Supply Chain Management, 5e (Chopra/Meindl) Chapter 10 Coordination in a Supply Chain
10.1 True/False Questions 1) Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages. ns!er" T#$% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the the ull!hip %ffect (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design +) lack of coordination occurs either ,ecause different stages of the supply chain have o,-ectives that conflict or ,ecause information moving ,et!een stages gets delayed and distorted. ns!er" T#$% &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design ) nformation is distorted as it moves !ithin the supply chain ,ecause complete information is not shared ,et!een stages. ns!er" T#$% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design ) The ,ull!hip effect ena,les different stages of the supply chain to have a consistent estimate of !hat demand looks like. ns!er" F'S% &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the the ull!hip %ffect (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design ) The ,ull!hip effect results in improved supply chain coordination. ns!er" F'S% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design
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7) The ,ull!hip effect negatively impacts performance at every stage and thus hurts the relationships ,et!een different stages of the supply chain. ns!er" T#$% &iff" + Topic" 10.+ The %ffect %ffect on 4erformance of 'ack of (oordination (oordination (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design 8) The ,ull!hip effect leads to increased trust ,et!een different stages of the supply chain and enhances any potential coordination efforts. ns!er" F'S% &iff" + Topic" 10.+ The %ffect %ffect on 4erformance of 'ack of (oordination (oordination 'earning *utcome" (ompare common approaches to supply chain design 9) The ,ull!hip effect moves a supply chain a!ay from the efficient frontier ,y increasing cost and decreasing responsiveness. ns!er" T#$% &iff" 1 Topic" 10.+ The %ffect %ffect on 4erformance of 'ack of (oordination (oordination (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design :) The ,ull!hip effect reduces the profita,ility of a supply chain ,y making it simpler to provide a given level of product availa,ility. ns!er" F'S% &iff" 1 Topic" 10.+ The %ffect %ffect on 4erformance of 'ack of (oordination (oordination 'earning *utcome" (ompare common approaches to supply chain design 10) ncentive o,stacles refer to situations !here incentives offered to different stages or participants in a supply chain lead to actions that increase varia,ility and reduce total supply chain profits. ns!er" T#$% &iff" 1 Topic" 10. *,stacles to (oordination (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" &iscuss options for measuring supply supply chain performance 11) ncentives that focus only on the local impact of an action result in decisions that minimi;e total supply chain profits. ns!er" F'S% &iff" Topic" 10. *,stacles to (oordination (oordination in a Supply (hain 'earning *utcome" &iscuss options for measuring supply supply chain performance
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1+) mproperly structured sales force incentives are a significant o,stacle to coordination in the supply chain. ns!er" T#$% &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" &iscuss options for measuring supply chain performance 1)
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19) 'ot si;e ,ased quantity discounts reduce the ,ull!hip effect !ithin the supply chain. ns!er" F'S% &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" &iscuss options for measuring supply chain performance 1:) Trade promotions and other short2term discounts offered ,y a manufacturer result in large orders during the promotion period follo!ed ,y very small orders after that. ns!er" T#$% &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" &iscuss options for measuring supply chain performance +0) ehavioral o,stacles are often related to the !ay the supply chain is structured and reduce the ,ull!hip effect. ns!er" F'S% &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" &iscuss options for measuring supply chain performance +1)
imi;e total supply chain profits. ns!er" T#$% &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" &iscuss options for measuring supply chain performance ++) Sharing of 4*S data helps reduce the ,ull!hip effect ,ecause it allo!s each stage of the supply chain to use orders from the previous stage to forecast future demand. ns!er" F'S% &iff" + Topic" 10.
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+) ?hen a single stage controls replenishment decisions for the entire chain5 the pro,lem of multiple forecasts is magnified and coordination !ithin the supply chain follo!s. ns!er" F'S% &iff" + Topic" 10.
