Flexibility x 3

Transportation is a key function in the supply chain as it acts as a physical link between customers and suppliers, enabling the flow of materials and resource. shippers often presume that transportation will respond to short-term demand changes and, in particular, be willing to accommodate uncertainties, which they do, but this accommodation comes at a cost. Flexibility, thus, should rather be a proactive characteristic that is embedded into the carrier organization’s strategy, behavior, processes and technology. However, such flexibility can only come about if supplier, carrier and customer collaborate.

Collaboration for flexibility

This collaboration, so they say, needs to be both vertical and lateral:

While much of the research on collaboration has been of the “vertical” nature there is also the need to consider “horizontal” collaboration. Such collaboration may be referred to as alliances, where competitors look for new opportunities, or clusters, where organisations with complementary capabilities offer a greater degree of service scope.

Initially, this is a collaboration between two parties only, supplier and customer:

The degree or stages of collaboration are very similar to the cooperative strategies employed by Child et al. (2005).

Types of collaboration

Following Bask (2001), who put forward the idea that there is a triangle of dyadic relationships between supplier, customer and carrier, the authors suggest that we ought to

reconsider the classic dyadic relationship and re-articulate the collaboration models into a tripartite form to consider the carrier, supplier and customer.

Taking the four degrees of collaboration and the three dyadic relationships into account, 12 constellations are possible:

I think the figure speaks for itself.

Types of flexibility

After consulting the literature, the authors come up with a long list of possible flexibility assets

Internal flexibility

• Mode
  • Ability to provide different modes of transport
• Fleet
  • Ability to provide different vehicle types to carry different goods
• Vehicle
  • Ability to configure vehicles to carry products of different types or to cater for different loading facilities
• Node
  • Ability to plan, approve and implement new nodes in the network
• Link
  • Ability to establish new links between nodes
• Temporal
  • Ability to sequence infrastructure investment
• Capacity
  • Ability to accommodate variations or changes in traffic demand
• Routing
  • Ability to accommodate different routes
• Communication
  • Ability to manage a range of different information types

External flexibility

• Product
  • The range and ability to accommodate the provision of new transport services
• Mix
  • The range and ability to change the transport services currently being provided
• Volume
  • The range of and ability to accommodate changes in transport demand
• Delivery
  • The range of and ability to change delivery dates
• Access
  • The ability to provide extensive distribution coverage

I think the list captures the essential types of flexibility that are or should be inherent in transportation.

Types of logistics services

The types of flexibility then play a major in the type of logistics services that can be provided by a carrier:

• Routine logistics services, with little or no flexibility other than adapting to external circumstances.
• Standard logistics services, with some degree of flexibility, particularly in terms of delivery and mix.
• Customized logistics services, with a full range of flexibility types.

Flexibility and collaboration

In the end, the authors develop a figure based on the above:

I instantly like papers that convey their message through good illustrations. A picture tells more than  words, and this figure does that, showing the vertical collaboration with the supply chain, and the lateral collaboration that exists on the 3PL side.

Conclusion

I like this paper, because it clearly shows the role of freight carriers in reducing supply chain risk by achieving the necessary flexibility in supply chains. It is interesting to note that they use the term transport(ation) flexibility or logistics flexibility, signifying a marked difference between logistics and supply chain mangement. It also carries a notion of the gap that exists between managing and operating a supply chain. What this paper also does is highlight some of the possible metrics of transport flexibility, based on a collaborative approach to relationships between carrier, supplier and customer.

Reference

Naim, M., Potter, A., Mason, R., & Bateman, N. (2006). The role of transport flexibility in logistics provision The International Journal of Logistics Management, 17 (3), 297-311 DOI: 10.1108/09574090610717491

Author links

• cardiff.ac.uk: Mohamed Naim
• cardiff.ac.uk: Andrew Potter
• cardiff.ac.uk: Robert J Mason
• lboro.ac.uk: Nicola Bateman

Related

• husdal.com: Fighting transportation uncertainty in supply chains
• husdal.com: What kind of supplychainist are you?
• husdal.com: Supply chain mangement – fact or fiction?

