Split of orders after agreements

This example illustrates the benefit of thinking outside the box as defined by Industrial Chemicals and examining the root causes for order variation, i.e., the supply chain structure. But it also means moving to a bigger box, i.e., including more entities in the supply chain. The new perspective considers the link between demand variation and truck capacity driven by existing coordination agreements (backhaul discounts). The case shows the benefit 

We will now focus on steps involved in completing an audit of a supply chain ([59]). The goals of this supply chain audit are to (1) understand the architecture of the current supply chain and (2) identify potential sources for improvement. 

The first step in a supply chain audit is to map chain structure and ownership as well as associated flows of physical products and information (orders) between members of the supply chain. The role of a supply chain map is to get a picture of the overall supply process and where the particular retail store fits. It reminds the manager that the current supply sources may need to evolve as the product characteristics change. 

Key decisions at this stage involve the level of detail to include, e.g., a cross-product analysis rather than a focused analysis of an individual stock-keeping unit (SKU), the granularity of the data that will be considered (annual vs. monthly vs. daily flows), use of a finished goods inventory or work-in-process inventory, or whether the raw material and its sources will be included. These critical choices impact the Four C analysis. 

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