Supply Chain Integrity: Protecting Our Blind Spots

Research on supply chain risk and resilience has focused a lot on accidental disruptions, caused for example by an earthquake or the fire at a supplier’s plant. A sometimes overlooked element of supply chain risk management are disruptions that are caused by malicious intent, for example fraud. Indeed, due to their complexity, modern supply chain systems have become vulnerable to deliberate harm. A recently published report by Zurich Insurance Group and SICPA, titled Supply Chain Integrity: Protecting Companies’ Blind Spots, is focused on such types of risk. The authors argue that “companies can increase their ability to safeguard against deliberate supply-chain ‘infiltration,’ such as that caused by counterfeit or tampered products”. In their study, they “offer numerous recommendations and examples gathered in interviews with government and industry experts, enforcement specialists, risk managers and executives at large corporations”. I believe this report makes an important contribution to widen our understanding of supply chain risk and resilience.

A Massive Shift in Search for Supply Chain Talent

Supply chain management is currently undergoing a very interesting transformation. Supply chain management used to be a collection of logistics and procurement processes but it has become far more important in recent years. In more and more companies chief supply chain managers report directly to the CEO – or supply chain experts even become CEO, as in the case of Apple’s Tim Cook! But how do future supply chain managers need to be like? An article by Chao (2015) argues that “an understanding of technology and an ability to work in a global environment are increasingly important in the supply chain”. Technological and analytical skills are needed that enable companies to cope with the wealth of data. Another skill that is needed is the ability to construct complex and global supply chains. Companies expect supply chain managers to think strategically and solve problems. That also means that universities worldwide need to adapt their curricula to this changing demand.

Multi-Methodological Research in Supply Chain Management

Just like OM research, SCM research is dominated by three research methodologies: (1) analytical modelling research (optimization, computational, and simulation models etc.), (2) quantitative empirical research (surveys etc.), and (3) case study research. There has been a recent trend towards multi-methodological research that combines different methodologies. A new article by Choi, Cheng and Zhao, titled Multi-Methodological Research in Operations Management, investigates this trend. The authors “present some multi-methodological approaches germane to the pursuit of rigorous and scientific operations management research” and “discuss the strengths and weaknesses of such multi-methodological approaches”. The authors make clear that multi-methodological approaches can make our research “more scientifically sound, rigorous, and practically relevant” and “permit us to explore the problem in ‘multiple dimensions’”. However, such research can also be “risky as it requires high investments of effort and time but the final results might turn out to be not fruitful”. Anyhow, as the authors conclude: “no pain, no gain”!

Choi, T., Cheng, T., & Zhao, X. (2015). Multi-Methodological Research in Operations Management. Production and Operations Management DOI: 10.1111/poms.12534

Personal Predictions for Supply Chain Management in 2016

I believe that SCM in 2016 will be focused on customers – more than ever before! First, analyzing customer data could become the new core competency. Many companies already got rid of non-core processes. For example, Apple has focused on R&D and marketing but outsourced production to contract manufacturers – a typical smiling curve! Now, companies are increasingly focusing on analyzing customer data and just happen to be making phones or cars. Cars could soon be offered by innovative IT giants from silicon valley who outsource engineering to traditional carmakers. Cars could become “software on wheels”. Second, production will take place closer to consumer markets. While labor costs in China continue to increase (and there is no “new China”!), new technologies make production close to major markets affordable again. For example, Adidas will start production in Germany in 2016 – in its new “Speedfactory”, which is operated largely by robots. This could dramatically speed up delivery to fashion-conscious consumers. Finally, what we will see in 2016 are truly sustainable business models (see my previous blog post). I wish you a good start into 2016!

Future Engineering and Manufacturing Supply Chains

According to a new DHL white paper, titled Engineering & Manufacturing 2025+ – Building the World, the Engineering & Manufacturing (E&M) sector is on the brink of change. The E&M sector is expected to transform over the next 10 to 15 years by responding to this change with intelligent and sustainable manufacturing as well as new business and collaboration models. These transformations will have substantial implications for our supply chains. While traditional supply chain goals like quality, efficiency, total cost, or delivery performance will remain important, future E&M supply chain models will (1) reflect a global network of regional supply chains, (2) focus on risk management to create resilience and compliance, (3) take care of emissions and resources to make the world sustainable, (4) implement end-to-end connectedness and integration, and (5) be agile and responsive. And I agree: In this era of volatility and due to the need to create CO2-neutral business models, supply chains need to be adapted and redesigned soon.

SCM Case Study with Adidas

Adidas

Today, John McNamara, SVP Sourcing, Adidas Group, visited me and my SCM students at Copenhagen Business School. He presented a case study about the supply chain processes for t-shirts. It was very insightful and also a lot of fun for my students (and me). Thanks, John, for a great case study and an insightful discussion!

Sustainable Business Models Require a Revolution of SCM

The United Nations Conference on Climate Change (COP 21) has begun near Paris today. Let us hope it does not fail again – like too many other conferences before. Indeed, time is slipping away and the world will face a bleak future if we do not act now. (A prediction of this future can be found in Stager’s (2015) recent comment.) What we will see are totally new business models or as Unruh (2015) puts it in a nutshell: “A rule-of-thumb I give managers is that if your sustainability performance indicators only improve when customers use your product less often, it means you’re in trouble.” But if business will not be as usual, we cannot afford to manage supply chains the same way as before. Rather we need to revolutionize our supply chain toolset. I expect that a large part of our future research projects will be about how supply chains, as the backbones of business, can make CO2-neutral business models happen.

Update (2015-12-12): A deal to attempt to limit the rise in global temperatures has been agreed. The Paris Agreement is certainly not perfect, but it will provide a hook on which people can hang their demands now. This will have supply chain implications.

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