The effect of supply chain noise on the financial performance of Kanban and Drum-Buffer-Rope: An agent-based perspective

Abstract

Managing efficiently the flow of products throughout the supply chain is essential for succeeding in today's marketplace. We consider the Kanban (from Lean Management) and Drum-Buffer-Rope (DBR, from the Theory of Constraints) scheduling mechanisms and evaluate their performance in a four-echelon supply chain operating within a large noise scenario. Through an agent-based system, which is presented as a powerful model-driven decision support system for managers, we show the lower sensitivity against variability and the higher financial performance of DBR, which occurs as this mechanism improves the supply chain robustness due to its bottleneck orientation. Nonetheless, we prove the existence of regions in the decision space where Kanban offers similar performance. This is especially relevant taking into account that Kanban can be implemented at a lower cost, as DBR requires a higher degree of information transparency and a solid contract between partners to align incentives. In this sense, we offer decision makers a methodological approach to reach an agreement when the partners decide to move from Kanban to DBR in a bid to increase the overall net profit in supply chains operating in a challenging noise scenario.