Martin Christopher

Managing Global Sourcing Risk

Daniel Dumke — Mon, 23 Jan 2012 17:34:15 +0000

Probably most companies source at least some parts for their products from global sources. This could be the steel from Australia, electronics from Taiwan or cloth from India. The reasons for international sourcing usually include cost and quality, which might be superior compared to local sources.

On the other hand longer shipment ways and less direct access and control may also increase the risks of quality failures, delays or even disruptions.

So at the moment a lot of companies struggle to find the right balance between increased risks and reduced cost in international sourcing. This study gives an inside view into fifteen companies and how they handle risks related to global sourcing, and therefore this overview is a good example for current practices in the field of supply chain risk mitigation.

Method

The authors still see a gap in the knowledge about how other companies analyze their sourcing related risks and how these risks are mitigated by them.

Therefore they use a multiple case study approach with 15 cases / companies within seven industries. In each company several information sources were tapped, including expert interviews.

Afterwards the authors compared the individual results in a cross case analysis.

Sourcing globally

But first the authors start with a literature analysis to analyze the reasons and risks of global sourcing.

Figure 1 shows their results regarding the advantages and risks of sourcing globally.

Figure 1: Sourcing Globally: Advantages and Risks (Christopher et al., 2011; click to zoom)

From this the authors extract a risk classification for global sourcing risks (figure 2).

Figure 2: Sourcing Globally: Risk Classification (Christopher et al., 2011; click to zoom)

Risks in global sourcing

Building on this literature review the authors conduct their case study. The cross-case analysis reveals risks in the following industries:

retail,

fashion retail and wholesale,

consumer electronics,

oil/gas,

mechanical and electrical equipment,

fast moving consumer goods (food and drink), and

aerospace.

The risks are shown in figure 3.

Figure 3: Risk Overview (Sourcing Globally) (Christopher et al., 2011; click to zoom)

Strategies for risk mitigation

The identified risks are handled very differently by each of the companies. Figure 4 shows the different approaches to identify and manage the risks.

Figure 4: Risk Management Strategies and Tools (Christopher et al., 2011; click to zoom)

Overall the authors find:

The study proposes four generic strategies for managing global sourcing risk: network re-engineering, collaboration, agility and a risk management culture. Evidence of each of these strategics was found in the case studies although no single company was applying all of them.

The study also shows that even though many managers were aware of the risks their companies were exposed to, risk management strategies were not implemented in a systematic and holistic manner.

Conclusion

It is not possible to generalize these results for any company, due to the specific exploratory nature of the method used. But I find the findings quite interesting and I think they could be used as a foundation to build your own mix of mitigation strategies.

Reference:

Christopher, M., Mena, C., Khan, O., & Yurt, O. (2011). Approaches to managing global sourcing risk Supply Chain Management: An International Journal, 16 (2), 67-81 DOI: 10.1108/13598541111115338

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Measuring agile Capabilities in the Supply Chain

Daniel Dumke — Wed, 13 Apr 2011 12:22:00 +0000

Today I introduce you to the process of measuring agility in a supply chain. Agility is a major concept in the research of the last 10 years or so. I already have written some articles on this topic:

Consequently, the goal of today’s article is to expand on those and define what are the key factors of SC agility and how it could be measured.

Method

The paper presented is based on two sources: an empirical investigation of agile capabilities in Europe and a literature review of the current research available.

The concept developed is based on the literature review and it is then tested using the survey.

Agility Framework

Agility has already been described early in four basic dimensions (according to Goldman et al.,1995): 1) Enriching the customer, 2) cooperating to enhance competitiveness, 3) organizing to master change and uncertainty, 4) leveraging the impact of people and information

An extensive literature review leads to the agility framework shown in figure 1. The dimensions are described below (quoted).

Figure 1: Presentation of the Agility Framework (van Hoek et al., 2001)

Customer sensitivity
Customer centred versus product centred logistics policies (ten questions): assumes that “agile” policies emphasize customers and markets, while “lean” policies focus on the elimination of waste in products and processes.
Virtual integration
Immediate conversion of demand information into new products using knowledge-based methods versus multi-stage, multi-function methods (three questions): assumes that agile policies focus on instantaneous demand capture, interpretation and response while lean policies emphasize stable production periods and protecting the “operations core”.
Process integration
Self management versus work standardization (five questions): assumes that agile policies focus on operator self- management to maximize autonomy and immediate response, while lean policies emphasize work standardization to ensure conformance to quality and productivity standards.
Network integration
Fluid clusters v. long term supply chain partnerships (six questions): assumes that “agile” policies emphasize fluid clusters of network associates, while lean policies focus on a more fixed set of long-term stable partnerships.
Measurement
Capabilities versus “world class” measures of performance (seven questions): assumes that agile policies are based on broad-based measures that underpin capabilities, while lean policies emphasize “hard” measures such as quality and productivity only.

