Coordination in Supply Chain
Coordination in Supply Chain
Coordination in Supply Chain
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Suggestions.
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Bullwhip Effect
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Refrences
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Operational obstacles. operational errors are included in this obstacle which says
that order taking, order filling, order processing and placing are not up to the
mark which adversly effect the coordination For example, orders of larger sizes,
larger replenishment lead times, rationing and shortages can all mean orders are
unable to reflect true customer demand
Pricing obstacles: certain pricing decision and practices or factors that directly
effect the pricing of a product are also a reason to detach orders from actual
demand generated For example, a company may overbuy if its supplier offers a
discount on a larger lot of orders, or if its demand is exceptionally large, but
members in the upstream supply chain can't rely on these sales figures to forecast
future demand.
Behavioral obstacles. Its the obstacle which arises from inter personal behaviour
of supply chain members in which they quickly respond to local situations or
temporary problems while neglecting the root causes and permanent issues. They
may blame each other for fluctuations in local demand, resulting in loss of trust or
even turning themselves into mutual enemies.
Suggestions.
In my suggestions bahavioral obstacles should be dealt on priority because it can cause loss of
your delicate information which that particular member have who is thinking to leave your
supply chain. And for that be in contact with each and every member of supply chain when
product is under construction find out the problems any member is having and try to solve that
problem with in the time frame. Secondly try to find out the sales in terms of sales through
( sales to the final customers) this would reduce the sales force incentive obstacle. PnG had
suffered from this sales force obstacle in last years. And finally they decided to measure the sales
in terms of sales through instead of sales in. Plan properly before you want to buy something
from a supplier even if a discount is offered over a large volume. Upgrade information system,
go for latest IT solutions os that information is kept, recorded, delivered and inpreted properly.
Align the incentives with the goals in this way every member would participate in his best
capacities to increase total supply chain profit. Secondly make sure that your members know that
functions or actions would be evaluated on basis of total supply chain profit instead of total cost
or local cost
3. Bullwhip Effect
Bullwhip effect may be regarded as lack of coordination in supply chain. It trickles down as
supply chains move down i.e. firms at the top of a supply chain face a much higher variance in
orders than firms facing retail demand causing bullwhip effect to rise. Bullwhip effect increases
supply chain costs by increasing
Manufacturing cost
Invetory cost
Replenishment lead time
Transportation cost
Labor cost for loading and off loading
It also decreases product availbility, damaging relationships across supply chain and
decreasing supply chain profitibilty
Order size/ Order cost tradeoff customers try to place orders of large
lots as unit price in that order may reduce in result of large order size, and
order review and placement costs are compartively low as well as
compared to small order size. If daily demand is accumulated to make up
larger weekly orders, daily information will be lost and forecasts will
become less accurate.
New Product game: when ever new products are prmoted it is expected
that they would generate a higher profit . However, it is extremely difficult
to make accurate forecasts on such profits. Secondly, the technology of
production may not yet be stabilized and hence there is uncertainity in
supplies according to that product. Again this demand is not the actuall
demand. So do not consider this demand.
Some other factors casuing bulwhip effect are
Disorganization
Lack of information
Order batching
Price variations
Over-reactiong on backlogs
Neglecting to order just to reduce inventory
Lack of customers confidence.
Strategy and Planning: This collaboration activity provides basic ground rules for the
collaboration it determines the product mix their placement and develops event plans for
made.
Analysis: planing and execution are checked and evaluated for exceptions in this stage.
Results are aggrigated and performance is measured
Refrences:
(http://www.findarticles.com/p/articles/mi_qa3796/is_200404/ai_n9366598/)
Collaborative Planning, Forecasting, and Replenishment Research Paper Tuomas
Toiviainen & Jeffrey Hansen 2/2/2011 (http://www.scf.usc.edu/~jdhansen/CPFR
%20Research%20Paper.pdf)
CPFR collaborative planning, forecasting, and replenishment delivering results for
manufacturers serving the retail sector february 2003 by j.d edwards
(http://www.sccori.com/SCM/COLLABORATIVEPLANNINGFORECASTING.pdf)