<ul><li>On the Economies of Inventory Management within Globally Dispersed Value Chains – A Provisional Model toward the D...
<ul><li>the  alignment of  scale- and scope- with inventory pooling- and postponement  economies </li></ul><ul><li>an issu...
<ul><li>the  value chain is given and fixed </li></ul><ul><li>source and destination  markets  of products are set a prior...
<ul><li>Economies of inventory management,  being  composed of economies of postponement and pooling,  only  reflect to  i...
<ul><li>Index set of the presented demand pattern: </li></ul><ul><li>Safety stock, if required, is being placed close to d...
<ul><li>In scenario #2 inventory pooling happens as soon as possible along the value chain. Therefore, each I d  = {( j , ...
<ul><li>A Primary Use Case – Scenario 3 (pooling w/ postp., pure postp., postp. w/ pooling) </li></ul>© Andreas Rutsch, Ch...
<ul><li>there are  more economies of pooling than vice versa </li></ul><ul><li>slope of pure postponement  for this use ca...
<ul><li>this primary  use case aims to validate the initial point of a generic model </li></ul><ul><li>economies of invent...
<ul><li>Thank you for your attention. </li></ul>© Andreas Rutsch, Chemnitz University of Technology
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On the Economies of Inventory Management within Globally Dispersed Value Chains – A Provisional Model toward the Determination of Value-added Services

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On the Economies of Inventory Management within Globally Dispersed Value Chains – A Provisional Model toward the Determination of Value-added Services

  1. 1. <ul><li>On the Economies of Inventory Management within Globally Dispersed Value Chains – A Provisional Model toward the Determination of Value-added Services </li></ul><ul><ul><li>Andreas Rutsch, CUT, Department of Factory Planning and Factory Management </li></ul></ul>© Andreas Rutsch, Chemnitz University of Technology
  2. 2. <ul><li>the alignment of scale- and scope- with inventory pooling- and postponement economies </li></ul><ul><li>an issue of capability engineering concerning the provision of V alue- A dded S ervices VAS </li></ul><ul><li>the trade-off between transaction costs and the diversification of products and related VAS </li></ul><ul><li>the ability to increase total economic surplus creating the market gap for new business blueprints </li></ul><ul><li>… </li></ul><ul><li>… </li></ul><ul><li>… </li></ul><ul><li>Objectives </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  3. 3. <ul><li>the value chain is given and fixed </li></ul><ul><li>source and destination markets of products are set a priori and remain the same </li></ul><ul><li>expecting a single point of control </li></ul><ul><li>all product demands request the same VAS </li></ul><ul><li>a particular VAS is already present </li></ul><ul><li>distribution of demand per market is known </li></ul><ul><li>a rooted tree </li></ul><ul><li>transportation between echelons is always considered as full foad </li></ul><ul><li>no overall weight-increasing or overall weight-losing VAS </li></ul><ul><li>continuous replenishment </li></ul><ul><li>the value chain can be appropriately described by its inherent lead times </li></ul><ul><li>inventory stock savings resulting from the economies of inventory management are benchmarked against everything direct to shelf </li></ul><ul><li>inventory is interrelated with risk </li></ul><ul><li>Model Assumptions </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  4. 4. <ul><li>Economies of inventory management, being composed of economies of postponement and pooling, only reflect to inventories/ stock levels of a product requesting the same value-added service. Economies of postponement (centrifugal tendencies) are functions of each customer’s order cycle / customer order decoupling point , its requested service level (the probability that a demand can be met from stock) , and the equivalent demand. By contrast [I]nventory pooling economies are centripetal forces, if customer’s order cycle is bigger than logistics lead time to realize demands . If customer’s order cycle is smaller than logistics lead time the resulting force is centrifugal, hence the occurring lead-time gap consists of postponement economies. Both, [P]ooling and postponement economies , could result in safety stock savings. </li></ul><ul><li>Model Assumptions (continued) </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  5. 5. <ul><li>Index set of the presented demand pattern: </li></ul><ul><li>Safety stock, if required, is being placed close to demand a,b d j,k,m : </li></ul><ul><li>Total safety stock for scenario #1 can be constituted as: </li></ul><ul><li>A Primary Use Case – Scenario #1 (benchmark) </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  6. 6. <ul><li>In scenario #2 inventory pooling happens as soon as possible along the value chain. Therefore, each I d = {( j , k , m )} defines a new index subset: </li></ul><ul><li>From (8) the location of stock is according to: </li></ul><ul><li>This leads to a new index set, stating the echelons where known demand can be realized at the earliest: </li></ul><ul><li>A Primary Use Case – Scenario #2 (pure pooling) </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  7. 7. <ul><li>A Primary Use Case – Scenario 3 (pooling w/ postp., pure postp., postp. w/ pooling) </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  8. 8. <ul><li>there are more economies of pooling than vice versa </li></ul><ul><li>slope of pure postponement for this use case is smaller for all a n than for pure pooling </li></ul><ul><li>it takes a n = 12 product options for ‘postponement with pooling’ to outpace the effect of pure pooling </li></ul><ul><li>greatest economies can be established through facilitating all options available for pooling </li></ul><ul><li>Discussion of Results </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  9. 9. <ul><li>this primary use case aims to validate the initial point of a generic model </li></ul><ul><li>economies of inventory management along global value chains are not thoroughly understood yet </li></ul><ul><li>lead time reduction (not considered here) should also account for great economies and needs some further research </li></ul><ul><li>understanding the economies provides the capacity to design VAS </li></ul><ul><li>pooling and postponement can lead to a competitive edge </li></ul><ul><li>a generic model is needed which provides a general theory about occurring economies within globally dispersed value chains </li></ul><ul><li>Conclusion </li></ul>© Andreas Rutsch, Chemnitz University of Technology
  10. 10. <ul><li>Thank you for your attention. </li></ul>© Andreas Rutsch, Chemnitz University of Technology

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