Short answer
Design supply chains with a strong emphasis on rapid and accurate information dissemination, as this is a primary driver of revenue preservation.
- Field
- Innovation & Design
- Source
- Journal of theoretical and applied electronic commerce research (2008)
- Method
- Discrete Event Simulation
- Evidence
- Strong effect
Delays in real-time information and material flow within manufacturing supply chains directly correlate with lost sales revenue, with information delays having a more significant impact than material delays. This innovation & design research insight is drawn from a 2008 study published in Journal of theoretical and applied electronic commerce research. Using Discrete event simulation, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Design supply chains with a strong emphasis on rapid and accurate information dissemination, as this is a primary driver of revenue preservation.
Information flow delays in supply chains reduce revenue by up to 20%
Delays in real-time information and material flow within manufacturing supply chains directly correlate with lost sales revenue, with information delays having a more significant impact than material delays.
Journal of theoretical and applied electronic commerce research · 2008
Key Findings
- 01There is a direct relationship between delay times in information and material flow and lost sales revenue.
- 02Information delays contribute more significantly to lost sales revenue than material delays.
Application
Design takeaway
Design supply chains with a strong emphasis on rapid and accurate information dissemination, as this is a primary driver of revenue preservation.
How to apply
When designing or redesigning a supply chain, model the impact of potential information delays on projected revenue and prioritize solutions that minimize these delays.
Project actions
- 01Consider using simulation tools to model your supply chain and test the impact of different communication strategies.
- 02Focus on how quickly information can travel from the customer back to the manufacturer in your design.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Quantifies the financial impact of supply chain disruptions.
- +Highlights the differential impact of information vs. material delays.
Limitations
Simulations are models, and real-world factors like human error or unexpected events can further complicate supply chain dynamics.
Reliability & validity
The use of discrete event simulation provides a controlled environment to test variables, enhancing internal validity. However, external validity may be limited by the specific model used (Beer Distribution Game).
Think critically
How might the 'bullwhip effect' in supply chains be exacerbated by information flow delays, and what design interventions could mitigate this?
Design Principles
"Information velocity is a critical determinant of supply chain revenue."
Understanding the financial impact of information flow disruptions is crucial for optimizing supply chain design and management. This insight highlights the critical need for robust communication systems and real-time data visibility to mitigate revenue loss and improve overall business performance.
What This Means for Your Design
If information or materials are slow to move through a supply chain, the company loses money on sales, and slow information is more damaging than slow materials.
How to use in your project
- 1.Use this research to justify the importance of efficient information systems in your design project, especially if it involves a supply chain element.
Add to My Project
Quick Cite
Paragraph starter
Research indicates that disruptions in information flow within supply chains can lead to significant revenue loss, with information delays being more detrimental than material delays. This underscores the importance of designing systems that ensure rapid and accurate data transmission from customer to manufacturer to maintain optimal sales performance.
Source
Journal of theoretical and applied electronic commerce research
Disruptions in Information Flow: A Revenue Costing Supply Chain Dilemma
journal · 2008
View sourceQuestions About This Research
- What does the research say about information flow delays in supply chains reduce revenue by up to 20%?
- Design supply chains with a strong emphasis on rapid and accurate information dissemination, as this is a primary driver of revenue preservation. Evidence: Journal of theoretical and applied electronic commerce research (2008).
- Why does "Information flow delays in supply chains reduce revenue by up to 20%" matter for design?
- Understanding the financial impact of information flow disruptions is crucial for optimizing supply chain design and management. This insight highlights the critical need for robust communication systems and real-time data visibility to mitigate revenue loss and improve overall business performance.
- How can designers apply this research?
- Design supply chains with a strong emphasis on rapid and accurate information dissemination, as this is a primary driver of revenue preservation.
- What were the main findings?
- There is a direct relationship between delay times in information and material flow and lost sales revenue.. Information delays contribute more significantly to lost sales revenue than material delays.
- What research method was used?
- Discrete Event Simulation.
- How strong is the evidence?
- Evidence strength is rated Strong effect, based on a 2008 journal from Journal of theoretical and applied electronic commerce research.
- What should I do differently in my next project?
- When designing or redesigning a supply chain, model the impact of potential information delays on projected revenue and prioritize solutions that minimize these delays.
- What are the limitations?
- The study's findings are based on a simulation of the Beer Distribution Game, which may not perfectly represent all real-world supply chain complexities.