Supply Chain Coordination Concepts

Vocabulary flashcards covering core concepts, obstacles, and collaboration mechanisms in supply chain coordination from Chopra Chapter 9.

Bullwhip measure

A measure of variance amplification calculated as: $\text{variance amplification} = \frac{\text{variance of upstream orders}}{\text{variance of final-customer demand}}$ over matching periods, where a value above $1$ indicates amplification.

Channel inventory change

Absent returns or shrinkage, the change in channel inventory defined as sell-in minus final-customer sell-through.

Total performance

The goal of supply-chain coordination to increase total supply-chain surplus, noting that internal transfer prices redistribute profit but do not create total surplus by themselves.

Shortage allocation

The practice of distributing supply when demand exceeds availability; allocation based only on current orders can reward order inflation, whereas historical sell-through or turn-and-earn rules reduce gaming.

Continuous Replenishment Program (CRP)

A supply chain initiative that supports continuous replenishment of product inventory.

Vendor Managed Inventory (VMI)

An arrangement that transfers replenishment decision rights to the supplier within agreed limits.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

A business practice where supply-chain partners jointly coordinate plans, forecasts, execution, and exceptions.

Blockchain

A decentralized, verifiable, tamper-evident digital ledger that can improve multi-party traceability and coordination across a supply chain.

Supply-chain coordination

A condition achieved when each stage's actions support the maximization of total supply-chain surplus.

Bullwhip effect

A supply chain phenomenon where order variability becomes progressively larger as one moves upstream from final customers.

Incentive obstacle

A coordination obstacle that occurs when incentives at different stages or functions are locally focused, such as rewarding sales representatives based on sell-in rather than end-customer sales.

Information-processing obstacle

A coordination obstacle caused by distorted or unshared demand signals, such as forecasting using upstream orders rather than point-of-sale (POS) data.

Pricing obstacle

A coordination obstacle created when pricing policies, such as temporary wholesale discounts, induce lot sizing and forward buying.

Operational obstacle

A coordination obstacle resulting from operational choices, such as large minimum order quantities or long replenishment lead times.

Behavioral obstacle

A coordination obstacle rooted in organizational problems, such as mutual blame, lack of trust, and limited joint learning following forecast errors.

Forward buying

The practice of purchasing extra inventory during temporary wholesale price discounts, which shifts order timing into large spikes followed by troughs without increasing actual consumer consumption.

Rationing-and-shortage gaming

Strategic order inflation by buyers during a product shortage when supply is allocated proportionally to current order sizes.

Retail-event collaboration

A CPFR scenario where trading partners jointly plan specific promotional events, estimate sales lift, and align inventory and replenishment.

Distribution-center replenishment collaboration

A CPFR scenario focusing on coordinating demand forecasts and replenishment schedules directly into regional distribution centers.

Store-replenishment collaboration

A CPFR scenario that uses daily POS sales, store-level inventory, shelf capacity, and display plans to determine store replenishment needs.

Collaborative assortment planning

A CPFR scenario where supply-chain partners jointly analyze shopper preferences, demographics, shelf space, and profitability to determine store cluster product offerings.