Tag Archive | Report

The Dark Secret of the Chocolate Supply Chain

We cannot spare our students the dark secrets of supply chain management. As future decision makers, they need to understand the social and ecological consequences their decisions might have somewhere else on this planet. The chocolate supply chain is a perfect illustration of the complex relationships between consumerism, supply chain management, value creation, and ethical consequences. I have been using this example in my SCM courses for years. So, what is the impact of chocolate? The environmental group Mighty Earth has recently published an investigation into deforestation caused by chocolate: Chocolate’s Dark Secret. Their team visited several protected areas inside Ivory Coast and found that illegal cocoa production has entirely overtaken areas that had been covered by rain forests in the past. Particularly, they found that the world’s largest chocolate companies are connected to cocoa from sources linked to illegal deforestation. The report illustrates how cocoa moves through the supply chain and how value is created in the chocolate industry.

World Bank Study: Global Shortage of Logistics Skills (Guest Post by Kai Hoberg, KLU)

My guest post today comes from Kai Hoberg from the Kühne Logistics University (KLU) in Hamburg. Together with his co-authors, Alan McKinnon and Christoph Flöthmann, he has just published a new report, which is commissioned by the World Bank and analyzes the shortage of qualified logistics personnel.

Qualified logistics personnel is in short supply worldwide. This is the conclusion of our new report, titled Logistics Competencies, Skills, and Training: A Global Overview. While there are too few well-trained executives in the logistics sector in emerging countries, there is an acute shortage of qualified staff at the operational level in developed economies. We argue that this skills shortage is likely to worsen in the absence of new initiatives. There are two aspects that deserve further elaboration: First, physically, there are too few people available to cover vacant position in the logistics sector. Second, the currently employed workforce is partially lacking the skills demanded for their job. Based on an empirical analysis, we derive multiple recommendations for relevant stakeholders, i.e. companies, governmental institutions and logistics associations. The proposed measures include innovative training methods like logistics-related business games that can be employed without requiring high upfront investments or long implementation lead-times.

Kai Hoberg is Associate Professor of Supply Chain & Operations Strategy at KLU. In his academic career he was a visiting scholar at Cornell University, Israel Institute of Technology, University of Oxford and National University of Singapore. He is on the scientific advisory board of the German Logistics Association (BVL) and has been working with companies like Procter & Gamble, McKinsey & Company, Jungheinrich and Zalando on supply chain innovation projects.

Rethinking the Future of Plastics

Today’s economy is a plastics economy, as most of our global supply chains contain plastics. A report, published by the Ellen MacArthur Foundation, is titled The New Plastics Economy: Rethinking the Future of Plastics. Herein it becomes evident that linear supply chains need to become circular: “The circular economy is gaining growing attention as a potential way for our society to increase prosperity, while reducing demands on finite raw materials and minimising negative externalities. Such a transition requires a systemic approach, which entails moving beyond incremental improvements to the existing model as well as developing new collaboration mechanisms.” The report “explores the intersection of these two themes, for plastics and plastic packaging in particular: how can collaboration along the extended global plastic packaging production and after-use value chain, as well as with governments and NGOs, achieve systemic change to overcome stalemates in today’s plastics economy in order to move to a more circular model?”

Can Your Supply Chain Avoid Extinction?

“Slicing and dicing the supply chain to service ever more diverse and demanding customers has become the core challenge for Chief Supply Chain Officers. But simply expanding the number of supply chain configurations and maintaining separate organizations to manage them—the approach followed by most organizations—is driving too much complexity and wasting potential synergies.” This is how a new report by Accenture starts. It is titled: Can Your Supply Chain Avoid Extinction? The authors recommend three strategies to move toward a differentiated supply chain: First, companies should focus on supply chain configurations that drive value, as this will serve customers best. Second, companies should choose the right digital technologies for each configuration, hereby applying only those capabilities that enable them to deliver the right supply chain response. Third, companies should find the right structure and governance; this includes embedding innovation thinking at the heart of the organization. Have a look at the full report.

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.

