strategies investigated are as follows [30]:
1. Eliminating the distribution echelon of the supply chain, by including the distribution function in the manufacturing echelon.
2. Integrating the flow of information throughout the chain.
3. Implementing a just-in-time (JIT) inventory policy to reduce time delays.
4. Improving the movement of intermediate products and materials by modifying the order quantity procedures.
5. Modifying the parameters of the existing order quantity procedures.
The objective of the simulation model is to determine which strategies are the most effective in smoothing the variations in the demand pattern. The just-in-time strategy (strategy 3 above) and the echelon removal strategy (strategy 1 above) were observed to be the most effective in smoothing demand variations.
Wikner et al. [31] examine five supply chain improvement strategies, then implement these strategies on a three-stage reference supply chain model. The five strategies are [31]:
1. Fine-tuning the existing decision rules.
2. Reducing time delays at and within each stage of the supply chain.
3. Eliminating the distribution stage from the supply chain.
4. Improving the decision rules at each stage of the supply chain.
5. Integrating the flow of information, and separating demands into “real” orders, which are true market demands, and “cover” orders, which are orders that bolster safety stocks.
Their reference model includes a single factory (with an on-site warehouse), distribution facilities, and retailers. Thus, it is assumed that every facility within the chain houses some inventory. The implementation of each of the five different strategies is carried out using simulation, the results of which are then used to determine the effects of the various strategies on minimizing demand fluctuations. The authors conclude that the most effective improvement strategy is strategy 5, improving the flow of information
at all levels throughout the chain, and separating orders.
4. Supply chain performance measures
An important component in supply chain design and analysis is the establishment of appropriate performance measures. A performance measure, or a set of performance measures, is used to determine the efficiency and/or effectiveness of an existing system, or to compare competing alternative systems. Performance measures are also used to design proposed systems, by determining the values of the decision variables that yield the most desirable level(s) of performance. Available literature identifies a number of performance measures as important in the evaluation of supply chain effectiveness and efficiency. These measures, described in this section, may be categorized as either qualitative or quantitative.
4.1. Qualitative performance measures
Qualitative performance measures are those measures for which there is no single direct numerical measurement, although some aspects of them may be quantified. These objectives have been identified as important, but are not used in the models reviewed here:
• Customer satisfaction: The degree to which customers are satisfied with the product and/or service received, and may apply to internal customers or external customers. Customer satisfaction is comprised of three elements [33]:
1. Pre-transaction satisfaction: satisfaction associated with service elements occurring prior to product purchase.
2. Transaction satisfaction: satisfaction associated with service elements directly involved in the physical distribution of products.
3. Post-transaction satisfaction: satisfaction associated with support provided for products while in use.
• Flexibility: The degree to which the supply chain can respond to random fluctuations in the demand pattern.