supply chain management

Supply Chain Conferences 2012

Daniel Dumke — Wed, 14 Dec 2011 13:32:00 +0000

Just another year comes to an end and so it is high time to aggregate the upcoming conferences on supply chain management and related topics in 2012.

The goal is to have a comprehensive overview of the most instructive and useful conferences of the year.

If you have any additions, just let me know in the comments section of this article. Also, you can recommend one of the conferences or the other from your personal experience.

In accordance with the topic of the blog I focussed my selection on conferences, which also have tracks related to supply chain risk management. As last year, I also added a column for the Target Audience being either Business, Research or Both.

Since not all major conferences have released the dates for 2012, I will update this post as soon as I receive new information. You can subscribe to my site and get updates via RSS or email by clicking the icons in banner on this page.

Supply Chain Conferences 2012
Name	Location	Start	End	Fees	Target Audience	Call for Papers	Links
FMI 2012 Supply Chain Conference	Orlando, FL, USA	2012-01-22	2012-01-24	USD 2’045	Business	none	GMA online
Global Supply Chain Management Spring Conference	West Lafayette, IN, USA	2012-02-10			USD 100	Both	none	Purdue University
21th Annual IPSERA Conference	Naples, Italy	2012-04-01	2012-04-04	EUR 395 – 540	Research	2011-11-01	Naples University
RIMS Annual Conference	Philadelphia, PA, USA	2012-04-15	2012-04-18	USD 525	Business	none	RIMS
POMS 22st Annual Conference	Chicago, IL, USA	2012-04-20	2012-04-23	tbd.	Research	2012-01-31	POMS
CSCMP Europe 2012	Frankfurt a. M., Germany	2012-04-23	2012-04-25	USD 925 – 1’420	Both	2012-01-09	CSCMP Europe
Gartner Supply Chain Executive Conference	Palm Desert, CA, USA	2012-05-21	2012-05-23	USD 2’195 – 2’595	Business	None	Gartner
European Supply Chain and Logistics Summit	Berlin, Germany	2012-06-19	2012-06-21	GBP 1’495	Business	none	Supply Chain Summit
SMART Conference and Expo 2013	Sydney, Australia	2012-06-26	2012-06-27	tbd.	Both	tbd.	SMART Conference
4th Joint World Conference on Production & Operations Management / 19th EurOMA Conference 2012	Amsterdam, NL	2012-07-01	2012-07-05	EUR 550 – 650	Research	2012-01-13	POM / EurOMA
2nd International Conference on Logistics, Informatics and Service Science (LISS)	Beijing, China	2012-06-08	2012-06-11	tbd.	Research	2012-03-02	LISS 2012
NOFOMA Conference 2012	Turku, Finland	2012-06-09	2012-06-10	EUR 150 – 625	Research	2012-04-30	NOFOMA
ANZAM Operations, Supply Chain and Services Management Symposium 2012	Perth, Australia	2012-12-05	2012-12-07	tbd.	Research	tbd.	ANZAM
17th International Symposium on Logistics (ISL 2012)	Cape Town, South Africa	2012-07-08	2012-07-11	tbd.	Both	2012-01-14	ISL
CSCMP Annual Global Conference	Atlanta, GE, USA	2012-09-30	2012-10-03	USD 1295 – 1795	Both	none	CSCMP
European Transport Conference	Glasgow, Scotland	2012-10-10	2012-10-12	GBP 270 – 350	Research	2012-02-12	ETC
5th International Symposium on Network Reliability	Hong Kong, China	2012-12-18	2012-12-19	tbd.	Research	2012-01-30	INSTR 2012
Hamburg International Conference of Logistics	Hamburg, Germany	tbd.			tbd.	Research	tbd.	Hamburg University of Technology
SCC Executive Summit North America	Palm Springs, CA, USA	tbd.			tbd.	Business	None	SCC

Updates

2012/01/06: Added the 5th International Symposium on Network Reliability
2012/01/13: Added the RIMS Annual Conference
2012/01/27: Added the European Transport Conference 2012

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Issues in Supply Chain Management

Daniel Dumke — Wed, 22 Jun 2011 10:26:00 +0000

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:

What are the operational definitions of the key business processes and what are the relationships among these processes?
How should the existing supply chain be mapped? Should the map include all connected firms or only the primary firms?
What is the value proposition at the consumer level or end point of the supply chain?
What metrics should be used to evaluate the performance of the entire supply chain, individual members or subsets of members?
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?
What determines with whom to link business processes?
What determines the processes to link with these key members?
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.

