Valuing Supply-Chain Responsiveness Under Demand Jumps (Vol 61, Pg 46, 2018)

Supply chain responsiveness helps companies reduce the mismatches between supply and demand. When the demand uncertainty is high, companies with more responsive supply chains can better align their resources with fluctuating demand, thereby minimizing the mismatch risk. In this chapter, we present the methods used to enhance the responsiveness of supply chains, such as lead time reduction, multiple sourcing, and quantity flexibility. One challenge of establishing responsiveness is the difficulty of quantifying its value of organizations. To address this challenge, we propose analytical methods that help price the value of supply chain responsiveness depending on the evolutionary dynamics of demand uncertainty.