Guidelines for Collaborative Supply Chain System Design and Operation

John A. Muckstadt, David H. Murray, James A. Rappold () and Dwight E. Collins
Additional contact information
John A. Muckstadt: Cornell University
David H. Murray: College of William & Mary
James A. Rappold: University of Wisconsin
Dwight E. Collins: Aspen Technology

Information Systems Frontiers, 2001, vol. 3, issue 4, No 5, 427-453

Abstract: Abstract Over the past decade, firms have adopted supply chain management as a critical element of their corporate strategies. Despite these efforts, it is our observation that many firms do not realize the anticipated benefits of constructing collaborative operating relationships with supply chain partners. Our purpose in this paper is to establish a set of guiding principles for the effective design and execution of supply chain systems. These principles suggest why, what, and how collaborative relationships should be constructed. While constructing and operating a competitive supply chain is the primary objective of supply chain management, we have observed several impediments to achieving this goal. First, demand uncertainty is so substantial in most supply chain environments that if it is not adequately addressed, it can severely degrade the anticipated performance of the supply chain as measured in terms of unit cost, speed, quality, and responsiveness to changing conditions. Second, supply chains with poor physical characteristics that operate with long and variable response times cannot take full advantage of collaborative relationships due to their inability to respond to changes in the environment. Third, firms with poor information infrastructures lack the capabilities necessary to acquire, store, manipulate, and transmit data effectively and quickly. Fourth, business processes are often not designed properly, both intra- and inter-organizationally, to adapt to evolving supply chain conditions. Finally, decision support systems and operating policies that guide day-to-day operating decisions may not be adequately designed to contend with supply chain uncertainty. We also suggest that the strategic and tactical modeling paradigms employed in supply chain decision support systems are inadequate in many operational environments because of the manner in which uncertainty is treated. Furthermore, collaborative relationships that focus on reducing the uncertainty in operating environments by employing improved information systems and business processes will result in more efficient allocation of key resources, faster response times to market forces, and more reliable supply chain performance; however, these collaborative arrangements by themselves cannot compensate for fundamentally flawed and operationally ineffective manufacturing and distribution environments.

Keywords: supply chain management; collaborative planning; production planning and control; operations strategy; multi-echelon inventory systems; capacitated production (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (9)

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DOI: 10.1023/A:1012824820895

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