Information enrichment designing the supply chain for competitive advantage1997 MasonJones.docx

Information enrichment designing the supply chain for competitive advantage1997 MasonJones.docx

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Informationenrichmentdesigningthesupplychainforcompetitiveadvantage1997MasonJones

Informationenrichment:

designingthesupplychainforcompetitiveadvantage

Mason-Jones,R., Towill,D.R.. SupplyChainManagement. Bradford:

1997.Vol.2, Iss. 4;  pg. 137

Abstract（DocumentSummary）

Theconceptofthe"seamlesssupplychain"isfurtherexploitedbyencouragingmarketplaceinformationtomovethroughthesupplychainwithaslittledistortionaspossible.Itisconcludedthattremendousbenefitscanresultfromadoptingaholisticapproachiftheattitudinalproblemsassociatedwithinformationsharingcanbeovercome.

FullText （5965 words）

CopyrightMCBUPLimited（MCB）1997

R.Mason-Jones:

PostgraduateResearcher,LogisticsSystemsDynamicsGroup,FacultyofEngineeringandEnvironmentalDesign,UniversityofWales,Cardiff,UK

D.R.Towill:

Professor,LogisticsSystemsDynamicsGroup,FacultyofEngineeringandEnvironmentalDesign,UniversityofWales,Cardiff,UK

ACKNOWLEDGMENT:

TheauthorswouldliketoextendtheirgratefulthankstoEPSRCwhofundthisresearchunderStudentshipNumber94315659inassociationwiththePhDtitle"HierarchicalControlofSupplyChainDynamics".

Introduction

Oneofthekeyattributesofasuccessfulwinnerintoday'shighlycompetitivemarketplaceistheabilitytorespondrapidlytotheendconsumerdemand.Tomaximizecompetitiveadvantageallmemberswithinthesupplychainshould"seamlessly"worktogethertoservetheendconsumer（Towill,1996）.Alotofrethinkingtowardsindustrialrelationshipshas,therefore,beennecessarytomovetowardstheseamlesssupplychaininwhichthe"players"thinkandactasone.Themainideasurroundingpartnershipsourcingisthatviaclosertiesandtheresultinginformationsharingthepartnerswillbemoreabletoeffectivelymeettheircustomers'demands.Itisveryeasytodiscusstheprinciplesofpartnershipbuttheactual"how"ofusingtheexchangedinformationtomaximizebenefitstoallplayershasnotbeenfullyexplored,（Whiteoak,1994）.Thisarticlepresentsresultsfromresearchaimedatanalysingthe"how"ofinformationusagethroughthesupplychaintogainstrategicadvantageintheproductdeliveryprocess（PDP）.

Duringthediscussionscontainedwithinthepaperanimportantdistinctionismadebetweena"supplychain"anda"pipeline".Basicallythepipelineisamechanismbywhichmaterialsandinformationflowthroughasupplychain.Pipelinesaresmooth,welldefinedpassagesenablingundisruptedmovement,thereforerequiringsomeformofdesignbythesupplychainmembers.Allcompaniesbelongtoasupplychainbutunfortunatelynotallhavedevelopedtooperateeffectivepipelines.Theterm"pipelinemanagement"wasfirstcoinedbyForrester（1960）.AsoutlinedbyFarmerandVanAmstel（1990）theconceptisrelevanttomanysituationswheretheorganizationalsystemisrequiredtobalanceaflowofincomingmaterialsagainstoutgoingcomponents/products.

Tocompeteeffectivelyinthemarketplacemuchpressurehasbeenexertedonsupplychainsandindividualcompaniestoimprovepipelineperformancebyoptimizingtheirresponsetocustomerdemand.Asanimportantcontributiontothisimprovement,organizationshaveimplementedspecificpipelineprocessimprovementtechniquessuchasjust-in-time（JIT）andmanufacturingresourcesplanning（MRP）.Methodologiessuchas"leanmanufacturing"haveshownimprovementstoawholehostofindustries,mostnotablytheautomotivesectorwhereextensiveresearchhasbeencarriedout（Womacketal.,1990）.Morerecentlythisapproachhasbeenbroadenedtoencompass"leanthinking"andshowntoapplytoaverywiderangeofindustries（WomackandJones,1996）.

Nomatterhowfarupstream,allplayerswithinthesupplychainareworkingtomeetthemarketplacedemand.However,inmanysupplychainsonlytheplayerclosesttotheendcustomerhastheluxuryofknowingthetruedemand.Marketinformationnotoriouslysuffersfromdelayanddistortionasitmovesthroughthesupplychain.Thetwomainissuesinsupplychain（re）designaretolimitordermagnificationastheinformationmovesupthesupplychain（i.e.reducinguncertainty）andtoreducethetimedelayinreceivinginformation（i.e.retaininginformationvalue）.Thepaperpresentstheachievablebenefitsavailabletoallsupplychainsviamarketsalesinformationusageatalllevelsofthepipeline.

