Network Disruption Analysis

As the perhaps overly long title implies, A Review of Current Practice in Network Disruption Analysis and an Assessment of the Ability to Account for Isolating Links in Transportation Networks presents a comprehensive review of the scholarly literature related to the field of network-disruption analysis. James Sullivan, Lisa Aultmann-Hall and David Novak show that while a number of methods have attempted to deal with the problem of isolating links in different ways, but none has been ubiquitously successful. To develop a comprehensive and useful measure of transportation network robustness it is thus important to successfully address the issue of isolating network links.

Comprehensive

The review in this paper is indeed comprehensive and after reviewing close to 40 papers they design a tree diagram of the various methods or approaches for transport network disruption analysis that are employed in the papers. I know many of these papers, some have even been reviewed on this blog, but there is quite a number that are unknown to me. Persumably those are highly quantitatative papers, as I tend to shy away from those. A bit on the side perhaps, but I am slightly surprised that they did not mention Bell and Iida’s book on Transportation Network Analysis, which does have a chapter on network reliability.

Anyway, they also included one of my papers on the subject, a seminar paper I wrote in 2006 on Transport Network Vulnerability – Which terminology and metrics should we use? and according to the authors, I fit into the “Business as usual” box, which is right, I guess.

Not only does the paper categorize the various approaches, it also highlights the potential shortcomings of each method, compared to the other methods.

Vulnerability, Reliability and Robustness

Before designing the tree map the authors initially categorize the papers as falling into three main categories:

• minimizing a network’s vulnerability, or its potential for large-scale failure due to relatively minor disruptions
• maximising a network’s robustness, or its capability of adapting to or recovering from disruption
• maximizing a network’s reliability or its resistance to disruption

I think this is a very interesting division that can be used in many settings, not just for transport network analysis. Suddenly, the difference between vulnerability, reliability and robustness is very clear to me.

Vulnerability versus suscpetibility

Another interesting take-away from this paper is that the authors make a clear distinction between vulnerability and susceptibility:

Vulnerability in a network typically refers to the degree of inability of a system to function due to the effects of disruption, whereas susceptibility refers to the link-specific measure of the likelihood of link failure due to a disruptive event.

Essentially, links that are well-protected are not susceptible to failure, while links that are critical to a network make the entire network vulnerable.

Isolating links

The authors contend that one important consideration for disruption analysis is the presence of isolating links or isolated sub-networks. An isolating link is one that is the sole connection for a subset of the network to the rest of the network:

Isolating links are very important,  because

The presence and number of isolating links has a major impact on the robustness of transportation networks; as adoes the connectivity of the network. A useful measure of network robustness must account for connectivity, the presence of isolating links, demand and capacity. In addition, the measure must address these various issues in such a way that no single factor unduly dominates the final output value.

In other words, measuring the impact of transport network disruptions is not an easy and straightforward task.

Conclusion

This is an excellent paper that summarizes and categorizes most of the current literature on transport network disruption, and presents a framework that enables a more holistic understanding of the field of network disruption analysis.

In line with the authors’ conclusion, I too think that the paper is of particular value when considering global transport systems that consist of numerous interconnected networks of vastly different shapes and scale and where the presence of isolating links is a major challenge that needs to be adressed.

Reference

Sullivan, J., Aultman-Hall, L., & Novak, D. (2009). A review of current practice in network disruption analysis and an assessment of the ability to account for isolating links in transportation networks Transportation Letters: The International Journal of Transportation Research, 1 (4), 271-280 DOI: 10.3328/TL.2009.01.04.271-280

Author links

• uvm.edu: James L Sullivan
• linkedin.com: Lisa Aultmann-Hall
• linkedin.com: David C Novak

Related links

• uvm.edu: James Sullivan’s MS thesis

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• husdal.com: Bad location equals bad logistics?

How to handle a supply chain disruption?

one of the ideas from this article that I like very much are the different alternatives for handling a supply chain, basically only two: to act or not to act, that is the question.

These two options start from the very first signs of disruption: To act: close down the supply chain, or not to act: keep the supply chain running.

The same goes for pre-event measures, or mitigative measures as I like to call them. Here, to act means trying to prevent disruptions from happening, while not to act mens either to accept the disruption and its consequences despite possible actions that could be taken, or to accept the disruption because it can neither be influenced as to probability nor as to consequence.

Similarly, when it comes to post-event measures, or contingent measures as I would call them, there is again the option of acting or handling internally or not acting or passing on the event and it s consequences.

Going with the flow

Another interesting though from this paper is the supply chain flow, and where the purpose of handling supply chain disruptions is to regain a stable flow in both incoming, outgoing and internal flows.

Furthermore,  regaining a stable flow after a supply chain disruption also implies short-term stability or market patience while the disruption is handled and long-term stability or market confidence after an event has been handled.

Total expected result impact

Combining the disruption handling options, the types of flows and the chain of events creates twelve possible combinations of impacts which must be added in order to obtain the total expected result impact:

This splits the disruption impacts into individual units while at the same time keeping the full picture intact.

Conclusion

What I like about the model developed in this paper is that addresses the entire supply chain from supplier until end customer. It is a holistic and generic model for estimating disruption risks in the supply chain flow in a systematic and structured manner. The model presents, as far as I can see, the most complete estimation of disruption risks, it includes incoming and outgoing flows and it separates between mitigative and contingent handling of disruptions, thus balanacing proactive and reactive risk management.

Reference

Paulsson, U., Nilsson, C., & Wandel, S. (2011). Estimation of disruption risk exposure in supply chains International Journal of Business Continuity and Risk Management, 2 (1) DOI: 10.1504/IJBCRM.2011.040011

Author links

• lu.se: Ulf Paulsson
• linkedin.com: Carl-Henric Nilsson
• linkedin.com: Sten Wandel

Related posts

• husdal.com: Ulf Paulsson’s DRISC model
• husdal.com: Inbound and outbound vulnerability

The three gaps

Because SCRM is still a nascent area, so the authors, most researchers in this area tend to come from different more established areas. However, this diversity affects collaboration with other researchers [...] and it can also hamper research engagement with industry. Essentially, there are three areas where researchers disagree most:

(1) a definition gap—there is no clear consensus on the definition of SCRM (because some limit the scope of SCRM to rare but large impact events while others believe that SCRM is about demand-supply uncertainties);

(2) a process gap—there is lack of research on an important aspect of the risk management process, namely, the response to supply chain risk incidents; and

(3) a methodology gap—there is shortage of empirical research in the area of SCRM.

