Arnold Maltz

Inventory management for stochastic lead times with order crossovers

We study the impact of stochastic lead times with order crossover on inventory costs and safety stocks in the order-up-to (OUT) policy. To motivate our research we present global logistics data which violates the traditional assumption that lead time demand is normally distributed. We also observe that order crossover is a common and important phenomenon in real supply chains. We present a new method for determining the distribution of the number of open orders. Using this method we identify the distribution of inventory levels when orders and the work-in-process are correlated. This correlation is present when demand is auto-correlated, demand forecasts are generated with non-optimal methods, or when certain ordering policies are present. Our method allows us to obtain exact safety stock requirements for the so-called proportional order-up-to (POUT) policy, a popular, implementable, linear generalization of the OUT policy. We highlight that the OUT replenishment policy is not cost optimal in global supply chains, as we are able to demonstrate the POUT policy always outperforms it under order cross-over. We show that unlike the constant lead-time case, minimum safety stocks and minimal inventory variance do not always lead to minimum costs under stochastic lead-times with order crossover. We also highlight an interesting side effect of minimizing inventory costs under stochastic lead times with order crossover with the POUT policy—an often significant reduction in the order variance.

Impact of culture on supplier selection decision making

Purpose – Source location decision making is a contemporary problem facing many businesses as they globalize their supply chains. This paper seeks to empirically determine the influence of culture on the industrial procurement managers perception of the different characteristics of potential global sourcing locations, with a view to integrating the influence of culture operating at different levels into a global sourcing location decision framework; thereby enhancing managerial insights to the role played by culture in making decisions.Design/methodology/approach – The paper applies factor analysis and multiple regression on a survey sample of 181 responses gathered from native eastern and western procurement managers. The authors investigate how 12 procurement attributes drawn from the literature relate to each other with respect to low‐cost regions.Findings – The research results show that procurement managers select regions for low‐cost sourcing based on both specific measures and individual and/or gr...

Organizational alignment and supply chain governance structure: Introduction and construct validation

Purpose – The purpose of this paper is to introduce and validate two new constructs with the potential to sharpen our understanding of how and why firms integrate their internal supply chains and assess the governance structure of their supply chains. The first construct, organizational alignment (OA), is a reflective scale measuring the extent to which upper management attempts to foster integration between internal supply chain functions. The second, supply chain governance structure (SCGS), is a formative index, and is a first attempt at developing a measurement instrument to assess SCGS along multiple dimensions.Design/methodology/approach – Following a literature review, measures of OA and SCGS are conceptualized. These instruments are used to collect data, after which they are refined and validated through parallel scale development (OA) and index construction (SCGS) processes.Findings – OA shows acceptable content and construct validity, and SCGS shows acceptable results for content and item specif...

Improving Supply-Chain-Reconfiguration Decisions at IBM

We developed a decision-support system for IBMs supply-chain-configuration decisions. Managers and analysts used this prepackaged multiobjective decision-analysis procedure in facilitated workshops to analyze mid-level supply-chain configuration decisions based on 22 considerations covering cost, quality, customer responsiveness, strategic issues, and operating constraints. These multiattribute utility analyses incorporated uncertainty through expert estimates of probabilities and were implemented in a spreadsheet environment. We applied the approach to five IBM supply-chain decisions, and the results satisfied internal stakeholders that the analysis correctly included financial and nonfinancial considerations along with the associated risks and provided a useful audit trail for executive management. IBM now views this decision-support system as a potential template for future supply-chain decisions.

Linking logistics to strategy in Argentina

Qualitative results of a benchmarking process in logistics areas between companies operating in Argentina are presented. A description of the main logistics processes reengineered by these companies is done and some inferences are taken from the study. The companies are finally analyzed according to another benchmarking process generated in Michigan State University, which leads to a discussion on how companies can be characterized as world class in emerging countries.

The link between economic and environmental performance of the top 10 U.S. ports

ABSTRACT Ports currently face increasing demands to address a variety of environmental issues and achieve sustainability objectives. Using insights from the resource-based view of firms, this study examines the link between economic performance (EP) and environmental performance (ENP) of the top 10 U.S. seaports. Geospatial modeling is used to capture pollution incidents that can be geographically dispersed; in addition, both a bootstrap data envelopment analysis (DEA) approach and an undesirable DEA model are used to measure port ENP and EP. Our findings are in general consistent with assertions that positive EP can be attained in conjunction with good environmental practices. Ports’ capabilities of strategic capital investment in physical assets, collaborative interorganizational processes, and performance monitoring are essential, while they pursue both economic and environmental goals simultaneously.

Purchasing Logistics Services in a Transborder Situation: Logistics Outsourcing in US‐Mexico Coproduction

One strategy for dealing with the increasing problem of cross‐border movement is to involve third‐party specialists. Reports on an investigation of third‐party use in maquiladora or twin‐plant logistics across the US‐Mexico border. A mail survey of 250 companies operating in the El Paso‐Juarex area was carried out. Results showed that the surveyed firms used third parties more than US firms in general.

A Customer Service Course: Bringing Marketing and Logistics Together:

Business is becoming more aware of the importance of customer service in customer satisfaction and retention. Customer service must be positioned as something that ultimately depends on successful management of both organizational and final consumer relationships across the supply chain. Unfortunately, traditional marketing curriculums study the delivery of customer service as a static and isolated event rather than as a function of the total business enterprise. Following suggestions for more integrative curriculums, the authors develop a course that positions customer service as an outcome of the total system and uses concepts from various research streams to promote successful delivery of customer service. Specific suggestions for course content and pedagogy are presented.

Purchasing-logistics integration and supplier performance: an information-processing view

Purpose The purpose of this paper is to develop a purchasing-logistics integration (PLI) conceptualization along two dimensions: mutual responsibility and integrative efforts. This conceptualization is then tested as to whether it provides any insights for supplier performance. Design/methodology/approach Information-Processing Theory is used to posit hypotheses linking the dimensions of PLI with various measures of supplier performance. Hypotheses are then tested with a dyadic data set of purchasing and logistics managers, using multiple regression methods. Findings Purchasing managers found mutual responsibility to positively influence supplier delivery speed, whereas logistics managers found it to positively influence supplier price performance. Generally speaking, purchasing managers perceived a stronger linkage between formal integrative efforts (liaison roles and joint reward systems) and supplier performance, whereas logistics managers perceived this linkage to be stronger for informal integrative efforts such as information exchange and collaboration. Research limitations/implications Study results are cross-sectional in nature and consist of three major industry groupings. The dyadic data were analyzed separately to avoid significant data loss. Practical implications Supply chain managers will find the areas where purchasing and logistics managers overlap in their perceptions (as well as where they differ) useful. In addition, an understanding of how PLI influences supplier performance should help improve organizational effectiveness. Originality/value PLI is a highly important, yet understudied, internal connection. This study provides a useful framework in helping academics and practitioners better understand this crucial internal connection, and how it relates to the performance extracted from suppliers.

Procurement from Developing Countries

In 2008, world trade amounted to over