The authors go further and analyze how these dimensions are represented other common supply chain concepts like just in time or lean production (figure 2).

Figure 2: Representation of Agile Dimensions in common SC Concepts (van Hoek et al., 2001)

Changed Approach

The “agile approach” changes supply chain management as a whole. The authors compare the traditional vs. agile approach very extensively. A summary can be found in figure 3.

Figure 3: Approaches to Agility in Supply Chain Management (click to enlarge; van Hoek et al., 2001)

Conclusion

Overall this article is a good starting point to answer the question “what is agility?”. For business it is important to transfer this framework into their measurement systems to get a benchmark how well they perform, since “you cannot manage what you don’t measure”.

Reference:

Hoek, R., Harrison, A., & Christopher, M. (2001). Measuring agile capabilities in the supply chain International Journal of Operations & Production Management, 21 ½, 126-148 DOI: 10.1108/01443570110358495

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Improving Confidence to mitigate Supply Chain Risks

Daniel Dumke — Mon, 04 Apr 2011 14:28:00 +0000

Yet another paper on risk mitigation strategies. This time: How to reduce risks by improving confidence. You can find the complete paper of today in the web.

Lack of Confidence

The authors theorize that especially demand risk (volatility) has increased during the last years. With several SC concepts which are aimed to reduce the slack in the supply chain during the same period, overall risks in the SC have increased dramatically.

This leads to a lack of confidence by the managers responsible for the SC in:

Order cycle time

Current order status

Demand forecasts given

Supplier’s capability to deliver

Manufacturing capabilities

Quality of the products

Transportation reliability

Services delivered

If you are still unsure if in your supply chain the lack of confidence prevails, have a look at this list.

Outcomes of the Lack of Confidence (Christopher and Lee, 2004)

Risk Spiral

The lack of confidence can help to increase risks even further. Since according to the risk spiral, lack of confidence may lead to a increase of buffers in the supply chain to make sure that the product can still be delivered.

This on the other hand leads to longer cycle times / pipelines, which reduces the visibility even further.

Risk Spiral (Christopher and Lee, 2004)

Solution

Instead of increasing buffers the authors recommend to improve visibility and control:

Visibility

The key to improved supply chain visibility is shared information among supply chain members. Traditionally companies have tended to subscribe to the view that ‘information is power’ and to interpret the phrase as meaning power is diminished if that information is shared. In fact in supply chains the reverse is true. If information between supply chain members is shared, its power increases significantly. This is because shared information reduces uncertainty and thus reduces the need for safety stock.

Control
The goal here is to improve flexibility over the supply and own processes. The time to react to the new information gained above has to be used well.

Conclusion

Visibility and control summarizes several existing strategies (like information exchange and reducing lead times) into a new concept for thinking about supply chain risk mitigation. It therefore has the potential to lead to new / better strategies to reduce risks. The table above can be used to analyzed if some supply chain is already affected by low confidence. From a scientific standpoint I am missing the grounds for this conclusions. Obviously, this paper is not proving / supporting any theory, since it does not contain any survey or other modeling method. But on the other hand it also does not contain any hint for the method used for theory creation.

Reference:

Christopher, M., & Lee, H. (2004). Mitigating supply chain risk through improved confidence International Journal of Physical Distribution & Logistics Management, 34 (5), 388-396 DOI: 10.1108/09600030410545436

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Managing Strategic Partnerships

Daniel Dumke — Wed, 09 Mar 2011 06:57:00 +0000

Setting up the right partnerships is hard to do. There are multiple levels to the decision with which companies to setup formal relations and how deep this relationship should be? Christopher and Jüttner (2000) develop a framework for managing partnerships. The full paper can be found here.

Introduction

The authors use focus group interviews and multiple case studies to gain insights into practitioners’ experiences.
Several factors are affecting an increasing focus on partnership management: The value chain orientation, rationalization of the supplier base, growing interdependencies and growing focus on the competition of supply chains and not companies.

