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The Evolution of Trust

Trust plays an important role in supplier–buyer relationships. One way to approach this important concept is game theory. If you have ever wondered how game theory could be taught in a supply chain management course, I can recommend Nick Case’s The Evolution of Trust – an interactive guide to the game theory of why and how we trust each other. The guide starts by explaining the game of trust (= the prisoner’s dilemma). Then it illustrates what happens if multiple games and multiple tournaments are played with different players. We can learn from this guide that “the game defines the players” but also that “the players define the game”. We can learn that, in order for trust to evolve, we need the knowledge of possible future repeat interactions, we need a win–win situation, and we need a low level of miscommunication. I will definitely use The Evolution of Trust in my future supply chain management courses.

Fisher’s Supply Chain–Product Match/Mismatch Framework

I have used Fisher’s (1997) supply chain–product match/mismatch framework (What Is the Right Supply Chain for Your Product?) in my teaching for years! Herein, the author argues that functional products require a physically efficient supply chain strategy, whereas innovative products require a market-responsive supply chain strategy. Fisher’s framework finds empirical support: Wagner et al. (2012) demonstrate that “the higher the supply chain fit, the higher the Return on Assets (ROA) of the firm”. Interestingly, a majority of the firms from their sample achieve a negative misfit, i.e. they target high responsiveness for their supply chain although their products are functional. Extensions of the framework exist, for example by Lee (2002), who adds a “supply” dimension, and more recently Gligor (2017), who argues that “benefits generated by perfect supply chain fit might be offset by the resources deployed to achieve that fit”. Research presented by Perez-Franco et al. (2016) helps to “capture, evaluate and re-formulate the supply chain strategy of a business unit”.

Fisher, M.L. (1997). What Is the Right Supply Chain for Your Product? Harvard Business Review, 75 (2), 105-116.

Showing Creativity in SCM Research

A colleague recently recommended the following article to me: Mansfield (2003): Spatializing Globalization: A “Geography of Quality” in the Seafood Industry. Herein, the author takes a look at the quality of products in that industry. She challenges “recent perspectives that define quality as an alternative to global, industrial forms of production” and “finds that quality is also important for industrial food production and for the global geography of the surimi [a fish paste] seafood industry”. In general, the author takes an interpretive approach – an approach that is almost absent in SCM research, and that might be inspirational for our otherwise empiricist discipline. Particularly, she employs actor–network theory, which proposes that reality does not exist by nature but is rather constructed through socio-material networks. SCM researchers could learn from such a type of research that (1) theory could be mobilized in many different creative ways; (2) technical supply chain issues are embedded in larger social-political arrangements; (3) geography might inform SCM (theoretically as well as materially); and (4) “quality”, or other concepts, do not exist by nature but are stabilized through networks.

The End of Supply Chain Theory?

It is among the common research practices in our field to build a statistical model with a limited set of variables in order to take the lens of a theory – often being alien to our field – on a supply chain phenomenon, and to test this model based on maybe 200 datasets. Other researchers collect data from three or four case companies to build or extend a research model that comprises a small set of propositions. So far so good. “So far so outdated”, I should say if I were to be malicious. Why? Researchers in fields like supply chain management might soon (or already?) be competing with “companies like Google, which have grown up in an era of massively abundant data, [that] don’t have to settle for wrong models”, as the editor in chief of Wired put it already back in 2008, proclaiming The End of Theory. So, is the data deluge about to make our research obsolete? If so, how should our community adapt to this new reality?

Purchasing & Supply Management: What We Should Teach (Guest Post by Lydia Bals)

Today’s guest post comes from Lydia Bals, who presents project PERFECT’s recent insights on competences in purchasing & supply management.

Project Perfect Logo

Professional purchasing & supply management (PSM) forms the link between a complex network of internal and external stakeholders with increasing international dependencies and performance requirements. As part of the PERFECT project (Purchasing Education and Research for European Competence Transfer) a group of researchers conducted case study research to identify individual buyer competences, knowledge and skills that are required to cope with such current requirements and prepare for future trends. In total, 46 interviews were conducted with representatives from 16 companies, standing for various industries in the European Union, and differing in their sizes and business models. The practitioners emphasized that PSM employees should possess both operational and basic PSM knowledge as well as competences related to communication and relationship management. In terms of specific future competences, “sustainability” and “digitization” stood out. Digitization is expected to particularly impact PSM operational tasks with regards to automation: Sub functions, especially taking care of the purchase-to-pay process, are expected to disappear. As a result, companies are advised to qualify personnel accordingly to facilitate their transfer to other, more strategic roles. Regarding the strategic PSM tasks, looking at the source-to-contract process, the critical question for the future is how technology will enable different ways of working, e.g. by application of big data analytics. As these are newer competence areas, the practitioners indicated that a breakdown of knowledge and competences for “sustainability” and “digitization” is needed to prepare employees as well as students adequately for such future developments. For more information, see the full Project PERFECT Intellectual Output 2 White Paper.

Lydia Bals is Professor of Supply Chain & Operations Management at the University of Applied Sciences Mainz and affiliated with the Department of Strategic Management & Globalization, Copenhagen Business School. She was the project lead for the PERFECT case study data collection and analysis.

Teaching Case – Zara: The World’s Largest Fashion Retailer

The Case Centre has recently selected the winners of their 2017 Awards and Competitions. This year’s winning case in the Production and Operations Management category is closely related to supply chain management: Zara: The World’s Largest Fashion Retailer, written by Kasra Ferdows, Jose A.D. Machuca & Michael Lewis. This case is an updated version of the 15th in the ranking of top 40 overall best selling Zara case. The new case “presents a detailed and updated description of Zara’s unique operating model and many of its best practices: its retailing, design, order administration, production, and distribution systems” and “also includes new sections about Zara’s on-line business and Inditex’ increased attention to ethical and sustainability issues in its extended supply chain”. The learning objectives cover several important aspects of global supply chain management, including the design and operations of global supply networks, making this teaching case particularly relevant for courses related to our discipline.

The Pen Is Mightier than the Keyboard

My students tend to use their laptops in classes. I have forwarded this very interesting article by Mueller & Oppenheimer (2014) to them. It was published in one of the most influential journals in psychology and contains good arguments to stop this practice. First, the authors summarize existing research that finds that laptops serve as distractions. Students typically self-report a belief that laptops in class are beneficial. Even when they admit that laptops distract them, they believe the benefits outweigh the costs. Research finds that students using laptops are not on task, show lower academic performance, and are less satisfied with their education than students who do not use laptops. Second, the authors’ own results suggest that “even when laptops are used solely to take notes, they may still be impairing learning because their use results in shallower processing”. They found that “students who took notes on laptops performed worse on conceptual questions than students who took notes longhand”.

Mueller, P., & Oppenheimer, D. (2014). The Pen Is Mightier Than the Keyboard. Psychological Science, 25 (6), 1159-1168 DOI: 10.1177/0956797614524581

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