Reference:

Lambert, D.M., & Cooper, M.C. (2000). Issues in Supply Chain Management Industrial Marketing Management , 29, 65-83 DOI: 10.1016/S0019-8501(99)00113-3

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Current Evolution of Supply Chain Management

Daniel Dumke — Mon, 02 May 2011 13:17:00 +0000

One very important part of supply chain management research is the historical analysis of supply chain practices and properties over time. Just recently I published an article on the development of supply chain strategies over the course of 20 years.
Today I want to highlight a more short term, nonetheless interesting analysis done using two surveys from 2003 and 2004 on the current state and evolution of supply chain management practices.

Surveys and Foundation

The results of the first survey were published in 2003. The 2004 study was meant as a follow up. Overall 209 participants mainly from North America and Europe from more than 20 different industries took part in the survey.
A major part of the survey consists of rating the performance in different areas of supply chain management (eg. purchasing, transportation, planning, inventory management…) based on a supply chain maturity model (figure 1). The differences between the results were then analyzed.

Figure 1: Supply Chain Maturity Model (Poirier and Quinn, 2004)

Results

There is some identifiable progress between the two years in terms of the maturity level. Figure 2 shows the results of the self assessment for 2004. The authors state that especially the high tech sector and retail show a high percentage of level 4 and 5 companies. Comparing 2003 with 2004 the results suggest a forward movement in all key areas except for the supply chain software and technology bit.

Figure 2: Results Maturity Level in Supply Chain Functions (Poirier and Quinn, 2004)

Another part of the surveys was the strategy development within the companies. The authors conclude that

overall strategy development continues to be a weak spot among the responding companies.

Especially due to a missing link between supply chain and business strategy. In 2004, over half of the companies reported to have no supply chain strategy. Only 25% agreed that their SC strategy is integrated into the business strategy. But still, the strategies are only shared with their entire supply chain by about 15%.
The authors infer that short term cost-reduction efforts still seam to be the major focus of supply chain management. This is also confirmed by a greater focus of the companies towards supply chain initiatives on reducing cost than increasing revenues.

The authors see the following hypothesis confirmed:

Companies and industries will vary widely in terms of their evolution agains the supply chain framework
Impacts of supply chain initiatives will be significant and well-documented, particularly with regard to cost savings and revenue improvements.
Companies will adopt technology solutions before improving their related processes, thereby foreclosing on the technology’s full benefits
Inter-enterprise collaboration will be a mark of the advanced firms
Customers will be the driving force behind many supply chain initiatives

Conclusion

Long term historical supply chain research can be a key in understanding the political drivers behind supply chain development within a company. And of course improving as a result. The research presented here is a good start in this direction but should be supported by a longer term continuity.
To be honest I was surprised that this short term view even spotted significant differences, since reaching another level in this maturity model usually would take more than one year (this then again shines back on the validity of the sample). And sadly I was not able to find a follow up article from one of the last years which repeated the study.

As always with questionnaire based surveys, especially those which have to be filled without guidance by one of the researchers, the results may heavily be biased by the interviewee and his environment.

From the deduction particularly the third hypothesis (“companies will adopt technology before changing processes”) seems to be hard to confirm in a survey alone and the presented evidence looks weaker than the others.

Reference:

Poirier, C.C., & Quinn, F.J. (2004). How are we doing – A Survey of Supply Chain Progress Supply Chain Management Review, 8 (8), 24-31

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Supply Chain Management Literature Review

Daniel Dumke — Mon, 11 Apr 2011 14:29:00 +0000

It’s not that there are no articles on supply chain risk management anymore. But after writing on current research in the last weeks (like the one on system failure here) I have been wondering more about the foundations of supply chain management in general. So I decided to review an article today on general supply chain management research, in this case a literature review by Sachan and Datta (2005).
The complete article can be found here.

