Flexibility Planning for Materials Management
Informational Impact on Supply Chain Performance (diss.)
Researcher:
Financed by:
The Professorship’s own resources
Motivation:
Regulating the acceptance of materials in the form of flexibility-guided framework contracts are a commonly utilized instrument in industrial practice to curb demand / inventory risk while at the same time allowing for higher delivery capability and response. In the meantime, also scientists have demonstrated the advantages of such contracts through model simulations. Up to now, however, there have been no available methods for achieving transparency regarding the cost situation in advance for cooperative contract negotiations or ways to acquire detailed advice regarding operative implementation.
Objectives:
Upon that background, the goal is to develop a method for contractual arrangements that both fills scientific gaps in model formulations and provides a transparent demonstration of costs and useful information for parameterization of ERP (Enterprise Ressource Planning) systems.
The following activities have already been completed:
The following activities have already been completed:
Overview of State-of-the-Art in flexibility-oriented planning methods in materials management was completed, including flexibility-oriented preparation of contracts. After analyzing how industrial requirements deviate from the State-of-the-Art, a standardized model for flexibility-oriented contractual arrangements was developed that, utilizing a software-based tool, shows cost consequences of various parameters to be set and also yields information relevant to operative implementation in the
form of recommendations on entering demand patterns into common ERP systems. The model closes currently existing gaps of scientific models and comprises a potential for broad dissemination, due to its tangibility and ease of use. The standardization of elaborated contract schemes enables further concretization of the term flexibility and enables industry-wide applications by developed coherent
standardized parameters. These also facilitate an easy and comprehensible calculation of financial risks that are caused by providing flexibility to customers’ orders.
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The appliance in practice gained high acceptance by the intelligible formulation of flexibility oriented demand patterns and tangible displays of additional risks caused by inevitable stocking. On operational level the grant of volume flexibility was quite easy to implement. Process flows needed to be changed slightly, and the adjustment of the ERP-system was manageable. The provision of time flexibility was more complex, due to necessary adaptations of processes and an awkward parametrization of the ERP system. The challenge was to enable postponements for demand forecasts and to differentiate those concurrently from backorders. A complete and thorough integration of all business processes, from customers’ to suppliers´ interfaces within one company represents a very important
success factor for the realization of these contracts. The dissertation was completed successfully at the end of the year 2006.
Activities in progress:
Publication and dissemination.