Coordination and Collaboration Flashcards
Explain supply chain coordination
- All stages of the supply chain take actions that are aligned and increase supply chain profits
- Create incentives such that locally optimal decisions correspond to globally optimal decisions for the complete supply chain
What are obstacles to coordination?
- Local optimization of decisions regarding pricing and ordering at every stage of SC
- Information is distorted or delayed between different stages of the SC
What are impacts of coordination?
- Lower order quantities and lower product availability due to double marginalization
- Global supply chain optimum cannot be achieved due to local objectives
- Bullwhip effect: Increasing variability of orders and inventory along the value chain
What does the contract theory say?
Contracts provide incentives for the different stages of the supply chain to behave towards an overall optimal way despite their different objectives
What are the procedual steps for contracts in supply chains?
- Classification of the decision situation
- Designing a contract
- Evaluating the efficiency
- Parametrization and implementation
What is important in the classification of a decision situation?
- Determine demand situation: Deterministic, detemernistic & price sensitive, uncertain
- Information (a)symmetry
What is information (a)symmetry?
Different knowledge of supply chain actors regarding important parameters, especially regarding PoS data and self-inflicted fluctuations in demand (e.g., due to promotions)
What are the steps of designing a contract?
- Defining decision competencies
Target: Controlling (downstream) stages of the SC by shifting decision making competencies - Setting the contract parameters
E.g.: Order quantities, Pricing/discounts, Minimum Order Quantity, Quantity Flexibility, Rationing schemes, Supply Lead Time Requirements, Quality Requirement
How is the efficiency of a contract evaluated?
- Impact of contract on total supply chain profits
- Impact of contract on individual profits of manufacturer and retailer
How does the parametrization and implementation of a contract work?
Negotiating the contractual terms, formulation and execution of the contract
How are the mechanisms of a contract design analyzed?
- Analysis of decentralized decision of players (individual point of view)
→ Uncoordinated supply chain - Analysis of centralized decision (supply chain view, complete information)
→ Global optimum for supply chain - Designing and implementation of contract coordination mechanisms to incentivize bot actors to achieve the total optimum solution despite individual decisions
→ Contract → Coordinated supply chain
What are different demand types for contract design?
- Deterministic demand
- Price sensitive (deterministic) demand
- Uncertain demand
What is collaboration?
Supply Chain Collaboration facilitates the cooperation of participating members along the supply chain to improve performance
Name process-driven collaboration concepts
- Information Sharing (IS)
- Continuous Replenishment Programs (CRP)
- Vendor Managed Inventory (VMI)
- Collaborative Planning, Forecasting, and Replenishment (CPFR)
Name technology-driven collaboration concepts
- Electronic Marketplaces
- Tracking and Tracing
- Collaborative Supply Chain Management Systems
What is information sharing?
- Retailer shares information about demand and inventory with the manufacturer
- Retailer continues to place orders
What is a continuous replenishment program (CRP)?
- Manufacturer regularly replenishes inventory of retailer
- Replenishment based on PoS or inventory data
- Inventory is owned by retailer
What is a vendor managed inventory?
- Manufacturer takes over responsibility for inventory management of retailer
- Planning based on PoS data
- Inventory is often owned by supplier until it is sold by the retailer
What is collaborative planning, forecastinf, and replenishment (CPFR)?
- Collaborative planning, forecasts and inventory planning by retailer and manufacturer
- Objective: Increasing product availability, reducing inventory, transportation + logistic costs
- Requirements: Synchronizing data, Standardizing the exchange of information
- Potentials: Reduction of retail inventories, Reduction of inventories along the supply chain
What are the steps to a sCPFR model?
- Strategy and Planning: Rules of collaboration, Joint business plan
- Demand & Supply Management: Demand forecast, Planning orders/shipments
- Execution: Place orders, Prepare/deliver/receive shipments
- Analysis: Monitor activities for exceptions, Calculate and share KPIs
What are benefits of process-driven collaboration concepts?
PoS data available to manufacturer
Improving forecasts of manufacturer
Better matching of supply and demand
Increased supply chain profits regarding retailer and manufacturer margins
What are problems of process-driven collaboration concepts?
Sharing / collaborative use of (partly) confidential data
Retailer sells multiple competitive products