Top of the pops

Why are downloads interesting? As more and more journals go online, the number of downloads an article has measures how popular or sought after an article is. Downloads are interesting because they not only reveal what is read but also which topics academics currently work on or what ‘previous’ and ‘published’ research they use in their current work. So what DO academics work on? Mind you, the list is based on the Emerald statistics for IJLM, IJPDLM and SCM:IJ, so it is highly selective and highly biased, and thus not fully representative. Nonetheless, it does suggest that some themes have a higher readership than others:

• Supply chain risk management
  • Christopher & Lee (2004)
    Mitigating supply chain risk through improved confidence
• Supply chain integration and collaboration
  • Pålsson & Johansson’s (2009)
    Supply chain integration obtained through uniquely labelled goods
• Corporate social responsibility, ethics, and green/reverse supply chains
  • Hanafi et al. (2008)
    Reverse logistics strategies for end-of-life products
• Lean and agile supply chains
  • Masson et al. (2007)
    Managing complexity in agile global fashion industry supply chains
• E-commerce
  • Cho et al.  (2008)
    Logistics capability, logistics outsourcing and firm performance in an e-commerce market
• RFID
  • Spekman &Sweeney (2006)
    RFID: from concept to implementation

I am not at all surprised that corporate responsibility and green/reverse logistics rank high on the list, and they are certainly not going to be less popular in the future, as noted by Betty Feng in her post on green versus efficient.

Other hotbeds

Several other fields also make an impact, and again, no surprises here:

• Value chain analysis
• Humanitarian logistics
• Demand management
• Logistics outsourcing
• Warehousing and inventory management
• Transportation
• Implementation of SCM

A fuller list of articles (but without links) can be found at interorganisational.org. If I can find the time and inspiration for it I will try to assemble a list like above with links for all the articles mentioned.

And the trend?

Well, quoting Gyöngi,

Integration, CSR, risk management, even humanitarian logistics were already hot topics the last time we looked at them. Optimisation doesn’t make the list any more – though that can be due to the convenience sample of these very journals. The same goes for customisation and modularisation, and supply chain design. “Global” this and that has been dropped.

So now you know what to research, if you want to be in the hot seat.

And I have a lot of reading to do…

Reference

Pålsson, H., & Johansson, O. (2009). Supply chain integration obtained through uniquely labelled goods: A survey of Swedish manufacturing industries International Journal of Physical Distribution & Logistics Management, 39 (1), 28-46 DOI: 10.1108/09600030910929174

Christopher, M., & Lee, H. (2004). Mitigating supply chain risk through improved confidence International Journal of Physical Distribution & Logistics Management, 34 (5), 388-396 DOI: 10.1108/09600030410545436

Hanafi, J., Kara, S., & Kaebernick, H. (2008). Reverse logistics strategies for end-of-life products The International Journal of Logistics Management, 19 (3), 367-388 DOI: 10.1108/09574090810919206

Masson, R., Iosif, L., MacKerron, G., & Fernie, J. (2007). Managing complexity in agile global fashion industry supply chains The International Journal of Logistics Management, 18 (2), 238-254 DOI: 10.1108/09574090710816959

Cho, J., Ozment, J., & Sink, H. (2008). Logistics capability, logistics outsourcing and firm performance in an e-commerce market International Journal of Physical Distribution & Logistics Management, 38 (5), 336-359 DOI: 10.1108/09600030810882825

Spekman, R., & II, P. (2006). RFID: from concept to implementation International Journal of Physical Distribution & Logistics Management, 36 (10), 736-754 DOI: 10.1108/09600030610714571

Links

• interorganisational.org: Trendspotting
• gscmotion: When Green encounters Efficiency

Supply Chain Risk Literature Reviews

Looking for literature reviews in supply chain risk? This blog contains a compilation of more than 250 journal articles, white papers, research reports, books and conference presentations on supply chain risk and related subjects. Sorted by last name of first author:
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Related

