Transport contract optimization under information asymmetry: an example

The present paper shows why information asymmetry and bivariate stochastic demand and spot price induce different behaviours and economic inefficiency in a carrier – shipper relationship. An example is offered of a single period, single echelon, shipper-carrier transport model where demand addressed to the shipper and the spot transport price, two exogenous stochastic variables, follow a bivariate exponential probability distribution function. We evaluate the objective functions of the carrier and shipper over one period reiterated with a mix of long-term and short-term procurement strategies under five scenarios of information sharing. Some clues as to ways of solving for other types of bivariates are provided.supply chain management, coordination, information sharing, decision anylisis, bivariate statistics

Review of order fulfilment models for Catalogue Mass Customization

Mass Customization (MC) is not a mature business strategy and hence it is not clear that a single or small group of operational models are dominating. Companies tend to approach MC from either a mass production or a customization origin and this in itself gives reason to believe that several operational models will be observable. This paper reviews actual and theoretical fulfilment systems that enterprises could apply when offering a pre-engineered catalogue of customizable products and options. Issues considered are: How product flows are structured in relation to processes, inventories and decoupling point(s); - Characteristics of the OF process that inhibit or facilitate fulfilment; - The logic of how products are allocated to customers; - Customer factors that influence OF process design and operation. Diversity in the order fulfilment structures is expected and is found in the literature. The review has identified four structural forms that have been used in a Catalogue MC context: - fulfilment from stock; - fulfilment from a single fixed decoupling point; - fulfilment from one of several fixed decoupling points; - fulfilment from several locations, with floating decoupling points. From the review it is apparent that producers are being imaginative in coping with the demands of high variety, high volume, customization and short lead times. These demands have encouraged the relationship between product, process and customer to be re-examined. Not only has this strengthened interest in commonality and postponement, but, as is reported in the paper, has led to the re-engineering of the order fulfilment process to create models with multiple fixed decoupling points and the floating decoupling point syste

Research on Pricing Strategy of Online Reverse Auction Based on Complete Information

Aiming at the problem of reverse auction which involves one buyer and multiple sellers in procurement market, this paper studies about online reverse auction via internet during which different sellers arrive at different time and bid, and the buyer makes decision whether to purchase after receiving each bid. And then, the random pricing strategy of online reverse auction is researched. After the compare with single pricing strategy, it shows that the random pricing strategy using the market information to make a procurement price can avoid the waste of cost and incomplete procurement, and a case test is provided in the end. Key words: Online reverse auction; Random pricing strategy; Competitive analysi

The impact of coordination and information on transport procurement

Transport cost is second in importance after production cost in industry. It is the purpose of the present paper to study the impact of information sharing and contractual instruments between a supply chain and its transport suppliers. After reviewing the literature, we propose a model to measure the benefits in terms of transport cost and standard deviation of transport cost. We evaluate three scenarios over one period reiterated for a shipper carrier two-echelon model with a mix of long- term and short-term procurement strategies: perfect information, asymmetric information and private information at one level of the supply chain. We evaluate the transfer in rent between carrier and shipper according to the information known and give some insights on optimal contract parameters.Supply chain management, coordination, contracts, information sharing, game theory, mechanisms

Key factors and conditions for implementing the drop-shipping method as an alternative to traditional supply chain

The drop-shipping method is an innovative alternative to the traditional supply chain, rooted in the principles of e-commerce. Drop-shipping has gained increasing popularity over the years. The main objective of this research is to identify the key factors and conditions for its implementation as part of the traditional supply chain. An empirical study was conducted among Bulgarian Small and Medium-sized Enterprises (SMEs) from various industries using survey and interview methods to gather the necessary data. Descriptive analysis was employed to examine the characteristics and distribution of the studied variables. Furthermore, regression analysis was conducted to explore the influence of various factors on delivery times and the average number of annual sales. Additionally, a correlation analysis was performed to examine the relationships between suppliers, delivery times, and levels of customer satisfaction when implementing the drop-shipping method. A variation analysis was also carried out to delve into the connections and changes between the two categories of factors – supplier-related and customer-related. The data from this study can serve as guidelines for implementing new innovative delivery methods within SMEs, aiming to provide the necessary factors and conditions for their successful operation

