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Just to let you know, I changed the licensing for the articles of this blog:
The new license simplifies the usage of parts of my work: Now my contributions can be used as long as:

  • You refer to me as the original author.
  • You do not use the work for commercial purposes.
  • You use the same or a similar license to redistribute the content which builds on my work.

All the details can be found here.

This weekend is going to be great. I finally get the chance to conquer Scandinavia. My wife and I are doing a bicycle tour to Copenhagen. Just three days and 250 km, but the scenery is said to be amazing and the weather should be stable.
But don’t worry: Since I always select my accommodations according to the availability of internet access, I will still be able to publish an article on Monday.

Now let’s see what I read this week:

  • Some of my fellow colleagues at the research institute say that Cloud Logistics is the new hot topic. Here are some thoughts on the topic how cloud services can help reduce supply chain risks. ( IFW )
  • I found this new article on Sciencedirect related to supply chain design: “Robust possibilistic programming for socially responsible supply chain network design: A new approach”. The paper touches some new topics by combining aspects of uncertainty and social responsibility. ( Sciencedirect)
  • RIMS just announced a webinar on “Strategic Implications of Data Risks: Exploring the intersection of privilege, protection and preparedness”. The seminar is USD 30 for non-members and will be held on May 15, 2012. ( RIMS )

I hope you enjoy your weekend!

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I just realized that my favorite book on crafting diagrams to better communicate in a graphical way ( Envisioning Information just has been turned into a paper on mapping supply chains.

So I am happy to summarize an article, which focusses on how to convey complex information in an concise and comprehensive way.

Supply chain mapping

I already wrote about this topic several times. But because this is a very important issue, I did not hesitate to do it again from a different angle.

There are several key advantages to supply chain mapping:

  1. To link corporate strategy to supply chain strategy.
  2. To catalog and distribute key information for survival in a dynamic environment (in order) to direct the focus of the managers.
  3. To offer a basis for supply chain redesign or modification.
  4. Current channel dynamics can be displayed in a supply chain map.
  5. The process of building the strategic supply chain map, in itself, will help define the perspective of the supply chain integration effort.
  6. continued in the article

However there are obstacles preventing an effective supply chain mapping. One is, as often, the complexity of the supply chain.

Even with only a few echelons in focus the number of entities and connections just explodes. Figure 1 shows the results of some simple calculation. A supply chain with five tiers and only two connections per tier already contains 13 chain elements.

Mapping complexity primary entities forward per tier
Figure 1: Number of Entities in a Supply Chain Map (Farris, 2010)

So in no time a supply chain map looks like the one in figure 2 or 3.

Three primary entities forward and two backward
Figure 2: Complexity of a “short” Supply Chain (Farris, 2010)

Reflecting magnitude of flow
Figure 3: Bad Example for the Representation of Material Flow (Farris, 2010)

Issues in supply chain mapping

Four issues in supply chain mapping can be recognized.

[…] Four issues [were identified] which must be addressed to further the development of strategic supply chain mapping:
  1. proprietary information;
  2. inadvertently changing channel dynamics;
  3. getting lost in too many details; and
  4. providing an ineffective perspective for management use.

Recommended supply chain mapping

Over a five year period the author conducted several “classroom laboratories” with his students doing experiments on how to improve current mapping techniques.
This is where the above mentioned book comes into play. In it you find a picture of probably the oldest geo-visualization (figure 4). In this case it was used to describe the declining strength (measured in number of soldiers) of Napoleon’s invasion of Russia and the way back. Highlighting the fact that most soldiers did not die in battle, but on their way to and from Moskow.

Minard’s geovisual map
Figure 4: First Geovisual Map (click to zoom; by Minard, 1844-1870; Farris, 2010)

While this also highlights the importance of a good supply chain. Focus in this case is on the massive amount of information which can be extracted from this diagram (strategies, movement, location, time, strength), while still keeping a relatively low size and low perceived complexity.

Based on this idea and other insights, several iterations with the students lead to several key learnings and a recommended supply chain map. Figure 5 shows the recommended map, displaying the supply chain interactions on an industry- (not company!) level.

