Chapter 1 THE STATE OF PRACTICE IN SUPPLY - CHAIN MANAGEMENT : A RESEARCH PERSPECTIVE ∗

In this paper, I will describe examples of state-of-the-art practice in supply-chain management; e.g., vendor-managed inventory, quick response, and other contemporary systems, such as Wal-Mart’s RetailLink. The perspective will be that of what I call the IDIB Portfolio; i.e., what Information (I), Decision-Making (D), Implementation (I), and Buffer (B) systems are employed in managing real-world supply chains. Most operations-research models consider only two components of this portfolio: the decision-making and the buffer systems. More specifically, most operations-research models involve selecting a decision-rule to minimize expected buffer (i.e., inventory-holding) and backorder cost given a fixed level of information. Implementation as a decision variable is typically ignored. However, in the real world, with changing information, communication, and implementation technologies, supply-chain management can – and should – be viewed as changing the nature of the entire IDIB Portfolio. After interpreting current practice from the perspective of the IDIB Portfolio, I will forecast future practice using Collaborative Planning, Forecasting, and Replenishment (CPFR) as an example. I will describe the elements of CPFR, identify companies that are using it, and the challenges they face in realizing its potential. Finally, I will identify research opportunities in CPFR, and, more generally, research opportunities involving the IDIB Portfolio. ∗Forthcoming in Applications of Supply Chain Management and E-Commerce Research in Industry, E. Akçali, J. Geunes, P.M. Pardalos, H.E. Romeijn, and Z.J. Shen (editors), Kluwer Academic Publishers, Dordrecht, The Netherlands, 2004.