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Supply Chain Resilience

In our new article, Two Perspectives on Supply Chain Resilience (Wieland & Durach, 2021), we provide a new definition of supply chain resilience:

Supply chain resilience is the capacity of a supply chain to persist, adapt, or transform in the face of change.

Based on our observation that SCM scholars have often taken an engineer’s perspective to interpret supply chain resilience, we argue that it needs to be complemented with a social–ecological perspective. Our discipline is surprisingly isolated from the ongoing resilience debates in other fields, such as ecology and urban science. Supply chain resilience is not just about “bouncing back” and persistence, as the engineer’s view implies. Supply chain resilience promises to be about “bouncing forth”, adaptation, and transformation. It is time to study the assumptions we make about the supply chain more explicitly. The supply chain is not only an engineered system that needs to be stabilized, as it may be the case with a subway system. It is a fluid system that contains social actors and is anchored in our complex world.

Wieland, A., & Durach, C. F. (2021). Two Perspectives on Supply Chain Resilience. Journal of Business Logistics.

Food Supply Chain Emissions

The importance of food supply chain emissions has increased. According to a study, entitled Food Systems Are Responsible for a Third of Global Anthropogenic GHG Emissions, recently published in Nature Food by Monica Crippa et al. (2021), our food systems emit 34% of the world’s greenhouse gas emissions every year. It turns out that “[t]he largest contribution came from agriculture and land use/land-use change activities (71%), with the remaining were from supply chain activities: retail, transport, consumption, fuel production, waste management, industrial processes and packaging”. What is remarkable about this study is the level of detail and size of the dataset, called EDGAR-FOOD, which identifies the sources of greenhouse gas emissions across the entire food production and supply chain. One of the coauthors argues that “[a]ny policy decision requires a good and robust evidence base”, hoping that “EDGAR-FOOD will be helpful in identifying where action to reduce food system greenhouse gas emissions is most effective”.

Crippa, M., Solazzo, E., Guizzardi, D., Monforti-Ferrario, F., Tubiello, F. N., & Leip, A. (2021). Food Systems Are Responsible for a Third of Global Anthropogenic GHG Emissions. Nature Food, 2, 198–209.

Critical Engaged SCM Research

The Journal of Supply Chain Management is doing an excellent job of stretching the boundaries of our discipline. I know from various conversations with colleagues that I am not the only fan of the journal. I would like to give an example of a very powerful recent JSCM paper: Touboulic, McCarthy, & Matthews (2020). It is entitled Re-Imagining Supply Chain Challenges Through Critical Engaged Research. The authors explore “how engaged research can support the development of the theory and practice of supply chain management (SCM) and present critical engaged research as an extended form of engaged research”. Check out the following video from the authors explaining their vision of critical engaged SCM research.

Net-Zero Challenge: The Supply Chain Opportunity

A new World Economic Forum report, entitled Net-Zero Challenge: The Supply Chain Opportunity and co-authored with Boston Consulting Group, showcases “the opportunity that all companies have for huge climate impact through action to decarbonize global supply chains”. This report argues that addressing supply-chain emissions enables many companies to impact “a volume of emissions several times higher than they could if they were to focus on decarbonizing their own direct operations and power consumption alone”. Among the major findings of the report: (1) Many companies can multiply their climate impact by decarbonizing supply chains; (2) Eight supply chains account for more than 50% of global emissions; (3) Net-zero supply chains would hardly increase end-consumer costs; (4) But: decarbonizing supply chains is hard. The report contains a step-by-step guide, which shows nine major initiatives every company can undertake. These initiatives were identified through interviews with a large number of global companies that, according to the authors, lead the way in reducing supply-chain emissions.

