No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Improvement of Supply Chain Management by Bullwhip Effect Reduction
Abstract
The overall supply chain (SC) for an item from the moment of preparing for production (resource supplying) through production until the moment of product placement on the shelf of retail facilities is accompanied by a great amount of inventories in every “inter-station” — each SC company. The lack of information or/and incomplete information is the same as the fear of the impossibility of meeting the demand that affects the supply creation in every SC member — starting from the inventory in the raw material warehouse of the producer through the inventory of finished goods of the producer to the inventory in the central distribution warehouse, local wholesale warehouses, and even in the warehouses of retail facilities. The SC members are the first, the second, the third, and so on successors to each other; or observed in the reverse direction the third, the second, and the first predecessor.
ResearchGate has not been able to resolve any citations for this publication.
This paper will focus on a make-to-stock multi-period order fulfilment system with random orders from different classes of customers under limited production circumstances. For this purpose a heuristic algorithm has been developed aimed at maximizing the customer service level in any cycle and in the entire multi-period. In this paper, in order to validate the results obtained with this algorithm, a mixed integer programming model was developed that is based on the same assumptions as the algorithm. The model takes into account the priorities of customer groups and the balanced customer service level within the same group. The presented approaches are applied to a real example of Fast Moving Consumer Goods. Their comparison was carried out in several scenarios.
Most discussions and articles about supply chain metrics are, in actuality, about internal logistics performance measures. The lack of a widely accepted definition for supply chain management and the complexity associated with overlapping supply chains make the development of supply chain metrics difficult. Despite these problems, managers continue to pursue supply chain metrics as a means to increase their “line of sight” over areas they do not directly control, but have a direct impact on their company's performance. We provide a framework for developing supply chain metrics that translates performance into shareholder value. The framework focuses on managing the interfacing customer relationship management and supplier relationship management processes at each link in the supply chain. The translation of process improvements into supplier and customer profitability provides a method for developing metrics that identify opportunities for improved profitability and align objectives across all of the firms in the supply chain.
Purpose
Planning processes along a demand supply network in an environment characterized by rapid market fluctuations and product changes are studied. The relationship between demand planning and the bullwhip effect is investigated by comparing planning accuracy in different demand supply network echelons and locating where there is most nervousness.
Design/methodology/approach
The current demand supply planning process flow was described based on interviews with key decision‐makers throughout the demand‐supply network from retailers to second tier suppliers. A data analysis of the quality of plans for demand and supply was generated in each decision‐making point by collecting planning and actual data of two products.
Findings
The results show that planning accuracy varies between the parties in the supply chain. The connection between planning nervousness and the bullwhip was investigated in detail through a vendor‐managed inventory (VMI) model in the chain. Planning nervousness causes bullwhip, as the changes in demand were amplified in the used information sharing process in VMI. In product introduction phase, the phenomenon was emphasized.
Practical implications
To stabilize and simplify planning the process should be differentiated according to product life‐cycle phases. One proposal is to improve communication practices with suppliers, especially to stabilize demand information sharing with VMI‐suppliers.
Originality/value
The structure of the electronics supply chain makes planning processes challenging. In this research we were able to follow the data flow and planning process throughout the supply chain, which is not often the case.
The purpose of this study is to analyse customer segmentation and capable-to-promise functionality in a demand fulfilment process. This is done through a literature review and a case study, the case showing that the company has experienced good results from using an advanced planning system based on customer segmentation and capable-to-promise functionality.
p>In the competitive environment, many manufacturers are increasingly focusing on designing the systems that help them to manage variable demand and supply situations. Dynamic allocation of demands is very important in case of customer order allocations. Order promising and allocation can be based on the simple sequence that enables a manufacturing company to receive orders unless there are some other priority orders. Manufacturing company can also manage allocations of supply to key customers and channels, thereby ensuring that they can meet contractual agreements and service levels in the priority that yields better profit. This paper will focus on a Maketo- Stock order fulfillment system facing random demand with random orders from different classes of customers. Available-to-promise (ATP) calculating from master production schedule (MPS) exhibits availability of finished goods that can be used to support customer order allocation. This order allocation system is adapted in MTS (make-to-stock) production model and all orders are treated according to maximization of customer service policy. It allows incoming purchase orders as well as existing inventory on hand to be selected and allocated to customer sale orders and back orders. The system then automatically allocates the available stock to the selected sales orders. We developed an integrated system for allocation of inventory in anticipation of customer service of high priority customers and for order promising in real-time. Our research exhibits three distinct features:
(1) We explicitly classified customers in groups based on target customer service level;
(2) We defined higher level of customer selection directly defined according to company strategy to develop small and medium customers;
(3) We considered backorders that manufacturing company has to fulfill in order to maximize overall customer service for certain customers.</p
This paper intends to take up an overview of gaps existing in Advanced Planning Scheduling system (APS). Even if APS system provide a number of solution approaches for several practical problems (inventory and global costs reduction, customer service level increase, pertinent decision making), improvement ways still emerge. Firstly, we have led a functional analysis, to identify some gaps about supply chain management activities (financial aspect and Engineering To Order concept). Then, we made a literature review to identify works have been done in these areas. This review allowed us to outline a second kind of weakness liked to the functional range of some modules too (demand forecasting, proposition of lots sizing, reactivity). So, gaps and potential solutions proposed in the scientist literature, are presented in this paper. We conclude by underlining another type of problem, concerning the management needed to install correctly an APS system.