This is creating three gaps that need to be closed for supply chain risk research to achieve some common ground.

SCRM Literature Review

According to the authors, a useful first step in learning more about these gaps is to characterize the diversity in scope in supply chain risk research methods among researchers. So they do, and they come up with this selected list of articles (in chronological order):

• Jüttner et al. (2003)
  Based on sources: environmental risk sources, network risk sources, and organizational risk sources
• Spekman and Davis (2004)
  Six dimensions of supply chain as risk sources, (1) inbound supply, (2) information flow, (3) financial flow, (4) the security of a firm’s internal information system, (5) relationship with partners, and (6) corporate social responsibility
• Cavinato (2004)
  Based on five subchains/networks as risk sources, (1) physical, (2) financial, (3) informational, (4) relational, and (5) innovational
• Chopra and Sodhi (2004)
  Categorize supply chain risks at a high level as disruptions or delays. These risks pertain to (1) systems, (2) forecast, (3) intellectual property, (4) receivable, (5) inventory and (6) capacity risk
• Christopher and Peck (2004)
  Categorize supply chain risks as (1) process, (2) control, (3) demand, (4) supply, and (5) environmental
• Kleindorfer and Saad (2005)
  Based on the sources and vulnerabilities of risks, (1) operational contingencies, (2) natural hazards, and (3) terrorism and political instability
• Bogataj and Bogataj (2007)
  Categorize supply chain risks as (1) supply risks; (2) process risks; (3) demand risks; and (4) control risks
• Sodhi and Lee (2007)
  Categorize supply chain risks in the consumer electronics industry broadly as those requiring strategic decisions and those requiring operational decisions, in three categories: (1) supply, (2) demand, and (3) contextual risks
• Tang and Tomlin (2008)
  Categorize supply chain risks as (1) supply, (2) process, and (3) demand risks, (4) intellectual property risks, (5) behavioral risks, and (6) political/social risks
• Manuj and Mentzer (2008a)
  Categorize supply chain risks as (1) supply, (2) operations, (3) demand, and (4) other risks including security and currency risks, See
• Manuj and Mentzer (2008b)
  for another categorization: (1) supply, (2) operational, (3) demand, (4) security, (5) macro, (6) policy, (7) competitive, and (8) resource risks
• Oke and Gopalakrishnan (2009)
  Consider low-impact high-frequency and high-impact low-frequency risks in three major categories: (1) supply, (2) demand, and miscellaneous risks in the retail sector
• Rao and Goldsby (2009)
  Categorize supply chain risks as (1) framework and (2) problem specific, and (3) decision making risk

Many of these articles have been reviewed on this blog (see links), some I know of, but hadn’t had the chance to review, while some are completely unknown to me, adding yet more papers to my already 2-foot high pile of “to be reviewed”-papers on my desk :(

The authors come up with even more articles and

classified the existing SCRM literature according to four key elements for managing supply chain risks: (1) risk identification; (2) risk assessment; (3) risk mitigation; and (4) responsiveness to risk incidents, the last one subdivided into responsiveness to (a) operational risks (frequent risk events stemming from inherent supply-demand uncertainty); and (b) catastrophic risks

I think this is an excellent classification scheme, as it follows the standard risk management procedures laid out in ISO73.

What is supply chain risk management?

Because the literature review indicated that there is much diversity in the scope including in definition of SCRM, the authors decided to investigate this further and conducted a survey on the definition of supply chain risk and of SCRM, asking the following main questions, with subsequent follow-up questions.

Q1 What is supply chain risk management (SCRM)?
Q2 How is SCRM different from supply chain management?
Q3 What is the link between SCRM and Enterprise Risk Management (ERM)?

Interestingly, the answer for the first question are somewhat divergent, see below:

When asked what SCRM is, disruptions and disasters rank low on the list.

When asked what SCRM should primarily be defined as, disruptions and disasters come up top of the list. Personally, I am not sure which is better; what do you think?

Supply Chain Risk Management goes where?

The authors also asked where supply chain risk management should be placed in relation to supply chain management and in relation to enterprise risk management, resulting in the following figures:

I think they got it right, because SCRM cannot be decoupled from SCM, nor can it be decoupled from ERM. In my opinion.

Conclusion

This paper should be required reading for any supply chain risk researcher. Not only does it list the most important works in supply chain risk management research, it classifies them in accordance with established risk management norms and it also lays the groundwork for future research into supply chain risk, by asking the research community itself where it thinks supply chain risk should place itself and where it should be headed, thus building rapport with those most likely to follow suit.

Reference

Sodhi, M., Son, B., & Tang, C. (2011). Researchers’ Perspectives on Supply Chain Risk Management Production and Operations Management, 21(1), 1-13 DOI: 10.1111/J.1937-5956.2011.01251.X

Author links

• city.ac.uk: Manmohan S Sodhi
• city.ac.uk: Byung-Gak Son
• ucla.edu: Christopher S Tang

Related posts

• husdal.com: Current gaps in supply chain risk research

Familiar trains of thought

Terje Aven is perhaps one of Norway’s most prominent risk researchers, with more than 130 publications on risk-related issues, and in this article he picks up familiar thoughts and threads from papers previously reviewed on this blog, first and foremost perhaps his article from 2010 on how to define and describe risk, and also his 2007 paper that contained a framework for unifying risk and vulnerability, where uncertainty is a major part of the equation, just as it is here.

