Coordination and demand uncertainty in supply chains

Abstract

We present the importance of coordination for different levels of uncertainty about customer demand. We have defined a framework to study different coordination scenarios. This framework considers the perimeter of decision making (DM) and information sharing between supply chain members. In this article, we have tested two coordination scenarios for different levels of uncertainty about customer demand. These scenarios are applied in two test cases. The most interesting result is: a global optimisation (a global perimeter of DM) remains more powerful than a local optimisation (a local perimeter of DM) if there are uncertainties about customer demand. We even found that global optimisation became more important as uncertainty increased.

Keywords:

• supply chain planning
• operational logistics
• global operations and logistics management
• best practices and benchmarking