BUSINESS VALUE OF SMART CONTRACT: CASE OF INVENTORY INFORMATION DISCREPANCIES

Firms are increasingly interested in Blockchain Smart Contracts as a solution for the visibility of the digital supply chain. Blockchain can help realize the cost reductions by providing a “single version of the truth” for a firm and its trading partners. By sharing important information such as inventory levels, manufacturing performance and operations indicators, and order and shipment information, firms can eliminate the delays and uncertainties in the information that contributes to “the bullwhip effect” and inflates required buffer stock. This paper focuses on the impact of blockchain in an inventory operation to cope up with information discrepancies. We present and compare the cost differences between an existing technology (like EDI) and blockchain. Using technologies like blockchain and smart contracts will enable a more transparent, sustainable, and resilient supply chain

Periodic Replenish and Recount Policy to Address Record Inaccuracy from Stock Loss

Inventory record inaccuracy (IRI) often arises in retail environments due to unaccounted stock loss. Theft, misplacement, spoilage, and transaction errors will reduce the true inventory values without changing the inventory record. As previous inventory replenishment policies assume perfect record accuracy, increasing IRI can cause unexpected stockout events, mistimed reorders and replenishment freezes. Solutions to rectifying IRI vary from the use of improved tracking technologies to prevent it initially occurring at all to recounting programs which estimate true inventory value. Unfortunately, in retail environments, high‑tracking technology is unsuitable and continuous counting programs are too costly. To address the limitations of current solutions, we offer a Periodic Replenish and Recount Policy (PRRP) which accounts for stochastic stock loss and minimizes total costs including recounting. The theoretical foundation of PRRP allows for the discovery of both an optimal order quantity as well as optimal count frequency for a given inventory system. We find that in instances of stochastic stock loss, PRRP balances the trade-offs between shortage, surplus and counting costs

The effect of inventory record inaccuracy in information exchange supply chains

The goal of this paper is to quantify the impact of Inventory Record Inaccuracy on the dynamics of collaborative supply chains, both in terms of operational performance (i.e. order and inventory stability), and customer service level. To do so, we model an Information Exchange Supply Chain under shrinkage errors in the inventory item recording activity of their nodes, present the mathematical formulation of such supply chain model, and conduct a numerical simulation assuming different levels of errors. Results clearly show that Inventory Record Inaccuracy strongly compromises supply chain stability, particularly when moving upwards in the supply chain. Important managerial insights can be extracted from this analysis, such as the role of 'benefit-sharing' strategies in order to guarantee the advantage of investments in connectivity technologies

The diffusion and impact of radio frequency identification in supply chains : a multi-method approach

As a promising and emerging technology for supply chain management, Radio Frequency Identification (RFID) is a new alternative to existing tracking technologies and also allows a range of internal control and supply chain coordination. RFID has generated a significant amount of interest and activities from both practitioners and researchers in recent years. However, the factors important for its diffusion in supply chains and the impact on supply chain performance have not been well understood. Many organizations are reluctant to participate in supply-chain level RFID projects because of this lack of understanding. My dissertation proposes to help understand RFID's use in supply chains through a multi-method approach - an empirical study to understand the diffusion and impact of RFID and a simulation study to understand RFID's impact on inventory accuracy in supply chains. My first study on the factors influencing RFID adoption decision showed that compatibility, trading partner's RFID capability, trading partner power, competitive pressure, transaction volume and financial resources are significant factors for RFID adoption in a supply chain context. The second study which looked into the post-adoption use of RFID for supply chain has found that adoption cost, complexity, organizational readiness, external pressure and trading partner readiness significantly influence RFID infusion, which finally improves firm's supply chain process performance. The third study used a simulation model to examine RFID's impact on inventory management in supply chains. The key findings were that the benefits reaped from RFID heavily depend on product type which implements RFID. The above findings indicate that organizations have to carefully evaluate their RFID project with different factors identified in this dissertation to successfully implement RFID and derive its full benefits. My dissertation has contributed to RFID research in particular, and supply chain technology adoption in general, by showing the importance of trading partner issues for supply chain technology diffusion and use

Impact of RFID information-sharing coordination over a supply chain with reverse logistics

Companies have adopted environmental practices such as reverse logistics over the past few decades. However, studies show that aligning partners inside the green supply chain can be a substantial problem. This lack of coordination can increase overall supply chain cost. Information technology such as Radio Frequency Identification (RFID) has the potential to enable decentralized supply chain coordinate their information. Even though there are research that address RFID on traditional supply chain, few researches address how to coordinate RFID information sharing in a green supply chain. We study, through simulation experiments, two types of RFID information-sharing coordination under different configurations related with their inventory policies: basic and advanced. Statistical analyses show that better results can be presented in advanced RFID configuration given new coordination and inventory policy decisions presented. In addition, these findings shows what are the RFID information-sharing coordination that can provide better system improvement depending on the supply chain scenarios and factors

Hybrid Model for It Investment Analysis: Application to Rfid Adoption in the Retail Sector

One of the major obstacles in Information Technology (IT) adoption is its return on investment analysis. IT benefits in organizations are hard to measure and are usually realized over time. System dynamics approach has been used in IT literature to identify the impact of IT on business processes. Given benefits of any IT system in organizations, however, there is a high degree of uncertainty in achieving such benefits. Managerial flexibility in decision making process of implementing a new IT helps managers to overcome this uncertainty over time. Traditional cost benefit analysis such as NPV that is typically used to value any technology is unable to value managerial flexibilities while real options theory offers a model that can value a new investment as uncertainties about the system decreases over time. In this dissertation, we are proposing a new hybrid model for IT return on investment (ROI) that combines system dynamics and real options as two major techniques in economics of IT. This robust hybrid model takes advantages of both techniques while overcoming their weaknesses. We propose a systems dynamic solution to simulate the way an IT influences and improves an organization to be able to estimate the parameters used in the real options model. The hybrid model is used to find the best time for investing in item-level RFID in the retail sector.The results of return on investment analysis on item-level investment show that the variable cost of investment that is the tag prices dominates the return on investment. Other factors such as product unit price and consequently type of retail stores are important as well. The system dynamics simulation provided some major parameters of the real options model such as the expected payoffs and volatility of the expected payoffs that were hard to find in the literature.Business Administration (MBA