Three different perspectives

The paper starts off by comparing three definitions of risk:

1) AS/NZS 4360

Risk is the possibility of something happening that impacts on your objectives. It is the chance to either make a gain or a loss. It is measured in terms of likelihood and consequence

2) COSO ERM

Risk is the possibility that an event will occur that adversely affects the achievement of objectives. Risk is described by likelihood and impact.

3) ISO 31000

Risk is the effect of uncertainty on objectives. An effect is a deviation from the expected (positive or negative). Risk is often expressed in terms of a combination of the consequences of an event and the associated likelihood of occurrence.

and looks at how these definitions are different from each other and what this entails for the understanding of risk.

What makes them different?

The paper makes a major point in highlighting that these definitions are perhaps not contradictory, but nonetheless slightly inconsistent:

• all refer to objectives as a point against which risk is measured
• AS/NZS and COSO refer to probabilities or possibilities as the main pillar of risk, while ISO uses uncertainty
• AS/NZS and ISO accommodate  both desirable and undesirable outcomes, while COSO only refers to undesirable consequences
• all definitions pair consequences and likelihood
• all lack a precise definition of likelihood and probability

Thus, they are perhaps more confusing than actually clarifying what risk is. Would you agree?

What are the problems with these definitions?

There are three questions that arise from these definitions:

• Should risk be linked to objectives?
• Should risk be defined through probabilities or should risk be defined through uncertainties?
• Is it possible to establish a unified perspective?

The preliminary answer is that

• Objectives are a two-edged sword. First of all, an objective either way may hide the overall best solution, and who is to say what the right objective  really is, and thus, which consequences that are really undesirable or desirable?
• Probabilities are not a certainty, they are a tool and nothing more than numbers that are used to express uncertainty, and as all tools, they have their limitations.
• Considering that the three definitions are quite divergent, a unified perspective may seem impossible from the outset, but it doesn’t take too much reformulation to come with a more holistic point of view, and that is the topic of this article

So how can we establish a view of risk that captures all perspectives?

A unified perspective?

The unified framework for enterprise risk assessment and risk management the authors come up with rests on 3 main pillars:

1. Risk is covering two components
   a) the impact of events/consequences in relation to some reference
   b) the associated uncertainties
2. Risk is expressed using knowledge-based or judgemental probabilities
3. These probabilities are conditional on a background knowledge which may be based on many assumptions.

The figure below illustrates the concept:

I think the figure perfectly captures all elements of risk, the impact (positive or negative), the probability of said impacts, and the uncertainty associated with the probabilities, shown by the size of the squares marking the impacts.

Critique

Not all of Terje Aven’s discourses on risk are easy to follow as they tend to be highly quantitative in nature; this one is spot on, and I think he has a major point. Having said that, there wasn’t much enterprise risk in the article, and the example case didn’t shed much light on it either. Personally, I’d say that enterprise could have been omitted from the title without making much difference. In fact, I think that would indeed have been a better title.

Reference

Aven, E., & Aven, T. (2011). On how to understand and express enterprise risk International Journal of Business Continuity and Risk Management, 2 (1), 20-34 DOI: 10.1504/IJBCRM.2011.040012

Author links

• linkedin.com: Eyvind Aven
• uis.no: Terje Aven

Related posts

• husdal.com: How to define risk
• husdal.com: Risk management vocabulary

Theories turned ideologies?

Ghoshal questions the very basis for many of the topics taught in business schools, such as principal-agent theory, transaction-cost economics and game theory, among others:

• In courses on corporate governance grounded in agency theory we have taught our students that managers cannot be trusted to do their jobs – which, of course, is to maximize shareholder value – and that to overcome “agency problems”, managers’ interests and incentives must be aligned with those of the shareholders by, for example, making stock options a significant part of their pay.
• In courses on organization design, grounded in transaction cost economics, we have preached the need for tight monitoring and control of people to prevent “opportunistic behavior”.
• In strategy courses we have presented the “five forces” framework to suggest that companies must compete not only with their competitors, but also with their suppliers, customers, employees and regulators.
• MBA students are not alone in having learned, for decades, these theories of management. Thousands of executives who have attended business courses have learned the same lessons, although the actual theories were not presented to them so directly.
• Even those who never attended a business school have learned to think in these ways, because these theories have been in the air, legitimizing some actions, de-legitimizing others, and generally shaping the intellectual and normative order withing which all day-to-day decisions are made.

Theories have turned into accepted truths that have turned into ideologies about how business works and how it should be run. Few, if any, have questioned these theories, and Ghoshal puts it quite harshly when he says that

academic research related to the conduct of business has had some very significant and negative influences on the practice of management. These influences have been less at the level of adoption of a particular theory and more at the incorporation, within the worldview of managers, of a set of ideas and assumptions that have come to dominate much of management research [...] By propagating ideologically inspired amoral theories, business schools have actively freed their students from any sense of moral responsibility.

Essentially then, if I follow Ghoshal’s train of thought, we have fallen victim to our own theories, or ideologies, and we should not feel so surprised at what perspired at Enron, or the Lehman Brothers for that matter.

What would business be without Milton Friedman?

In particular, Milton Friedman’s postulation that “Few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money as possible for their stockholders” does not go down well with Ghoshal, and I am inclined to agree.

I mean, who can honestly say that companies will not survive and prosper (and perhaps even more so) when they simultaneously pay attention to the interest of customers, employees, shareholders, and perhaps even the communities in which they operate? Luckily, and what bodes well for the future, some academics are in fact beginning to see business management in this light. Unfortunately, they are up against the mighty enemy of mainstream economics which is not yet ready to accept such new ideas.

MBA = Major Bad Ass?

We’ve probably all heard the usual euphemism for PhD, Permanent Head Damage, snd if I follow through on Ghoshal’s thoughts, MBA could be described as Master of Bad Administration, or as some say, Major Bad Ass, which would certainly be in line with Ghoshal’s own perception:

Combine agency theory with transactions costs economics, add in standard versions of game theory and and negotiations, and the picture of the manager that emerges is one that is now very familiar in practice: the ruthlessly hard-driving, strictly top-down, command-and-control-focused, shareholder-value-obsessed, win-at-any-cost business leader.

