Issues in Supply Chain Management

Very often this blog is concerned with the risk part of supply chain risk management. But to understand the risks within supply chain management, one has to understand the supply chain part as well. In 2000 Lambert and Cooper published a paper on the current “Issues in Supply CHain Management” and I want to highlight the main points here.

Understanding of supply chain management

Since the development of the supply chain management concept there has been and still is some discussion on what supply chain management actually includes? A very broad definition of the term can be:

Supply Chain Management is the integration of key busi- ness processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders.

The process frontiers between the companies merge into one and with the help of the information flow all processes are managed (figure 1).

Figure 1: Integrated Business Processes within a Supply Chain (click to enlarge; Lambert and Cooper, 2000)

In the sense of this definition, logistics therefore…

… is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements.

Methodology

To come to a better understanding of supply chain management the authors used an practice oriented approach and conducted a case study of nine supply chains with over 90 in-depth interviews spanning 15 companies. The interviews were guided using a 36 question interview guide and lasted between one and three hours.

Results

Based on this large research base it is now possible to derive several key findings.
Figure 2 highlights the elements of supply chain management.

Figure 2: Framework of Supply Chain Management (Lambert and Cooper, 2000)

The Network Structure contains the identification of supply chain members (and non-members), furthermore the structural dimensions of the network in horizontal (number of tiers) and vertical (number of elements in each tier) terms.
Supply Chain Business Processes, where key processes are:

• Customer relationship management
• Customer service management
• Demand management
• Order fulfillment
• Manufacturing flow management
• Procurement
• Product development and commercialization
• Returns
  Concerning the business processes the author find that the links between processes can be categorized into four different classes:
• Managed process links, which are actively integrated and managed by the focal company
• Monitored process links, are not seen as critical but still monitored
• Not-managed process links, are links where the focal company is not actively involved in
• Non-member process links, managers are aware of other, parallel supply chains.
  An example of such supply chain with its links can be found in figure 3.

Figure 3: Example of a Supply Chain with different Links (click to enlarge; Lambert and Cooper, 2000)

The Management Components of SCM are described in figure 4.

Figure 4: Management Aspects of Supply Chain Management (Lambert and Cooper, 2000)

Missing pieces

Based on their research the authors state eight key questions related to their framework which need further research in the future:

1. What are the operational definitions of the key business processes and what are the relationships among these processes?
2. How should the existing supply chain be mapped? Should the map include all connected firms or only the primary firms?
3. What is the value proposition at the consumer level or end point of the supply chain?
4. What metrics should be used to evaluate the performance of the entire supply chain, individual members or subsets of members?
5. What is the process to take the map of the existing supply chain and to modify it to obtain the best supply chain given the desired outputs?
6. What determines with whom to link business processes?
7. What determines the processes to link with these key members?
8. What determines the type/level of integration that should be applied to each process link?

Conclusion

Of course some of these questions have already been answered in the meantime, at least partially. But I wanted to highlight this general framework since it shows several important aspects for risk management as well. E.g. the categorization of the links, which could be a great tool to maximize the efficiency of risk management efforts or that supply chain mapping overall also has positive effects for risk management.