Synchronization in supply chains: implications for design and management
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Synchronization in supply chains: implications for design and management M Khouja* University of North Carolina at Charlotte, Charlotte, NC, USA Supply chain management literature calls for coordination between the different members of the chain. Materials should be moved from one supplier to the next according to a just-in-time schedule. In this paper, we show that for many supply chain configurations, complete synchronization will result in some members of the chain being ‘losers’ in terms of cost. We develop an algorithm for optimal synchronization of supply chains and provide some guidelines for incentive alignment along the supply chain. In developing the model, we use the economic delivery and scheduling problem model and analyze supply chains dealing with single and multiple components. For single-component supply chains, we derive a closed-form expression for the optimal synchronized cycle time. For multi-component supply chains, we develop an algorithm for finding the optimal synchronized cycle time. We test the performance of the algorithm and show that it provides optimal solutions for a wide range of problems. We illustrate the models with numerical examples. Journal of the Operational Research Society (2003) 54, 984–994. doi:10.1057/palgrave.jors.2601606 Keywords: inventory control; synchronization; supply chain management
Introduction Efficient and effective management of material flows across a supply chain is critical to its success.1 A supply chain involves suppliers (one or more tiers), assemblers/manufacturers, distribution centers, retailers, and customers as shown in Figure 1. We consider a simple serial supply chain. A simple serial supply chain is one in which each supplier is captive and supplies one or more components to only one upper tier supplier or assembly plant as shown in Figure 1a. Also, each supplier has a single source for each component. A more complex supply chain is one in which at least one supplier supplies one or more components to two or more upper tier suppliers, or two or more suppliers supply the same component to an upper tier supplier as shown in Figure 1b. Synchronization of a supply chain in terms of a just-intime (JIT) cycle time is advocated as a way of exposing problems and solving them. In well-managed supply chains, inventory flows between members of the chain with little delay.1 The goal of supply chain management is to optimize the whole system.2 Total chain-wide transportation, holding, and setup costs should be minimized. However, this integration may be difficult to achieve because different members of the chain have conflicting objectives.2 Chain members whose inventory holding cost is small, either because the capital invested is small or they can arrange *Correspondence: M Khouja, Business Information Systems and Operations Management Department, The Belk College of Business Administration, University of North Carolina at Charlotte, Charlotte, NC 282
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