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An Overview of the Supply Chain
Special Seminar in Operations Management:Supply Chain Strategy
15.795Spring 2000
Term Project for:
Prof. Charlie Fine
Catherine Tedesco5/11/00
This paper can be posted on the course website and used, in whole or in part, in future publications.
An Overview of the Supply Chain
AbstractThis paper presents a model of the supply chain and discusses issues critical to each stage. The ‘what, why, and how’ of each element of the supply chain is examined.1 The discussion is based on a synthesis of books and articles, each of which has examined some portion or portions of the 1 What is it?, Why is it important?, How can it be accomplished?
supply chain. While these references all have different perspectives, few of the concepts introduced in them are mutually exclusive.
Introduction
Managing the supply chain consists of “managing all the different processes and
activities that produce value in the hands of the ultimate customer.”2 Managing these processes
and activities is of increasing importance due to three key system changes during the past
decade. First, today’s global economy is fostering a far greater degree of national and
international competition than ever before. Second, today’s businesses realize that they need to
examine total costs in the design of their procuring, manufacturing, and distribution systems.3
Finally, most companies are not vertically integrated in their entirety. This makes their search
for a quality network of upstream and downstream partner companies vital4, not only for their
organization to continue to function but in order for them to maintain control of their channel
and their profit margins.
This paper presents a model of the supply chain, and examines issues critical to each
stage. For the purposes of this discussion, the supply chain will be broken down into the
following generic stages:1. Design2. Sourcing3. First Stage Inventory4. Manufacturing
5. Distribution and Finished Goods Inventory
The interaction between these stages is illustrated in figure 1. The ‘information cloud’
represents all of the potential exchanges of information that could take place.
Figure 1: The Generic Supply Chain
2 Lummus, et al, “Strategic Supply Chain Planning”, Production and Inventory Management Journal, 3, 1998 pg. 493 Ibid.4 Fine, Charles H., Clockspeed: Winning Industry Control in the Age of Temporary Advantage, Perseus Books, MA, 1998, pg. 71
2
Product Design for the Supply Chain
Product design is the first step in the supply chain. Although no construction material
flows from this step, product design sets the framework within which the remainder of the
supply chain must function. Product design transforms customer needs and corporate strategy,
and synthesizes a solution. This solution can come in many forms, and designs can emphasize
improvements in a variety of different metrics (design for manufacturing, design for cost, etc.).
One version of design for X (DFX) is design for supply chain.
A critical example of the interface between product design and the supply chain is the
concept of postponement. Postponement is the idea that products can be designed to add
differentiating features late in production, or even distribution.5 The most extreme example of
this is a product that is designed to meet several need sets where the final differentiation is done
by the end user. An example of this would be the multi-colored cellular phone faces that the
consumer selects and installs at the point of sale.
In order for postponement to work effectively a product needs to have a modular product
design, a modular process design, and an agile supply network.6 A modular product design is
the first step towards mass customization (the customization of products for mass markets such
as cellular phones, printers, or computers). By designing products to be built in a series of
assemblies and subassemblies, engineers give businesses the opportunity to build components in
different locations, increase the number of standard components (within a product or across
product lines), and isolate potential quality problems.7 By disconnecting manufacturing links,
modular design not only enables mass customization of products, it also gives companies the
opportunity to focus their design and manufacturing efforts on strategically important areas
while subcontracting less critical components.8 This process is self-reinforcing and, when
5 Lee, et al, “Getting Ahead of Your Competition Through Design for Mass Customization”, Target, Volume 13, Number 2, April/May 1997, pg. 96 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 1177 Ibid.8 Narasimhan, Ram and Das, Ajay, “Manufacturing Agility and Supply Chain Management Practices”, Production and Inventory Management Journal, 1, 1999 pg. 4
3
applied correctly, can lead to shorter product design cycles and superior products. The
reinforcing loop is illustrated in figure 2.
