More than just a supply chain

Supply chain management (SCM) often overlooks or neglects the mundane side of physical distribution and transportation, despite the fact that these activities form the backbone of SCM, says Peck (2006). The issue of supply chain disruptions is of particular importance in sparse transportation networks, because with only few transportation modes and/or links available between communities, these communities become extremely vulnerable to any disruption, since in a possible worst-case scenario no suitable alternative exists for deliveries to or from these communities. This makes supply chain disruptions in a sparse transportation networks different from disruptions a non-sparse network, since supply chains, here more than elsewhere, serve a purpose that extends beyond the immediate concerns of SCM.

Bad locations – Bad logistics

For those of you who cannot attend the WCTR, here is my presentation:

The full paper has been presented earlier, in my post on How Norwegian freight carriers handle supply chain disruptions.

WCTR 2010

This presentation will take place on July 13, 0945-1115 in session B1.1, room 0.07 at the WCTR conference.

Reference

Husdal, J. & Bråthen, S. (2010). How Norwegian freight carriers handle supply chain disruptions. Paper presented at the World Conference for Transportation Research 2010, Lisbon, Portugal, 11-15 July 2010.

Related

• husdal.com: How Norwegian freight carriers handle supply chain disruptions
• husdal.com: Supply chain disruptions in sparse transportation networks

Sparse transportation networks

Transportation is perhaps the staple ingredient in supply chains, as I wrote about a couple of weeks ago, and a thought-out transportation provision adds valuable flexibility to supply chains. The consequences and mitigation of supply chain disruptions in sparse transportation networks is the topic of a paper that I will present at the World Conference on Transport Research, WCTR, in Lisbon, Portugal, in July this year, and is based on a 2009 study from Norway, aimed at investigating how businesses and freight carriers located in sparse transportation networks are affected by and relate to supply chain disruptions. The study we conducted indicates that transportation-dependent businesses seek a vertical integration of a freight carrier into their supply chain, while freight carriers establish flexible solutions to meet the contingent needs of different businesses. The study also develops a new framework for the categorization of supply chains, and introduces the notion of the constrained supply chain.

Read online

Bad Locations Bad Logistics

Reference

Husdal, J. & Bråthen, S. (2010). How Norwegian freight carriers handle supply chain disruptions. Paper presented at the World Conference for Transportation Research 2010, Lisbon, Portugal, 11-15 July 2010.

WCTR

wctr2010.info: Offcial WCTR conference website

If you you would like to know more about the background for this study, e.g. the survey questionnaire, or if you are attending the WCTR and would like to link up with me, please get in touch.

Related

• husdal.com: Transportation – The staple ingredient in supply chains

Project planning in remote areas

The post is in fact more than a year old, and the blog itself has a gap of one year between the most recent and the posts before that, perhaps because the blog owner himself was in a remote location? The posts and the About page would suggest so, but anyway, speculations aside, let me briefly recap the major logistics challenges in remote areas:

Local involvement and ownership

If on-site staff are involved in ordering supplies they are more likely to be aware of logistics challenges and local providers of services than the head office is, and they also be more ready to seek and find alternatives, should the need arise.

Packaging

Materials are probably being sourced far from the end project location, and then transported the same far way, and more often than not they are inappropriately packaged for forwarding over long distances using sub-standard equipment to an remote environment.

Transport arrangements

Transport may be difficult because there is maybe only one possible route, and possibly this route, e.g. road, may even have been built specially for the project, and thus, it may not be properly cared for. This means that there is often little if any existing infrastructure to support the transport of goods and material from the point of import or landing to the site.

Delays

Given the non or poorly existing infrastructure, delays are the rule, not the exception. This also means that there is little point in mobilizing a large work crew on-site in anticipation of the arrival.

Inventory Control System

On-site inventory control may be hard, a) because of improper storage facilities (e.g. lack of security and/or an on-site inventory manager), and b) lack of control over who has the power to collect and sign for materials. Responsibilities need to be clearly established and exercised firmly.

Disposal of surplus

Because of the difficulties in supplying the project, there is often a tendency to over-supply with greater than usual levels of contingency. A surplus of materials is quite common after the project is finished, but how does one get rid of excess materials?

Want to read more?

