143 posts · 86,018 views
I am blogging about current research in Supply Chain Risk Management. Risk Management in Supply Chains is getting more important due to globalization and shorter product life cycles. The goal of my blog is to summarize and analyze current literature of Supply Chain Management at the associated Risks.
Daniel Dumke
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- February 16, 2011
- 05:42 AM
- 1,155 views
Mitigation or Contingency Strategies against Disruptions
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Uncertainty can be categorized in continuous risk, more slowly changing patterns, and disruptions, which describe abrupt changes in a system.
Tomlin (2006) investigates the question which supply chain strategies perform best when dealing with the later.
Mitigation vs. Contingency Planning
From case studies analyzed in literature the author first deducts disruption management strategies used in practices. The summary can be seen in figure 1.
Figure 1: Strategies for Managing Disruptions (Tomlin, 2006)
Mitigation strategies are distinguished from contingency strategies by the time when an action is performed. Often most of the cost occur at the same time.
Mitigation Strategies, are planned and executed before the risk occurs (eg. increasing inventory levels).
Contingency Strategies, are planned beforehand but executed after the risk occurs (eg. power generator after a power failure). Continue reading "Mitigation or Contingency Strategies against Disruptions"
... Read more »
Tomlin, B. (2006) On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks. Management Science, 52(5), 639-657. DOI: 10.1287/mnsc.1060.0515
- February 9, 2011
- 11:26 AM
- 1,090 views
Risk, Information and Incentives in Telecom Supply Chains
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Supply chains risks can also be analyzed in a specific industry context and this is exactly what Agrell et al. (2004) did with telecom supply chains. They used a three tier SC (2nd tier supplier, EMS, OEM) to include the selection, coordination and motivation of independently operating suppliers in the model.
In terms of risk handling and sharing the telco industry is to some extent unique as well; there are several possible complications, like
differing business logic in the different stages,
individual relations between revenue and product life cycles
design of products and processes and
a lack of effective incentive structure to induce global supply chain optimization promotes the opportunistic and myopic behavior of the chain firms.
Figure 1: Historical Development within the Telco Industry (Agrell et al., 2004) Continue reading "Risk, Information and Incentives in Telecom Supply Chains"
... Read more »
Agrell, P., Lindroth, R., & Norrman, A. (2004) Risk, information and incentives in telecom supply chains. International Journal of Production Economics, 90(1), 1-16. DOI: 10.1016/S0925-5273(02)00471-1
- January 3, 2011
- 10:05 AM
- 1,040 views
Effective Performance Management
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Aviation and steering a company can be viewed as somehow alike. At least this is the starting point for the article by Srinivas (2009) reviewed today.
Aviation Analogy
But unlike companies a pilot has some advantages: a clear starting point, a given destination, he knows on which path to get there, he knows anytime if he is off course and he also knows how to get back on track.
Company as a staggering Airplane
On the other hand within a company you have a hard time defining those parameters:
Starting PointThere is a distorted view on the company, enhanced by a myopic financial view, financial reporting that draws a misleading picture and reward systems that drive people to overstate the current status
DestinationOften there are more goals than employees and the missing alignment of reward system with goals leads to further problems
Path to get thereThe goals seldomly translate into a clear path that provides the employess with guidance to reach the destination safely, and most of all: nobobdy is expecting variation to the path!
Agile Course CorrectionIs this difference because of poor strategy and planning or poor execution, furthermore there is usually a (unknown) delay between cause and effect
Continue reading "Effective Performance Management"
... Read more »
Srinivas, S. (2009) Effective Performance Management . Journal of Business Logistics, 30(2), 85-100. info:/
- December 13, 2010
- 05:14 AM
- 1,006 views
Enablers and Barriers to Risk Mitigation
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Everybody concerned with the task of developing risk mitigation strategies has a list in his mind of different factors influencing a company's exposure to risk and if you think about it: those factors are probably related.
Example: The number of suppliers for one component can have a huge impact on risk, but the necessity of a high number of (redundant) suppliers may itself be affected by the trust you built with your main supplier. Both trust and having multiple suppliers affect supply chain risk by themselves, but they are also related.
Faisal et al (2006) investigate these relations in a more in depth way.
Results
Their results are summarized in figure 1. Information sharing has the most driving capabilities and is therefore located on the bottom of the pyramid. Aligning incentives within the supply chain also drives SC risks but is itself dependent on the information sharing within the supply chain, and so on.Figure 1: Hierarchy based Model for Risk Mitigation in Supply Chains (Faisal et al., 2006) Continue reading "Enablers and Barriers to Risk Mitigation"
... Read more »
Faisal, M. N., Banwet, D.K., & Shankar, R. (2006) Supply Chain Risk Mitigation: Modeling the Enablers. Business Process Management Journal, 12(4), 535-552. info:/
- December 15, 2010
- 02:55 PM
- 977 views
Bias in Supply Management Decisions
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
... and what to do about it.
