ch13 Coordination in the Supply Chain.pptVIP

8/29/00 S. Chopra / Demand Planning Chapter 13Coordination in the Supply Chain Objectives Describe supply chain coordination, the bullwhip effect, and their impact on performance Identify causes of the bullwhip effect and obstacles to coordination in the supply chain Discuss managerial levers that help achieve coordination in the supply chain Describe actions that facilitate the building of strategic partnerships and trust within the supply chain Outline Lack of Supply Chain Coordination and theBullwhip Effect Effect of Lack of Coordination on Performance Obstacles to Coordination in the Supply Chain Managerial Levers to Achieve Coordination Building Strategic Partnerships and Trust Withina Supply Chain Achieving Coordination in Practice Lack of SC Coordination and the Bullwhip Effect Supply chain coordination – all stages in the supply chain take actions together usually results in greater total supply chain profits SC coordination requires that each stage take into account the effects of its actions on the other stages Lack of coordination results when: Objectives of different stages conflict or Information moving between stages is distorted Bullwhip Effect Fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers shown in Figure 13.1 Distorts demand information within the supply chain, where different stages have very different estimates of what demand looks like Results in a loss of supply chain coordination Examples: Proctor Gamble Pampers ; HP printers ; Barilla pasta The Effect of Lack ofCoordination on Performance Manufacturing cost increases Inventory cost increases Replenishment lead time increases Transportation cost increases Labor cost for shipping and receiving increases Level of product availability decreases Relationships across the supply chain worsens Profitability decreases The bullwhip effect reduces supply chain profitability by making it more expen