Backlog Of Orders Research Articles

Assessing the Implications of the Red Sea Conflict on the Indian Supply Chain: A Comprehensive Analysis

The Red Sea, a vital trading route for India, is disrupted by the ongoing conflict between the Houthi rebels and Israel. This study aims to investigate how the dispute affects India’s supply chain in several different industries. The possible repercussions include restricted access to raw materials, delays and higher prices in maritime transportation, and concerns of energy scrutiny from disruptions in gas and oil. To lessen the impact on the economy we examine alternate trade routes and assess the potential effects on investors’ confidence. This study aims to examine and assess the diverse repercussions of the Red Sea War on the Indian supply chain offering insights on strategic planning, policy decisions and risk mitigation measures for the Indian government, businesses and stakeholders. The Red Sea crisis has had a multifaceted impact on different sectors of the Indian economy. In the healthcare sector, a huge number of medical supplies and prescription drugs which are transported via sea have seen a spike in the shipping cost due to rerouting which has disrupted the medical supply chain. On the other hand, there is no direct impact on the consumer sector; however, the increased freight prices and geopolitical concerns impact the wholesale price index which is expected to hike and influence the food grain prices and exports of basmati rice in particular owing to the well-established domestic supply chain. The FMCG industry is comparatively protected from the adverse effects of the crisis in contrast to industries such as agricultural and maritime foods. This crucial route, particularly affecting goods moving between Europe, North Africa, and the Middle East, historically used for nearly half of India's exports and a third of imports, is now deemed unsafe. Ships are being rerouted around Africa's Cape of Good Hope, leading to a 30% increase in transit times and a surge in shipping costs. Indian companies are feeling the heat – Arvind Ltd. faces lost revenue due to order backlogs, while exporters like Euro Fruits grapple with quadrupled freight costs and declining grape quality. The auto industry is also impacted, with companies like MG Motor India experiencing delays and rising logistics expenses. India’s energy, resources and industrial sectors have all been severely disrupted by the Red Sea crisis with critical exports including chemicals and petroleum products being heavily impacted. Since the Suez Canal handles a significant amount of India’s import of crude oil, rerouting owing to continual conflicts presents logistical difficulties and possible inflationary pressures. The government is actively engaging in efforts to mitigate these impacts by looking into alternative shipping lanes and providing assistance to affected exports. The possibility of delays and financial costs is still a major issue for businesses navigating obstacles relating to insurance premiums and logistical difficulties. To navigate these challenges, the Indian government is exploring a multi-pronged approach. Financial support in the form of direct subsidies, soft loans, and government-backed cargo insurance could help businesses offset increased costs and mitigate risks associated with delays and rerouting. Additionally, India is looking to diversify its trade routes by exploring alternative sources for crude oil and LNG imports, along with utilizing ports outside the conflict zone. Long-term solutions are also being considered, such as investing in the Northern Sea Route and expanding land transport infrastructure. Renewed focus on the India-Middle East-Europe Economic Corridor (IMEC) project could offer a comprehensive network connecting India, the Middle East, and Europe. By implementing these strategies, India can build a more resilient supply chain and minimize the long-term impact of the Red Sea conflict on its trade.

Sales Order Backlog and Credit Ratings

This study examines the association between sales order backlog and credit ratings. We posit that credit rating agencies consider order backlog as a positive signal about strong future demand and incorporate that into their rating decisions and provide higher ratings to firms with substantial order backlogs. However, being a non-GAAP, unaudited metric, order backlog could also reduce financial reporting quality and hence, credit ratings of firms. Using a sample of US firms from 1980 to 2017, we find a positive and significant association between order backlog and credit ratings, suggesting that order backlog serves as a valuable measure in credit rating assessment by providing positive signals about future earnings to rating agencies.

