Thursday, June 24. 2010

Supply Chain Performance and its topological features

Perhaps this research by Pero et al. can support small and medium sized companies with the design and redesign of its supply chain network.
The goal of the study was to analyze the connection between topological features of the supply chain and the resulting supply chain performance.

Method and Model
The authors used simulation techniques and statistical analysis to simulate a pull based supply network. The network consists of a retailer-, distributor- and manufacturer-level.
Demand and lead times were random, the supply chain performance was measured with stock outs that occured.

Results
The results show that:
  • An increasing number of nodes at each level increases the probability of stock outs.
  • The performance of the supply chain was not affected by the number of levels in the supply chain and the distance between the nodes.
  • Furthermore the number of sources for each node seems to increase the risk for stock outs.
Conclusion
Due to their simple structure the results are very compelling. To get the perfect supply chain performance all you have to do is following the above mentioned "rules" (results).

But you have to keep in mind the premises on which the model builds:
For example, supply chain performance is only measured in terms of "stock outs". Stock out should never be the single performance measure you rely on, since there may not be a direct correlation with more important company goals like profit, ...

Besides, it would be advised to model your own individual supply chain to accommodate for your specific configuration and needs. Especially strategic decisions like the supply chain configuration should be important enough to not take the shortcut.



Reference
Pero, M., Rossi, T., Noé, C., & Sianesi, A. (2010). An exploratory study of the relation between supply chain topological features and supply chain performance International Journal of Production Economics, 123 (2), 266-278 DOI: 10.1016/j.ijpe.2009.08.030
Posted by Daniel Stengel in Articles at 10:04 | Comments (2) | Trackbacks (0) Tweet This!
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Thanks for mentioning this article, that I was blissfully unaware of. It's now on my "to-read"-list, which never seems to get any shorter, quite the opposite.
#1 Jan Husdal (Homepage) on 2010-06-29 14:56 (Reply)
I don't really like my to-read list. Since I started collecting papers systematically, the following rule holds true: half of my papers are marked as "read" the other half is not. The total number does not really matter...

At least my book shelf has a physical limit in height!
#1.1 Daniel Stengel (Homepage) on 2010-06-29 15:24 (Reply)

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