Framework for Strategic Partnerships (Christopher and Jüttner, 2000)

Framework

The key factors of the framework are: to define a balanced set of relationships, development of an interface structure, cooperation, change management, relationship promoters and monitoring.

Defining a balanced set of relationships
Keep in mind that partnerships are resource-intensive investments, first a company has to define its own strategy. Since the complexity of the network is dependent on number of levels, the existing relationships have to be evaluated: Can I substitute suppliers, buyers, goods? What are our common interest and what are my transaction cost? Christoper and Jüttner suggest, that this should not be done by multidimensional evaluation matrices, but a simple hierarchy to rank the suppliers / buyers may be sufficient. To generate some incentives for new comers this ranking and the generation process should be made transparent.
Developing the right interface structure
The authors argue that the quality of relationship is influenced by the closeness of the parties. There are distinctive types of interfaces which can be used for such a relationship: 1) only buyer / seller interaction (focus on price and margin, few resources invested, large number of relationships); 2) closer collaboration between buying and selling (“account management”); 3) relationship between companies, where there is direct interaction between a range of functions and usually substantial investment in the relationship
Cooperation
Here aspects like information sharing or data accuracy come into play. Also the sensitive parts of partnership are important
Change management
The authors want to point out that the change towards a company which embraces strategic relationships is not an easy one. Therefore managing people through this change is an essential part of partnership management.
Assigning a relationship promoter
To prevent relationship issues a relationship promoter on each side of the partnership is advised.
Monitoring the relationships
Monitoring can be done in a formal and / or informal way. The important point here is not to loose track of what has been achieved and how it was achieved.

Conclusion

Christopher and Jüttner provide a refreshing read on strategic partnership management. Refreshing, because they are not focussed on only one possible way eg. to measure the performance of the chain. They acknowledge that depending on the context a more informal way of measuring might be appropriate as well.

Reference:

Christopher, M., & Jüttner, U. (2000). Developing strategic partnerships in the supply chain: a practitioner perspective European Journal of Purchasing & Supply Management, 6 (2), 117-127 DOI: 10.1016/S0969-7012(99)00038-6

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Supply Chain Risk Sources, Consequences, Drivers and Mitigation

Daniel Dumke — Wed, 23 Feb 2011 09:35:00 +0000

I just stumbled upon one of the articles I already read about a year ago, shortly after I started my research. Beside indication of a future research agenda (see as well here), Jüttner et al. (2003) also explain some fundamental concepts of supply chain risk management.

How to get there?

Jüttner et al. decided to conduct a exploratory study with practitioner interviews and compare these results with a literature review. Four basic concepts for Supply Chain Risk Management evolved from this, namely Risk Sources, Risk Consequences, Risk Drivers and Risk Mitigation Strategies.

Risk Sources

[are] environmental, organisational or supply chain-related variables which cannot be predicted with certainty and which impact on the supply chain outcome variables

So there are three categories for risk sources: Environmental, Network and Organization.

Environmental risk sources may for example be the result of accidents (eg. fire), socio-political actions (eg. terrorist attacks) or force majeure (like hurricanes or earthquakes)
Network-related risk sources unfold from interactions between organisations within the supply chain, examples are: Lack of Ownership (unclear responsibilites between supply chain partners eg. due to increased concentration and outsourcing), Chaos can result from missing trust or badly communicated information, finally Inertia describes a lack of flexibility within the supply chain.
The interviews showed
a consensus that network-related risks are an important and so far neglected source of risk.
Organisational risk sources can be found within one of the participants of the supply chain in focus and can be found within the production factors like labour (strikes), machines (failure), etc.

To conclude: From the point of view of the links within the supply chain, environmental and organizational uncertainties can be seen as risks “to” the links in the supply chain whereas network-related uncertainties are risk sources “of” the links.

Risk Consequences

Risk can have consequences can be measured ex post by the performance indicators used. Ex ante they are contained within the variances of the indicators. Three different consequences can be named:

Financial consequences
Reputation damage
Health and safety concerns

Risk Drivers

Risk drivers further increase the risk experienced by the supply chain participants (examples: competition increases the risk indirectly, outsourcing (increased complexity) has a direct effect on risks)

The major drivers for risk are: focus on efficiency rather than effectiveness, globalization of supply chains, focussed factories and centralized distribution, the trend to outsourcing and the reduction of the supplier base.