These are just some of the highlights mentioned in the above article. I do suggest reading the article in full for further insights. The blog is written by someone who obviouslyworks in the field, and who has experiences his share of challenges working on projects that requried remote logistics.

Bad locations – bad logistics?

This post does remind me of my own research into logistics challenges in sparse transportation networks, where even in not so remote areas, logistics challenges abound. While not directly transferable to my research, the post on remote logistics has given me some food for thought.

Link

• kruegs.wordpress.com: Logistics Planning for Projects in Remote Areas

Related

• husdal.com: Bad locations – Bad logistics?

What are sparse transportation networks?

Disruptions of the transportation network as part of the supply chain are of particular interest in countries or regions with sparse transportation networks. Typically traits of such regions are few transportation mode options and/or few transportation link options for each transportation mode, for example maybe only one railway line and two roads, no port, no airport. With only a few transportation modes and links available between population centers, they become extremely vulnerable to any disruption in the transportation system or supply chain, since in a possible worst-case scenario no suitable alternative exists for deliveries to or from these communities (Dalziell and Nicholson, 2001; Berdica, 2002; Husdal, 2005; Jenelius et al., 2006; Taylor et al., 2006; Husdal, 2009)

Why are sparse transportation networks important?

The question is, are businesses located in regions with sparse transportation networks in fact more prone to supply chain disruptions than businesses located in more favorable locations? Does a sparse transportation network in fact constrain the supply chain setup, such that it is more vulnerable and more likely to be disrupted? If this is the case, how do companies with constrained supply chains deal with their exposure to disruptions? What are typical disruptions in certain locations or for certain types of business, what is the cost associated with these disruptions, and how do companies counter or mitigate supply chain disruptions in their production planning, choice of supplier(s), choice of transportation mode(s), stockpiling and warehousing, and/or what contingency plans do they have? Do they focus on mitigation measures or on contingent solutions (Tomlin, 2006; Asbjørnslett, 2008)?

A  framework for the categorization of transportation networks or supply chains

A supply chain that is subject to a sparse transportation network can not be structured freely, but is limited by constraints, mainly transportation mode choice (air, sea, rail, road) and transportation link choice within each mode. From this departure point, we can develop a new framework for the categorization of supply chains, based on the number of links and modes available in the transportation network, and establishes four principal types of networks or supply chains: Free, Directed, Limited and Constrained. In a free supply chain there are little or no constraints as to transportation modes and there is a dense transportation network with many possible links. In a directed supply chain there are many possible links, but few modes, thus directing the supply chain towards a certain mode or set of modes. In a limited supply chain there are many mode choices but few links, which creates an overall limited setup. In a constrained supply chain there are few choices as to mode and/or links and in worst case the supply chain is locked to one mode and very few, or maybe, only one link.

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A framework for risk and vulnerability in supply chains

The framework combines the notions on supply chain risk in Jüttner et al. (2003) and the notions in Craighead et al. (2007) that supply chain characteristics play a major role in supply chain disruptions. On one side a supply chain is exposed to certain risks, that may (or not) lead to certain supply chain disruptions. One the other side the supply chain has certain characteristics, which determine the supply chain vulnerability. The severity of supply chain disruptions is related to supply chain design characteristics (supply chain density, supply chain complexity and node criticality) and supply chain mitigation capabilities (recovery capability and warning capability). In brief: supply chain structure and supply chain organization. Within this framework, a company can address supply chain disruptions in two ways: 1) Redesign the supply chain towards a better structure, in order to gain a better location, or 2) Redesign the supply chain towards a better organization, in order to gain better preparedness.

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A framework for overcoming locational disadvantage

Sparse transportation networks can be categorized as non-free supply chains and viewed as an unfavorable supply chain structure. By re-designing the structure, locational disadvantages can be lessened or entirely eliminated, and a supply chain wise “badly” located company can become “well” located. Conversely, if the structure cannot be improved (or not improved further), by re-designing the organization, proper training and adding supply chain visibility such that early warnings and early proactive and reactive actions are possible, a company can turn from badly prepared into well prepared. This may also be the case with favorably located (or supply chain structured) businesses that may have overlooked their preparedness.

