JournalofOperationsManagement21(2004)613 627Fromsupplychaintodemandchain:theroleofleadtimereductioninimprovingdemandchainperformancea,∗b,1a,2SuzannedeTreville,,Ari-PekkaHameriaEcoledesHautesEtudesCommerciales,UniversityofLausanne,1015Dorigny,SwitzerlandbHarvardBusinessSchool,Boston,MA02163,USAReceived1December2002;receivedinrevisedform1October2003;accepted1October2003AbstractToimprovedemandchainperformance,isitbetterforpartiesinasupplychaintofocus rstonleadtimereduction,orinsteadconcentrateonimprovingthetransferofdemandinformationupstreaminthechain?Eventhoughthetheoryofsupplyanddemandchainmanagementsuggeststhatleadtimereductionisanantecedenttotheuseofmarketmediation(.,adjustingproductionto tactualcustomerdemandasitmaterializes)[(2)(1997)105]toreducetransactionuncertaintyinthechain,whichcanbeconceptualizedastheprimarygoalofsupplychainmanagement[(3)(1993)289],demandchainpartiesoftenareobservedinpracticetobeginwithinformationtransferimprovement,,weproposeaframeworkforprioritizingleadtimereductioninademandchainimprovementproject,usingatypologyofdemandchainstoidentifyandrecommendtrajectoriestoachievedesirablelevelsofmarketmediationperformance.':Demandchainmanagement;Supplychainmanagement;Leadtime;Logistics;Informationtransfer;,thecompanyattemptedtomaintainanequipmentutilizationlevelofapprox-ANordicpulpandpaperproducerwasexperienc-imately90%.Productionofvariouspapergradesfol-ingdif cultiesinmanagingitssupplychain,whichlowedastandard4-weekcycle, sship-4-weekcycleimpliedthataparticulargradewouldbepingofproductsfromitsNordicplantsthroughoutproducedduringaperiodofafewhours,-dertodeliveryaveraged6months;hence,thepipelineproachresultedinlargelotsizes,-∗.:+,E-mailaddresses:@(),stockoutswerefrequentbecausetheinventoryinthershapiro@(),@().1longleadtimeshinderedthecompany sabilitytoTel.:+.:+,wherepro tmarginswere0272-6963/$ seefrontmatter':
./JournalofOperationsManagement21(2004)613 tactualcustomerdemandastheseconsiderationsinmind,thecompanyhiredaitmaterialized(Fisher,1997).Insteadofpursuingwell-knownconsulting rmtoassistinimprovingthecustomizationsupportedbymarketmediation,-Supplychainmanagementtheoryclearlyaddressestributors,-Distributorswereexpectedtocutpapertoorder,per-mancethroughthetransferofdemandinformationmittingincreasedresponsivenesswithoutneedingtowhenleadtimesarelong(.,Fisher,1997;Fisherreducetheequipmentutilizationratesorthecyclepe-andRaman,1996;Heikkil ,2002;Leeetal.,1997; owthroughouttheMason-JonesandTowill,1999;Perryetal.,1999).Inchainwastobemademoretransparentthroughinstal-practice,however,supplychainimprovementeffortslationofanEnterpriseResourcePlanning(ERP) owofinformationthroughuseoftechnologyandtimes,.(2000,)describedtheplightofinformation owwouldnaturallyleadtoanimprovedsuchcompanies: Manyproductstodayhavesuchproduct tcallforachangeEighteenmonthsandseveralhundredsofthousandsinproduction eveniftheyhavetrackedearlysales,ofdollarslater,itbecamecleartomanagementthatthehavepaidattentiontoproducttesting,, owinthechainhadledproblemiswealreadyowntheproduct;. partnershipswiththedistributorsandtheinformationShouldtheNordicpulpandpaperproducerhavetechnologyinstalledwereunsuccessfulinimprovingbegunbyreducingleadtimes?Ifso,howmuchshouldthe asimpliedbymuchofthesupplychainpapercompanyhadnoexperienceinmanagingdistrib-literature ,themanagementtime rst?investedintheprojecthadcausedthecorebusinessesInourview,suchconfusionresultsfromaninsuf ,-(1989),-environment whichissuf cientlycomplexthatChoiquiredproductionfacilitiesineachmajormarket,etal.(2001;seealsoNew,1996) sothatThissolution,thoughexpensive,,butitlimitedthecompany sOneapproachtomanagingcomplexityofempir-abilitytoimprovecompetitivenessthroughincreasedicaldataistoorganizesuchdataintoatypologyproductcustomization,requiringimprovedmarket(Bacharach,1989).Inthispaper,wedevelopaty-mediationintheexistingchain thatis,throughad-pologyofsupplychainsaccordingtorelativelead