Risk Mitigating Strategies

… can be defined as

strategic moves organisations deliberately undertake to mitigate the uncertainties identified from the various risk sources (Miller, 1992)

Conclusion

The results of this article experienced a widespread use and are accepted by many researchers. The definitions mentioned can be used as basis for further research in the supply chain risk management field.

Reference:

Juttner, U., Peck, H., & Christopher, M. (2003). Supply Chain Risk Management: Outlining an Agenda for Future Research International Journal of Logistics Research and Applications, 6 (4), 197-210 DOI: 10.1080/13675560310001627016

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Managing Supply Chains with multiple Pipelines

Daniel Dumke — Mon, 10 Jan 2011 15:42:00 +0000

Companies offer a smaller or larger range of products serving different markets, depending on their history and primarily the respective business model.

From a supply chain management point of view this poses the question if it is ok just to use the same supply chain strategy for all those products.

Pipelines vs. Supply Chains

Aitken et al. (2005) make a convincing argument against this approach and instead suggest the “pipeline” to describe

the specific operational mechanisms and procedures that are employed to service specific product/market contexts

within one supply chain.
So one supply chain usually contains several different pipelines.

Case Study

The authors conducted a case study with a lightning company producing a range of lighting products for diverse markets.
During the four year project there were two major phases: first the introduction of lean production, and second increasing the responsiveness of the plant.

Four different pipelines were identified by clustering the products. The clusters were defined by considering the trade off between economies of scale, economies of scope and the diseconomies of averaging.

Cluster 1: low volume products
Cluster 2: high volume, low variant products
Cluster 3: multiple variants of standard products
Cluster 4: customized products

Pipeline Strategies

Different pipeline strategies were identified and are listed in table 1.

Table 1: Categorization of Pipeline Strategies (Aitken et al. 2005; click to enlarge)

Conclusion

Pipelines are a useful way of differentiating supply chain and selecting the right strategies depending on the market and product properties. Aitken et al. describe a normative scenario, in practice differences in supply chains are often due to missing integration of different parts of a company (eg. after a merger). But especially in those cases it is necessary to develop an approach for reintegration without loosing sight of the different needs of the customers.

Reference:

Aitken, J., Childerhouse, P., Christopher, M.G., & Towill, D.R. (2005). Designing and Managing multiple Pipelines Journal of Business Logistics, 26 (2), 73-95

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Personalized Products and their Impact on Supply Chain Design

Daniel Dumke — Wed, 08 Dec 2010 09:41:00 +0000

Experts from research and business alike argue that within the last decades consumers have grown to be a more demanding factor for supply chain management. At the same time manufacturing and supply chain strategies adapted to this development (from lean to agile, see Christopher and Towill, 2000).

But how are customer demands going to develop? Are we already seeing the decentralized manufacturing world, where everybody uses his own 3D printer to produce individual products on their desks? Probably not yet.

But at least for some industries product personalization is one big issues these days. Poulin et al. 2006 analyzes what options companies have to personalize products for their customers and shows the possible effects on supply chain design.

Personalization

From the literature the authors summarize their framework for product personalization. It consists of the following eight options:

Poulin et al., 2006
Personalization Option	Characteristics
Popularizing	Limited number of product to match a wide variety of customer needs, for those who want off-the-shelf products. Focus on evolving the popular product mix in line ith evolving customer needs
Varietizing	Extensive mix of products to satisfy almost all customer needs. Retailers pick those they want to offer off-the-shelf and rely on quick delivery from the distribution network for fast delivery of the others
Accessorizing	A limited set of core products matched with a wide array of accessories. Final assembly of accessorized products performed to order either by the user, the retailer or a fulfillment center
Parametering	Customer defines the desired product through the setting of parameters and the selection of options. He is guided through the specification process. Manufacturing is strictly to order
Tailoring	Product designed/engineered to customer needs. The customer is closely involved in the product realization process
Adjusting	Product adjusted to customer needs after usage. Distributed information systems capture customer feedback
Monitoring	Product is replaced by more adequate product as the customer needs evolve, ensuring continually a best-fit product. This involves regular and interactive customer feedback
Collaborating	Client is viewed as a collaborator with an open dialog. Expert field systems interact with clients, seeking to continually optimize client return

Methodology

To gain insights on the effects on supply chain design the authors conduct a case study in the golf iron industry, where already now a high product variety is a standard. They build a systems model of the industry to improve understanding of the relevant factors and different clients.

