An Overview of the Supply Chain

Special Seminar in Operations Management:Supply Chain Strategy

15.795Spring 2000

Term Project for:

Prof. Charlie Fine

Catherine Tedesco5/11/00

This paper can be posted on the course website and used, in whole or in part, in future publications.

An Overview of the Supply Chain

AbstractThis paper presents a model of the supply chain and discusses issues critical to each stage. The ‘what, why, and how’ of each element of the supply chain is examined.1 The discussion is based on a synthesis of books and articles, each of which has examined some portion or portions of the 1 What is it?, Why is it important?, How can it be accomplished?

supply chain. While these references all have different perspectives, few of the concepts introduced in them are mutually exclusive.

Introduction

Managing the supply chain consists of “managing all the different processes and

activities that produce value in the hands of the ultimate customer.”2 Managing these processes

and activities is of increasing importance due to three key system changes during the past

decade. First, today’s global economy is fostering a far greater degree of national and

international competition than ever before. Second, today’s businesses realize that they need to

examine total costs in the design of their procuring, manufacturing, and distribution systems.3

Finally, most companies are not vertically integrated in their entirety. This makes their search

for a quality network of upstream and downstream partner companies vital4, not only for their

organization to continue to function but in order for them to maintain control of their channel

and their profit margins.

This paper presents a model of the supply chain, and examines issues critical to each

stage. For the purposes of this discussion, the supply chain will be broken down into the

following generic stages:1. Design2. Sourcing3. First Stage Inventory4. Manufacturing

5. Distribution and Finished Goods Inventory

The interaction between these stages is illustrated in figure 1. The ‘information cloud’

represents all of the potential exchanges of information that could take place.

Figure 1: The Generic Supply Chain

2 Lummus, et al, “Strategic Supply Chain Planning”, Production and Inventory Management Journal, 3, 1998 pg. 493 Ibid.4 Fine, Charles H., Clockspeed: Winning Industry Control in the Age of Temporary Advantage, Perseus Books, MA, 1998, pg. 71

2

Product Design for the Supply Chain

Product design is the first step in the supply chain. Although no construction material

flows from this step, product design sets the framework within which the remainder of the

supply chain must function. Product design transforms customer needs and corporate strategy,

and synthesizes a solution. This solution can come in many forms, and designs can emphasize

improvements in a variety of different metrics (design for manufacturing, design for cost, etc.).

One version of design for X (DFX) is design for supply chain.

A critical example of the interface between product design and the supply chain is the

concept of postponement. Postponement is the idea that products can be designed to add

differentiating features late in production, or even distribution.5 The most extreme example of

this is a product that is designed to meet several need sets where the final differentiation is done

by the end user. An example of this would be the multi-colored cellular phone faces that the

consumer selects and installs at the point of sale.

In order for postponement to work effectively a product needs to have a modular product

design, a modular process design, and an agile supply network.6 A modular product design is

the first step towards mass customization (the customization of products for mass markets such

as cellular phones, printers, or computers). By designing products to be built in a series of

assemblies and subassemblies, engineers give businesses the opportunity to build components in

different locations, increase the number of standard components (within a product or across

product lines), and isolate potential quality problems.7 By disconnecting manufacturing links,

modular design not only enables mass customization of products, it also gives companies the

opportunity to focus their design and manufacturing efforts on strategically important areas

while subcontracting less critical components.8 This process is self-reinforcing and, when

5 Lee, et al, “Getting Ahead of Your Competition Through Design for Mass Customization”, Target, Volume 13, Number 2, April/May 1997, pg. 96 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 1177 Ibid.8 Narasimhan, Ram and Das, Ajay, “Manufacturing Agility and Supply Chain Management Practices”, Production and Inventory Management Journal, 1, 1999 pg. 4

3

applied correctly, can lead to shorter product design cycles and superior products. The

reinforcing loop is illustrated in figure 2.