Value of Air Cargo: Air Transport and Global Value Chains

I recently found an interesting report: Value of Air Cargo: Air Transport and Global Value Chains, published by Developing Trade Consultants. The authors write: “Global Value Chains (GVCs) represent a new trade and development paradigm. They enable countries to specialize in narrowly defined tasks, such as component production, research and development, or assembly. Tasks originating in a variety of countries are then combined through a complex network of trade and investment links, to produce finished goods […].” The report analyzes data to investigate the linkages between GVC trade and air cargo. It shows that countries engage in more trade in value terms if they have better air cargo connectivity – which is measured by an “Air Connectivity Index”. A strong association is found between a higher ACI score (i.e. stronger air connections to more countries) and a higher total trade value: “[O]ne percent increase in air cargo connectivity is associated with a 6.3% increase in total exports and imports.”

Global Supply Chain Report 2017 (Guest Post by Dexter Galvin)

I am happy to share the following guest post by Dexter Galvin, Head of Supply Chain, CDP. Thank you for contributing to my blog.

Our latest Global Supply Chain Report 2017, written in partnership with BSR and the Carbon Trust, revealed emissions savings of 434 million tonnes disclosed by suppliers in 2016. That’s more than the annual emissions of France, and it shows that the supply chain is a critical component – the missing link – in securing our sustainable, low-carbon future. Our data showed that supply chain action isn’t just about reducing emissions; it’s also good for the bottom line. Companies with emissions reduction projects disclosed cost savings of $12.4 billion as a result of their carbon-cutting measures – double what was reported in 2015. Almost half of the top 100 projects by savings were related to energy efficiency, and with a payback period of three years or less, the majority of projects had an attractive investment profile too. While the savings achieved by suppliers were certainly impressive, around half of the 4,300 companies we surveyed didn’t report any emissions reduction activities at all. So think what the impact could be – on costs and carbon levels – if they all took action?

Dexter runs the Supply Chain program at the global climate change NGO, CDP, from their London Headquarters. He has launched a number of important global initiatives to drive climate action in private and public sector supply chains, including CDP’s Action Exchange initiative. You can follow him on Twitter: @GalvinDex

SCM – It’s All About Data

The volume, variety and velocity of business and supply chain data are increasing dramatically. At the same time, improved technologies, such as artificial intelligence and machine learning, are already on the horizon. Ernst & Young has recently published an interesting report, titled Digital Supply Chain: It’s All About That Data. The authors make one thing very clear: “Companies must act now to focus, simplify and standardize big data through an enterprise data management strategy.” If companies fail to do so, the authors argue, “technology will drive increasing data cost, complexity and inefficiency; companies will be unable to benefit from advanced analytics like machine learning; and they will be unprepared for the next wave of data growth triggered by new technologies like IoT and blockchain.” In other words, companies fail to be successful unless they become masters of their supply chain data. Maybe business schools should increase the proportion of IT knowledge in their SCM curricula?

The State of Sustainable Supply Chains

Supply chain management can play a key role to help creating a more sustainable world that leaves no one behind. A new report, The State of Sustainable Supply Chains (pdf), echoes the voices of more than 100 specialists from 70 companies to reveal how companies “are embedding sustainability in their supply chains by managing risks and adopting corporate commitment to human rights, ethics, the environment and the communities from which they source goods and services”. The report was produced by Ernst & Young in association with the United Nations Global Compact. The authors present six main study findings: (1) “Supply chain sustainability can no longer be ignored”; (2) “companies are predominantly risk-driven with aspirations to unlock strategic opportunities and benefits”; (3) “companies tailor their approaches and governance to create sustainable supply chains”; (4) “leading companies are establishing a shared commitment with suppliers”; (5) “technology enables visibility and influence beyond tier 1”; and (6) “collaboration is critical for companies to achieve greater impacts”.

Supply Chain Integrity: Protecting Our Blind Spots

Research on supply chain risk and resilience has focused a lot on accidental disruptions, caused for example by an earthquake or the fire at a supplier’s plant. A sometimes overlooked element of supply chain risk management are disruptions that are caused by malicious intent, for example fraud. Indeed, due to their complexity, modern supply chain systems have become vulnerable to deliberate harm. A recently published report by Zurich Insurance Group and SICPA, titled Supply Chain Integrity: Protecting Companies’ Blind Spots, is focused on such types of risk. The authors argue that “companies can increase their ability to safeguard against deliberate supply-chain ‘infiltration,’ such as that caused by counterfeit or tampered products”. In their study, they “offer numerous recommendations and examples gathered in interviews with government and industry experts, enforcement specialists, risk managers and executives at large corporations”. I believe this report makes an important contribution to widen our understanding of supply chain risk and resilience.