Citations of Excellence Awards 2014
Like every year (see my previous post), Emerald rewards authors of exceptional papers covered in its extensive Emerald Management Reviews database with a Citation of Excellence Award (full list). I went through the latest list of the Citations of Excellence Top 50 papers. This time, the list contains at least two papers from related disciplines that could be useful to influence the way we are conducting research in our field. The first paper by Kim, Ferrin & Rao (2008) presents a trust-based consumer decision-making model in electronic commerce. The results of the study show “that Internet consumers’ trust and perceived risk have strong impacts on their purchasing decisions”. The second paper by Locke, Qin & Brause (2007) asks: “Does monitoring improve labor standards?” The authors find that monitoring alone “appears to have produced only limited results”, but, when “monitoring efforts were combined with other interventions […], working conditions seem to have improved considerably”.
Kim, D., Ferrin, D., & Rao, H. (2008). A Trust-based Consumer Decision-making Model in Electronic Commerce: The Role of Trust, Perceived Risk, and Their Antecedents. Decision Support Systems, 44 (2), 544-564 DOI: 10.1016/j.dss.2007.07.001
Locke, R., Qin, F., & Brause, A. (2007). Does Monitoring Improve Labor Standards? Lessons from Nike. Industrial and Labor Relations Review, 61 (1), 3-31 digitalcommons.ilr.cornell.edu/ilrreview/vol61/iss1/1/
Personal Predictions for Supply Chain Management in 2015
Dear readers. I hope you enjoyed reading this blog in 2014. Based on dozens of discussions I had throughout the year, I would like to share my predictions for topics that could become important in supply chain management in 2015 with you. First, I believe that ethical issues will soon play a much more important role than ever, as, so far, social standards or animal rights have too often been neglected in our textbooks. Second, a supply chain consists of relationships between people, who work in teams and groups across independent companies. So, there might soon be a supplementation of the traditional view of the supply chain as a network of black boxes called “suppliers”, “buyers”, “consumers”. Finally, better technologies and algorithms, and, thus, lower transaction costs, might soon make the old SCM dream come true to integrate the end-to-end supply chain. We might soon see totally new business models (enterprise mobility linked to SCM could be a good example). I wish you a good start into 2015.
Design for Postponement
Today, I would like to draw your attention to one of my favorite articles in the field of supply chain management: Design for Postponement by Swaminathan & Lee (2003). The article identifies three key postponement enablers: First, process standardization, where the initial steps of a process are standardized across a product line and distinct personalities are added at a later stage (e.g., localized manuals or power supply modules of a printer). Second, process resequencing, where more common components are added at the beginning of a process (e.g., cut of clothes), whereas components that create product differentiation are added later (e.g., color of clothes). Finally, component standardization, where key components are standardized to postpone decisions. The article also explains interesting concepts like “vanilla boxes” and “partial postponement”. I believe that postponement should be a key element of a supply chain management curriculum and that this classic article is really helpful to teach it.
Swaminathan, J.M., & Lee, H.L. (2003). Design for Postponement. Handbooks in Operations Research and Management Science, 11 (Supply Chain Management: Design, Coordination and Operation), 199-226 https://doi.org/10.1016/S0927-0507(03)11005-5
Human Rights in the End-to-End Supply Chain
“Certification programs have their merits and their limitations. With the growing availability of social media, analytics tools, and supply chain data, a smarter set of solutions could soon be possible”, as Robert Handfield and I argue in our paper, just published in Supply Chain Management Review. We believe that an evolution from company thinking to supply chain thinking will now help to make businesses more socially responsible: “Traditional solutions that focus just on a brand (e.g., Company A) or the labels used with the brand (e.g., a label saying that Company A’s product is ‘fair’) are being supplemented by solutions that recognize a brand’s network (e.g., Company A’s upstream supply chain) and reveal how all entities of that network are treated (e.g., an interactive map of the supply chain on a smart device)”. This transformation requires costly data, but becomes realistic as transaction costs are increasingly reduced due to new technologies, standards, and algorithms.
Wieland, A., & Handfield, R.B. (2014). The Challenge of Ensuring Human Rights in the End-to-End Supply Chain. Supply Chain Management Review, 18 (6), 49-51
Logistics is not Supply Chain Management, End of Story
There still seems to be much confusion about the terms “logistics” and “supply chain management”. Much like accounting, SCM takes a cross-functional perspective within an organization (this includes purchasing, R&D, marketing, sales, IT, and – logistics), but goes beyond the first and second tiers on both the supplier and customer sides. Therefore, supply chain managers are typically concerned with managing the relationships with channel partners. SCM relates to questions like: How can the bullwhip effect be avoided? How can production be ensured if a supplier’s supplier’s plant burns down? How can CO2 emissions of a product be measured, including the emissions of a supplier’s supplier’s plant, an LSP’s trucks, and disposal by consumers? What alternative types of governance are available to coordinate with a second-tier supplier or a retailer, if a direct contract with them is impossible (or you don’t even know who they are)? A logistics manager might ask some of these questions, too, but isn’t she mainly concerned with managing the flow and storage of goods and services?
The Mechanisms of Supply Chain Resilience
Two ingredients are needed to create supply chain resilience (Wieland & Wallenburg, 2013): robustness, which is proactive, and agility, which is reactive. Robustness builds on anticipation “to gain knowledge about potential changes that might occur in the future” and preparedness “to maintain a stable situation”. Agility builds on visibility “to gain knowledge about actual changes that are currently occurring” and speed “to get back to a stable situation”.
