Centralised and decentralised supply chain planning

The major task of supply chain planning – as the tactical level of supply chain management – is the determination of supply-chain-wide master plans on a medium-term basis. Both in literature and in commercial supply chain management systems, a centralised approach to supply chain planning is frequently proposed. Due to the incongruence between incentives of the firms involved in the supply chain and overall supply chain objectives, a centralised supply chain planning will either not be accepted or will not lead to system-wide effectiveness. For this reason, supply chain planning decisions are most commonly coordinated on a decentralised basis. In this paper, we analyse the implications and limitations of centralised and decentralised supply chain planning approaches. The results derived from this analysis establish the basis for introducing a generic, conceptual approach supporting the design of a decentralised supply chain planning.supply chain management; SCM; supply chain planning; centralised coordination; decentralised coordination; master planning; supply chain design