Today's business environment is characterised by globally dispersed supply and manufacturing networks. In addition, the level of product variety continues to increase in almost all sectors. Managing product variety in the context of international operations has received very little attention to date in the research literature. Here we present findings from a simulation study investigating the impact of product variety, supply lead-time and demand uncertainty on production flow time within a multinational corporation (MNC) context. A generic simulation model is used to investigate the impact of increasing product variety in combination with supply lead-time and demand uncertainty in an international manufacturing setting. The simulation focuses on the upstream activities of forecasting, inbound supply and manufacturing. The structure and logic of the simulation model are based on insights gained from an empirical study of a real MNC supply network. The study shows that increasing the level of product variety has a detrimental impact on flow time. In the presence of supply lead-time and demand uncertainty, high levels of variety result in much longer flow times relative to more stable conditions. The impact is greatest when variety involves critical materials that are required early in the production process and that entail long set-up times. The value of the study is that it quantifies the potential relative impacts of different factors on production flow time in an MNC context. Implications of the study for managing international operations are discussed, particularly with respect to the in-bound supply of materials. The potential value of postponement strategies and the need in some cases for fundamental product and process redesign to mitigate the negative impacts of variety are noted. The study could be extended to incorporate downstream distribution, logistics and transport activities, multiple manufacturing sites and multiple potential supply routes.
|Title of host publication||Dispersed Manufacturing Networks|
|Subtitle of host publication||Challenges for Research and Practice|
|Number of pages||28|
|Publication status||Published - 2009|