Risk, Resilience, and Rebalancing in Global Value Chains
The McKinsey Global Institute (MGI) has recently published a new report: Risk, Resilience, and Rebalancing in Global Value Chains. The authors show that becoming more resilient does not have to mean sacrificing efficiency. Their research highlights the many options for strengthening resilience. They argue that “[companies] have an opportunity to emerge from the current crisis more agile and innovative.” They also write: “Intricate supplier networks that span the globe can deliver with great efficiency, but they may contain hidden vulnerabilities. Even before the COVID‑19 pandemic, a multitude of events in recent years temporarily disrupted production at many companies. Focusing on value chains that produce manufactured goods, this research explores their exposure to shocks, their vulnerabilities, and their expected financial losses. We also assess prospects for value chains to change their physical footprint in response to risk and evaluate strategies to minimize the growing cost of disruptions.” I found this report to be very insightful.
Supply Chain Risk Management: Revisiting Ericsson
Norrman & Jansson’s (2004) case study on Ericsson’s supply chain risk management (SCRM) practices is definitely part of the canon of SCM literature. After 15 years, it was time for an update. Together with Andreas Norrman, I visited Ericsson in Stockholm to investigate their SCRM practices. The results can now be found in our new article, The Development of Supply Chain Risk Management over Time: Revisiting Ericsson. Our article demonstrates how Ericsson’s SCRM practices have developed, indicating that improved functional capabilities are increasingly combined across silos and leveraged by formalized learning processes. Important enablers are IT capabilities, a fine-grained and cross-functional organization, and a focus on monitoring and compliance. Major developments in SCRM are often triggered by incidents, but also by requirements from external stakeholders and new corporate leaders actively focusing on SCRM and related activities. Although our article did not focus on SCM in the era of COVID-19, decision-makers can learn about many practices and tools that might also be useful to cope with the current situation.
Norrman, A. & Wieland, A. (2020). The Development of Supply Chain Risk Management over Time: Revisiting Ericsson. International Journal of Physical Distribution & Logistics Management, 50 (6), 641-666. https://doi.org/10.1108/IJPDLM-07-2019-0219
Supply Chain Resilience and COVID-19
The COVID-19 outbreak demonstrates that our global supply chains have become very vulnerable systems. I had the pleasure of speaking to Future Insights Network about the impact of COVID-19 on the global supply chain and resilience last week.
Balancing Efficiency and Resilience in Multimodal Supply Chains
In his new report, titled Balancing Efficiency and Resilience in Multimodal Supply Chains, McKinnon (2018) writes: “Over the past twenty years, supply chain resilience has become a hot topic in industrial, government and academic circles – for good reason. Business surveys and a mass of anecdotal evidence have revealed that supply chains have become more vulnerable to disruptions and the consequences of these disruptions become more severe. […] Despite this attention and research efforts, many companies are still at an early stage in the development and implementation of supply chain risk management strategies.” The author examines “how efficiency and resilience can be balanced in the management of multi-modal supply chains”. The author further “investigates the trade-off between supply chain resilience and efficiency, the approaches to sustainability in supply chain management, innovation and technological development, collaboration and alliances and risk mitigation”. The report summarizes findings from a Roundtable of the International Transport Forum held in April 2018. A call for papers deals with supply chain resilience.
McKinnon, A. (2018). Balancing Efficiency and Resilience in Multimodal Supply Chains. International Transport Forum Discussion Papers, OECD Publishing, Paris.
The Missing Link? EU Supply Chains after Brexit
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.
Performance Measurement Systems in the Era of Turbulence
Our new article, titled Accounting for External Turbulence of Logistics Organizations via Performance Measurement Systems (Supply Chain Management: An International Journal, Vol. 21, No. 6), is out now. It deals with the interface of supply chain risk management – a “hot topic” in SCM research – and performance measurement systems (PMS). The article was co-authored by Andreas Bühler, Carl Marcus Wallenburg and me. We address two research objectives: First, we focus on the outcome of PMS design for turbulence: We argue “that accounting for external turbulence via metrics in PMS design is beneficial for logistics organizations and show to what extent it increases organizational resilience and the [performance] of the companies”. Second, we focuses on the antecedents of PMS design for turbulence: We demonstrate “that the approach which the upper management of an organization has toward how to use the PMS in general will strongly impact the extent to which an organization incorporates risk metrics into its PMS”.