Optimizing Power Plant Availability and Reliability Excellence through End-to-End Asset Healthiness Monitoring Dashboard

PT Indonesia Power Semarang PGU, a sub-company of PT PLN that Operating power plants with a total capacity of 1,409 MW, has a way to manage assets using a web-based asset management which based on ISO 55001:2014. Our asset management’s pillars such as Work, Planning, and Control (WPC), Supply Chain Management (SCM), and Reliability should be incorporated by risk management to make decision easier. The system is called the end-to-end asset healthiness dashboard. Prior to the implementation of this system, there were increases in the backlog of Work Orders (WO) due to delays in receiving materials (WMATL). From the WO backlog, there were 45.47% WMATL WO in 2018 and 78.47% in 2020. Real-time asset wellness, follow-up tasks related to asset wellness, and Asset Criticality Ranking (ACR) are displayed on the dashboard. When WPC and SCM are integrated as good as possible, ACR selects the assets’s follow-up task related to asset wellness, maintenance is completed quickly and when needed, and the SCM process is accurately linked to maintenance execution and listed in the 52-week planning. By keeping our power plants availability, this condition also makes it easier to maintain the highest priority assets first. In 2021, it successfully reduces WMATL WO by 14.65%. Ultimately, our assets are effectively managed, consistently meeting the reliable electric power needs of our consumers.

The impact of supply chain disruptions on business expectations during the pandemic

Utilizing the Federal Reserve Bank of Atlanta’s Business Inflation Expectations (BIE) survey, which has been continuously collecting subjective probability distributions over own-firm future unit costs since October 2011, we document two facts about firms’ marginal cost expectations and risk during the COVID-19 pandemic. First, in the early months of the pandemic, firms, on net, saw COVID-19 largely as a demand shock and lowered their one-year ahead expectations. However, as the pandemic wore on, firms’ one-year ahead unit cost expectations rose sharply alongside their views on supply chain and operating capacity disruptions. Second, the balance of unit cost risks shifted sharply over the course of the pandemic and by the end of 2022, upside risks had sharply outweighed perceived downside risks over the year ahead. We find that both positive demand shocks (e.g. large order backlogs) and negative supply shocks (e.g. long supplier delivery times and labor shortages) have contributed to elevated short-term unit cost expectations and risk. Specifically, supply shocks accounted for roughly 40% of the increase in manufacturers’ and nearly one-third of service-providers’ unit cost expectations.

Measurement of maintenance planning and control effectiveness using the Lean approach

Ineffective maintenance management can result in a backlog of maintenance work orders, inefficient activity prioritisations, and unnecessary outages. Making a strategic decision is challenging due to traditional procedures that only treated maintenance at a tactical level. Usually, the key performance indicator (KPI) measured for maintenance management is related to work order compliance. However, there is still less work focusing on measuring the effectiveness of Maintenance Planning and Control (MPC) processes. This paper aims to showcase a measurement of the maintenance effectiveness at offshore facilities using Lean methodology by measuring the lead time of sub-processes of MPC activities to evaluate existing practices, identify gaps and develop key recommendations. To this end, the lead time of the baseline MPC process is analysed and benchmarked with that of the improved MPC where new parameters to monitor and verify the process efficiency are included. The results show that a lead time improvement of close to 60% was achieved with the proposed methodology.

The path to kina convertibility: An analysis of Papua New Guineaʼs foreign exchange market

AbstractPapua New Guinea (PNG) has faced a foreign exchange (forex) shortage since 2015. The Bank of PNG has resorted to forex rationing to protect reserves, leading to a large backlog of orders and import compression. This paper surveys the structure of PNGʼs forex market and analyses recent market conditions. We argue that a real exchange rate depreciation is required to restore currency convertibility. We develop a forex market model that features a backlog of unmet orders which suggests that a frontloaded depreciation is preferred to an often‐favored gradual adjustment. Empirical results indicate that the governmentʼs large budget deficits have contributed to the forex shortage, highlighting the need for greater fiscal restraint. In the longer term, we argue for more exchange rate flexibility and forex allocation through competitive auction.

