Simulation-Based Modeling and Analysis of Schedule Instability in Automotive Supply Networks
Within automotive supply chains, instability of order schedules of original equipment manufacturers (OEMs) creates inefficiencies in suppliers’ production processes. Due to the market power of the OEM, first tier suppliers are not always able to influence
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Abstract Within automotive supply chains, instability of order schedules of original equipment manufacturers (OEMs) creates inefficiencies in suppliers’ production processes. Due to the market power of the OEM, first tier suppliers are not always able to influence the scheduling behavior of their customers. However, addressing the root causes of schedule instability, in particular the unreliability of suppliers’ production processes, can help to curtail short-term demand variations and increase the overall supply chain efficiency. To this end, we introduce a stylised assembly supply chain model with two suppliers and a single OEM. This supply chain can be disrupted by a shortage occurring at one of the two suppliers due to random machine breakdowns, what consequently creates dependent requirements variations affecting both the buyer and the other supplier. Therefore the paper at hand contains two main sections. At first, a simulation model is developed containing the said mechanism causing schedule instability. Secondly, a simulation study is carried out to derive managerial and theoretical implications accordingly.
1 Introduction Companies within automotive supply chains exchange and update demand information on a regular basis. Typically, suppliers receive from their customers daily updates of short-term delivery requirements and mid-term demand forecasts as a basis for production planning. It is however not uncommon that required shipment quantities and due dates become revised by the customer at short notice [13] and result in particular from the adjustment of the planned production schedule by the OEM. Such adjustments need not result exclusively from a change in the market T. Gruchmann (B) ZNU - Centre for Sustainable Corporate Leadership, Witten/Herdecke University, Alfred-Herrhausen-Str. 50, 58448 Witten, Germany e-mail: [email protected] T. Gollmann NTT DATA Deutschland, Hans-Döllgast-Str. 26, 80807 Munich, Germany e-mail: [email protected] © Springer International Publishing Switzerland 2017 K.F. Dœrner et al. (eds.), Operations Research Proceedings 2015, Operations Research Proceedings, DOI 10.1007/978-3-319-42902-1_61
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demand but may occur due to re-scheduling of production orders at the OEM. The German Association of the Automotive Industry (VDA) cites the complexity of the supply chain, technical and quality-related problems as well as other contingencies as sources of the said demand variations [16]; similar causes are mentioned in [1]. As a consequence, suppliers in automotive supply networks face an increased volatility within their production processes which lead to additional tool change-overs and inefficient lot sizes [6]. VDA estimates the resulting costs to be up to 5 % of the suppliers’ turnover [16]. The described phenomenon is termed in the literature as schedule instability. Specifically, schedule instability is defined as incessant adjustment of OEM’s production schedule which reacts to changed conditions [10]. Sivadasan et al. [13
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