A modular process design is one that enables different steps in a process to be completed

independent of the elapsed time between them as well as their respective locations. A good

example of a modular process is the customized paint colors that are now available in hardware

stores. By separating the manufacture of the paint from the mixing of the pigment, paint

manufacturers have not only reduced paint inventories but have added value for the customer by

ensuring that they can obtain their exact color.9

9 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 119

4

Figure 2: The Reinforcing Loop of Modular Design

An agile supply network supported by modular product and process design is the final

link in the postponement chain. By redefining distribution centers and customer sites to include

the final customization process (such as distribution center localization), relevant inventories can

be kept close the customers.10 This improves product availability without creating unsustainable

inventory levels.11 An agile supply network can also be exploited on a global basis to satisfy

local content rules, reduce or avoid tariffs, and provide rapid customer service in locations far

removed from primary manufacturing sites.12 The ‘curse’ of increasing product variety that is

unavoidable in global markets (due to variations in language, power supplies, local tastes, etc.)

makes postponement a necessary capability for most modern corporations.13

10 Distribution center localization is a term for shipping generic products to local distribution centers where they are localized to meet country specific requirements (such as power supplies)Lee, Hau, “Effective Inventory and Service Management Through Product and Process Redesign”, Operations Research, 44, 1, 1996, pg. 15711 Lee, Hau, “Design for Supply Chain Management: Concepts and Examples”, Perspectives in Operations Management: Essays in Honor of Elwood S. Buffa, Edited by Rakesh K. Sarin, Kluwer Academic Publishers, MA, 1993, pg. 4812 Feitzinger, Edward and Lee, Hau, “Mass Customization at Hewlett-Packard: The Power of Postponement”, Harvard Business Review, January/February 1997, pg. 12013 Billington, Corey and Lee, Hau, “Designing Products and Processes for Postponement”, Management of Design: Engineering and Management Perspectives, Edited by Sriram Dasu and Charles Eastman, Kluwer Academic

IncorporateModules

into Design

ConcentrateResources

on StrategicComponents

SubcontractNon-StrategicComponents to

SpecialistFirms

PositiveCustomerFeedback

andIncreased

Sales

ImproveDifferentiating DesignFeatures and ReduceProduct Development

Cycle Time

ReduceManufacturing Costs,Improve Quality, and

Reduce ProductDevelopment Cycle

Time

+

+

+

+

+

+

CompetitiveEnvironment

ExertsPressure to

Improve

+

+

5

Sourcing

As fewer companies remain vertically integrated, sourcing becomes of greater

importance. Not only are more companies outsourcing, but most of them are also acting to

reduce the number of suppliers they deal with. This increased reliance on outsourcing from an

‘exclusive’ vendor base highlights the importance for companies to “manage the entire network

of supply to optimize overall performance”.14 Faced with this daunting task some companies

choose to outsource their interactions with the supplier network.

A third party integrator can be used to “take over all planning, acquisition, receiving,

storage, management, and distribution” tasks related to some or all input components and

materials.15 Proponents of this method suggest benefits such as elimination of holding costs,

lower ordering costs, no inventory management, and better service levels by vendors.16 While it

is possible that such arrangements could be beneficial when applied selectively to commodity

components such as fasteners and cable, it is unlikely that these arrangements will be beneficial

when applied more broadly to custom or strategically important components for two primary

reasons. First, these cost reductions are probably superficial, since it is reasonable to believe that

these third parties will be passing on any costs that they experience in their fee for providing the

service. Second, it is difficult to believe that vendors would be able to serve their customers

better through a middleman. The more likely outcomes of such a system are long term cost

increases and increasing dependence for sourcing knowledge on the third party. This is likely to

lead to less flexibility and long run uncompetitiveness. This reinforcing loop is illustrated in

figure 3.

Publishers, MA, 1994, pg. 10614 Lummus, et al, “Strategic Supply Chain Planning”, Production and Inventory Management Journal, 3, 1998 pg. 4915 Lawrence, F. Barry and Varma, Anoop, “Integrated Supply: Supply Chain Management in Materials Management and Procurement”, Production and Inventory Management Journal, 2, 1999, pg. 216 Lawrence, F. Barry and Varma, Anoop, “Integrated Supply: Supply Chain Management in Materials Management and Procurement”, Production and Inventory Management Journal, 2, 1999, pg. 3

