Business integration model with due‐date re‐negotiations

Abstract

Purpose

This paper aims to enhance the responsiveness of enterprises with regard to delivery schedules in a supply chain. Based on the observations in industry, it seems that companies often re‐negotiate their due‐dates. These phenomena have begun to appear only recently, as a result of the advancements of information technology and flexibility in the supply chain. However, these due‐date re‐negotiation processes are haphazard and ad hoc in nature, and a formal process is needed to respond to market fluctuations more quickly. In this paper, a re‐negotiable order processing method is developed that can change the already‐assigned due‐dates or allow partial shipments to increase the flexibility of firm response to a rush order from a prior customer (PC).

Design/methodology/approach

A due‐date re‐negotiation process is defined and a formal system for handling customer orders is proposed. The new data and business process integration model are proposed for the due‐date re‐negotiation process based on RosettaNet's Partner Interface Processes. Web services and ubiquitous computing technologies are used in the proposed system architecture to allow for responsive sales order management.

Findings

The paper shows that assigned due‐dates can also be re‐negotiated by enhancing the connectivity and visibility of the supply chain with co‐operative customers. In the early stage of the product life cycle or high‐regional demand variation environments, it is better to re‐negotiate due‐dates than to meet scheduled due‐dates.

Practical implications

In some instances, meeting the due‐date requested by a customer relates to the success or failure of a particular sales order. The proposed re‐negotiation method could help the sales offices of the MF to respond to PC requests quickly and flexibly. Rush orders from PC might be acceptable based on the slack gained through the re‐negotiation of co‐operative customers' assigned orders.

Originality/value

There has been a considerable volume of studies on the due‐date assignment, order releasing, and scheduling problems. However, these previous studies considered due‐dates as exogenous parameters or fixed endogenous variables. In this paper, the assigned due‐dates for pre‐contracted co‐operative customers are considered as re‐negotiable variables. On the other hand, most studies on ubiquitous computing technologies, especially those relate to radio frequency identification (RFID), have focused mostly on asset management and processing time reduction. This paper suggests other benefits of increased visibility and traceability of RFID technology in enhancing responsiveness and flexibility in the sales order management system.

Citation

Park, M., Lee, D., Shin, K. and Park, J. (2010), "Business integration model with due‐date re‐negotiations", Industrial Management & Data Systems, Vol. 110 No. 3, pp. 415-432. https://doi.org/10.1108/02635571011030051