Maybe not all leaders are like this? I hope so.

Reference

Ghoshal, S. (2005). Bad management theories are destroying good management practices IEEE Engineering Management Review, 33 (3), 79-79 DOI: 10.1109/EMR.2005.26768

Author link

• wikipedia.org: Sumantra Ghoshal

Read online

• corporation2050.org: Bad management theories

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• community.kinaxis.com: Have business schools lost their way?
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Have business schools lost their way?

Ghoshal (2005) argued that “bad management theories are destroying good management practices“, blaming business schools for the demise and corruption of good business ethics, because it is scientifically easier to teach shareholder value maximization at the expense of everything else than to argue for (let alone calculate the value of) corporate social responsibility as a driving force in business and supply chain management. With that as a backdrop, Fawcett and Waller set out to describe what theory is, what constitutes a valuable theoretical contribution and how theoretical deliberations can produce richer explanations in supply chain research.

What is theory?

Theory, so the authors, comes down to three different types of conversations or dialogues often found in academic journals:

• Description focuses on what we observe or how things are done. Although informative, description by itself is often less than fully satisfying and is seldom enduring. We inherently want to know more.
• Explanation elaborates the whys that underlie the whats and hows we encounter in the world around us. Explanation relates phenomena of interest to create better understanding. Explanation helps managers understand key causal relationships, helping them discern that if they pull lever “A,” outcome “B” will result. Insight into why the world works the way it does has the potential to endure as well as to influence. This is theory.
• Prescription informs what to do when faced with a given challenge or set of circumstances. Importantly, accurate prescription is based on sound understanding—that is, good theory. Absent the understanding created by good theory, our prescriptions will be flawed, leading to either (a) a partial, but incomplete solution to our dilemma or (b) an unexpected and potentially counterproductive result.

These conversation types are not mutually exclusive,  and the authors state that “as business academics, our opportunity, and responsibility, is to help explain the decision-making environment that surrounds managers, by mingling description, explanation, and prescription within a single conversation”.

Mind you,

Our research makes the greatest contributions to knowledge discovery and dissemination when it helps us understand the core phenomena, and their interrelationships, that influence our tumultuous world.

Perhaps akin to what Christopher and Holweg wrote about supply chain turbulence in their article on Supply Chain 2.0?

What constitutes a valuable theoretical contribution?

Fawcett and Waller hit the nail on the head when they argue that “The challenge for authors, editors, and reviewers alike is to determine what justifies a legitimate contribution to an ongoing conversation. Fortunately, no clear, easy-to-define metric exists. If it did, our conversations would become formulaic and stale as authors played the game of getting published, as I wrote about in The Catch 22 of academic publishing.

But how do we distinguish a valuable contribution and how can we evaluate if what we come up with is really valuable?

• When we demonstrate how a new variable changes our understanding of the focal phenomena, theoretical insight often emerges.
• When we find paradoxical inconsistencies in reported findings about a common phenomenon, we should be spurred to additional inquiry. Such questioning may lead us to a completely new way of thinking about our world. We might even start a new conversation.
• We might find it useful to try on a new pair of theoretical lenses from another discipline or field to help us suspend our assumptions about how the world works. New lenses often help us see more clearly.
• We should occasionally challenge the appropriateness of our methodological tools. As we do so, we may realize that the way we collect and analyze data constrains our vision, hiding from view alternative contexts, phenomena, and explanations.
• Today’s decision contexts are dynamic. A careful evaluation may reveal that extant theory no longer adequately explains our decision-making environment. Sometimes “generation gaps” are real and what worked in the past is no longer relevant or valid today.

Ultimately, so Fawcett and Waller, the measure of a valuable theoretical contribution is whether or not it helps us perceive and understand the world more clearly. James Stock wrote about Broader research = better research already in 1997, and I think he was right, and still is.

How can supply chain research become better?

As business academics, we have the opportunity and obligation, say Fawcett and Waller, to consider how our research can identify and delineate paths to value creation, corporate competitiveness, and societal well-being. How can we do that?

• Step 1: Become knowledgeable about real-world problems
  Being conversant in the day-to-day language of business can mitigate the knowledge production gap that emerges when we ask questions that only interest a handful of other academics
• Step 2: Periodically look through a new set of lenses
  To avoid getting overly comfortable and dependent on a limited set of inquiry tools, we must investigate theories and methods from varied disciplines. By examining vexing problems through new lenses, we will see various facets of complex phenomena in a new light.
• Step 3: Learn to communicate via appropriate language
  We can and must do a better job of identifying and communicating the practical implications of our research. It should not be our goal to simply entertain other academic researchers.

Reference

Fawcett, S., & Waller, M. (2011). Making Sense Out of Chaos: Why Theory is Relevant to Supply Chain Research Journal of Business Logistics, 32 (1), 1-5 DOI: 10.1111/j.2158-1592.2011.01000.x

Author link

• linkedin.com: Stanley E Fawcett
• linkedin.com: Matthew A Waller

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• husdal.com: Borrowing our way to a science

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Quo vadis, SCM?

Two weeks ago I asked the question, Quo Vadis, SCRM?, and the direction of supply chain risk research seems to be very similar to supply chain management research, which is only naturally, since one provides the basis for the other. Today’s article investigates the history of the SCM literature looking at the various trends and developments in the field through a historical analysis covering the 10-year-period between 1997 and 2006. During this decade, SCM evolved into a more prominent area of research, or borrowed its way to a discipline as Smith and Buddress (2005) call it. Supply chain management always has been and probably always will be a melting pot of various disciplines, with influences from logistics and transportation, operations management and materials and distribution management, marketing as well as purchasing and information technology, and manyothers, all working together “to produce an overall supply chain strategy that ultimately enhances firm performance.”

