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MAnAging suPPliERs ovER TiME 187

Figure 5.14 Typical supply chain dynamics

Manufacturer’s
orders to its suppliers
10 10
Sales from store
Orders Orders

0 0
Time Time

Manufacturer Consumers

10 Wholesaler Retail store 10

Store’s orders
Orders Wholesaler’s orders Orders to wholesaler

to manufacturer
0 0
Time Time

4 Rationing and shortage gaming – this cause of supply chain distortion occurs when a
supplier rations supplies to its customers. If the customers are aware this is happen-
ing, it is in their interests to place a larger order in the hope that they will still get
what they need, even after the order has been rationed down.

Managing suppliers over time
Operations spend most of their supply chain effort in trying to overcome the worst
effects of supply chain dynamics. While the first step in doing this is clearly to under-
stand the nature of these dynamics, there are several, more proactive actions that
operations take. These include coordination activities, differentiation activities and
reconfiguration activities.

Coordination

Efforts to coordinate supply chain activity have been described as falling into three
categories, as illustrated in Table 5.4. 13
1 Information sharing – demand information, not just from immediate customers, is
transmitted up the chain so that all the operations can monitor true demand, free of
the normal distortions. Information regarding supply problems, or shortages, may

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