Decisions within a company are not made on pure rational grounds. Assuming that there is the will to make a rational decision, nevertheless limits in information gathering, computing capabilities and memory lead to irrational conclusions (bounded rationality).
So the goal must be to enhance rational decision making and for this end Kaufmann et al. (2009) developed a framework to combat irrationality.
Methodology
The authors use case studies to analyze companies behavior in decision making. In this case they interviewed several executives from 15 companies primarily from the automotive and mechanical engineering industries. Continue reading "Bias in Supply Management Decisions "
... Read more »
Kaufmann, L., Michel, A., & Carter, C.R. (2009) Debiasing Strategies in Supply Management Decision-Making. Journal of Business Logistics, 30(1), 85-106. info:/
- February 23, 2011
- 04:35 AM
- 973 views
Supply Chain Risk Sources, Consequences, Drivers and Mitigation
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
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. Continue reading "Supply Chain Risk Sources, Consequences, Drivers and Mitigation"
... Read more »
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
- October 21, 2010
- 05:42 AM
- 971 views
Supplier Selection in a Turbulent World
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
At the moment I am focussing more on the interviews I am conducting for my research, so I am not reading as much anymore. I therefore try to select articles which are both useful for my research and my blog.
Today I read an article with the fuzzy title "Supply chain risk in turbulent environments — A conceptual model for managing supply chain network risk" by Peter Trkman and Kevin McCormack.
The authors present a framework for the identification and prediction of supply risk.
Conceptual Framework for assessing Supplier Risk (Trkman and McCormack 2009) Continue reading "Supplier Selection in a Turbulent World"
... Read more »
Trkman, P., & McCormack, K. (2009) Supply chain risk in turbulent environments—A conceptual model for managing supply chain network risk. International Journal of Production Economics, 119(2), 247-258. DOI: 10.1016/j.ijpe.2009.03.002
- March 7, 2011
- 08:25 AM
- 969 views
Information Sharing in Supply Chains
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Obstacles to Information Sharing
There are many obstacles to information sharing in a supply chain. Confidentiality is probably one of the biggest issues, but there are others not so obvious like antitrust regulations, the timeliness and accuracy of the provided information, differing technologies between the supply chain partners or a mismatch in the alignment of incentives. Therefore trust and cooperation become critical ingredients in a supply chain partnership.
Drivers of Information Sharing
Lee and Whang discuss those obstacles and present some common types of information sharing in their paper of 2000.
In their view supply chain management primarily implies a focus change from the business to the supply chain. Inter-firm communication gains importance. The goal should be to integrate material, information and money as the three supply chain flows. Drivers behind this development are globalization and the more cost effective IT. Nonetheless, information sharing is only an enabler for better coordination and planning of the supply chain.
Continue reading "Information Sharing in Supply Chains"
... Read more »
Lee, H., & Whang, S. (2000) Information sharing in a supply chain. International Journal of Manufacturing Technology and Management, 1(1), 79. DOI: 10.1504/IJMTM.2000.001329
- January 31, 2011
- 11:16 AM
- 959 views
Effects of Process Maturity and Uncertainty on SC Performance
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Process orientation may or may not be a very hip topic right now. Nevertheless effective processes are a foundation for company performance. Lockamy, Childerhouse, Disney, Towill and McCormack (2008), analyze and explain the impact of process maturity and uncertainty on supply chain performance, the full paper can be obtained here free of charge.
In close collaboration with several businesses they conducted an empirical study on this topic, which I present in the following.
Business Process Orientation and Quickscan
Business process orientation can be described using the dimensions process management, process jobs and process view.
Process management & measurement means that the company is using metrics on aspects of the process such as output quality, cycle time, process cost and variability, in contrast to traditional accounting measures.
Process jobs focus on processes as opposed to functions, and are cross-functional in responsibility.
Finally, process view is the cross-functional, horizontal picture of a business involving elements of structure, focus, measurement, ownership and customers.
Relationship between Process Capabilities and Maturity (Lockamy et al., 2008)
The authors used the Quick Scan methodology with over 20 different supply chains. It consists of the following four methods: questionnaire analysis, process mapping, semi-structured interviews, modelling from numerical data.
Each quick scan took about two weeks at the site of the client and resulted in: a current status of the organization and the supply chain, evaluation of the maturity of its practices and processes and its ability to meet current and future customer needs, furthermore details on the management of uncertainty and interfaces beteween these areas.
