Centralization and Decentralization in Supply Chain Management

A supply chain is basically a network or an integrated process wherein several business entities work together and add certain kind of value to the raw materials which results into a finished product. Before reaching its final stage, the product undergoes various operations and correlating these operations involve developing a complex supply chain network. One major problem with complex supply chain network is the limited access of information of supply chain (as a whole), available to the individual decision makers. Each being responsible for the decisions taken for a certain part of supply chain. Every decision maker tries to operate under the presumption that optimizing their objective function would optimize the complete supply chain. However, it has been made known that greater efficiency can be attained by employing centralization technique. This paper aims at studying how centralization and decentralization affects a supply chain network.