./JournalofOperationsManagement21(2004)613 (1984,)wrote, TheKanbanor just-in-time in-thepositionofthecompanywithinthistypologyventorysystemsintheJapaneseautoindustryprovidedeterminestheapproachthatshouldbefollowedinatasteofthingstocomeinrelationsbetween[-equipmentmanufacturers(OEMs)]andsuppliers. viewingthesupplychainmanagementandleadtimeTheemphasisofmuchoftheJITliteratureinthereductionliteratures,(boththeoreticalandpractical)focusedonthetypologyallowsustoidentifyattractivedemandchainpullofproductfromupstreamoperationsbasedoncontextsandtorecommendtrajectoriesforreachingthe demands ofthedownstreamoperations, (1997)describedSupplychainmanagementhasbeende nedastheunrecognizedpotentialformarketmediationin theintegrationofkeybusinessprocessesfromendautomobilesales:mostautomobilesarepurchaseduserthroughoriginalsuppliersthatprovidesprod-fromasmallselectionthathappenstobeavailableucts,services,andinformationthataddsvalueforatadealer,ratherthanhavingtheautomobilebuilttocustomersandotherstakeholders (Lambertetal.,,JITresultedinsomeinitialcon-1998,).FrohlichandWestbrook(2002)-in-time(JIT)deliveryef cientphysicalsupplyofgoods.(frequent,smalllotswithareductionofbufferin-AsecondoutcomeofJITwasachangeinattitudesventories),reductionofthesupplierbase,evaluatingtowardsuppliers,movingfromarms-lengthnegotia-suppliersbasedonqualityanddeliveryperformance,,thereestablishinglong-termcontractswithsuppliers,,-lengthrela- cientdelivery,coordinatedplanning,,wewillusemostoftheclassicJITandoperationsmanagementlit-theterm supplyintegration torefertointegrationerature(.,Hall,1983;Harmon,1993;Hayesetal.,thatsupportstheef cientmanufactureanddelivery1988;Schonberger,1982;Suzaki,1987).ofgoods,andwewilluse demandintegration toEllramandCooper(1990,)wereamongtherefertointegrationthatsupportsmarketmediation, rstpost-JITauthorstoissuecautionsabouttheriskswiththeprimaryroleofdemandintegrationbeingtheinvolvedinintegratingthesupplychain(seealsotransferofdemandinformationtofacilitategreaterBensaou,1999).Hand eld(1993,)(.,PfefferandSalancik,Intheearlydaysoflogistics(theprecursorto1978)toaddressthequestionofwhenthebene tsofsupplychainmanagement),thefocuswasmoreonsupplychainrelationships(whichhereferredtoassatisfyingtheneedofthesupplierforef ciency(inJITpurchasing,orthe socialcoordinationofinter-particular,manufacturinganddistributionef cien-dependentactors ))thanonsatisfyingtheneedofthecustomerfortoHand eld,,pullproduc-byareductioninthesupplybasecombinedwithtionconcepts,whichlinkedthedecisiontoproduceinformationsharing(including,butnotlimitedto,toevidenceofdownstreamdemand,causedanewdemandinformation).Theresultingmodelproposed
./JournalofOperationsManagement21(2004)613 627thatdemanduncertaintyandinformationsharingwerecontradictiontoSterman s(1989)conclusionthattheantecedentstosupplybasereduction,whichwasanbullwhipeffectarisesfromirrationalityormisinter-antecedenttoJITpurchasing,whichinturnwasanpretedfeedback(seealsoMetters,1997)., eldFisher(1997)notedthatsucheffortstoincreasethesuggestedthatthetypeofenvironmentalandtrans-speedofinformation ,withJITpurchas-uncertaintyhadtochoosewhethertoemphasize(a)ingrelationshipslikelywhentheexpectedreductionef cientphysicalsupplyofgoods(riskingproduc-intransactionuncertaintyjusti edthelossofcontrolinggoodsthatdidnotmeetcustomerdemand)orimpliedbythepartnership.