A modular process design is one that enables different steps in a process to be completed
independent of the elapsed time between them as well as their respective locations. A good
example of a modular process is the customized paint colors that are now available in hardware
stores. By separating the manufacture of the paint from the mixing of the pigment, paint
manufacturers have not only reduced paint inventories but have added value for the customer by
ensuring that they can obtain their exact color.9
9 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 119
4
Figure 2: The Reinforcing Loop of Modular Design
An agile supply network supported by modular product and process design is the final
link in the postponement chain. By redefining distribution centers and customer sites to include
the final customization process (such as distribution center localization), relevant inventories can
be kept close the customers.10 This improves product availability without creating unsustainable
inventory levels.11 An agile supply network can also be exploited on a global basis to satisfy
local content rules, reduce or avoid tariffs, and provide rapid customer service in locations far
removed from primary manufacturing sites.12 The ‘curse’ of increasing product variety that is
unavoidable in global markets (due to variations in language, power supplies, local tastes, etc.)
makes postponement a necessary capability for most modern corporations.13
10 Distribution center localization is a term for shipping generic products to local distribution centers where they are localized to meet country specific requirements (such as power supplies)Lee, Hau, “Effective Inventory and Service Management Through Product and Process Redesign”, Operations Research, 44, 1, 1996, pg. 15711 Lee, Hau, “Design for Supply Chain Management: Concepts and Examples”, Perspectives in Operations Management: Essays in Honor of Elwood S. Buffa, Edited by Rakesh K. Sarin, Kluwer Academic Publishers, MA, 1993, pg. 4812 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 12013 Billington, Corey and Lee, Hau, “Designing Products and Processes for Postponement”, Management of Design: Engineering and Management Perspectives, Edited by Sriram Dasu and Charles Eastman, Kluwer Academic
IncorporateModules
into Design
ConcentrateResources
on StrategicComponents
SubcontractNon-StrategicComponents to
SpecialistFirms
PositiveCustomerFeedback
andIncreased
Sales
ImproveDifferentiating DesignFeatures and ReduceProduct Development
Cycle Time
ReduceManufacturing Costs,Improve Quality, and
Reduce ProductDevelopment Cycle
Time
+
+
+
+
+
+
CompetitiveEnvironment
ExertsPressure to
Improve
+
+
5
Sourcing
As fewer companies remain vertically integrated, sourcing becomes of greater
importance. Not only are more companies outsourcing, but most of them are also acting to
reduce the number of suppliers they deal with. This increased reliance on outsourcing from an
‘exclusive’ vendor base highlights the importance for companies to “manage the entire network
of supply to optimize overall performance”.14 Faced with this daunting task some companies
choose to outsource their interactions with the supplier network.
A third party integrator can be used to “take over all planning, acquisition, receiving,
storage, management, and distribution” tasks related to some or all input components and
materials.15 Proponents of this method suggest benefits such as elimination of holding costs,
lower ordering costs, no inventory management, and better service levels by vendors.16 While it
is possible that such arrangements could be beneficial when applied selectively to commodity
components such as fasteners and cable, it is unlikely that these arrangements will be beneficial
when applied more broadly to custom or strategically important components for two primary
reasons. First, these cost reductions are probably superficial, since it is reasonable to believe that
these third parties will be passing on any costs that they experience in their fee for providing the
service. Second, it is difficult to believe that vendors would be able to serve their customers
better through a middleman. The more likely outcomes of such a system are long term cost
increases and increasing dependence for sourcing knowledge on the third party. This is likely to
lead to less flexibility and long run uncompetitiveness. This reinforcing loop is illustrated in
figure 3.
