The impact of enhanced coordination and scheduling of production and distribution in the light of various levels of collaboration within retail supply chains of SME manufacturers

Investigating potential efficiency advances within supply chain management has experienced a great amount of recognition during recent years both in industry and academia. Within this context, a wide variety of investigations regarding the impact of increased demand visibility has already shown its positive effects on supply chain performance. However, most collaborative SCM research has mainly focused on situations in which manufacturers engage with all their downstream partners in a homogeneous collaboration pattern. In view of extensive entry cost, lack of trust or non-availability of suitable IT-systems or skill-sets this however provides only limited support to actual problems of many, particularly smaller companies. In a real-life business environment companies commonly operate within supply chains that are characterised by a wide variety of distribution policies and stages of collaboration. Each relationship between any two members of such chains requires individual strategies and guiding principles which often results in conflicting interests. Thus, investigating such heterogeneous delivery frameworks, is necessary to reveal possible advantages and drawbacks within the process of emerging with a varying number of customers from a traditional reorder-point (ROP) focused towards a collaborative planning forecasting and replenishment (CPFR) centred supply chain. Consequently, within this dissertation, discrete-event simulation is applied to investigate what impact increasing adoption of collaborative replenishment between manufacturer and several major customers has on each market participant. To support decision making amongst particularly smaller companies, the investigation evolves around the distinct supply chain frameworks of three German SME food manufacturers. The main research objectives of the thesis are firstly developing an appropriate simulation framework that allows exploring a multitude of possible issues within a complex supply chain context, and secondly to utilise the developed model in order to investigate the impact of enhanced coordination and scheduling of production and distribution in the light of various levels of collaboration. To address these objectives, the thesis progresses by firstly introducing the main concepts that constitute the background of the research, followed by an outline of supply chain modelling in general and simulation modelling in particular as the investigation methods of choice. Later on, the underlying research methodology is described in more detail with a major focus on developing an appropriate simulation model that sufficiently allows investigating the wide range of issues and ideas that are proposed earlier on in the thesis. Complementary to this, the dissertation discusses the process of collecting, pre-processing, decomposing and exploiting raw sales data. Within this context, innovative forecasting approaches are introduced and evaluated for their suitability for implementation in simulation models. Within the major investigation part addressing the core elements of the second research objective, the thesis extends the work of Smaros et al. (2003) and Waller et al. (1999) by initially investigating what impact a limited collaboration framework involving only part of the customer base has on global supply chain performance. Following this, a CPFR system is split up into individual collaboration modules in order to analyse how important and how necessary each of these modules is when altering distribution frameworks. This is done to answer questions like “How much collaboration is really necessary or really reasonable?” or “What function of a collaboration framework is most beneficial for individual customers?”. Finally, the effects of some customers engaging in collaboration on others that do not adjust their replenishment system is also explored. Within this context the investigation clarifies who would benefit the most from an early adoption of collaboration and to what extent the remaining non-collaborating customers are disadvantaged by not participating.

Following this, a number of complementary issues are discussed such as various prioritization strategies that evolve around the delivery process between manufacturers and several customers that are engaged at different stages of collaboration. Further investigations show the extent to which demand overstating reorder behaviour can be accommodated for in an altering, more collaborative supply chain. This is done in order to obtain recommendations regarding what ordering behaviour to encourage or condemn in the light of varying levels of demand transparency. Finally, the previously obtained insights are expanded by investigating the impact of increased demand transparency and collaboration within supply chain environments with perishable goods. This will broaden the scope of applicability of the research. Altogether, the study successfully advances academic research ahead of previous considerations and simultaneously results in diverse findings on how to improve typical shortcomings experienced by the participating companies. A number of best practice improvement designs are generated and recommended for implementation. The benefits of engaging in collaborative replenishment are emphasised in particular, even in cases of limited scale and scope. The various analyses suggest that manufacturer and customers can indeed substantially benefit from even a partial increase in demand visibility. This nevertheless comes at a cost since favouring some customers due to sharing a collaborative replenishment system, means that others often seem to experience more severe delivery delays and a drop in service-level. Such issues have not been explored sufficiently within the context of emerging collaborative replenishment structures but are certainly worthwhile considering very carefully before engaging in any collaborative partnership.