Supply chain operations have different levels of planning integration:

• Collaborative integration requires trust.
• Optimized integration require control and trust.

A short run is a period of time when at least one input variable is fixed. Otherwise, it is a long run.

The inventory order interface is the location in a supply chain where a unique customer order is fulfilled by stock inventory.


Demand models:

• Keep finished goods inventory (FGI).
• Make to stock (MTS).
• Configure to order (CTO).
• Assemble to order (ATO).
• Make to order (MTO).
• Engineer to order (ETO).
• Make once (project).

Classic models of supply chain operations are based on inventory control.

• More effective for distribution supply chains.
• More effective for supply chains with less pooling locations.

Material requirements planning (MRP) took advantage of computers to optimize inventory of dependent stock.

• Less effective with increase in supply chain size and complexity.
• Rigid master production schedules may cause excess buffering.

Just-in-time (JIT) operations relied on the demand pull in a supply chain to trigger production of a small batch of dependent stock.

• More effective with higher schedule integration.
• Reduced the bullwhip effect in a supply chain.
• Lean manufacturing is the widespread application of JIT principles to minimize buffering costs.

Vendor managed inventory (VMI) took advantage of information technology to implement a push model where the manufacturer or supplier controls the inventory at a retailer.

• The manufacturer or supplier has full control of the inventory level at a retailer in a hard VMI model.
• The retailer has the option to modify the inventory level in a soft VMI model.
• The consignment VMI model stipulates that the inventory remains property and liability of the manufacturer or supplier until it is consumed by customers.

Theory of Constraints (TOC) advocated that supply chains can maximize output by focusing on effective management of the bottlenecks (i.e. constraints).

1. Identify the constraints.
2. Identify steps to exploit the constraints.
3. Subordinate everything else to steps in 2.
4. Fix the constraints.
5. Go back to 1 whenever constraints have changed.

TOC strategies raised the importance of supply chain management for integrating all activities in a business.

Fully scheduled operations propose that mathematical optimizations should be applied to all planning decisions.

• More effective for a short run.
• High level of dependency on information technology and data integration.

A supply chain typically uses several operating strategies.