6

Figure 3: The Reinforcing Loop of Integrated Supply17

Other important issues in the sourcing arena that have come into their own in the past

decade center around the opportunities provided by global sourcing. Global sourcing can result

in significant cost reductions and new business opportunities, but can also have an adverse effect

on the agility of the supply chain as it introduces longer lead times with greater variability. One

study showed that while only 10.4% of local suppliers had turnaround times greater than one

month, 54.7% of overseas suppliers had turnaround times of this magnitude.18 Some issues that

need to be considered when pursuing a global sourcing model are listed in table 1.1. Duties and Tariffs∑ Material inputs∑ Intermediate products∑ Finished goods

2. Human Resources Management∑ Cultural differences∑ Language Differences∑ Skill Differences

3. Currency Exchange Rates∑ Fluctuate randomly

4. Control of Operations∑ Centralized control can be difficult in a

multinational environment5. Corporate Tax Rates∑ Vary significantly between countries

6. Product Designs∑ Vary by national markets (especially for consumer

17 Inspired by Fine, Charles H., Clockspeed: Winning Industry Control in the Age of Temporary Advantage, Perseus Books, MA, 1998, pg. 16318 Kwan, Albert, “The Use of Information Technology to Enhance Supply Chain Management in the Electronics and Chemical Industries”, Production and Inventory Management Journal, 3, 1999, pg. 11

Company Xoutsources

procurementCompany X'sprocurement

abilitydecreases

3rd party'sprocurement

abilityincreases

3rd party'sappeal as a

procurementexpert increases

Company X'sappeal as a

procurementexpert decreases

+

++

-

-+

As Company X becomes more dependant on the 3rd party,the 3rd party can extract greater surplus from Company X.

7

goods)7. Tradeoffs∑ Long lead times∑ Lower costs∑ Access to new technologies∑ Dependence on suppliers from some nations

8. Strategy and Quotas∑ Market penetration strategies∑ Local content rules∑ Counter trade∑ Quotas

Table 1: Issues Introduced by Global Sourcing19

Modeling can be an extremely useful way to analyze these tradeoffs. However it usually cannot

incorporate all of the relevant issues, therefore judgement related to issues that are not

incorporated in the model is essential. Both Hewlett-Packard and IBM have successfully used

modeling to refine their global supply chains.20

First Stage Inventory Reduction

Inventory consists of three main categories: input material (sometimes called raw

materials), work in process, and finished goods (including that which is tied up in the

distribution channel). For the purposes of this discussion the term ‘first stage inventory’ will

refer to the first two categories. Inventory generally exemplifies waste. Large inventories, even

in isolated sections of a supply chain, are symptomatic of a malfunctioning process. Effective

inventory management not only reduces holding costs (including obsolescence), but can also

improve customer service.21 In their paper on Managing Supply Chain Inventory, Billington and

Lee identify the pitfalls and opportunities outlined in table 2.

19 Cohen, Morris and Lee, Hau, “Resource Deployment Analysis of Global Manufacturing and Distribution Networks”, Journal of Manufacturing and Operations Management, 2, 1989, pg. 8320 Flaherty, M. Therese, Global Operations Management, McGraw-Hill, NY, 1996, pg. 30321 Billington, Corey and Lee, Hau, “Managing Supply Chain Inventory: Pitfalls and Opportunities”, Sloan Management Review, Spring, 1992 pg. 65

8

Pitfalls1. No supply chain metrics2. Inadequate definition of customer service3. Inaccurate delivery status data4. Inefficient information systems5. Ignoring the impact of uncertainties6. Simplistic inventory stocking policies7. Discrimination against internal customers8. Poor Coordination9. Incomplete shipment methods analysis10. Incorrect assessment of inventory costs11. Organizational barriers12. Product-process design without supply chain consideration13. Separation of supply chain design from operational decisions

14. Incomplete supply chain

Opportunities1. Design for supply chain management2. Integrate databases throughout the supply

chain3. Integrate control and planning support

systems4. Redesign organizational incentives5. Institute supply chain performance

measurement

6. Expand view of supply chain

Table 2: Pitfalls and Opportunities in Managing Supply Chain Inventory22

An example from a major U.S. shipyard illustrates many of the pitfalls identified by

Billington and Lee. The shipyard’s steel assembly area was unable to complete significant

numbers of hull modules (blocks on the order of 100 tons) due to missing parts, despite

significant raw material inventories and work in process inventories in the sub assembly area.

