Quantitative Model for Supply Chain Visibility: Process Capability Perspective

Abstract

Currently, the intensity of enterprise competition has increased as a result of a greater diversity of customer needs as well as the persistence of a long-term recession. The results of competition are becoming severe enough to determine the survival of company. To survive global competition, each firm must focus on achieving innovation excellence and operational excellence as core competency for sustainable competitive advantage. Supply chain management is now regarded as one of the most effective innovation initiatives to achieve operational excellence, and its importance has become ever more apparent. However, few companies effectively manage their supply chains, and the greatest difficulty is in achieving supply chain visibility. Many companies still suffer from a lack of visibility, and in spite of extensive research and the availability of modern technologies, the concepts and quantification methods to increase supply chain visibility are still ambiguous. Based on the extant researches in supply chain visibility, this study proposes an extended visibility concept focusing on a process capability perspective and suggests a more quantitative model usingZscore in Six Sigma methodology to evaluate and improve the level of supply chain visibility.

Characterizing supply chain visibility – a literature review

“…Visibility has a range of levels determined by the amount of useful information that is shared across the SC Bartlett et al (2007) The management of upstream and downstream relationships with suppliers and customers in order to create enhanced value in the final market place at less cost to the SC as a whole Brandon-Jones et al (2014) Information flows concerning inventory and demand levels within the SC at a given time Caridi et al (2010Caridi et al ( , 2014 The ability of the focal company, i.e. the SC leader, to access/share information related to the SC strategy and the operations of SC partners Chan (2003) Quality of information transferred between suppliers, manufacturers, distributors, and customers Francis (2008) Identity, location, and status of entities transiting the SC, captured in timely messages about events, along with the planned and actual dates/times for these events Goswami et al (2013) Having access to relevant information that can be used for various SC-related decision making Griffiths et al (2009) The ability to see, understand, and react intelligently to market, environmental and process requirements within limited periods Holcomb et al (2011) The extent of information visible to supply chain partners Jeyaraj and Sethi (2012) The ability to access or view pertinent data or information as it relates to logistics and supply chain, regardless of the point in the supply chain where data exists Jonsson and Mattsson (2013) A potential outcome of information sharing: making the supply chain more effective Kaipia and Hartiala (2006) The sharing of all relevant and meaningful information between SC partners, also over echelons in the chain Kim et al (2011) The extent to which information/knowledge related to SC cooperation from partner firms is visible to the focal firm through the inter-organizational information system Klueber and O'Keefe (2013) The ability to provide and access information elements at a level chosen by relevant SC stakeholders Lee and Rim (2016) Process visibility, with a focus on operational capabilities McIntire (2014)…”

“…improving demand forecast, updating production schedules, monitoring sales, providing alerts for abnormality and delay of products in transit, etc. Examples of business processes are product design, demand forecasting, production planning, ordering process, inventory management, manufacturing execution, delivery or logistics performance and quality management (Balasubramanian et al, 2002;Barratt and Barratt, 2011;Bartlett et al, 2007;Caridi et al, 2014;Chan, 2003;Delen et al, 2007;Goel, 2010;Heah and Omar, 2005;Kaipia and Hartiala, 2006;Kim et al, 2011;Lee and Rim, 2016;McIntire, 2014;Musa et al, 2014;Nooraie and Parast, 2015;Pfahl and Moxham, 2014;Rai et al, 2012)…”

“…(Cherrett et al, 2015;Kim et al, 2011) manufacturer (Caridi et al, 2014;Rai et al, 2012) and volume flexibility (Balasubramanian et al, 2002;Nooraie and Parast, 2015;Yu and Goh, 2014) The extent of delivery information captured in real time using RFID or mobile technology (Cherrett et al, 2015;Delen et al, 2007;Musa et al, 2014;Papert et al, 2016;Rai et al, 2012) The extent of delivery information tracking or sharing through automated tracking system or through a web portal (Cherrett et al, 2015;Goel, 2010;Rai et al, 2012) Detail of delivery information (e.g. lead time at distribution center, lead time during journey, lead time of an item at a store) shared between manufacturer and retailers (Delen et al, 2007;Lee and Rim, 2016) The extent of information on the status of stocks and the flows of shipments (Francis, 2008;Pfahl and Moxham, 2014;Rai et al, 2012) The extent of instantly updated status about the state of products during transportation, between terminal operator, logistics service provider and transport manager, e.g. departure/arrival schedules, de...…”

“…515, 526). Most studies have explained the utility of information in a cluster of key business processes such as product design, demand forecasting, production planning, ordering process, inventory management, manufacturing execution, delivery or logistics performance, and quality management (Balasubramanian et al , 2002; Barratt and Barratt, 2011; Bartlett et al , 2007; Caridi et al , 2014; Chan, 2003; Delen et al , 2007; Goel, 2010; Kaipia and Hartiala, 2006; Kim et al , 2011; Lee and Rim, 2016; McIntire, 2014; Nooraie and Parast, 2015; Pfahl and Moxham, 2014; Rai et al , 2012). To understand the relationship between transformational characteristics and business process improvement, we summarize the ways that information is aligned with decision making in the following business processes: CPFR, logistics process (inbound and outbound logistics), and new product design and development.…”

“…stock reduction, delivery adherence) is considered an immediate effect of the relative improvement in the “accessibility” and “quality” of information sharing and information technology adoption (Brandon-Jones et al , 2015; Caridi et al , 2010; Kim et al , 2011; Williams et al , 2013; Zhang et al , 2011). On the other hand, various studies argue that the effectiveness of SCV has a “usefulness” dimension and emphasize the utility of information in business operations (Barratt and Oke, 2007; Caridi et al , 2014; Kaipia and Hartiala, 2006; Lee and Rim, 2016; McIntire, 2014; Pfahl and Moxham, 2014; Wei and Wang, 2010). In line with both streams of articles, we take into account the accessibility and quality of information sharing, as well as the utilization in business processes, to define explicable and practical metrics of the characteristics and the effectiveness of SCV.…”