Personal Predictions for Supply Chain Management in 2017
What are the upcoming SCM trends? Firstly, in our recent research about “hot topics” in SCM, sustainability topped the list. Indeed, 2016 has, most probably, been Earth’s hottest year on record. Ask yourself: “What will be my contribution to revolutionize our business models and create truly sustainable supply chains?” Secondly, 2017 could become the year for supply chain managers, as an increasing number of companies realize that SCM belongs in the C-suite – and that this can make a difference! Another example is Lego, the toy maker, which has recently appointed a supply chain expert to become new CEO. Companies seem to understand that SCM is not just another name for logistics; it rather creates the smile of value creation. Finally, machine learning and artificial intelligence have recently made an astonishing leap forward. Not much imagination is needed to realize that this development is about to “disrupt” decision making in SCM. Why not let machines select your suppliers? Have a good new year!
Jay W. Forrester (1918–2016)
Jay Wright Forrester was “an electrical engineer whose insights into both computing and organizations more than 60 years ago gave rise to a field of computer modeling that examines the behavior of things as specific as a corporation and as broad as global growth”, as the New York Times writes in an obituary. Forrester was a pioneer of systems dynamics, which “deals with how things change through time, which includes most of what most people find important”, as he once wrote. Forrester’s (1961) book Industrial Dynamics had a huge impact on the development of supply chain management. Herein, he studied “the behavior of industrial systems to show how policies, decisions, structure, and delays are interrelated to influence growth and stability”. His analysis of what we call “supply chain” today revealed an effect now known as the bullwhip effect – undoubtedly the single most important theory in supply chain management. Forrester died last week at his home in Concord, Massachusetts.
Forrester, J.W. (1961). Industrial Dynamics. ISBN 0262060035
The Refugees Who Make Our Clothes
Syrian refugee children “have been making clothes for British shoppers”, a BBC investigation has found. “All the brands say they carefully monitor their supply chains and do not tolerate the exploitation of refugees or children.” However, it seems that some brands do not have improved supply chain transparency much after the tragic Rana Plaza building collapse.
Why Isn’t SCM Research More Relevant to SCM Practitioners?
“There’s a pervasive paradox in academia”, as Nobel (2016) writes in her recent article (Why Isn’t Business Research More Relevant to Business Practitioners?): “Research conducted at business schools often offers no obvious value to people who work in the world of business.” It seems that “working on relevant problems has little impact on faculty members’ academic success” and the ability to engage with practitioners is not evaluated by academic appointment committees. But what can be done to avoid a disconnect between academics and practitioners in SCM research? How can we be more relevant? One way could be that editors and reviewers routinely ask for research questions that are relevant to practitioners. That does not mean that our research should be “applied”. But it needs to be ensured that research is relevant to the decisions faced by policymakers, managers, and other stakeholders. Nobel’s article provides several ideas that could help SCM researchers to become more relevant.
The State of Sustainable Supply Chains
Supply chain management can play a key role to help creating a more sustainable world that leaves no one behind. A new report, The State of Sustainable Supply Chains (pdf), echoes the voices of more than 100 specialists from 70 companies to reveal how companies “are embedding sustainability in their supply chains by managing risks and adopting corporate commitment to human rights, ethics, the environment and the communities from which they source goods and services”. The report was produced by Ernst & Young in association with the United Nations Global Compact. The authors present six main study findings: (1) “Supply chain sustainability can no longer be ignored”; (2) “companies are predominantly risk-driven with aspirations to unlock strategic opportunities and benefits”; (3) “companies tailor their approaches and governance to create sustainable supply chains”; (4) “leading companies are establishing a shared commitment with suppliers”; (5) “technology enables visibility and influence beyond tier 1”; and (6) “collaboration is critical for companies to achieve greater impacts”.
The Fascinating Future of SCM
Who would have said ten years ago that SCM is an exciting discipline? Not many! But isn’t it exciting what is currently going on? We can observe a number of disruptive innovations that are about to shift the way business is done. If we want to get a taste of what we will experience in SCM in the near future, we can look at how high-tech companies define it already now (see for example Microsoft’s definition of SCM): It will be about true visibility across end-to-end processes – and these processes involve raw material suppliers, component suppliers, …, and ultimately consumers. We might soon need to trash current textbooks that are based on over-simplistic OR models and Excel sheets. Such approaches are often too static to keep pace with current developments. Business schools will have to re-think their SCM curricula: Programming skills and knowledge about artificial intelligence might soon be expected by any SCM graduate.
Should Companies Have a Chief Supply Chain Officer (CSCO)?
Supply chain management has certainly become far more strategic in recent years. But does that mean that companies should have a chief supply chain officer (CSCO)? In their new article, titled The Appointment of Chief Supply Chain Officers to Top Management Teams, Roh, Krause & Swink (2016) aim to answer this question. Based on empirical data, they show that “financial leverage, internationalization, and diversification all predict CSCO appointment to the [top management team]” and that these contingencies also “positively moderate the effect of CSCO presence on firm performance”. Most importantly, appointing a CSCO makes sense when financial leverage, internationalization, and diversification levels are high, but it does not make sense when these levels are low. But companies should be fast now: The authors also reveal that “most of the contingency performance effects manifest only for early adopters of the CSCO role”. I am sure that CSCOs will soon be appointed in many companies.
Roh, J., Krause, R., & Swink, M. (2016). The Appointment of Chief Supply Chain Officers to Top Management Teams: A Contingency Model of Firm-level Antecedents and Consequences. Journal of Operations Management https://doi.org/10.1016/j.jom.2016.05.001
Can Supply Chains Become Truly Sustainable?
Our world is in crisis! Ten years ago, Time Magazine featured the headline: “Be Worried. Be Very Worried.” (about global warming). But things only got worse since. Leaked TTIP documents point to a race to the bottom in ecological standards between the EU and the U.S. New NASA figures show that April 2016 was the seventh month in a row that broke global temperature records and NOAA data show that “[t]he globally averaged temperature over land and ocean surfaces for 2015 was the highest among all years since record keeping began in 1880”. A second aspect of the sustainability debate relates to resource scarcity: Some metals might soon be in short supply. However, many companies have unsustainable business models in place. For example, Apple expects an iPhone to be replaced after just three years. Is there any hope? In their new JSCM article, Montabon et al. (2016) describe an ecologically-dominant logic which could help companies to develop sustainable business models. A must-read!
Montabon, F., Pagell, M., & Wu, Z. (2016). Making Sustainability Sustainable. Journal of Supply Chain Management, 52 (2), 11-27 https://doi.org/10.1111/jscm.12103
How Many Slaves Work For You?
When we buy our new shirt, phone or coffee, we rarely think about slavery in the global supply chains of these products. Slavery? In the 21st century? Isn’t slavery a thing of the past? Well, it might surprise us, but slavery still exists and it exists in almost every global supply chain. It has been estimated that 200,000 child slaves work in Ivory Coast alone, that a large proportion of coltan that is used for the capacitors of our phones is mined by slaves, and that the cotton we need for our clothes is often picked by children. The Slavery Footprint online tool answers the following question: “How many slaves work for you?” Based on research data and the data you enter in a short survey, the tool estimates the answer for you. After having taken the survey, you will most likely be quite surprised about how many slaves are involved in the supply chains of your products.
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.
