Managing Disruptions in Decentralized Supply Chains with Endogenous Supply Process Reliability

Tang, Sammi; Gurnani, Haresh; Gupta, Diwakar

doi:10.1111/poms.12160

Cited by 169 publications

(132 citation statements)

References 31 publications

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“…Recently, there is increasing interest in this research area, as rms need to e ectively manage supply uncertainty in today's complex global supply chains; see, for instance, the recent works of Tomlin (2006), Dada et al (2007), Serel (2008, Burke et al (2009), Federgruen and Yang (2009), Tang et al (2014), and Xu and Lu (2013. However, none of the above papers consider component procurement strategies under an assembly structure.…”

Section: Literature Reviewmentioning

confidence: 99%

Component procurement strategies in decentralized assembly systems under supply uncertainty

Pan

2015

IIE Transactions

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In this article we analyze the interactions among the assembler and two component suppliers in their procurement decisions under a Vendor-Managed Inventory (VMI) contract. Under the VMI contract, the assembler rst o ers a unit price for each component and will pay component suppliers only for the amounts used to meet the actual demand. The two independent component suppliers then decide on the production quantities of their individual components before the actual demand is realized. We assume that one of the component suppliers has uncertainty in the supply process, in which the actual number of components available for assembly is equal to a random fraction of the production quantity. Under the assembly structure, both component suppliers need to take into account the underlying supply uncertainty in deciding their individual production quantities, as both components are required for the assembly of the nal product. We rst analyze the special case under deterministic demand and then extend our analysis to the general case under stochastic demand. We derive the optimal component prices o ered by the assembler and the corresponding equilibrium production quantities of the component suppliers. . IntroductionSourcing components from a complex global supplier network can lead to a high degree of uncertainty in the supply process. Various supply chain glitches such as unexpected supply disruptions, insu cient supplier capacity, or transportation delays across borders can cause unexpected shortfalls in the required components and halt the assembly of the nal products. At the same time, long procurement lead times in a global supply network make it di cult and expensive to deal with such component shortfalls using emergency orders. Consequently, rms need to e ectively manage supply uncertainty in their component procurement decisions to avoid such potential component shortfalls. This is especially critical for products with rapidly changing technology or short life cycle such as electronic products, as it is expensive to keep safety stock of components due to high obsolescence costs.In this article we analyze the interactions among the assembler and component suppliers in their procurement decisions under a Vendor-Managed Inventory (VMI) contract. Specifically, we assume that the assembler needs to procure two required components from two independent suppliers to assemble the nal product. Under the VMI contract, the assembler rst o ers a unit price for each component and will pay component suppliers only for the amounts used to meet the actual demand. Based on the unit component prices o ered by the assembler, the two independent component suppliers then decide on the production quantities of their individual components and ship the components to the assembler before the actual demand is realized. Here, we assume that the production CONTACT Kut C. So rso@uci.edu Color versions of one or more of the figures in the article can be found online at www.tandfonline.com/uiie. and/or transportation lead times are long,...

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Section: Literature Reviewmentioning

confidence: 99%

Component procurement strategies in decentralized assembly systems under supply uncertainty

Pan

2015

IIE Transactions

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“…Observe that competition may exist vertically between the upstream supplier and downstream resellers (e.g., in Tang et al 2014), or horizontally between the same layer of suppliers (e.g., in Babich et al 2007) or resellers (e.g., in Tang and Kouvelis 2011). In this special issue, some papers incorporate both vertical and horizontal competitions under an uncertain supply chain environment.…”

Section: Competition and Interactions In Supply Chainsmentioning

confidence: 99%

Innovative supply chain optimization models with multiple uncertainty factors

Choi

Govindan

et al. 2017

Ann Oper Res

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Uncertainty is an inherent factor that affects all dimensions of supply chain activities. In today's business environment, initiatives to deal with one specific type of uncertainty might not be effective since other types of uncertainty factors and disruptions may be present. These factors relate to supply chain competition and coordination. Thus, to achieve a more efficient and effective supply chain requires the deployment of innovative optimization models and novel methods. This preface provides a concise review of critical research issues regarding innovative supply chain optimization models with multiple uncertainty factors. It also introduces the special issue's research papers and their respective insights.

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“…Despite all, supply disruptions are surely enough all too common. To mitigate delivery risk, buyers may either source from multiple suppliers or offer benefits to preferred suppliers to improve SC reliability [27]. These incentives towards suppliers can either be direct (investment subsidy) or indirect (inflated order quantity).…”

Section: Supply Chain Reliabilitymentioning

confidence: 99%

“…These incentives towards suppliers can either be direct (investment subsidy) or indirect (inflated order quantity). Preferably a mixed model of investment subsidy and/or inflated order quantity for the preferred supplier together with multiple supplier sourcing as alternative delivery in case of partial disruption is applied [27].…”

Section: Supply Chain Reliabilitymentioning

confidence: 99%

Towards a Multidisciplinary Approach on Creating Value: Sustainability through the Supply Chain and ERP Systems

Soete

2016

Systems

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Abstract:Manufacturing Resource Planning (MRP) is a widely used approach through manufacturing environments in a variety of sectors. With a tendency to go to specialized, smaller lot sizes in several industries (e.g., the pharmaceutical sector), companies are dealing with capacity bottlenecks if the planning rhythm wheel is not well calibrated or when production lines are not flexible enough in terms of changeover (C/O) and set-up times (S/U) (OEE is too small). A well-established communication system including other enterprise resources or production factors (e.g., Enterprise Resource Planning, ERP) is favorable to any extent. More and more questions arise from stakeholder communities and end-users on whether or not supply chains and manufacturing environments are sustainable and safe. Departments such as Environmental Health, Safety & Sustainability (EHS & S) and Product Stewardship are too often at the "blind" side of the ICT interface. When it comes to product and organizational sustainability, data seems to be lacking in order to conduct sustainability assessments proficiently. Years of intensive research and experience proved that primary data to perform sustainability assessments often are measured through equipment control sensors (e.g., flow rates, temperatures, etc.) and sent to PLCs and many other systems. Nevertheless, these data measurements are in many cases simply not penetrating through the Manufacturing Execution Systems (MES) because these bottom-up engineering data seems to be of little value to planning, procurement, etc. This communication paper deals with how sustainability assessments can be embedded in business operational management systems. After all, who does not want a "live Carbon Footprint" for process improvements and external sustainability reporting instead of a series of expensive resource consuming studies of 4 to 6 months digging into data logs in traditional Life Cycle Assessment (LCA)? This communication paper has taken one step further in coupling business ERP systems with environmental sustainability of products, services and enterprises.

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Managing Disruptions in Decentralized Supply Chains with Endogenous Supply Process Reliability

Cited by 169 publications

References 31 publications

Component procurement strategies in decentralized assembly systems under supply uncertainty

Component procurement strategies in decentralized assembly systems under supply uncertainty

Innovative supply chain optimization models with multiple uncertainty factors

Towards a Multidisciplinary Approach on Creating Value: Sustainability through the Supply Chain and ERP Systems

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