• husdal.com: NOFOMA

When logistics still was, well, ‘logistics’

Logistics or supply chain management as it is now called is a relatively new science, and was even newer in 1997, the year of today’s article. Then, logistics was still logistics, Cooper Lambert and Pagh had just published their seminal article ‘Supply Chain Management: More Than a New Name for Logistics?’, and most companies were only barely starting to think about global outsourcing and its implications for their own supply chain management. Even the title of the journal the article was published in, International Journal of Physical Distribution & Logistics Management, suggests that logistics at that time was mostly a physical day-to-day operation, not an area were strategic decisions were made. How times have changed…

What disciplines can logistics benefit from?

In his article, Stock lists the following as disciplines that can be used within the realm of logistics:

• accounting
• business/management
• computing
• economics
• marketing
• mathematics
• philosophy
• political science
• psychology
• sociology

He then runs through these disciplines one-by-one, looking at how they have contributed to logistics in the past (if they have) and what new concepts are emerging that can be applied to logistics, or vice versa. It is a very interesting read, and for almost every discipline, Stock lists a number of possible applications:

accounting

• Relating zero-base budgeting to the development of logistics mission statements.
• Development of logistics budgets in international markets where changes can often be rapid and unpredictable.
• Development of specific logistics-related goals and objectives each year that directly tie in to budgetary expenditures for personnel, equipment, etc.

computing

• Development of control programmes for robotics used in various logistics activities.
• Generation of customer databases to be used in segmentation studies, profitability analysis.

economics

• Defining and understanding inter- and intra-firm organizational relationships.
• Developing and maintaining strategic alliances and partnerships with vendors, suppliers and logistics service providers.
• Investigation of the nature and scope of relationships with suppliers.
• Supply chain management issues such as risk sharing, capital outlays, power and conflict between channel intermediaries and the  costs and benefits of supply chain integration.

marketing

• JIT and TQM in relationships between companies,  suppliers, vendors and customers.
• Identification and classification of  types and nature of various logistics relationships.
• Application of constructs (e.g. commitment, communication, co-operation, shared values, trust) used in relationship marketing research to better understand logistics relationships.

philosophy

• Examining existing ethical rules or norms in logistics decision making.
• Development of company policies relating to employee-employee and employee-employer relations, behaviour of employees in relationships with suppliers, vendors, customers and other relevant publics of the firm.
• Examination of the corporate culture in an organization.

political science

• Examining complaining behaviour of customers and the possible actions of customers to service failures of companies.
• Investigation of company-employee relations, especially with respect to employee suggestions and/or criticisms.
• Examination of group behaviour, such as in teams or committees.

psychology

• Examination of logistics research which have grouped companies, organizations, employees, or customers into categories in order to identify the properties or characteristics of each group.
• Inclusion of both qualitative and quantitative research methods/analyses in logistics research.
• Examination of entities in various stages of development to determine degrees of variability in characteristics, inputs and outputs common to firms, departments and individuals in specific stages.

sociology

• Implementation of environmental awareness programmes in packaging design and in warehouses and/or distribution centres (e.g. reverse logistics)
• Employee acceptance of quality programmes, cost-service trade-off strategies, strategic alliances and partnerships and other corporate-wide improvement efforts
• Corporate philosophy that logistics creates customer satisfaction, sustainable competitive advantage and customer loyalty.

Looking back, I think many of these issues have been covered in the literature on supply chain and logistics since 1997, although very few actually cite Stock in their references.

Conclusion

I like mixing ideas, and my approach to logistics, or supply chain management is no exception (Being an intersectionist, as I explained yesterday, I better keep these two terms separate from each other).  This mixture of ideas is what I first tried in my 2004 philosophical essay on Transportation Reliability and Vulnerability, where I in the end concluded with feeling a certain kinship with Giordano Bruno, and perhaps it is time to refresh what I wrote back then (excerpt only):

Giordano Bruno was a philosopher who took the current ideas of his time and extrapolated them to new and original vistas. He claimed that all matter was intimately linked to all other matter, that we live in a universe in which all things are related. Nothing could be more true of the global supply chains of our days.