After that they describe the deployment of each of the above mentioned personalization options within the industry. For example:

Golf clubs can be parameterized using different coloring
the tailoring option would be used if a customer asks for a different weight distribution in the cavity of an iron head to correct specific, personal miss-hits.
Adjustments would involve the post sale process, where the iron is adjusted to specific needs

Effects on Design

In the following table the effects on supply chain design are listed.

Table 2: Impact of Personalization Options on Demand and Supply Network Processes (click to enlarge, Poulin et al., 2006)

The authors then visualize the effects of the customer involvement and differing decoupling points within the supply chain, effectively generating multiple supply chains for the different customer demands (see figure 1).

Figure 1: Point of Customer Involvement and Decoupling Point of Personalized Offers (click to enlarge, Poulin et al., 2006)

Conclusion

Personalized products are going to be the order winners of the future. The supply chain design has to adapt to these challenges and Poulin et al. gives a good start to change the supply chain accordingly.

Reference:

Poulin, M., Montreuil, B., & Martel, A. (2006). Implications of personalization offers on demand and supply network design: A case from the golf club industry European Journal of Operational Research, 169 (3), 996-1009 DOI: 10.1016/j.ejor.2005.02.005

Christopher, M., & Towill, D. (2000). Supply chain migration from lean and functional to agile and customised Supply Chain Management: An International Journal, 5 (4), 206-213 DOI: 10.1108/13598540010347334

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Leading by Design

Daniel Dumke — Mon, 06 Dec 2010 15:26:00 +0000

Is there consensus about the role of product design as the leading function in the supply chain? Not yet! This article introduces the topic of integrating decisions in product and supply chain design and gives a short glimpse on the “how to implement” part.

Case study

During the last weeks I conducted the following case study on the impact of product design on supply chains using literature and expert interviews, looking for an answer to the basic question: What are the advantages of integrating product design into your supply chain decisions?

European retailer for furniture

Supply chain management starts with the product design. They are using this integration to reduce cost but also carbon emissions. One example, the packaging they use is designed for the specific transportation requirements so that efficiency is raised.
Marks & Spencer, UK
Are using their product design as an integrated part of its overall risk management. Apparel design is also leading procurement decisions (see reference for more information).
Big European food company
Product design is lead my marketing function. Supply chain design is guided by those decisions.

Research

In the literature Khan et al. 2008 also take the view that product design and supply chain design should be integrated more to improve overall results. They first state that product design is usually neglected in corporate risk management. To minimize risks the authors recommend to establish “design led procurement” and “design-led risk management” to improve agility, relationships with suppliers, while on the other hand avoiding over dependence.

How To

Fixson (2005) introduces a framework for an integrated decision making of product, process and supply chain decisions. Decisions taken within those three domains depend on six different product characteristics:

Product modularity
Component complexity
Loosely coupled interfaces
Number of components
Product platforms
Component commonality

Product Characteristics Impacting (constraining and enabling) Design Decisions in Product, Process, and Supply Chain Domain (Fixson, 2005)

He argues that the more interfaces exist between product components the higher the complexity not only in the production processes but also within the supply chain design. This framework however can be used as,

a guideline to focus on design decisions critical for the product and company under consideration; [… it can help to] explore the advantages and limitations of various operational strategies for given product architectures [… and] to improve a company’s strategy planning capabilities over time.

Conclusion

From systems theory it should be obvious that integrating decision making should lead to better results than decisions in separate functions. But the mentioned examples are only a skewed sample to emphasize the point: Yes, it makes sense to integrate product development. But the implementation has to be thoroughly planned.

Reference:

Khan, O., Christopher, M., & Burnes, B. (2008). The impact of product design on supply chain risk: a case study International Journal of Physical Distribution & Logistics Management, 38 (5), 412-432 DOI: 10.1108/09600030810882834

Fixson, S. (2005). Product architecture assessment: a tool to link product, process, and supply chain design decisions Journal of Operations Management, 23 (3-4), 345-369 DOI: 10.1016/j.jom.2004.08.006

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The Impact of Supply Chain Strategy on Shareholder Value

Daniel Dumke — Tue, 19 Oct 2010 08:39:00 +0000

I had this article marked for some time now and I finally got to read it. It describes the connection between Shareholder Value and the concept of Value Based Management (VBM) and Supply Chain Strategy.

