Tag Archive | Globalization

Should Companies Have a Chief Supply Chain Officer (CSCO)?

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

SCM Case Study with Adidas

Adidas

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!

Supply Chain Scholars, it is Time to Matter in Today’s Debates!

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!

Contract Manufacturing

How does contract manufacturing work? The following figure illustrates this.

Contract Manufacturing

Sustainable Supply Chains: A Country Comparison

The global not-for-profit organization CDP (formerly the Carbon Disclosure Project) has published a report: Supply Chain Sustainability Revealed: A Country Comparison. The report was written by Accenture Strategy. “While climate and water risks are apparent, the implications for businesses and economies reliant on complex supply chain models are less understood”, says Paul Simpson, CEO, CDP. “The good news is that as companies transform their supply chains into digital supply networks they will gain greater end-to-end visibility, traceability and access to information to report on their compliance progress and mitigate climate risks”, adds Gary Hanifan, managing director, Accenture Strategy. The report reveals that suppliers in France, the UK, Spain and Germany are identified as the most sustainable ones, whereas suppliers in China, Italy and the U.S. turn out to be particularly vulnerable. The report also shows that Brazil, Canada and India must do more to encourage suppliers to report emission reduction initiatives.

The Ethical Shopper: A Myth?

It has often been assumed that one of the characteristics of SCM philosophy is “a customer focus to create unique and individualized sources of customer value, leading to customer satisfaction” (Mentzer et al., 2001). This assumption has led to business models like Primark, which aim to satisfy customer needs for fashion by making incredibly cheap garments available – so cheap that many teenagers nowadays are used to throw them away after just two weeks. Part of the truth is that such customer needs are not only satisfied by these businesses, but also created by the marketing experts that are part of the system. But to what extend can we expect that customers critically reflect the way they consume? A very interesting article by Michael Hobbes argues: “We’re still trying to eliminate sweatshops and child labor by buying right. But that’s not how the world works in 2015.” Hobbes’ article is titled The Myth of the Ethical Shopper. See also: Supply Chain Management and Corporate Social Responsibility.

The Smile of Value Creation

The Smile of Value Creation

Mudambi (2008) notes that “value-added is becoming increasingly concentrated at the upstream and downstream ends of the value chain” and that “activities at both ends of the value chain are intensive in their application of knowledge and creativity”. Value-added along the value chain is, thus, represented by a “smiling curve”.

Mudambi, R. (2008). Location, Control and Innovation in Knowledge-intensive Industries. Journal of Economic Geography, 8 (5), 699-725 DOI: 10.1093/jeg/lbn024

Do We Really Need a New Smart Phone Every Two Years?

We all know about natural resource scarcity. However, as brand companies make consumers believe they need a new smart phone every two years, today’s global supply chains are responsible for incredibly large amounts of electronic waste. A new United Nations University report, titled The Global E-waste Monitor – 2014, details e-waste generation by region. The total amount of e-waste generated in 2014 is 41.8 million metric tonnes (Mt) and it is forecasted to increase to 50 Mt in 2018. This e-waste comprises 12.8 Mt of small equipment (e.g., toasters, video cameras), 11.8 Mt of large equipment (e.g., washing machines, photovoltaic panels), 7.0 Mt of cooling and freezing equipment, 6.3 Mt of screens, 3.0 Mt of small IT (e.g., mobile phones, computers), and 1.0 Mt of lamps. With 32% of the world’s total, the United States (7.1 Mt) and China (6.0 Mt) are responsible for most of the e-waste overall. The top per capita producers, however, are Norway (28.3 kg), Switzerland, Iceland, Denmark, and the United Kingdom.

Baldé, C.P., Wang, F., Kuehr, R., Huisman, J. (2015). The Global E-waste Monitor – 2014. United Nations University, IAS – SCYCLE, Bonn, Germany

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

Logistics Performance Index 2014

Today, the World Bank has released its Logistics Performance Index 2014. The report is titled “Connecting to Compete 2014: Trade Logistics in the Global Economy”. The index, which is based on survey data collected from more than 1,000 logistics managers, allows a comparison of 160 countries in terms of trade dimensions, such as infrastructure quality, customs performance and timeliness of shipments. It is a valuable resource for researchers, business executives and politicians to analyze the current state of logistics in the world. The results of the new report “point to Germany as the best performing country with an LPI score of 4.12 […] (on a scale of 1 to 5)”. Moreover, “15 of 28 European Union (EU) member states and 23 of 34 Organisation for Economic Co-operation and Development (OECD) members were among the top 30 countries”. The report highlights that “[s]upply chains—only as strong as their weakest links—are becoming more and more complex, often spanning many countries while remaining critical to national competitiveness”.