(b)marketmediation(adjustingproductiontomatchWilliamsetal.(2002)evaluatedelectronicinfor-actualdemand,oftenresultinginloweredproductionmationtransfersinsupplychainsfromatransactionef ciencies).Fisherproposedthatthechoicebetweencosteconomicsviewpoint,notingthattheriskofop-ef -Asurveyofretailersandtheirsuppliersspon-ingef cientphysicalsupply, cantunwillingnesstoshareinformationthat,indemandformanyproductswasshiftingfromfunc-manycases,,onlytionaltoinnovativeascompaniessawopportunities25%ofthosesurveyedrelatedthattheyregularlytoimprovecompetitivenessthroughincreasedrespon-sharedpoint-of-sale(POS)datawithchannelpartnerssiveness(asexempli edbytheNordicpulpandpaper(,accessed,2003).producerdescribedearlierinthispaper).Fisher sworkAsinterestinsupplychainmanagementincreasedrepresentedaradicaldeparturefromageneralassump-duringthelate1980sandthe1990s,researchersbe-tioninthesupplychainmanagementliteraturethatgantofocusonthespeedandqualityofinformationmarketmediationplaysaroleinallsupplychains(., owthroughthechain,withtheQuickResponseini-Ellram,1991;Houlihan,1985;Mentzeretal.,2001).tiativeintheapparelindustrybeingoneofthemostVollmannetal.(2000)suggestedthattheterm sup-visibleefforts(.,Abernathyetal.,1999;Fisherandplychain bereplacedbytheterm demandchain Raman,1996).Leeetal.(1997)appliedForrester stoemphasizetheshiftinemphasisfromef cientsup-(1961)conceptofindustrialdynamicstothe ,informationinthesupplychain,demonstratingthattheJournalofOperationsManagementpublishedathevariabilityofinformationreceivedbythesupplierspecialissuededicatedtodemandchains,encourag-issubstantiallygreaterthanthevariabilityofdemandingresearcherstodeveloptheoryspeci ctodemandwhen(a)ordersformtheonlyinformationconcerningchains(seeSelenandSoliman,2002).At rstglance,demandthatistransferredwithinthechain,(b)ordersthischangeinnomenclatureappearsundesirable:asaarebatched,(c)prices uctuate,and(d)thecustomer eld,operationsmanagementhasbeenfarfrompar-reactstoconcernsaboutbeingplacedonallocationsimoniousinitsdesignationofterms,andtheideaofbyplayingarationinggame(.,byincreasingtheaddingtheterm demandchain to supplychain, orderquantityrelativetoactualdemandtoavoid valuechain, and logistics soundslikearecipeforshortages).Leeetal.(1997,)demonstratedthatconfusion,especiallygiventhegenerallyheldassump-this bullwhipeffect thatis,thedistortionofde-tion,discussedabove,thatmarketmediationplaysanmand uctuations,whichareampli resultsatleastinpartfrom strategicin-Ithasbecomeincreasinglyclear,however,thatteractionsamongrationalsupplychainmembers, inthereisafundamentaldifferencebetweenchains
./JournalofOperationsManagement21(2004)613 ,Nokiacusonef logistics becameasubsetoftheterm supplychain10daysinexchangeforimprovedinformationcon-management ,giventheinnovativena-gistics(Lambertetal.,1998),differentiatingbetweentureoftheproductsinvolved,marketmediationwassupplyanddemandchainsisusefulinemphasizingtheappropriatedemandchainmanagementapproachthefactthatintegrationbetweensupplychainpartiesinallthesecasesaccordingtoFisher s(1997)frame-doesnotnecessarilyimplymarketmediation,andwork,responsetotheoverturesmadebyNokiarangedthatmarketmediationrepresentsatrade-offbetweenfromenthusiastictonegative,andtheprojectout-customerserviceandsupplyef ,ToemphasizethedifferentiationofchainnetworksHeikkil concludedthatFisher sproposition thattheintosupplyanddemandchains,wecombineFisher schoiceofmarketmediationorphysicalef