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Certainty against flexibility – the concept of frozen horizon – chances, problems and solutions

Hahn A.

Zeszyty Naukowe Akademii Morskiej w Gdyni

2014

nr 84

48--55

This scientific article is about the complexity of supply chains, the problematic of fixed order points and the potential of regulated agreements between the Original Equipment Manufacturer and its Suppliers. There are two different perspectives. On the one hand, the OEM tries to be as flexible as possible, whereas the supplier needs a clear certainty about future orders. To be competitive on the current market, it is not enough just to improve the internal processes of a specific company, but rather the whole supply chain has to be optimized. Consequently, one main point has to be focused within the supply chain – certainty against flexibility. With the implementation of individual contracts between every direct cooperating business, the frozen horizon could help to avoid the arising waste by the bullwhip effect which is exclusively attributable to the uncertainty of the supplier. The OEM has to realize that a reduction of its own flexibility and control leads to a tremendous optimization of the entire supply chain and thus to a better position in the market as well.