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0) Supply chain coordination improves if all stages of the chain take actions that are aligned and together increase total supply chain surplus. ns!er" T#$% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" &iscuss options for measuring supply chain performance 1) Supply chain coordination improves if all stages of the chain take actions that are aligned and together decrease total supply chain surplus. ns!er" F'S% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" &iscuss options for measuring supply chain performance +) ?ith an uncoordinated supply chain each stage tries to ma>imi;e its o!n profits5 resulting in actions that often diminish total supply chain profits. ns!er" T#$% &iff" 1 Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" &iscuss options for measuring supply chain performance 10.+
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) nformation is distorted as it moves !ithin the supply chain ,ecause ) complete information is shared ,et!een stages. ) complete information is not shared ,et!een stages. () firms try to ,e too accurate. &) all of the a,ove %) and ( only ns!er" % &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design ) nformation distortion is e>aggerated ,y the fact that ) supply chains today produce a large amount of product variety. ) supply chains today produce a small amount of product variety. () the telephone effect is e>treme in situations !here technology is in use. &) different stages of supply chains send e>cessive data. %) none of the a,ove ns!er" &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design ) The situation in !hich fluctuations in orders increase as they move up the supply chain from retailers to !holesalers to manufacturers to suppliers is kno!n as ) market fluctuations. ) the !hiplash effect. () the ,ull!hip effect. &) lack of visi,ility. %) none of the a,ove ns!er" ( &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design 7) The ,ull!hip effect causes ) a loss of supply chain coordination. ) distortion of demand information !ithin the supply chain. () different stages of the supply chain to have a very different estimate of !hat demand looks like. &) all of the a,ove %) and only ns!er" & &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design
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8) The lack of coordination !ithin a supply chain !ill result in a decrease in ) manufacturing cost. ) inventory cost. () replenishment lead time. &) level of product availa,ility. %) transportation cost. ns!er" & &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design 9) The lack of coordination !ithin a supply chain !ill result in an increase in ) profita,ility. ) inventory accuracy. () replenishment lead time. &) level of product availa,ility. %) transportation cost. ns!er" ( &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect 'earning *utcome" (ompare common approaches to supply chain design :) The ,ull!hip effect ) positively impacts performance at every stage. ) hurts the relationships ,et!een different stages of the supply chain. () enhances the relationships ,et!een different stages of the supply chain. &) none of the a,ove %) ,oth and ( ns!er" &iff" + Topic" 10.+ The %ffect on 4erformance of 'ack of (oordination 'earning *utcome" (ompare common approaches to supply chain design 10) The ,ull!hip effect moves a supply chain ) a!ay from the efficient frontier ,y increasing cost and decreasing responsiveness. ) a!ay from the efficient frontier ,y decreasing cost and increasing responsiveness. () to!ard the efficient frontier ,y increasing cost and decreasing responsiveness. &) to!ard the efficient frontier ,y increasing cost and increasing responsiveness. %) none of the a,ove ns!er" &iff" 1 Topic" 10.+ The %ffect on 4erformance of 'ack of (oordination (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design
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11) Situations !here incentives offered to different stages or participants in a supply chain lead to actions that increase varia,ility and reduce total supply chain profits are referred to as ) incentive o,stacles. ) information processing o,stacles. () operational o,stacles. &) pricing o,stacles. %) ,ehavioral o,stacles. ns!er" &iff" 1 Topic" 10.+ The %ffect on 4erformance of 'ack of (oordination (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design 1+) ncentives that focus only on the local impact of an action result in decisions that ) do not ma>imi;e total supply chain profits. ) ma>imi;e total supply chain profits. () minimi;e total supply chain profits. &) minimi;e total supply chain cost. %) none of the a,ove ns!er" &iff" + Topic" 10.+ The %ffect on 4erformance of 'ack of (oordination (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design 1) mproperly structured sales force incentives ) help create sta,le demand. ) have very little effect on the timing of customer o rders. () tend to create spikes in customer orders. &) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes. %) none of the a,ove ns!er" ( &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design 1) The sales typically measured ,y a manufacturer are ) the quantity sold to final customers @sell-through). ) the quantity sold to distri,utors or retailers @sell2in). () the quantity reported ,y the salesperson. &) all of the a,ove %) none of the a,ove ns!er" &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" &iscuss options for measuring supply chain performance 102: (opyright 3 +01 4earson %ducation5 nc. pu,lishing as 4rentice 6all
