Decisions in a decentralized supply chain can still be made centrally and rolled out across the network, but often the nodes are given a degree of autonomy to be able to manage their own unique business requirements and makes decisions based on local information.
The difference between the centralized and decentralized networks is that a centralized network can determine all tiers of suppliers, while a decentralized network only assigns first-tier suppliers (who arrange their own suppliers). Centralized supply chains rely on creating a central repository of data without any fragmentations in the supply chain so that all locations work seamlessly. Decentralized supply chains rely on local advantages and unique regional factors that can improve supply and production.
In the decentralized distribution schema, a distinct inventory is kept to satisfy the demand at each source of demand, and, in centralized distribution, the inventories are aggregated in a central distribution center or warehouse and all demands are satisfied from this facility.
For a decentralized supply chain scenario where a focal company and suppliers make their own decisions separately. One of the primary benefits of a decentralized supply chain is that it can drastically cut logistical costs at the local level. Operations are situated near the end customer, bringing those shipping costs right down.
Decentralized systems also enable flexibility and agility for localized issues. A decentralized supply chain can empower individual sites to solve problems creatively.
Decentralized supply chain networks