Personal Predictions for Supply Chain Management in 2021

The pandemic has caused a great deal of suffering to many people. More than ever, the crisis made the general public aware of the importance of supply chain management. In the beginning, many realized that supply chain disruptions can create problems with supplies of food, face masks, and medicine. Later, many recognized the importance of functioning SCM for vaccine distribution. Most importantly, the crisis teaches us that we have to leave outdated narratives behind. Much has been questioned, many new ideas have emerged. This crisis could therefore turn into an opportunity for the necessary societal transformation. It might just be a foretaste of the much more existential crises that lie ahead. If lockdowns and vaccinations are answers to the pandemic, then the answers to the climate and biodiversity crises are what? Many of these answers might be found in our global supply chains. Identifying them could be an important leadership opportunity for SCM in 2021. Now is the time for the SCM community to positively shape the future!

What the 2020 Nobel Prize Means for SCM

This year’s Nobel Memorial Prize in Economics goes to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats”. Wilson “developed the theory for auctions of objects with a common value – a value which is uncertain beforehand but, in the end, is the same for everyone”. Examples for this include the volume of minerals in a particular area and the future value of radio frequencies. Milgrom “formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder”. He demonstrated that an auction format “will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding”. I am sure their work will now attract even more attention in the SCM discipline, because auctions already play an important role in many supplier–buyer relationships. Let us not forget the important work on auctions that has already been conducted in our discipline, for example by Wagner & Schwab (2004), Hartley and her coauthors (2006) and Carter & Kaufmann (2007), to name just a few.

Risk, Resilience, and Rebalancing in Global Value Chains

The McKinsey Global Institute (MGI) has recently published a new report: Risk, Resilience, and Rebalancing in Global Value Chains. The authors show that becoming more resilient does not have to mean sacrificing efficiency. Their research highlights the many options for strengthening resilience. They argue that “[companies] have an opportunity to emerge from the current crisis more agile and innovative.” They also write: “Intricate supplier networks that span the globe can deliver with great efficiency, but they may contain hidden vulnerabilities. Even before the COVID‑19 pandemic, a multitude of events in recent years temporarily disrupted production at many companies. Focusing on value chains that produce manufactured goods, this research explores their exposure to shocks, their vulnerabilities, and their expected financial losses. We also assess prospects for value chains to change their physical footprint in response to risk and evaluate strategies to minimize the growing cost of disruptions.” I found this report to be very insightful.

Remaining Carbon Budget

The IPCC defines the world’s remaining carbon budget as the cumulative net global anthropogenic CO2 emissions to the time that emissions reach net zero that would result in limiting global warming to a given level, accounting for the impact of other anthropogenic emissions. In other words, it allows us to calculate how much CO2 can still be released to limit global warming to a maximum of 1.5°C and 2°C, respectively. Currently, emissions equivalent to 42 gigatonnes (Gt) of CO2 are released globally every year. The following MCC Carbon Clock shows that time is ticking very fast and that we urgently would need to decarbonize our global supply chains.

Supply Chain Risk Management: Revisiting Ericsson

Norrman & Jansson’s (2004) case study on Ericsson’s supply chain risk management (SCRM) practices is definitely part of the canon of SCM literature. After 15 years, it was time for an update. Together with Andreas Norrman, I visited Ericsson in Stockholm to investigate their SCRM practices. The results can now be found in our new article, The Development of Supply Chain Risk Management over Time: Revisiting Ericsson. Our article demonstrates how Ericsson’s SCRM practices have developed, indicating that improved functional capabilities are increasingly combined across silos and leveraged by formalized learning processes. Important enablers are IT capabilities, a fine-grained and cross-functional organization, and a focus on monitoring and compliance. Major developments in SCRM are often triggered by incidents, but also by requirements from external stakeholders and new corporate leaders actively focusing on SCRM and related activities. Although our article did not focus on SCM in the era of COVID-19, decision-makers can learn about many practices and tools that might also be useful to cope with the current situation.

Norrman, A. & Wieland, A. (2020). The Development of Supply Chain Risk Management over Time: Revisiting Ericsson. International Journal of Physical Distribution & Logistics Management, 50 (6), 641-666.

How To Be An Anti-Racist in SCM

The world is currently watching the shocking cases of police violence in the United States. But racism also exists on a smaller, more subtle level. In a recent interview, Terry Esper, a logistics scholar from The Ohio State University, shares his experience with racism and gives us excellent advice.