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So what have I been reading this week? There have been several great articles all around the web this week, some from a conceptual view, how to prevent risk and several news stories about operational risks which manifest themselves.

Two large companies have been hit by major "virtual" disruptions. On the other hand the Japanese earthquake still disrupts production at some car makers.
  • Sony Servers have been attacked and over 70 million customer files (including credit card information) has been stolen ( Wall Street Journal)
  • Amazon cloud offerings (EC2) has been hit by an outage with several customers including Foursquare affected ( Yahoo)
  • Toyota will not be able to run full production until the end of the year due to the quake ( NY Times)
  • Also, Canon is struggling with the effects ( Reuters)
  • Overall ratings for all Japanese car makers have been lowered by S&P ( BBC)

  • "Supply chain redesigns: not just about the oil", discusses the impact of high oil prices on supply chain redesign efforts ( Supply Chain Quarterly)
  • Acts of God or Acts of Man? Jan Husdal elaborates on the role decision makers play in shaping the effects of desasters ( Jan Husdal)
  • "Operational Risk Management: Discipline and Professional Development...", on a related subject: how is operational risk management integrated into todays businesses ( Operational Risk Management Blog)

Research / Studies
  • Christopher Craighead analyzes the Japan disaster and its aftermath from a researchers perspective ( Penn State University)

The current environment is a good example why risk management is an important part of every aspect of supply chain management, be it virtual or real.
I am curious to see the first analyses, if the impact on the japanese car makers is despite SCRM efforts or due to a lack of them. In the last week I wrote about how agile supply chains can be used for risk mitigation and I summarized a great article on the impact of risks on SC performance.

You can complement this listing with your favorite articles in the comment section below.

Originally posted by (Daniel Stengel) at
There are many definitions of agility. A supply chain can be defined as agile, when it is flexible and responds quickly to customer needs. Agility can also be seen as a measure to mitigate supply chain risks, building on this thought Dani and Ranganathan (2008) developed a model to mitigate risks using the concept of agility .

Concept for Agile Risk Mitigation
The authors develop the model based on two premises: (1) scenario planning is used to identify supply chain risks and (2) the system is designed to react fast and flexible to mitigate the risk.
Figure 1 shows the resulting concept.
Agile Risk Mitigation within Supply Chains.
Figure 1: Concept for agile Supply Chain Risk Mitigation (Dani and Ranganathan, 2008)

Two general mitigation "arms" are necessary. One for the foreseen risks which can be mitigated proactively and unforeseen risks which have to be reduced reactively.
Continue reading "Agile Supply Chains and Uncertainty"

Originally posted by (Daniel Stengel) at
I am often astounded by the fact how many great articles I haven't read yet. A good scientific paper contains an comprehensive description of the methodologies used, a theoretical foundation and literature review from which hypothesis are drawn, which are then confirmed or rejected in the course of the paper. And of course, it is always a plus to actually find some results in the course of the analysis.

From this category I would like to introduce an article by Wagner and Bode (2008) on an empirical examination of supply chain performance along several dimensions of risk. The complete article is defnitly worth a read and can be found here (free of charge).

Introduction & Hypothesis
The authors start by highlighting the major factors involved in the importance of supply chain risk management nowadays: There has been an upward trend in crisis and catastrophes, at least on the level of media coverage and awareness. Furthermore modern supply chains have been optimized for leanness in recent years, leaving them more exposed towards risks.
To decide on the the possible investments on mitigation strategies, a supply chain manager needs to know the probability of an adverse event and the effect of the disruption on supply chain performance.
Hendricks and Singhal (reviewed here 1, 2) already concluded, that SC risks can have severe consequences on performance and the stock price.
Continue reading "Impact of Risks on Supply Chain Performance"

Originally posted by (Daniel Stengel) at
This article concludes this week in supply chain management by collecting the top stories published in the last seven days.
About 100 to 150 web articles or news stories relevant for supply chain risk management are published each week. However I am amazed how many articles seem to contain valid information, but after more thorough examination proof to be filled with advertisement be it for services or conferences. After removing those, the following articles have been left.

  • Japan’s supply chain ripple effects with comments from Y. Sheffi from the MIT ( MIT News)

  • Can uninsurable risks be insured? Lockton Launches Risk Management Tool to Address Uninsurable Risks (

Research / Studies
In the last week I wrote about a practitioners view on supply chain risk management and how supply chain simulation can help to reduce the bullwhip effect.

You can complement this listing with your favorite articles in the comment section below.

Originally posted by (Daniel Stengel) at
I already reviewed some articles of Denis Towill primarily because he does some interesting research on simulation and supply chains, but also because I like his clear style in his articles.
In one of his early papers (1992) he teamed up with Naim and Wikner and described state of the art strategies to fight the bullwhip effect or as it is called in the paper by its older name: Industrial Dynamics.

Industrial Dynamics
I already described the causes of the bullwhip effect and how to measure it in an older post. The bullwhip effect describes amplifications in demand within the supply chain. Exemplary effects can be seen in figure 1.
The effects of the Bullwhip Effect on the Demand Level at different Stages of the Supply Chain
Figure 1: Effect of the Bullwhip Effect (Towill et al. 1992)

Continue reading "Supply Chain Simulation and the Bullwhip Effect"

Originally posted by (Daniel Stengel) at
In 2005 Uta Jüttner was researcher at the Cranfield University, UK, especially renowned for several minds working on supply chain risk management, like Martin Christopher or Denis Towill.

