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Personal Predictions for Supply Chain Management in 2020

When I made my predictions last year, the first one being about new technologies, the second one related to our planetary boundaries, I certainly underestimated the pace of these developments.

The first prediction has now already materialized in many companies across the globe. More and more supply chain managers I have talked to have implemented innovative solutions, such as robotic process automation and process mining. What I can also see are more and more business models that rely on machine learning.

The second prediction came true in an oppressive way: Europe was hit by an unprecedented heat wave, Southern Africa by a terrifying drought. The Amazon – on fire. Siberia – on fire. And now? Australia is on fire; it is estimated that, so far, at least 480,000,000 mammals, birds and reptiles were killed. This is not a Mad Max movie; the world is in climate crisis. Political leadership is lacking from some of those countries with the highest per-capita emissions, including the U.S. and, tragically, Australia. What gives hope is the emergence of a global climate movement.

Instead of just repeating my predictions from last year, I would like to recommend three books related to these topics (see link). Visionary companies and courageous supply chain managers don’t look back, they don’t waste time with 20th-century business models. They look forward and are part of an exciting journey that shapes a digital, post-carbon economy. They will turn challenges into first-mover advantages and create great business opportunities. Isn’t this what SCM is all about?

I wish you a good start into the new year!

Exciting Times Are Ahead

The whole world can see it clearly. A wind of change is currently blowing through the air and the past eventful weeks have almost turned it into a storm: The IPCC published its Special Report on the Ocean and Cryosphere in a Changing Climate; world leaders at the Climate Action Summit in New York demonstrated growing recognition that the pace of climate action must be rapidly accelerated; climate activist Greta Thunberg received the Right Livelihood Award “for inspiring and amplifying political demands for urgent climate action reflecting scientific facts”; several million people across the globe joined the Global Climate Strike; Germany followed other countries by introducing a carbon price; and the European Investment Bank decided to divest from fossil fuel projects. It is becoming increasingly clear that the fossil era, which has long shaped the global power structure, is coming to an end. While late movers are now desperately trying to conserve the obsolete fossil solutions of the 20th century with the help of trade barriers, those states relying on green technologies are gaining significant influence. The task of our discipline is now to adapt our theories, methods and practices to this new reality. Exciting times are ahead!

Mapping the Cobalt Supply Chain

Cobalt has become a key commodity for battery-powered vehicles and other electronic products. The Democratic Republic of Congo is the largest producer of cobalt. The so-called “Copperbelt” in the southeastern part of the country hosts most of the cobalt ore, mainly extracted through large-scale industrial mining but also through artisanal and small-scale mining activities by more than 100,000 miners. The sector faces numerous sustainability challenges within local supply chains, such as child work and other human rights violations. The Federal Institute of Geosciences and Natural Resources from Germany has now published a report, titled Mapping of the Artisanal Copper-Cobalt Mining Sector in the Provinces of Haut-Katanga and Lualaba in the Democratic Republic of the Congo, which analyzes the cobalt supply chain in the Congo. The focus of the mapping lay on the beginning of the supply chain, i.e. from the cobalt ore to the first domestic sale of production, which is often overlooked by Western consumers and users.

Supply Chains in the Bronze Age

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.

Supply-chain Trade

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.

Issues in Supply Chain Management

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.

Lambert, D.M. & Enz, M.G. (2016). Issues in Supply Chain Management: Progress and Potential. Industrial Marketing Management, 62, 1-16.

21st Century Procurement Skills (Guest Post by Christoph Flöthmann)

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.

2018 Impact Factors of SCM Journals

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!

The Digital Supply Chain Transformation

“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?

The Supply Chain of Tomorrow

It is time for a new video! Future Insights Network’s CEO and Co-Founder, Maria P. Villablanca, recently talked to me about the supply chain of tomorrow. Enjoy watching the video…