Wieland, A., & Wallenburg, C.M. (2013). The Influence of Relational Competencies on Supply Chain Resilience: A Relational View. International Journal of Physical Distribution & Logistics Management, 43 (4), 300-320 https://doi.org/10.1108/IJPDLM-08-2012-0243
Reducing Risk and Creating More Resilient Supply Chains
That does a supply chain risk researcher’s heart good: MIT Sloan Management Review has recently published two interesting case studies about the interface between risk and supply chain management. First, in the magazine’s spring issue, Chopra and Sodhi call attention to a dilemma faced by most managers: “Solutions to reduce risk mean little unless they are evaluated against their impact on cost efficiency”. To protect supply chains from disruptions anyway, the authors suggest two strategies: (1) segmenting the supply chain and (2) regionalizing the supply chain. Second, in the summer issue, Sáenz and Revilla present a five-step process started by Cisco shortly after a major risk event: (1) identify strategic priorities, (2) map the vulnerabilities of the supply chain design, (3) integrate risk awareness into the product and the value chain, (4) monitor resiliency, and (5) watch for events. Both articles complement each other very well and give a quick entry into the area of supply chain risk and resilience.
Chopra, S., & Sodhi, M.S. (2014). Reducing the Risk of Supply Chain Disruptions. MIT Sloan Management Review (spring 2014)
Sáenz, M.J., & Revilla, E. (2014). Creating More Resilient Supply Chains. MIT Sloan Management Review (summer 2014)
The Science of Sustainable Supply Chains (Guest Post by Dara O’Rourke, UC Berkeley)
My guest post today comes from Dara O’Rourke. In his recent Science article, The Science of Sustainable Supply Chains, Dara argues that the field of supply chain management needs to significantly improve and integrate sustainability measurement systems and decision-support tools.
The science of sustainability measurement has progressed alongside efforts to advance supply chain traceability, impact assessment, and aggregation of data into sustainability indicators. Advances in life-cycle assessment (LCA) and product “footprinting” are increasingly being deployed in efforts to turn data into decision-support tools for global brands and retailers. However, the speed and dynamism of modern supply chains creates challenges for incorporating sustainability data into sourcing decisions. In addition, the use of divergent methodologies, data sets, and system boundaries have led to confusion across assessment initiatives. In order for these systems to generate accurate sustainability assessments, there is a need for consistent LCA inventory data and common data sets for up-stream activities; consistent life-cycle impact factors; better uncertainty analysis; localization of LCA data sets; modeling of nonlinear responses and ecosystem dynamics; and improved systems for valuing ecosystem services. Better data, decision-support tools, and incentives are needed to move from simply managing supply chains for costs, compliance, and risk reduction, to predicting and preventing unsustainable practices.
Dara O’Rourke is a professor of Environmental Science, Policy, and Management at the University of California, Berkeley. He is the co-founder of GoodGuide, Inc. which recently launched PurView, a supply chain sustainability data platform for retailers and brands. You can follow Dara on twitter @DaraORourke.
O’Rourke, D. (2014). The Science of Sustainable Supply Chains. Science, 344 (6188), 1124-1127 https://doi.org/10.1126/science.1248526
The Governance of Global Value Chains
It can be very insightful to see how supply chains are viewed in other research fields. Gereffi, Humphrey and Sturgeon (2005) take a transaction-based political economy perspective to explain The Governance of Global Value Chains. To do so, three variables (complexity of transactions, ability to codify transactions, capabilities in the supply base) are identified, and combinations of the values of these variables constitute the structure of global value chains, leading to five types of governance (market, modular, relational, captive, hierarchy). Hereby, “market” contains the lowest level of explicit coordination and power asymmetry, whereas “hierarchy” contains the highest one. I was somewhat surprised that the article, although having been cited more than 2,700 times, has been quite ignored by SCM researchers. Likewise, Ponte and Sturgeon (2014) in their recent article that attempts to draw together GVC theory lacks any citation to the SCM literature. We might, more than in the past, think outside of the boxes we have framed if we don’t want to miss results potentially relevant for our highly overlapping fields of enquiry.
Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The Governance of Global Value Chains. Review of International Political Economy, 12 (1), 78-104 DOI: 10.1080/09692290500049805
Ponte, S., & Sturgeon, T. (2014). Explaining Governance in Global Value Chains: A Modular Theory-building Effort. Review of International Political Economy, 21 (1), 195-223 DOI: 10.1080/09692290.2013.809596
Climate Extremes Will Challenge Our Supply Chains (Guest Post by Anders Levermann, PIK)
In his recent Nature article, Climate Economics: Make Supply Chains Climate-smart, Anders Levermann argues that supply chains need to adapt to extreme weather. He discusses this topic in the following guest post.
Extreme weather events are likely to intensify the more greenhouse-gases we emit – and these extremes are more than just a local risk. Links in global economic chains and world markets mean that flooding or heat-waves in one place can have repercussions elsewhere. Extreme rainfall and typhoon Yasi paralyzed the world’s fourth largest coal exploration site in Australia in 2010/11. Coking coal prices went up by 25% in 2011. In order to estimate the impact of climate change on our society we need to understand both future weather extremes and our global economic network. In Potsdam we recently set up a website to collect and analyze this data. Everyone can register and contribute expertise. In a similar fashion as Wikipedia we hope to gradually generate a global community that creates a system of checks and balances to obtain an up-to-date database of high quality and detail to induce a global adaptation of our supply chains. For news follow @ZEEANit on Twitter or register at zeean.net.
Anders Levermann is a physics professor for the dynamics of the climate system and co-chair of the research domain Sustainable Solutions at the Potsdam Institute for Climate Impact Research.
Levermann, A. (2014). Climate Economics: Make Supply Chains Climate-smart. Nature, 506, 27-29 DOI: 10.1038/506027a