Tipping Point

A production manager at a manufacturing firm is struggling to clear a backlog of orders while also keeping new customers happy – causing clashes with the finance department

Ripple effect mitigation capabilities of a hub and spoke distribution network: an empirical analysis of pharmaceutical supply chains in India

In this study, we focus on ripple effect mitigation capability of the Indian pharmaceutical distribution network during disruptions like COVID-19 pandemic. To study the mitigation capabilities, we conduct a multi-layer analysis (network, process, and control levels) using Bayesian network, mathematical optimisation, and discrete event simulation methodologies. This analysis revealed an associative relationship between ripple effect mitigation capabilities and network design characteristics of upstream supply chain entities. Using stochastic optimisation and Lagrangian relaxation, we then find ideal candidates for regional distribution centres at the downstream level. We then integrate these downstream locations with other supply chain entities for building the network optimisation and simulation model to analyse overall performance of the system. We demonstrate utility of our proposed methodology using a case study involving distribution of N95 masks to ‘Jan Aushadhi’ (peoples’ medicines) stores in India during COVID-19 pandemic. We find that supply chain reconfiguration improves service level to 95.7% and reduces order backlogs by 10.7%. We also find that regional distribution centres and backup supply sources provide overall flexibility and improve occupational health and safety. We further investigate alternate mitigation capabilities through fortification of suppliers’ workforce by vaccination. We offer recommendations for policymakers and managers and implications for academic research.

Lenovo Schedules Laptop Manufacturing Using Deep Reinforcement Learning

Lenovo Research teamed with members of the factory operations group at Lenovo’s largest laptop manufacturing facility, LCFC, to replace a manual production scheduling system with a decision-making platform built on a deep reinforcement learning architecture. The system schedules production orders at all LCFC’s 43 assembly manufacturing lines, balancing the relative priorities of production volume, changeover cost, and order fulfillment. The multiobjective optimization scheduling problem is solved using a deep reinforcement learning model. The approach combines high computing efficiency with a novel masking mechanism that enforces operational constraints to ensure that the machine-learning model does not waste time exploring infeasible solutions. The use of the new model transformed the production management process enabling a 20% reduction in the backlog of production orders and a 23% improvement in the fulfillment rate. It also reduced the entire scheduling process from six hours to 30 minutes while it retained multiobjective flexibility to allow LCFC to adjust quickly to changing objectives. The work led to increased revenue of US $1.91 billion in 2019 and US $2.69 billion in 2020 for LCFC. The methodology can be applied to other scenarios in the industry.

Does order backlog matter for financial reporting quality? Evidence from revenue restatements

In this study, we investigate the relationship between revenue recognition restatements and order backlog. Order backlog, a leading indicator of future earnings, is defined as the monetary value of unfilled orders at year-end. The presence of an order backlog can be economically significant and can have positive or negative implications. However, it is not clear whether there is an association between order backlog and financial reporting quality and, if there is, whether the relationship is negative or positive. Our results suggest that revenue recognition restatements are more likely to occur when order backlogs or changes in order backlogs are significant. Additionally, firms just meeting an earnings target when they have greater order backlog changes, and firms with a higher deferred-revenue-to-order-backlog ratio, are more likely to restate revenue. Finally, audit firms with more experience auditing companies with average backlogs above the median mitigate the association between backlogs and revenue restatements. Hence, financial statement users and auditors should use more skepticism in reviewing financial statements when firms have order backlogs.

Regional logistics demand forecasting: a BP neural network approach

With the rapid development of e-commerce, the backlog of distribution orders, insufficient logistics capacity and other issues are becoming more and more serious. It is very significant for e-commerce platforms and logistics enterprises to clarify the demand of logistics. To meet this need, a forecasting indicator system of Guangdong logistics demand was constructed from the perspective of e-commerce. The GM (1, 1) model and Back Propagation (BP) neural network model were used to simulate and forecast the logistics demand of Guangdong province from 2000 to 2019. The results show that the Guangdong logistics demand forecasting indicator system has good applicability. Compared with the GM (1, 1) model, the BP neural network model has smaller prediction error and more stable prediction results. Based on the results of the study, it is the recommendation of the authors that e-commerce platforms and logistics enterprises should pay attention to the prediction of regional logistics demand, choose scientific forecasting methods, and encourage the implementation of new distribution modes.

