Adaptive Make-to-Order strategy in distributed manufacturing supply chains

Globalization has led to increase in outsourcing of production activities, which in turn creates a new organization paradigm so called networked or virtual enterprises. This trend has created challenging opportunities in terms of supply chain management. Under such complex manufacturing network, independent companies are working in a distributed or decentralized manner. Each of which probably has no right to access sensitive information of the others. Coordination of activities is of vital importance to quickly respond to dynamic market condition, especially in Make-to-Order (MTO) supply network, which usually leads to higher average lateness. In this connection, an adaptive MTO coordination strategy (or sometimes called as mechanism) with contract is proposed in this paper for distributed manufacturing supply chains for multiple product types. Results indicate that the proposed adaptive strategy can improve the performance of the supply chain in terms of total operating cost and demand fill rate. The latter is usually regarded as a weakness of traditional static MTO production strategy.