Many of the products we see, touch and interact with are related to supply chain and operations management. Understanding how a supply chain works and how it relates to the success of a business are essential skills.

Jimmy Chen

In a perfect retail world, suppliers would deliver the exact number of products needed to meet consumer demand. It's impossible to achieve that goal, says Professor Jimmy Chen, management. He investigates the influence of suppliers' allocation decisions and studies how retailers regulate their suppliers through vendor compliance programs.

"A supplier might have a fixed amount of inventory. I'm interested in the methods that can be applied to determine the allocation of the inventory and how different methods may impact the service levels," Chen says. "If the supplier's shipments do not meet the retailer's target service level specified on the vendor compliance program, then the retailer can impose a penalty."

To better understand the supplier-retailer relationship, Chen uses data collected from the vendor compliance programs of large retailers such as Lowe's or CVS to review regulations and the ways retailers incentivize their suppliers. "We can study the literature and formulate theoretical models, but interviewing managers and reviewing actual compliance programs help substantiate the contributions," he says. He plans to further investigate the conflicts of interest between supplier and retailer that result in such compliance programs.

"The context I'm working in is business to business. However, by implementing better allocation methods, the supply chain as a whole will incur lower operation costs, which eventually would benefit the consumer," says Chen, who teaches Qualitative Reasoning for Managers and Global Supply Chain Management. "Many of the products we see, touch and interact with are related to supply chain and operations management. Understanding how a supply chain works and how it relates to the success of a business are essential skills."

After graduation, many of Chen's students begin corporate careers that include various functions in supply-chain management. He hopes to teach them the fundamental knowledge of business analytics and operations and help them understand how vendor compliance programs can impact business-to-business relationships.

Posted Sept. 29, 2014

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