Optimal Supply Network with Vendor Managed Inventory in a Healthcare System with RFID Investment Consideration

Supply Chain Management in the healthcare sector faces several significant challenges, including complexity in healthcare systems, high supply chain costs, balancing quality and costs, delay in delivery, product availability from vendors, inventory waste, and unpredictability and uncertainty. Among those challenges, having an effective inventory management system with an optimal supply network is important to improve the match between supply and demand, which would improve the performance of for healthcare firms. Vendor Managed Inventory (VMI) system is a replenishment solution in which the vendor monitors and decides the time and the quantity of the inventory replenishment of their customers subject to their demand information exchange. A VMI contract in the location-inventory assignment problem is a decision tool for management in the healthcare industry, in which it enables the management to have a cost and service effective decision tool to critically re-evaluate and examine all areas of operations in a SC network looking for avenues of optimization. This dissertation is based on a real-world problem arising from one of the world\u27s leading medical implant supply company applied to a chain of hospitals in the province of Ontario. The chain of hospitals under study consists of 147 hospitals located in Ontario, Canada. The vendor is a supplier of three types of medical implants (a heart valve, an artificial knee, and a hip). In Chapter 2 of this dissertation, we present an optimal supply healthcare network with VMI and with RFID consideration, in which we shed light on the role of the VMI contract in the location-inventory assignment problem and integrate it with both the replenishment policy assignment and the Radio Frequency Identification (RFID) investment allocation assignment in healthcare SC networks using both VMI and direct delivery policies. A numerical solution approach is developed in the case of the deterministic demand environment, and we end up with computational results and sensitivity analysis for a real-world problem to highlight the usefulness and validate the proposed model. We extend our research of integrating the VMI contract in the location-inventory assignment problem with the replenishment policy assignment under a deterministic demand environment to include the stochastic demand environment. The impact of the uncertainty of the demand as a random variable following two types of distributions, normal and uniform distributions, is studied in Chapter 3. Motivated by the lack of investigations and comparative studies dealing with the preference of dealing with VMI contracts to other traditional Retailer Managed Inventory (RMI) systems, we provide in Chapter 4 of this dissertation a comparative study in which we compare the total cost of the VMI system with another two situations of traditional RMI systems: first, a traditional RMI system with a continuous replenishment policy for all hospitals and with assigned storage facilities and second, a traditional RMI system with a direct delivery policy for all hospitals without assigning a storage facility. Computational results, managerial insights, sensitivity analysis, and solution methodologies are provided in this dissertation. Keywords: Vendor Managed Inventory, healthcare system, location-inventory, RFID technology, supply-chain network, stochastic demand, location-inventory assignment problem, and retailer managed Inventory

Detailed Inventory Record Inaccuracy Analysis

This dissertation performs a methodical analysis to understand the behavior of inventory record inaccuracy (IRI) when it is influenced by demand, supply and lead time uncertainty in both online and offline retail environment separately. Additionally, this study identifies the susceptibility of the inventory systems towards IRI due to conventional perfect data visibility assumptions. Two different alternatives for such methods are presented and analyzed; the IRI resistance and the error control methods. The discussed methods effectively countered various aspects of IRI; the IRI resistance method performs better on stock-out and lost sales, whereas error control method keeps lower inventory. Furthermore, this research also investigates the value of using a secondary source of information (automated data capturing) along with traditional inventory record keeping methods to control the effects of IRI. To understand the combined behavior of the pooled data sources an infinite horizon discounted Markov decision process (MDP) is generated and optimized. Moreover, the traditional cost based reward structure is abandoned to put more emphasis on the effects of IRI. Instead a new measure is developed as inventory performance by combining four key performance metrics; lost sales, amount of correction, fill rate and amount of inventory counted. These key metrics are united under a unitless platform using fuzzy logic and combined through additive methods. The inventory model is then analyzed to understand the optimal policy structure, which is proven to be of a control limit type

Retail Inventory Control Strategies

Despite using computerized merchandise control systems in retail, the rate of stockouts has remained stagnant. The inability to satisfy customer needs has caused a loss of 4% in potential revenue and resulted in dissatisfied customers. The purpose of this qualitative multiple case study was to explore cost-effective inventory control strategies used by discount retail managers. The conceptual framework that grounded the study was chaos theory, which helped identify why some business leaders rely on forecasting techniques or other cost-effective strategies as an attempt to prevent stockouts. The target population was comprised of discount retail managers located throughout northeast Jacksonville, Florida. Purposeful sampling led to selecting 6 retail managers who successfully demonstrated cost-effective inventory control strategies for mitigating stockouts. Data were collected through face-to-face semistructured interviews, company websites, and company documents. Analysis included using nodes to identify similar words and axial-coding to categorize the nodes into themes. Transcript evaluation, member checking, and methodological triangulation strengthened the credibility of the findings. Five themes emerged: (a) internal stockout reduction strategies, (b) external stockout reduction strategies, (c) replenishment system strategies, (d) inventory optimization strategies, and (e) best practices for inventory control. This study may contribute to positive social change by improving inventory management, which may reduce demand fluctuations in the supply chain and reduce logistics costs in the transportation of freight thereby leading to improved customer satisfaction