DISTORTION OF BATCHING IN THE SUPPLY CHAINManufacturerArea DistributorLocal DistributorRetail Store
In the table above there is reasonably steady end-customer demand at a rate of 5 items per week. The end customer (a retail store perhaps) orders from a local distributor at this rateand this local distributor, perhaps because of custom and practice, places bi-weeklyorders with the area distributor. The area distributor delivers at this bi-weekly rate, but, toreplenish its stock, places monthly orders back to the manufacturer. The manufacturer actually makes them in economic batches (EBQ) of 100 and therefore makes them onlyoccasionally.
3. Complete the above table in accordance with what is described above.
Whenever two operations in a supply chain arrange for one to provide products or services to the other, there is the potential for misunderstanding and miscommunication.This may be caused simply by not being sufficiently clear about what a customer expectsor what a supplier is capable of delivering. There may also be subtle reasons stemmingfrom differences in perceptions of seemingly clear agreements. The effect is analogous tothe children’s game of Chinese whispers. The more children the message passes betweenthe more distorted it tends to become. When the game finishes and the last child says outloud what the message is, the first child and all intervening children are amused.Given the disruptive nature of the supply chain dynamics described previously, animportant aspect of supply chain planning and control is the attempt by operationsmanagers to improve supply chain performance.The first step is to understand the dynamics – which is what you are doing as studentsThe proactive actions which operations can take are all concerned with coordinating thesupply chain activities
Efforts to coordinate supply chain activity fall into three categories
– We will see how Green Gear Cycling attempts to do thisThis is also the reason
why lack of information drives plans and people crazy
– This can be done through
vendor managed inventory
harmonize decision making ensuring that differences in forecasting methods