Towards real-time customized management of supply and demand chains

Abstract

Our focus herein is on developing an effective taxonomy for the simultaneous and real-time management of supply and demand chains. More specifically, the taxonomy is developed in terms of its underpinning components and its research foci. From a components perspective, we first consider the value chain of supplier, manufacturer, assembler, retailer, and customer, and then develop a consistent set of definitions for supply and demand chains based on the location of the customer order penetration point. From a research perspective, we classify the methods that are employed in the management of these chains, based on whether supply and/or demand are flexible or fixed. Interestingly, our taxonomy highlights a very critical research area at which both supply and demand are flexible, thus manageable. Simultaneous management of supply and demand chains sets the stage for mass customization which is concerned with meeting the needs of an individualized customer market. Simultaneous and real-time management of supply and demand chains set the stage for real-time mass customization (e.g., wherein a tailor first laser scans an individual’s upper torso and then delivers a uniquely fitted jacket within a reasonable period, while the individual is waiting). The benefits of real-time mass customization can not be over-stated as products and services become indistinguishable and are co-produced in real-time, resulting in an overwhelming economic advantage.

Keywords

Value chain / supply chain / demand chain / taxonomy / real-time management / mass customization / information and decision technologies / services

References

[1] Barut M., Sridharan V.. Design and evaluation of dynamic capacity apportionment procedure. European Journal of Operational Research, 2004, 155(1): 112-133.

[2] Bhattacharje S., Ramesh R.. A multi-period profit maximizing model for retail supply chain management: an integration of demand and supply side mechanisms. European Journal of Operational Research, 2000, 122(3): 584-601.

[3] Chan L. M. A., Simchi-Levi D., Swann J.. Flexible pricing strategies for improving supply chain performance. Working Paper, 2000, Ontario, Canada: University of Toronto

[4] Croom S., Romano P., Giannakis M.. Supply chain management: an analytical framework for critical literature review. European Journal of Purchasing & Supply Management, 2000, 6(1): 67-83.

[5] ElHafsi M.. An operational decision model for lead-time and price quotation in congested manufacturing systems. European Journal of Operational Research, 2000, 126(2): 355-370.

[6] Elimam A. A., Dodin B. M.. Incentives and yield management in improving productivity of manufacturing facilities. IIE Transactions, 2001, 33(2): 449-462.

[7] Eschenbacher, J., Knirsch, P., and Timm, I. J., “Demand chain optimization by using agent technology”, Proceedings of the International Conference on Integrated Production Management, Tromso, Norway, pp. 285–292, 2000.

[8] Frohlich M. T., Westbrook R.. Demand chain management in manufacturing and services: web-based integration, drivers and performance. Journal of Operations Management, 2002, 20(6): 729-745.

[9] Hanfield R., Nichols E.. Introduction to Supply Chain Management, 1999, New York, NY: Prentice Hall

[10] Harris F. H., Pinder J. P.. A revenue management approach to demand management and order booking in assemble-to-order manufacturing. Journal of Operations Management, 1995, 13(4): 299-309.

[11] Heikkila J.. From supply to demand chain management: efficiency and customer satisfaction. Journal of Operations Management, 2002, 20(6): 747-767.

[12] Huttunen K., Eloranta E., Holmstrom J.. Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction, 2000, New York, NY: John Wiley & Sons

[13] Kahn, H. and Easton, F. F., “The role of pricing in supply chain profits”, published at http://sominfo.syr.edu/ facstaff/ffeaston/Research/SCP_DSI_072902.PDF, 2003.

[14] Korhonen P., Huttunen K., Eloranta E.. Demand chain management in a global enterprise-information management view. Journal of Operations Management, 1998, 9(6): 526-531.

[15] Krishnamurthy, A., Suri, R., and Vernon, M, “A new approach for analyzing queuing models of material control strategies in manufacturing systems”, Proceedings of the 4th International Workshop on Queuing Networks with Finite Capacity (QNETs2000), West Yorkshire, U.K., July 2000.

[16] La Londe B. J., Masters J. M.. Emerging logistics strategies: blueprints for the next century. International Journal of Physical Distribution and Logistics Management, 1994, 24(7): 35-47.

[17] Lampel J., Mintzberg H.. Customizing customization. Harvard Business Review, 1996, 38(1): 21-30.

[18] Landeghem H. V., Vanmaele H.. Robust planning: a new paradigm for demand chain planning. Journal of Operations Management, 2002, 20(6): 769-783.

[19] Lederer P. J., Li L.. Pricing, production, scheduling, and delivery time competition. Operations Research, 1997, 45(3): 407-420.

