Metodología

The relationship between increased visibility and improved supply chain

performance has been discussed from both theoretical and practical perspectives

(Barratt and Oke, 2007; Bartlett et al., 2007; Holcomb et al., 2010). Bartlett et al.

(2007) studied the Rolls-Royce supply chain and demonstrated that exchanging

high quality information through an internet-based platform improved its

capacity planning, material ordering, and inventory management. In addition,

Barratt and Oke (2007) explored five case studies and showed that the simulation

supply chain gained a sustainable competitive advantage through high levels of

supply chain visibility. In particular, the research of Holcomb et al. (2010) identified that reduced operation costs along with increased customer satisfaction

is the competitive advantage granted by improving visibility.

However, previous research has not shown the correlation between increased

visibility and improved supply chain performance. A contribution of this

research is to quantify the correlation between increased visibility and improved

supply chain performance. The results show a significant correlation in supply

chain LeAgility with the degree of visibility, but it is not a linear relationship.

Sharing more information at higher frequency will increase the visibility of the

supply chain; however it does not necessarily mean a better supply chain

performance. This phenomenon may be explained by two key elements of supply

Chapter 6 Discussion

Xin Wang Page 131

6.1.1 Information sharing frequency (heartbeat)

Information sharing frequency (often called heartbeat or drumbeat) is one of the

key elements for implementing visibility in supply chains. An appropriate

information sharing frequency can provide enough operational information about

the supply chain status, whilst keeping costs down. Supply chain uncertainty

plays a vital role in identifying information sharing frequency. For example, the

business environment simulated in the Operational Visibility experiment was

much more complex than the Demand Visibility experiment. Supply chain

uncertainty was significantly higher in the Operational Visibility experiment

once the unexpected events were incorporated. Figure 6.1 shows the supply

chain total value with different information sharing frequency for the Demand

Visibility and Operational Visibility experiments. The supply chain total value in

the Demand Visibility experiment increased by only 0.5% after changing the

information sharing frequency from 2 weeks (Scenario 1.5) to 1 week (Scenario

1.4). Increasing the information sharing frequency had a very small improvement

in terms of leanness; but it improved supply chain flexibility for the simulation

supply chain (Table 5.2). However, when the supply chain uncertainty increased

in the Operational Visibility experiment, a higher information sharing frequency

Chapter 6 Discussion

Xin Wang Page 132 Figure 6.1: Supply chain total value in different heartbeat scenarios for the

Demand Visibility and Operational Visibility experiments

This suggests that there may be a ‘critical’ information sharing frequency for each supply chain. This ‘critical’ frequency depends on the supply chain lead

time and the uncertainty level. Sharing information at the ‘critical’ frequency will

cause supply chains to their most LeAgility. If the information rate is higher than the ‘critical’ frequency, the supply chain may be more visible, but suffer extra

resource expenses; an information rate below ‘critical’ will reduce decision

making quality and resulting the performance.

6.1.2 Sharing more information or at a higher frequency

Supply chain executives have to address this question when they implement

supply chain visibility: should we share more information content or share

information with higher frequency, or both? The results from the Operational

0 0.5 1 1.5 2 2.5 Demand Visibility Experiment Operational Visibility Experiment 2.06 2.05 _2.02 1.71 Su p p ly Vh ai n To tal Val u e

Supply chain total value in different

heartbeat scenarios

1-week information sharing frequency

2-week information sharing frequency

Chapter 6 Discussion

Xin Wang Page 133 Visibility Experiment suggest that the information content is more important than

information sharing frequency. For instance, sharing the right information

content with a two-week information sharing frequency (Scenario 2.5) achieved

a better LeAgile supply chain performance than those scenarios with a one-week

information sharing frequency (Scenario 2.3, 2.2, 2.1).

However, sharing information is not always a case of ‘the more the better’.

Sharing non-value added information can waste resources, and is termed ‘digital waste’ (Abbott et al., 2005). Digital waste can complicate and confuse decision- making. For example, the forecast accuracy in Scenario 1.3 for the Demand

Visibility experiment decreased after inventory information was shared (Figure

5.2). One possible reason could be that sharing inventory information without

accessing the customer demand information may be seen as digital waste that

worsens the forecast of the suppliers. The right information at a lower frequency

is better than more information at a higher frequency – maybe because people are

unable to process it into decision making and hence it incorporates more digital

waste.

6.1.3 Summary

The main outcome of this research is the correlation between information

visibility and improved supply chain LeAgility. The author identified three

stages of correlations between visibility level and increased supply chain

Chapter 6 Discussion

Xin Wang Page 134 1. Stage one: supply chain LeAgility appears to have a leaner correlation

with the degree of visibility, and becomes most LeAgile at the visibility

level .

2. Stage two: supply chain LeAgility does not improve significantly when

continuously increasing the visibility level from to (the critical visibility level). For example, in the demand visibility experiment, the

supply chain becomes most LeAgile in Scenario 1.5 with a two-week

information sharing frequency; however, in Scenario 1.4, the supply

chain LeAgility improved only by 0.5% (Figure 6.1) when increased the

information sharing frequency to every week.

3. Stage three: supply chain LeAgility decreases with the increasing

visibility level. In order to become more visible, supply chains need to

use extra resources, such as further investment in IT systems, employee

training, or the vertical integration of the supply chain. These extra

resources diminish overall supply chain performance through a loss in ‘lean’.