More Complexity = More Disruptions?
Trends in management towards a concentration on core competencies and outsourcing of non-core activities have created complex networks, i.e., global supply chains. At the same time, it has been discussed that this increased complexity has also made companies more vulnerable. An interesting paper, Structural Drivers of Upstream Supply Chain Complexity and the Frequency of Supply Chain Disruptions, co-authored by Bode and Wagner, is currently forthcoming in the Journal of Operations Management. Herein, the authors distinguish between three drivers of upstream supply chain complexity: (1) horizontal complexity (= the number of direct suppliers in a firm’s supply base), (2) vertical complexity (= the number of tiers in the supply chain), and (3) spatial complexity (= the geographical spread of the supply base). Based on survey data, the authors find that all of these three drivers increase the frequency of supply chain disruptions. It is further found that these three variables even amplify each other’s effects in a synergistic fashion.
Bode, C., & Wagner, S. (2015). Structural Drivers of Upstream Supply Chain Complexity and the Frequency of Supply Chain Disruptions. Journal of Operations Management, 36, 215–228 https://doi.org/10.1016/j.jom.2014.12.004
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.
Are Apple’s Promises to Protect Workers Routinely Broken?
“Poor treatment of workers in Chinese factories which make Apple products has been discovered”, as BBC Panorama reports in an article. Is this just another example of the underside of global supply chains? Watch the video from the article.
Are your Supply Chains Tiger and Orang-Utan Friendly?
Accounting for roughly 40% of vegetable oil production, palm oil is the most important vegetable oil worldwide. As a key commodity, it is an ingredient of a large range of products, including processed food, cosmetics, shampoo, and soap. A recent Greenpeace report reveals how palm oil supply chains are pushing Sumatran tigers and orang-utans closer to extinction (pdf). It becomes evident “that the palm oil sector is currently the greatest single driver of deforestation in Indonesia, accounting for about a quarter of all forest loss”. The report demonstrates that palm oil supply chains “are aiding and abetting the clearance of the Bornean orang-utan’s rainforest habitat and that of the even scarcer, critically endangered Sumatran tiger” and that “[t]hey have also been complicit in peatland destruction and depriving communities of their land and livelihoods”. How can research in the field of supply chain management help to recognize the true costs of palm oil production?
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
Aboard a Cargo Colossus
New York Times reports: “As companies look for more efficient ways to move freight from factories in China to consumers in Europe, the Mary is among the newest giants, known as the Triple-E’s. Owned and operated by A.P. Møller – Mærsk of Denmark, the world’s largest container shipping company, the Triple-E’s went into service last year, muscling their way into the $210 billion container industry.” Watch the video from the article.
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
Supply Chain Process Modeling
Are you planning to integrate process modeling in your supply chain curricula? I am currently teaching a new course about supply chain process re-engineering at Copenhagen Business School. As part of a group work, the task of the students is to model processes between supply chain partners using the standard Business Process Model and Notation (BPMN). Initially, I thought about letting the students model the processes using PowerPoint or Visio, but then I realized that this isn’t the most appropriate way for such a group task. Then, I found a web-based process modeling platform that turns out to be ideal for my course. It is part of the BPM Academic Initiative of Signavio. I use the BPMN teaching packages in my course and offer my students the possibility of practical training with Signavio’s Process Editor. I have opened up a collaborative workspace and invited my students by sending an invitation link. No installation is required, it is free of charge.