ciencyfordivisionofsupplychains(accordingtowhetherprod-agivenchaindependedessentiallyonthenatureofuctdemandisfunctionalorinnovative)withVollmanndemand proposedthataetal. ssuggestedchangeofterminology(fromsup-varietyofdemandandsupplychainstructureswasre-plytodemandchainmanagement)-ment,Heikkil addedconstructssuchasdurationofDe ,trust,andcustomerperceptionsoftheemphasizesmarketmediationtoagreaterdegreethansupportreceivedfromthesuppliertothenatureofitsroleofensuringef (seealsoMentzeretal.,2001).Itispossibleinmanychainstode neadecouplingSeveralresearchershavestudiedthevaluethatpoint,thatis,apointinthechainatwhichinven-demandinformationavailabilityholdsforsupplytoryisheldtopermitanupstreamfocusonef .(1996)modeledsupplyandadownstreamfocusonmarketmediationatwo-levelsupplychaintostudytheimpactonsup-(.,Nayloretal.,1999).Insituationsofproductionplierinventoriesthatwouldresultfromaccesstotostockupstreamandtoorderdownstreamfromthetimelydemandinformation,demonstratingthatfasterdecouplingpoint,thedecouplingpointoftenservesaccesstodemandimprovedthesupplier s llrateattomarktheorderpenetrationpoint,thatis,-Speci (2002,playsacriticalroleinsupplychainmanagement(.,2003)usedexperimentsbasedonthebeergame(LeeSharman,1984).Insituationswheregoodsaredeliv-etal.,1997;Metters,1997;Sterman,1989)todemon-eredfromstock,theorderpenetrationpointisatthestratethatexposuretoPOSdatabene tedupstream nishedgoodswarehouse,butanupstreamdecouplingsupplychainmemberswhendemandwasstableandpointneverthelesscanbecreatedtopermitmarketme-itsdistributionwasknown,.(2002),,Thonemannandadownstreamchainfocusedondemandintegra-(2002)usedananalyticalmodeltodemonstratethattion(.,ademandchain)(customerintentHeikkil (2002)studiedattemptstoimprovethetoplaceanorder,withoutspecifyingthesuppliertotransferofdemandinformationinsixdemandchainsreceivetheorderortheexactproducttobeordered)experiencingdif cultieswithmatchingsupplywithreducedmanufacturingcostsandimprovedservice
./JournalofOperationsManagement21(2004)613 627levelswhenleadtimeswerezero,butthatmarketductionef ciencyinitiallywasassumedtobeuni-mediationeffortsbasedontheadvancedemandin-versallyapplicablebutnowisunderstoodtoapplyformationcouldsubstantiallyincreasethebullwhiptoonlyasubsetofsupplychains,.(2003)-neeringapproachtodemonstratethatdemandsharingmandinformation whichcanbefullorpartial iswasabletoreducebutnoteliminatethebullwhipexpectedtoreducecostsrelatedtotransactionun-effectinasupplychaininwhichmanufacturingwascertainty(Hand eld,1993) exibilitytorespondtothenewmanufacturinglackedthe exibilitytorespond,De-information,-increasedbullwhipeffect(Thonemann,2002).Fi-ingtheorderquantity;thatis,theysuggestedthatnally,thetransferofdemandinformationhasbeenmarketmediationattemptsshouldbelimitedinsit-showntodependnotonlyonthetypeofproductuationsofin exiblemanufacturing(.,longleaddemandbutalsoonthequalityoftherelationshiptimes),withthechainfocusing,instead,onef cientbetweensupplierandcustomer,(inpress)demonstratedthathighcapacityutilization(implyinglongmanufacturing,,leadtimes)substantiallyreducedthevalueofadvance(partial)demandinformationinInterestinleadtimereductionwasalsooriginallyasingle-stage,,eventhoughleadtimeRabinovichetal.