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Configuring A Supply Chain To Reduce The Cost Of Demand Uncertainty

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  • MARSHALL FISHER
  • JANICE HAMMOND
  • WALTER OBERMEYER
  • ANANTH RAMAN

Abstract

Reducing lead time enables a company to react more quickly to demand information and, hence, to better match supply with uncertain demand. But it is only one lever for improving response capability. Managers are familiar with others (e.g., excess capacity, supplier choice, and so forth) but lack techniques to quantify the impact of adjusting these levers. Here, we enumerate a number of these levers and present a model whereby they might be combined into effective response capability. The impact of adjusting these levers is illustrated by data obtained from a skiwear manufacturer that did so. Some of the insights that resulted run counter to intuition.

Suggested Citation

  • Marshall Fisher & Janice Hammond & Walter Obermeyer & Ananth Raman, 1997. "Configuring A Supply Chain To Reduce The Cost Of Demand Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 211-225, September.
    • Handle: RePEc:bla:popmgt:v:6:y:1997:i:3:p:211-225
    DOI: 10.1111/j.1937-5956.1997.tb00427.x
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    References listed on IDEAS

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    1. Marshall Fisher & Ananth Raman, 1996. "Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales," Operations Research, INFORMS, vol. 44(1), pages 87-99, February.
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    Cited by:

    1. Geary, S. & Disney, S.M. & Towill, D.R., 2006. "On bullwhip in supply chains--historical review, present practice and expected future impact," International Journal of Production Economics, Elsevier, vol. 101(1), pages 2-18, May.
    2. Wright, David & Yuan, Xin, 2008. "Mitigating the bullwhip effect by ordering policies and forecasting methods," International Journal of Production Economics, Elsevier, vol. 113(2), pages 587-597, June.
    3. Stratton, Roy & Warburton, Roger D.H., 2006. "Managing the trade-off implications of global supply," International Journal of Production Economics, Elsevier, vol. 103(2), pages 667-679, October.
    4. Tachizawa, Elcio M. & Gimenez, Cristina, 2010. "Supply flexibility strategies in Spanish firms: Results from a survey," International Journal of Production Economics, Elsevier, vol. 124(1), pages 214-224, March.
    5. Ramanathan, Usha & Gunasekaran, Angappa, 2014. "Supply chain collaboration: Impact of success in long-term partnerships," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 252-259.
    6. Wu, Yue, 2010. "A dual-response forwarding approach for containerizing air cargoes under uncertainty, based on stochastic mixed 0-1 programming," European Journal of Operational Research, Elsevier, vol. 207(1), pages 152-164, November.
    7. Disney, S. M. & Towill, D. R., 2003. "The effect of vendor managed inventory (VMI) dynamics on the Bullwhip Effect in supply chains," International Journal of Production Economics, Elsevier, vol. 85(2), pages 199-215, August.
    8. Ken Moon & Patrick Bergemann & Daniel Brown & Andrew Chen & James Chu & Ellen A. Eisen & Gregory M. Fischer & Prashant Loyalka & Sungmin Rho & Joshua Cohen, 2023. "Manufacturing Productivity with Worker Turnover," Management Science, INFORMS, vol. 69(4), pages 1995-2015, April.
    9. Khouja, Moutaz & Christou, Eliana & Stylianou, Antonis, 2020. "A heuristic approach to in-season capacity allocation in a multi-product newsvendor model," Omega, Elsevier, vol. 95(C).
    10. Warburton, Roger D.H., 2007. "An optimal, potentially automatable ordering policy," International Journal of Production Economics, Elsevier, vol. 107(2), pages 483-495, June.
    11. David Simchi-Levi & William Schmidt & Yehua Wei & Peter Yun Zhang & Keith Combs & Yao Ge & Oleg Gusikhin & Michael Sanders & Don Zhang, 2015. "Identifying Risks and Mitigating Disruptions in the Automotive Supply Chain," Interfaces, INFORMS, vol. 45(5), pages 375-390, October.
    12. Charles L. Munson & Jianli Hu & Meir J. Rosenblatt, 2003. "Teaching the Costs of Uncoordinated Supply Chains," Interfaces, INFORMS, vol. 33(3), pages 24-39, June.
    13. Monica Faraoni & Lorenzo Petretto, 2009. "Market-Driven Management and Global Supply Chain," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 2 Market-.

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