Obstacles to Coordination in a Supply Chain

Any factor that leads to either local optimization by different stages of the supply chain or an increase in information delay, distortion, and variability within the supply chain is an obstacle to coordination. If managers in a supply chain are able to identify the key obstacles, they can then take suitable actions to help achieve coordination. We divide the major obstacles into five categories  

Incentive obstacles occur in situations when incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits. 

Information-processing obstacles occur when demand information is distorted as it moves between different stages of the supply chain, leading to inaeased variability in orders within the supply chain. 

FORECASTING BASED ON ORDERS AND NOT CUSTOMER DEMAND When stages within a supply chain make forecasts that are based on orders they receive, any variability in customer 

Now assume that periods of random increase are followed by periods of random decrease in demand. Using the same forecasting logic as earher, the retailer will now anticipate a declining trend and reduce order size. This reduction will also become magnified as we move up the supply chain. 

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