The Smile of Value Creation

The Smile of Value Creation

Mudambi (2008) notes that “value-added is becoming increasingly concentrated at the upstream and downstream ends of the value chain” and that “activities at both ends of the value chain are intensive in their application of knowledge and creativity”. Value-added along the value chain is, thus, represented by a “smiling curve”.

Mudambi, R. (2008). Location, Control and Innovation in Knowledge-intensive Industries. Journal of Economic Geography, 8 (5), 699-725 DOI: 10.1093/jeg/lbn024

Horizontal Alliances between Logistics Service Providers

Supply chain research typically investigates phenomena that occur in vertical relationships, e.g., between suppliers and buyers. In our new article, The Interplay of Different Types of Governance in Horizontal Cooperations: A View on Logistics Service Providers, we take a look at horizontal relationships. For example, such relationships occur when two LSPs collaborate to complement their service portfolios. Particularly, our research analyzes the influence of contractual governance on the effectiveness of two types of operational governance (a formal and a relational type). It relates contractual governance and operational governance to two major outcome dimensions of horizontal cooperations between LSPs (cooperation-based firm performance and cooperation-based learning). The results reveal that contractual safeguarding is able to partly replace process formalization when aiming for better cooperation-based firm performance and complement process formalization when aiming for cooperation-based learning. At the same time, relational capital is always complemented by contractual safeguarding independently from the desired cooperation outcome.

Raue, J.S., & Wieland, A. (2015). The Interplay of Different Types of Governance in Horizontal Cooperations: A View on Logistics Service Providers. International Journal of Logistics Management, 26 (2) DOI: 10.1108/IJLM-08-2012-0083

G7 Summit: World Leaders Discuss Global Supply Chains

Expectations were low for the G7 Summit in Germany, which ended today. It is thus all the more surprising that the participants have agreed to phase out the use of fossil fuels by the end of the century. When asked about what he – besides climate targets – considers the most important result of the summit, one of the participants, the President of the European Commission, Jean-Claude Juncker, made a remarkable statement today on German TV: “Well, this might surprise you, as it is rarely reported on in the news: We had an in-depth discussion about supply chains. Surely, we cannot accept that we, in our part of Europe, wallow in wealth and, in the face of the global problems caused by social dumping, let others pick up the bill for our wealth. What we need are fair conditions everywhere: labor rights, environmental standards. And this is what we will be working on.” It seems that the world’s leaders have put supply chains on their priority list.

Supply Chain vs. Supply Chain Competition

Many theory-testing efforts in our field are made by borrowing theories from other fields (e.g., transaction cost economics or resource-based theory), adapting them to a supply chain context and deriving hypotheses that are eventually tested statistically. By doing so, we have reached a lot! But we also need our own theories. For example, several years ago, Lambert & Cooper (2000) noted: “One of the most significant paradigm shifts of modern business management is that individual businesses no longer compete as solely autonomous entities, but rather as supply chains”. So, part of our theoretical toolkit could be a theory of supply chain vs. supply chain competition which could explain how the supply chains of Apple and Samsung interact. However, surprisingly few attempts have been made towards such a theory. This includes a thought piece by Rice & Hoppe (2001) and, more recently, a case study by Antai & Olson (2013). We need to continue this theory-building process.

Rice, J.B. & Hoppe, R.M. (2001). Supply Chain vs. Supply Chain: The Hype & the Reality. Supply Chain Management Review, 5 (5) http:

Antai, I. & Olson, H. (2013). Interaction: A New Focus for Supply Chain vs Supply Chain Competition. International Journal of Physical Distribution & Logistics Management, 43 (7), 511-528 DOI: 10.1108/IJPDLM-06-2012-0195

