SC Design: Organizational Roles in Network Management

Supply chain design and optimization has been covered in this blog to a great extend. The concept of design implicitly assumes that there is at least one designer, who decides how the desired “optimal” supply chain design should look like.

Defining a supply chain as a group of legally independent companies, shows that the complexity in this decision process might be drastically increased, since one has to include multiple players and their goals in the process.

In their 2005 article on “Managing Supply Networks: Organizational Roles in Network Management” Knight and Harland analyze the roles that companies can assume in this process and therefore contribute to the foundations of supply chain design.

Background and method

It has been argued that adopting the network perspective necessarily requires us to accept that the complexity and dynamics of interdependencies between network actors, resources and activities render it impossible for any one organization to manage a network […]. At best, organizations can manage within a network by developing and enacting strategies to improve their network position.

The authors employ role theory to analyze the supply chain decision making process:

Role theory’s central premise is that an actor should be viewed as a collection of roles; role theory suggests that “roles are evoked by situations and the content of roles is socially constructed”. Roles are seen as clusters of behaviours expected of parties in particular statuses or positions. In considering roles we analyse behaviour less by the characteristics of a focal organization or the network in which it is embedded and more in terms of the part the organization is playing. Taking a dramaturgical approach, roles are “like scripts which we then enact”.

Roles can be dynamically adjusted, even though “some roles are more institutionalised, and that, in this situation, the role enactor has less flexibility.”

The distribution of roles between the participants is usually not “imposed” by the context, but derived through negotiation between the elements of the supply chain.

The authors used a case study approach to analyze different roles within the supply chain. Core example was the UK National Health Service (NHS) Purchasing and Supply Agency, responsible for a budget of about GBP 2.5bn.

The purchased product portfolio is displayed in figure 1. Each of which indicates a different supply chain stream.

Figure 1: Portfolio of Purchased Material by the NHS Purchasing and Supply Agency (Knight and Harland, 2005)

To separate the different roles within the supply chain interviews were conducted with the supply chain participants and strategic “plans and activities” were identified and analyzed to deduct underlying roles within the chain.

Findings

Six roles could be identified with distinct properties.

• Innovation facilitator covers promoting and facilitating product and process innovation. One team established a programme of meetings with each of the main component suppliers in a network to consider jointly their research and development plans and activities. The team’s short-term aim was to support suppliers’ efforts to reduce product costs and increase functionality, but the wider objective was to foster higher levels of investment in R & D and co-ordinate the purchaser input. In a more reactive mode, teams often respond to requests for assistance from suppliers who, for example, believe they have a product which may be adapted for use in healthcare.

At the time of the research, this role mostly involved liaison with suppliers, but relationships were also being formed with research institutions and research sponsors.

• Co-ordinator is a role with two closely inter-related facets. First, portfolio teams acted as administrators or project managers of inter-organizational activities. These may be finite initiatives, for example coordinating the implementation of new EU regulations on CE marking arrangements in the prosthetic service and components network, or on-going, such as coordinating the work of the Prosthetic Strategic Supply Group which brings together representatives from across the supply base and the NHS (Harland and Knight, 2001b). Second, the role of co-ordinator can also be less formalised. In a number of networks, team members are actively involved in facilitating intra-network relations, communication and working practices.

• Supply policy maker and implementer is also a two-faceted role. The Agency is charged with determining policy for supply structure and practice in the NHS (Dept. of Health, 1999), and where appropriate implementing such policy. For example, it may be appropriate for the acquisition of some goods and services to be centralised, whilst others that are currently acquired with the support of buyers in the Agency might best be sourced by personnel based in local NHS hospital Trusts. The Agency is responsible for setting standards for purchasing practice, and providing support for developing purchasing staff competence throughout the NHS. The second aspect of this role relates to determining policy on specific issues.

• Advisor Portfolio teams were called upon to provide formal and informal advice to NHS hospital Trusts, Health Authorities, suppliers, the NHS Executive and government. In some cases, this was on specific supply issues; in others, members of portfolio teams contributed to, for example, working groups on wider problems, as the supply expert.

• Information broker entails collating, analysing and disseminating information to various parties (as for Advisor), sometimes when requested, but often pro-actively to monitor demand and spending pat- terns, and to encourage focus on key issues.

• Network structuring agent In this role, teams moni- tor and influence the structure of exchange relation- ships between the NHS and the private sector. An important element of this role is to take a sector level perspective on supply markets and acting to promote competitiveness. This can involve protecting critical suppliers from the detrimental consequences of fragmented purchasing by the NHS (e.g. peaks and troughs in demand for ambulance bodybuilding work; absence of forward planning of demand for electronic assistive technology). It also covers restructuring supply routes to interface directly with manufacturers rather than wholesalers, thus reducing costs and prices.

The roles can also overlap and so some teams can work on multiple issues at the same time.

Conclusion

Undoubtedly , this is a great descriptive framework and the roles might help to align strategy discussions internally and between companies. And therefore presents a “common language”, which can be used to facilitate the supply chain design process.

On the other hand I missed a more in-depth discussion of the role dynamics and especially how and how fast these roles might change. If relatively stable, the roles might enable a prudent supply chain participant to analyze past behavior more in depth and make predictions for future behavior. If very dynamic, even the descriptive power might be in question, since they would not provide a stable descriptor to be of value.

From the study design the core case company (NHS) seems to be large enough to provide a huge diversity of different supply chains, but on the other hand might be so large that itself is prone to assume certain roles and therefore skew the case study result to a significant degree.