Simultaneous configuration of platform products and manufacturing supply chains: Comparative investigation into impacts of different supply chain coordination schemes

Abstract

It is widely acknowledged that effective supply chain management calls for coordination among the various chain members. This article studies the impacts of different supply chain coordination schemes on the optimal decisions of simultaneous configuration of platform products and their supply chain, as well as the supply chain performance. Three possible coordination scenarios of a supply chain consisting of one manufacturer and multiple suppliers are examined. In scenario non-interactive supplier, the manufacturer optimises its own costs and imposes the resulting policy to the suppliers without any question. In scenario non-cooperative supplier, each level of the chain is optimising a local pay-off function in a decentralised way. In the third scenario cooperative supplier, both levels of the chain are assumed to cooperate in the sense that their common objective is to minimise the overall operational cost. This article addresses the above scenarios through a comprehensive industrial case. Experimental results show that the manufacturer would prefer a cooperative relationship with its suppliers. With a higher level of supply chain integration, the manufacturer could serve the market with higher product variety. Suppliers with higher flexibility would prefer to establish a more cooperative relationship with the manufacturer. The supply chain system becomes more effective under a higher level of supply chain integration. © 2010 Taylor & Francis.