Coordinating material and information flows with supply chain planning

Abstract

PurposeThe purpose of this paper is to study how companies can select a supply chain planning (SCP) mechanism to improve the balance between material flow and information flow.Design/methodology/approachThe methodology of the paper is an inductive case study approach. Coordination theory is used as a background for the paper. Based on a literature survey, determinants of the selection of a SCP approach are defined. Cases of SCP are used to validate the framework presented.FindingsThe paper suggests that specific supply chain characteristics need to be balanced by selecting a coordination mechanism that uses information optimally to support the material flow. Flexible material flow needs frequent updates of the plan based on accurate information. If frequent information sharing and planning practices are used to support inflexible material flow, the result may be volatility in plans, and planning resources are wasted. If a flexible material flow is supported by inadequate information, waste may be produced in the material flow, in the form of excess inventories or capacity.Research limitations/implicationsThe paper presents a framework for finding the balance between information flows and material flows and for applying a coordination mechanism.Practical implicationsCompanies can use the framework to analyse the management of their material flow and their use of information. In future research the framework could be developed to give more support for situations with different levels and sources of uncertainty.Originality/valueThe framework provides a new perspective on the discussion how information should be used to improve supply chain performance.