The European car industry has supply chains that criss-cross the English Channel. Therefore, 23 automotive business associations across Europe have now joined forces to caution against a no-deal Brexit. “The UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel,” their joint statement says. However, pan-European supply chains are not a new idea. A research team has now uncovered the geographic origin of archaeological tin artifacts from the Mediterranean. They could demonstrate that tin from Israel, Turkey and Greece originated from tin deposits in Europe. These findings show that even in the Bronze Age, i.e. around 4000 years ago, far-reaching and complex trade routes must have existed between the Eastern Mediterranean and Europe. It is interesting to observe that millenia-old truths have been forgotten by those promoting a no-deal Brexit these days.
Berger, D. et al. (2015). Isotope Systematics and Chemical Composition of Tin Ingots from Mochlos (Crete) and other Late Bronze Age Sites in the Eastern Mediterranean Sea: An Ultimate Key to Tin Provenance? PLoS ONE 14 (6), e0218326. https://doi.org/10.1371/journal.pone.0218326
Today, I would like to call attention to a highly-cited article by Baldwin & Lopez-Gonzalez, titled Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses, which was published in The World Economy in 2015. The journal’s perspective – trade policy and other open economy issues – differs from the supply chain management perspective I normally talk about here, which gives this article an interesting complementary perspective. The authors use the term “supply-chain trade” to characterize “complex cross-border flows of goods, know-how, investment, services and people”. They compare two positions: “According to policymakers [supply-chain trade] is transformative; among economists, however, it is typically viewed as trade in goods that happens to be concentrated in parts and components”. Based on two rich datasets, they argue “that the facts are on the side of the policymakers”, as “[f]lourishing supply-chain trade has revolutionised global economic relations and the revolution is still in full swing”. Definitely a good read!
Baldwin, R. & Lopez-Gonzalez, J. (2015). Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses. The World Economy, 29 (1), 65-83. https://doi.org/10.1111/twec.12189
Lambert & Cooper’s (2000) paper Issues in Supply Chain Management has certainly been one of the most influential articles of our discipline. Herein, they presented a framework for SCM as well as questions for how it could be implemented. The framework contained a set of cross-functional, cross-organizational business processes that could be used as a way to manage relationships with customers and suppliers. The article continues to be an important cornerstone in research on the topic of integration. Now, more than fifteen years later, Lambert & Enz (2016) present an updated version, Issues in Supply Chain Management: Progress and Potential. Herein, the authors “review the progress that has been made in the development and implementation of the proposed SCM framework since 2000 and identify opportunities for further research”. Interestingly, they have changed their minds about some statements made in the 2000 article, for example that competition is no longer between companies, but between supply chains, which they now argue is not technically correct. The authors also present a revised version of the framework from 2000.
Lambert, D.M. & Cooper, M.C. (2000). Issues in Supply Chain Management. Industrial Marketing Management, 29 (1), 65-83. https://doi.org/10.1016/S0019-8501(99)00113-3
Lambert, D.M. & Enz, M.G. (2016). Issues in Supply Chain Management: Progress and Potential. Industrial Marketing Management, 62, 1-16. https://doi.org/10.1016/j.indmarman.2016.12.002
Our guest post today comes from Christoph Flöthmann, an expert in strategic and digital procurement, who has recently co-authored a new report.
Digitalization already has a major impact on procurement, as we write in our new report: 21st Century Procurement Skills. Thanks to artificial intelligence (AI) and robotic process automation (RPA), process-mining tools can be used to reshape and analyze all kinds of processes. Dashboards, governed by analytics bots, help to detect and prevent maverick buying in real-time without any human input. This is ultimately driving procurement effectiveness, efficiency and compliance. However, the digital transformation can only succeed if procurement has bright talents with the right skills in place who steer AI and manage the remaining high-value-adding tasks: First, digital fluency is a new meta-competency that enables managers to reach their targets by being in command of digital tools. Second, the ability for complex and collaborative problem-solving will be key to master the challenges posed by both digitalization and uncertain markets. Because AI and RPA take over tasks that are rather simple and require a low level of human collaboration, the procurement professionals’ scope is about to shift to highly complex and highly collaborative tasks such as developing and approving category strategies. Finally, procurement needs transformational leaders that are able to empower their teams to strive for developing and applying their new skill sets.
Dr. Christoph Flöthmann is a consultant in Roland Berger’s Operations Competence Center. In 2018, he and his project team were finalists at the World Procurement Awards in London for developing and implementing a digital procurement strategy platform. Before becoming a consultant, he completed his Ph.D. at Copenhagen Business School and Kühne Logistics University, specializing in research on competencies and careers in supply chain management.
Claviate Analytics have recently published their newest InCites Journal Citation Reports. It is great to see that the 2018 impact factors of all but one journals related to supply chain management have increased again, which highlights the rapidly growing relevance of our discipline. Two journals have an impact factor larger than 7: Journal of Operations Management (7.776; +2.9) and Journal of Supply Chain Management (7.125; +1.0). With an impact factor larger than 5, International Journal of Physical Distribution & Logistics Management (5.212; +1.0) has now arrived in the first league of management journals. Other SCM-related journals with high impact factors are: Supply Chain Management: An International Journal (4.296; +0.5), Management Science (4.219; +0.7), International Journal of Operations & Production Management (4.111; +1.2), Journal of Business Logistics (3.171; +0.3) and Journal of Purchasing & Supply Management (3.089; −0.6). But there are even more SCM journals with an impact factor around 2: Manufacturing & Service Operations Management (2.667; +0.9), Operations Research (2.604; +0.3), International Journal of Logistics Management (2.226; +0.5), Production and Operations Management (2.171; +0.4) and Decision Sciences (1.960; +0.3). Although the impact factor is certainly an imperfect proxy of a journal’s quality, I can only hope that rather conservative qualitative rankings, such as the ABS-AJG list, the UT Dallas list or the FT50 list, will finally be adapted to this new reality. This step is urgently needed!
