BUS606: Operations and Supply Chain Management

Identifying the effect of operational information It is a key issue to make sure what the accurate information that should be exchanged is when coordination took place. The implementation of information sharing among enterprises needs cost. Tradeoff must be made between cost and obtained benefit. To do this, the effect of operational information must be identified.

The object of information exchange among enterprises is to acquire balance and stabilization of supply chain. From the view of system control, a stable system can be defined like this: a real system in a state of balance could go back to this state after a self-adjust course when it is influenced by external force. Otherwise it is not stable. The balance state of a supply chain is a state in which downstream and upstream enterprises join tightness, production process is persistent, requirements can be fulfilled in time, and the indexes of supply chain performance are fixed in a certain time. This state could be denoted by such indexes as cost of inventory, fulfillment rate of order, and lead time, et al. Combining qualitative analysis and quantitative research is useful to identifying the effect of operational information.

Compartmentalization of operational information coordination

Operational information coordination can be compartmentalized in three ways. Firstly, operational information coordination in supply chain experiences in ternal coordination and external coordination. Enterprises (especially the manufacturer) should implement internal coordination first. Internal coordination aims to send accurate information in exact form to people who need them for production and management at the right time. Then the supply chain arrives at a new level, and a new instability point would take place. In this point, different modes of information exchange between this enterprise and the others in the supply chain might lead the system to various states, presenting inventory cost high or low, response to customer quickly or slowly. To select one of them, supply chain system needs extra information, which provided by other partners.

Secondly, operational information coordination can be compartmentalized according to the span and the depth of information flow. Monolayer information flow is between retailer and distributor, or between distributor and manufacturer, or between manufacturer and supplier. Multilayer in formation flow enables an y enterprises getting the information as needed (refer Fig. 1).

Figure 1. Span of information flow

Figure 2. Depth of information flow

The depth of information flow refers to the vertical dimensions in which different information are exchanged (refer Fig. 2). It may consist:

• Information communication. This is the original state of information exchange in supply chain among enterprises. The content of exchanged information is none but order to enable the production activity developed to fulfill demands of customer.
  

• Information coordination and cooperation. In a volatile market place, competitive advantage needs to be gained from a seamless supply chain. Coordination and cooperation in general have a common goal: to create a transparent, visible information flow through the entire supply chain. So, much more information (e.g. inventory information, lead time information and forecast information) should be shared besides order to acquire mutual benefit, save money and coat, and improve the efficient of operation.
• Information collaboration. With the increasing of uncertainty, supply chain collaboration has been strongly advocated since the mid 1990's under the banner of concepts such as VMI, CPFR, and Continuous Replenishment (CR). Collaboration is the process of shared creation: two or more individuals with complementary skills interacting to create a shared understanding that none had previously possessed or could have come to on their own. Collaboration creates a shared meaning about a process, a product, or an event. In this sense, there is nothing routine about it. Something is there that wasn’t there before. Information collaboration drives at knowledge creation in supply chain. When collaboration, enterprises in supply chain use information to create something new: new perspectives and new products.