The problem stemmed from a combination of sources including a lack of specific raw materials

as well as a disconnect between the master planning system and the shop planning system. This

disconnect caused unneeded parts to be scheduled ahead of critical missing parts. As the

manufacturing operations fell further and further behind, raw material continued to be delivered

and parts continued to be cut in accordance with the original schedule (leaving critical missing

parts unmanufactured). The assembly areas ran out of space and began shipping incomplete

modules to later stages of construction as well as building blocks on top of one another.

22 Billington, Corey and Lee, Hau, “Managing Supply Chain Inventory: Pitfalls and Opportunities”, Sloan Management Review, Spring, 1992 pg. 71-72

9

After overriding shop planning systems and creating a basic ‘pencil and paper’ pull

system based on the final erection schedule, the shipyard was finally able to regain control of

their process. After the five-foot high stacks of plating were finally reduced to their normal

height of about three inches, senior management was able to integrate control and planning

support systems (opportunity #3) as well as redesign organizational incentives (opportunity #4)

to ensure that these problems would not reoccur.

Manufacturing Efficiency

Integrating manufacturing into an agile supply chain has always been a difficult problem.

Manufacturing has traditionally been at odds with both procurement (for procuring shoddy or

late input materials) and with sales and marketing (due to manufacturing’s inability to satisfy

customer needs).23 Manufacturing has therefore typically been considered inflexible at best. In

a global economy inflexibility is no longer an option. As a result more firms are looking at

reducing cycle time, reducing change over time (between parts), and creating manufacturing

systems with an optimal lot size of one. By working out just-in-time (JIT) delivery

arrangements with suppliers, ‘pull’ systems on the manufacturing floor, and ‘make-to-order’

production schedules, companies can not only reduce inventories but reduce the time from order

to delivery dramatically.

In some cases the choices that manufacturing management needs to make to accomplish

these objectives may seem counterintuitive. For example in highly variable or low volume

environments, relying on humans to do a task rather than robotics can be more cost effective

because of reduced changeover times, even though a robot can perform the specific task more

quickly. In others, such as production of instrument cluster face plates at Denso24, switching

from a die system to a ‘slower’ laser cutting system is actually more cost effective due to

significantly reduced switchover times. With 100 – 200 switchovers per day the switchover is

23 Porteus, Evan L. and Whang, Seungjin, “On Manufacturing/Marketing Incentives”, Management Science, 3, 9, 1991, pg. 116624 An automotive component supplier

10

far more important than the actual production time.25 The goal for manufacturing should not be

producing products at the lowest manufacturing cost. Companies need to look at total cost

throughout the supply chain when making manufacturing decisions.26

Distribution Improvements and Finished Goods Inventory Reduction

Finished goods inventories and distribution can be a major challenge for most

manufacturers who do not build to order and have customers who take delivery at the

manufacturer’s facility. Challenges associated with inventory management of finished goods are

most evident in spare parts and service organizations. IBM’s National Service Division (NSD)

exemplifies the difficulties in this aspect of supply chain management. IBM’s customers are

geographically dispersed and expect an extremely high level of service.27 The NSD inventory

planning system controls upwards of 200,000 part numbers in order to support 1,000 IBM

products. In 1989 their distribution and warehousing network housed billions of dollars in

inventory and consisted of: Two central warehouses 21 field distribution centers (regional distribution centers) 64 parts stations (service branch offices)

15,000 outside locations (customer sites, service personnel’s tool kits, etc.)28

By introducing a planning and operational control system called Optimizer, IBM was able to

reduce their inventory stocking levels by 20 to 25% while improving customer service.29 IBM

has continued its work in the supply chain space throughout its organization with the

optimization, performance evaluation, and simulation tool referred to as the Asset Management

25 Martin, Mark, et al, “Design for Variety”, Product Variety Management: Research Advances, Edited by Teck-Hua Ho and Christopher S. Tang, Kluwer Academic Publishers, MA, 1999, pg. 10626 Cohen, Morris and Lee, Hau, “Manufacturing Strategy: Concepts and Methods”, The Management of Productivity and Technology in Manufacturing, Edited by Paul R. Kleindorfer, Plenum Publishing Corporation, NY, 1985, pg. 18427 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 6628 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 6829 Cohen, et al, “Optimizer: IBM’s Multi-Echelon Inventory System for Managing Service Logistics”, Interfaces, January-February, 1990, pg. 77