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Robustness – Flexibility – Agility – Resilience

Robustness, flexibility, agility and predominantly resilience (McManus, 2007) are key components in addressing unfavorable supply chains. The ability to survive (resilience) is likely to be more important in a business setting than the ability to quickly regain stability (robustness) or the ability to change course (flexibility or agility). A well-handled supply chain or transportation network disruption can translate into business continuity, while an ill-handled supply chain or transportation network disruption can translate into business dis-continuity, if not handled appropriately.

Supply chain life cycle

Overcoming unfavorable supply chains may be of particular interest in a supply chain life cycle perspective, where supply chains come into existence and cease to function as business opportunities come and go.  A constrained supply chain setting may affect the ability to form new supplier and customer relationships (i.e. supply chains), and thus, this may limit the business opportunities for companies in said disadvantageous locations.

References

Asbjørnslett, B. (2008). Assessing the Vulnerability of Supply Chains. In G. A. Zsidisin & B. Ritchie (Eds.), Supply Chain Risk: A Handbook of Assessment, Management and Performance. New York: Springer.

Berdica, K. (2002) An introduction to road vulnerability: what has been done, is done and should be done. Transport Policy, 9(2) 117-127.

Craighead, C. W., Blackhurst, J., Rungtusanatham, M. J. & Handfield, R. B. (2007) The Severity of Supply Chain Disruptions: Design Characteristics and Mitigation Capabilities. Decision Sciences, 38(1), 131-156.

Dalziell, E. and Nicholson, A. J. (2001) Risk and impact of natural hazards on a road network. Journal of Transportation Engineering, 127( 2), 159-166.

Husdal, J. (2005) The vulnerability of road networks in a cost-benefit perspective. Paper presented at the TRB Annual Meeting, Washington DC, USA, 12 January 2005.

Husdal, J. (2009). Does location matter? Supply chain disruptions in sparse transportation networks. Paper presented at the TRB Annual Meeting, Washington DC, 11 January 2009.

Jenelius, E.; Petersen, T. and Mattson, L.-G. (2006) Importance and exposure in road network vulnerability analysis.Transportation Research Part A, 40, 537-560.

Jütner, 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.

Taylor, M., Sekhar, S., & D’Este, G. (2006). Application of Accessibility Based Methods for Vulnerability Analysis of Strategic Road Networks Networks and Spatial Economics, 6 (3-4), 267-291

Tomlin, B. (2006) On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks. Management Science, 52(5), 639-657.

Mc Manus, S. et al (2007) Resilience Management – A Framework for Assessing and Improving the Resilience of Organisations. Research Report 2007/01, Resilient Organisations, New Zealand.

Notes

Sparse transportation networks are a typical trait of much of the Norwegian road network. and the research described above is part of a research project at Møreforsking Molde / Molde Research Institute in Molde, Norway, and also part of my PhD research.  In a study initiated by the Norwegian Public Roads Administration, a selection of  manufacturing and production companies and transportation and logistics providers were surveyed and interviewed in order to investigate how companies located in sparse transportation networks are affected by and relate to supply chain disruptions. If you would like to know more about the project, please contact me.

Related

• husdal.com: Finding the right location – Minimizing disruption costs

Reference

Husdal, J. (2009). Does location matter? Supply chain disruptions in sparse transportation networks. Paper presented at the TRB Annual Meeting, washington DC, 11 January 2009.

Abstract

This paper serves as a conceptual gateway for further research into supply chain disruptions in sparse transportation networks.

Disruptions of the supply chain are of particular interest in countries or regions with sparse transportation networks. Here, the supply chain can not be structured freely, but is limited by constraints, and with only a few transportation modes and links available between communities, they become extremely vulnerable, since in a worst-case scenario no suitable alternative exists for deliveries to or from communities. Thus, the structure or design of the supply chain, along with the organization and preparedness become important factors in determining if a company has a favorable or an unfavorable location.

The question then arises, are businesses located in regions with sparse transportation networks more prone to supply chain disruptions than businesses located in more favorable locations? Does a sparse transportation network constrain the supply chain setup, such that it is more vulnerable and more likely to be disrupted?

The paper develops a new framework for the categorization of supply chains, based on the number of links and modes available in the transportation network, where sparse transportation networks can be categorized as constrained supply chains with an unfavorable supply chain setup. Within the constrained supply chain framework, a company can address its locational disadvantage by either redesigning the supply chain towards a better structure, in order to gain better location, or by redesigning the supply chain towards a better organization, in order to gain better preparedness.

