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Distributed work requires coordination to manage the interdependencies of the process activities, even though it has no direct impact on the process output [ 95 ]. As the SC partners become closer, the more important the coordination of the entire SC becomes [ 98 ]. For [ 18 ], the coordination is about solving conflicts among members via clarification of viewpoints and their grouping in accordance with different inclinations in a way that everyone can get to know what other members are thinking.

On the other hand, [ 99 ] understands SC coordination as the distribution of the right raw materials, production of goods, and services on the right time to the right customers. SC coordination-also called interface management [ 27 ]-refers to the act of harmonizing actions, decisions, and objectives among the SC partners for the achievement of the SC goal [ 22 ], i. Only if the SC operates in a coordinated manner-from the customer order through the delivery [ 17 ] — the SC performance can be optimized [ 19 ].

This requires the development of mechanisms that can align the objectives of independent supply chain members and coordinate their decisions and activities so as to optimize system performance [ 39 ]. This can be accomplished in two ways [ 11 ]: by having less need for information processing or by having more capacity for information processing. However, the dynamics of each SC partner and the market makes SC coordination difficult [ 17 ]. For this reason, it is needed that SC collaboration and SC cooperation are in place [ 28 ]. SCs are one of many different forms of inter-enterprise practices [ 25 ].

In the case of SC collaboration, it is often defined as two or more chain members working together to establish a functioning alliance [ ] that creates a competitive advantage through a unified approach to value creation [ 70 ], which in turn requires considering several points of view [ 14 ]. Effective collaboration within each SC partner cross-functional and between SC partners cross-enterprise is essential to achieve supply chain goals, individually and collectively [ 73 ]. To implement the strategic SCM shift, from production efficiency to customer-driven, requires high-level collaboration between supply chain partners [ 15 ].

However, when getting into a collaborative practice, the closer the relationship, the higher the possibility that the transaction comes true, but also, the higher the uncertainty and risk of being stuck-in and being caught with a single partner [ ]. On the other hand, cooperation is necessary for achieving common benefit or win-win situations [ 30 ], and maximize profits [ 15 ]. A cooperative SC is only possible when goals, policies, and objectives are aligned with the strategic, tactical, and operational decisions of each SC partner [ 56 ]: using effective incentive systems such as accounting methods, transfer pricing schemes, quantity discounts, etc.

Cooperation, therefore, is achieved through negotiation rather than central management and control [ 5 ]. In response to the challenges presented in section 1. Regarding the SC modeling approaches; [ 44 ], [ 77 ], [ ], and [ ] classify the different approaches for SC modeling, as analytical or simulation models. According to [ 10 ], traditional supply chain modeling approaches involve the application of optimization, mathematical, simulation, and system dynamics models.

Within the analytical or mathematical approach, [ ] mentions the use of continuous-time differential equation models, discrete-time difference models, discrete event models and classical operational research methods.

While these models allow the maximization of certain aspects, simulation models allow a more realistic capture of the SC characteristics and provide a means to evaluate the impact of policy changes [ ]. More recently, [ ] states that deterministic mathematical models are widely employed and are useful to evaluate the impact of various types of uncertainty on operational performance, while simulation models are employed to incorporate uncertainty in various system parameters, and are useful for evaluating the operational performance of only a particular scenario. Regarding the SC modeling elements; [ ] classifies the SC modeling elements into structural production, transportation and control flow, inventory, demand, supply, information elements.

Regarding the level of abstraction issue, [ 10 ] points out that if the focus of the SC model is more on planning and studying behavior at an aggregated level, then a certain level of aggregation must be resorted, as too many organizations in the model might lead to such a complex network that making sense of its collective behavior could become virtually impossible. Regarding the SC modeling perspectives; [ 32 ] proposes the SCOPE paradigm, a three dimensional model that includes a discrete breadth perspective work, business process, SC, and holistic networks elements , the interlinked width perspective material, information, cash, and capacity elements , and the integrated depth perspective organization, people, technology, and controls elements.

