Exploring the utilization of a CONWIP system for supply chain management. A comparison with fully integrated supply chains

Abstract

Some authors have developed important advances in order to integrate and improve the performance of the supply chain (SC), by sharing information through communication technologies with a decentralized approach. An alternative to improve the performance in an SC may be to introduce a CONWIP supply chain (CONWIP SC) policy with a centralized approach in the supply chain management. In this paper we review the literature to present the benefits of the CONWIP system in different production environments and discuss the possible utilization of this system to manage the entire supply chain. A characterization of the CONWIP-based approach to supply chain management is presented, and a simulation model to explore and evaluate the advantages of this strategy, in comparison with a fully integrated supply chain (FI SC) is developed. We carry on this analysis for different levels of demand volatility and material flow constraints along the chain, and we optimize parameters to ensure the best performance of each control supply chain policy in each scenario. Our research shows that CONWIP SC policy may offer advantages and improved performances in global metrics while both policies offer similar service levels. Main advantages are smaller average of orders placed, less impact of demand variability on the ordering policy, shorter average finished goods inventory and work in process levels and potential inventory cost, substantial comparative funds savings to run the business model, and easier control of inventories.