Forward Buying and Strategic Stockouts

Price promotions are temporary price cuts that suppliers offer to buyers. When promotions are sufficiently attractive, buyers choose to backlog some portion of demand in anticipation of a possible forward buy at the discounted price. While it has been shown that a backlog of orders as a normal business practice can be successful in certain situations, the potential benefits of such strategic stockouts in the context of price promotions are not fully understood. This paper explores these benefits while offering theoretical and managerial insights into the link between forward buying and strategic stockouts along with a practically appealing control policy.

Balancing the Books

An electronics manufacturer is struggling to clear a backlog of orders while also keeping new customers happy – leading to clashes with the finance department

Manpower Constraints and Corporate Policies

Manpower constraints are the pervasive lack of specialized high- and low-skill workers, irrespective of the wage firms might offer. For a panel of German firms, we show manpower-constrained firms have higher capacity utilization and longer backlog of orders (measured in months). They are more willing to increase their capital expenditures, and more willing to grow their employment in the following year. Manpower constraints vary substantially over time and across industries, being higher on average in traditional manufacturing industries and lower in high-tech industries. For identification, we exploit the fall of the Berlin Wall in 1989, and the subsequent differential fluxes of Eastern immigrants across Western states, which followed the pre-existing patterns of Eastern German immigration immediately after WWII. We construct a Manpower Constraint (MPC) Index calibrating the loadings on firm-level financials that are also available in commonly used data set for US, European, and Asian firms. Our results help inform relevant debates such as the reform of immigration policies and the investment in public and private education for low-skilled workers.

Assessing the benefits of labelling postponement in an export-focused winery

Supporting wine production operations in an increasingly global market has grown ever more challenging. Export-focused wineries supply many foreign clients, often requiring different labels for the same kind of wine. Order forecasts tend to be highly inaccurate, and wineries must be able to quickly react to changes, making lot-sizing an important consideration. One tool to reduce product misallocation is postponing product differentiation, where the natural decoupling point for premium wine is the labelling process. However, the double handling involved incurs additional costs and time penalties. We analyse the performance impact of postponing the labelling of bottled wines by developing a multi-stage mixed-integer stochastic programming model with full recourse for demand scenarios. The underlying data and policies are based on an unnamed Chilean export-focused winery. The model supports lot-sizing under several winery production policies. We experiment with different levels of capacity tightness, demand variability and demand correlation between wines, optimising for reducing order backlogs, inventory levels and line set-ups. While we find that some amount of postponement will always be recommended, the exact mix and degree depend on these external factors. Postponement has the most benefits when production capacity is moderately tight, demand variability is high and wines have negatively correlated demands.

Aircraft Wing Build Philosophy Change through System Pre-Equipping of Major Components

In the civil aircraft industry there is a continuous drive to increase the aircraft production rate, particularly for single aisle aircraft where there is a large backlog of orders. One of the bottlenecks is the wing assembly process which is largely manual due to the complexity of the task and the limited accessibility. The presented work describes a general wing build approach for both structure and systems equipping operations. A modified build philosophy is then proposed, concerned with large component pre-equipping, such as skins, spars or ribs. The approach benefits from an offloading of the systems equipping phase and allowing for higher flexibility to organize the pre-equipping stations as separate entities from the overall production line. Its application is presented in the context of an industrial project focused on selecting feasible system candidates for a fixed wing design, based on assembly consideration risks for tooling, interference and access. Further industrial, human and cost factors are discussed to establish project competiveness. The main findings show a potential to reduce assembly time of systems equipping operations by 30% together with a lower ergonomic impact score. The paper also presents design rules derived from the case study towards a system design for a pre-equipping build philosophy. Primarily, cross component interfaces should be avoided as much as possible. Access for phase one structural operations need to be considered as well as major component jig pickup points. To increase system installation independence, layout considerations of components should lead to sufficient access to all components at any installation stage.

