Measurement And Inhibition Of Bullwhip Effect In Hybrid Supply Chain For Service-oriented Manufacturing

As global competition intensifies, many manufacturing companies—including IBM, GE, Caterpillar, Alstom, Honeywell and so on—are seeking to be service-oriented manufacturing manufacturer that integrates services into their core product offerings. In this way, they may achieve superior competitive advantage to their competitors’ and gain greater percentage of service revenues over total turnover. Because of transition of product portfolio, the previous manufacturing supply chain is transformed into hybrid supply chain. The hybrid supply chain(HSC) is formed as a network by a group of manufacturers and service providers who work together to offer total solutions(TS) to customers. The integration between service provider and manufacturer results in new characteristics that bring about a great challenge for supply chain management. Firstly, instability caused by customers’ behaviours is a pervasive and enduring characteristic of supply chain management. In this paper, customers’ behaviours are represented as customers’ responses to variable service levels, and interaction between customers’ responses and capacity utilization has a great impact on supply chain instability, which represents an important concern in supply chain research. Secondly, in this research, the product demand variance amplification progressively is named product flow bullwhip and the service capacity variance amplification progressively is named service flow bullwhip. Service flow bullwhip effect and product flow bullwhip effect are both caused by the delivery of total solution. Such phenomenon results in a great challenge to measure the bullwhip in hybrid supply chain. Thirdly, the gap between demand and supply is filled by the inventory in manufacturing supply chain, but the gap between demand and supply is smoothened by the backlog in service supply chain. How to tackle the coupling between service flow and product flow is of great challenge to the hybrid supply chain management research. To tackle these problems, some studies are conducted as follows.Firstly, the effect of customers’ behaviour on demand information distortion is discussed. The key elements of customers’ behaviours and the relationships between products demand and services demand are analysed and modelled. With considering customer sensitivity, the optimal policy of inventory strategy and capacity utilization strategy is proposed to form the completely new countermeasures to smoothen the bullwhip effect.Secondly, the metrics of bullwhip effect in hybrid supply chain are proposed. The bullwhip effect in hybrid supply chain consists of both service flow bullwhip and product flow bullwhip. With considering the operation effctiveness, cost control and customer service level, the quantitative metrics is proposed to measure the total performance of bullwhip effect. Then the combination of production strategy and service strategy is proposed to smoothen the bullwhip effect in hybrid supply chain.Thirdly, the coupling between service flow and product flow is discussed. Inventory is used to smoothen the imbalance between products demand and supply, but service orders backlog is used to smoothen the imbalance between services demand and the supply. According to the rule of coupling between service flow and product flow, the combination of service capacity and inventory strategies is used to smoothen the gap between total solution demand and supply.These researches tackle some key problems of hybrid supply chain operation and achieve some of innovation as depicted as follows. Firstly, we do not follow assumption that the production capacity is infinite, and find that customers’ behaviour is a new cause of bullwhip. Secondly, a set of metrics, such as order rate variance ratio, inventory variance ratio, backlog variance ratio and capacity variance ratio, are proposed to measure the total performance of bullwhip effect in hybrid supply chain. Since that, the quantitative countermeasure of bullwhip effect in hybrid supply chain is constructed. Thirdly, the optimal policy of coupling between service flow and product flow is proposed to design the multi-echelon hybrid supply chain.