Publishers, MA, 1994, pg. 10614 Lummus, et al, “Strategic Supply Chain Planning”, Production and Inventory Management Journal, 3, 1998 pg. 4915 Lawrence, F. Barry and Varma, Anoop, “Integrated Supply: Supply Chain Management in Materials Management and Procurement”, Production and Inventory Management Journal, 2, 1999, pg. 216 Lawrence, F. Barry and Varma, Anoop, “Integrated Supply: Supply Chain Management in Materials Management and Procurement”, Production and Inventory Management Journal, 2, 1999, pg. 3
6
Figure 3: The Reinforcing Loop of Integrated Supply17
Other important issues in the sourcing arena that have come into their own in the past
decade center around the opportunities provided by global sourcing. Global sourcing can result
in significant cost reductions and new business opportunities, but can also have an adverse effect
on the agility of the supply chain as it introduces longer lead times with greater variability. One
study showed that while only 10.4% of local suppliers had turnaround times greater than one
month, 54.7% of overseas suppliers had turnaround times of this magnitude.18 Some issues that
need to be considered when pursuing a global sourcing model are listed in table 1.1. Duties and Tariffs∑ Material inputs∑ Intermediate products∑ Finished goods
2. Human Resources Management∑ Cultural differences∑ Language Differences∑ Skill Differences
3. Currency Exchange Rates∑ Fluctuate randomly
4. Control of Operations∑ Centralized control can be difficult in a
multinational environment5. Corporate Tax Rates∑ Vary significantly between countries
6. Product Designs∑ Vary by national markets (especially for consumer
17 Inspired by Fine, Charles H., Clockspeed: Winning Industry Control in the Age of Temporary Advantage, Perseus Books, MA, 1998, pg. 16318 Kwan, Albert, “The Use of Information Technology to Enhance Supply Chain Management in the Electronics and Chemical Industries”, Production and Inventory Management Journal, 3, 1999, pg. 11
Company Xoutsources
procurementCompany X'sprocurement
abilitydecreases
3rd party'sprocurement
abilityincreases
3rd party'sappeal as a
procurementexpert increases
Company X'sappeal as a
procurementexpert decreases
+
++
-
-+
As Company X becomes more dependant on the 3rd party,the 3rd party can extract greater surplus from Company X.
7
goods)7. Tradeoffs∑ Long lead times∑ Lower costs∑ Access to new technologies∑ Dependence on suppliers from some nations
8. Strategy and Quotas∑ Market penetration strategies∑ Local content rules∑ Counter trade∑ Quotas
Table 1: Issues Introduced by Global Sourcing19
Modeling can be an extremely useful way to analyze these tradeoffs. However it usually cannot
incorporate all of the relevant issues, therefore judgement related to issues that are not
incorporated in the model is essential. Both Hewlett-Packard and IBM have successfully used
modeling to refine their global supply chains.20
First Stage Inventory Reduction
Inventory consists of three main categories: input material (sometimes called raw
materials), work in process, and finished goods (including that which is tied up in the
distribution channel). For the purposes of this discussion the term ‘first stage inventory’ will
refer to the first two categories. Inventory generally exemplifies waste. Large inventories, even
in isolated sections of a supply chain, are symptomatic of a malfunctioning process. Effective
inventory management not only reduces holding costs (including obsolescence), but can also
improve customer service.21 In their paper on Managing Supply Chain Inventory, Billington and
Lee identify the pitfalls and opportunities outlined in table 2.
19 Cohen, Morris and Lee, Hau, “Resource Deployment Analysis of Global Manufacturing and Distribution Networks”, Journal of Manufacturing and Operations Management, 2, 1989, pg. 8320 Flaherty, M. Therese, Global Operations Management, McGraw-Hill, NY, 1996, pg. 30321 Billington, Corey and Lee, Hau, “Managing Supply Chain Inventory: Pitfalls and Opportunities”, Sloan Management Review, Spring, 1992 pg. 65
8
Pitfalls1. No supply chain metrics2. Inadequate definition of customer service3. Inaccurate delivery status data4. Inefficient information systems5. Ignoring the impact of uncertainties6. Simplistic inventory stocking policies7. Discrimination against internal customers8. Poor Coordination9. Incomplete shipment methods analysis10. Incorrect assessment of inventory costs11. Organizational barriers12. Product-process design without supply chain consideration13. Separation of supply chain design from operational decisions
14. Incomplete supply chain
Opportunities1. Design for supply chain management2. Integrate databases throughout the supply
chain3. Integrate control and planning support
systems4. Redesign organizational incentives5. Institute supply chain performance
measurement
6. Expand view of supply chain
Table 2: Pitfalls and Opportunities in Managing Supply Chain Inventory22
An example from a major U.S. shipyard illustrates many of the pitfalls identified by
Billington and Lee. The shipyard’s steel assembly area was unable to complete significant
numbers of hull modules (blocks on the order of 100 tons) due to missing parts, despite
significant raw material inventories and work in process inventories in the sub assembly area.
