The doctoral dissertations of the former Helsinki University of Technology (TKK) and Aalto University Schools of Technology (CHEM, ELEC, ENG, SCI) published in electronic format are available in the electronic publications archive of Aalto University - Aaltodoc.

Supply Chain Coordination – Studies on Planning and Information Sharing Mechanisms

Riikka Kaipia

Dissertation for the degree of Doctor of Science in Technology to be presented with due permission of the Department of Industrial Engineering and Management for public examination and debate in Auditorium TU2 at Helsinki University of Technology (Espoo, Finland) on the 9th of November, 2007, at 12 o'clock noon.

Overview in PDF format (ISBN 978-951-22-8949-3)   [861 KB]
Dissertation is also available in print (ISBN 978-951-22-8948-6)


Supply chain information flow significantly influences material flow behaviour. To improve supply chain performance, efficient information sharing practices are largely recommended. However limited knowledge exists on how companies should choose their supply chain planning approaches and the extent to which information is required. Additionally, current literature does not give answers to the question of which situations, or during which supply chain phase, vendor managed inventory, VMI is an efficient replenishment mechanism.

This research treats the selection of coordination mechanisms, especially supply chain planning and VMI, for manufacturing companies. The coordination theory is applied to provide a theoretical basis to consider how companies can jointly manage business processes across the supply chain. The research questions are (1) how to select operational coordination mechanisms to match demand and supply in manufacturing companies, and (2), how reach the balance between information flow and material flow by the use of chosen mechanism. The thesis consists of six studies, which contain three empirical case studies and three studies where both modeling and case study research approaches are used. The studies are reported as six research papers.

A framework on selecting the supply chain coordination mechanism is developed based on literature findings. The framework suggests that the selection should take place according to the match between execution flexibility and information abundance. Information sharing should target on providing accurate and good-quality information for the decision-makers. Flexible operations should be supported with frequent planning practices that capture information quickly. If execution flexibility is low, it needs to be supported with more stable planning. This framework is used as a tool to analyse the results from papers.

Two main reasons for the imbalance between material flow and information flow was identified. Frequent plan updates according to demand changes, varying planning prosesses and horizons caused planning nervousness. This phenomenon caused bullwhip and large volume changes at the supplier. The other reason was lack of planning capability, inadequate information or inability to use shared information. Planning nervousness can be reduced with stabilising planning and synchronising information sharing between supply chain players.

The suitability of VMI was measured with supplier's reaction time. The time benefit for the supplier is dependent on the delays caused by order batching. It was observed that suppliers' long production planning horizon and infrequent production makes benefiting from VMI more challenging for manufacturers. Improving the quality of shared VMI information takes place by offering the right information and improving downstream planning.

This thesis consists of an overview and of the following 6 publications:

  1. Kaipia, R., Holmström, J., Tanskanen, K. (2002), VMI: What are you losing if you let your customer place orders?, Production Planning & Control, Vol. 13, Iss. 1, pp. 17-25. © 2002 by authors and © 2002 Taylor & Francis. By permission.
  2. Kaipia, R., Holmström, J., Hellström, M. (2007), Measuring the benefit of changing the value offering in grocery supply chains, Production Planning & Control, Vol. 18, Iss. 2, pp. 131-141. © 2007 by authors and © 2007 Taylor & Francis. By permission.
  3. Kaipia, R., Korhonen, H., Hartiala, H. (2006), Planning nervousness in a demand supply network: an empirical study, The International Journal of Logistics Management, Vol. 17, Iss. 1, pp. 95-113. © 2006 Emerald Group Publishing. By permission.
  4. Kaipia, R., Holmström, J. (2007), Selecting the right planning approach for a product, Supply Chain Management: An International Journal, Vol. 12, Iss. 3, pp. 3-13. © 2007 Emerald Group Publishing. By permission.
  5. Kaipia, R., Kallionpää, S. (2007), Exploiting VMI to increase flexibility in packaging material supply, International Journal of Production Economics, in review. © 2007 by authors.
  6. Kaipia, R. (2007), The effects of delivery speed on supply chain planning, International Journal of Logistics: Research & Applications, forthcoming. © 2007 by author and © 2007 Taylor & Francis. By permission.

Keywords: supply chain, supply chain coordination, coordination theory, supply chain planning, information sharing, vendor managed inventory

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© 2007 Helsinki University of Technology

Last update 2011-05-26