Effective supply chain management tends to become a pivotal issue in manufacturing competitiveness nowadays. The concept of seamless supply chain is emerging for encouraging the market place information to move through the supply chain as efficiently as possible with Information Technology as a key enabler. This offers immense opportunities that can best be exploited by a judicious re-engineering of the systems and processes along the supply chain. However the analysis, design and implementation costs are often quite significant. Thus before embarking upon IT investment one requires a closer understanding of the value of information and its role in the chain dynamics. At present most SMEs are cautious and prefer phased IT investment only. Every phase may result in a more frequent review of the end customer demand picture that a preceding stage in the chain is willing to share with its supplier. The success of such a chain depends on whether this results in an improved performance for each player in the chain as well as for the chain as a whole. One of the pivotal factors is the decision making of each player based on the available local information at the time of decision making. Typically an information delay is associated with the available information due to the review period involved in accessing the demand picture. Thus decision focused supply chain models can help demonstrate the value of the available information to the chain members. This paper presents an n stage decision focused supply chain simulation model and highlights its key results along with its industry implications. Here each chain stage acts as a decision stage. Based on the local information of the order and the sampled information available from the immediate customer (i.e. the preceding stage) about the end customer demand, decisions at each stage are made. A concept of information cost associated with more frequent sampling of the end customer demand, is used as part of the total system cost. The key insights from our simulation study are quite interesting. A seemingly good decision at a stage based on local information often ends up as not only detrimental to the total chain costs but also to the total costs of the stage itself. This indicates that decision integration across the chain is a critical factor for ensuring success of the information enriched chain. The impact of increased IT investment at all chain stages does not guarantee improvements. Sometimes phased IT investment by a stage may be counter-productive. Thus a careful analysis of the chain with a focus on integrated decisions is useful to ensure success. There is a need to evolve a judicious use of decisional flexibility at selected chain stages.
Supply Chain, Simulation, Review Period, Decision-lnformation Synchronization Delay, Flexibility
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