Tag Archive | Supply Chain Management

The European Meat Industry’s Environmental Catastrophe

A new research report, provided by Mighty Earth, argues that “[deforestation] is the result of a long supply chain that starts on the South American frontier and ends on European plates”. The report is titled The Avoidable Crisis. It reveals that a small group of companies controls the global agricultural trade: “These companies collectively control the majority of global grain trade […]. In addition to their role in trade, these companies also play a more direct role in driving ecosystem conversion by providing plantation owners with financing, fertilizer, infrastructure, and other incentives for new deforestation to expand their supply base. Given their outsized role, these companies have the power to insist that suppliers protect native ecosystems and land rights. But so far, these companies have prioritized reckless expansion over even easy conservation wins.” The authors argue that “[the] EU must send a strong signal to the market by requiring that companies implement measures for transparency and traceability into their supply chains”.

Teaching Case – Everything Is Connected: A New Era of Sustainability at Li & Fung

The Case Centre has recently announced the winners of their 2018 global awards and competitions. Already last year, the winning case in the Production and Operations Management category was closely related to supply chain management (see my previous post, Zara: The World’s Largest Fashion Retailer). This is also the case for the 2018 category winner, which is titled Everything Is Connected: A New Era of Sustainability at Li & Fung. It was written by Hau L. Lee and Sheila Melvin. The case deals with the way how Li & Fung, a Hong-Kong-based trading company, reacted to the Rana Plaza disaster and other such events to ensure sustainable supply chain management. Li & Fung’s Head of Learning and Development is right when saying: “The hard part is to make sustainability part of our DNA, to get 27,000 people to understand that this is now as fundamental to us as the fact that we source globally.” Therefore, this case could be a great building block for future SCM courses!

Business Success through Sustainable SCM

Are business success and sustainability contradictory? A new whitepaper by Schmidpeter & Bungard, sponsored by DHL, is rather optimistic and argues that both goals can instead be mutually beneficial. The paper is titled Unlock the True Value of Your Supply Chain: Business Success through Sustainable Supply Chain Management. The authors states: “Sustainable Supply Chain Management (SSCM) can help drive positive business change by helping companies save costs, strengthen ‘license to operate’ and generate additional revenue streams.” But the authors also acknowledge that “[a]lthough there are good tools and best practices available for integrating sustainability into your business, there is no silver bullet that will let you realize the benefits of SSCM overnight”. They also acknowledge that the Sustainability department should not do it alone: “The topic of sustainability should be on the agenda for every leader and employee within a company”. The white paper might partly be quite optimistic, but it provides several good practices from business reality.

Supply Chain Coordination with Contracts

Today I would like to talk about Supply Chain Coordination with Contracts, a chapter written by Cachon (2003). It has become the standard reference when it comes to teaching some key supply chain models. Coordination between the members of a supply chain is certainly very relevant but also challenging. Because the members of a supply chain are typically concerned with optimizing their own objectives, their actions might not lead to optimal supply chain performance. Therefore, contracts need to be carefully designed. The author “reviews and extends the supply chain literature on the management of incentive conflicts with contracts”. For example, Cachon presents key supply chain models, hereby extending the newsvendor model “by allowing the retailer to choose the retail price in addition to the stocking quantity” and “by allowing the retailer to exert costly effort to increase demand”. Teaching such models can help students to gain the required problem-solving competencies and abstraction capabilities that are needed in today’s business world.

Cachon, G.P. (2003). Supply Chain Coordination with Contracts. Handbooks in Operations Research and Management Science, 11 (Supply Chain Management: Design, Coordination and Operation), 227-339 https://doi.org/10.1016/S0927-0507(03)11006-7

The Constitution of Trust

Trust plays an important role in supply chain management research (see some of my previous posts, e.g. The More Trust the Better! Really?, The Evolution of Trust). An article by Free (2008), titled Walking the Talk? Supply Chain Accounting and Trust among UK Supermarkets and Suppliers, asks: “How are calculative practices implicated in the constitution of trust in the UK retail sector?” This leads to two principal findings: First, “existing definitions of trust need to be more tightly and coherently elaborated to be applicable in the inter-organizational context”. The author proposes “a set of trust constructs that reflects both institutional phenomena (system trust) and personal and interpersonal forms of trust (trust, trusting behaviours, trustworthiness and trusting disposition)”. Second, “trust can be invoked in both ritualistic and instrumental ways”. Here, the author suggests “that the simple dichotomy of trust and distrust […] should be expanded to embrace manipulation and the use of trust as a discursive resource”.

Free, C. (2008). Walking the Talk? Supply Chain Accounting and Trust among UK Supermarkets and Suppliers. Accounting, Organizations and Society, 33 (6), 629–662. https://doi.org/10.1016/j.aos.2007.09.001

Three Types of SCM Definitions

Today, I present Mentzer et al.’s (2001) must-read article, Defining Supply Chain Management. The authors demonstrate that, “although definitions of SCM differ across authors […], they can be classified into three categories”: (1) SCM as a management philosophy (= supply chain orientation), which involves a systems approach to viewing the supply chain as a whole, a strategic orientation toward cooperative efforts, and a customer focus; (2) SCM as an implementation of a management philosophy, which involves seven activities such as “mutually sharing information”; and (3) SCM as a set of management processes, which includes processes such as “customer relationship management” and “order fulfillment”. The article also contains a useful definition of SCM as “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole”.

Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. & Zacharia, Z.G. (2001). Defining Supply Chain Management. Journal of Business Logistics, 22 (2), 1–25. https://doi.org/10.1002/j.2158-1592.2001.tb00001.x

Personal Predictions for Supply Chain Management in 2018

Today I present my personal predictions for supply chain management in 2018. Sustainability and digitization will certainly top the SCM agenda! First, much more action is needed to combat global warming. SCM could play a key role to cope with this challenge, as a “supply chain” rather than “company” perspective helps to understand that upstream greenhouse gas emissions may occur anywhere in the world. Unfortunately, time is slowly running out! New technologies like blockchain, ID systems like bluenumber and standards like ISO 24000 could help us make a breakthrough. Second, we might see increased momentum to move beyond the machine learning hype. Machine learning could soon be integrated in all kinds of value-creating processes. But while IT giants like Google, Amazon and SAP highlight the strengths and opportunities of such technologies, we should also take the weaknesses and threats into consideration: Will robots take our children’s jobs? And what does all this mean for SCM? 2018 will bring some more questions and hopefully even more answers.

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