Integrated Approach to Assess Supply Chains: A Comparison to the Process Control at the Firm Level

Abstract

This study considers whether or not optimizing process metrics and settings across a supply chain gives significantly different outcomes than consideration at a firm level. While, the importance of supply chain integration has been shown in areas such as inventory management, this study appears to be the first empirical test for optimizing process settings. A Partial Least Squares (PLS) procedure is used to determine the crucial components and indicators that make up each component in a supply chain system. PLS allows supply chain members to have a greater understanding of critical coordination components in a given supply chain. Results and implications give an indication of what performance is possible with supply chain optimization versus local optimization on simulated and manufacturing data. It was found that pursuing an integrated approach over a traditional independent approach provides an improvement of 2% to 49% in predictive power for the supply chain under study.