Poster

Full paper

Jan-Husdal-TRB-2009-090305

Update

This paper preceded the research that was to come. An updated paper based on the actual research that was done, can be found in this post: Bad Locations – Bad Logistics? How Horwegian freight carriers handle transportation disruptions

Related

• husdal.com: Location, location, location
• husdal.com: Does location matter?
• husdal.com: TRB2009 – are you going there?
• husdal.com: Are roads more important than computers?

The comparison

If you compare the travel time between two major cities in Norway, say,  Oslo and  Stavanger and two equally distant cities in Portugal, say Porto and Faro, located about 558 km and 556 km from each other, it takes almost 3 hours more to cross this distance in Norway. Why?

More roads

One issue is that central Europe of course has a much denser road network, forcing more traffic on to the same roads, while a European traveler can chose between many possible routes, without deviating too much from the intended direction. That is not possible in Norway. But that is not the only reason.

More motorways

Norway has very fem kilometers of motorways compared to the rest of  Europe. Besides that, the speed limit in Norway is 80 km/h (50 mph), and usually 90 km/h on most (of the few) motorways. No wonder that traveling in Norway requires a good dose of patience. But that too is not the only reason why things are moving so slowly in Norway.

Better roads

Norwegian roads are sub-standard compared to much of Europe. Anyone who has ever been to Norway will agree.It has it’s charm for the tourist who is not in a rush, but business travelers, freight forwarders and truckers pay the price. Delays and disruptions are common. I could blame it on the topography and the fact that road construction is indeed expensive in Norway. But maybe it is because infrastructure is seen as a cost rather than an investment with a return potential?

Depressing

This is the average speed (km/h) for traveling between major cities in European countries:

1. France 110,3
2. Germany 109,0
3. Portugal 98,8
4. Austria 98,3
5. Denmark 97,3
6. UK 96,0
7. Switzerland 91,8
8. Sweden 88,1
9. Finland 78,4
10. Ireland 74,4
11. Poland 71,9
12. Norway 68,2
13. Albania 65,5

Links

• tu.no: Norge er Europas Trafikkjumbo

Related

• husdal.com: How come one of the world’s richest countries has Europe’s worst road network?

Supply Chain Disruptions in Sparse Transportation Networks: Does Location Matter?

This paper serves as a conceptual gateway for further research into supply chain disruptions in sparse transportation networks.

Disruptions of the supply chain are of particular interest in countries or regions with sparse transportation networks. Here, the supply chain can not be structured freely, but is limited by constraints, and with only a few transportation modes and links available between communities, they become extremely vulnerable, since in a worst-case scenario no suitable alternative exists for deliveries to or from communities. Thus, the structure or design of the supply chain, along with the organization and preparedness become important factors in determining if a company has a favorable or an unfavorable location.

The question then arises, are businesses located in regions with sparse transportation networks more prone to supply chain disruptions than businesses located in more favorable locations? Does a sparse transportation network constrain the supply chain setup, such that it is more vulnerable and more likely to be disrupted?

The paper develops a new framework for the categorization of supply chains, based on the number of links and modes available in the transportation network, where sparse transportation networks can be categorized as constrained supply chains with an unfavorable supply chain setup.A Within the constrained supply chain framework, a company can address its locational disadvantage by either redesigning the supply chain towards a better structure, in order to gain better location, or by redesigning the supply chain towards a better organization, in order to gain better preparedness.

The full paper will be made available on this website on the day it is presented, 12 January 2009.

Related

• husdal.com: Location, location, location
• husdal.com: Does location matter?
• husdal.com: Supply chain disruptions in sparse transportation networks
• husdal.com: Are roads more important than computers?

In a previous article I contended that sparse transportation networks, like in Norway, are a recipe for supply chain disruptions. Furthermore, unlike in regions with a dense transportation network, supply chain management in a sparse network setting comes close to being business continuity management, because a well-handled supply chain disruption can translate into business continuity, while an ill-handled supply chain disruption can translate into business dis-continuity. Now, this minor incident is hardly going to cause any business dis-continuities in Norway, but, if like last time, the clear-up takes 12 days, or more, this will be a costly affair for all involved.