Analysis

The analysis is pretty straight forward, Sachan and Datta start with showing the different research designs used: empirical/descriptive and quantitative/qualitative. In supply chain management the research methods range from surveys, interviews and case studies, to more quantitative approaches like mathematical modeling or simulation. Using these categories the authors reviewed 440 supply chain management articles from 1999 to 2003.

Authors’ Conclusions

The authors themselves draw the following conclusions from the data at hand:
Conclusion 1:

If academicians today do not expand the approaches to research, managers will continue to perceive them as irrelevant academicians, which address fictitious problems and are not interested in the real world.

Conclusion 2:

Simulation is often performed to check for validity of the models developed in an paper, or to examine the efficiency of heuristics, or to assess model solution times.

Conclusion 3:

It is remarkable that not more papers have an inter-organizational level (dyad, chain and network) of analysis despite the increasing attention toward these level had started at the beginning of the 1980s.

Furthermore they identify the following gaps in the research:

Theories of other discipline are applied in very few papers
Secondary data sources are used in many papers, but not in an innovative way
The research at inter-organizational level is very less.

Conclusion

There are two major conclusions drawn in the article: Academicians make themselves irrelevant, because they only use a specific set of methods, to solve problems which are not rooted within business problems.
Secondly, only few papers focus on a supply chain network, most of them only view single relationships between one or two elements of the chain, ignoring most network effects.

The conclusions drawn are both very intriguing, but they are really missing some more explanations. So, for example, why are they sure that the choice of methods is the reason for the great gap between research and business?
Anyone reading papers on supply chain management realized the gap between the title of the field and much of the research done there. Still, it would be more interesting to know why most research is only done on sub systems.

Reference:

Sachan, A., & Datta, S. (2005). Review of supply chain management and logistics research International Journal of Physical Distribution & Logistics Management, 35 (9), 664-705 DOI: 10.1108/09600030510632032

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Supply Chain Risk Webinar

Daniel Dumke — Tue, 23 Nov 2010 13:30:00 +0000

I stumbled upon a Webinar which touches the topic of Supply Chain Risks, in this case: “Removing the Risks and Profiting from a Sustainable Supply Chain“.
It will be conducted by a small consulting firm (SD&S, Main Speaker is Jos Darmanata). Here are the facts:

Date: Thursday, 16th December 2010
Time: 14:15 GMT
Topics include
Key aspects of the Sustainable Supply Chain Triangle, Major SC issues, Structured approach on how to start implementing sustainability
Participation is free of charge

If you are interested, have a look at their registration website. If you took part please let me know in the comment section of this article.

Disclaimer: I am nor have been affiliated with WTG Webinars or SD&S.

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Supply Chain Conferences 2011

Daniel Dumke — Mon, 01 Nov 2010 15:40:00 +0000

In preparation for next year I have been busy looking for Supply Chain Conferences. The goal is to have a comprehensive overview of instructive and useful conferences in 2011.

The conferences I selected all have tracks related to Supply Chain Risk Management. In this year’s table I added another column for the Target Audience as either Business, Research or Both.

Since not all major conferences have released any dates for 2011, I will update this post as soon as I receive new information. You can subscribe to my site and get updates via RSS or email by clicking the icons in banner on this page.

This year I have personally attended the HICL (Hamburg International Conference of Logistics, proceedings) and CSCMP Annual Global Conference in San Diego and I can recommend both of them.

