Time compression in the supply chain: information management is the vital ingredient

Abstract

Our total cycle time (TCT) compression strategy encompasses the whole system in the supply chain from consumer demand to customer satisfaction. TCT has two major components that are essential to meeting customer demand: information flow and material flow. Both are necessities and together make up the total supply chain lead‐time; the information activates the material pipeline. Therefore to optimise a time compression strategy TCT must include both the information and material flows. We show in the paper that a very effective way of achieving TCT is via access to EPoS data by all “players” in the supply chain. The tremendous benefits exhibited by TCT compression within the supply chain can be described as “squaring the dynamic response circle”. Not only are the stock dynamic responses improved via time compression, but the capacity dynamics are also radically improved. Therefore TCT compression avoids the dilemma frequently faced by companies when implementing change of having to trade off customer service level against capacity utilisation. Our results are verified using a simulation model of a common real‐world supply chain.