Shareholder Value

The emergence of the Shareholder Value demands lead to the Value Based Management approach to operationalize the concept. The goal of both is to enable companies to generate real value, with a clear focus on the shareholders of the company in focus. Real value is created when a company can not only compensate investors for the total costs involved in the investment, but also provide a premium which compensates for the additional risk (in comparison to a risk free investment) incurred.

Shareholder Value can be seen and measured from an internal and external view point. Internally usually the Economic Value Added (EVA®) is used. It is calculated using the Operating Profit and the true cost of capital. Alternatively, if measured from outside a measure based on the market capitalization is used.

Driver of Shareholder Value

Revenue growth, operating cost reduction, working capital efficiency, and fixed capital efficiency are the drivers of Shareholder Value.

It is obvious that Supply Chain strategy directly or indirectly affects all these drivers.

A very important notion of VBM for the Supply Chain strategy is the focus on discounted cash flows (DCF) as the basis for the profits of multi-period models.

To increase discounted cash flows one has two options: increase / decrease revenues / cost or accelerate revenues / decelerate cost.

Supply Chain Strategies

The following strategies therefore can improve the Shareholder Value:

Decrease end to end pipeline times (especially focus on the cash to cash cycle)
Partner with the suppliers to reduce the lead times of all (!) incoming products
Slash internal lead times, by integrating and optimizing processes
Improve information flow from the demand side
Reduce risks to decrease capital costs associated with the company

Conclusion

Current research focusses very much on working capital as a driver for better Shareholder Value. Supply Chain Management can be the key in achieving the necessary reductions in receiveables, debt and inventory. You can find related links in the section below.

Reference:

Christopher, M., & Ryals, L. (1999). Supply Chain Strategy: Its Impact on Shareholder Value The International Journal of Logistics Management, 10 (1), 1-10 DOI: 10.1108/09574099910805897

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Design of Agile Supply Chains

Daniel Dumke — Tue, 29 Jun 2010 13:28:00 +0000

I already reviewed two other articles about agile supply chains. One on the role of distribution centers in supply chains and one on the migration from lean to agile supply chains.

But the question comes to mind if lean and agile supply chains have to be mutually exclusive or if it is possible to combine them. Christopher and Towill (2001) had a look at this question regarding the supply chain design.

Factors for Leanness / Agility

Several factors influence the design decision if a supply chain should be more agile or lean. Nowadays more often than not supply chains compete, not companies. This implies that not only companies must act market orient, but also supply chains.
Market orientation can be analyzed using the market winner / market qualifier concept. This also means that there are different foci of the lean and agile supply chain.

Correlation of Agile / Lean Supply Chains to Market Winners / Market Qualifiers

Strategies

Christopher and Towill mention three ways to combine the lean and agile paradigm in one supply chain:

80/20 approach
Usually in a supply chain with multiple products only a few of them make most of the overall volume (20% make 80% of the volume). Result: for the high volume products choose a lean approach, while for the low volume products an agile strategy might be better suited.
Decoupling point approach
Strategic inventory can act as a decoupling point within a supply chain. If you select this point wisely, it can be beneficial to use a lean strategy up to this point and an agile strategy after this point.
Base and surge demand
the strategies can also be combined if the demand pattern shows a base demand. This demand could be produced using a lean strategy, while the surge implements a more agile approach.
Base and Surge demand
Source: Christopher and Towill (2001)

Conclusion

It is important to see, that not only leanness and agility can be combined, but also the strategies mentioned above can be used complementarily.

Reference:

Christopher, M., & Towill, D. (2001). An integrated model for the design of agile supply chains International Journal of Physical Distribution & Logistics Management, 31 (4), 235-246 DOI: 10.1108/09600030110394914

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Agile Supply Chains

Daniel Dumke — Thu, 15 Apr 2010 09:43:00 +0000

I have been reading a lot of interesting articles lately, hence I could not post as often as I wanted. I found an article by van der Vorst and Beulens (2002; “Identifying sources of uncertainty to generate supply chain redesign strategies”) which opens a new perspective on the SCRM issue. I am going to publish a review later this week and link it here.
Today I wanted to highlight the basics of supply chain management by talking about “Supply chain migration from lean and functional to agile and customised” by Christopher and Towill (2000).
Agile supply chains are a quite new concept which emphasis a change in the corporate mindset to adjust to the constantly changing customer demand.