Use of Audit Data to Improve the Supply Chain Performance

Dissertation presented as the partial requirement for obtaining a Master's degree in Information Management, specialization in Knowledge Management and Business IntelligenceIn the last decades, globalization and digitalization were two of the main reasons for the increase of complexity in supply chains, altering the industries due to the massive amount of information available. This complexity started to become harmful for the companies that do not understand how to use data and information as their competitive advantage, increasing the risk and costs associated with their processes, and decreasing effectiveness and efficiency. We look for the concept and area of internal auditing and process mining techniques as a solution to revert this situation. While research has focused on different and mostly narrow aspects in these areas and solution-oriented and more practical approaches can be found and applied to a broader environment, a practical solution that incorporates these areas into the supply chain are hard to find. Therefore, following a design science research methodology, this study proposes an iterative framework that consists of a guide for an organization that wants to incorporate new technologies into their processes in the supply chain while making the best out of the massive amount of information available using internal auditing and focus on process mining techniques. The framework provides a chain of steps that can be adapted by the company during the transformational process, guaranteeing a smooth transition away from the traditional systems to a more modern and flexible architecture

Coordinating Demand Fulfillment With Supply Across A Dynamic Supply Chain

Today, technology enables companies to extend their reach in managing the supply chain and operating it in a coordinated fashion from raw materials to end consumers. Order promising and order fulfillment have become key supply chain capabilities which help companies win repeat business by promising orders competitively and reliably. In this dissertation, we study two issues related to moving a company from an Available to Promise (ATP) philosophy to a Profitable to Promise (PTP) philosophy: pseudo order promising and coordinating demand fulfillment with supply. To address the first issue, a single time period analytical ATP model for n confirmed customer orders and m pseudo orders is presented by considering both material constraints and production capacity constraints. At the outset, some analytical properties of the optimal policies are derived and then a particular customer promising scheme that depends on the ratio between customer service level and profit changes is presented. To tackle the second issue, we create a mathematical programming model and explore two cases: a deterministic demand curve or stochastic demand. A simple, yet generic optimal solution structure is derived and a series of numerical studies and sensitivity analyses are carried out to investigate the impact of different factors on profit and fulfilled demand quantity. Further, the firm's optimal response to a one-time-period discount offered by the supplier of a key component is studied. Unlike most models of this type in the literature, which define variables in terms of single arc flows, we employ path variables to directly identify and manipulate profitable and non-profitable products. Numerical experiments based on Toshiba's global notebook supply chain are conducted. In addition, we present an analytical model to explore balanced supply. Implementation of these policies can reduce response time and improve demand fulfillment; further, the structure of the policies and our related analysis can give managers broad insight into this general decision-making environment

Kysynnän hallinnan parantaminen toimitusprojektiympäristössä varhaista kysyntäinformaatiota hyödyntämällä