Continue reading "Effects of Process Maturity and Uncertainty on SC Performance"
... Read more »
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), 12. DOI: 10.1504/IJMTM.2008.018237
Christopher, M., & Peck, H. (2004) Building the Resilient Supply Chain. The International Journal of Logistics Management, 15(2), 1-14. DOI: 10.1108/09574090410700275
- January 19, 2011
- 07:34 AM
- 944 views
Supply Chain Disruptions and Shareholder Wealth
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
In last weeks article (Hendricks and Singhal, 2005) I described the effects of supply chain glitches on supply chain performance. This week should be viewed an update to that.
Already in 2003 Hendricks and Singhal showed in an article the devastating effects supply chain glitches can have on the shareholder value. Up to that time a strong correlation between excellence in supply chain management and shareholder value has always been presumed. Many have alluded to the compelling bottom-line benefits and tremendous payoffs that accrue to firms from developing effective supply chains, but hard evidence to support this has been very limited.
Metrics
Supply chain glitches are found by browsing through press releases in search for announcements of a demand / supply mismatch.
Increases or decreases in the shareholder value are assessed using the stock price of the company. Continue reading "Supply Chain Disruptions and Shareholder Wealth"
... Read more »
Hendricks, K., & Singhal, V.R. (2003) The effect of supply chain glitches on shareholder wealth. Journal of Operations Management, 21(5), 501-522. DOI: 10.1016/j.jom.2003.02.003
- February 14, 2011
- 09:06 AM
- 938 views
Strategic Supply Chain Design and the Product-Relationship Matrix
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Yet another case study. This time on strategic network design. Why? A major problem for businesses is to find the right strategy for a given situation. And "right" here means optimal (for a given KPI).
Research question might be: Are there general categories which can be used to make different decision situations comparable? And if yes, what would optimal strategies under these circumstances be?
Definitions
Seuring (2009) tries to answer the first research question using case studies. From literature he defines the strategic decision fields to be
Product design/engineering (products or parts),
Plant and equipment (plant),
Organisation and management (processes),
Labour and staffing (people) and
Production planning and control (planning).
For Seuring the SC decisions best can be categorized using a two dimensional matrix with the supply chain at the y-axis and the product dimension on the x-axis. As you can see in figure 1 he does not focus on the supply / demand side (like eg. Fisher 1997), but in both dimension aims at the process view.
The supply chain dimension with can be divided into configuration and operation, the product dimension into the product design, production and return phase.
Figure 1: The Product-Relationship-Matrix in Supply Chain Management (Seuring, 2009) Continue reading "Strategic Supply Chain Design and the Product-Relationship Matrix "
... Read more »
Seuring, S. (2009) The product-relationship-matrix as framework for strategic supply chain design based on operations theory. International Journal of Production Economics, 120(1), 221-232. DOI: 10.1016/j.ijpe.2008.07.021
- August 16, 2010
- 06:07 AM
- 929 views
Identifying important Activities within the SCOR Process Categories
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
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)
Continue reading "Identifying important Activities within the SCOR Process Categories"
... Read more »
Lockamy, A. III, & McCormack, K. (2004) Linking SCOR planning practices to supply chain performance: An exploratory study. International Journal of Operations , 24(12), 1192-1218. DOI: 10.1108/01443570410569010
- January 10, 2011
- 10:42 AM
- 918 views
Managing Supply Chains with multiple Pipelines
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
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.
Continue reading "Managing Supply Chains with multiple Pipelines"
... Read more »
Aitken, J., Childerhouse, P., Christopher, M.G., & Towill, D.R. (2005) Designing and Managing multiple Pipelines. Journal of Business Logistics, 26(2), 73-95. info:/
- March 9, 2011
- 01:57 AM
- 917 views
Managing Strategic Partnerships
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
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) Continue reading "Managing Strategic Partnerships"
... Read more »
Christopher, M., & Jüttner, U. (2000) Developing strategic partnerships in the supply chain: a practitioner perspective. European Journal of Purchasing , 6(2), 117-127. DOI: 10.1016/S0969-7012(99)00038-6
- January 5, 2011
- 07:59 AM
- 913 views
Definition of Risk
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
What is risk anyway?
I read this paper already some time ago. It is very important to have a clear definition of the terms used in research. But from my previous experience I know that also in business a clear understanding of the different aspects of risks is important to stay consistent.
Case Study
At a client I was involved in a company wide risk assessment. The participating middle managers were required to list and assess relevant risks using an Excel sheet. There were predefined categories for impact (eg. less than €1m, between €1m and €10m and above €10m) and probability (eg. p 50%).