Giordano Bruno is unique compared to the other martyrs of his time because of the power of his forward-thinking, where others were personal-thinking or contrary-thinking. Bruno advocated the use of conceptualizing, that is to think in terms of images. He said that to think was to speculate with images. Complex scientific correlations are often better explained in pictures than in mathematical formulae. Consequently, Bruno was able to rationalize his theories, even though he used no mathematics. Rather than spinning his ideas from the yarn of algebra, the cobweb of modern science, Bruno molded pictures and manipulated visual images to interpret complex ideas.

(Read the full passage about Giordano Bruno)

Following Bruno’s lead, leaving the mathematical world of  economics and hard-fact decisions in logistics and supply chain management behind, the research that is to follow on this blog intends in every way to be rich in images, but poor in formulas.

Reference

Stock, J. (1997). Applying theories from other disciplines to logistics International Journal of Physical Distribution & Logistics Management, 27 (9/10), 515-539 DOI: 10.1108/09600039710188576

Links

• University of South Florida: James Stock’s homepage

Related

• husdal.com: Transportation reliability and vulnerability – a question of cost and benefit?

The Four Seasons of Supply Chain Management

Well, they are not exactly four “seasons”, I just thought it would be a catchy term to use. Anyways, what the article by Larson and Halldorson describes, is  the relationship or linkage between SCM and logistics, and depending on ones point of view, four different strands are discernible: the Tradionalist, the Unionist, the Re-Labelist, and the Intersectionist.

Actually, there may be five, as I will return to below.

• Traditionalist
  • SCM is a part of logistics, along the lines of external or inter-organizational logistics
• Re-Labelist
  • SCM is logistics, but renamed, a form of “integrated” logistics
• Unionist
  • Logistics is a part of SCM, reducing logistics to one of many business processes or areas
• Intersectionist
  • SCM is a broad strategy that cuts across many if not all business areas, where logistics becomes operational decisions, SCM becomes strategic decision, and tactical decisions fall to the intersection.

Does Supply Chain Management exist?

Five years have passed since this article, and has the world changed? Is there now a consensus on the lineage between logistics and SCM? Already more than ten years ago, in 1997, LaLonde asked the same question in ‘Supply Chain Management: Myth or reality?’ and  most recently, a similar question was asked in a PhD dissertation from Sweden: Supply Chain Management – does it exist? by Erik Sandberg from the University of Linköping. What Sandberg found out was that management appears to be good in management, but lack the necessary focus on supply chain activities, while logistics handles operations as best they can, but are in dire need of strategic directions from the management level, which in the end could give the company ‘a sustainable competitive advantage vis-à-vis its competitors’ . So basically, the two, management and logistics, are living side-by-side, more or less unaware of that they need to intersect. Is that the fifth variant, the ‘Desectionist‘? I thought of calling it ‘Separatist’, but I don’t think that would be politically correct.

Personally I would call myself an intersectionist. What kind of SupplyChainist are you?

Reference

Halldorsson, A., & Larson, P. (2004). Logistics versus supply chain management: an international survey International Journal of Logistics, 7 (1), 17-31 DOI: 10.1080/13675560310001619240

Author links

• soton.ac.uk: Arni Halldorsson
• umanitoba.ca: Paul D Larson

Related

• husdal.com: Supply Chain Management – does it really exist?
• husdal.com: Economies of integration
• interorganisational.org: SCM Theory and Practice – what comes first?

Top Management Support

In his dissertation, Sandberg contends that

Supply chain management (SCM) has been discussed by researchers as well as business practitioners for more than two decades now, but still surprisingly little of this philosophy can be seen in today’s business practices.

One important enabler for taking the SCM philosophy from theory into practice  is top management support. The purpose of his dissertation is therefore

to describe and explain the role of top management in a company’s supply chain management practices.