2014 NOFOMA Special Issue

I am very happy to present the 2014 NOFOMA Special Issue, which I have recently co-edited for the International Journal of Physical Distribution & Logistics Management. It contains some of the best research that has been presented at the 26th NOFOMA Conference, which took place at Copenhagen Business School last year. First, the article by da Mota Pedrosa et al. (2015) is titled Logistics Innovation Development: A Micro-level Perspective; it investigates the micro-foundations of customer knowledge acquisition during logistics innovation development. Second, Gammelgaard’s (2015) article, The Emergence of City Logistics: The Case of Copenhagen’s Citylogistik-kbh, provides a better understanding of the organizational change processes in city logistics projects. Third, in the article about Humanitarian Logistics: The Role of Logistics Service Providers by Vega & Roussat (2015), a new perspective to humanitarian logistics research is brought to us. Finally, Bhakoo et al. (2015), whose research deals with Supply Chain Structures Shaping Portfolio of Technologies, explore impact of integration through the “dual arcs” framework.

da Mota Pedrosa, A., Blazevic, V., & Jasmand, C. (2015). Logistics Innovation Development: A Micro-level Perspective. International Journal of Physical Distribution & Logistics Management, 45 (4), 313-332 DOI: 10.1108/IJPDLM-12-2014-0289

Gammelgaard, B. (2015). The Emergence of City Logistics: The Case of Copenhagen’s Citylogistik-kbh. International Journal of Physical Distribution & Logistics Management, 45 (4), 333-351 DOI: 10.1108/IJPDLM-12-2014-0291

Vega, D., & Roussat, C. (2015). Humanitarian Logistics: The Role of Logistics Service Providers. International Journal of Physical Distribution & Logistics Management, 45 (4), 352-375 DOI: 10.1108/IJPDLM-12-2014-0309

Bhakoo, V., Singh, P., & Chia, A. (2015). Supply Chain Structures Shaping Portfolio of Technologies: Exploring the Impact of Integration through the “Dual Arcs” Framework. International Journal of Physical Distribution & Logistics Management, 45 (4), 376-399 DOI: 10.1108/IJPDLM-12-2014-0298

Supply Management’s Next Evolution

Recent discussions have demonstrated that supply management organizations should not just focus on price but on total cost of ownership. But what is next? A new report, titled Supply Management’s Next Evolution, has now been published by strategy& (formerly Booz & Company). The authors believe that “the next step is for sourcing organizations to move beyond ‘optimizing the buy’ to ‘maximizing value’ for the enterprise” – a transition that could be challenging for many companies, especially if they lack talents that are able to take part in strategic discussions. The authors find that supply management organizations, who successfully manage this transition, follow four common practices: First, they “participate in (re-)architecting product and service designs and contribute to sourcing-related design changes in clear, quantifiable ways”. Second, they “optimize the supply base by tailoring suppliers to the demand profile”. Third, they “segment suppliers to better engage each distinctly”. Finally, they “demonstrate the bottom-line impact”.

Do We Really Need a New Smart Phone Every Two Years?

We all know about natural resource scarcity. However, as brand companies make consumers believe they need a new smart phone every two years, today’s global supply chains are responsible for incredibly large amounts of electronic waste. A new United Nations University report, titled The Global E-waste Monitor – 2014, details e-waste generation by region. The total amount of e-waste generated in 2014 is 41.8 million metric tonnes (Mt) and it is forecasted to increase to 50 Mt in 2018. This e-waste comprises 12.8 Mt of small equipment (e.g., toasters, video cameras), 11.8 Mt of large equipment (e.g., washing machines, photovoltaic panels), 7.0 Mt of cooling and freezing equipment, 6.3 Mt of screens, 3.0 Mt of small IT (e.g., mobile phones, computers), and 1.0 Mt of lamps. With 32% of the world’s total, the United States (7.1 Mt) and China (6.0 Mt) are responsible for most of the e-waste overall. The top per capita producers, however, are Norway (28.3 kg), Switzerland, Iceland, Denmark, and the United Kingdom.

Baldé, C.P., Wang, F., Kuehr, R., Huisman, J. (2015). The Global E-waste Monitor – 2014. United Nations University, IAS – SCYCLE, Bonn, Germany


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