Tag Archives: research blogging

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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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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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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Six levels of risk management

Revised on: 2015-09-10

In spite of all efforts to design safer systems, we still witness severe, large-scale accidents. A basic question is: Do we actually have adequate models of accident causation in the present dynamic society? That was the question asked by Jens Rasmussen in 1997 when he wrote Risk management in a dynamic society: a modelling problem. Here he argues that risk management includes several levels ranging from legislators, over managers and work planners, to system operators. Should supply chain risk management follow suit?

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A new and better way of classifying and managing risks?

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Revised on: 2015-11-12

Risk. The probability of an event occurring and the consequences of the event occurring. That is how most of us would classify and compare risks in a scientific manner. Does it have to be like that or is there a different, or perhaps even a better way? Maybe there is. Ten years ago, Andreas Klinke and Ortwin Renn set out to do just that, in Precautionary principle and discursive strategies: classifying and managing risks. Here they developed an integral risk concept based on eight criteria for classifying and managing risk. A novel approach, but what happened to it?

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Single, sole, dual, multiple sourcing?

Revised on: 2015-09-22

Old classics never die. While some papers are written, published and quickly forgotten (because no one cites them), other papers stand the test of time and survive as classic or seminal papers. A risk/benefit analysis of sourcing strategies: Single vs. multiple sourcing, written by Mark Treleven and Sharon Schweikhart in 1988 is perhaps not the most cited paper since its inception more than 20 years ago (Scopus only comes up with 31 citations), but it is a paper that is cited in the supply chain risk literature until this day, and for a good reason, as it was among the first papers to examine the costs and benefits of single versus multiple sourcing strategies.

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Risky decisions – just do it, or not?

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Revised on: 2015-09-03

Choosing the right supplier is a risky decision. Chose the wrong supplier, and you may face a severe disruption in your supply chain. Chose the right supplier, and all goes well. Hopefully. But is it possible to judge supply risk objectively? In the end, all risk decisions are subject to the decision maker’s perception of risk. The question is, does risk perception influence risk decisions? That is what Scott C Ellis, Raymond M Henry and Jeff Shockley try to answer in Buyer perceptions of supply disruption risk: A behavioral view and empirical assessment. Here they operationalize and explore the relationship between three representations of supply disruption risk: magnitude of supply disruption, probability of supply disruption and overall supply disruption risk. This is an article that hits right home they way I view risk.

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Security, visibility and resilience

Revised on: 2015-09-12

The numerous possibilities of disruptions and disturbances in the supply chain demand a supply chain that is responsive to a variety of threats. A non-responsive and hence unreliable supply chain is by definition a vulnerable supply chain, and the keys or tools to mitigating supply chain vulnerability are security, visibility and resilience. So said Theodore Glickman and Susan White in 2006, when they published Security, visibility and resilience: the keys to mitigating supply chain vulnerabilities. Here they present a framework for how these three tools interact with seven basic supply chain concerns, and combined make up 21 considerations for improving supply chain reliability.

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Logistics risks – the new science?

Revised on: 2015-09-08

Can logistics become an academic discipline? And can logistics risk be my new academic discipline? According to my own description, this site deals with supply chain risk research and related subjects. Or should I say logistics risks? Perhaps logistics is indeed a wider and more comprehensive term than supply chain? I may be leaning towards that now, because in Towards a science of logistics: cornerstones of a framework of understanding of logistics as an academic discipline a selection of no less than eight academics from Germany describe the five cornerstones of logistics as an academic discipline, and show how logistics in fact can act as an integrative platform over a wide range of different issues at the micro meso and macro level. I never thought of that before.

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Outsourcing – risking it all?

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Revised on: 2015-09-12

“The world is at risk and the supply chain is not exempt.” Are you scared? “Supply risk used to be defined as the potential for strikes by transport workers, fires at a key supplier’s plant, or missed deliveries. That simple vision no longer applies.” These pompous words mark the beginning of today’s article, Supply chain risk in an uncertain global supply chain environment, written by Jack Barry in 2004. His article raises some essential supply chain questions, and reminds us that global sourcing may be low cost, but not low risk.

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A grounded definition of supply risk

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Revised on: 2015-09-09

Risk has many facets and has been studied widely in many settings for many decades. But risk in a supply chain management context is a rather new field of study, just as supply chain management is a new field of research. At least it was in 2003, when George Zsidisin decided to write his definition of supply risk. In A grounded definition of supply risk he discusses several existing definitions, investigates how purchasing organizations define their own risk, and develops a holistic definition that encompasses both the causes and the consequences of supply risk.

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