The problem stemmed from a combination of sources including a lack of specific raw materials
as well as a disconnect between the master planning system and the shop planning system. This
disconnect caused unneeded parts to be scheduled ahead of critical missing parts. As the
manufacturing operations fell further and further behind, raw material continued to be delivered
and parts continued to be cut in accordance with the original schedule (leaving critical missing
parts unmanufactured). The assembly areas ran out of space and began shipping incomplete
modules to later stages of construction as well as building blocks on top of one another.
22 Billington, Corey and Lee, Hau, “Managing Supply Chain Inventory: Pitfalls and Opportunities”, Sloan Management Review, Spring, 1992 pg. 71-72
9
After overriding shop planning systems and creating a basic ‘pencil and paper’ pull
system based on the final erection schedule, the shipyard was finally able to regain control of
their process. After the five-foot high stacks of plating were finally reduced to their normal
height of about three inches, senior management was able to integrate control and planning
support systems (opportunity #3) as well as redesign organizational incentives (opportunity #4)
to ensure that these problems would not reoccur.
Manufacturing Efficiency
Integrating manufacturing into an agile supply chain has always been a difficult problem.
Manufacturing has traditionally been at odds with both procurement (for procuring shoddy or
late input materials) and with sales and marketing (due to manufacturing’s inability to satisfy
customer needs).23 Manufacturing has therefore typically been considered inflexible at best. In
a global economy inflexibility is no longer an option. As a result more firms are looking at
reducing cycle time, reducing change over time (between parts), and creating manufacturing
systems with an optimal lot size of one. By working out just-in-time (JIT) delivery
arrangements with suppliers, ‘pull’ systems on the manufacturing floor, and ‘make-to-order’
production schedules, companies can not only reduce inventories but reduce the time from order
to delivery dramatically.
In some cases the choices that manufacturing management needs to make to accomplish
these objectives may seem counterintuitive. For example in highly variable or low volume
environments, relying on humans to do a task rather than robotics can be more cost effective
because of reduced changeover times, even though a robot can perform the specific task more
quickly. In others, such as production of instrument cluster face plates at Denso24, switching
from a die system to a ‘slower’ laser cutting system is actually more cost effective due to
significantly reduced switchover times. With 100 – 200 switchovers per day the switchover is
23 Porteus, Evan L. and Whang, Seungjin, “On Manufacturing/Marketing Incentives”, Management Science, 3, 9, 1991, pg. 116624 An automotive component supplier
10
far more important than the actual production time.25 The goal for manufacturing should not be
producing products at the lowest manufacturing cost. Companies need to look at total cost
throughout the supply chain when making manufacturing decisions.26
Distribution Improvements and Finished Goods Inventory Reduction
Finished goods inventories and distribution can be a major challenge for most
manufacturers who do not build to order and have customers who take delivery at the
manufacturer’s facility. Challenges associated with inventory management of finished goods are
most evident in spare parts and service organizations. IBM’s National Service Division (NSD)
exemplifies the difficulties in this aspect of supply chain management. IBM’s customers are
geographically dispersed and expect an extremely high level of service.27 The NSD inventory
planning system controls upwards of 200,000 part numbers in order to support 1,000 IBM
products. In 1989 their distribution and warehousing network housed billions of dollars in
inventory and consisted of: Two central warehouses 21 field distribution centers (regional distribution centers) 64 parts stations (service branch offices)
15,000 outside locations (customer sites, service personnel’s tool kits, etc.)28
By introducing a planning and operational control system called Optimizer, IBM was able to
reduce their inventory stocking levels by 20 to 25% while improving customer service.29 IBM
has continued its work in the supply chain space throughout its organization with the
optimization, performance evaluation, and simulation tool referred to as the Asset Management
