Framework for flexibility in dynamic supply chain management

Abstract

Effective Supply Chain Management (SCM) is a pivotal issue in the dynamically changing business environment. Dynamic SCM requires integrated decision-making amongst autonomous chain partners with effective decision information synchronization amongst them. By exploiting flexibility in supply chain structures, better performance can be achieved. Similarly, by judiciously employing decision flexibility and the associated dynamic control amongst autonomous supply chain nodes, many improvements are possible. The paper presents a study on the role of different flexibility options (i.e. no flexibility, partial flexibility and full flexibility) in a dynamic supply chain model based on some key parameters and performance measures. Supply chain flexibility has significant potential and needs a greater research attention. The paper attempts to advance the knowledge of dynamic control on effective flexibility exploitation in the context of dynamic supply chains. A simulation model of a dynamic supply chain is used for this purpose. The key results are highlighted along with industry implications. Here each supply chain node involves decision-making. Based on the order and sample information available from the immediate buyers or customers, the supplier selection decisions are dynamically made. A seemingly good decision at a stage based on local information often ends up as detrimental not only to the total chain cost, but also to the total costs of the node itself. These observations are important for the designers and managers of the flexible supply chain systems to arrive at appropriate types and a judicious level of flexibility to attain significant improvements in total cost reduction. The modelling of dynamic supply chains with a focus on flexibility can offer enormous potential to the industry. This paper addresses this interesting and challenging domain.