Category Archives: ARTICLES and PAPERS

Posts inspired by academic articles I have read

Visualizing the risk of global sourcing

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Revised on: 2015-09-23

The benefits of global sourcing as part of a firm’s purchasing strategy have been widely discussed in the academic literature, yet so there are few models that provide a comprehensive risk and cost assessment to guide managerial decision-making. A picture says more than a thousand words, and here is one paper that has it all and that literally illustrates the differences between different sourcing strategies: On risk and cost in global sourcing by Matthias Holweg, Andreas Reichhart and Eui Hong. The paper defines three basic cost elements in global sourcing: static, dynamic and hidden cost, and uses this framework to assess the costs and risks inherent in global sourcing scenarios from three different points of view: conceptually, analytically and empirically. It is paper shows how brings the message across of where to source and where not to source.

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Supply Chain Turbulence

Revised on: 2015-09-12

We are living in turbulent times. So are our supply chains. Nonetheless, the standard tenets of supply chain management prescribe that supply chains are most efficient when fully controlled from end to end, without any volatility or uncertainty. The basic idea is that variability is detrimental to performance as it causes cost in the form of stock-outs, poor capacity utilisation, and costly buffers. Really? Martin Christopher and Matthias Holweg disagree, and that is why they wrote “Supply Chain 2.0”: managing supply chains in the era of turbulence. This paper questions the established approach and argues that in the light of increasing turbulence a different approach to supply chain management is needed. What is needed is an approach that builds structural flexibility into the supply chain decision making. Only thus can we create the level of adaptability that is needed to remain competitive in the face of turbulence.

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Sustainable supply chains

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Revised on: 2015-09-10

Sustainability has become a huge buzzword, both in today’s business world and within the broader facets of society. So say Craig R Carter and P Liane Easton in their 2011 article Sustainable supply chain management: evolution and future directions. Here they conduct a systematic review of the sustainable supply chain management (SSCM) literature in the principal logistics and supply chain management journals, across a 20-year time frame. They discover that SSCM has evolved from a perspective and investigation of standalone research in social and environmental areas, through a corporate social responsibility perspective, and towards a convergence of perspectives of sustainability as the triple bottom line. What I found interesting is how supply chain risk management and contingency planning links up with sustainable supply chains.

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Transportation Resilience

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Revised on: 2015-11-10

There hasn’t been a proper literature review on my blog for a while, but this post will put it right again, hopefully. Moreover, there hasn’t been a post on transportation for a while either, and this post will put that right, too. The other day I came across Transportation security and the role of resilience: A foundation for operational metrics, a recent article by Andrew Cox, Fynnwin Prager and Adam Rose that presents a framework for evaluating transportation resilience, including the important role of perceptions in potentially amplifying security risks. With transportation being a major part of any supply chain this article also presents a framework for evaluating supply chain security and resilience. Based on the July 2005 terrorist attacks in London this paper not only develops a predictive resilience measures but also describes various strategies at the macro, micro and meso level.

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Cross-border supply chains

Revised on: 2015-09-03

What are the main change and trend drivers for international supply chains? How will future cross-border supply chains look like? That is what Ari Pekka Hameri and Juha Hintsa wrote in Assessing the drivers of change for cross-border supply chains. In a study commissioned by the World Customs Organization in 2006, they sought to identify a set of foreseeable drivers of change and their predicted impact on global supply chain management for the next 20 years. Their findings: supply chains are likely to become even more complex and challenging to manage, which will pave the way for end-to-end integrated service providers in a strongly consolidated logistics market, and thus ultimately lead to an increase in risks and vulnerabilities in international supply chains.

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Diamonds are forever – suppliers not

Revised on: 2015-09-08

Today I am taking a closer look at how buyer-supplier relationships evolve over time. This is the buyer-supplier relationship life cycle, where supply chains are dynamic and where supply chain partners are constantly changing: New suppliers are added, others are contractually terminated, cease to exist or become obsolete. Needless to say, nurturing and honing these relationships also improves supply chain performance. However, as Stephan Wagner points out in his recently published article on Supplier development and the relationship life-cycle, supplier development and supplier performance are dependent on the current stage or phase in the relationship life cycle.

