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World Bank Study: Global Shortage of Logistics Skills (Guest Post by Kai Hoberg, KLU)

My guest post today comes from Kai Hoberg from the Kühne Logistics University (KLU) in Hamburg. Together with his co-authors, Alan McKinnon and Christoph Flöthmann, he has just published a new report, which is commissioned by the World Bank and analyzes the shortage of qualified logistics personnel.

Qualified logistics personnel is in short supply worldwide. This is the conclusion of our new report, titled Logistics Competencies, Skills, and Training: A Global Overview. While there are too few well-trained executives in the logistics sector in emerging countries, there is an acute shortage of qualified staff at the operational level in developed economies. We argue that this skills shortage is likely to worsen in the absence of new initiatives. There are two aspects that deserve further elaboration: First, physically, there are too few people available to cover vacant position in the logistics sector. Second, the currently employed workforce is partially lacking the skills demanded for their job. Based on an empirical analysis, we derive multiple recommendations for relevant stakeholders, i.e. companies, governmental institutions and logistics associations. The proposed measures include innovative training methods like logistics-related business games that can be employed without requiring high upfront investments or long implementation lead-times.

Kai Hoberg is Associate Professor of Supply Chain & Operations Strategy at KLU. In his academic career he was a visiting scholar at Cornell University, Israel Institute of Technology, University of Oxford and National University of Singapore. He is on the scientific advisory board of the German Logistics Association (BVL) and has been working with companies like Procter & Gamble, McKinsey & Company, Jungheinrich and Zalando on supply chain innovation projects.

Rethinking the Future of Plastics

Today’s economy is a plastics economy, as most of our global supply chains contain plastics. A report, published by the Ellen MacArthur Foundation, is titled The New Plastics Economy: Rethinking the Future of Plastics. Herein it becomes evident that linear supply chains need to become circular: “The circular economy is gaining growing attention as a potential way for our society to increase prosperity, while reducing demands on finite raw materials and minimising negative externalities. Such a transition requires a systemic approach, which entails moving beyond incremental improvements to the existing model as well as developing new collaboration mechanisms.” The report “explores the intersection of these two themes, for plastics and plastic packaging in particular: how can collaboration along the extended global plastic packaging production and after-use value chain, as well as with governments and NGOs, achieve systemic change to overcome stalemates in today’s plastics economy in order to move to a more circular model?”

Can Your Supply Chain Avoid Extinction?

“Slicing and dicing the supply chain to service ever more diverse and demanding customers has become the core challenge for Chief Supply Chain Officers. But simply expanding the number of supply chain configurations and maintaining separate organizations to manage them—the approach followed by most organizations—is driving too much complexity and wasting potential synergies.” This is how a new report by Accenture starts. It is titled: Can Your Supply Chain Avoid Extinction? The authors recommend three strategies to move toward a differentiated supply chain: First, companies should focus on supply chain configurations that drive value, as this will serve customers best. Second, companies should choose the right digital technologies for each configuration, hereby applying only those capabilities that enable them to deliver the right supply chain response. Third, companies should find the right structure and governance; this includes embedding innovation thinking at the heart of the organization. Have a look at the full report.

Implications from the Rana Plaza Disaster (Guest Post by Brian Jacobs and Vinod Singhal)

Today’s guest post comes from Brian Jacobs and Vinod Singhal, who present the results of their recent research on social issues in global textile supply chains.

Rana Plaza, an eight-story building in Bangladesh that housed garment factories employing approximately 5000 workers, collapsed on April 24, 2013. The resulting fatalities (over 1100) and injuries (over 2400) made it one of the worst industrial accidents in history. The scale of this tragedy increased awareness of the risks and costs of sourcing from low-cost countries. Such risks and costs are often assumed to be sufficient to motivate firms to source production in developed, high-cost countries rather than developing, low-cost countries. To examine this assumption, we studied the stock market reaction to 39 global apparel retailers with significant sourcing in Bangladesh. We found that although stock market reaction to retailers on the day of the Rana Plaza disaster was negative, its magnitude and significance dissipated by the following day. Our research shows that capital market forces alone are insufficient to prevent tragedies such as the Rana Plaza disaster, or to motivate large scale changes in sourcing patterns. In fact, garment exports from Bangladesh have increased since 2013 even though substandard working conditions persist. While managers should weigh ethics and their moral obligation in addition to financial considerations, it is doubtful that firms can affect the needed changes without participation by non-market forces such as NGOs and policymakers. For full details of our research, please see our article The Effect of the Rana Plaza Disaster on Shareholder Wealth of Retailers: Implications for Sourcing Strategies and Supply Chain Governance, forthcoming in Journal of Operations Management.

Vinod Singhal is a Professor of Operations Management and holds the Charles W. Brady Chair at the Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia. Brian Jacobs is an Associate Professor of Supply Chain Management at the Eli Broad College of Business, Michigan State University, East Lansing, Michigan.

Jacobs, B., & Singhal, V. (2017). The Effect of the Rana Plaza Disaster on Shareholder Wealth of Retailers: Implications for Sourcing Strategies and Supply Chain Governance. Journal of Operations Management DOI: 10.1016/j.jom.2017.01.002

Global Supply Chain Report 2017 (Guest Post by Dexter Galvin)

I am happy to share the following guest post by Dexter Galvin, Head of Supply Chain, CDP. Thank you for contributing to my blog.

Our latest Global Supply Chain Report 2017, written in partnership with BSR and the Carbon Trust, revealed emissions savings of 434 million tonnes disclosed by suppliers in 2016. That’s more than the annual emissions of France, and it shows that the supply chain is a critical component – the missing link – in securing our sustainable, low-carbon future. Our data showed that supply chain action isn’t just about reducing emissions; it’s also good for the bottom line. Companies with emissions reduction projects disclosed cost savings of $12.4 billion as a result of their carbon-cutting measures – double what was reported in 2015. Almost half of the top 100 projects by savings were related to energy efficiency, and with a payback period of three years or less, the majority of projects had an attractive investment profile too. While the savings achieved by suppliers were certainly impressive, around half of the 4,300 companies we surveyed didn’t report any emissions reduction activities at all. So think what the impact could be – on costs and carbon levels – if they all took action?

Dexter runs the Supply Chain program at the global climate change NGO, CDP, from their London Headquarters. He has launched a number of important global initiatives to drive climate action in private and public sector supply chains, including CDP’s Action Exchange initiative. You can follow him on Twitter: @GalvinDex

SCM – It’s All About Data

The volume, variety and velocity of business and supply chain data are increasing dramatically. At the same time, improved technologies, such as artificial intelligence and machine learning, are already on the horizon. Ernst & Young has recently published an interesting report, titled Digital Supply Chain: It’s All About That Data. The authors make one thing very clear: “Companies must act now to focus, simplify and standardize big data through an enterprise data management strategy.” If companies fail to do so, the authors argue, “technology will drive increasing data cost, complexity and inefficiency; companies will be unable to benefit from advanced analytics like machine learning; and they will be unprepared for the next wave of data growth triggered by new technologies like IoT and blockchain.” In other words, companies fail to be successful unless they become masters of their supply chain data. Maybe business schools should increase the proportion of IT knowledge in their SCM curricula?

Frequency of “Supply Chain” in Books

The following Google Ngram Viewer graph shows the frequency of the terms “supply chain”, “logistics” and “procurement” in books published between 1975 and 2008. It turns out that the use of the term “supply chain” accelerated in the late 1990s and overtook “logistics” in 2007. We can only speculate about the current use, as Google’s database ends in 2008.n-gram_supply_chain_logistics_procurement

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