Bühler, A., Wallenburg, C.M., & Wieland, A. (2016). Accounting for External Turbulence of Logistics Organizations via Performance Measurement Systems. Supply Chain Management: An International Journal, 21 (6), 694-708 DOI: 10.1108/SCM-02-2016-0040
If you do not have access to the article, the accepted author manuscript can be downloaded for free at Copenhagen Business School’s Research@CBS platform (click on the document in the green box there).
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”.
Future Research Themes in Supply Chain Management
What are the future dominant research themes in supply chain management? In my new article, Mapping the Landscape of Future Research Themes in Supply Chain Management, co-authored with Robert Handfield and Christian Durach and published in the Journal of Business Logistics, we make an attempt to answer this important question. Our research is based on survey data collected from 141 SCM scholars. Big data ranks 1st on the list of topics that scholars expect will become important in the next years. Interestingly, this topic does not even appear in the top 10 of the list of topics that scholars think should become important. This list is led by sustainability and risk management instead. We calculated the differences between the will-become-important and should-become-important topics. The largest discrepancies can be found for: (1) the “people dimension” of SCM, (2) ethical issues, (3) internal integration, (4) transparency/visibility, and (5) human capital/talent management. These five under-represented topics could thus be good choices for future research projects or special journal issues.
Wieland, A., Handfield, R., & Durach, C. (2016). Mapping the Landscape of Future Research Themes in Supply Chain Management. Journal of Business Logistics, 37 (3), 1-8 https://doi.org/10.1111/jbl.12131
If you don’t have access to the journal, please feel free to request a copy of the paper via ResearchGate (blue button on their page).
Citations of Excellence Awards 2016
Each year, Emerald awards certificates to highly cited papers, hereby also taking into account the content of the papers (see my previous post). I identified five Citations of Excellence winners related to SCM this year: (1) Technology Designed to Combat Fakes in the Global Supply Chain by Li; (2) The Reduction of Greenhouse Gas Emissions from Freight Transport by Pooling Supply Chains by Pan, Ballot & Fontane; (3) Ensuring Supply Chain Resilience: Development and Implementation of an Assessment Tool by Pettit, Croxton & Fiksel; (4) Closed-Loop Supply Chains: A Critical Review, and Future Research by Souza; and (5) Data Science, Predictive Analytics, and Big Data: A Revolution that Will Transform Supply Chain Design and Management by Waller & Fawcett. All of these articles were selected from articles published in 2013. It can again be observed that articles dealing with sustainability or resilience seem to have a good chance to become highly cited, but also articles about innovative technologies turn out to be quite popular.
Li, L. (2013). Technology Designed to Combat Fakes in the Global Supply Chain. Business Horizons, 56 (2), 167-177 https://doi.org/10.1016/j.bushor.2012.11.010
Pan, S., Ballot, E., & Fontane, F. (2013). The Reduction of Greenhouse Gas Emissions from Freight Transport by Pooling Supply Chains. International Journal of Production Economics, 143 (1), 86-94 https://doi.org/10.1016/j.ijpe.2010.10.023
Pettit, T., Croxton, K., & Fiksel, J. (2013). Ensuring Supply Chain Resilience: Development and Implementation of an Assessment Tool. Journal of Business Logistics, 34 (1), 46-76 https://doi.org/10.1111/jbl.12009
Souza, G. (2013). Closed-Loop Supply Chains: A Critical Review, and Future Research. Decision Sciences, 44 (1), 7-38 https://doi.org/10.1111/j.1540-5915.2012.00394.x
Waller, M., & Fawcett, S. (2013). Data Science, Predictive Analytics, and Big Data: A Revolution That Will Transform Supply Chain Design and Management. Journal of Business Logistics, 34 (2), 77-84 https://doi.org/10.1111/jbl.12010
How We Should Tackle Risk in Global Supply Chains
Managing risks in a global supply chain can be a difficult task, as I argue in my new essay, titled Managing the Unknown: How We Should Tackle Risk in Global Supply Chains. Most importantly, there are substantial differences between two systems: “the company” and “the supply chain”. In a company it might be relatively easy to get an overview about all the risks that might occur. But a supply chain consists of hundreds, sometimes thousands of companies. Consider all the suppliers, suppliers’ suppliers etc. in an automotive supply chain. Approaches to manage risks that occur in a company are, therefore, not necessarily scalable to manage all the risks that occur in a system as complex and dynamic as a supply chain. As I also argue, we need to increase the robustness of a supply chain instead. Based on the results of our research, my essay presents both intra-organizational and inter-organizational factors that can help companies to increase the robustness of their supply chains.
