Dynamic Coordination of Supply Chains

Michael Paulitsch

Publication: ThesisDoctoral thesis

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Business-to-business exchanges have become a common form of procurement due to their advantages regarding flexibility (such as the ability of being able to quickly change business partners), although the mean procurement prices are generally higher compared to long-term contracts. On the other side, a lot of procurement managers still believe that long-term relationships are the key in the procurement process partly due to cost savings. Two main conflicting opinions on the optimal type of relationship - as it seems. In this thesis, a portfolio approach for risk-hedging supply chains in dynamic business environments is presented, where uncertainties are defined by value ranges in addition to target or mean values. This portfolio approach combines the advantages of both relationship types - spot market and long-term relationship - while avoiding influences of disadvantages. This portfolio approach uses simulation techniques in order to find portfolio and contract settings that coordinate supply chain partners and achieves cost-optimal supply chain performance in dynamic business environments. Furthermore, inventory is used as real option in an approach that is called speculative forward procurement. Speculative forward procurement is shown to be advantageous for the overall performance of supply chains in nearly all simulation settings. The presented model is developed and evaluated using a real supply chain process of the chemical processing industry. If procurement managers use a portfolio approach and speculative forward procurement, it is shown that cost savings of more than 10 % compared to only using the spot market and about 5 % compared to the use of long-term relationships for coordinating settings can be achieved. (author's abstract)
Original languageEnglish
Awarding Institution
  • WU Vienna
Place of PublicationAugasse 2-6, A-1090 Wien, Austria
Publication statusPublished - 1 Jun 2003

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