Demand Forecasting, Resilience and Mapping (Book Review)

Daniel Dumke — Mon, 31 Oct 2011 14:30:00 +0000

I am a huge fan of Open Access in research and a while ago I was made aware of a book on supply chain management, which has recently been published under an open access license. The full book can be downloaded on the web site of the publisher.
The book contains 27 chapters / articles on a range of supply chain related topics, such as optimization, public sector supply chains, modeling and simulation, but also several papers which addressed supply chain risks in one way or the other.
I was especially interested in the risk related chapters, so I will give you a short overview on three of the papers:

A Hybrid Fuzzy Approach to Bullwhip Effect in Supply Chain Networks, by H. Tozan and O. Vayvay

The authors of the first paper propose a fuzzy-neural-network approach for demand forecasting. In supply chain management a test case for demand forecasting, has always been the bullwhip effect. The better your demand forecasting the less pronounced the bullwhip effect will be. And this can be a real money saver.

A simulation of their new approach shows that for a three tier supply chain (customer, retailer, factory) especially the fluctuations at the retailer can be reduced quite drastically (figure 1 a and b).

Figure 1: Orders and Production in the Base vs. Proposed Model (Tozan and Vayvay, 2011)

Integrating Lean, Agile, Resilience and Green Paradigms in Supply Chain Management (LARG_SCM), by H. Carvalho and V. Cruz-Machado

The second article I would like to highlight, tries to integrate the supply chain concepts of lean, agile, resilience and sustainability / green. One of the weaknesses in supply chain management research has always been the strong focus on one of the concepts, neglecting the fact that successful companies often have to integrate different aspects in one supply chain. A supply chain of a high-end computer manufacturer for example might have to be green and agile at the same time, a military supply chain probably should integrate the concepts of agility and resilience to be successful.
First the authors introduce the mentioned concepts and compare them in a nice table view.

Next they build a graphical model of the supply chain and added vectors to symbolize how the different concepts influence decisions in the supply chain.
Figure 2 aggregates the results.

Figure 2: Impact of different Concepts on Supply Chain Management Decisions (Carvalho and Cruz-Machado, 2011)

Supply Chain Resilience Using the Mapping Approach, by A.P. Barroso, V.H. Machado and V. Cruz-Machado

The last paper analyzes supply chain resilience using the example of a supply chain in the automotive industry. Supply chain mapping is a simple technique where the elements and connections of a supply chain are drawn on a map. The elements and connections are the enriched with additional information like inventory levels and policies or lead times.
After describing the methodology the authors use a case study to analyze the resilience of the chain. The supply chain mapping enables them to unveil several points for improvement:

The assembler has no alternative suppliers for part B. An identical situation is found for all the other parts.
Like the assembler, the 1st Tier B has no buffer stock. There is no inventory of raw materials, work in progress, and final products.

Conclusion

The first paper shows a quite interesting approach to demand forecasting, which (at least in the simulation) was able to produce much better results than more traditional approaches. If you are interested in this topic, I already discussed several other aspects of forecast risk and problems with forecasting, but I also touched other methods to improve forecasting (e.g. by information sharing).

The second paper contributes to the understanding of the effect of different aspects of some generic concepts in supply chain management. Even though it only considers a small amount of supply chain decisions, the results are quite clear: It is not possible to easily combine the different concepts and it highlights the need either to find trade-offs or to develop new approaches to satisfy all goals.

The third paper introduces the supply chain mapping methodology, which is quite simplistic in nature, but in my point of view one of the most powerful methods to analyze supply chain risks in practice. The case study should be read as an example only and gives a few hints on how to implement the methodology and analyze the results.

Reference:

Tozan, H., & Vayvay, O. (2011). A Hybrid Fuzzy Approach to Bullwhip Effect in Supply Chain Networks Supply Chain Management, 49-72

Carvalho, H., & Cruz-Machado, V. (2011). Integrating Lean, Agile, Resilience and Green Paradigms in Supply Chain Management (LARG_SCM) Supply Chain Management

Barroso, A.P., Machado, V.H., & Cruz Machado, V. (2011). Supply Chain Resilience Using the Mapping Approach Supply Chain Management

Rate This:

Tags:

bullwhip effect

concept

resilience

supply chain mapping

scrm introduction