(2002,)noted, althoughtherereductionwasconsiderablylessemphasizedintheissubstantialevidencethatlearningaboutdemandJITliteraturethanwasreductioninwaste especiallybeforeundertakingproductionacts[as]asubstituteexcessinventory(.,Blackburn,1991;Hall,1983;forproductinventories,itisnotunderstoodwhattheMonden,1983;Schonberger,1982;Suri,1998;mosteffectivewayistoachievethatsubstitution. Suzaki,1987;Womacketal.,1990).WhereasJITIntheirstudy,implementationofanenterprise-wideisfocusedprimarilyonrepetitivemanufacturing,informationsystem hypothesizedtoimprovede-GoldrattandCox(1984)addressedleadtimereduc-mandchainperformance ledinsteadtoanincreasetioninabatch owenvironment,-fromoperationalinitiativessuchasleanproduction cationofacompetitivestrategybasedsolelyonthatresultedinleadtimereduction,thanfromdi-speed,referredtoas Time-BasedCompetition (.;rectinvestmentininformationsystemstoimproveBlackburn,1991;Holmstr m,1995;Schmenner,information ,recentexper-1988;Stalk,1988;StalkandHout,1990;Suri,1994,imentalworkcarriedoutattheHarvardBusiness1998).Schmenner(2001)proposedhis TheoryofSchool,againusingthebeergame,demonstratedthatSwift,EvenFlow, claimingthatcompaniesempha-reducingleadtimes evenwithnotransferofde-sizing ow whichimpliesafocusonspeedandonmandinformation loweredcostsubstantiallymorereductionofvariability -unchanged(McAfee,2003).tionhadbeenlargelyanecdotalandexploratory,HoppInsummary,literaturethataddressesthewilling-andSpearman(1996)compiledasetofthemathe-nesstotradeproductionandsupplychainef ciencymaticalprinciplesdeterminingleadtime basedonformarketmediationbegantoemergeinthe1980squeuingtheory whichtheyreferredtoas -physics. Suri(1994,1998)simultaneouslydevel-diationcompensatedfortheresultinglossesofpro-opedamanufacturingstrategy(alsobasedonqueuing
./JournalofOperationsManagement21(2004)613 6276193theory)-izedtherelationshipsofbottleneckutilization,,-the eldofqueuingtheoryformanydecades(Suriterminethemarketmediationabilityofagiven5etal.,1995),buttheworkbyHoppandSpearmancustomer manufacturerpairinademandchain:de-(1996)andSuri(1994,1998)representedthe rstmandinformationtransfer thedemandinformationcomprehensiveapplicationoftheseprinciplestothe(partialorfull) andrelativesupplyleadtime theAlthoughthesetofmathematicalprinciplesdriv-supplyleadtimerelativetothewindowoftimedur-ingleadtimereductionarecommonlyknownandac-ingwhichthecustomerhasinformation(partialorceptedamongresearchersinthe eldofoperationsfull),suchknowledgedoesnotappeartohavebeenwidelydisseminatedtopractitioners(Suri,1994,).Onereasonmaybethatthesemathematicalprinciplesarenotemphasizedinmuchoftheopera-Often,acustomerinacustomer ,Conventionalwisdomclaimsthatleadtimere-theavailabilityofinformationthatwouldfacilitateductionisnotpossibleinindustrieswithexpen-meaningfulforecastsofdemandincreasescontinu-siveequipment assumedtorequirehighcapacityouslyovertimeuntilthemomenttheexactdemandutilization likethepulpandpaperindustry,butsuchisknown().Attheotherextreme,(1995,),forexample,hasresearched exibility(closely(.,anarchitect splanforanapartmentbuildingwithrelatedtorelativeleadtimeandmarketmediation27unitsiscompleted,indicatingtheneedfor27par-capabilities)inthepulpandpaperindustry,demon-ticularrefrigerators).Or,,,ratherthanreductionareaxiomaticandleadtospeci candcontendwithdemandinformationthatrevealsitselfconcreteinstructionsconcerninghowtogoaboutre-slowlyandcontinuouslyovertime,(1994,1998)demonstratedem-availabilityofdemandinformationatthreeperiodsofpirically,however,,beforeT,observationsareei-0thesemathematicalrelationships,,partial01 ,concerningsuchAttimeT,,mayhaveOfcourse,astheSyncraSystemssurveypreviouslymentionedsovividlydemonstrates,,,wede-4Thereare,however,casesinwhichmanufacturersarelimitedin .(1999),forexample,presentedanexampleofapharmaceutical rmlimitedinitsability5toreduceleadtimesbecausetheFederalDrugAdministrationThiscustomer manufacturerpaircanbelocatedanywhereinapprovalsspeci .