What Do We Mean When We Say, “Structural Racism”? A Walk down West Florissant Avenue, Ferguson, Missouri

Walter Benjamin describes the concept of “presence of mind” as a way of thinking about and being in time that is at once, historical, prophetic, and actively engaged in the fullness of the moment. Its achievement is a bodily art as much as a mental one; it is the sort of understanding that comes from walking down the street.The street I want to walk along today is West Florissant Avenue, in Ferguson, Missouri. There on August 4, 2014, Emerson Electric announced third-quarter sales of $6.3 billion, down about 1 percent from the second quarter, but undergirded by a record backlog of orders. A quarter mile to the northeast, five days later, Officer Darren Wilson killed Michael Brown. While the distance between the spot on Canfield Drive where Michael Brown died and the corporate headquarters of Emerson Electric is so small that the shots fired by Officer Wilson must have been audible in the company lunchroom, I do not want to draw too direct a line between them. I do not want to suggest that Emerson Electric is responsible for the murder of Michael Brown, at least not according to any conventional understanding of responsibility in our society. I do, however, want to use the proximity of Emerson’s corporate headquarters and the shooting of Michael Brown to suggest something about the framing determinants of historical events: ways the relationship between the past and the future is hedged in, limited, perhaps even determined by past histories and the habits of mind they support. After explaining what I mean on a fairly abstract level, with reference to the long history of the United States, I narrow the aperture a bit to think about the history of racism and real estate, of white supremacy and wealth, of structural racism with particular attention to the history of twentieth-century Saint Louis. I then, finally, return to Ferguson, the recent past, and the notion of “presence of mind.”

How to Supply Assembly Liines

Great efforts are currently dedicated to cost engineering in industry. The lean production approach is a good way to lower production costs. Material flows and treatment should be planned and controlled neither too early nor too late, because early production leads to an increase of stocks of materials and late production to a backlog of orders. This task is especially important in serial production, e.g. in the automotive industry. A buffer stock could be connected with assembly lines in many ways, such as handcarts, fork lift trucks or special cableways. A modern method of material supply in an assembly workshop is the usage of tow trains consisting of a tow truck and several carts. The number of carts in a train can change but it cannot be high because of turnings and crossings. The task is to find and optimize transport routes. This task is considered to be NP-hard. The paper describes several approaches to solving the task.

Hybrid MTO-MTS production planning: An explorative study

Research on the planning and control of combined make-to-order/make-to-stock or hybrid production systems often takes a typical MTO or MTS perspective. We examine the benefits of a hybrid planning approach without priority for either MTO or MTS. We develop a Markov Decision Process model for a two-product hybrid system to determine when to manufacture MTS and MTO products. Contrary to earlier studies with this approach, this study includes a positive lead time for MTO products. We characterize optimal policies and show how decisions should be based on both inventory level and backlog state of MTO products. Especially discriminating between states with and states without backlog of MTO orders is shown to be important in determining whether to increase MTS stock. Savings of up to 65 percent are achieved compared to policies that prioritize MTS or MTO.

Customers’ Capital Market Information Quality and Suppliers’ Performance

We empirically examine the association between downstream firms’, i.e., customers’ capital market information quality, and the operating performance of upstream firms, i.e., suppliers. Customers’ capital market information quality is measured by the customers’ provision of earnings forecasts, the customers’ reported earnings quality, and the customers’ coverage by financial analysts and credit rating agencies. We hypothesize and find a positive association between customers’ capital market information quality and suppliers’ operating performance measured by the DuPont profitability ratios. The association is stronger for suppliers with higher sales volatility, no order backlogs, customers who are less dependent on their input, and shorter business relation with customers. Collectively, the results suggest that the quality of information provided by the customers to the capital market has a spillover effect in the input market, i.e., helps the suppliers improve their performance.