25 Martin, Mark, et al, “Design for Variety”, Product Variety Management: Research Advances, Edited by Teck-Hua Ho and Christopher S. Tang, Kluwer Academic Publishers, MA, 1999, pg. 10626 Cohen, Morris and Lee, Hau, “Manufacturing Strategy: Concepts and Methods”, The Management of Productivity and Technology in Manufacturing, Edited by Paul R. Kleindorfer, Plenum Publishing Corporation, NY, 1985, pg. 18427 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 6628 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 6829 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 77
11
Tool (AMT).30 Due to the use of AMT in IBM’s Personal Systems Group (PSG), IBM has
saved approximately $750 million in material costs and price-protection expenses (paid to
business partners for lost value in inventory that they are holding).31 In another technology
company application in 1990, Hewlett-Packard began to use the Worldwide Inventory Network
Optimizer (WINO) to identify inventory that could be reduced throughout their supply chain.32
Distribution improvements can be of critical importance to customer satisfaction. The
basic philosophy that ‘a part is a part’ is unacceptable to customers when it is their part that is
missing. While acceptable levels of customer service might be obtainable simply by overloading
the supply chain with inventory this is hardly a viable solution, particularly when products are
subject to rapid depreciation (computers and other high tech devices).33 Many of the lessons
learned from Cohen and Lee’s examination of mainframe and automobile manufacturers spare
parts networks can be extrapolated for other products as well. A summary of these lessons
learned is as follows:
1. Network Stocking Policies∑ Low usage & expensive items should be stocked centrally∑ High usage & inexpensive items should be stocked locally∑ No location stocks all items, each item is stocked at relatively few locations
2. Implications for the Design of the Logistics System∑ Central distribution centers able to respond quickly to a wide range of orders∑ Distribution centers and warehouse with lower usage may be closed due to fixed costs∑ Local facilities should be stocked with a collection of high demand parts customized to
the location of the facility
3. Service Management∑ ‘a part is not a part’ – parts should be considered as individuals when predicting demand
30 Lin, Grace, et al, “Extended-Enterprise Supply-Chain Management at IBM Personal Systems Group and Other Divisions”, Interfaces, 30, 1, 2000, pg. 1031 Lin, Grace, et al, “Extended-Enterprise Supply-Chain Management at IBM Personal Systems Group and Other Divisions”, Interfaces, 30, 1, 2000, pg. 732 Billington, Corey and Lee, Hau, “The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard”, Interfaces, 25, 5, 1995 pg. 4733 Cohen, Morris and Lee, Hau, “Out of Touch with Customer Needs? Spare Parts and After Sales Service”, Sloan Management Review, Winter 1990, pg. 65
12
∑ Customer oriented service levels should be developed and measured∑ Service measurements should be applied to all participants in the supply chain
4. Data and Parameter Analysis
∑ Demand prediction should be based on objective measurement and calculations
5. Control System Implementation∑ Control systems must be tested thoroughly and integrated into the company’s IT
structure34
In addition to improvements in customer satisfaction and reductions in inventory costs
derived from optimal versions of conventional supply chains, technology will continue to
revolutionize the methods that are used to distribute products. In particular, it is reasonable to
expect that information based products (books, videos, music, etc.) will be distributed through
electronic rather than physical distribution channels. Technology improvements are also
reducing the number of distribution steps involved in the supply chain. The popularity of the
Internet increases the importance of various categories of direct marketing (B2C or B2B).
Middle men from ship brokers to retail stores are finding themselves cut out of transactions in
favor of a more direct approach. Direct interaction with the customer also enables companies to
develop a two-way interaction that helps them to learn customer preferences and develop
products and services accordingly.35
Information Dissemination
With the large number of diverse interactions throughout the supply chain it is easy to
argue that the most valuable step in the supply chain is not really a step at all, but is instead the
cloud of information which surrounds the flow of materials. When information flow is arranged
so that ordering and production decisions are based solely on the demand from the next step in
the supply chain, each player is likely to ‘gamble’ based on their own predictions of future
34 Cohen, Morris and Lee, Hau, “Out of Touch with Customer Needs? Spare Parts and After Sales Service”, Sloan Management Review, Winter 1990, pg. 6535 Simchi-Levi, David, et al, Designing and Managing the Supply Chain, McGraw-Hill, MA, 2000, pg. 214
13
demand. Such gambling introduces volatility and incorrect inventory levels into the chain. Such