“Accelerating technology and automation are resulting in wholesale transformation of the supply chain profession.” This is the key message of EY’s new report, titled Supply Chain: Skills for the Digital Era. It is not long, but definitely a good read. The report states that “[p]rocesses with repeatable elements such as planning, monitoring and forecasting can all be automated and enhanced by robotics, artificial intelligence and advanced analytics”. The authors observe that this leads to a transformation of supply chain management: “Where performance improvement in the past may have focused on the optimisation of individual operational areas, it now needs to harness a broader view that understands, for example, how supply chain impacts on profitability.” The report ends by identifying four future personas for the supply chain, based on their mindset (data-driven vs. vision-led) and style (investigative vs. collaborative): There are technologists, orchestrators, analysts and innovators. Does our research and teaching cover all of them?
Among the most interesting SCM articles I have recently read is Jack et al.’s (2018) recent study, titled Accounting, Performance Measurement and Fairness in UK Fresh Produce Supply Networks. Why I highlight this study here is because this is one of the rare interpretive studies related to SCM and it could therefore serve as a blueprint for those of us who struggle with the dominance of positivist studies in our discipline. The authors build on John Rawls’ theories of justice as fairness and apply it to the supply chain relationships between suppliers and supermarkets. They then ask three questions: First, “how performance measurement, risk management and communication of accounting information are used by intermediaries in an allegedly unfair commercial environment”. Second, “the extent to which the accounting and control practices observed support perceptions that suppliers in supermarket-dominated supply networks are treated unfairly”. And third, “what accounting and control practices would be indicative of fair commercial relationships?” I wish I could see more studies like this.
Jack, L., Florez-Lopez, R., & Ramon-Jeronimo, J.M. (2018). Accounting, Performance Measurement and Fairness in UK Fresh Produce Supply Networks. Accounting, Organizations and Society, 64, 17-30 https://doi.org/10.1016/j.aos.2017.12.005
The 20th century was dominated by an analog, linear and fossil economy, but we are about to shift to an economy that is digital, circular and post-fossil. It seems obvious that our discipline, to remain relevant, needs to drive this transition rather than clutching at obsolete managerial practices and theoretical perspectives. Those who participate in developing new business models will gain a first-mover advantage, while those trying to keep the 20th-century economy alive will soon be forced out of business.
My personal predictions for 2019 relate to these transitions. First, robotic process automation and process mining are increasingly shaping the way of modern business. This will have a tremendous influence on end-to-end business processes. Great chances are within our reach, as learning machines are taking over increasingly complex tasks from white-collar workers. But we should not overlook the danger of a small number of IT giants using their scripts to centrally control the majority of our global supply chain processes.
Second, we sometimes seem to assume that we can change the laws of nature, just like other laws. This becomes clearer when moving into the anthropocene epoch. But planetary boundaries, including the Earth’s carbon budget, cannot be negotiated or abolished like budgets in business. We simply have to accept that exponential growth and a capped number of planets – and this number is 1 – do not fit well together. One does not need to be good in math to understand that if we cannot change the number of planets, it will have to be our supply chains that will need a radical and ambitious transformation. But how can we achieve degrowth and decarbonization in our supply chains? We could shift from linear supply chains to circular ones, from selling products to selling services (e.g. the right to use instead of owning a phone), from consumer orientation to user orientation. Thus, SCM theory needs to shift away from the “consumer” of things they don’t need towards the “user” of limited resources. This would incentivize producers to keep resources in the loop instead of building products for the scrap yard.
Millennials are not primarily driven by income, but by doing something meaningful. They are scared by the climate crisis. My wish for 2019 is that we all start teaching them that they can be part of an exciting journey that could simultaneously save our planet and create income and wealth. Let us hope the best for 2019 and beyond!
There has recently been surge of interest in ecosystems as a distinct solution to the problem of inter‐firm coordination. Ecosystems play a particular role in sectors such as IT, telecommunications, video games, among others. In their recent SMJ article, Jacobides et al. (2018) define an ecosystem as “a set of actors with varying degrees of multilateral, nongeneric complementarities that are not fully hierarchically controlled”. From their research it becomes apparent why and when ecosystems emerge, and what makes them distinct from other governance forms, including markets, alliances, or hierarchically managed supply chains. An important difference between ecosystems and supply chains is that in supply chains “the hub (OEM, or buying firm) has hierarchical control—not by owning its suppliers, but by fully determining what is supplied and at what cost”, whereas ecosystems tend to be rather modular. The authors also reflect on “when we might expect to see ecosystems displace traditional market‐based arrangements or vertically integrated supply chains”.
Jacobides, M.G., Cennamo, C., & Gawer, A. (2018). Towards a theory of ecosystems. Strategic Management Journal, 39 (8), 2255-2276 https://doi.org/10.1002/smj.2904