The research problem of this Master's Thesis is: How can a manufacturing company utilize advance demand information (ADI) in order to improve operational efficiency in the delivery project environment? In the delivery project environment information on upcoming demand is available at two stages: the quotation stage and the definition stage, where more detailed design is carried out. The research methods of this study are literature review, interviews with case company representatives and qualitative and quantitative project case analyses. The literature review analyzes the key features of the delivery project environment and their implications on information sharing and demand response strategies. Further, theoretical frameworks for classifying and utilizing ADI on different planning levels are developed. These frameworks are used in the analyses of the empirical study. The empirical study is divided into three parts: the initial study, current state analysis on ADI, and the development of a systematic approach for the utilization of advance demand information. An essential part of the empirical study is the qualitative and quantitative analysis of different project cases, including three in which ADI utilization has been piloted. Based on the analyzed project cases, it can be stated that the utilization of ADI has led to improved service levels. Further, the capacity planning accuracy and the management of critical components have improved. On the other hand, the implication of the study is that utilizing ADI is not feasible in all types of delivery project situations. The utilization is most beneficial in a situation in which demand is lumpy and the probability that the quotations turn into orders is high. In a situation in which project demand overlaps with more stable continuous demand, ADI can be utilized in decreasing the inventory buffers for standard products. The implication of the research is that systematic planning processes play an important role in the utilization of ADI. As a result new models for utilizing ADI on the project portfolio level and the project level are created. In addition, the thesis presents recommendations and improvement suggestions for the case company that can be divided into three classes: (1) improvement suggestions related to the quality and sharing of information (2) improvement suggestions related to current demand-supply planning processes (3) improvement suggestions related to the factors that enable efficient demand management, i.e. organizational and performance measure modifications.Tämän diplomityön tutkimuskysymyksenä on, miten varhaista kysyntätietoa voidaan hyödyntää toimitusprojektiympäristössä operatiivisesti tehokkaalla tavalla. Projektiympäristössä varhaista kysyntätietoa on olemassa kahdesta vaiheesta: tarjousvaiheesta ja määrittelyvaiheesta, jolloin sopimus on allekirjoitettu, mutta lopullisia asiakastilauksia ei ole vielä tehty. Työn tutkimusmetodeina ovat kirjallisuuskatsaus, haastattelut tapausyrityksen edustajien kanssa ja kvantitatiiviset ja kvalitatiiviset projektianalyysit. Kirjallisuuskatsauksessa analysoidaan toimitusprojektiympäristön ominaispiirteitä ja näiden vaikutuksia kysyntäinformaation jaolle ja sen hyödyntämiselle. Lisäksi kehitetään varhaisen kysyntätiedon luokittelu- ja analysointiviitekehys sekä teoreettinen malli varhaisen kysyntätiedon hyödyntämiselle, joita hyödynnetään empiirisen tutkimusosan analyyseissä. Empiirinen tutkimus jakautuu esitutkimukseen, varhaisen kysyntätiedon nykytila-analyysiin sekä varhaisen kysyntätiedon hyödyntämisen mallien kehittämiseen. Olennainen osa empiiristä analyysia on valittujen projektien analysointi kvalitatiivisesti ja kvantitatiivisesti. Näistä kolmessa pilottiprojektissa on hyödynnetty varhaista kysyntätietoa. Analysoitujen tapausprojektien pohjalta voidaan todeta, että varhaista kysyntätietoa hyödyntämällä on voitu parantaa projektien palvelutasoa, tarkentaa kapasiteetin suunnittelua ja parantaa kriittisten komponenttien hankintojen hallintaa. Toisaalta tutkimus osoittaa, että varhaisen kysyntätiedon hyödyntäminen ei ole kannattavaa kaiken tyyppisissä toimitusprojektitilanteissa. Hyödyntäminen sopii erityisesti tilanteeseen, jossa kysyntä on erityisen vaihtelevaa ja on hyvin todennäköistä, että tarjous muuttuu tilaukseksi. Tilanteessa, jossa projektikysyntä on päällekkäistä tasaisemman jatkuvan kysynnän kanssa, voidaan varhaista kysyntätietoa hyödyntää standardituotteiden varastotasojen laskussa. Tutkimus osoittaa, että tärkeässä osassa hyödyntämisen kannalta ovat systemaattiset suunnitteluprosessit. Empiirisen osan tuloksena syntyvät uudet suunnittelumallit varhaisen kysyntätiedon hyödyntämiseen projektiportfoliotasolla ja projektitasolla. Lisäksi työssä annetaan suosituksia ja parannusehdotuksia tapausyritykselle, jotka voidaan jakaa kolmeen luokkaan: (1) tiedon laatuun ja jakamiseen liittyvät suositukset, (2) kysynnän hallinta- ja suunnitteluprosesseihin liittyvät suositukset sekä (3) projektiorganisaatioon ja mittareihin ts. tiedon jaon mahdollistajiin liittyvät suositukset

Order fulfillment in online retailing : what goes where

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2005.Includes bibliographical references (p. 139-146).We present three problems motivated by order fulfillment in online retailing. First, we focus on one warehouse or fulfillment center. To optimize the storage space and labor, an e-tailer splits the warehouse into two regions with different storage densities. One is for picking customer orders and the other to hold a reserve stock that replenishes the picking area. Consequently, the warehouse is a two-stage serial system. We investigate an inventory system where demand is stochastic by minimizing the total expected inventory- related costs subject to a space constraint. We develop an approximate model for a periodic review, nested ordering policy. Furthermore, we extend the formulation to account for shipping delays and advance order information. We report on tests of the model with data from a major e-tailer. Second, we focus on the entire network of warehouses and customers. When a customer order occurs, the e-tailer assigns the order to one or more of its warehouses and/or drop- shippers, so as to minimize procurement and transportation costs, based on the available current information. However, this assignment is necessarily myopic as it cannot account for any subsequent customer orders or future inventory replenishments.(cont.) We examine the benefits from periodically re-evaluating these real-time assignments. We construct near- optimal heuristics for the re-assignment for a large set of customer orders by minimizing the total number of shipments. Finally, we present saving opportunities by testing the heuristics on order data from a major e-tailer. Third, we focus on the inventory allocation among warehouses for low-demand SKUs. A large e-tailer strategically stocks inventory for SKUs with low demand. The motivations are to provide a wide range of selections and faster customer fulfillment service. We assume the e-tailer has the technological capability to manage and control the inventory globally: all warehouses act as one to serve the global demand simultaneously. The e-tailer will utilize its entire inventory, regardless of location, to serve demand. Given we stock certain units of system inventory, we allocate inventory to warehouses by minimizing outbound transportation costs. We analyze a few simple cases and present a methodology for more general problems.by Ping Josephine Xu.Ph.D

Information-shared postponement strategies in supply chain management

Ph.DDOCTOR OF PHILOSOPH