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Supply chain risk – in your head?

Revised on: 2015-09-09

The risk perception an individual supply chain professional has influences the risk management strategies this individual chooses to mitigate the effect of potential supply chain disruptions. But does risk perception influence the occurrence of disruptions? In other words, if you think you are at risk, are you actually more likely to experience disruptions than if you think you are not at risk? Enhancing supply chain resilience with flexibility and redundancy is one way to counter supply chain disruptions. But do the chosen resilience measures actually play a moderating role in reducing the frequency of supply chain disruptions? That is what George Zsidisin and Stephan Wagner investigate in their newest article, Do Perceptions Become Reality? The Moderating Role of Supply Chain Resiliency on Disruption Occurrence. This article paints an interesting picture of how supply chain professionals view risk, which risk they perceive and what they do in reaction to these risks.

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A typology of crises

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Revised on: 2015-09-13

What defines a crisis? Are there different types of crises? Crisis management is the focus of this week’s posts and today’s article attempts to develop a scheme for classifying different types of crises. In Towards a New Typology of Crises by Stephan Gundel, crises are classified according to how predictable and influenceable they are. This generates four types of crises: Conventional, Unexpected, Intractable and Fundamental crisis. Is that a useful differentiation for the practical handling of crises and for research into crisis management? Let’s look at how the author came to land on such a typology.
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Seconds From Disaster

Revised on: 2015-09-03

Accidents don’t just happen. They are a chain of critical events leading up to the disaster. Everyone who has watched an episode of the National Geographic Television series “Seconds from Disaster” will have heard that phrase. It’s the same with supply chain disasters; they are often the result of decision gone wrong and/or warnings not heeded. An insightful article in the Journal of Contingencies and Crisis Management, The Devil Lies in Details! How Crises Build up Within Organizations, by Christophe Roux-Dufort shows how organizational imperfections lay a favorable ground for crises to occur because managerial ignorance makes blind to the presence of these imperfections.

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Hamilton’s Circle of Risk

Revised on: 2010-11-16

Searching for background information in my preparation for tomorrow’s lecture on supply chain risk, I was again reminded of an old acquaintance in risk management: Gustav Hamilton’s Circle of Risk. First conceptualized in 1974, Gustav Hamilton, the risk manager for Sweden’s State Company Limited, or Statsföretag AB in Swedish, created a “risk management circle,” graphically describing the interaction of all elements of the risk management process, from assessment and control to financing and communication. I have not seen it referenced in the international literature, but it does occur quite often in Swedish academic circles, and is frequently cited by both MSc and PhD students. Perhaps time to take a closer look?

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Learning from toys – again

Revised on: 2015-09-12

The year 2007 will be remembered as the year the toy industry was shaken by a seemingly endless stream of recalls. Can we learn something from the 2007 toy recall crisis? Is China really to blame, or are the drivers and causes of this crisis originating from much closer to home? Yes it is, says Mary B Teagarden, Professor of Global Strategy at the Thunderbird School of Global Management, in her 2009 article Learning from Toys: Reflections on the 2007 Recall Crisis, where she contends that much of blame lies with (American) businesses themselves. Much of the focus has been on China and its contractors, but China is not solely to blame, as many of the risk drivers come from the companies who outsourced the production, not the Chinese manufacturers.

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Supply Chain Risk and Vulnerability in Indonesia

Revised on: 2015-09-10

Indonesia. 17000 islands spread over a distance of 6000 kilometres. Mega-cities and remote desolate villages side by side. Congested freeways and dirt roads just a short distance apart. Home to frequent earthquakes and volcano eruptions, mudslides and flooding in the rainy season. A logistical challenge for any supply chain, if not a logistical nightmare, and thus prone to supply chain disruptions. One would think that supply chain risk management would find fertile soil here, but does it? According to what Rofyanto Kurniawan and Suhaiza Zailani wrote in Supply Chain Vulnerability and Mitigation Strategy of the Manufacturing Firms in Indonesia: Manager’s Perspectives, Indonesia still has a long way to go.