Supply Chain Conferences 2011
Name	Location	Start	End	Fees	Target Audience	Call for Papers	Links
FMI 2011 Supply Chain Conference	Orlando, FL, USA	2011-01-30	2011-02-01	USD 1’995	Business	none	GMA online
Financial Supply Chain Payments Conference	Orlando, FL, USA	2011-03-15	2011-03-17	USD 595 – 695	Business	none	US Bank
12th Logistics Forum Duisburg	Duisburg, Germany	2011-03-16	2011-03-17	EUR 590 – 990	Business	none	BVL
Supply Chain Risk Management Forum	Toronto, Canada	2011-03-29			CAD 1,275	Business	none	Conference Board
20th Annual IPSERA Conference	Maastricht, The Netherland	2011-04-10	2011-04-13	EUR 395 – 540	Research	2010-11-19	Maastricht University
POMS 22st Annual Conference	Reno, USA	2011-04-29	2011-05-02	USD 395 -550	Research	2011-01-14	POMS
Supply Chain Risk Management	Singapore	2011-05-09	2011-05-10	not published	Business	none	Marcus Evans
SMART Conference and Expo 2011	Sydney, Australia	2011-05-24	2011-05-26	tbd.	Both	2010-11-22	SMART Conference
Gartner Supply Chain Executive Conference	Scotsdale, AZ, USA	2011-06-01	2011-06-03	USD 2195	Business	None	Gartner
18th EurOMA Conference 2011	Camebridge, UK	2011-06-03	2011-06-06	GBP 450 – 640	Research	2011-01-17	EurOMA
European Supply Chain and Logistics Summit	Prague, Czech Republic	2011-06-07	2011-06-09	tbd.	Business	none	Supply Chain Summit
CSCMP Europe 2010	Barcelona, Spain	2011-06-08	2011-06-10	EUR 750	Both	2011-01-10	CSCMP Europe
1st International Conference on Logistics, Informatics and Service Science	Beijing, China	2011-06-08	2011-06-11	tbd.	Research	2011-01-25	LISS 2011
NOFOMA Conference 2011	Harstad, Norway	2011-06-09	2011-06-10	EUR 350 – 555	Research	2011-01-10	NOFOMA
1-2-1 Supply Chain Excellence Summit 2011	London, Great Britan	2011-06-14			tbd.	Business		Supply Chain Excellence
ANZAM Operations, Supply Chain and Services Management Symposium 2011	Geelong, Australia	2011-06-15	2011-06-17	AUD 480 – 800	Research	2011-02-28	ANZAM
13th International Conference on Modern Information Technology	Trondheim, Norway	2011-06-22	2011-06-24	tbd.	Research	2011-01-17	NTNU Trontheim
16th International Symposium on Logistics (ISL 2011)	Berlin, Germany	2011-07-10	2011-07-13	tbd.	Both	2011-01-14	ISL
Global Supply Chain SumMIT	Shah Alam, Malaysia	2011-07-19			free	Business	none	MISI
Hamburg International Conference of Logistics	Hamburg, Germany	2011-09-08	2011-09-09	tbd.	Research	2011-01-31	Hamburg University of Technology
SCC Executive Summit North America	Palm Springs, CA, USA	2011-09-28	2011-09-30	USD 1200 – 2500	Business	None	SCC
CSCMP Annual Global Conference	Philadelphia, USA	2011-10-02	2011-10-05	USD 1345 – 1845	Both	none	CSCMP
4th OSCM Conference	Male, Maldives	2011-12-15	2011-12-17	tbd.	Research	2011-07-31	OSCM
Advances in Supply Chain and Manufacturing Mgmt. (ASCMM 2011)	Kharagpur, India	2011-12-16	2011-12-18	USD 200 – 500	Research	2011-06-30	ASCMM 2011
9th International Heinz Nixdorf Symposium	Paderborn, Germany	tbd.			tbd.	Research	tbd.	Paderborn University
Supply Chain Management SIG 2011 Conference	Haifa, Israel	tbd.			tbd.	Research	tbd.	Institute of Technology
International Conference on Logistics Reseach (RIRL)	tbd.	tbd.			tbd.	Research	tbd.	BeM Mgmt. School

Update (04/Mar/2011): Added 1-2-1 Supply Chain Excellence Summit and OSCM Forum
Update (28/Mar/2011): Added Marcus Evans Conference on SCRM
Update (15/Apr/2011): Added Gartner Supply Chain Executive Conference
Update (10/Jun/2011): Added Global Supply Chain SumMIT
Update (29/Jul/2011): Added SCC Executive Summit

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Supply Chain Crisis Management

Daniel Dumke — Mon, 25 Oct 2010 10:23:00 +0000

Supply Chain Risk Management is one way to look at risks within a company (and beyond). But there are broader and more narrow disciplines as well, with Business Continuity on the one end and Supply Chain Crisis Management on the other.