A Logistics Survey

Much of his work is based on  a survey of 482 logistics managers at Swedish manufacturing companies, resulting in the follwowing findings:

1. existing collaborations are mainly performed at an operational level in the companies,
2. there are differences in the focal company’s attitude and behaviour depending on if the collaboration partner is situated downstream or upstream in the supply chain,
3. increased intensity in the collaboration results in more positive effects,
4. top management involvement is an important driver for increased intensity of the collaboration, and
5. top management involvement in a dyadic collaboration is an important driver for increased collaboration with supply chain members on the other side of the focal company.

These results, he says, clearly indicate the importance of top management involvement for successful supply chain collaboration, both when it comes to increased intensity in existing collaborations and in creating.

A Management Survey

Sandberg also conducted in-depth interviews with 15 top management members resulting in a more thorough explanation of top management’s role in a company’s SCM practices. Six archetypes of this role are presented:

1. the supply chain thinker,
2. the frame setter,
3. the process designer,
4. the relationship manager,
5. the controller, and
6. the organiser for the future.

Here, he says, top management, in accordance with a traditional management style, applied what Mintzberg calls a “deliberate emergent” management approach, meaning that they focus on defining the strategic boundaries, while not interfering with day-to-day logistics operations.

Summary conclusion

What Sandberg comes down to is that management appears to be good in management, but lack the necessary focus on supply chain activities, while logistics handles operations as best they can, but are in dire need of strategic directions from the management level, which could give the comapny

a sustainable competitive advantage vis-à-vis its competitors

So basically, the two, management and logistics, are living side-by-side, more or less unaware of that they need to intersect. I find this a very strong contention, and I look forward to reading more from Erik Sandberg.

Reference

Sandberg, E. (2007). The Role of Top Management in Supply Chain Management Practices. Unpublished PhD Dissertation, Linköping University, Linköping.

Link

• Linköping University – Download the dissertation

Related

• husdal.com: Is there a Nordic approach to logistics?

Publisher’s review

I haven’t actually read the book yet, but I certainly look forward to getting my hands on it, since it looks very promising, based on the reviews on the publisher website:

This book encourages European researchers to dare diverge from mainstream ‘American way’, and to explore new avenues in line with hot topics and key questions within European business. (Paul D. Larson, Professor, University of Manitoba, Asper School of Business, Canada)

The authors of this book make a synthesis of the research conducted in the Nordic countries compared with conventional mainstream research. As a result a Nordic approach to logistics research has crystallized, and that is what this book is about.
(Nathalie Fabbe-Costes, Professor, Université de la Méditerranée-Aix-Marseille II, France)

The chapters provide an understanding and, perhaps more importantly, consciousness for scholars that are part of this research environment: Where are we now, what have we been influenced by, and in what area are we able to provide positive impact?
(Daniel Knudsen, Senior Project Manager, Sony Ericsson Mobile Communications AB, Sweden)

Based on my own experience, yes, there may in fact be a Nordic approach to Supply Chain Management, an approach that is less concerned with cost-effectiveness and hardcore business thinking, but more leaning towards the societal impact of sound and sustainable supply chain management.

Buy this book

• Buy this book at amazon.com
• Buy this book from the publisher

Related

• husdal.com: NOFOMA
• husdal.com: The latest trends in logistics and supply chain management research

Reasons for increased supply chain vulnerability

• The trend towards just-in-time and lean practices have led to a focus on efficiency rather than effectiveness.
• The trend towards reducing costs (at almost any cost) has led to a globalization of supply chains, more complex and hence more vulnerable.
• The trend towards economies of scale has led to centralized distribution and manufacturing, which has lowered costs but at the same time also made the supply chain less flexible.
• The trend towards outsourcing non-core business activities in order to gain market competitiveness has led to loss of control of the supply chain when it may be most needed.
• The trend towards consolidation of suppliers, not necessarily brought on by the customer company itself, but by incidental mergers and acquisitions has led to an increased risk of supply failure.

