Supply chain focus dependent safety stock placement |
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Authors: | Gangaraju Vanteddu Ratna Babu Chinnam Kai Yang and Oleg Gushikin |
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Affiliation: | (1) Department of Industrial & Manufacturing Engineering, Wayne State University, 4815 Fourth Street, Detroit, MI 48202, USA;(2) Ford Research and Advanced Engineering, 2101 Village Road, Dearborn, MI 48121, USA |
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Abstract: | Increasing globalization, growing product range diversity, and rising consumer awareness are making markets highly competitive,
forcing supply chains to adapt constantly to different stimuli. Growing competition between supply chains (as well as players
within them) is also warranting a priority for overall supply chain performance over the goals of individual players. It is
now well established in the literature that, among the many order winners, both overall supply chain cost and responsiveness
(i.e., supply chain lead time) are the most significant determinants of supply chain competitiveness. The literature, however,
mostly focuses on supply chain cost minimization with rather simplistic treatment of responsiveness. By introducing the concept
of a coefficient of inverse responsiveness (CIR), we facilitate efficient introduction of responsiveness related costs into
the scheme of supply chain (SC) performance evaluation and/or optimization. Thus, our model aids supply chain managers in
achieving better strategic fit between individual business unit strategies and overall supply chain requirements in terms
of cost efficiency and responsiveness. In particular, it aids in strategic placement of safety stocks at different stages
in the supply chain. Our model also offers managerial insights that help improve our intuitions into supply chain dynamics.
The model is more suited for strategic SC alignment, for example, when dealing with product changeovers or introduction of
new product, rather than for operational control. |
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Keywords: | Supply chain strategy Business strategy Safety stock costs Cost of responsiveness Supply chain cycle time Coefficient of inverse responsiveness |
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