./JournalofOperationsManagement21(2004)613 :(a)fulldemandinformationtransfer,(b),and(c)node-Wede ,orderbatching,orFulldemandinformationtransferisanantecedenttopricepromotionsthatincreasethebullwhipeffect,.
./JournalofOperationsManagement21(2004)613 627621(FrohlichandWestbrook,2002).,contexts,,forexample,-ToyotaMotorManufacturing sGeorgetownplant,indownperiod,however, selectronicsignaltotheseatsuppliersothattheseatthatERPsystemfairlyeasily,butBMWhasfoundthathasbeencustomizedforthatparticularautomobilecantransferringandanalyzingpartiallyobserveddemandbemanufacturedanddeliveredtotheToyotaassem-dataismuchmoredif cult;hence,thecompanyisex-blylinebythetimetheautomobilereachesthepointperimentingwiththeuseofKalman lterstoincreaseintheassemblyprocesswheretheseatisinstalleditsabilitytousepartialdemandinformation(H ttmeir(Mishina,1993).andPrenninger,inpreparation).-Partialdemandinformationtransferrepresentsantomerandcompanyanalystshaveaboutfuturedemandefforttotransferearlyobservationsofdemand,or(Fisheretal.,1994;HammondandRaman,1996).informationthatimprovestheaccuracyofdemandforecasting, ,relayingPOSWhereasfulldemandinformationusuallyiswellde-datatoamanufacturermayrepresentpartialdemand ned(.,speci cquantitiesofspeci cproducts),informationtransferbecausesuchhistoricaldemandpartialdemandinformationoftenisencapsulatedininformationmayaidinestimatingdemandinthenearimpressions,forecasts,: ,,,andandforecastingwiththatofamanufacturer,asoccursthusthebene tsoftransferringinformationatallisincollaborativeplanning,forecasting,,itisnotsurprisingthatthesupplyment(CPFR).Aswillbediscussedlater,whetherthechainliterature,aswellasobservationsofpractice,primaryemphasisisonthetransferoffull,orpartial,indicatesthattransferringpartialdemandinformationinformationwilldependonthatmanufacturer , (2002)demonstratedthatconstructsdescrib-primaryissuesinvolvedintransferringsuchpartialingthestrengthoftherelationshipbetweencustomerinformation:(a)turninghistoricaldata or,arguablyandmanufacturer(.,duration,trust,andpercep-moredif cult,thevague,unquanti edimpressionstionsofsupport)neededtobeaddedtoproductde-thatthecustomerhasaboutfuturedemand intous-mandcharacteristicsindeterminingwhetherademandableinformation;and(b) (.,Mentzeretal.,2001),-phisticatedtechniquesthatFisheretal.(2000)referredshipissueisthefactthatleadershipwithinademandtothemas rocketscienceretailing. BMWprovideschainentailsthattheleaderislikelytobephysically
./JournalofOperationsManagement21(2004)613 627distant,asituationgenerallybelievedtonegativelyduringwhichactualdemandinformationisobserv-moderatetherelationshipbetweenleaderbehaviorablebythecustomer(-isactuallycollectedandtransferredtothemanufac-tive,however,ifcorrectlyenacted(Antonakisandturer),,Atwater,2002).Thetopicofleadershipisbeyondtheforeaseofexposition,wewillfollowthethreetimescopeofthispaper,,andwede nethreelevelsofrelativeuseofpartialdemandinformationrequiresappropri-supplyleadtime(RSLT):(a)fullyobserveddemand,ateleadership whichbecomesmorechallengingto(b)partiallyobserveddemand,and(c)noobservedprovidewithdistance ,amanufacturerwithanab-partialdemandinformationtransferplacesimportantsolutesupplyleadtimeof20dayswouldbeatafullydemandsonthecustomer ,-anoobserveddemandRSLTifthe rstinforma-mationismoredif cultiesinbuildingtheneededcustomer ,-schedulingoradjustingproductiontore ,afullyobservedofactualdemand(asexempli edinthebeergame).-timeduringwhichthecustomerisabletoobservefulllatedtotheupstreamampli cationofdemandvari-demand,butisstillshortenoughtopermitproductionability(.,thebullwhipeffect).,,supplylead6time thatis,-forthecustomer ismeasuredrelativetotheperiod67Ouruseoftheterm leadtime differsfromthestandarduseThisignoresthetimeitwouldtakethebuyertoactuallyintheliterature;itoftenmeans orderleadtime ,chainmanagementliteratureand manufacturingleadtime .