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The impact of supply chain glitches

Revised on: 2015-09-03

The other day I wrote about supply chains and disasters. Today I will deal with something that is much less catastrophic and write about supply chains and glitches. However, to the shareholders, a supply chain glitch may be just as disastrous (pun intended) as a supply chain disaster. In The effect of supply chain glitches on shareholder wealth from 2003, Kevin B Hendricks and Vinod R Singhal investigate the shareholder wealth effects of supply chain glitches that resulted in production or shipment delays, using a sample of 519 announcements made during 1989-2000. Here they find that glitch announcements on average decrease shareholder value by near 11%. How did they arrive at this value?

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The impact of supply chain disasters

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Revised on: 2015-09-28

Disasters. The result: Damaged infrastructure. End result: Disrupted supply chains. But how do disasters really impact supply chains? What is the supply chain risk of disasters? While the damage done by windstorms and floods may be different from that of an earthquake, do they also impact supply chains differently, and does it even differ by industry or sector? Is it different upstream or downstream the supply chain? According to what Nesih Altay and Andres Ramirez wrote in their very recent article Impact of disasters on firms in different sectors: Implications for supply chains, the kind of disaster and the place a company has in the supply chain matters considerably. Interestingly, so they say, upstream partners enjoy a positive impact, while downstream partners have to plan for the opposite.

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Toy stories: lessons to be learned

Revised on: 2015-09-08

Christmas. Toys. Two things that belong together. But it isn’t always a happy story. Not only do seasons play a big role in supply and demand, so do fads; what is popular today may not be so anymore tomorrow, and as if that wasn’t enough to cope with, product safety issues are probably keeping more CEOs up at night than the unpredictability of sales figures. The year 2007 will be particularly remembered as the year the toy industry was shaken by a seemingly endless stream of recalls. Way ahead of this, in 2001, M Eric Johnson wrote Learning From Toys: Lessons in Managing Supply Chain Risk from the Toy Industry. Here he shows that how the toy industry handles supply chain risk is applicable to many other industries as well.

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Control or laissez-faire?

Revised on: 2015-09-09

Maintaining a company’s competitive advantage depends on managing and controlling a global supply chain that is perhaps never static, and one major supply chain risk is that supply networks are constantly changing. Supply chains, once established, have become increasingly unpredictable in today’s global and highly dynamic business environment. No sooner have you mapped your supply chain end-to-end and devised a strategy for how to manage it, the chain changes on you – new and better suppliers emerge and new relationship configurations pop up. Perhaps not controlling, but letting things happen and letting supply networks emerge is the best management strategy? According to Supply networks and complex adaptive systems: control versus emergence by Thomas Choi, Kevin Dooley and Manus Rungtusanatham supply chain managers must appropriately balance how much to control and how much to let emerge.

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Adaptation versus Transformation

Revised on: 2015-09-12

Many businesses believe themselves to be nested in a stable environment and are confounded when things suddenly change, and the world today no longer is the same world it was yesterday. Adapt or transform, that is the question, and in Adaptive Fit Versus Robust Transformation: How Organizations Respond to Environmental Change, written by Cynthia Lengnick-Hall and Tammy Beck in 2005, both options are explored. While adaptation may work temporarily, transformation and building a resiliency capacity is what works best in the long run. What is it about resilience that is so important, and most importantly, why?

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German Autos at risk? Perhaps not.

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Revised on: 2015-09-22

The German automotive industry. Volkswagen, Mercedes, Porsche, Audi, BMW. The embodiment of craftsmanship, functionality and reliability. Cars that work and an industry that knows how to make it work. But how about supply chain risk management? Does that work equally well? That is what Jörn-Henrik Thun and Daniel Hoenig set out to investigate in daptive Fit Versus Robust Transformation: How Organizations Respond to Environmental Change. Interestingly, the results show that the group using reactive supply chain risk management seems to do better in terms of disruptions resilience or the reduction of the bullwhip effect, whereas the group pursuing preventive supply chain risk management seems to do better as to flexibility or safety stocks.

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