Agility

Agility is described as a capability which contains organisational structure, information systems, logistic processes and mindsets.
Result of an agile supply chain is its flexibility. It has to be separated from the lean supply chains or the lean manufacturing concept which focusses on reducing “fat” (eg. inventory, cost, …) wherever possible.

Market qualifiers / Market winners

Why does this change happen? According to Christopher and Towill there is a constant change of the factors which contribute to the market qualifiers and the market winners (based on Hill (1993)).

Hence periodically a new market winner emerges and downgrades the previous market winner to a market qualifier

For example in the early 80s the market winner was quality, in the late 80s it was cost. Presently the authors identified lead time as the new market winner.

Agile Logistics

Agile Logistics are defined by the four basic elements shown in the graphics.

Elements of agile logistics

An agile supply chain can be devided into two parts one where the products are pushed based on planning and forecast and one where products are pulled from the upstream within the supply chain based on the real customer demand.
So one part of designing an agile supply chain is the decision about where to place the decoupling points. There can be two different decoupling points one for the information decoupling (up to where in the supply chain is the information about customer demand shared) and the placement of strategic inventory.

Conclusion

This is a very good article to explain the basics of agile supply chains. There are many followers building on this work. But up to now I have not been able to find one article dealing with the measurement of agility or flexibility. This should be very useful for analyzing adequate measures to achieve agility.

Reference:

Christopher, M., & Towill, D. (2000). Supply chain migration from lean and functional to agile and customised Supply Chain Management: An International Journal, 5 (4), 206-213 DOI: 10.1108/13598540010347334

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Supply Chain Manager of the Future

Daniel Dumke — Sat, 20 Feb 2010 14:50:00 +0000

“Management Development and the Supply Chain Manager of the Future” by J. Mangan and M. Christopher (2005) aims to bridge the gap between current offerings of knowledge providers (eg. universities), current capabilities of users (eg. students and managers) and buyers (aka. companies).First it seems to be a good idea to get an impression of the demographics of the current supply chain managers. The Supply Chain Management Research Group at Ohio State found in a study, that nearly 95 percent of the supply chain managers are male, median age of managers 39 and about 20% have an additional professional qualification (eg. APICS). It’s also quite interesting to note that the average time the managers worked in the field of supply chain management is about 18 years combined with a high job rotation.

It is also highlighted how these SC-professionals gain the foundation of their knowledge.

In decreasing order of frequency: formal college, in-house training, seminar / workshop, ‘on the job’, and in-house training with an external trainer. Three major institutions are identified to support the professional education. First, so called professional bodies (like CSCMP), second, tertiary education at universities and lastly, publicly funded centres of excellence (like The MIT – Zaragoza International Logistics Program).

The authors argue that the current business transformation processes lead to a special need for experience and education for supply chain managers (this is taken from Christopher, 2004). For example:

The transformation from supplier-centric to customer-centric SCM, leads to the design of customer-driven supply chains, therefore a manager needs market understanding and customer insight.

In their own research they asked the provider-side (universities) what key changes they see to enhance the education. These are the main topics:

Specific logistics competencies are required for emerging markets.
Courses need to be more practical.
Multimodal nature of logistics and SCM needs to be highlighted more.
Need to differentiate between different learners.
Focus on processes and flows.
In-class exercises.
Best practice exists within certain companies.

The goal is to train the future supply chain manager to acquire the knowledge in the following areas:

General

Finance
IT
Management / Strategy

Logistics & Supply Chain Management

Operations
Focus on processes / flows
Legal, security and international trade
Multimodal logistics
Logistics in emerging markets

Competencies / Skills

Analytical
Interpersonal
Leadership
Change management
Project management

Conclusion

On the plus side the article summarizes the literature about the key qualifications, knowledge and skills which are necessary for supply chain managers to cope with the requirements of a changing business.

But on the other side the research part seems to be unilaterally focussing on the provider side, and there especially on the universities. Not only is one of the three randomly selected (?) public funded institutions located at the Hull University (home of the lead author), but also one of the research questions “What are the optimum approaches for career development?” was posed only to the provider side. I guess the result (Masters degree is listed first) does not come as a surprise.

Reference:

Mangan, J., & Christopher, M. (2005). Management development and the supply chain manager of the future The International Journal of Logistics Management, 16 (2), 178-191 DOI: 10.1108/09574090510634494

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