Yearly Archives: 2008

Global Supply Chain Risk Management

Finally it appears that someone has developed an easy, hands-on, not-so-academic and straightforward approach to global supply chain risk management: Global Supply Chain Risk Management by Ila Manuj and John T Mentzer. When I say finally, it is because it is not often that I come across papers that have fully grasped the concept of supply chain risk management and made it look so easy at the same time. In their very recent paper they develop a global supply chain framework and a five-step approach for global supply chain risk management and mitigation.

Postscript: As I later discovered, there are in fact two separate articles, by the same authors, Ila Manuj and John T. Mentzer, with almost the same title, published the same year, 2008, in two different journals. Click here for Global Supply Chain Risk Management Strategies by Manuj and Mentzer.

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Can Somali pirates bring down supply chains?

The BBC news this morning ran an interesting and worrying story: Shipping companies are considering to avoid The Somali coast and Suez canal on their way to Europe and rather take the long route around Africa. That will make for an extra lead time of 3-4 weeks, but at least the goods will arrive safely. If enough shipping companies in fact take such a step, this could mean a temporary supply chain disruption for Europe, while the new lead times settle in.

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International Transport Economics Conference 2009

If you haven’t already done so, make sure to bookmark this conference in your calendar. The International Transport Economics Conference (ITrEC) 2009 will be held during June 15-16, 2009, at the University of Minnesota. ITrEC brings together researchers, practitioners, and policy-makers interested in all questions of transport economics. Topics include economic questions relating to revenue and finance; congestion, pricing, and investment; production and cost estimation; transport demand; energy and environment; safety; institutions and industrial organization; and transport and land use. The conference is designed to appeal to participants from varied backgrounds, including economists and transport professionals in particular.

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Avoid Supply Chain Breakdown – Tailored Risk Management

In my previous post on Ericsson versus Nokia – the now classic case of supply chain disruption I mentioned that Ericsson’s and Nokia’s different handling of the same supply chain disruption has become somewhat of a textbook case of how ill-handled disruptions can make or break a company’s existence. Here it is again, as the introduction to an article on tailored risk management by Sunil Chopra and ManMohan S. Sodhi from 2004. The essence of the article is that by understanding the variety and interconnectedness of supply chain risks, managers can tailor balanced and effective risk-reduction strategies for their companies.

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Ericsson versus Nokia – the now classic case of supply chain disruption

When faced with a supply chain disruption, proactive and reactive supply chain risk management can in fact make or break a company’s existence. One of the most famous (or rather infamous) cases is the fire at the Philips microchip plant in Albuquerque, New Mexico, in 2000, which simultaneously affected both Nokia and Ericsson. However,  both companies took a very different approach toward the incident, and in hindsight, clearly displayed how to and how not to handle supply chain disruptions.

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Risikohåndtering i forsyningskjeder

Dette er et foredrag jeg holdt på konferansen Transport og Logistikk, 15.oktober 2008. Foredraget “Risikohåndtering i forsyningskjeder” var en del av programmet omkring Logistikkutfordringer. Dette var første gang jeg foredrog om supply chain risk på norsk, og det var spennende. Jeg var også veldig tidlig i min egen forskning innenfor dette feltet og mange av tankene har modnet betydelig siden den gang, hvis jeg sammenligner med min siste forelesning om supply chain risk ved Høgskolen i Molde.

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Global Risks 2008 – A prediction come true

In my post on Hyper-optimization and supply chain vulnerability: an invisible global risk? I highlighted some of the issues in Global Risks 2008, a report prepared by the World Economic Forum. It is now frightening to see how true the predictions in this report were, in particular, how it predicted the current economic downturn. Maybe we should pay more attention to these reports?

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A new supply chain perspective: The supply chain life cycle

It is not often that I come across papers with a holistic view of the supply chain as a living and dynamic system. However, the introductory chapters of Architecture for supply chain analysis and methodology for quantitative measurement of supply chain flexibility, a 2001 PhD thesis by Wei Deng Solvang, explore the topic of supply chains having a typical 5-phase life cycle. I find that highly interesting. Not only is a supply chain a network of interlinked actors, but the links (or relations, if you so wish) are constantly changing, with new ones appearing and old ones dissipating.

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Overcoming locational disadvantage

Following up my previous post, Sparse transportation networks – a recipe for supply chain disruptions?, when it comes to a business’ physical location in relation to the functioning of the supply chain, obviously there are good locations and bad locations. Can a business’ organization compensate for that? Yes – by either structuring its supply chain or honing its organization, thus going from badly located to well located and from badly prepared to well prepared.

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Will your business byte the dust?

To backup or not to backup? Honestly, you shouldn’t even be asking yourself this question. Can you afford not to backup? In the article Managing risk in global supply chains, Paul Wassenhove mentions the “3Bs” that flow in any supply chain: Boxes, Bytes and Bucks. Traditionally, the boxes have received the most attention, but all three flows are equally important, and securing vital business information, or the “bytes”, is paramount in Business Continuity Planning. Why?