1) Situations !here demand information is distorted as it moves ,et!een different stages of the supply chain5 leading to increased varia,ility in orders !ithin the supply chain are referred to as ) incentive o,stacles. ) information processing o,stacles. () operational o,stacles. &) pricing o,stacles. %) ,ehavioral o,stacles. ns!er" &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" &iscuss options for measuring supply chain performance 17) The fact that each stage in a supply chain forecasts demand ,ased on the stream of orders received from the do!nstream stage results in ) forecasts ,ased on actual consumer demand patterns. ) a reduction in demand as !e move up the supply chain from the retailer to the manufacturer. () a magnification of fluctuations in demand as !e move up the supply chain from the retailer to the manufacturer. &) an increase in forecast accuracy. %) none of the a,ove ns!er" ( &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" &escri,e ma-or approaches to forecasting 18) The lack of information sharing ,et!een the retailer and manufacturer ) magnifies the ,ull!hip effect. ) minimi;es the fluctuation in manufacturer orders. () leads to a large fluctuation in manufacturer orders. &) all of the a,ove %) and ( only ns!er" % &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design
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19) ctions taken in the course of placing and filling orders that lead to an increase in varia,ility are referred to as ) incentive o,stacles. ) information processing o,stacles. () operational o,stacles. &) pricing o,stacles. %) ,ehavioral o,stacles. ns!er" ( &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design 1:) ?hen a firm places orders in lot si;es that are much larger than the lot si;es in !hich demand arises5 ) varia,ility of orders is minimi;ed up the supply chain. ) varia,ility of orders is magnified up the supply chain. () suppliers gain ,etter visi,ility of consumer demand. &) suppliers gain a more sta,le demand pattern. %) none of the a,ove ns!er" &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design +0) #ationing schemes that allocate limited production in proportion to the orders placed ,y retailers ) result in a game in !hich retailers try to increase the si;e of their orders to increase the amount supplied to them. ) lead to a magnification of the ,ull!hip effect. () lead to the manufacturer ,eing left !ith a surplus of product and capacity. &) all of the a,ove %) and ( only ns!er" & &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design
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+1) Situations in !hich the pricing policies for a product lead to an increase in varia,ility of orders placed are referred to as ) incentive o,stacles. ) information processing o,stacles. () operational o,stacles. &) pricing o,stacles. %) ,ehavioral o,stacles. ns!er" & &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design ++) 'ot si;e ,ased quantity discounts ) decrease the lot si;e of orders placed !ithin the supply chain. ) increase the lot si;e of orders placed !ithin the supply chain. () magnify the ,ull!hip effect. &) and ( only %) and ( only ns!er" % &iff" 1 Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design +) For!ard ,uying results in ) a sta,ili;ed ,uying pattern. ) small orders during the promotion period follo!ed ,y very small orders after that. () small orders during the promotion period follo!ed ,y large orders after that. &) large orders during the promotion period follo!ed ,y very small orders after that. %) none of the a,ove ns!er" & &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design +) 4ro,lems in learning !ithin organi;ations that contri,ute to the ,ull!hip effect are referred to as ) incentive o,stacles. ) information processing o,stacles. () operational o,stacles. &) pricing o,stacles. %) ,ehavioral o,stacles. ns!er" % &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design
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+) ehavioral o,stacles to supply chain coordination are often related to ) the communication ,et!een different stages. ) pricing and operational decisions. () the !ay the supply chain is structured. &) all of the a,ove %) and ( only ns!er" % &iff" Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design +7) ?hich of the follo!ing managerial actions in the supply chain !ill not increase total supply chain profits and moderate the ,ull!hip effectA ) ligning of goals and incentives ) ncreasing information inaccuracy () mproving operational performance &) &esigning pricing strategies to sta,ili;e orders %) uilding partnerships and trust ns!er" &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain 'earning *utcome" (ompare common approaches to supply chain design +8) ligning goals and incentives !ithin the supply chain !ill ) improve coordination !ithin the supply chain. ) encourage every participant in supply chain activities to ma>imi;e total supply chain profits. () reduce demand uncertainty. &) all of the a,ove %) and only ns!er" % &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design
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+9) ?hich of the follo!ing is not an approach to improve coordination !ithin the supply chain ,y aligning goals and incentivesA ) ligning incentives across functions ) Sharing point of sales @4*S) data () 4ricing for coordination &) ltering sales force incentives from sell2in to sell2through %) none of the a,ove ns!er" &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design +:) ?hich of the follo!ing is not an approach to achieve coordination ,y improving the accuracy of information availa,le to different stages in the supply chainA ) Sharing point of sales @4*S) data ) mplementing colla,orative forecasting and planning () &esigning single stage control of replenishment &) 4ricing for coordination %) none of the a,ove ns!er" & &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" (ompare common approaches to supply chain design 0) Sharing point of sales @4*S) data across the supply chain can help reduce the ,ull!hip effect ,ecause ) each stage of the supply chain uses orders from the previous stage to forecast future demand. ) all supply chain stages can forecast future demand ,ased on final customer demand. () all stages can respond to the same change in customer demand. &) all of the a,ove %) and ( only ns!er" & &iff" Topic" 10.
