Center For Digital Strategies

Supply Chain Management: Technology, Globalization, and Policy at a Crossroads

M. Eric Johnson
Interfaces, Volume 36, 2006

The forces of globalization and technology are changing supply chains. In many cases, the supply chains are literally disintegrating. Product designers, marketers, and manufacturers that were previously housed in a single facility are now spread over several continents in organizations with different cultures, languages, and business objectives. For example, not long ago, apparel firms, such as Levi Strauss and Company, did it all—operating their own US production plants along with their core design and marketing activities. In the past few years, that has changed. 

Paper in PDF Format (46K)

Topics: Manufacturing, Marketing, Product Development, Risk, Supply Chain

Information Security in the Extended Enterprise

Scott Dynes

M. Eric Johnson, Hans Brechbühl
Field Study, 2005

What are the main drivers of private-section investment in information security? How exposed are firms to cyber risks arising from their reliance on the information infrastructure? Initial results are presented from a field study of a manufacturing company and four of its suppliers of different sizes. We find that many managers believe: that information security is less a competitive advantage than a qualifier for doing business; that firms’ internal networks are not at additional risk as a result of using the information infrastructure to integrate their supply chains; and that their supply chains are robust to internet outages of up to a week in duration. We discuss their security perceptions and actions in the context of a cost model.

Paper in PDF Format (253K)

Topics: Information Security, Manufacturing, Risk

Static and Dynamic Pricing of Excess Capacity in a Make-to-Order Environment

David Pyke, Praveen K. Kopalle, Joseph M. Hall
CDS Working Paper Series 2003-2

The interactions between pricing and production/supply chain performance are not well understood. Can a firm benefit from knowing the status of the supply chain or production facility when making pricing decisions? How much can be gained if pricing decisions explicitly and optimally account for this status? This paper addresses these questions by examining a make-to-order manufacturer that serves two customer classes – core customers who pay a fixed negotiated price and are guaranteed job acceptance, and “fill-in” customers who make job submittal decisions based on the instantaneous price set by the firm for such orders. We examine four pricing policies that span a range of complexity and required knowledge about the status of the production system at the manufacturer, including the optimal policy of setting a different price for each possible state of the queue. We demonstrate properties of the optimal policy, and we illustrate numerically the financial gains a firm can achieve by following this policy vs. simpler pricing policies. The four policies we consider are (1) state-independent (static) pricing, (2) allowing fill-in orders only when the system is idle, (3) setting a uniform price up to a cut-off state, and (4) general state-dependent pricing. Although general state dependent pricing is optimal in this setting, we find that charging a uniform price up to a cut-off state performs quite well in many settings and presents an attractive trade-off between ease of implementation and profitability. Thus, a fairly simple heuristic policy may actually out-perform the optimal policy when costs of design and implementation are taken into account.

Paper in PDF Format (190K)

Topics: Knowledge Management, Manufacturing, Marketing, Process, Supply Chain

Postponement Strategies for Channel Derivatives

Emily Anderson

M. Eric Johnson
International Journal of Logistics Management, 11, 2000

The value of postponing product differentiation until final distribution for manufacturers who market a family of product derivatives through multiple channels is examined. A model is developed of a supply chain that distributes many short-lived products through different channels. Using the model, we find the postponement is particularly valuable for managing short-life products. Postponement increases distribution service levels while reducing costs and order fulfillment risk. Postponement is particularly valuable when there are many derivative products and forecast error is high. Trade-off curves are presented, that allow managers to evaluate the benefits of investing in postponement strategies.

Paper in PDF Format (89K)

Topics: Manufacturing, Operations, Strategy