Disruptions in Information Flow: A Revenue Costing Supply Chain Dilemma

Abstract

The integration of supply chains as a mechanism for value creation is largely dependent on continuous flow of real time accurate information from the customer back upstream to the manufacturer. This ideal is often unachievable when disruptions in the flow of information and materials are known to regularly occur in some manufacturing supply chains. This paper focuses on quantifying the potential lost sales revenue attributed to information and material delays in a supply chain using discrete event simulation of the Beer Distribution Game. Results indicate a direct relationship between lost sales revenue and delay times. When exposed to several levels of delay such disruptions will cause loss of sales revenue. Interestingly, data collected suggests that information delays play a larger role than material delays as a contributor to lost sales revenue. This study provides a solid platform to further justify the implementation of technology such as RFID in an effort to decrease the level of lost sales revenue in manufacturing supply chains. The implementation of technologies that will increase the speed of information flow throughout a supply chain as well as increasing visibility of inventory in the supply chain can assist to minimise lost sales.