Supply chain coordination : studies on planning and information sharing mechanisms

Supply chain information flow significantly influences material flow behaviour. To improve supply chain performance, efficient information sharing practices are largely recommended. However limited knowledge exists on how companies should choose their supply chain planning approaches and the extent to which information is required. Additionally, current literature does not give answers to the question of which situations, or during which supply chain phase, vendor managed inventory, VMI is an efficient replenishment mechanism. This research treats the selection of coordination mechanisms, especially supply chain planning and VMI, for manufacturing companies. The coordination theory is applied to provide a theoretical basis to consider how companies can jointly manage business processes across the supply chain. The research questions are (1) how to select operational coordination mechanisms to match demand and supply in manufacturing companies, and (2), how reach the balance between information flow and material flow by the use of chosen mechanism. The thesis consists of six studies, which contain three empirical case studies and three studies where both modeling and case study research approaches are used. The studies are reported as six research papers. A framework on selecting the supply chain coordination mechanism is developed based on literature findings. The framework suggests that the selection should take place according to the match between execution flexibility and information abundance. Information sharing should target on providing accurate and good-quality information for the decisionmakers. Flexible operations should be supported with frequent planning practices that capture information quickly. If execution flexibility is low, it needs to be supported with more stable planning. This framework is used as a tool to analyse the results from papers. Two main reasons for the imbalance between material flow and information flow was identified. Frequent plan updates according to demand changes, varying planning prosesses and horizons caused planning nervousness. This phenomenon caused bullwhip and large volume changes at the supplier. The other reason was lack of planning capability, inadequate information or inability to use shared information. Planning nervousness can be reduced with stabilising planning and synchronising information sharing between supply chain players. The suitability of VMI was measured with supplier’s reaction time. The time benefit for the supplier is dependent on the delays caused by order batching. It was observed that suppliers’ long production planning horizon and infrequent production makes benefiting from VMI more challenging for manufacturers. Improving the quality of shared VMI information takes place by offering the right information and improving downstream planning.