Conventional supply chain integration concepts focus primarily on the internal and external integration of individual supply chains (can be viewed as intra-supply chain integration). Due to the highly integrated nature of petrochemical value chains, related supply chains should also be integrated by taking account of enterprise/industry-wide synergies and interdependencies (can be viewed as inter-supply chain integration). Inter-supply chain integration can typically develop along three dimensions: - Upstream feed clusters (upstream in the chemical value chain) - Downstream product clusters (downstream in the chemical value chain) - Macro logistics network clusters (within and across related logistics networks for liquid bulk, dry bulk, packaged goods and gases) This dissertation presents a generic framework of applicable intra- and inter-supply chain planning processes that supports related long- (strategic), medium- (tactical) and short-term (operational) supply chain decisions for large-scale petrochemical companies. This type of companies has to manage relative complex supply chains. Highly complex supply chains (due to an extensive product portfolio, supplier base, customer base, manufacturing processes, transportation, and management processes and systems) require far more advanced planning processes than simple supply chains. Advanced supply chain planning processes cover an extended supply chain scope, deal with longer time horizons, and utilize more sophisticated analytical techniques and decision support systems. An extensive literature study, supplemented by empirical research in the South African petrochemical industry, provided the foundation for the advanced supply chain planning framework concluded in this dissertation. Semi-structured interviews and a questionnaire presented to an informed audience constitute the empirical research conducted. The related best practices, concepts, approaches followed, and level of advancement in three supply chain planning dimensions were derived. To guide petrochemical companies along the planning advancement journey, the roadmap developed can be utilized for the application and implementation of the advanced supply chain planning framework. This roadmap articulates the advancement stages, dimensions, characteristics, and triggers to advance. Typical characteristics associated with the advancement stages and dimensions provide the means for a company to assess their level of progression. The essential mechanisms that can enable interventions are also articulated. Thesis (PhD (Logistics))--University of Stellenbosch, 2006.
Electronic business demands from production companies to be interoperable with business partners. This requires them to integrate their subsystems and collaborate with their business partners. It is difficult to choose an implementation standard among different and competing standards and achieve full integration with business partners. Experience shows that the restriction to just one data format hardly ever works out. As all these standards are at the implementation level (Platform Specific Languages), the recommended solution is the specification of production system (processes and data for exchange) by using platform independent languages and applying a model driven architecture for the transformation of a platform independent model into a platform specific model. Data models are designed in UPCC (UML Profile for Core Components) neutral syntax notation, which is a metamodel for business information. This permits their subsequent representation in different syntactical data structures. For the modelling of production processes we propose the use of the BPMN (Business Process Modelling Notation) and the UPCC for designing the structure of production documents. This process specification can be transform into any implementation standard, such as ebXML for processes implementation and OAGIS BOD (Business Object Document) for document implementation. The overall approach is presented using an example of a technological process.
Demand-driven replenishment moves organizations away from a dependence on forecasts based on retrospective data and enables them to become responsive to what is actually occurring, or predicted to occur, at the distribution channels. In order to respond rapidly to demand changes, the institution of better information systems to help the channel better align inventory holding with demand is important. This case study explores working practices of procurement in distribution channels and examines the role of better demand information and retail inventory in enabling better control in retail behavior. The solutionproposed in this paper is a knowledge system which provides the decision maker with better characteristics of distribution channels such as quick response, efficient inventory management, collaborative planning and forecasting.
Postal traffic represents one of the activities of the Public Enterprise of PTT Communications "Serbia" that deals with the transfer of written and otherwise formatted communications, small quantities of goods and cash remittances, between spatially separated subjects in national and international traffic. Through the use of modern information and communication technologies, the communication and exchange of data between users is performed electronically, and the system is capable of meeting all postal service demands with quality, efficiency, effectiveness and economy. A high degree of satisfaction of electronic postal services users is viewed as the primary business objective, and it is achieved through the provision of quality services at affordable prices, good and quick accessibility of data, high-speed execution of services, and a high level of accuracy.