Transportation networks like freeways and interstate highways are the main backbone of modern society and play an important role in supply chains. Consequently then, the reliability of the transportation network or the reliability of supply chains is thus a decisive factor not only in terms of market outreach and competition, but also in terms of continuity, to ensure a 24/7 operation of the community we live in. Any threat to the reliability of the transportation network constitutes a vulnerable spot, a weakness in the supply chain. In Norway, this weakness seems to come to the surface more often than necessary.

Links

• NRK Trøndelag – Frykter nytt ras i Løsberga
• husdal.com – Sparse transportation networks – a recipe for supply chain disruption?
• dagbladet.no – Ikke trygt å rydde opp
• vg.no – Ryddearbeidet på E6 vil ta flere uker

Related

• husdal.com: Are roads more important than computers?

Design Characteristics and Mitigation Capabilities

In The Severity of Supply Chain Disruptions: Design Characteristics and Mitigation Capabilities, Craighead et al. contend that the severity of supply chain disruptions are linked to a) the supply chain design characteristics and b) the supply chain mitigation capabilities. I like to look at it this way: the impact of supply chains disruptions depend on a) the structure and b) the organization of the supply chain, where the structure makes up the physical side (a) of the supply chain and the organization makes up the human side (b) of the supply chain. These two parts are complementary in that both are needed for the successful handling of a supply chain disruption, while at the same time, a deficiency in one part can be compensated by the strength of the other part, i.e. a badly structured supply chain can be strengthened by a well organized supply chain. How?

Resilient organizations

In the New Zealand research project Resilient Organisations the focus is NOT on the vulnerability of  systems to failure, but on the ability to manage and minimize the impact of any failures.  This is achieved by focusing on organizational preparedness.

If the supply chain structure represents a company’s location and the supply chain mitigation capabilities or organization represent a company’s preparedness, ideally then, a company will be both well-located and well-prepared vis-à-vis any form of disruption. Conversely, given a supply chain structure prone to disruption, combined with a lack of organization, a company will be both badly located and badly prepared. This implies that firms placed in disadvantageous locations can notably better their supply chain by focusing on improving their supply chain characteristics.

Location versus preparation

In regions or countries with sparse transportation networks or few transportation mode choices the structure or design of the supply chain becomes an important factor in determining if a company has an advantageous or a disadvantageous location.

By re-designing the structure, locational disadvantages can be lessened or entirely eliminated, and a supply chain wise “badly” located company can become “well” located. Conversely, if the structure cannot be improved (or not be improved further), by re-designing the organization, proper training and adding supply chain visibility such that early warnings and early proactive and reactive actions are possible, a company can turn from badly prepared into well prepared.

Related

• husdal.com: Sparse transportation networks – a recipe for supply chain disruptions?

Norway – a typical example

Road density in Norway vs Europe

With only a few transportation modes and links available between population centers, these population centers become extremely vulnerable to any disruption in the transportation system or supply chain, since in a possible worst-case scenario no suitable alternative exists for deliveries to or from these communities. The issue of sparse transportation networks is well illustrated in the figure left,  showing same-scale maps of the road network Norway (the author’s home country) and Europe, taken from an online route planner. Lack of details and missing road links aside, it should come as no surprise that Central Europe enjoys a much better denser road network than the Scandinavian countries, and Norway in particular, and hence has many more rerouting options in case of disruptions.

Location matters

From the community is as important as to the community, since the supply chain goes both ways, meaning that no goods or supplies can come in and no manufactured goods or supplies to companies in other locations can leave. Few will question that the sender, the recipient, the freight hauler, or society at large, experience additional costs when goods or people cannot reach their destinations in time or in space. A non-functioning, or at best, badly-functioning link will impose costs on the user in terms of loss of time, additional operation costs or other costs as a result of delays and diversions. Transporters of perishable goods will also experience a loss of value.

The constrained supply chain issue

The question then arises, are businesses located in regions with sparse transportation networks in fact more prone to supply chain disruptions than businesses located in transportation-wise more favorable locations? Does the sparse transportation network influence the setup of the supply chain? Does a sparse transportation network in fact constrain the supply chain setup, such that it deviates from the ideal and thus is more vulnerable and more likely to be disrupted?

Update 2010 – the answer

Two years on, I am now about to answer the question. Yes, location matters, but being aware of your location matters more: How Norwegian freight carriers handle supply chain disruptions.

Related

• husdal.com: Sparse transportation networks – overcoming locational disadvantage