Information sharing and coordination mechanisms for managing uncertainty
in supply chains: a simulation study
Int'l J. of Production Research, 49 (3):
765--803 (2011)DOI: 10.1080/00207540903460216
Abstract
The study aims to investigate the effectiveness of information sharing
and coordination mechanisms in reducing uncertainty. Supply chains
are constantly subject to unpredictable events that can adversely
influence its ability to achieve performance objectives. This paper
primarily aims at managing uncertainties originating from unexpectedly
large demand spikes. The supply chain literature is full of effective
supply chain uncertainty management practices. This paper reviews
the different practices for improving management of uncertainty and
proposes several combinations of information sharing and coordination
mechanism for reducing the uncertainty in supply chains. Next, the
proposed combinations are tested on the make-to-stock supply chain
of a paper tissue manufacturer using an agent-based simulation approach
to show how the use of different levels of information sharing and
coordination can be effective in managing uncertainty under daily
operations facing a huge mismatch of actual and forecast demand.
The findings of this research suggest that, a centralised information
structure without widespread distribution of information and coordination
is not effective in managing uncertainty of supply chain networks,
even with increased frequency of information flow. Similarly, coordinating
material flows without widespread information sharing does not improve
supply chain uncertainty management. Central coordination of material
flows with supply chain wide information sharing across different
members is found to be essential in managing supply chains effectively
under uncertainty.