Four different types of repeat business are identified, one relating to repeat business customisers and three relating to versatile manufacturing companies, and the strategic importance of repeat business is discussed. It is indicated that for some ETO companies, repeat business is perceived to be an important method to reduce costs and achieve business stability. However, a number of the other companies studied saw repeat business as infeasible and hence need to find other ways to reduce costs and improve company performance measures. Future research to extend this work into a longitudinal study or a broader survey is proposed.     

An optimal ordering strategy for a third-party managed supply chain

The rapid pace of new product introduction and global sourcing of raw materials and manufacturing facilities have created a complex and fragmented supply chain. Retailers in many consumer product industries are relying on third-party supply-chain managers (SCMs) to manage the global supply chain cost-effectively with short production lead times. To meet delivery requirements, the SCM must start the production process before receiving a firm order from retailers. We assume a two-stage production process where, in stage 1, a base product is produced. In stage 2, the base product is customised. The SCM absorbs the penalties associated with over- or underestimating retailers’ demand. Hence, the SCM has to decide on (a) the optimal production quantity of the base products and (b) the number of base products to be customised without delay. We develop a profit maximisation model for this strategy using a nonlinear objective function with two decision variables and one constraint. Applying Kuhn–Tucker conditions, closed-form solutions are obtained for the two decision variables. Also, formulations are given for two additional strategies: postpone customisation of all products and produce customised products only. An example illustrates the use of our model. We also examine the impact of demand variability on the effectiveness of the three strategies. Results show that postponement may not always be the best strategy for an SCM.     

Efficiency analysis of supply chain processes

We present an integrated benchmarking approach. To analyse the performance of inter-organizational (supply chain) processes at company level we combine dependency analysis and data envelopment analysis (DEA). DEA has been proven to be a powerful tool for benchmarking processes and for identifying the most efficient ones. Before using DEA analysis the inputs and outputs as well as the relevant dependencies have to be identified. To support the determination of input and output variables we propose to use dependency analysis. We illustrate the application of this integrated approach by analysing the results of an empirical benchmarking study of 65 European and North American companies. The study shows that make-to-stock is still the predominating manufacturing strategy of the analysed industries. Therefore, we utilize different DEA models with weight restrictions only for companies with a make-to-stock strategy. The results support our basic hypotheses that efficient supply chains lead to high financial performance. Furthermore they indicate improvement potential for the benchmarked supply chain processes.     

Value of information exchange and synchronization in a multi-tier supply chain

We investigate the value of various information exchange mechanisms in a four-echelon supply chain under a material requirements planning framework. In the absence of any information sharing, each echelon would develop its own forecasts and plan its inventories based on the history of actual demand from its downstream customer (or echelon). Through a simulation study, we compare this policy with policies where each echelon has access to (i) the end-user demand history and (ii) the planned order schedule of the downstream echelon. Among all the demand information exchange mechanisms, planning inventories based on the planned downstream order schedules resulted in the lowest average inventory level for the entire supply chain. However, use of end-user demand history to forecast and plan inventories at all echelons resulted in the lowest total cost. In addition to the information exchange mechanisms, a simple synchronized replenishment system was considered and evaluated in the study. In the synchronized system, the retailer determines a fixed order interval and the upper echelons replenish only at integer multiples of this interval. The study found that synchronized inventory replenishments among the echelons, even without any exchange of demand information, can bring about more benefits and cost reduction than any of the information exchange mechanisms.     

Maximizing supply chain profits with effective order management: integration of activity-based costing and theory of constraints with mixed-integer modelling

The development of a profitable-to-promise order management model in a make-to-order manufacturing environment is presented. The primary objective is to maximize profitability while ensuring that the firm has adequate resources to satisfy demand. The effectiveness of Activity-Based Costing and Theory of Constraints-based approaches is compared to assess order profitability. This order management model uses a mixed-integer program to consider simultaneously capacity, the relevant costs of supply chain resources and profitability. The results suggest that a close examination of cost structures is necessary for choosing an effective framework for a profitable-to-promise application. In manufacturing environments where direct manufacturing costs constitute a relatively small percentage of the total manufacturing cost, it would be beneficial to consider an Activity-Based Costing approach. On the other hand, in environments where direct costs are large, a Theory of Constraints-based approach would suffice.