Managing product availability in an assemble-to-order supply chain with multiple customer segments

In this article, we propose a novel availability management process called Available–to–Sell (ATS) that incorporates demand shaping and profitable demand response to drive better supply chain efficiency. The proposed process aims at finding marketable product alternatives in a quest to maintain a financially viable and profitable product portfolio, and to avoid costly inventory overages and shortages. The process is directly supported by a mathematical optimization model that enables on demand up–selling, alternative–selling and down–selling to better integrate the supply chain horizontally, connecting the interaction of customers, business partners and sales teams to procurement and manufacturing capabilities of a firm. We outline the business requirements for incorporating such a process into supply chain operations, and highlight the advantages of ATS through simulations with realistic production data in a computer manufacturing environment. The models featured in this paper have contributed to substantial business improvements in industry–size supply chains, including over $100M of inventory reduction in IBM's server computer supply chain.