./JournalofOperationsManagement21(2004)613 627623tionsofdemandcanbeevenpartiallyobserved,,causingproductiontobeginbe-foredemandisobserved,attemptsatmarketmediationareexpectedtoresultinaplanningloopeffect(StalkandHout,1990;Suri,1998).Insuchacase,whendemandisobservedsubsequenttothetimeproduc-tionhasbegun,-allydesiredbythecustomer,whilealso ,,causingtheproductionmanagementtostartquotinglongerleadtimes,,collaborativemechanismssuchasCPFRthatpositivelyrelatedtotransactionuncertaintyduetotheintegratecustomers andmanufacturers -empli edbysystemsinwhichthetransferofinfor-ThediscussionaboveimpliesthatdifferentRSLTmationsupportsef cientmanufactureandsupplyofcapabilities,coupledwithdifferentamountsofde-theproduct,suchasvendor-managedinventorysys-mandinformationtransfer,dictatedifferentlevelsoftemsaspracticedbyBarilla(Hammond,1994),ortheadvisablemarketmediation,:JITproductiontechniqueoffreezingtheproduction(a)nomarketmediation,(b)partialmarketmediation,scheduletoreduceprocessvariability,explicitlytrad-and(c)(.,Chaseetal.,2001).,wepropose,realizehigherperformanceWhenthemanufacturingpartofachainhasaccessbyavoidingallattemptstoadjustproductiontode-toatleastsomemeaningfulinformationconcerningmand,focusinginsteadonsupplyintegration(Frohlichdemand,andwhenitssupplyleadtimespermititandWestbrook,2002),withsupply/demandimbal-torespondtosuchinformation, ectchainsinregionIeventhoughmanyofthesehaveei-newinformationconcerningdemand,,,,shortleadtimeswho ndfullmarketmediationad-foramanufacturerwithapartiallyobserveddemandvisable(.,who ndfullresponsivenesstobemore
./JournalofOperationsManagement21(2004)613 627bene cialthanachievinggreaterproductionef cien-thanthosebeginningwithimprovementsindemandcies),-taneously?Althoughsuch parallelprocessing cienttodemandchainpartners,,inthepresenceoflonglead(2003)refertoasan agilepipelinestrategy ,inthattimes,ittypicallyismoredif ,becauseitismoredif culttodemonstratethemutualbene ,ifthegoalofthedemandchainisfullmarketmediation,-handcornerofThecasesevaluatedbyHeikkil (2002):shouldthis rm s (implyingthattheprojectbeginsbymonthsto10dayscarriedoutbyNokiabroughtoneofimprovinginformationtransfer),horizontal(),orInthiscase,bene tsofdemandinformationtransferdiagonal(implyingbothimprovementeffortssimulta-wereobvioustothecustomer,andimprovingthede-neously)?(alternatingimprovementefforts),orshouldother vecases,theleadtimereductionallowedpro-achaincompletemovementeitherhorizontallyorductiontoincorporateobserveddemandinformationverticallybeforemovingintheorthogonaldirection?partially, demonstratedthatWeproposethatitisbettertobegintheprojectwithimprovingdemandinformationtransferinthesecasesasmuchleadtimereductionaspossible,attemptingtorequiredastrongrelationshipbetweencustomerandimprovethetransferofdemandinformationonlyaf-manufacturer, tsofdemandinformationreductioneffortsinvolvethemanufactureronly,:basedonmathematicallawsthatarewellunderstood,(.,Suri,1998).ratherthanattemptingtoimprovebothrelativeleadOntheotherhand,aswehavearguedabove,informa-timeandinformationtransfersimultaneouslyispos-tiontransferrequiresthedevelopmentoftrustbetweenitivelyrelatedtoreductionindemandchaintransac-channelpartners,whichinmanyindustriescanrequiretionuncertainty().