The Bullwhip Effect is problematic: order variability increases as orders propagate along the supply chain. The fundamental differential delay equations for a retailer's inventory reacting to a surge in demand are solved exactly. Much of the rich and complex inventory behavior is determined by the replenishment delay. The analytical solutions agree with numerical integrations and previous control theory results. Managerially useful ordering strategies are proposed. Exact expressions are derived for the retailer's orders to the manufacturer, and the Bullwhip Effect arises naturally. The approach is quite general and applicable to a wide variety of supply chain problems.
Purpose
This study attempts to determine the relative contribution of each of the causes of the bullwhip effect and to identify which causes of the bullwhip effect have relatively significant impacts on the variability of orders in supply chains.
Design/methodology/approach
Computer simulation models are developed. A fractional factorial design is used in collecting data from the simulation models. Statistical analyses are conducted to address the research objectives.
Findings
When all of the nine possible causes of the bullwhip effect are present in the simulation models, the following six factors are statistically significant: demand forecast updating, order batching, material delays, information delays, purchasing delays and level of echelons. Among these six factors, demand forecast updating, level of echelons, and price variations are the three most significant ones.
Research limitations/implications
Simulation models for the beer distribution game are developed to represent supply chains. Different supply chain structures can be constructed to examine the causes of the bullwhip effect.
Practical implications
In order to mitigate the bullwhip effect, supply chain managers need to share actual demand information and coordinate production and distribution activities with their partners.
Originality/value
This study measures the relative contribution of each of the causes of the bullwhip effect and provides evidence that transparent and accurate information flow and supply chain coordination could be a key to reduce the amplification of demand in supply chains.
This research develops a framework for organizational value creation from agile IT applications. Based on the four themes
in the business value research—business process perspective, complementarities, application level of analysis, and extent
of use—three antecedents (organizational fit, process assimilation, and network adoption) are identified as pre-requisites
for realizing the value of agile supply chain applications. Advanced planning and scheduling (APS) systems are used as examples,
and two case studies for their implementation in the electronics and consumer goods industry are reported to support the propositions.
The theories of diffusion of innovation, complementarities, network externalities, and technology structuration are applied
to develop the propositions for fit, assimilation, and network effects. Information sharing and industry clockspeed are identified
as the moderating factors in the proposed model. The framework has both managerial and research relevance. The research guides
managers regarding ways to more fully realize the value of agile applications and forms a basis for future research on the
business value of IT applications.
Literature on supply chain management (SCM) covers several disciplines and is growing rapidly. This paper firstly aims at extracting the essence of SCM and advanced planning in the form of two conceptual frameworks: The house of SCM and the supply chain planning matrix. As an illustration, contributions to this feature issue will then be assigned to the building blocks of the house of SCM or to the modules covering the supply chain planning matrix.Secondly, focusing on software for advanced planning, we outline its main shortcomings and present latest research results for their resolution.
An important observation in supply chain management, known as the bullwhip effect, suggests that demand variability increases as one moves up a supply chain. In this paper we quantify this effect for simple, two-stage, supply chains consisting of a single retailer and a single manufacturer. Our model includes two of the factors commonly assumed to cause the bullwhip effect: demand forecasting and order lead times. We extend these results to multiple stage supply chains with and without centralized customer demand information and demonstrate that the bullwhip effect can be reduced, but not completely eliminated, by centralizing demand information.
SME Profit Increase Strategy Planning
- J Omerbegović-Bijelović
A new “reading” of production/service planning
- J Omerbegović-Bijelović
APICS dictionary, The Association for Operations Management — APICS
- J Blackstone
- J Cox
Models and Method(s) for Improving of Management Quality, EURO XIV (proceedings of abstracts
- J Omerbegović-Bijelović
Modelling the Development of the Management Quality (MQ) considering Dependences between Attributes of MQ
- J Omerbegović-Bijelović
Metaupravljanje i kvalitet upravljanja (Metamanagement and Quality of Management) — monograph, Zaduz?bina Andrejević
- J Omerbegović-Bijelović
Model and Method for Measuring and Development of the Management Quality and Software Implementation of the same, AIRO ’96
- J Omerbegović-Bijelović
- M Vučković
Information and Technology in the Supply Chain: Making Technology Pay
- Cooper Price Waterhouse
- PW Cooper