Regarding the SC modeling purposes; [ ] suggests that there is a relationship between the type of model and the use of the model, i. On the other hand, [ 26 ] suggests that SC models are either coordination-oriented de-centralized decision making or logistics-oriented centralized decision making. In this section we review the issues related to the modeling approaches, analytical models derived, and the use of simulation models. According to [ ], even though in the real world most SC consist of firms that manage both backlogs and inventories simultaneously, most of the recent work considers only pure inventory SC.

Finally, it is the opinion of [ 15 ] that due to the highly complex nature of large SCs, the use of formal and quantitative approaches are very difficult. Regarding the use of simulation models; they strongly focus on the representation of physical interactions between SC partners, and entities related to SC coordination are often implicitly modeled [ ]. The majority of these models are steady-state models based on average performance or steady-state conditions, static models which are insufficient when dealing with the dynamic characteristics of the supply chain system, i.

The SCM formulation introduced in section 1. As this formulation considers the goal of SCM to be a function of three elements, in this paper we propose to consider them as the necessary conditions to achieve a SCM value creation. An example of some of the work already validated and reported in the literature, is the following:.

BP synchronization ; [ ], [ 44 ] states that business-process BP synchronization is achieved when a properly timing is achieved via a lead time variability reduction. For [ 94 ], on the other hand, BP synchronization takes place at the decision level, when two or more BPs have a common decision center.

Finally, the GRAI modeling formalism [ ], [ ] seems to summarize the last positions, as it considers a decision center located at the GRAI grids as the cross between a function and a decision, where there is a time-driven part and an event-driven part: the time-driven part synchronizes the different functions based on the intervals of time over which a decision extends and after which a decision needs to be reconsidered; the event-driven part represents the change of states that triggers a new function-decision interaction represented by GRAI nets.

The solution space that is free of constraints is expressed as a constraint graph and the solution is found beginning from the root to the leaves. The review of the SC C 4 concept made in Section 2. Within this context, we identify four abilities necessary for SCM value creation:.

Supply Chain Structures Coordination Information And Optimization 1st Edition

In this way, communication is possible when the means are in place and the shared information is relevant to each SC partner. Cooperation; ability to support strategic commitments by aligning the individual strategic, tactical, and operational decisions with the common objectives, goals, and policies. It must be noted that the definitions offered differ from the traditional concepts present in the SCM literature, as we consider them to be part of a continuum-in the sense of the types of SC configurations presented by [ ], Table 2 -of enablers to advance through the stages of the SC management maturity model proposed by [ ], as shown in Figure 1.

Types of SC configurations, adapted from [ ]. From this last, we identify three SC modeling needs: 1 to represent many realistic features, i. From here our proposal: SC modeling faces issues dealing with the number and nature of the variables used scale-related issues , and with the assumptions and extension of the analysis scope-related issues. The scale-related issues refer to the characteristics of real-life SCs-i.

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The scope-related issues refer to the existing SC models, that are limited by a number of assumptions, focus only on one certain part of the SC, or are not flexible enough to allow easy exploration of innovative policies [ ], [ ]. We claim that these scale and scope related issues will be overcome when SC modeling becomes comprehensive, dynamic, detailed, and realistic:.

Comprehensive, including all the members of the SC [ 17 ]; and dynamic, accommodating the upstream and downstream flows [ ]. This calls for a multi-view model, as it is impossible to describe the SC from a single standpoint [ 45 ], [ ], [ ], [ ].

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Detailed, including all the strategic, tactical, and operational levels [ ]. This calls for a multi-level model, as in practice a SC face more problems concerned with quantitative issues at the operational level than with qualitative issues at the strategic level [ 48 ], [ ]. Realistic, based on real-life assumptions [ ].

This calls for a multi-stage model, as the goal of SCM is the creation of value, and there is a set of conditions and abilities necessary for this creation to take place. As the focus of SCM has shifted from production efficiency to customer-driven and partnership synchronization approaches, its objective is to optimize the order fulfillment process, which is basically driven by customer issues, and influenced by the profitability of all the SC members. If we take into account that:.

