Today, I present Mentzer et al.’s (2001) must-read article, Defining Supply Chain Management. The authors demonstrate that, “although definitions of SCM differ across authors […], they can be classified into three categories”: (1) SCM as a management philosophy (= supply chain orientation), which involves a systems approach to viewing the supply chain as a whole, a strategic orientation toward cooperative efforts, and a customer focus; (2) SCM as an implementation of a management philosophy, which involves seven activities such as “mutually sharing information”; and (3) SCM as a set of management processes, which includes processes such as “customer relationship management” and “order fulfillment”. The article also contains a useful definition of SCM as “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole”.
Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. & Zacharia, Z.G. (2001). Defining Supply Chain Management. Journal of Business Logistics, 22 (2), 1–25. https://doi.org/10.1002/j.2158-1592.2001.tb00001.x
The P value debate has revealed that hypothesis testing is in crisis – also in our discipline! But what should we do now? Nature recently asked influential statisticians to recommend one change to improve science. Here are five answers: (1) Adjust for human cognition: Data analysis is not purely computational – it is a human behavior. So, we need to prevent cognitive mistakes. (2) Abandon statistical significance: Academia seems to like “statistical significance”, but P value thresholds are too often abused to decide between “effect” (favored hypothesis) and “no effect” (null hypothesis). (3) State false-positive risk, too: What matters is the probability that a significant result turns out to be a false positive. (4) Share analysis plans and results: Techniques to avoid false positives are to pre-register analysis plans, and to share all data and results of all analyses as well as any relevant syntax or code. (5) Change norms from within: Funders, journal editors and leading researchers need to act. Otherwise, researchers will continue to re-use outdated methods, and reviewers will demand what has been demanded of them.
Leek, J., McShane, B.B., Gelman, A., Colquhoun, D., Nuijten, M.B. & Goodman, S.N. (2017). Five Ways to Fix Statistics. Nature, 551 (2), 557-559. DOI: 10.1038/d41586-017-07522-z
Today I present my personal predictions for supply chain management in 2018. Sustainability and digitization will certainly top the SCM agenda! First, much more action is needed to combat global warming. SCM could play a key role to cope with this challenge, as a “supply chain” rather than “company” perspective helps to understand that upstream greenhouse gas emissions may occur anywhere in the world. Unfortunately, time is slowly running out! New technologies like blockchain, ID systems like bluenumber and standards like ISO 24000 could help us make a breakthrough. Second, we might see increased momentum to move beyond the machine learning hype. Machine learning could soon be integrated in all kinds of value-creating processes. But while IT giants like Google, Amazon and SAP highlight the strengths and opportunities of such technologies, we should also take the weaknesses and threats into consideration: Will robots take our children’s jobs? And what does all this mean for SCM? 2018 will bring some more questions and hopefully even more answers.
It is widely known that the term “supply chain management” was popularized by Keith Oliver, among others, in the early 1980s. Interestingly, in a 2003 strategy+business article, Oliver has revealed that, looking for a catchy phrase, his consulting team originally proposed the term “integrated inventory management” (I2M). While, in our modern understanding, SCM is focused not only on intra- but also inter-organizational coordination and typically takes a more strategic perspective, “I2M” already focused on “tearing down the functional silos that separated production, marketing, distribution, sales, and finance to generate a step-function reduction in inventory and a simultaneous improvement in customer service”. Later, at a key steering committee meeting, Oliver’s team introduced “I2M” but “the phrase failed to resonate with participants”. One of the managers, a Mr. Van ’t Hoff, challenged Oliver to explain what he meant by “I2M”. I am not sure whether Mr. Van ’t Hoff is aware of it, but this moment marked the birth of the term “supply chain management”:
Among the best ways to teach supply chain management is by discussing different types of real-world supply chains. In their interesting report, Enabling Trade: From Valuation to Action, the World Economic Forum (in collaboration with Bain & Company) present several supply chains that could be discussed. The introdution makes one point clear: “The overall benefits to nations, producers and consumers are clear. However, making it happen is not as simple – particularly because supply chains cut across multiple stakeholders, requiring collaboration and leadership that goes beyond local constituents and borders.” This is where the report delves deeper into examples of practical application. Among the examples presented in the report is the avocado supply chain. This example demonstrated how “a number of supply chain improvements have enabled Kenyan avocados to be profitably exported to high-value markets in the European Union”. It illustrates that supply chains “must be able to react to changes in market dynamics in order to maintain a virtuous cycle”.
Academics and students often have very different ideas in mind when they talk about case study research. Indeed, case studies in SCM research are not alike and several different case study research designs can be distinguished. A recent article by Ridder (2017), titled The Theory Contribution of Case Study Research Designs, provides an overview of four common approaches. First, there is the “no theory first” type of case study design, which is closely connected to Eisenhardt’s methodological work. The second type of research design is about “gaps and holes”, following Yin’s guidelines. This type of case study design is what can be seen in SCM journals maybe most often. A third design deals with a “social construction of reality”, which is represented by Stake. Finally, the reason for case study research can also be to identify “anomalies”. A representative scholar of this approach is Burawoy. Each of these four approaches has its areas of application, but it is important to understand their unique ontological and epistomological assumptions. A very similar overview is provided by Welch et al. (2011).
Ridder, H.G. (2017). The Theory Contribution of Case Study Research Designs. Business Research, 10 (2), 281-305. DOI: 10.1007/s40685-017-0045-z
Impact of the Fourth Industrial Revolution on Supply Chains (Guest Post by Wolfgang Lehmacher, Forum)
My guest post today comes from Wolfgang Lehmacher, who presents a white paper prepared by the World Economic Forum in collaboration with BVL International.
The report, titled Impact of the Fourth Industrial Revolution on Supply Chains, provides preliminary considerations for Fourth Industrial Revolution-driven supply chains. Based on the impact on supply chains of advanced technologies, in particular the Internet of Things, artificial intelligence, advanced robotics, enterprise wearables and additive manufacturing, the report highlights seven areas of focus for business and government: new roles and responsibilities, supply chain performance, agile organizations, ecosystem for skilling, support for SMEs, leadership and neutral platforms. The Fourth Industrial Revolution changes the way in which we produce and manage the supply chain, and paves the way for the creation of new value chains. The following developments are expected to play a major role in this process going forward: Open innovation, i.e. greater openness of companies towards involving both other companies and their customers in innovation and development processes, distributed manufacturing as an approach to the comprehensive decentralization of production structures and the elimination of classic manufacturing paradigms, and new collaboration models between companies, primarily horizontally, but also vertically.
Wolfgang Lehmacher is Head of Supply Chain and Transport Industries at the World Economic Forum. During his career he was Partner and Managing Director (China and India) at the global strategy firm CVA and President and CEO of GeoPost Intercontinental. He is member of the IATA Air Cargo Innovation Awards Jury and the Logistikweisen, a think tank under the patronage of the German Federal Ministry BMVI. He is FT, Forbes, Fortune, BI contributor and author of books, including The Global Supply Chain – 2017 and How Logistics Shapes Our Lives – 2013 (German).