Abstract
The integration of supply chains as a mechanism for value creation is largely dependent on continuous flow of real time accurate information from the customer back upstream to the manufacturer. This ideal is often unachievable when disruptions in the flow of information and materials are known to regularly occur in some manufacturing supply chains. This paper focuses on quantifying the potential lost sales revenue attributed to information and material delays in a supply chain using discrete event simulation of the Beer Distribution Game. Results indicate a direct relationship between lost sales revenue and delay times. When exposed to several levels of delay such disruptions will cause loss of sales revenue. Interestingly, data collected suggests that information delays play a larger role than material delays as a contributor to lost sales revenue. This study provides a solid platform to further justify the implementation of technology such as RFID in an effort to decrease the level of lost sales revenue in manufacturing supply chains. The implementation of technologies that will increase the speed of information flow throughout a supply chain as well as increasing visibility of inventory in the supply chain can assist to minimise lost sales.
Highlights
Chain Management (SCM) emphasizes the close coordination of the business units in the chain [41]
It was found that do more orders get unfilled as the time delay is increased, but the concept of increases in lost revenue is more related to information delays rather than material delays, this finding presents a compelling argument for the investment of emerging technologies such RFID as a tool to increase the speed at which information flows throughout the supply chain, which will impact the manner in which stock levels are maintained at every echelon of a supply chain when all supply chain partners are aware of the long lead time in information flow
This study builds upon previous Supply Chain Management (SCM) literature by providing a different perspective on the costs associated with running an inefficient supply chain
Summary
Chain Management (SCM) emphasizes the close coordination of the business units in the chain [41]. Declines in supply chain performance can have many sources, which can be attributed to individual decision-making. Each decision can potentially create or compound a perturbation in the flow of materials and/or information in a supply chain. These situations can originate times of undesirable stock levels, tying up significant resources and lowering the efficiency and effectiveness of any member operating in a supply chain, presenting as opportunity costs at the retail end of the supply chain. Failure to commit to effectively integrating and managing a supply chain is a significant source of inefficiencies for firms [6]. In a competitive business environment, supply chains are quickly realising that increasing uncertainty in market expectations, quantum leaps in technology and globalisation of supply chains, the customer is still king [56]
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