Supply Chain Optimization and Sourcing Transformation

The main goal of a SC is the creation of internal and external value, and that there are some governance mechanisms necessary precursors to SC value creation, i. An efficient SCM requires the modeling of the SC, and in order for these models to be useful and realistic, these models need to follow a multi-view, multi-level, multi-stage approach,.

Future research will address this issue. In order to remain competitive within a global economy context, companies need to compete through their SCs. This demands that companies focus in create value for their customers and shareholders, act in a synchronized way when conducting their business practices, think in terms of strategic and operational impacts, and fulfill constraints and objectives in the process. A way to address this challenge is through the use of SCM practices.

There are several issues related to the implementation of a successful SCM practice, which-it has been suggested — can be overcome with the help of SC design. In this paper we reviewed the issues related to the creation of value in a SCM context, as well as the approaches, elements, perspectives, and purposes of SC modeling. The contribution of this paper to the SCM literature is a set of SCM value creation conditions and abilities that need to be taken into account in a multi-view, multi-level, multi-stage context, in order to develop a real-life useful SCM model.

It must be noticed the exploratory nature of this research, which does not pretend to be neither comprehensive nor final but instead, the starting point for establishing the basis of the novel discipline of SCM modeling. Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3. Help us write another book on this subject and reach those readers. Login to your personal dashboard for more detailed statistics on your publications. Edited by Hakan Tozan.

Edited by Dilek Onkal. We are IntechOpen, the world's leading publisher of Open Access books. Built by scientists, for scientists. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. Downloaded: Introduction The increased competition in the global market has obliged firms to maintain high customer service levels while at the same time, to reduce cost and maintain profit margins [ 1 ].

A supply chain management formulation In his published work of , [ 18 ] stated that the competitiveness level of the current industrial scenarios at that time made of SC management SCM a topic of interest.

End-to-End Supply Chain Management

Coordination of geographically-distributed independent companies. Operation as a whole unit. Synchronization of interrelated business processes. Strategic, tactical, and operational scale.

6 Strategies for Better Supply Chain Management in the Current Economy

Materials, information, and cash flows context. Set of objectives and constraints. Current challenges 1. The SCM formulation challenge The implementation of the previous SCM formulation proves to be a challenge: authors like [ 1 ], [ 13 ], [ 15 ], [ 17 ], [ 38 ], [ 39 ], [ 48 ], [ 49 ], [ 50 ], [ 51 ], and [ 52 ] recognize the fact that SC partners operate independently, with their own objectives which are often conflicting.

This dynamic SC reconfiguration calls for serious research attention [ 15 ], as it presents several challenges: In the ideal world, SCs are designed focused upon customer efficiency [ 16 ], with an integration of the decisions and operational activities of the business partners [ 39 ]; in real life, SC are designed focused upon factory effectiveness [ 16 ], as traditionally, managers focus on the management of their internal operations to improve profitability [ 39 ].

Research objective and structure of the paper In view of the previous sections, the main objective of this paper is to present a literature review of the concepts relevant to the modeling of value creation in a SCM context: Section 2 reviews the concept of SCM value and its governance mechanisms; Section 3 reviews the current SC modeling practices and their shortcomings; Section 4 establishes the conditions and abilities necessary for a successful SCM value creation, the modeling requirements of a SC model to be used for SCM purposes, and futures research venues; Section 5 presents the concluding remarks.

SCM value creation As the focus of SCM has shifted from production efficiency to customer-driven and partnership synchronization approaches [ 15 ], its objective is to optimize the order fulfillment process [ 63 ], which is basically driven by customer issues [ 64 ], and influenced by the profitability of all the SC members [ 65 ]. Internal and external value The objective of a business is to make a profit by delivering more value to a customer at a similar cost to the competition, or the same value as the competition at a lower cost [ 68 ].

In this context, two perspectives of value are [ 70 ]: Internal value or shareholder perspective, i. Governance mechanisms: The SC C 4 concept According to [ 82 ] there are some governance mechanisms that are necessary precursors to SC value creation: structural mechanisms, i. Table 1. Relationship between the SC C 4 concept and different disciplines.