I am a huge fan of Open Access in research and a while ago I was made aware of a book on supply chain management, which has recently been published under an open access license. The full book can be downloaded on the web site of the publisher. The book contains 27 chapters / articles on a range of supply chain related topics, such as optimization, public sector supply chains, modeling and simulation, but also several papers which addressed supply chain risks in one way or the other. I was especially interested in the risk related chapters, so I will give you a short overview on three of the papers:
A Hybrid Fuzzy Approach to Bullwhip Effect in Supply Chain Networks, by H. Tozan and O. Vayvay
The authors of the first paper propose a fuzzy-neural-network approach for demand forecasting. In supply chain management a test case for demand forecasting, has always been the bullwhip effect. The better your demand forecasting the less pronounced the bullwhip effect will be. And this can be a real money saver.
A simulation of their new approach shows that for a three tier supply chain (customer, retailer, factory) especially the fluctuations at the retailer can be reduced quite drastically (figure 1 a and b).
Figure 1: Orders and Production in the Base vs. Proposed Model (Tozan and Vayvay, 2011)
Happy 200! This is my 200th article on the SCRM Blog. One of my goals for this year was to build a good foundation on supply chain management for you, the readers, to be able to browse through a collection of great articles on supply chain risk management, and related topics.
The rising number of reviews made it possible to have a separate category on SCRM Introduction. In nearly 20 articles I wrote about topics like
supply chain management in general ( 1, 2) and supply chain strategies ( 1, 2),
But these article only make up 10% of the now 200 articles published during the last 23 month! If you are curious to learn more about supply chain risk management, just browse the archive or have a look at the categories and popular tags in the sidebar. But now let’s go to this weeks news in supply chain management.
This article sheds light on the question of how much flexibility is necessary to secure the supply chain against disruption risks. The paper reviewed today takes a closer look at three supply chain risks: supply, process and demand risks (figure 1).
Figure 1: Selected Risks for further Analysis (Tang and Tomlin, 2008)
The authors focus on the short term agility to reduce risk and chose five strategies, which are analyzed in depth (figure 2).
Figure 2: Strategies for risk reduction using Flexibility (Tang and Tomlin, 2008)
The strategies are backed by several case studies each. For all five strategies the authors build a different model. First stands the description of the scenario, second is the development of the model which fits the scenario and is able to deploy the strategy. The last step is the description of the results.
Some weeks ago I wrote about Fisher’s suggestions on how to select the right supply chain for your product. But how to continue from there? How do different products affect the further planning steps needed? So I looked for another article to fill the gap and found “Selecting the right planning approach for a product” by Kaipia and HolmstrÃ¶m (2007) which covers different planning approaches for different products. This review is based on the review of Fisher’s model, so make sure to read that article as well.
The authors build their planning approach on three methods:
Development of a framework to differentiate planning approaches for different types of products based on a case company
Application of the selection framework in a case study
Figure 1: Overview Case Companies (Kaipia and HolmstrÃ¶m, 2007; click to enlarge)
I had a productive week. Nonetheless, there is still a lot to do. The next deadline for handing in parts of my dissertation is by the end of October, so at the moment I am working on the last bits and pieces there. I still found some time to read on the internet, this is the best of over 30 articles I read.
Sony seems to be hit quite hard by the Thailand flooding, several new product launches have been delayed “indefinitely”. ( BBC)
Jeff Ashcroft hast a short review of some highlights of this years CSCMP conference. ( constellation research)
I found this great interview with Professor Ravi Anupindi on how Cisco prepared their supply chain for the H1N1 virus. ( Michigan University)
This review is about a preprint article which already has been accepted for publication by the “European Journal of Operational Research”. But since there is only a limited space for articles in each issue of the journal, final publication of the article is delayed. One could now argue in a general note that this behavior also signifies a delay of the progress of supply chain research over all, with all its negative long term effects. Furthermore, in the days of the internet journals should not limit themselves to an artificial (article) limit, but see only the sky or in this case the number of quality publications as their limit. But in this case I was able to gain access to an early copy.
Product design & supply chain management
I already wrote several times ( 1, 2, 3, 4) on how product architecture and supply chain design could be integrated, so this is not really a new topic. But it also touches a more integrative approach of supply chain management.
Building from the early models, where a supply chain could easily be defined by a handful of properties, supply chain models nowadays reach a new level of complexity. One of these extensions is the integration of supply chain activities into the product development process, which is supposed to yield (if we trust case studies like IKEA) enormous benefits in every performance aspect of the supply chain and ultimately the company.
Today I review an article called “18 Ways to Guard Against Disruption”. It was published in the Supply Chain Management Review in 2005 by Elkins et al.
