Supply Chain Coordination Mechanism

Recently in the increasingly uncertainty environment of globalization and customization, supply chain management(SCM) has undergone a rapid development in theory and practice. Growing competitive pressures, and market globalization together with an increased focus on their core competence has led companies to develop supply chains that can quickly response to the more multivariable and mutable customer needs. To remain competitive, these companies must collaborate with the others of the supply chain (SC) further to reduce operating costs while continuously improving customer service. With many companies entering into the SC, many problems such as demand uncertainty, bullwhip effect, information obstacles etc. have resulted into higher operational costs and slower response. Effective SCM requires coordination among the various channel members including retailers, manufactures, intermediaries and vendors. With recent advances in communications and information technology, as well as a rapidly growing array of logistics options, all stages of the SC can capture the customer's demands and quickly response to them through more effective information exchange and consistent forecasting. Forecasting, planning, scheduling and control based on IT have been the main way for all companies to reduce market uncertainty and bullwhip effect in the SC. Accordingly, the planning and coordinating mechanism and its relative strategies play a critical role in the management practices. Developing the favorable planning &coordination mechanisms within the SC will improve the overall performance of the SC.On the basis of the above backgrounds, this paper presents a theoretical framework and its strategies for the planning &coordination mechanisms within the SC. Specifically, it unfolds as follows: The chapter one is relative literature review. Firstly this research's theoretical and practical implications are introduced in this part. And then three important problems and five macro-fields in the SC are analyzed and summarized through a large volume of domestic and foreign literature on SCM. The chapter two focuses on the conceptual framework and modeling. After a brief description of the SC concept and operations, the conceptual frameworks of supply chain planning (SCP) and supply chain coordination (SCC) are discussed as well as inthis part. Based on these analyses, this part further builds a mathematical model named as SC Hierarchical Matched Model (SCHMM) to highlight the balance between supply and demand in the precondition of maximization profits of the whole SC. At the same time, the relationship between SCP and SCC also is emphasized to develop the perfect planning &coordination mechanism that integrates many planning and coordinate parameters for simplicity. The three general strategies of supply chain planning &coordination are specifically discussed in chapter three. The strategies based on the logistics management and multi-stage inventory control are importantly illustrated. How to plan and coordinate the lead-time or response cycle time is also presented. In chapter four, a synthesized strategy based on the SCM/ERP integrated system architecture is put forward mainly to help the SC planner and coordinator to realize efficient and effective planning and coordination providing thorough information share to reduce the SC complication. The last chapter briefly analyzes Tsingdao Beer Company's operation of supply chain planning and coordination and puts forwards some suggestions for improvement on the basis of all of the above theories.The useful conclusions and innovations of the paper are as follows: Firstly, the research on SCM is divided into three prime existing problems and five research fields according to the similarity and importance of recent domestic and foreign literature on SCM and our comprehension to research on SCM. Secondly, the paper summaries the key elements of SCM and presents a hierarchical matched model to analyze some supply planning and coordination parameters. Thirdly, three general strategies of SC planning &coordination with respect to logistics management, multi-stage inventory, and lead-time are presented; at the same time each strategy being discussed particularly. Fourthly, the conceptual architecture of SCM/ERP integrated system is given to help supply chain entities to establish a synthesized planning &coordination mechanism. Fifthly, the paper discusses their applications in modern SC to examine the theories and strategies as stated above.