The top three topics of SCM to date

Analyzing past and present literature the authors find 13 topics or categories of topics, three of which stand out more prominently than the 10 others:

• SCM Strategy 23%
  • e.g. Strategic alignment, competitive advantage, agency theory, risk management
• SCM Frameworks, Trends and Challenges 18%
  • e.g.Trends, definitions, reviews and problems
• Alliances/Relationships 16%
  • e.g. Relationship building, trust, commitment, vertical and horizontal cooperation
• E-Commerce 8%
  • e.g. How e-commerce and the Internet affects the supply chain
• Time-based Strategies 6%
  • e.g. Just-in-Time, Inventory management, mgility and flexibility, postponement
• Information Technology 5%
  • e.g. Internal and external decision support systems and information exchange
• Quality 5%
  • e.g. ISO and QM practices
• Supplier Development and Management 4%
  • e.g. Supplier selection, training and improvement
• Environmental and Social Responsibility 3%
  • e.g. Environmental policies, ethical practices, goverment regulations, human rights
• Outsourcing 3%
  • e.g. Outsourcing, 3PL, and contract manufacturing
• HR Management 3%
  • Organizational change, virtual organizations, learning skills, responsiveness
• Buyer Behavior 2%
  • e.g. Inter-firm behavior, negotiations and organizational decision processes
• International/Global 2%
  • e.g. Global logistics, cultural issues, international trade, worldwide sourcing

The top three make up 57% of the reviewed literature and from my point of view I would liked to know how many of these 405 articles relate to supply chain risk and related subjects, but I guess they are more or less evenly scattered among the 13 topics.

The top three are important not only because of the numbers alone, but because of an increase in articles in recent years, thus also signifying a trend:

SCM Strategy

The most discussed area in the literature is that of Supply Chain Strategy, but – and this is a big “but” – most of these articles only investigated strategy alignment between the firm and one key supplier rather than a chain investigation, according to the authors. Consequently, so they say,

…there is room for further investigation from the viewpoint of non-purchasing management within the top management teams of organizations to establish whether these suggested strategic alliances and streamlining have come to fruition or are still only ideas in the minds of ambitious supply chain managers…

Thus, despite the increase of a greater focus on the strategic importance of alignment between supply chain and the parent firm, there is considerable work left to be done. Vivek Sehgal’s book on Supply Chain Strategy is a good starting point.

SCM Frameworks, Trends and Challenges

SCM Frameworks, Trends and Challenges represent the second largest area of recent growth within the supply chain field, and is focused on constructing frameworks for the development and mechanics of supply chains and the overall understanding of SCM by explaining various components of the chain itself.  According to the authors,

…Based on our analysis, and the maturation of SCM, we see this area in a steady or decreasing state, as researchers appear to be examining other areas relevant to SCM. We believe that contributions provided by such studies were important for building the foundations of SCM…

Does this suggest that no new frameworks will developed in future literature? I doubt so. Business is continually evolving, so are supply chains, and so should SCM frameworks. In my opinion. There is always room for new ideas and new concepts. Besides, perhaps SCM can simply do what James Stock argued for in his 1997 article on applying theories from other disciplines to SCM, and always find new horizons to expand into?

Supplier Alliances and Relationships

The third-largest group of articles in this review did not fully emerge until around 2003, and  only 13 artides in the sample focused on any form of buyersupplier relationship issues before 2001. The authors explain that

…The resurgence of publications in this area over the past 5 years is surely a result of a general trend within industries of moving away from simple transaction and contractual-based relationships, and toward more long-term relational forms of collaboration between parties involved in supply chain activities. The development of these long-term, strategic relationships between buyers and sellers within the supply chain has been previously shown to offer opportunities to create considerable competitive advantage…

While many supply chains have gained considerable from vertical and horizontal collaboration, others have claimed the opposite in more recent articles I have come across. Too much collaboration and development can actually harm performance.

Level of analysis and research design

Visualizing their review findings and looking at the level of analysis (firm versus network) and research design (empirical versus non-empirical), it is clear that most researchers are clinging to empirical case studies of a single firm or chain:

What this figure tells me is that non-empirical research focusing on supply networks could be one of the future SCM research trends, the same research gap that exists in supply chain risk management research.

Future Research

Despite having been around for nearly 20 years, if counting from the very early beginning and the first definitions of SCM in the early 90s, there are still opportunities for growth and improvement, and the authors list the following as possible future research alleys:

Larger Sample Sizes

Many studies in supply chain management are empirical, relate to one focal company only and thus suffer from statistical condusion errors due to small sample sizes.

…researchers can delve into a few companies but examine multiple tiers and many suppliers within each tier in order to further increase sample sizes and observe more network or chain wide phenomena. Addressing this issue will ensure that a more system-wide perspective of SCM is achieved within academic research and can partially counter the small sample size problem…

That is task #1.

One-Tier Investigations

Many of the articles reviewed only looked at the relationship between the main supplier and the manufacturer, which very often represents an important dynamic. However, within the dyad there is a multiplidty of issues that are yet to be addressed.

… one alternative is to focus on one organization and increase the sample size by looking at all of the suppliers of that organization across the various tiers, thereby offering a much richer sample in terms of the interaction between suppliers and purchasers across the entire chain.  While more difficult to perform, future studies which expand the focus beyond simple one-tier buyer-seller relationships are necessary for understanding how further supply chain efficiencies can be achieved…

That is task #2.

Limited Methodological Analysis

Several of the articles limited their methodology to correlation analysis where multiple regression or SEM would have provided a more in-depth analysis. Further, they often failed to report descriptive information such as sample size, frame of reference or even response rate.

…if future studies are to improve the analyses presented need to be more sophisticated or at least more thorough. Researchers could examine related fields to benchmark reporting standards for analytical procedures, as well as some of the shortcomings of past work. Here,  triangulation is a good way to mix qualitative and quantitative methods, resulting in cross-method synergies and an improved approach for studying SCM…

That is task #3.

Lack of Longitudinal Studies

Most studies represent a spedfic moment in time while in many instances a longitudinal study would be far more informative. Although these studies require considerably longer time-frames, following a group of firms longitudinally would provide significant data in developing megatrends in the supply chain.

