Devising of Optimisation Models and Modelling Systems for Supply Chain Essay

Devising of Optimisation Models and Modelling Systems for Supply Chain Planning and Management - Essay Example Supply chain misalignments, the main challenges facing today's supply chains, can be grouped into the following four major categories. Supply chain incentive misalignment characterizes the lack of consistent incentives among supply chain partners. It is well understood that different parties in the supply chain often have different incentives for doing business. They will not cooperate with their supply chain partners unless they have an incentive for doing so. Supply chain incentive misalignment is associated with two common observations in supply chain management. First is the widespread existence of conflicting objectives among the supply chain partners. For instance, suppliers typically want manufacturers to commit themselves to purchasing large quantities in stable volumes with flexible delivery dates. Unfortunately, manufacturers require just-in-time (JIT) supply in small batches from their suppliers due to changing demand and their unwillingness to hold inventories. Thus, the suppliers' goals are in direct conflict with the manufacturers' desire for inventory holding and flexibility. The otheThe other observation is the lack of shared visions (and risks) between the supply chain partners. For example, suppliers, manufacturers, and retailers often optimise their inventory levels according to their own forecast of future demand. They do not share their observation of the shifts in the marketplace. The result is high inventory costs, high response time or poor service levels. In practice, aligning supply chain incentives can be achieved through so-called performance measurement schemas (Lee and Whang, 1999, 633-40). A performance measurement schema specifies the rules such as how supply chain costs can be calculated and allocated, what service levels should be achieved by supply chain partners, and what constraints the supply chain partners should abide by. Supply chain process misalignment occurs when supply chain processes are not synchronized within or between trading partners. Efficient and effective supply chain management requires innovative enterprise and inter-enterprise breakthroughs for synchronization of supply chain processes. The critical factor behind supply chain process misalignment is the interdependency of supply chain processes. Tackling the issues of supply chain process misalignment entails determining which process does what (in the case of managerial processes, which process decides what) and which process knows what. Supply chain information misalignment occurs when information necessary to support decision-making processes is not readily available, not usable or incorrect. Although recent developments in information technology, such as the internet, enable more information to be readily available for use, supply chain information misalignment still exists due to several reasons. Firstly, the needed information