I wanted to get an overview of current research on Supply Chain Crisis Management first, so today I explore “Managing supply chains in times of crisis: a review of literature and insights” by Natarajarathinam, Capar and Narayanan. The article is focussed on providing the researcher with a current state of supply chain crisis management, but practitioners will probably find the “Practical Implications of SC Crisis Management” in figure 3 (below) useful.

Crisis

So how do crises fit into the Supply Chain Risk Management landscape? The authors cite Merriam-Webster on crisis, where it is defined as:

an unstable or crucial time or state of affairs in which a decisive change is impending; especially: one with the distinct possibility of a highly undesirable outcome.

So in a supply chain context, a crisis is comparable to a disruption where the flow of goods, information or money is interrupted.

Methodology

The authors used an review of peer-reviewed articles as a basis for their work. For their sample they were using keywords like “crisis”, “risks”, “disaster”, “uncertainty” and more. This search resulted in 118 relevant articles published between early articles before 1990 and 2008.

Figure 1:Published Articles on Supply Chain Crisis Management by Year (Natarajarathinam et al., 2009)

Classification

As a next step the articles were classified according to the framework in the figure below.

Figure 2: Classification Framework (Natarajarathinam et al., 2009)

Results

One purpose of the article was to guide future research on the topic of supply crisis management, so the authors conclude:

Sources: More than 60 percent of the literature reviewed is exclusively concerned with external sources of risk and there is a high concentration on handling natural and man-made crises.
Scale: Most research focusses on crises on the supply chain or regional level, so no surprise there.
Stages: A major part of the current research is done on the proactive side, like preparation and mitigation rather than response and recovery
Research method / Respondent: The authors conclude that “There is a need for more case studies and empirical research in crisis management for not-for-profit supply chains.”

The authors also filtered the practical implications of current supply chain crisis management research and listed them in figure 3.

Figure 3: Practical Implications of SC Crisis Management Literature (Natarajarathinam et al., 2009)

Conclusion

It has been a long time since I have read such a clearly written article. I liked the presentation of the methodology. The only thing missing there would be the inclusion of non-peer reviewed journals as well considering the relatively small number of articles screened.

I found that the discussion of the term “Crisis Management” could have been more elaborate. How is the relation between Disruptions and Crisis? Are crises really just grave disruptions? If yes, is there really a need for another category here and how are the less grave disruptions called?

Reference:

Natarajarathinam, M., Capar, I., & Narayanan, A. (2009). Managing supply chains in times of crisis: a review of literature and insights International Journal of Physical Distribution & Logistics Management, 39 (7), 535-573 DOI: 10.1108/09600030910996251

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Supply Chain Integration as major Value Driver

Daniel Dumke — Mon, 11 Oct 2010 08:27:00 +0000

“Arcs of integration” is a concept developed by Frohlich and Westrook (2001) which describes the degree of integration of suppliers and customers within a Supply Chain.

Arcs of Supply Chain Integration (Frohlich and Westrook, 2001)

Methodology

This concept was developed within the scope of an international study on supply chain strategies. In this survey the authors used the mail survey research method to collect over responses form over 700 companies from all over the world (Asia/Pacific: 26%, Europe: 50%, North America: 14%, South America: 10%). Data was gathered not only on the supply chain integration of each respondent (eg. shared access to planning systems, shared production planning, knowledge of inventory levels), but also on performance parameters on each company (eg. market share, profitability, return on investment).

Strategies

There are two major tactics for supply chain integration:

coordination and integration of the forward physical flow of deliveries between suppliers, manufacturers and customers
backward coordination of information technologies and the low of data from the customer to the suppliers

The authors distilled five different strategies from the answers from the survey:

Inward-facing
for companies without much up- or downstream integration
Periphery-facing
only little integration in both directions (compared with other companies from the sample)
Supplier-facing
higher integration on the supply side, low integration on the customer side
Customer-facing
vis-versa to 3
Outward-facing
strong integration on the supply and customer side

Results

The results show that those companies applying an outward-facing strategy clearly recorded greater rates of performance compared to all other strategies.

