Applying the Theory of Constraints to Supply Chain Collaboration
Authors : Togar M. Simatupang, Alan C. Wright and Ramaswami Sridharan
Journal : Supply Chain Management: An International Journal, Vol. 9 No. 1, 2004.
Supply chain collaboration amongst independent firms or business units often provides larger benefits from effectively satisfying end customer needs than working in isolation. However, a lack of awareness about the existence of constraints along the supply chain prevents the benefits of collaboration from being fully realised. This paper attempts to apply the Theory of Constraints approach to overcome difficulties in realising the potential benefits of supply chain collaboration. Specifically, it shows how the Theory of Constraints approach can be used to expose an inherent dilemma of collaboration and establish collaborative replenishment policy and collaborative performance metrics so that the chain members can work together to advance supply chain profitability. Several opportunities for future research are recommended.
Keywords: Supply chain collaboration, Theory of constraints, Performance measurement.