volatility is often referred to as the ‘bullwhip’ effect. This observation states that demand
variability increases as you move further up in the supply chain.36 In their 1997 paper on the
bullwhip effect, Lee, Padmanabhan, and Whang, identified the four primary causes of the
bullwhip effect and suggested actions that could counteract these problems. Their suggestions
are presented in table 3. Although centralizing demand information (providing it to all
participants from a single source) will significantly reduce this variability, it will not rid the
supply chain of variability entirely.37 Compatible information technology (IT) is critical to
centralizing this information within a decentralized decision making framework (an important
feature in effective global operations).38
Causes of Bullwhip Information Sharing Channel Alignment Operational Efficiency
Demand Forecast Update
∑ Use point-of-sale (POS) data
∑ Electronic Data Interchange (EDI)
∑ Internet
∑ Vendor managed inventory (VMI)
∑ Discounts for information sharing
∑ Consumer direct
∑ Lead-time reduction
Order Batching ∑ EDI∑ Internet ordering∑ Computer assisted
ordering (CAO)
∑ Discount for truckload assortment
∑ Logistics outsourcing
∑ Reduction in fixed cost of ordering
∑ CAO
Price Fluctuations ∑ Continuous replenishment programs (CRP)
∑ Everyday low cost (EDLC)
∑ Everyday low price (EDLP)
∑ Activity-based costing (ABC)
Shortage Gaming ∑ Sharing sales, capacity, and inventory data
∑ Allocation based on past sales
Table 3: Causes and Solutions for the Bullwhip Effect39
Many manufacturers have adopted programs to reduce delivery times to their customers.
One representative program is Quick Response (QR) which has been adopted in the apparel
36 Lee, et al, “Information Distortion in a Supply Chain: The Bullwhip Effect”, Management Science, 43, 4, 1997, pg. 54637 Chen, et al, “Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information”, Management Science, 46, 3, 2000, pg. 44238 Lee, Hay and Billington, Corey, “Material Management in Decentralized Supply Chains”, Operations Research, 41, 5, 1993, pg. 83539 Lee, et al, “The Bullwhip Effect in Supply Chains”, Sloan Management Review, Spring, 1997, pg. 99
14
industry. This industry has typically been plagued by long lead times (5 to 8 months) that make
it difficult to accurately forecast demand and cost the industry about 25% of sales. By providing
a commitment to order from a given manufacturer, but being allowed more time to collect
demand data prior to fully specifying the order, retailers are able to reduce effective lead times
by one to four months. This provides a great benefit to retailers but models are inconclusive
regarding the impact on garment manufacturers.40
Conclusions
Information technology is critical to future improvements in supply chain networks.
Capturing the critical “moments of information” is essential to developing a successful supply
chain. In addition, capturing these “moments” can enable the transition from a supply chain to a
demand chain (a supply chain focused around producing customized products specifically
requested by the customer).41 However, information technology improvements are not alone in
their ability to improve the supply chain, nor can these improvements reach their full potential
for improving the supply chain in isolation. Each stage of the supply chain from design to
distribution comes with its own unique issues and opportunities for improvement. Table 4
summarizes some of the concepts addressed in this paper.Section Key ConceptsDesign ∑ Design for supply chain
∑ Postponement∑ Modular design
Sourcing ∑ Integrated supply∑ Impact of global sourcing
First stage inventory ∑ Pitfalls and opportunities in inventory managementManufacturing ∑ Manufacturing tradeoffs to enable effective supply chain managementDistribution and finished goods inventory
∑ Improving product availability while reducing total inventory∑ Impact of technology change on distribution methods and finished goods
inventoryInformation ∑ Causes and solutions for the bullwhip effect
∑ Using information to improve the effectiveness of the supply chain
Table 4: Key Concepts Addressed in this Paper40 Bergen, Mark and Iyer, Ananth, “Quick Response in Manufacturer-Retailer Channels”, Management Science, 43, 4, 1997, pg. 56741 Lummus, Rhonda and Vokurka, Robert, “Managing the Demand Chain through Managing the Information Flow: Capturing “Moments of Information””, Production and Inventory Management Journal, 1, 1999, pg. 19
15
In order to meet the ultimate goal of placing products the customer wants when and where the
customer wants them42; each stage of the supply chain must be understood and designed to work
together.
42 Copacino, William, Magee, John, and Rosenfield, Donald, Modern Logistics Management: Integrating Marketing, Manufacturing, and Physical Distribution, John Wiley & Sons, NY, 1985, pg. 2
16