Study on suppliers' flexibility in supply chains: is real-time control necessary?

In a supply chain, the suppliers' flexibility is considered as a tool to cope with the environmental uncertainties. Flexible suppliers are capable of supplying/processing other jobs in addition to the one for which they are the original supplier. In a cluster of flexible suppliers, it is expected that flexibility of suppliers be utilized more expressively through better control of the supply chain. The online real-time information system is considered as one of the tools for effective control of the supply chain. However, in a cluster of flexible suppliers, the physical and operating characteristics of alternative suppliers (available by virtue of suppliers' flexibility) may vary from each other for doing the same operation, which may result in a different lead-time to process the same job. This paper presents a simulation study on suppliers' flexibility level (SFL) in relation to information system automation level of the supply chain and physical characteristics of the flexible suppliers. This paper contributes an approach for decision-makers to identify the information system automation level and variations in physical characteristics of the alternative suppliers with respect to suppliers' flexibility level that can help in improving the overall delivery lead-time. A decision-maker can reach a trade-off between benefits obtained from supplier's flexibility and the investment required to have a suitable information system automation level and physical characteristics of suppliers. Results of simulation study show that if automation level of information system is not matching to the suppliers' flexibility level then supplier's flexibility may become counterproductive. Further, a relative change in physical characteristics of the alternative flexible suppliers as compared to the original supplier is more than a certain limit then suppliers' flexibility may again be counterproductive. However, a cost intensive real-time information system may not be needed when suppliers' flexibility levels are lower. Study identifies the productive and counterproductive performance regions for suppliers' delivery lead-time.