The role of uncertainty in supply chains under dynamic modeling

Abstract

The uncertainty in the supply chains (SCs) for manufacturing and services firms is going to be, over the coming decades, more important for the companies that are called to compete in a new globalized economy. Risky situations for manufacturing are considered in trying to individuate the optimal positioning of the order penetration point (OPP). It aims at defining the best level of information of the client's order going back through the several supply chain (SC) phases, i.e. engineering, procurement, production and distribution. This work aims at defining a system dynamics model to assess competitiveness coming from the positioning of the order in different SC locations. A Taguchi analysis has been implemented to create a decision map for identifying possible strategic decisions under different scenarios and with alternatives for order location in the SC levels. Centralized and decentralized strategies for SC integration are discussed. In the model proposed, the location of OPP is influenced by the demand variation, production time, stock-outs and stock amount. Results of this research are as follows: (i) customer-oriented strategies are preferable under high volatility of demand, (ii) production-focused strategies are suggested when the probability of stock-outs is high, (iii) no specific location is preferable if a centralized control architecture is implemented, (iv) centralization requires cooperation among partners to achieve the SC optimum point, (v) the producer must not prefer the OPP location at the Retailer level when the general strategy is focused on a decentralized approach.

Sustainable Regulation of Information Sharing with Electronic Data Interchange by a Trust-Embedded Contract

“…The contracts are helpful to align the pecuniary incentives of supply chain partners and induce successful forecast sharing. However, collaboration by contract is strongly influenced by the supply chain structure and is often difficult to apply in practice [15]. Meanwhile, we also find that the extant literature assumes that the supply chain members either absolutely trust, or do not trust the received information in decision making.…”

“…This study is motivated uncertainty of demand information sharing and subsequent moral hazard in supply chain commerce transactions. Thus, uncertain in demand forces companies to applying IT technologies (e.g., collaborative planning, collaborative forecasting and replenishment, CPFR) to enhance their ability of forecast and strategically control their production/purchasing schedule with many optimizing methods [15]. However, full scope of a firm's actions (for example, marketing demand forecast) is not observable, or at least unverifiable, by his partners in their cooperative business in many practical situations.…”

Impact of Infrastructure and Production Processes on Rioja Wine Supply Chain Performance

“…These Economic Benefits can be obtained through the use of an appropriate Infrastructure that enables low-cost, fast transport of raw materials and finished products, or as a result of optimal communication between SC members due to the integration of ICT and real-time joint decision-making, to improve resilience and reduce uncertainty [27,48]. Given this, the following hypothesis is proposed:…”

“…Better quality Infrastructure contributes to improved SC performance, but companies must reduce risks associated with transportation because this allows ensuring quality and avoids losses during the supply of raw materials and the distribution of the finished products, which helps to carry out fast transport with less energy expenditure and with less environmental impact [26,27], and information and communication technologies must be used for traceability, such as RFID [28,29]. Once the raw materials are in a company's warehouse, the production process begins: at this point, the combination between capacities and human factor's skills, and technology, represent the basis for reducing the risk [30].…”

Shipment Consolidation Policy under Uncertainty of Customer Order for Sustainable Supply Chain Management

“…Since better customer service results in higher customer satisfaction, and since customer satisfaction leads to customer loyalty and profitability [8], allowing order cancellation, whether from a flood of information about goods and prices shared among customers or from simple changes of customers' opinion, is beneficial for companies in the long term, even at the cost of increased order uncertainty. Since uncertainty is caused by many factors including inventory management, vendor selection, transport planning, production planning, distribution planning, and procurement planning, it thus is important to understand, manage, and reduce uncertainty in supply chain to improve performance [9]. Hence, such trade-offs must be considered when making decisions about shipment consolidation [10].…”