Inter-company supply chain planning : extending the current modeling perspective

Many companies are implementing new mechanisms to better manage operations across units in a supply chain. Both the operations management literature and the accounting literature are investigating such inter-organizational developments. Since supply chain planning (SCP) typically started across several units within the domain of a single company, the models that have been developed in inventory theory assume a single company perspective. SCP from a centralized perspective optimizes objectives at the level of the total chain. However, it is mainstream thought nowadays in the operations management literature that the planning function should focus as much as possible on the entire supply chain rather than on a single unit in the supply chain. Consequently, SCP across independent companies has seen some attempts in practice, although inventory models have not been formulated so far. The accounting literature has started to examine the conditions under which information exchange mechanisms and other elements of SCP are beneficial to each individual company in the supply chain. The present paper builds on this perspective of the individual units' objectives. Each unit will often be part of different supply chains, and we investigate how decisions made by the SCP functions of those different supply chains may interfere at the level of the unit. These planning decisions may not be in that unit's best interest, which would prevent independent companies from engaging in SCP. This paper introduces two new concepts to describe and support SCP across independent companies: outsourced SCP and between-supply-chain coordination.