In supply chain management, how does supply chain coordination improve the total supply chain surplus?
Understand the Problem
The question is discussing the benefits of supply chain coordination in supply chain management, particularly how alignment among all stages can enhance total supply chain surplus.
Answer
Supply chain coordination aligns actions to increase total surplus.
Supply chain coordination aligns the actions of all stages in the supply chain to collectively increase the total supply chain surplus. This prevents individual profit-maximization actions that could reduce overall profits.
Answer for screen readers
Supply chain coordination aligns the actions of all stages in the supply chain to collectively increase the total supply chain surplus. This prevents individual profit-maximization actions that could reduce overall profits.
More Information
Effective supply chain coordination can help in managing inventory better, reducing costs, and enhancing service delivery. When all stages work towards a common goal, it reduces inefficiencies like duplicated efforts, delays, and excess inventory.
Tips
A common mistake is not considering the entire supply chain as an integrated system, which can lead to decisions that benefit one part but harm another.
Sources
- Supply Chain Management - Quizlet - quizlet.com
- Supply chain coordination - Chegg - chegg.com
- Effective Supply Chain Coordination - Turvo - turvo.com
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