Chapter 5: The Value ofInformation5-1
5-1 Chapter 5: The Value of Information
5.1IntroductionValueof using anytype of informationtechnologyPotentialavailabilityofmoreandmoreinformation throughout the supply chainImplicationsthisavailabilityoneffectivedesign and managementof theintegratedsupplychain5-2
5-2 5.1 Introduction ⚫ Value of using any type of information technology ⚫ Potential availability of more and more information throughout the supply chain ⚫ Implications this availability on effective design and management of the integrated supply chain
Information TypesInventorylevelsOrdersProductionDeliverystatus5-3
5-3 Information Types ⚫ Inventory levels ⚫ Orders ⚫ Production ⚫ Delivery status
MoreInformationHelps reducevariability in the supply chain.Helpssuppliers make betterforecastsaccountingfor promotions andmarket changesEnables the coordination of manufacturing anddistribution systems and strategiesEnables retailers to better serve their customersbyofferingtools forlocating desireditemsEnablesretailers toreactand adapttosupplyproblemsmorerapidlyEnables lead time reductions5-4
5-4 More Information ⚫ Helps reduce variability in the supply chain. ⚫ Helps suppliers make better forecasts, accounting for promotions and market changes. ⚫ Enables the coordination of manufacturing and distribution systems and strategies. ⚫ Enables retailers to better serve their customers by offering tools for locating desired items. ⚫ Enables retailers to react and adapt to supply problems more rapidly. ⚫ Enables lead time reductions
5.2Bullwhip EffectWhilecustomerdemandforspecificproducts does not vary muchInventoryandback-orderlevelsfluctuateconsiderablyacrosstheirsupplychainP&G'sdisposablediaperscaseSales quiteflatDistributor orders fluctuate more thanretailsalesSupplierordersfluctuateevenmore5-5
5-5 5.2 Bullwhip Effect ⚫ While customer demand for specific products does not vary much ⚫ Inventory and back-order levels fluctuate considerably across their supply chain ⚫ P&G’s disposable diapers case ⚫ Sales quite flat ⚫ Distributor orders fluctuate more than retail sales ⚫ Supplier orders fluctuate even more