Supply Chain Management - Coordination

Supply Chain Management Revision Article Series

Summary

Coordination implies actions by various agents in the supply chain that are aimed at increase in total supply chain profits. It also implies that supply chain agents avoid actions that improve their local profits but hurt total profits. Hence supply chain coordination principles requires each stage of the supply chain to take into account the impact its actions have on other stages.

Coordination implies actions by various agents in the supply chain that are aimed at increase in total supply chain profits. It also implies that supply chain agents avoid actions that improve their local profits but hurt total profits. Hence supply chain coordination principles requires each stage of the supply chain to take into account the impact its actions have on other stages.

A lack of coordination creates "bullwhip effect" in the supply chain. Due to this effect, fluctuations in sales become larger and larger fluctuations in orders at higher stages in the supply chain. This leads to situations wherein large shortages or large surplus capacities are felt in the supply chain cyclically.


What are Obstacles to Coordination in a Supply Chain?

Incentive obstacles
Information processing obstacles
Operational obstacles
Pricing obstacles
Behavioral obstacles
(Chopra and Meindl)

Managerial Levers to Improve Coordination in Supply Chains

Aligning goals and incentives
Improving information accuracy
Improving operational accuracy
Designing pricing strategies to stabilize orders
Building Partnerships and trust
(Chopra and Meindl)



References


Sunil Chopra and Peter Meindl, Supply Chain Management: Strategy, Planning and Operations, Prentice Hall, 2001. Supply Chain Management: Chopra and Meindl - Book Information and Review



Articles for Further Study


Balakrishnan, Anantaram, and Geunes, Joseph, "Collaboration and Coordination in Supply Chain Management and E-Commerce," Production and Operations Management, Spring 2004

http://findarticles.com/p/articles/mi_qa3796/is_200404/ai_n9366598/



Supply Chain Coordination with Revenue-Sharing Contracts: A Missed Opportunity?




Fugate, Brian, Sahin, Funda,and Mentzer, John T., "SUPPLY CHAIN MANAGEMENT COORDINATION MECHANISMS," Journal of Business Logistics, 2006

http://findarticles.com/p/articles/mi_qa3705/is_200607/ai_n17180845/



Qing Zhang, Essentials for Information Coordination in Supply Chain Systems,AsianSocial Science, October 2008.
Presentation Slides

Partnerships in the Supply Chain

Knol Number - 1381 Links to be given to above two references