Supply chain risk management is closely linked to “business continuity” planning, since the biggest risk to business continuity may in fact be in the wider network (or supply chain) the individual business is just a part of. This means that one’s own continuity may be very much dependent on someone else’s continuity, and mapping an individual company’s risk profile involves identifying risk sources across the network.

Sources of supply chain risk

• Supply risk – disruptions in supply
• Demand risk – volatile demand and the bullwhip effect
• Process risk – operational constraints and limitations
• Control risk – decision rules hampering own production
• Environmental risk – external forces, natural hazards, politics

Suply chain risk profile

It is important for any business to understand that its own risk profile is directly and indirectly impacted by the strategic decisions that are made. A business’ vulnerability should always be examined in relation to the 5 sources of risk as described above.

Mapping the risk profile is a six step process that involves

• Prioritize earnings drivers
• Identify critical infrastructure that affect the earnings drivers
• Locate vulnerabilities in the critical infrastructure
• Model scenarios for the vulnerabilities
• Develop responses to the scenarios
• Monitor and detect potential disruptions as soon as possible

Managing supply chain risk

• Understand the supply chain
  - view it from end to end, from supplier to end customer.
• Improve the supply chain
  - can you simplify and reduce complexity and variability?
• Identify critical paths
  - what are the bottlenecks and key nodes/links?
• Manage the critical paths
  - make contingency plans.
• Improve network visibility
  - don’t be afraid to share information.
• Establish a supply chain continuity team
  - make it cross-functional
• Work with suppliers and customers
  - are your suppliers and customers aware of their own vulnerabilities?

Achieving supply chain resilience

Supply chain resilience requires a recognition that all strategic decisions have an impact on the supply chain and the supply chain risk profile. Hence, it may be necessary to re-engineer the supply chain. How this process works can be seen in the figure left.

In conclusion, the chapter on supply chain risk in in Logistics & Supply Chain Management by Christopher Martin provides a comprehensive and thorough perspective for anyoneone interested in the subject matter. As I said before, this chapter alone makes the book worth reading.

Reference:
Christopher, M. (2005) Managing risk in the supply chain. In: Logistics and Supply Chain Management, 3rd ed, Prentice Hall, pp. 233-258

Better than van Hoek and Harrison?

I prefer Logistics Management and Strategy by van Hoek and Harrison to this book. That said, while Christopher’s book has lesser compelling graphics and looks less like a textbook, it is one of the very few supply chain textbooks that deal with supply chain risk.

Reference

Christopher, M. (2005). Logistics and Supply Chain Management. Harlow: Prentice Hall.

Author Link

• martin-christopher.info: Martin Christopher

amazon.com

• Buy this book: Logistics and Supply Chain Management

Related

• husdal.com: Book Review: Supply Chain Risk – the forgotten discipline?

Who should read this book?

This book is written with the manager in mind, and is interspersed with examples from real life, along with calculations and illustrations that explain the concept in a manner that is practical and easy to follow even if you know nothing about supply chain management theory, common sense is all it takes. I highly recommend this book for anybody who wishes to learn the principles of supply chain risk management and put them into practice in one’s own business. Worth the price? YES!

An alternative

For the academically inclined, I suggest  Supply Chain Risk by George Zsidisin and Bob Ritchie or Supply Chain Risk by Claire Brindley, two books that have become indispensable to me.

Author link

• henley.reading.ac.uk: Donald Waters

Related

• husdal.com: The Resilient Enterprise

Better than Christopher?

I prefer this book to Logistics and Supply Chain Management by Martin Christopher. That said, while Christopher’s book has lesser compelling graphics and looks less like a textbook, it is one of the very few supply chain textbooks that deal with supply chain risk. In fact, I cannot remember any other textbook on  supply chain or logistics that deal with supply chain risk, except for Logistics and Supply Chain Management by Martin Christopher.

Author links

• cranfield.ac.uk: Remko van Hoek
• cranfield.ac.uk: Alan Harrison

Related

• husdal.com: Book Review: Logistics and Supply Chain Management