11

Tool (AMT).30 Due to the use of AMT in IBM’s Personal Systems Group (PSG), IBM has

saved approximately $750 million in material costs and price-protection expenses (paid to

business partners for lost value in inventory that they are holding).31 In another technology

company application in 1990, Hewlett-Packard began to use the Worldwide Inventory Network

Optimizer (WINO) to identify inventory that could be reduced throughout their supply chain.32

Distribution improvements can be of critical importance to customer satisfaction. The

basic philosophy that ‘a part is a part’ is unacceptable to customers when it is their part that is

missing. While acceptable levels of customer service might be obtainable simply by overloading

the supply chain with inventory this is hardly a viable solution, particularly when products are

subject to rapid depreciation (computers and other high tech devices).33 Many of the lessons

learned from Cohen and Lee’s examination of mainframe and automobile manufacturers spare

parts networks can be extrapolated for other products as well. A summary of these lessons

learned is as follows:

1. Network Stocking Policies∑ Low usage & expensive items should be stocked centrally∑ High usage & inexpensive items should be stocked locally∑ No location stocks all items, each item is stocked at relatively few locations

2. Implications for the Design of the Logistics System∑ Central distribution centers able to respond quickly to a wide range of orders∑ Distribution centers and warehouse with lower usage may be closed due to fixed costs∑ Local facilities should be stocked with a collection of high demand parts customized to

the location of the facility

3. Service Management∑ ‘a part is not a part’ – parts should be considered as individuals when predicting demand

30 Lin, Grace, et al, “Extended-Enterprise Supply-Chain Management at IBM Personal Systems Group and Other Divisions”, Interfaces, 30, 1, 2000, pg. 1031 Lin, Grace, et al, “Extended-Enterprise Supply-Chain Management at IBM Personal Systems Group and Other Divisions”, Interfaces, 30, 1, 2000, pg. 732 Billington, Corey and Lee, Hau, “The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard”, Interfaces, 25, 5, 1995 pg. 4733 Cohen, Morris and Lee, Hau, “Out of Touch with Customer Needs? Spare Parts and After Sales Service”, Sloan Management Review, Winter 1990, pg. 65

12

∑ Customer oriented service levels should be developed and measured∑ Service measurements should be applied to all participants in the supply chain

4. Data and Parameter Analysis

∑ Demand prediction should be based on objective measurement and calculations

5. Control System Implementation∑ Control systems must be tested thoroughly and integrated into the company’s IT

structure34

In addition to improvements in customer satisfaction and reductions in inventory costs

derived from optimal versions of conventional supply chains, technology will continue to

revolutionize the methods that are used to distribute products. In particular, it is reasonable to

expect that information based products (books, videos, music, etc.) will be distributed through

electronic rather than physical distribution channels. Technology improvements are also

reducing the number of distribution steps involved in the supply chain. The popularity of the

Internet increases the importance of various categories of direct marketing (B2C or B2B).

Middle men from ship brokers to retail stores are finding themselves cut out of transactions in

favor of a more direct approach. Direct interaction with the customer also enables companies to

develop a two-way interaction that helps them to learn customer preferences and develop

products and services accordingly.35

Information Dissemination

With the large number of diverse interactions throughout the supply chain it is easy to

argue that the most valuable step in the supply chain is not really a step at all, but is instead the

cloud of information which surrounds the flow of materials. When information flow is arranged

so that ordering and production decisions are based solely on the demand from the next step in

the supply chain, each player is likely to ‘gamble’ based on their own predictions of future

34 Cohen, Morris and Lee, Hau, “Out of Touch with Customer Needs? Spare Parts and After Sales Service”, Sloan Management Review, Winter 1990, pg. 6535 Simchi-Levi, David, et al, Designing and Managing the Supply Chain, McGraw-Hill, MA, 2000, pg. 214