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1) &ifferent stages of the supply chain must forecast and plan -ointly if complete coordination is to ,e achieved5 ,ecause ) -ust the sharing of 4*S data does not guarantee coordination. ) the manufacturer must ,e a!are of the retailer=s promotion plans to achieve coordination. () successful coordination requires that the entire supply chain is op erating to a common forecast. &) all of the a,ove %) and only ns!er" & &iff" Topic" 10. t stage. () the manufacturer is a!are of the retailer=s promotion plans to achieve coordination. &) all of the a,ove %) and only ns!er" &iff" Topic" 10.
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) *perational improvements that reduce lot si;es can dampen the ,ull!hip effect ,y ) decreasing the uncertainty of demand during the lead time. ) decreasing the amount of fluctuation that can accumulate ,et!een any pair of stages of a supply chain. () discouraging retailers from artificially inflating their orders in the case of a shortage. &) allocating the availa,le supply ,ased on past retailer sales. %) none of the a,ove ns!er" &iff" + Topic" 10.
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8) ?hich of the follo!ing is not a reason cooperation and trust !ithin the supply chain help improve performanceA ) more natural aligning of incentives and o,-ectives is achieved. ) ction2oriented managerial levers to achieve coordination ,ecome easier to implement. () n increase in supply chain productivity results5 either ,y elimination of duplicated effort or ,y allocating effort to the appropriate stage. &) ppropriate pricing schemes are harder to achieve if ,oth parties are aiming for the common good. %) greater sharing of detailed sales and production information results. ns!er" & &iff" 1 Topic" 10.
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0) ?hen identifying operational roles and decision rights for different parties in a supply chain relationship5 managers must ) divide the tasks in a !ay that makes one party more dependent on the other. ) divide the tasks in a !ay that neither party is dependent on the other. () consider the resulting interdependence ,et!een the parties. &) all of the a,ove %) and ( only ns!er" ( &iff" Topic" 10.
) There are ma-or o,stacles listed in the te>t to coordination in a supply chain. ?hich of the follo!ing is NOT one of these ma-or o,staclesA ) ncentive o,stacles ) Quality o,stacles () 4ricing o,stacles &) ehavioral o,stacles ns!er" &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" nalytic Skills 'earning *utcome" &iscuss options for measuring supply chain performance ) ?hich of the follo!ing managerial actions does not necessarily increase total supply chain profits and moderate information distortionA ) &esigning pricing strategies to sta,ili;e orders ) uilding strategic partnerships and trust () 4urchasing from the lo!est cost supplier &) mproving information visi,ility and accuracy ns!er" ( &iff" 1 Topic" 10.