Recommended strategic supply chain map
Figure 5: Example of a Recommended Supply Chain Map (Farris, 2010)

Lessons learned:

  • Utilize geovisualization techniques
    The mapping efforts utilized a geovisual technique combining weighted solid and dashed arrows and lines, defined symbology representing different trading relationships, and the representation of financial flow to develop maps rich in content.
  • Start at a higher level
    It is highly unlikely a company would be able to, or would desire to, expend the resources required to map 100 per cent of all of their customers and suppliers. Each mapping effort must determine the economic trade-off between the level of detail of their map, the cost to gather the detail, and the benefit received. […] Owing to the ready access to economic data, an industry macro map may offer the greatest mapping value for a relatively minimal investment. It is recommended that the map designer begin at a high level and then drill down.
  • Strive to keep the maps strategic
    […] strategic supply chain maps must maintain a strategic emphasis, any users with a desire to drill down to an operational level should utilize alternative process-related tools such as the SCOR model […]. Keep the strategic supply chain maps at a high, strategic level and avoid undue complexity.
  • Manage a synergistic network
    As value chain mapping continues to evolve, map designers may find that the term “supply chain” is a misnomer. Strategic supply chain maps quickly reflect a “supply network” as it is not unlikely that a customer’s customer may be a critical supplier’s supplier. Recognition of these types of relationships may have far-reaching strategic impact in terms of keiretsu-type relationships or jointly beneficial marketing efforts […].
  • Embrace mapping creativity
    […] it was determined there was no single approach to developing a strategic supply chain map. Creating a strategic supply chain map is as much an artistic endeavor as it is a defined process. […] It is recommended that firms attempting to strategically map their supply chain embrace this fact by asking multiple individuals who create a map to use the same data set. Each variation may result in components within the map which offer easier readability and should be incorporated into the final map.


The resulting supply chain map is overwhelming at first, but which map wouldn’t be. A complex system like a supply chain and its supporting parameters are just hard to zip onto a single page.
After a short while of looking at the map I was just amazed how much information could be deduced from it.

I think using the lessons learned and (not too many) different information layers in a map can result in highly aggregated and informative results, ergo in a real supply chain map.


Faris II, M.T. (2010). Solutions to strategic supply chain mapping issues International Journal of Physical Distribution & Logistics Management, 40 (3), 164-180 DOI: 10.1108/09600031011035074

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This item is already from 2009, but still very funny: Eric Cartman from South Park singing Poker Face (originally by Lady GaGa). And this is my way to end week 16 of 2012.
For me, this week was about consolidation of my certificates and credentials to prepare my curriculum vitae and other documents for my upcoming application phase.
I started my search this week for jobs focussing on the supply chain side of things. Jobs related to supply chain planning and SC risk management are top on my list, but the later seem to be quite rare (at least in Germany).
So, if you know about current job offerings in this area, you can contact me here.

Let’s have a look at my favorite supply chain related articles of the week.

  • The Supply Chain Brain gives a sneak peek into the Supply Chain Risk Leadership Council founded by Cisco. ( Supply Chain Brain)
  • Danny Halim elaborates on the advantages of customer segmentation and highlights nine key elements. ( Supply Chain Nation)
  • For over a year now I wanted to do an article about software support for supply chain risk management. Since I did not get around to do it yet, I do not want to withhold this news item: AIR Worldwide issued a press release stating that they improved the support for supply chain risks in their risk modeling software. ( AIR )
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Efficiency is about trade-offs. Effectiveness is about achieving a goal, making it happen no matter what.
But in reality resources are scarce and efficiently reaching a goal is nearly as important as reaching it at all.

Low-risk supply chains often contradict the efficiency demands of the company’s stakeholders.
Robust strategies, which reduce risks while keeping performance up, are still the holy-grail of supply chain risk management.
Simple strategies are not able to accomplish this goal, only a extensive redesign of the supply chain (as for example using the postponement strategies) may indeed be able to reduce risks while keeping performance up.

How these trade-offs can be optimized according to the goals of the company is the topic of the 2011 paper: “Optimizing efficiency-robustness trade-offs in supply chain design under uncertainty due to disruptions” by Shukla, Lalit and Venkatasubramanian.