Goal and method
The goal of this study was to assess the current state of supply chain risk management capabilities across multiple industries. The authors describe the results of several interviews with companies from multiple industries, which have been conducted by the Supply Chain Resource Consortium ( SCRC, an university industry partnership for documenting supply chain management knowledge).
I am not a big fan of huge announcements, but some of you already noticed a small change on all pages of this supply chain risk portal: After my wedding in September I took the last name of my wife (Dumke). So just this week I changed all the entries here and adapt a few accounts elsewhere on the internet and now we are up and running again. So right now I use this incident to monitor how fast such changes propagate through the common search engines. Search engines also helped me finding some of the best articles on the web this week, which I linked below.
Big in the news was the Thailand flooding and its impacts on supply chains located there.
This again is an old classic in supply chain risk literature. In 1997 Marshall L. Fisher published this article in the Harvard Business Review targeting a simple question: “What is the Right Supply Chain for Your Product?” It is noteworthy that this appears to be one of the most often cited papers in supply chain management. So I overlook the fact that it is quite weak on the methodological foundations. The full text of this paper can be found here.
One of the major highlights of Fisher’s work is its simplicity. The author defines two basic products: functional and innovative products (figure 1). The major differentiating factor is the uncertainty of demand: Functional products (e.g. a classic Coke) show a rather predictable demand pattern and have long product cycles. Innovative products on the other hand show an unpredictable demand, and the life cycle can be as short as a few month.
At this year’s HICL conference in Hamburg, I was able to present some of my own research. In the follow-up discussions several points were highlighted, especially focussing on the viability of supply chain wide cooperation and collaboration efforts and on the difficulties of doing a realistic quantification of supply chain risks.
I already read a great paper on this topic some time ago: “Assessing the vulnerability of supply chains using graph theory” by Stephan M. Wagner and Nikrouz Neshat (2010), which I present you today.
Disruptions and vulnerabilities
Several authors argue that several factors help increase the vulnerabilities of today’s supply chains. When supply chain complexity increases (e.g. supply chain length, higher division of labor, ...), the vulnerabilities also rise. Furthermore there is evidence that natural and man-made disasters are on the rise as well (figure 1).
Figure 1: History of Disasters (Wagner and Neshat, 2010)
As every Friday I enjoy reading into some of this weeks news. I am back from my vacation so I read a little more again this week. My favorite reads were the KPMG study and Jan Husdal’s article on research gaps.
Toyota finally recovered from the March earthquake, two month earlier then expected before. ( Japan Times)
The S P Jain Center of Management has a nice article on corporate “Survival strategies under uncertainty” by Rajiv Aserkar a Supply Chain Professor there. ( S P Jain Center of Management Blog)
Today’s paper is brand new and based on the dissertation works of Roberto Perez-Franco. It can be considered as a summary of the current state of the art in supply chain strategy and extends knowledge in the field of strategy evaluation. It can be downloaded for example from Yossi Sheffi’s homepage at the MIT.
The authors founded the following findings on two action research project with Saflex and a health care company. Several dozen interviews were conducted on different levels within the companies.
For the further research the authors define the major terms used: supply chain strategy and the difference between the supply chain and the supply chain strategy:
For the purpose of this paper, the supply chain strategy of a firm is understood as the set of ideas behind the activities, decisions and choices of that firmâ€Ÿs supply chain, which serve as logical bridge between the supply chain operations in the field and the business strategy.
The difference between a supply chain and a supply chain strategy is the difference between a set of physical entities and a set of ideas. So, for example, when AMR Research publishes its “Supply Chain Top 25” list, what they are ranking are supply chains, not supply chain strategies.
Functional Strategy Map ( FSM)
The authors introduce a Functional Strategy Map which “is a conceptual representation of the supply chain strategy as a bridge between operations and business strategy”. Three layers are aggregated in the FSM: strategic, functional and operational (figure 1).
Figure 1: Elements of a Functional Strategy Map (Perez-Franco et al., 2011)
A company’s supply chain is then evaluated based on the this concept using the criteria mentioned below. A example of the FSM might look like that from Saflex in figure 2.
I haven’t really touched on the early research on risks in supply chain management. One major stream is on random yields. Parlar and Wang (1993) were one of the firsts to extend the classic Newsboy and EOQ (Economic Order Quantity) models to include uncertainty.
Both models calculate the optimal inventory while including different cost factors (like setup cost for ordering, inventory holding cost) and decision variables (order volume and order timing). As an extension the Newsboy problem also includes random demand.
Parlar and Wang now extended these models by a second raw material source and making the availability random of both sources. In this case the yield of the supplier is represented by a exponential distribution with two independent expected yield and standard deviation for both suppliers.