[20] Lummus R. R., Vokurka R. J.. Defining supply chain management: a historical perspective and practical guidelines. Industrial Management and Data Systems, 1999, 99(1): 11-17.

[21] Mello, A., “Mass customization won’t come easy” published at http://techupdate.zdnet.com/techupdate/stories/main/0,14179,2833563,00.html, August, 2003.

[22] Mentzer J. T., DeWitt W., Keebler J. S., Min S., Nix N. W., Smith C. D., Zacharia Z. G.. Defining supply chain management. Journal of Business Logistics, 2001, 22(2): 1-25.

[23] Naylor J. B., Naim M. M., Berry D.. Leagility: integrating the lean and agile manufacturing paradigms in the total supply chain. International Journal of Production Economics, 1999, 62(1–2): 107-118.

[24] New S. J.. The Scope of supply chain management research. Supply Chain Management, 1997, 2(1): 15-22.

[25] Olhager J.. Strategic positioning of the order penetration point. International Journal of Production Economics, 2003, 85(3): 319-329.

[26] Pine B. J., Gilmore J. H.. The four faces of mass customization. Harvard Business Review, 1997, 75(1): 91-101.

[27] Quinn F. J.. What’s the buzz?. Logistics Management, 1997, 36(2): 43-46.

[28] Ross A.. Mass customization-selling uniqueness. Manufacturing Engineer, 1996, 75(6): 260-263.

[29] Sebastian J. G., Lambert D. M.. Internet-enabled coordination in the supply chain. Industrial Marketing Management, 2003, 32(3): 251-263.

[30] Simchi-Levi, D., Kaminsky, P., Sinchi-Levi, E., Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies, McGraw Hill-Irwin, 2003.

[31] So K. C., Song J. S.. Price, delivery time guarantees and capacity selection. European Journal of Operational Research, 1998, 111(1): 28-49.

[32] Swann, J. L., dynamic pricing models to improve supply chain performance, Evanston, IL: PhD Thesis in IEMS, Northwestern University, 2001.

[33] Tan K. C.. A framework of supply chain management literature. European Journal of Purchasing & Supply Management, 2001, 7(1): 39-48.

[34] Tien J. M.. On automated correctional data systems. Computers, Environment and Urban Systems, 1986, 10(3/4): 157-163.

[35] Tien J. M.. Individual-centered education: an any one, any time, any where approach to engineering education. IEEE Transactions on Systems, Man, and Cybernetics, Part C: Special Issue on Systems Engineering Education, 2000, 30(2): 1-6.

[36] Tien J. M.. Toward a decision informatics paradigm: a real-time information based approach to decision making. IEEE Transactions on Systems, Man and Cybernetics, Part C, 2003, 33(1): 102-113.

[37] Tien J. M., Berg D.. Systems engineering in the growing service economy. IEEE Transactions on Systems, Man, and Cybernetics, 1995, 25(5): 321-326.

[38] Tien J. M., Berg D.. A case for service systems engineering. Journal of Systems Science and Systems Engineering, 2003, 12(1): 13-39.

[39] Tien J. M., Cahn M. F.. An Evaluation of the Wilmington Management of Demand Program, 1981, Washington, DC: National Institute of Justice

[40] Towill D.R., Naim M.M., Wikner J.. Industrial dynamics simulation models in the design of supply chains. International Journal of Physical Distribution & Logistics Management, 1992, 22(5): 3-13.

[41] Treville S., Hameri A.. From supply chain to demand chain: the role of lead time reduction in improving demand chain performance. Journal of Operations Management, 2004, 21(6): 613-627.

[42] Tyndall G., Gopal C., Partsch W., Kamauff J.. Supercharging Supply Chains: New Ways to Increase Value through Global Operational Excellence, 1998, New York, NY: John Wiley & Sons

[43] Vollman T. E., Cordon C., Heikkila J.. Teaching supply chain management to business executives. Production and Operations Management Journal, 2000, 9(1): 81-90.

[44] Williams T., Maull R., Ellis E.. Demand chain management theory: constraints and development from global aerospace supply webs. Journal of Operations Management, 2002, 20(6): 691-706.

[45] Yasar, A. and Tien, J. M., “A robust dynamic pricing approach that tracks the customer’s imputed valuation”, Proc. of the 2003 IEEE International Conference on Systems, Man & Cybernetics, Washington, DC, 2003.

[46] Zhao W., Wang Y.. Coordination of joint pricing-production decisions in a supply chain. IIE Transactions, 2002, 34(3): 701-715.