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8) Sellers and ,uyers in a supply chain often colla,orate. ?hich of the follo!ing is not listed as a common activity of colla,orationA ) &emand and supply management ) Shared engineering () nalysis &) %>ecution ns!er" &iff" 1 Topic" 10.7 (olla,orative 4lanning5 Forecasting5 and #eplenishment @(4F#) (S" (ommunication ,ilities 'earning *utcome" &escri,e ma-or approaches to forecasting 9) fundamental aspect of successful colla,oration is ) sharing product designs. ) identification and resolution of e>ceptions. () no stock outs. &) complete information sharing. ns!er" &iff" 1 Topic" 10.7 (olla,orative 4lanning5 Forecasting5 and #eplenishment @(4F#) (S" (ommunication ,ilities 'earning *utcome" &escri,e ma-or approaches to forecasting
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10. %ssay Questions 1) ?hat is the ,ull!hip effect and ho! does it relate to lack of coordination in the supply chainA ns!er" pensive to provide a given level of product availa,ility. &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect (S" #eflective Thinking Skills 'earning *utcome" (ompare common approaches to supply chain design +) ?hat is the impact of lack of coordination on the performance of the supply chainA ns!er" lack of coordination occurs either ,ecause different stages of the supply chain have o,-ectives that conflict or ,ecause information moving ,et!een stages gets delayed and distorted. &ifferent stages of a supply chain may have o,-ectives that conflict if each stage has a different o!ner. s a result5 each stage tries to ma>imi;e its o!n profits5 resulting in actions that often diminish total supply chain. nformation is distorted as it moves !ithin the supply cha in ,ecause complete information is not shared ,et!een stages. This distortion is e>aggerated ,y the fact that supply chains today produce a large amount of product variety. The lack of supply chain coordination leads to increased inventories5 poorer product availa,ility5 and a drop in profits. &iff" + Topic" 10.1 'ack of Supply (hain (oordination and the ull!hip %ffect (S" #eflective Thinking Skills 'earning *utcome" (ompare common approaches to supply chain design
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) 6o! do improperly structured incentives lead to a lack of coordination in the supply chainA ns!er" ncentive o,stacles refer to situations !here incentives offered to different stages or participants in a supply chain lead to actions that increase varia,ility and reduce total supply chain profits. ncentives that focus only on the local impact of an action result in decisions that do not ma>imi;e total supply chain profits. uying decisions ,ased on ma>imi;ing profits at a single stage of the supply chain lead to ordering policies that do not ma>imi;e supply chain profits. mproperly structured sales force incentives are a significant o,stacle to coordination in the supply chain. n many firms5 sales force incentives are ,ased on the amount the sales force sells during an evaluation period of a month or a quarter. The sales typically measured ,y a manufacturer are the quantity sold to distri,utors or retailers @sell2in)5 not the quantity sold to final customers @sell-through).
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) &escri,e the impact of forecasts ,ased on orders rather than actual customer demand. ns!er" ?hen stages !ithin a supply chain make forecasts that are ,ased on orders they receive5 any varia,ility in customer demand is magnified as orders move up the supply chain to manufacturers and suppliers. n supply chains that e>hi,it the ,ull!hip effect5 the fundamental means of communication ,et!een different stages are the orders that are placed. %ach stage vie!s its primary role !ithin the supply chain as one of filling orders placed ,y its do!nstream partner. Thus5 each stage vie!s its demand to ,e the stream of orders received and produces a forecast ,ased on this information. n such a scenario5 a small change in customer demand ,ecomes magnified as it moves up the supply chain in the form of customer orders. (onsider the impact of a random increase in customer demand at the retailer. The retailer may interpret part of this random increase to ,e a gro!th trend. This interpretation !ill lead the retailer to order more than the o,served increase in demand ,ecause the retailer e>pects gro!th to continue into the future and thus orders to cover for future anticipated gro!th. The increase in the order placed !ith the !holesaler is thus larger than the o,served increase in d emand at the retailer. 4art of the increase is a one2time increase. The !holesaler5 ho!ever5 has no !ay to interpret the order increase correctly. The !holesaler simply o,serves a -ump in the order si;e and infers a gro!th trend. The gro!th trend inferred ,y the !holesaler !ill ,e larger than that inferred ,y the retailer @recall that the retailer had increased the order si;e to account for future gro!th). The !holesaler !ill thus place an even larger order !ith the manufacturer. s !e go further up the supply chain5 the order si;e !ill ,e magnified. Bo! assume that p eriods of random increase are follo!ed ,y periods of random decrease in demand. $sing the same forecasting logic as earlier5 the retailer !ill no! anticipate a declining trend and reduce order si;e. This reduction !ill also ,ecome magnified as !e move up the supply chain. The fact that each stage in a supply chain forecasts demand ,ased on the stream of orders received from the do!nstream stage results in a magnification of fluctuations in demand as !e move up the supply chain from the retailer to the manufacturer. &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" #eflective Thinking Skills 'earning *utcome" (ompare common approaches to supply chain design