…While longitudinal data are difficult to collect, these data provide an effective tool for studying organizational processes and enhance confidence in the assessment of causalit. SCM research which, for example, captures multi-tiered buyer-supplier relationships over a product life-cycle might be much more beneficial than if viewed at a single point in time…

That is task #4.

Limited Global Supply Chain Analysis

Globalization is becoming a powerful force within corporations and the world community. Thus, it is critical that researchers work to examine global SCM research questions, regardless of data access issues. American companies, and their foreign counterparts, are increasingly doing business overseas.

…global supply chains represents one of the least published topics within SCM literature over the past decade. However, at this moment it is arguably one of the most critical to industry practitioners. Among others, future research addressing SCM postponement on a global supply chain basis is very needed…

That is task #5.

Conclusion

This is an excellent article, connecting the past, the present and the future of supply chain management research, and it is indeed interesting to see how some topics have increased and decreased in number of articles over the years. While I would have loved to see all 405 articles listed in their references, I will trust that only the most important were selected for mentioning and that the rest is perhaps not worth reading (or at least not worth writing about). In the end I can only agree with the authors when they say that

It is our hope that researchers will use the gaps identified herein to generate much needed conceptual and empirical work in the SCM literature, thereby creating a body of literature that is more heavily influenced by a deeper analysis of the supply chain on a chain wide or network basis as opposed to the more popular dyadic studies. Certainly, there is ample opportunity for a wide range of methodological tools to analyze such chain wide or network phenomena. Rich detailed qualitative methodologies using approaches such as grounded theory and snowballing to delve deeply into a supply chain can prove to be valuable additions to the literature. Qualitative studies focusing on networks and using analogies to social networks in the consumer literature could serve as a point of entry to better understand these complex interdependent network relationships.

Continuing to advance the more popular streams of SCM literature is important for the evolution of the field, and the authors are right in saying that doing so will, undoubtedly, expand our understanding and knowledge of SCM. Clearly then, I and all the other supply chain (risk) management researchers have our work cut out for us.

Reference

Giunipero, L., Hooker, R., Joseph-Matthews, S., Yoon, T., & Brudvig, S. (2008). A Decade of SCM Literature: Past, Present and Future Implications. Journal of Supply Chain Management, 44 (4), 66-86 DOI: 10.1111/j.1745-493X.2008.00073.x

Author links

• fsu.edu: Larry Giunipero
• linkedin.com: Robert E Hooker
• linkedin.com: Sacha Joseph-Matthews
• mscd.edu: Tom E Yoon
• linkedin.com: Susan Brudvig

Related posts

• husdal.com: Future trends in supply chain management
• husdal.com: SCM – the new research cocktail
• husdal.com: Quo vadis, SCRM?

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Chain versus network

A supply chain is actually a misnomer. While this may be true in some case, more often than not it is a network, not a chain, as can be seen in Harland et al. (2003) and their article on Risk in supply networks. This misconception of the supply chain as a chain has also resulted in another erroneous image of what a supply chain is, namely the buyer-supplier dyad or buyer-supplier relationships, as seen in Triads in supply networks by Choi and Wu (2009).

The usual conceptualization of a supply chain as a chain has resulted in them being described from a focal firm perspective, neglecting the interdependencies between supply chains (e.g. shared suppliers). The overlapping nature of supply chains is more accurately described by a network. This location of supply chains as an element of a supply network is important in the consideration of events that have impact beyond a single supply chain.

Consequently, it is only when viewing the supply chain as a supply network that the full consequences of a disruption emerge, and thus, we need to separate the wheat from the chaff or the network from the chain:

• a supply chain describes the flow of information, materials and cash into and out of a focal company; and
• a supply network describes the connections between supply chains that share common elements.

Essentially then, while the focal firm has a supply chain, this chain at the same time is part of a larger network, as seen in Jüttner et al. (2003) an their Supply Chain Risk Management – Outlining a Future Research Agenda.

Disturbances versus disruptions

If we separate the chain form the network, then, when looking at the whole system, it is possible to discern between disturbances (affecting one focal company or one chain) and disruptions (affecting many companies and the entire network or parts of it), much like Peck (2006) did in Reconciling supply chain vulnerability, risk and supply chain management.

Disturbances can be separated from disruptions in terms of their impact on a supply network. Disturbances involve connected supply chain actors adapting to variations in material flow or information. This process of adaptation is constrained by the structure of the chain, that is to say that the chain structure does not change as a result of the adaptation process.

Disruptions involve the removal of ties/nodes from the network (either permanently or temporarily) as a consequence of some unanticipated critical event. As a result, the post-disruption network structure is irreversibly different to the pre-disruption network and the adaptation process inevitably involves the residual actors renegotiating existing and in some cases establishing new relationships, resulting in an irreversible change to the network structure.

In summary, disruptions differ from disturbances in terms of their range and impact. Disturbances do not change the chain structure whilst disruptions result in network irreversible structural changes. Network responses to disruption differ from normal network formation and evolution processes, in that the latter involves a considered process not constrained by time, whilst the former requires an urgent adaptation constrained by time.

This concept is not so unlike the deviation-disruption-disaster framework used in the book chapter on Risk Management in Global Supply Chain Networks by Visanadham and Gaonkar (2008), whose disruptions are the same as disturbances and whose disasters are the same as disruptions. Interestingly, this almost the same concept is not mentioned in the reference list for this article, but considering the search methodology they used in their literature review, it is not surprising that they did not find it.

Literature review explained

Regular readers will remember my previous post on a literature review article that explored how supply chain risk management research had evolved over the past decade, where I lamented that the researchers did not disclose much about their search methodology, thus making it difficult to follow their steps. Not so in this article. Here the authors provide detailed step-by-step information on how they searched, e.g. citation/co-citation is thoroughly explained, and also what particular keywords they used. This is indeed very helpful for other researchers attempting similar types of reviews in other fields of research. In this case, the following keywords were used and linked with supply chain disruption or supply chain disturbance: transaction cost economics (TCE, resource dependency, resource based (theory or view), buyer seller relationships, economic organization, network formation, social networks. Had I been on the team I probably would have included supply chain turbulence and supply chain volatility, and maybe more, just to make sure I get as many articles as possible.

