Bullwhip effect in integrated manufacturing and service networks

Abstract

An Integrated Manufacturing and Service Network (IMSN) is a grouping of companies, working together to offer a bundle of products and product-related services, that deliver value to customers over the entire useful life of the product, from purchase to disposal. The success of such an alliance is highly dependent on the seamless integration and interaction of business strategy, operational processes and enterprise systems between constituent companies and their design, manufacturing and sales operations. In this paper, we present system dynamics models to study the behavior of an IMSN and investigate the bullwhip effects that arise within such networks due to mismatches and delays between the manufacturing and service systems within the network. We show that integration and collaboration between the manufacturing and service operations with two-way information flow between them enhances profitability and minimizes the bullwhip effect within repair centers.