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) &escri,e the impact of ,ehavioral o,stacles on supply chain coordination. ns!er" ehavioral o,stacles refer to pro,lems in learning !ithin organi;ations that contri,ute to the ,ull!hip effect. These pro,lems are often related to the !ay the supply chain is structured and the communication ,et!een different stages. Some of the ,ehavioral o,stacles are as follo!s" 1. %ach stage of the supply chain vie!s its actions locally and is una,le to see the impact of its actions on other stages. +. &ifferent stages of the supply chain react to the current local situation rather than trying to identify the root causes. . ased on local analysis5 different stages of the supply chain ,lame each other for the fluctuations5 !ith successive stages in the supply chain ,ecoming enemies rather than partners. . Bo stage of the supply chain learns from its actions over time ,ecause the most significant consequences of the actions any one stage takes occur else!here. The result is a vicious cycle !here actions taken ,y a stage create the very pro,lems that the stage ,lames on others. . lack of trust ,et!een supply chain partners causes them to ,e opportunistic at the e>pense of overall supply chain performance. The lack of trust also results in significant duplication of effort. ample5 a manufacturer receives material from a supplier !ithout inspecting it as long as the supplier shares process control charts. . greater sharing of detailed sales and production information results. This sharing allo!s the supply chain to coordinate production and distri,ution decisions. s a result5 the supply chain is ,etter a,le to match supply and demand5 resulting in ,etter coordination. &iff" + Topic" 10. *,stacles to (oordination in a Supply (hain (S" #eflective Thinking Skills 'earning *utcome" (ompare common approaches to supply chain design
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8) &iscuss the importance of managing supply chain relationships for cooperation and trust. ns!er" %ffectively managed supply chain relationships foster cooperation and trust5 thus increasing supply chain coordination. n contrast5 poorly managed relationships lead to each party ,eing opportunistic5 resulting in a loss of total supply chain profits. The management of a relationship is often seen as a tedious and routine task. Top management5 in particular5 is often very involved in the design of a ne! partnership ,ut rarely involved in its management. This has led to a mi>ed record in running successful supply chain alliances and partnerships. supply chain partnership falters if the perceived ,enefit from the relationship diminishes or if one party is seen as ,eing opportunistic. 4ro,lems arise !hen communication ,et!een the t!o parties is !eak and the mutual ,enefit of the relationship is not reiterated regularly. ?hen managing a supply chain relationship5 managers should focus on the follo!ing factors to improve the chances of success of a supply chain partnership" 1. The presence of fle>i,ility5 trust5 and commitment in ,oth parties helps a supply chain relationship succeed. n particular5 commitment of top management on ,oth sides is crucial for success. The manager directly responsi,le for the partnership can also facilitate the de velopment of the relationship ,y clearly identifying the value of the partnership for each party in terms of his o!n e>pectations. +. Cood organi;ational arrangements5 especially for information sharing and conflict resolution5 improve chances of success. 'ack of information sharing and the ina,ility to resolve conflicts are the t!o ma-or factors that lead to the ,reakdo!n of supply chain partnerships. . tremely important in the supply chain conte>t ,ecause most relationships !ill involve parties !ith unequal po!er. $nanticipated situations that hurt one party more than the other often arise. The more po!erful party often has greater control over ho! the resolution occurs. The fairness of the resolution influences the strength of the relationship in the future. Fairness requires that the ,enefits and costs of the relationship ,e shared ,et!een the t!o parties in a !ay that makes ,oth !inners. relationship ,ased on po!er !ould ma>imi;e all ,enefits on one side. t is thus important that the !eaker party perceive the fairness of the stronger party=s procedures and policies for dealing !ith its partners. The stronger party is in control of its policies and procedures and should not ,ias the policies in a !ay that is opportunistic and does not ,enefit the entire supply chain. Fair procedures should encourage t!o2!ay communication ,et!een the partners. The procedures should ,e impartial and should allo! the !eaker party an opportunity to appeal the stronger party=s decisions. Finally5 the stronger party should ,e !illing to e>plain all its decisions. &iff" + Topic" 10.
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