Networks and relationships

Particular emphasis was put on articles relating to relationship formation, relationship dynamics, network formation, network attributes, and why firms form networks and relationships, leading to different-looking types of networks:

The authors postulate that

each of these network attributes has a particular significance in the way that networks respond to disruption. For instance, a disruption occurring at a node with high inbetweenness centrality will result in a greater disconnection amongst the network actors than a disruption occurring in a node with low inbetweenness centrality. In a similar fashion network, holes represent opportunities for nodes to build new connections with previously unconnected nodes following a disruptive event. Nodes with high-degree centrality enjoy a privileged position of power, which they may or may not use to their advantage, and this is in contrast with the network attribute of equivalence, which describes nodes, with no comparative privilege. The role of weak ties in responses to disruption may be of particular significance, as they are recognized as a mechanism for the effective dissemination of information across a network. If part of a network becomes aware of a disruption sooner than another part of the network, it follows that its actions are likely to be more effective in mitigating the impact of disruption.

Well spoken and perhaps not so unlike Cheng and Kam (2008) and their view of how disruptions propagate through a network and impact just a link or a node, a subnetwork, or – worst case – the entire network.

Conceptual framework

In the end, the authors develop the following conceptual network and hypotheses:

1. The time taken for a network to recover will be greater in dense networks, compared to the time taken for less dense networks to recover.
2. The impact of a disruption will be greater in less dense networks than in more dense networks.
3. Disruptions in dense networks will result in greater instability across the network during the recovery phase.
4. Networks with a higher proportion of holes, and associated high dependency ties, will experience greater disruptive impact on those networks with fewer holes.
5. Networks with a high proportion of holes, and associated high dependency ties, will take longer to recover from a disruptive impact than those networks with fewer holes.
6. Disruptions in structurally evolving networks will have greater impact than in mature networks with proportionately less holes.
7. Nodes whose shortest connecting path to a disruptive event is via a weak tie will be impacted less than a node whose shortest connecting path is through a greater number of strong ties.
8. Nodes whose shortest connecting path to a disruptive event is via a weak tie will recover more quickly than a node whose shortest connecting path is through a greater number of strong ties.
9. The co-location of influence (as a result of degree or inbetweenness centrality) and disruption will result in greater impact than the location of disruption at nodes of lesser influence.
10. The co-location of disruption and power will result in longer network recovery periods than the dislocation of disruption and power.
11. Disruptions connected to powerful nodes (described by centrality) will result in less impact and then accelerated recovery period when compared to disruptions connected to less powerful nodes.

Conclusion

The objective of this paper, so the authors say, was to review the extant relational literature relating to networks, with a view to combining these theoretical perspectives with the literature surrounding supply chain disruptions. That they have done, no doubt about that, and this is one of the best articles on supply chain disruptions I have come across in a very long time. It is also a fine extension of the work done by Craighead et al. (2007), who came up with six propositions that relate the severity of supply chain disruptions to supply chain design characteristics and supply chain mitigation capabilities, and  I’m definitely looking forward to seeing future research that builds on the work of Greening and Rutherford.

Reference

Phil Greening, & Christine Rutherford (2011). Disruptions and supply networks: a multi-level, multi-theoretical relational perspective International Journal of Logistics Management, 22 (1), 104-126 DOI: 10.1108/09574091111127570

Author links

• linkedin.com: Phil Greening
• cranfield.ac.uk: Christine Rutherford

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• husdal.com: Supply chain disruptions and network attributes
• husdal.com: Risk Management in Global Supply Networks
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Material, financial and information flows

The article takes a familiar approach in classifying and categorizing different supply chain risks the literature they review, namely

• material flow risks
• financial flow risks, and
• information flow risks,

an approach many supply chain researchers will readily recognize, i.e. the “boxes, bucks and bytes” in Kleindorfer and Wassenhove’s Managing Risk in Global Supply Chains, strangely enough not mentioned in their collection of literature. On a side note, to complete the flows that make up supply chain management, Wassenhove added two more flows,

• people flows, and
• knowledge or skills flows

in his book on Humanitarian Logistics, flows that in my opinion are equally important in supply chain risk management, as people are often the weakest link in the supply chain, and people are the agents that more often than not perceive risks as different from what objective measures tell them to be.

Risk definiton

When looking at their list of 80 or so references I was surprised to not find many articles I would have considered important in looking back how the supply chain risk management literature has evolved. However, when looking at the definition of supply chain risk they employ, it became clear to me why they were so “selective”:

supply chain risk should refer to (i) events with small probability but may occur abruptly and (ii) these events bring substantial negative consequences to the system

While the authors may subscribe to a risk definition similar to that of Paul Kleindorfer, I beg to disagree here, as I believe that the focus on risk as something that is only very negative is not the right way to address the full spectrum of risk issues. Consequently, I think the authors have not fully captured the development of supply chain risk management research.

Literature review

First the authors describe how they found the articles they reviewed:

Based on the description of definitions in previous section, we use search keywords supply chain, supply chain risk or supply chain risk management together with risk or uncertainty. After obtaining these articles,we use the criteria ‘‘high impact and low probability risk’’ to filter the most relevant ones. Finally we have shortlisted and reviewed 138 articles between the years of 1995 and the first half of 2008.

This is a valid approach, but I would have liked to know more about the search keywords. Are those the keywords employed by the authors of the reviewed articles? If so they may not always fully describe the content the article, since the number of keywords allowed is often limited by the journal publisher, and some authors may deliberately chose to use certain keywords and to omit other keywords. Or did the authors (of this article) read and then decide what keywords that fit? Also a bit puzzling to me is that they say to have reviewed 138 articles, but only 80 or so made it into the references of the article, which in hindsight may account for the articles that I thought were missing from this review.