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Sparse transportation networks and disruptions

The vulnerability of the transportation network as part of the supply chain is of particular interest in countries or regions with sparsely populated areas, and hence, a sparse transportation network. Typically traits of such regions are few transportation mode options and/or few transportation link options for each transportation mode, for example maybe only one railway line and two roads, no port, no airport. It should not come as a surprise then that the nature of sparse transportation networks, and thus sparse supply chains, makes them vulnerable to many different kinds of internal and external risks.

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Sustainable Manufacturing Summit Europe

Soaring fuel prices combined with increasing awareness of the need to adapt for a low-carbon future has brought sustainability to the forefront of every manufacturer’s agenda. How can regulators and manufacturers  integrate sustainability in to industrial policy and practice? Following up my previous post on sustainable supply chains, I’d like to promote the Sustainable Manufacturing Summit Europe, taking place in Brussels, Belgium, 19-20 November 2008.

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Identification and simulation of risks in supply networks

The other day I got an email from Jan Bertrand, a Master student at the University of Technology Hamburg-Harburg, Germany, who is working on comparing  tools for quantifying risks in supply networks. The reason for disruptions in supply networks is often due to a causal sequence of failure events. Therefore the causal relations of risks are modelled with a Bayesian network (Causal Network). Bertrand has established a website with a graphical model that visualizes the causal connection between risks and in an uncertain environment.

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Sustainability means less vulnerability?

Does sustainability improve a a company’s resilience towards supply chain vulnerabilities? Recently, in my research on supply chain vulnerability, I’ve come across the term sustainable supply chains. Curious as I am, and easily distracted by related topics, I decided to do some more digging, and this is what I came up with.

What are sustainable supply chains?

There are numerous definitions of the terms ‘Sustainable’ and ‘Supply Chain’, but in essence, this is a supply chain where the responsible manufacturer and retailer takes precedence over the green consumer. It is a supply chain, where resources are not just consumed but also replenished, and where business decisions consider long-term overall environmental and societal impacts. It’s not the opposite of just about business, but it is also not just about environment. It’s about

  • Profitability
    Yes, we need to make money, but we should do so in a responsible way.
  • Accountability
    Whatever we do, we will be held accountable for doing so.
  • Community
    How can our business benefit the community (more than just providing jobs and tax money)?
  • Environment
    Does our business harm the environment in any way?
  • Sustainability
    Do we simply consume, or do we also replenish?

Conclusion

A sustainable supply chain is not primarily seeking to maximize profits.

It may not necessarily be less susceptible to disruption, but nonetheless,  a disruption in a sustainable supply chain may be less likely to wreck widespread havoc, since a sustainable supply chain is not streamlined for profit, but is streamlined for resilience.

Links

Related posts

Inbound and outbound vulnerability

After publishing A conceptual framework for the analysis of vulnerability in supply chains, Gøran Svensson came up with a 2nd article along the same topic in 2002, entitled A conceptual framework of vulnerability in firms’ inbound and outbound logistics flows. The difference between the two papers is that while the former deals with the inbound flow only, the latter incorporates both the inbound and outbound flow.

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A conceptual framework for supply chain vulnerability

Today’s article is one of the earlier works on supply chain vulnerability, published in 2000. A conceptual framework for the analysis of vulnerability in supply chains by Göran Svensson uses the Swedish car manufacturer Volvo as grounds for establishing his theoretical framework. This is the first of two papers on the same topic; this paper deals particularly with the inbound supply chain. A second paper, which I will review tomorrow, deals both with inbound and outbound logistics.

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America’s Crumbling Infrastructure

My daily morning routine includes a cup of coffee while watching the World Business Report on BBC World News. Today they had a special report on America’s crumbling and failing infrastructure. The 2005 Report Card for America’s infrastructure issued by the American Society of Civil Engineers (ASCE) leaves no doubt: It’s a D. Is America’s critical infrastructure in critical condition?

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Drivers of supply chain vulnerability

In 2005, the topic of supply chain vulnerability was still a relatively unexplored territory, though it was already in its ascendancy to becoming one of the major areas of management research. In her article Drivers of supply chain vulnerability: an integrated framework, Helen Peck identifies four drivers of supply chain vulnerability, based on an exploratory and empirically grounded case study of commercial supply chains.

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Norwegian roads are dangerous!

I just learned from the news this evening, while writing on a rather dull post for this blog, that a rockfall has hit one of major roads in this region, Rv 70 in Sunndal. Rockfall is not an unknown event in Norway, especially not in this region, where roads undulate precariously along high mountains, and where the only “escape” is a dive into freezing cold waters. The road in question has a long history of rockfalls and the incident has cut off the most direct route between the coastal city of Kristiansund and Eastern Norway, but fortunately a detour route is available. In Norway’s sparse transportation network that is not always the case, and closed roads mean additional travel costs not only to the ordinary traveller (i.e. tourist), but most importantly to businesses, who then have no alternative for shipping their goods to their customers, or receiving their goods from their suppliers.

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Finding the right location – minimizing disruption costs

Classical facility location models assume that once optimally located and set up, facilities will operate as planned, smoothly, and without interruption. In reality, though, operations seldom go as planned; interruptions, unscheduled downtime and failures occur every once in a while, with unplanned and unbudgeted disruption costs as a consequence. Is it possible to know beforehand which locations that have the least disruptions costs?

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