The survey was therefore aimed at high impact, low probability events. One of the biggest tasks during this assignment was to train the managers on how these categories should be interpreted. But honestly, this categorization does not make this task very easy. Suppose the following disruption: missing employees due to an outbreak of the swine flu. The line in Excel might look like this:
Swine Flu: p Continue reading "Definition of Risk"
... Read more »
Kaplan, S., & Garrick, B. (1981) On The Quantitative Definition of Risk. Risk Analysis, 1(1), 11-27. DOI: 10.1111/j.1539-6924.1981.tb01350.x
- July 16, 2010
- 02:02 PM
- 905 views
Perception of Supply Risk
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
One of the most published supply risk researchers is George A. Zsidisin. In his 2003 article he describes the characteristics of inbound supply that affect the perception of risk.
Supply Risk
The author defines supply risk as the potential occurrence of an incident associated with inbound supply from individual supplier failures or the supply market, in which its outcomes result in the inability of the purchasing firm to meet customer demand or cause threats to customer life and safety.
He therefore includes the probability and significance of an adverse event.
Continue reading "Perception of Supply Risk"
... Read more »
Zsidisin, G. (2003) Managerial Perceptions of Supply Risk. The Journal of Supply Chain Management, 39(1), 14-26. DOI: 10.1111/j.1745-493X.2003.tb00146.x
- April 20, 2011
- 04:59 AM
- 896 views
Supply Chain Simulation and the Bullwhip Effect
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
I already reviewed some articles of Denis Towill primarily because he does some interesting research on simulation and supply chains, but also because I like his clear style in his articles.
In one of his early papers (1992) he teamed up with Naim and Wikner and described state of the art strategies to fight the bullwhip effect or as it is called in the paper by its older name: Industrial Dynamics.
Industrial Dynamics
I already described the causes of the bullwhip effect and how to measure it in an older post. The bullwhip effect describes amplifications in demand within the supply chain. Exemplary effects can be seen in figure 1.
Figure 1: Effect of the Bullwhip Effect (Towill et al. 1992) Continue reading "Supply Chain Simulation and the Bullwhip Effect"
... Read more »
Towill, D., Naim, M., & Wikner, J. (1992) Industrial Dynamics Simulation Models in the Design of Supply Chains. International Journal of Physical Distribution , 22(5), 3-13. DOI: 10.1108/09600039210016995
- November 29, 2010
- 09:48 AM
- 895 views
Level of Detail in a Simulation Model
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
After the last more general entries on managers perception of risk and measuring SC performance I wanted to make a detour back to the basics.
Simulation is one of the tools, which can be used for analyzing supply chain dynamics, optimization and to support corporate decision making.
One major question when starting a supply chain model has always been what level of detail should you choose? Someone could start with a single worker in an agent based simulation model and continue with the machine he is operating, but when the goal is to gain insights about the interaction between your company and your closest competitors this might be too much information.
To get a better grasp on this topic I read "The impact of different levels of detail in manufacturing systems simulation models" by J.F. Persson (Translation). Continue reading "Level of Detail in a Simulation Model"
... Read more »
Persson, J. F. (2002) The impact of different levels of detail in manufacturing systems simulation models. Robotics and Computer-Integrated Manufacturing, 18(3-4), 319-325. DOI: 10.1016/S0736-5845(02)00024-8
- August 9, 2010
- 09:35 AM
- 890 views
Designing the Green Supply Chain
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
Nowadays green logistics is an often heard buzz-word, but already eleven years ago Beamon published an article about the challenges with creating Green Supply Chains.
Traditional vs. Extended Supply Chain
A traditional supply chain has been mostly a one-way street. The issues analyzed were eg. the number of echelons, buyer-supplier relationships and inventory levels.
As a basis the extended supply chain has to consider at least the recycling / re-use and remanufacturing processes to be complete. More important though the strategy of the company has to be adjusted to include environmental aspects as waste, resource / energy use and pollution as well.
Continue reading "Designing the Green Supply Chain"
... Read more »
Beamon, B. (1999) Designing the green supply chain. Logistics Information Management, 12(4), 332-342. DOI: 10.1108/09576059910284159
- April 11, 2011
- 10:29 AM
- 890 views
Supply Chain Management Literature Review
by Daniel Dumke in SCRM Blog - Supply Chain Risk Management
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. Continue reading "Supply Chain Management Literature Review"
... Read more »
Sachan, A., & Datta, S. (2005) Review of supply chain management and logistics research. International Journal of Physical Distribution , 35(9), 664-705. DOI: 10.1108/09600030510632032
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