Key in understanding this field of research is to make an inquiry into how supply chain risks are managed in business environments. Jüttner first laid grounds for this by some conceptual work, I introduced here a while ago

Jüttner used an exploratory, quantitative survey. They selected 1700 members of the UK Chartered Institute for Logistics and Transport (CILT), with a response rate of 8% 137 managers replied to the survey request.
Furthermore six focus group discussions were held, with seven or eight members.
Those methods were used to answer the following questions:
  • How well are supply chain risks recognized across a network?
  • What is the current state of practice in SCRM?
  • What are the perceived critical issues of SCRM implementation?
Industry Position of the Survey Participants
Figure 1: Industry Position of the Participants (Jüttner 2005)

Continue reading "Practitioner Views on Supply Chain Risk Management"

Originally posted by (Daniel Stengel) at
This article concludes this week in supply chain management by collecting the top stories published in the last seven days.

This week the consequences of the Japan earth quake still rule the news coverage and the blogosphere.
  • Responding To The Post-Quake Component Supply Chain Crisis (Forbes Blog)
  • Toyota Europe shutdowns add to Japan supply fears (Reuters)
  • The big threat: Chip shortage (CNET)
  • New project launched to improve food chain supply between Australia and the UAE (AMEInfo)


Research / Studies
  • The proceedings of the 2009 IPSERA Conference are available for download here.
  • Risk a low priority in strategic sourcing (

I used the last week to write about a literature review in supply chain management and how to measure agile capabilities. I also added the Gartner Supply Chain Executive Summit 2011 to the conference list.

Please feel free to share your most interesting article(s) of the week in the comments below!

Originally posted by (Daniel Stengel) at
Today I introduce you to the process of measuring agility in a supply chain. Agility is a major concept in the research of the last 10 years or so. I already have written some articles on this topic:
Consequently, the goal of today's article is to expand on those and define what are the key factors of SC agility and how it could be measured.

The paper presented is based on two sources: an empirical investigation of agile capabilities in Europe and a literature review of the current research available.

The concept developed is based on the literature review and it is then tested using the survey.
Continue reading "Measuring agile Capabilities in the Supply Chain"

Originally posted by (Daniel Stengel) at
It's not that there are no articles on supply chain risk management anymore. But after writing on current research in the last weeks (like the one on system failure here) I have been wondering more about the foundations of supply chain management in general. So I decided to review an article today on general supply chain management research, in this case a literature review by Sachan and Datta (2005).
The complete article can be found here.

The analysis is pretty straight forward, Sachan and Datta start with showing the different research designs used: empirical/descriptive and quantitative/qualitative. In supply chain management the research methods range from surveys, interviews and case studies, to more quantitative approaches like mathematical modeling or simulation. Using these categories the authors reviewed 440 supply chain management articles from 1999 to 2003.
Continue reading "Supply Chain Management Literature Review"

Originally posted by (Daniel Stengel) at
Computer simulation has not been used on a professional scale until after World War II, and also then mostly for military uses like war games or simulations of atomic bomb explosions nowadays.
One of the first scientific papers on simulation has been published in the late 70s by Ören and Zeigler. They aggregate some fundamental knowledge about simulation and suggest an conceptual model for simulation, which I want to introduce today from the perspective of a supply chain

Components of Simulation
Simulation programs can be described completely using the following terms:
  • Model Structure, describes the static and dynamic aspects of the model, like components of the model, variables and rules for interaction (supply chain context: echelons and elements of the echelon)
  • Model Outputs, contain all variables and functions that can be observed during and after execution (eg. lead times, profit of the chain)
  • Input Scheduling, when is the model fed with what inputs (eg. how is demand generated)
  • Initialization of Simulation, what are the starting parameters of the model (eg. are queues already loaded?)
  • Termination of Simulation, what are the conditions for model termination, may be after specific time or specific model states
  • Data Collection, how and when is the data during simulation collected
  • Simulator, the simulator carries out the model's instructions to generate the new model states (nowadays the Simulator is usually a software like Arena, Anylogic or similar)

All those elements can be found within modern simulation tools, since they do not only include the Simulator component, but also aids to model and control the supply chain.

Simulation Models can be further characterized by the "language" they are using. First, is the model using a continuous or discrete time scale. Second, orientation the model: block- or expression-oriented; and last, what is the world view expressed in the model by differential equations, events or process interactions.
Continue reading "Advanced Concepts in Simulation"

Originally posted by (Daniel Stengel) at
Yet another paper on risk mitigation strategies. This time: How to reduce risks by improving confidence. You can find the complete paper of today in the web.

Lack of Confidence
The authors theorize that especially demand risk (volatility) has increased during the last years. With several SC concepts which are aimed to reduce the slack in the supply chain during the same period, overall risks in the SC have increased dramatically.
This leads to a lack of confidence by the managers responsible for the SC in:
  • Order cycle time
  • Current order status
  • Demand forecasts given
  • Supplier's capability to deliver
  • Manufacturing capabilities
  • Quality of the products
  • Transportation reliability
  • Services delivered

Continue reading "Improving Confidence to mitigate Supply Chain Risks"

Originally posted by (Daniel Stengel) at