Comparison of different Strategies for Supply Chain Integration (Frohlich and Westrook, 2001)

The authors draw the following conclusions from the data:

The outward-facing supply chain strategy is associated with the largest rates of significant performance improvements.
Manufacturers may be seriously jeopardizing performance by continuing to follow the inward-facing strategy.
Results for the supplier- and customer-facing strategies suggested that focusing on only the inbound or the outbound sides of the supply chain gained little more for manufacturers than adopting the periphery- or inward-facing strategies.
Over 40% of the sample was in the periphery-facing group. This suggests that periphery-facing may be the supply chain’s natural “equilibrium point” in terms of integration.

Conclusion

I can really recommend this article as a read and the first article I know which shows the connection between the degree of supply chain integration and performance levels.

Reference:

Frohlich, M., & Westbrook, R. (2001). Arcs of integration: an international study of supply chain strategies Journal of Operations Management, 19 (2), 185-200 DOI: 10.1016/S0272-6963(00)00055-3

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Internal

Identifying important Activities within the SCOR Processes

Daniel Dumke — Mon, 16 Aug 2010 10:07:00 +0000

The Supply Chain Operations Reference (SCOR) model has been developed by the Supply Chain Council to provide a best-practice framework for supply chain management practices and processes with the goal to increase performance.

SCOR

The SCOR model consists of five major process categories: Plan, Source, Make, Deliver and Return

Starting from that best practice processes are defined up to level three.

Supply Chain Operations Reference Model (SCOR, SCC 2000)

Research Question

In 2004 Lockamy and McCormack published an exploratory study on the question

What are the most important supply chain management planning practices in the Plan, Source, Make, Deliver decision area that relate to supply chain performance?

Results

From literature and the questionnaires nine general practices are derived, that might influence performance.

Planning processes
Collaboration
Teaming
Process measures
Process credibility
Process integration
IT support
Process documentation
Process ownership

Using factor analysis the authors find that “Planning processes” and “Collaboration” is especially important for supply chain performance within all SCOR process categories. The aggregated results are shown in the following table.

Results Lockamy and McCormack (2004)

Reference:

Lockamy, A. III, & McCormack, K. (2004). Linking SCOR planning practices to supply chain performance: An exploratory study International Journal of Operations & Production Management, 24 (12), 1192-1218 DOI: 10.1108/01443570410569010

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AMR announces Supply Chain Ranking 2010

Daniel Dumke — Fri, 04 Jun 2010 16:49:00 +0000

Gartner just announced the 2010 Supply Chain ranking conducted by AMR Research.
The ranking consists of the 25 companies with the best-ranked Supply Chains.

Ranking

This years Top 5 (extract):

Apple
Procter & Gamble
Cisco Systems
Wal-Mart Stores
Dell

Methodology

The following factors are included in the ranking and make up the overall score.

Peer Opinion / 154 voters (25%)
AMR Research Opinion / 27 voters (25%)
3-yr weighted ROA (25%)
Inventory Turns (15%)
3-yr weighted Revenue Growth (10%)

So there are three factor categories: subjective expert opinion, one supply chain number (inventory turns) and two primarily financial figures.

Methodology / Conclusion

There exists research supporting a correlation between supply chain performance and financial performance of a company, but up to now I have not found papers suggesting that the opposite is true as well. So I doubt that Revenue Growth and Weighted ROA are good indicators to appreciate supply chain performance.

Inventory turns on the other hand is probably very depend on the industry and product in focus and should be used with care.

The last factor is the expert opinion which contributes to the overall ranking. The expert ranking is split into the Peer Opinion and the AMR Research ranking. It is noteworthy, that the weights of both opinions are the same, even though there are five times more Peer Opinion experts than AMR experts indicating, that the AMR experts should be five times as knowledgeable than the other supply chain professionals.

From a business point of view the ranking show companies which have performed above average for a sustained period of time and their example could be used as a blueprint for Supply Chain Design.

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Mitigating Supply Chain Disruptions by using Option Contracts

Daniel Dumke — Sat, 22 May 2010 07:35:00 +0000

Mitigation strategies for supply chain risks have have been discussed in the literature for a long time now. Khan and Burnes (2007) mention several strategies like:

Multiple sources of supply vs single sourcing
Buffers
Risk sharing/knowledge transfer
Proactive supply management

But it seems difficult to assign a value and maximum cost for these strategies. Xu and Nizick (2009) are filling this gap.

