{"id":4033,"date":"2007-04-01T12:16:29","date_gmt":"2007-04-01T16:16:29","guid":{"rendered":"https:\/\/biznews.fiu.edu\/?p=4033"},"modified":"2014-11-14T16:03:28","modified_gmt":"2014-11-14T21:03:28","slug":"new-study-shows-that-coordination-among-supply-chain-partners-reduces-costs","status":"publish","type":"post","link":"https:\/\/biznews.fiu.edu\/2007\/04\/new-study-shows-that-coordination-among-supply-chain-partners-reduces-costs\/","title":{"rendered":"New study shows that coordination among supply chain partners reduces costs."},"content":{"rendered":"\n\n\n
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\nSushil K. Gupta<\/strong> <\/em><\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u201cWe need to cut costs!\u201d<\/p>\n

This mandate drives most companies today\u2014and many of them look to supply chain management as one area in which they could achieve that goal.<\/p>\n

\u201cThe importance of effective supply chain management is increasing amid intense global competition and growing business complexities,\u201d said Sushil K. Gupta<\/strong>, professor in the College of Business Administration\u2019s Department of Decision Sciences and Information Systems (DSIS).<\/p>\n

Gupta, along with three colleagues from other universities, recently completed a study that examines the benefits of coordinated decision making in a supply chain consisting of a manufacturer, a distributor, and several retailers. The paper, titled \u201cSupply Chain Scheduling: Just-in-Time Environment,\u201d will appear soon in the Annals of Operations Research<\/em>, a leading journal in the field.<\/p>\n

The study puts forth the premise that a harmonious relationship among various members of a supply chain is key to a firm\u2019s survival and growth.<\/p>\n

\u201cHowever, supply chains are susceptible to power plays wherein a dominant player may dictate terms to other members, thereby improving its own performance but decreasing the overall performance of the supply chain,\u201d Gupta said. \u201cIdeally, the supply chain\u2019s members should coordinate their operations to lower costs, to keep their competitive edges sharp, and to achieve global optimization.\u201d<\/p>\n

Complex calculations offer a simple formula for success.<\/em><\/p>\n

As part of their study, Gupta and his colleagues developed mathematical models for the individual optimization goals of the manufacturer and the distributor, and then compared the results of these models with the results obtained from a joint optimization model at the supply chain system level.<\/p>\n

\u201cIn our study, we examined conflict and cooperation issues in the supply chain,\u201d Gupta said. \u201cThe cost of conflict to a supply chain partner is a measure of the amount by which the unconstrained optimal cost increases when a decision is made under the scheduling constraints imposed by one of the partners.\u201d<\/p>\n

While the formulas may seem complex, the concepts they present make good, solid business sense. In essence, according to Gupta, three possible scenarios are at work in the supply chain system:<\/p>\n

    \n
  1. The manufacturer is the dominant partner, telling the distributor, \u201cHey, this is my production schedule. You do whatever you have to do on your end to manage distribution and inventory, but I\u2019m not changing. This is how I\u2019m going to control my costs.\u201d<\/li>\n
  2. The distributor is the dominant partner, telling the manufacturer, \u201cYou have to produce the goods according to my schedule. That\u2019s how I can best minimize my costs.\u201d<\/li>\n
  3. The manufacturer and distributor work together to develop a production and delivery schedule that minimizes costs at the system level.<\/li>\n<\/ol>\n

    Partners who choose cooperation over conflict reap the cost-savings benefits.<\/em><\/p>\n

    \u201cOur formulas and analyses demonstrate that when the manufacturer and distributor in the supply chain system agree to collaborate, they both benefit in today\u2019s just-in-time environment,\u201d Gupta said. \u201cThe creation of positive surplus in the supply chain system due to cost reduction can be shared by both partners\u2014an end result that makes the coordinated mechanism much more attractive. What\u2019s more, by working together, the partners build trust and strengthen their relationship.\u201d<\/p>\n

    Another key player in the supply chain\u2014the retailer\u2014benefits as well, as the resulting cost-savings and improvements in operational efficiencies help the supply chain system as a whole compete more effectively in today\u2019s global marketplace.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Sushil K. Gupta \u201cWe need to cut costs!\u201d This mandate drives most companies today\u2014and many of them look to supply chain management as one area in which they could achieve that goal. \u201cThe importance of effective supply chain management is increasing amid intense global competition and growing business complexities,\u201d said Sushil K. Gupta, professor in […]<\/p>\n","protected":false},"author":71,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[4],"tags":[3959,682,2528],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/4033"}],"collection":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/users\/71"}],"replies":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/comments?post=4033"}],"version-history":[{"count":1,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/4033\/revisions"}],"predecessor-version":[{"id":24289,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/4033\/revisions\/24289"}],"wp:attachment":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/media?parent=4033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/categories?post=4033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/tags?post=4033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}