Decentralized serial supply chains subject to order delays and information distortion: Exploiting real-time sales data

Decentralized serial supply chains subject to order delays and information distortion: Exploiting real-time sales data

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Article ID: iaor200634
Country: United States
Volume: 7
Issue: 2
Start Page Number: 152
End Page Number: 168
Publication Date: Mar 2005
Journal: Manufacturing & Service Operations Management
Authors: ,
Keywords: supply chain
Abstract:

Decentralized supply chains are traditionally order focused: stage managers focus on meeting replenishment orders of downstream stages: market demand information is relayed up through these orders, and therefore is subject to costly delay and distortion. This paper shows that sharing real-time sales data across all stages and a change in focus to meeting customer demand can mitigate performance impairment caused by the order focus. We show that a change of managerial focus in a decentralized chain can be made by measuring stages' performance based on their respective echelon stocks, which only depends on how well they respond to the market demand. A demand-focused measurement scheme can be made incentive compatible with the knowledge of the demand distribution; a heuristic scheme independent of the demand distribution can be used to achieve near incentive compatibility.

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