The role of uncertainty in supply chains under dynamic modeling

M. Fera,S. Miranda,A. Lambiase,F. Fruggiero,R. Macchiaroli

doi:10.5267/j.ijiec.2016.6.003

Abstract

Article history: Received April 4 2016 Received in Revised Format June 16 2016 Accepted June 27 2016 Available online June 27 2016 The uncertainty in the supply chains (SCs) for manufacturing and services firms is going to be, over the coming decades, more important for the companies that are called to compete in a new globalized economy. Risky situations for manufacturing are considered in trying to individuate the optimal positioning of the order penetration point (OPP). It aims at defining the best level of information of the client’s order going back through the several supply chain (SC) phases, i.e. engineering, procurement, production and distribution. This work aims at defining a system dynamics model to assess competitiveness coming from the positioning of the order in different SC locations. A Taguchi analysis has been implemented to create a decision map for identifying possible strategic decisions under different scenarios and with alternatives for order location in the SC levels. Centralized and decentralized strategies for SC integration are discussed. In the model proposed, the location of OPP is influenced by the demand variation, production time, stock-outs and stock amount. Results of this research are as follows: (i) customer-oriented strategies are preferable under high volatility of demand, (ii) production-focused strategies are suggested when the probability of stock-outs is high, (iii) no specific location is preferable if a centralized control architecture is implemented, (iv) centralization requires cooperation among partners to achieve the SC optimum point, (v) the producer must not prefer the OPP location at the Retailer level when the general strategy is focused on a decentralized approach. © 2017 Growing Science Ltd. All rights reserved

Highlights

Chain management (SCM) is generally divided into two main categories of issues: strategic and tactical
A dynamic system has been assumed in which operational strategies are mutually influenced between echelons
A full plan of experiment has been discussed. It was set with the inclusion of variations in lead times and loss of sales according to increases in holding and stockout costs

Summary

Introduction

Chain management (SCM) is generally divided into two main categories of issues: strategic and tactical. These two elements are present in many research approaches, but for the problem of locating the optimal order penetration point (OPP), the tactical and strategic decisions for supply chains (SCs) are merged. Uncertainty management becomes the key driver to achieving optimal performance for a robust supply chain (SC). The collaborative approach (that guarantees good results many times) can be used whenever a mathematical formulation and a simulation model are implemented in the design of an SC (Sambasivan et al, 2013; Efendigil & Önüt, 2012)

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