Title

Assessing Effect of Global Inventory Planning with Enterprise-wide Information for a Large Manufacturer

Department/School

Operations and Supply Chain Management

Date of this version

2015

Document Type

Article

Keywords

Inventory management; Supply chain; Simulation; Distribution network; Designed experiments; Analysis of variance; Enterprise information integration

Abstract

This paper studies how a global manufacturer with many subsidiaries can achieve enhanced business value for the organization by sharing information within its supply chain network. Specifically, the uncertainties in the demands from the downstream distribution center affect the inventory levels at the upstream distribution center under different inventory policies, considering the uncertain lead times and the given order fill rates. With a generic simulation model and real data, we evaluate the magnitude of savings in inventory under the new inventory policy where information can be shared among subsidiaries, compared to the status quo where subsidiaries run independently with no information sharing. The results show that average inventory level at the upstream DC under the new policy would be reduced by approximately 3%. Considering the given manufacturer's global supply chain distribution network holds about $4 billion in average inventory, the 3% improvement is a very significant savings.

Published in

Journal of Manufacturing Systems

Citation/Other Information

34, 34-42