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
DHL has recently released the fifth edition of their Global Connectedness Index, which provides an analysis of globalization, measured by international flows of capital, trade, information and people. In spite of growing anti-globalization tensions in many countries, the report indicates that globalization hits a new record high, as the aforementioned flows all intensified significantly for the first time since 2007. It is also found that the Netherlands, Singapore, Switzerland, Belgium and the United Arab Emirates are the most connected countries. Europe tops the regional ranking, while a group of Southeast Asian countries beats the expectations by the widest margin. “Surprisingly, even after globalization’s recent gains, the world is still less connected than most people think it is,” comments one of the report’s co-authors, Steven A. Altman. “This is important because, when people overestimate international flows, they tend to worry more about them. The facts in our report can help calm such fears and focus attention on real solutions to societal concerns about globalization.”
Sometimes a picture is worth a thousand words. A map of our globe enables us to reflect upon key issues in SCM: Who is actually producing our computers? Where does value creation take place? What are the core competencies of the brand company? Who is governing the computer supply chain? What is the role of contract manufacturers? Why is final assembly being done in China and not in the EU or Canada? Why is packaging being done in Eastern Europe or Mexico and not in China; and why not in Northern Europe or Canada, where the consumers are located? What modes of transport should be used? How long does it take to move a container from Hong Kong to Hamburg? What is the size of a container? What are typical container shipping rates? What can be problematic about sourcing raw materials from the Congo? How would you calculate the CO2 emissions of a computer? How could a linear supply chain become circular? What role will machine learning play? How will the supply chain change in the age of automation? What is the potential role of 3D printing? Is a “supply” chain about “supply” or is “demand” actually the factor that we should be looking? Is a supply “chain” actually a “chain”?
The United Kingdom has been one of the key links in EU supply chains for more than 40 years. BBC Newsnight has recently reported on how Brexit could break that chain and what the consequences could be for manufacturers. I like the video and have used it for my Supply Chain Risk Management course to discuss this topic with my students.
Exports can be decomposed into a foreign value added (FVA) and a domestic value added (DVA) component. FVA is a key measure of the importance of global supply chains. It refers to the imported goods and services incorporated in a country’s exports. DVA relates to the contribution of a country’s own (i.e. domestic) factors of production. The 2018 World Investment Report, recently published by UNCTAD, shows that “[f]rom 1990 until 2010, the share of FVA in total exports rose continuously, contributing to the growth in global trade” and, “in the past decade, for the first time in 30 years, the growth […] has come to a halt, with the share of FVA declining to 30 per cent in 2017”. But what are the reasons for a declining importance of the “extended workbench” model? First, the model is based on arbitrage; however, the economic success of emerging countries has led to an increase in labor costs. Second, manufacturing in high-wage countries is becoming increasingly profitable due to recent advances in robotics.
Supply chain management has certainly become far more strategic in recent years. But does that mean that companies should have a chief supply chain officer (CSCO)? In their new article, titled The Appointment of Chief Supply Chain Officers to Top Management Teams, Roh, Krause & Swink (2016) aim to answer this question. Based on empirical data, they show that “financial leverage, internationalization, and diversification all predict CSCO appointment to the [top management team]” and that these contingencies also “positively moderate the effect of CSCO presence on firm performance”. Most importantly, appointing a CSCO makes sense when financial leverage, internationalization, and diversification levels are high, but it does not make sense when these levels are low. But companies should be fast now: The authors also reveal that “most of the contingency performance effects manifest only for early adopters of the CSCO role”. I am sure that CSCOs will soon be appointed in many companies.
Roh, J., Krause, R., & Swink, M. (2016). The Appointment of Chief Supply Chain Officers to Top Management Teams: A Contingency Model of Firm-level Antecedents and Consequences. Journal of Operations Management https://doi.org/10.1016/j.jom.2016.05.001
Today, John McNamara, SVP Sourcing, Adidas Group, visited me and my SCM students at Copenhagen Business School. He presented a case study about the supply chain processes for t-shirts. It was very insightful and also a lot of fun for my students (and me). Thanks, John, for a great case study and an insightful discussion!
Journal rankings, h indices and citation counts have become the currencies of SCM scholars. But is this really what we should focus on? What about taking part in public debates? Indeed, SCM scholars have a lot of knowledge about the context of global business, including knowledge about social practices in low-cost countries, the pros and cons of outsourcing, and CO2 emissions in end-to-end networks. So, we have a lot to say that matters beyond academia! In their evocative comment, Prof, No One is Reading You, Biswas & Kirchherr (2015) argue: “An average academic journal article is read in its entirety by about 10 people. To shape policy, professors should start penning commentaries in popular media.” In a similar vein, Kristof (2014) in his comment Professors, We Need You! argues: “[Some] of the smartest thinkers […] are university professors, but most of them just don’t matter in today’s great debates.” We should wake up and make an impact!