Theroleofpartneringinallowingtimecompression

Theadvantagesofchangingfromtraditionaladversarialapproachestomodernindustrialrelationships,suchaspartnershipsourcing,havebeenwelldocumentedbyMacBethandFerguson（1994）.ThesearesummarizedasinFigure1,whichwasoriginallyconceivedbyNeilIrwinaspartoftheCBIDTIPartnershipInitiative（TowillandNaim,1993）.WhereasFigure1isessentiallybasedoncollaborationbetweenanytwoadjacentplayers,thisarticleisdirectedatthewiderholisticissueofcollaborationthroughoutthesupplychain.

InaseminalpublicationStalkandHout（1990）emphasizedtheimportanceoftimecompressionthroughasupplychaininordertogainshorterleadtimes,ordercontrol,andstocklevelreductions.Oneavailableresourcewithincompaniesthatinvariablyhasanunnecessarilylongleadtimeisdemandinformation.Infact,StalkandHout（1990）specificallywarnofthedangersofslowinformationleadtimes,summinguptheproblemswithinformationdelayswhentheystate:

"

Theunderlyingproblemhereisthatonceinformationages,itlosesvalue...olddatacausesamplifications,delayandoverhead...Theonlywayoutofthisdisjointedsupplysystembetweencompaniesistocompressinformationtimesothattheinformationcirculatingthroughthesystemisfreshandmeaningful."

Thus,thepurposeofthispaperistodemonstrateandbenchmark,viaarealisticsimulationmodel,theexpectedbenefitsoftakingaholisticviewofsupplychaininformationflow.However,theimplementationofsuchaholisticsupplychainrequiresadegreeoftrustbetweenall"players",hencethelinkwithpartnershipinitiatives.

Information:

acompetitiveadvantage

Themajortechnologybehindimprovedinformationflowwastheadventofelectronicdatainterchange（EDI）.Itoffersgreatlyimprovedinformationflowsandisanextremelyimportantaspectwithinleadingorganizationsinthefighttodecreaselead-times（Evansetal.,1993）.However,whiletheintroductionofEDIinmanycompanieshasofferedmarkedimprovementinthespeedoftransmissionoforders（oncesanctioned）,thecurrentinformationflowinthevastmajorityofsupplychainsisstillfarfromideal.Unfortunately,inalltoomanyinstancestheoldproblemsofdistortionandmagnificationoforderinformationremain,notleastbecausethemanydecisionprocesseswhichstillremainblockrapiddatatransferencetowhereitisreallyneeded.Inparticular,thereisstillmuchuntappedmileageinseekingtoimprovetheorderfulfilmentprocessesfromutilizingundistortedpointofsalesinformation.

Informationflowdoesnothavethesameleadtimeconstraintsthataproductionprocesshas,andviaITitispossibletoeliminatetheinformationtransmissionlead-timefromoneendofthechaintotheother.Themainconstrainttoenrichingasupplychainwithmarketsalesdataisthecommonattitudethatinformationispower.Asaconsequenceofthetraditionalculturecompanieswilldeliberatelydistortorderinformationtomasktheirintentnotonlytocompetitorsbuteventotheirownsuppliersandcustomers,unbelievablethoughthismayseem（Towill,1996）.Incontrast,Ackereetal.（1993）arguedthatmanagerscanandshouldredesigntheirbusinessprocessestogaincompetitiveadvantageandmustincludeimprovedinformationflowwithintheirnewstrategy.TheyoffersomepreliminarysimulationresultsbasedontheMITbeergame,whichshowthetremendouspotentialwhichmayberealizedbyredesigningthehandlingandusageofmarketsalesinformationthroughoutthesupplychain.

Marketsalesdataistheinformationcatalystforthewholesupplychain,holdingundiluteddatadescribingtheconsumerdemandpattern.Therefore,thebestwaytoensureeveryoneinthesupplychaingetsthemostuptodateandusefulinformationistofeedeachlevelofthesupplychaindirectlywiththemarketsalesdata.Managersshould,therefore,bechallengingandquestioningmechanismswithinpipeline,structureswhichdelayorderinformationthroughthesupplychain.

Figure2presentsthedistinctionbetweenthe"traditional"supplychainandthehereinadvocated"enriched"supplychainintheirapproachestoinformationusage.Inthetraditionalsupplychaintheretaileristheonlyplayerwhohasdirectsightofconsumerdemand;allothermembersonlyhavetheordersfromtheirimmediatecustomer,（i.e.thewarehouseonlyhassightofthedistributor'sorders）.Therefore,inthetraditionalmodethemarketinformationisdistortedinitiallybytheretailerandfurtherdistortedwitheachsuccessivelinkinthechain.However,intheinformationenrichedsupplychaineachplayer,nomatterhowfarupstream,receivesthemarketplacedatadirectly.Theenrichmentmechanismisanelectronicpointofsaleslink（EPOS）.Soratherthaneachplayertraditionallymakinganorderdecisionbasedpurelyontheinternalchainorderdata,hecannowmakeaninformedjudgementbasedonactualmarketdemandaswell.

Asanearlyindicationtothebenefitsofenrichingthepipeline,Figure2presentsthefactoryorderrateresponsetoastepupinmarketdemandforboththetraditionalandenrichedmodels.Thesimulationmodelsusedaredescribedlater.Thefactoryinthetraditionalsupplychaincannotevenbegintocompetewiththeinformationenrichedfactorybothintermsofresponseoversh