Adaptation of coordination mechanisms to network structures

Abstract

The coordination efficiency of Supply Chain Management is determined by two opposite poles: benefit from improved planning results and associated coordination cost. The centralization grade, applied coordination mechanisms and IT support have influence on both categories. Therefore three reference types are developed and subsequently detailed in business process models for different network structures. In a simulation study the performance of these organization forms are compared in a process plant network. Coordination benefit is observed if the planning mode is altered by means of a demand planning IT tool. Coordination cost is divided into structural and activity-dependent cost. The activity level rises when reactive planning iterations become necessary as a consequence of inconsistencies among planning levels. Some characteristic influence factors are considered to be a reason for uninfeasible planning. In this study the effect of capacity availability and stochastic machine downtimes is investigated in an uncertain demand situation. Results that if the network runs with high overcapacity, central planning is less likely to increase benefit enough to outweigh associated cost. Otherwise, if capacity constraints are crucial, a central planning mode is recommendable. When also unforeseen machine downtimes are low, the use of sophisticated IT tools is most profitable.