Case: Supply Chain Model

The supply chain consists of multiple suppliers for two plants. The suppliers are scattered around the world. There are two types of suppliers: Base suppliers and Option suppliers.
Base suppliers have lower per unit costs than option suppliers and deliver the ordered parts. Disruptions can lead to a partial or full loss of the suppliers capacity. Option suppliers have to fill the gap if one or more of the base suppliers fail to deliver the orders due to disruptions (like huricanes, fires, earthquakes).
Option suppliers have to be paid a fixed amount to establish the relationship.

Focussing on disruption risk they calculate an optimal solution for this supply chain network design problem.

The stage one questions are:

Who should be the base supplier?
Who should be the option suppliers (if any)?

Stage two:

How much should be acquired in a specific period?
How should the parts be transported to the plans (train, ship, truck, plane)

Solution

It is obvious that it might be useful to have an “option” supplier at hand, to bridge a gap in supply due to an unforeseen event (eg. high cost of lost demand, low cost of establishing a relationship). So this, of course is also the solution by the authors.

The additional benefit from using this model is the calculation of how much these “options” are worth for the company and therefore how much can be paid for such an option to be established.

Reference:

Xu, N., & Nozick, L. (2009). Modeling supplier selection and the use of option contracts for global supply chain design Computers & Operations Research, 36 (10), 2786-2800 DOI: 10.1016/j.cor.2008.12.013

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CSCMP's Annual Conference: Two days for early bird registration

Daniel Dumke — Thu, 29 Apr 2010 12:25:00 +0000

Attendees of the CSCMP Annual Conference 2010 who register before April, 30th will receive $400.00 US off the regular registration rates.
So there are only two days left!

The opening keynote will be held by former Kellogg Company CEO Carlos Gutierrez; Jack Bacon is going to close the event, with a talk on “Nonlinear Thinking for the Nonlinear World”.

You have the chance for registration here. The schedule can be found here, scroll to the bottom of the page.

An overview over other conferences on supply chain management for this year can be found in this blog.

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Acting on Supply Chain Disruptions

Daniel Dumke — Thu, 22 Apr 2010 07:43:33 +0000

Supply Chain Risk manifests itself in many ways. Today the German airlines restored their regular flight schedule again after six days of no or limited air traffic, after the latest eruption of the Eyjafjallajökull vulcano on Iceland.

The consequences of such events only rarely become evident, but in the background emergency plans have to be executed (or developed).

Case

10 years ago a disruption affected the supply chain at Ericsson, luckily the effects of this event on Ericsson have been published. Its about the so called “Albuquerque accident” in 2000, which was documented by Norrman and Jansson (2004).

Disruption

The Albuquerque accident was a small (30 sqm area), short (10 minutes) fire within one of the clean rooms of a supplier at Ericsson. The supplier was responsible for a important RF-chip for the cell phone production. The consequences therefore were very severe. It took the supplier three weeks to get the production running again and after six month the yield was only 50% of the pre incident rate. The cost for Ericsson were estimated at $200 million (which was compensated by insurance companies).

Analysis

A review in the Wall Street Journal concluded that Ericsson

took too long to take action after the incident
its reporting to upper management was flawed
had no alternative suppliers for this component
has not been prepared for this kind of accident

So how did they react?

Results

The goal was to minimize the risk exposure within the supply chain.

To achieve this they took action on two sides:

Organisation
Assigning clear responsabilities and establish a matrix organization
Processes
Reinforce processes for risk identification, risk assessment, risk treatment, incident handling & business continuity planning

Business impact

Since the financial consequences of the disruption were carried by the insurance companies it was at first harder for Ericsson to renew the insurance policies, but just the other way around after implementing those strict SCRM program mentioned above. As a result Ericsson was paying less afterwards.

It is noteworthy, that after experiencing this disruption Ericsson percieves that the concepts of agility, responsiveness and leanness are inducing higher risks.

Conclusion

The article seams strongly influenced by Ericsson and the objective research and presentation might be questioned. I am definitively missing some more insights on the a priori analysis, since it is one corner stone of the design of the measures. Within the article only a short excerpt from the WSJ has been quoted.

Other authors (as Lockamy et al. (2008)) find a much more positive connection between business performance and supply chain risk management, so this should be further analyzed.

