Dynamic supply chain management for lean manufacturing

Lean is a management philosophy to eliminate waste both in the inside and from the outside of factories. A supply chain strategy is a key issue for the improvement of the outside. Recent information technologies provide even small- and medium-sized supplier companies with a chance for entering into contracts with major supplier companies and large manufacturing companies in different Keiretsu groups, but will give the trouble for surviving in the dynamic supply chain environment at the same time. This chapter proposes a strategy for MTO (Make To Order) companies to find suitable business partners in the dynamic supply chain environment and to enter into proper contracts with the partners as well as to obtain appropriate profits. A supply chain model proposed in the chapter provides a negotiation protocol to determine suitable prices and delivery times for ordered products through the iteration of the negotiation process between the organizations, as well as through the modification processes of production schedules. A twolayered supply chain model is firstly proposed as a basic model for dynamic supply chain management of MTO companies. The model is extended to a three-layered supply chain model for representing the negotiation protocol among multi-layered organizations. A prototype of a supply chain simulation system is developed and computational experiments are carried out to evaluate the effectiveness of changing business partners and negotiating among the partners cooperatively.