13

demand. Such gambling introduces volatility and incorrect inventory levels into the chain. Such

volatility is often referred to as the ‘bullwhip’ effect. This observation states that demand

variability increases as you move further up in the supply chain.36 In their 1997 paper on the

bullwhip effect, Lee, Padmanabhan, and Whang, identified the four primary causes of the

bullwhip effect and suggested actions that could counteract these problems. Their suggestions

are presented in table 3. Although centralizing demand information (providing it to all

participants from a single source) will significantly reduce this variability, it will not rid the

supply chain of variability entirely.37 Compatible information technology (IT) is critical to

centralizing this information within a decentralized decision making framework (an important

feature in effective global operations).38

Causes of Bullwhip Information Sharing Channel Alignment Operational Efficiency

Demand Forecast Update

∑ Use point-of-sale (POS) data

∑ Electronic Data Interchange (EDI)

∑ Internet

∑ Vendor managed inventory (VMI)

∑ Discounts for information sharing

∑ Consumer direct

∑ Lead-time reduction

Order Batching ∑ EDI∑ Internet ordering∑ Computer assisted

ordering (CAO)

∑ Discount for truckload assortment

∑ Logistics outsourcing

∑ Reduction in fixed cost of ordering

∑ CAO

Price Fluctuations ∑ Continuous replenishment programs (CRP)

∑ Everyday low cost (EDLC)

∑ Everyday low price (EDLP)

∑ Activity-based costing (ABC)

Shortage Gaming ∑ Sharing sales, capacity, and inventory data

∑ Allocation based on past sales

Table 3: Causes and Solutions for the Bullwhip Effect39

Many manufacturers have adopted programs to reduce delivery times to their customers.

One representative program is Quick Response (QR) which has been adopted in the apparel

36 Lee, et al, “Information Distortion in a Supply Chain: The Bullwhip Effect”, Management Science, 43, 4, 1997, pg. 54637 Chen, et al, “Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information”, Management Science, 46, 3, 2000, pg. 44238 Lee, Hay and Billington, Corey, “Material Management in Decentralized Supply Chains”, Operations Research, 41, 5, 1993, pg. 83539 Lee, et al, “The Bullwhip Effect in Supply Chains”, Sloan Management Review, Spring, 1997, pg. 99

14

industry. This industry has typically been plagued by long lead times (5 to 8 months) that make

it difficult to accurately forecast demand and cost the industry about 25% of sales. By providing

a commitment to order from a given manufacturer, but being allowed more time to collect

demand data prior to fully specifying the order, retailers are able to reduce effective lead times

by one to four months. This provides a great benefit to retailers but models are inconclusive

regarding the impact on garment manufacturers.40

Conclusions

Information technology is critical to future improvements in supply chain networks.

Capturing the critical “moments of information” is essential to developing a successful supply

chain. In addition, capturing these “moments” can enable the transition from a supply chain to a

demand chain (a supply chain focused around producing customized products specifically

requested by the customer).41 However, information technology improvements are not alone in

their ability to improve the supply chain, nor can these improvements reach their full potential

for improving the supply chain in isolation. Each stage of the supply chain from design to

distribution comes with its own unique issues and opportunities for improvement. Table 4

summarizes some of the concepts addressed in this paper.Section Key ConceptsDesign ∑ Design for supply chain

∑ Postponement∑ Modular design

Sourcing ∑ Integrated supply∑ Impact of global sourcing

First stage inventory ∑ Pitfalls and opportunities in inventory managementManufacturing ∑ Manufacturing tradeoffs to enable effective supply chain managementDistribution and finished goods inventory

∑ Improving product availability while reducing total inventory∑ Impact of technology change on distribution methods and finished goods

inventoryInformation ∑ Causes and solutions for the bullwhip effect

∑ Using information to improve the effectiveness of the supply chain

Table 4: Key Concepts Addressed in this Paper40 Bergen, Mark and Iyer, Ananth, “Quick Response in Manufacturer-Retailer Channels”, Management Science, 43, 4, 1997, pg. 56741 Lummus, Rhonda and Vokurka, Robert, “Managing the Demand Chain through Managing the Information Flow: Capturing “Moments of Information””, Production and Inventory Management Journal, 1, 1999, pg. 19

15

In order to meet the ultimate goal of placing products the customer wants when and where the

customer wants them42; each stage of the supply chain must be understood and designed to work

together.

42 Copacino, William, Magee, John, and Rosenfield, Donald, Modern Logistics Management: Integrating Marketing, Manufacturing, and Physical Distribution, John Wiley & Sons, NY, 1985, pg. 2

16