Managing product availability in an assemble-to-order supply chain with multiple customer segments

Abstract

In this article, we propose a novel availability management process called Available-to-Sell (ATS) that incorporates demand shaping and profitable demand response to drive better supply chain efficiency. The proposed process aims at finding marketable product alternatives in a quest to maintain a financially viable and profitable product portfolio, and to avoid costly inventory overages and shortages. The process is directly supported by a mathematical optimization model that enables on demand up-selling, alternative-selling and down-selling to better integrate the supply chain horizontally, connecting the interaction of customers, business partners and sales teams to procurement and manufacturing capabilities of a firm. We outline the business requirements for incorporating such a process into supply chain operations, and highlight the advantages of ATS through simulations with realistic production data in a computer manufacturing environment. The models featured in this paper have contributed to substantial business improvements in industry-size supply chains, including over $100M of inventory reduction in IBM's server computer supply chain. © 2007 Springer-Verlag.