Reference:

Norrman, A., & Jansson, U. (2004). Ericsson’s proactive supply chain risk management approach after a serious sub-supplier accident International Journal of Physical Distribution & Logistics Management, 34 (5), 434-456 DOI: 10.1108/09600030410545463

Lockamy, A., Childerhouse, P., Disney, S., Towill, D., & McCormack, K. (2008). The impact of process maturity and uncertainty on supply chain performance: an empirical study International Journal of Manufacturing Technology and Management, 15 (1) DOI: 10.1504/IJMTM.2008.018237

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Supply Chain Collaboration and Performance Effects

Daniel Dumke — Tue, 06 Apr 2010 06:47:00 +0000

Today I have been reading the paper by Zacharia, Nix and Lusch on Supply Chain Collaboration. The goal of the paper was to assess firm-level business performance outcomes of collaboration projects. This was done using a survey of nearly 500 supply chain professionals.

Model
Zacharia, Nix, Lusch (2009)

The authors suggest the following hypothesis:

H1: The greater the interdependence of knowledge and process, the higher the level of collaboration among the firms.
H2: The greater the level of supply chain partner insight, the higher the level of collaboration among the firms.
H3: The higher the level of collaboration, the better the operational outcomes.
H4: The higher the level of collaboration, the better the relational outcomes (trust, credibility and relationship effectiveness) between the collaborating firms.
H5: The better the operational outcomes, the better the relational outcomes between the collaborating firms.
H6: The better the operational outcomes, the better the performance at the firm level (organizational performance, asset utilization, competitive position, and profit).
H7: The better the relational outcomes, the better the performance at the firm level (organizational performance, asset utilization, competitive position, and profit).

Implications

After conducting the survey all hypothesis are accepted (0,001 and 0,01 levels). These results imply that a) collaboration can lead to more effective solutions by joining forces (resource based view), furthermore, b) understanding of the collaboration partner is key to a successful collaboration. c) Collaboration projects can be challenging and firms are sometimes not willing to set aside the necessary resources. d) Improvements of operational and relational outcomes of a collaboration project lead to better business performance.

Conclusion

The paper closes a gap which it desires to address: how does collaboration affect the individual firm? But it also leaves some for further research. Before reading I would have expected a greater focus on the quantitative evaluation of the business performance side. The study clearly supports the view that collaboration is good for the business performance of the individual firm, but the method used is too qualitative and subjective to derive the key influence factors for improving business performance by collaboration.

Reference:

Zacharia, Z., Nix, N. W., & Lusch, R. F. (2009). An Analysis of Supply Chain Collaborations and their Effect on Performance Outcomes Journal of Business Logistics, 30 (2), 101-123

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Working Capital Management at Kraft

Daniel Dumke — Sun, 28 Mar 2010 13:59:00 +0000

The CSCMP’s Supply Chain Quarterly just published their first issue for 2010. One of the articles deals with the rising interest in reducing working capital using the example of Kraft Foods.
As well as other companies Kraft already had prior cash flow initiatives, where they analyzed their WC positions: payables, receivables, inventory, and capital expenditures.
Kraft realized that especially high inventories tie huge amounts of cash flow, therefore Supply Chain Management had to be included.

Project outline

Longterm, to make the changes sustainable
Decentralized, due to the heterogeneous nature of the company

each business unit has their own supply chain
in some product categories Kraft also owns the inventory at the store shelfs

Incentives, for managers at the business units to improve working capital
Experts advise, internal consultants were employed to support the business units
Three geographical phases, USA, Europe, World

Best practice

Reduction of SKUs, especially low-revenue / high volatility
Repetitive flexible manufacturing, producing a single product more frequently and lowering the produced quantity for each lot
Evaluating the reduction of customer service levels to reduce inventory
Software support, to forecast the best location for inventories

Conclusion

For companies without huge growth potential cash flow is one of the most important performance indicators available.
But reducing inventories nearly always also implies risks for the consumer service level and hence the revenues. As a result, the level of inventories and its dependent variables have to be tightly monitored and controlled.

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Supply Chain Conferences 2012

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Model Zacharia, Nix, Lusch (2009)

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Model
Zacharia, Nix, Lusch (2009)