./JournalofOperationsManagement21(2004)613 ,-andpaperproducerthathadfailedtoimprovetheper-ginwitheffortstoimproveinformation ow,recognizeformanceofitsdemandchain,revertingtoaseriesthatlittleimprovementwastakingplace,andrevertoflocalsupplychainsmakingnoefforttoengageintoleadtimereduction,, srelativesupplyleadtimeswereata(a)Notallsupplychainsfacesuf cientdemandnoobserveddemandlevel;therefore,aswehavepro-variabilitytowarrantinvestmentindemandinte-posed,anyeffortstoimproveinformation -(b)Forchainsfacingsuf -warranttheconsiderableeffortsrequiredformar-plishedthroughapplyingfactoryphysicsandQuickketmediation,theappropriatelevelofdemandin-ResponseManufacturingprinciplestoexistingopera-formationtransfertoaimfordependsontheRSLTtionsorthroughdedicatingfastand .(c),relationshipconstructssuchasintroducethearticle,anotherNordicpulpandpapertrustandrelationshipdurationareantecedentsofproducermadeasimilarefforttoincreasemarketme-successfuldemandinformationtransfer(Heikkil ,diationinthesupplychain(.,becomeademand2002),andtransformingthetransferreddemandchain).(1995,1997),thesecondcompany(d)Manufacturerswithsuf cientlyshortleadtimesworkedtoreducetheproductioncyclefromapproxi-shouldconcentratetheireffortswiththeircusto-mately4weeksto1week,,butthatimprovementwasaccom-hinderedbylongerleadtimes(resultingfrom,forplishedwithoutmajordif -example,highcapacityutilization)(e)Finally,ingeneral,,-vicelevelshaveimproved,ashaspro sobservation(1945,)thatreducedcycleinpaperproductionhasfacilitateda Nothingisaspracticalasagoodtheory. Ourgoalhigh andimproving eld(Bacharach,1989).companiesbelievethatreducingleadtimesisdif cultByrecognizingtheimportanceofcontextindemand
./JournalofOperationsManagement21(2004)613 627chainresearch,wecanlearnmore,andwealsocanEllram,.,Cooper,.,,partnerships,-InternationalJournalofLogisticsManagement1(2),1 ,., ,M.,Raman,A.,(1),87 ,.,Raman,A.,McClelland,., areyouready?HarvardBusinessWearegratefultoJohnAntonakis,JussiHeikkil ,Review78(4),115 ,RajanSuri,andHannuWager,alsoFisher,.,Hammond,.,Obermeyer,.,Raman,A.,,RobertHand eld,theassociateeditor,BusinessReview72(3),83 ,whosecommentshaveForrester,J., ,.,Cox,J.,,Abernathy,.,Dunlop,.,Hammond,.,Weil,D.,-on-Hudson,,,S.,Steckel,J.,Banerji,A.,,J.,Atwater,L.,:areviewmakinginmarketingchannels:,673 ,sharedinformation,,.,:somecriteriaforIn:Rapoport,A.,Zwick,R.(Eds.),(4),496 ,Boston,,M., ,.,-Irwin,Homewood,SloanManagementReview40(4),35 ,.(Ed.),-BasedCompetition:TheNextHammond,.,(A).,case9-694-046,Cambridge,,,.,Raman,A.,,Ltd.(A).Blocher,.,Garrett,.,Schmenner,.,-695-022,Cambridge,:takingone eld,.,(4),357 ,.,Powell,.,Pyke,.,(3),289 ,.,,OperationalResearch92(2),239 ,.,Aquilano,.,Jacobs,.,-Hayes,.,Wheelwright,.,Clark,.,,-HillManufacturing:,,,T.,Dooley,K.,Rungtusanatham,M.,:Heikkil ,J.,:supplynetworksandcomplexadaptivesystems:controlversusef (3),351 Management20(6),747 m,J., ciency astatisticalenquiryCroson,R.,Donahue,K.,(5),74 (3),185 ,R.,Donahue,K.,,.,Spearman,.,,supplychainmanagement:(1),1 ,.,,J.,Disney,.,Lambrecht,.,Towill,.,(1),22 : ttmeir,A.,Prenninger,(3),727 ,,.,:theindustrialLambert,.,Cooper,.,Pagh,.,:(1),13 (2),1 19.
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