Solid work

Having said the above, I am still very much impressed with the work the authors have done. Using citation and co-citation analysis, they identify three separate time periods and topical clusters within those periods.

Main issues discussed during the year 1995 until 1999 include financial risk management and operations strategies such as adoption of lean concept and early supplier involvement .Between years 2000 and 2003, the number of articles in SCRM slowly increases. Main issues vary from operation plans to relationship of supply chain partners. In the same time period, we also note the emerging of studies on information technology and information flow. Meantime, we also note a rising discussion on globalization risk associating with political and cultural practices. A dramatic increase of publications starts in 2004, from which SCRM exhibits a steady rising of interest from academic researchers and practitioners. Challenges and opportunities of outsourcing to low cost countries are the favorite discussion topics. Others include supply chain partner relationship, supply chain environmental, economy and political issues and growth of information sharing and security. Several studies on financial risk are also noted.

Note the scale on the y-axis above. I must say that I find it hard to believe that while there haven’t been written that many articles on supply chain risk management, but obviously more than enough, they have actually been cited close to 500 times in 2003. Possible, yes, but the authors do not say where the citations have been taken from, so it is hard to judge credibility of the figure.

Nonetheless, the figure leaves no doubt that supply chain risk management has seen a dramatic increase in interest in the recent decade.

Research gaps

The authors identify a number of research gaps or possible new research strands for budding researchers:

Robust planning: exploring the uncertainty inherent in a supply chain, and developing optimization decisions which provide more predictable results.

Revenue management: using pricing policies to allocate and relocate capacity from disrupted to non-disrupted segments of the supply chain.

Agency theory: investigating understanding supply chain interdependencies in a systems perspective.

Option theory: integrating real options and financial options for improving strategic/tactical and operational decisions.

System dynamics: understanding and analyzing the inherent control policies in a supply chain, e.g. the bullwhip effect in supply chain disruption management.

Reverse logistics: using returned items as a backup or reserve inventory to improve supply chain reliability and to reduce tied-up capital

I find this a very interesting list, especially the last suggestion, which also adds in sustainability, perhaps the coming issue in future supply chain management, as reported by eft.com.

Critique

This is a well-researched article. It is perhaps not so well written or well-structured. By that I mean that it doesn’t flow so well when reading it, and it takes some time for the main points to sink in. Some figures are not self-explanatory and are also not described  in enough detail in the text to fully understand what they convey. Overall however, the article brilliantly sums up the core topics of supply chain risk management of the past, the present, and where it may be headed to in the future.

Reference

Tang, O., & Nurmaya Musa, S. (2010). Identifying risk issues and research advancements in supply chain risk management International Journal of Production Economics 133 (1), 25-34 DOI: 10.1016/j.ijpe.2010.06.013

Author links

• linkedin.com: Qu Tang
• linkedin.com: S Nurmaya Musa

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• husdal.com: A literature review in supply chain risk management
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More than meets the eye

To me, the major point of this article is not the case study of a Chinese manufacturer of Special Purpose Vehicles, but a cause and effect diagram showing how internal and external risk affect all processes in the supply chain. Even more useful is a set of nine criteria used for assessing the trustworthiness of a case study. Not to mention the 80 or so references in the bibliography, where – as always – I didn’t find articles that I thought they would have cited, but more importantly, I found lots of articles I had not heard of before. Add to that a very detailed description of how the case study was undertaken and the lessons learned from it, this article is nothing less than a cookbook in supply chain risk management case studies.

Cause and effect

One very illustrative figure in the article is a cause and effect diagram showing internal and external supply chain risk in a product design change perspective.

Although based on this particular case study, in my opinion this diagram is generally applicable to almost any manufacturing supply chain.

Internal risks are related to:

• R&D risk: The inability to quickly redesign the product to meet customer’s requirements for design change
  
• Production risk: The inability to quickly and efficiently produce the product with customer’s changed design
  
• Planning risk: The inability to maintain stable and consistent planning production planning and scheduling
• Information risk: The inability to share information among different supply chain roles and make it accurate, secure and visible across the entire supply chain
• Organizational risk: The inability to adjust the organization structure and operational processes to match the dynamic characteristics of customer demand

External risks are related to

• Policy risk: The inability to meet industry and government regulations, trade rules and legal standards
  
• Supply risk: The inability to guarantee supply availability, timeliness, cost and quality
  
• Delivery risk: The inability to deliver on time and to guarantee the logistic capability

Trustworthiness criteria

A very interesting selling point of this article is the use of trustworthiness criteria and how the case study meets these:

• Credibility: Extent to which the results appear to be acceptable representations of the data
• Transferability: Extent to which the findings from one study in one context will apply to other contexts
• Dependability: Extent to which the findings are unique to time and place; the stability or consistency of explanations
• Confirmability: Extent to which interpretations are a result of the participants and the phenomenon as opposed to researcher biases
• Integrity: Extent to which interpretations are influenced by misinformation or evasion of participants
• Fit: Extent to which findings fit with the substantive area under investigation
• Understanding: Extent to which participants buy into results as possible representations of their worlds
• Generality: Extent to which findings discover multiple aspects of the phenomenon
• Control: Extent to which organizations can influence aspects of the theory

I find this an incredibly useful set of criteria, perhaps a few too many, but nonetheless, I think these are the critera every case study should be judged against.

Critique

There is only one “negative” point to be made about this article: It’s a bit on the long and detailed side, too detailed perhaps in its description of the case study. However, I don’t see where it could have been shortened. Having said that, the positive takeaways from this article which I already mentioned in the beginning more than outweigh the fact that it does take a while to fully read this article. Kudos on an job well done.

Reference

Lin, Yong, & Zhou, Li (2011). The impacts of product design changes on supply chain risk: a case study International Journal of Physical Distribution and Logistics Management, 42 (2), 162-186 DOI:10.1108/09600031111118549

Author links

• linkedin.com: Yong Lin
• gre.ac.uk: Li Zhou

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• husdal.com: Product design and supply chain risk