Model and robustness metric

The authors use a mathematical model to implement their robustness metric, which “is based on expected losses incurred due to network failures. It defines efficiency and robustness in terms of operational cost and expected disruption cost ( EDC), respectively. The EDC is defined in terms of loss of opportunity cost incurred due to not meeting demand on time after a disruption has occurred.”

Decision variables of the mixed-integer linear model are:

  • the assignment of the warehouse to the manufacturing center and
  • the assignment of the warehouse to the customer.

The objective function is defined as the weighted sum of efficiency and robustness. Efficiency is defined in terms of OC of the supply chain and robustness is defined in terms of the EDC [figure 1]:

Objective Function
Figure 1: Objective Function (Shukla et al., 2011)

The authors use secondary data to build a case study with scenarios from the current US.
Figure 2 shows an extract of the demand numbers used.

Demand by state for functional and innovative product
Figure 2: Aggregated Demand as Input for the Model (Shukla et al., 2011)

Figure 3 contains details of the risks experienced by the respective warehouse locations.
Warehouse distances and historical data from FEMA on presidential disasters reported from December 24, 1964 to March 3, 2007
Figure 3: Warehouse Distances and Risk Data (Shukla et al., 2011)

Four case studies are conducted, I picked number one as an example and refer you to the paper for further details.

Case study 1 deals with node failure or failure of warehouses for functional products. Since most of the warehouse locations are far apart we assume that failures are independent of each other and multiple failures can occur simultaneously. The probability of failure of a warehouse depends on the region in which the warehouse is located.


Figure 4 shows the efficient supply chain design for the first case study and figure 5 the corresponding results for more robust results.

Case study 1: most efficient supply chain
Figure 4: Case Study: Efficient Supply Chain Design (Shukla et al., 2011)

Case study 1: most robust supply chain network
Figure 5: Case Study: Robust Supply Chain Design (Shukla et al., 2011)

The authors state that:

The resulting supply chain is much more reliable in the long term since we have shown that a significant amount of robustness can be built into the system without compromising a lot on efficiency.


So there is no free lunch and it seems inevitable to sacrifice some of the efficiency to gain robustness, but this paper shows that in the case studies with only small cost increases risks can effectively be reduced based on supply chain design changes.
So if your customers value reliability this might be the right approach for your chain.


Shukla, A., Lalit, V., & Venkatasubramanian, V. (2011). Optimizing efficiency-robustness trade-offs in supply chain design under uncertainty due to disruptions International Journal of Physical Distribution & Logistics Management, 41 (6), 623-647 DOI: 10.1108/09600031111147844

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Finally I was able to hand in my dissertation to my professor. I hope to get his feedback soon.
This week I found several interesting articles, just pick those you find useful.

  • Russ Banham wrote about “Reducing Disruption in the Global Supply Chain” summarizing some strategies and case studies ( Wall Street Journal)
  • Enterra Insights presents an overview on the trade-offs between lean and resilient principles. ( Enterra Insights)
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Within a supply chain many supplier-buyer relationships exist. Even though supply chain management aims to take a high level view, these dyadic relationships form the basis of the supply chain and therefore should be the focus of a supply chain analysis.
The negotiation of the terms of these relationships defines the structure of the supply chain and can affect the power and profit distribution within the supply chain itself.
So, this week we’ll have a closer look at negotiations in the supply chain using a 2008 paper by Frederik Zachariassen.


As usual the work starts with an overview on negotiation-related literature in supply chain management and more general cases. The author finds several sources dealing with supply chain related negotiations, but notes:

The amount of negotiation literature dealing with negotiation strategies in a [general] commercial, business relationship is sparse and lacking in empirical research as stated in the introduction.

Due to these conclusions the core method is set to a case study to analyze the negotiating strategies on a general, qualitative level.
Overall 25 interview- and 15 observation-hours were conducted with a focal company and their suppliers. All results have been anonymized and “the total hours of interviews were split up between interviewing purchasing personnel on site of the case company and interviewing suppliers that interacted closely with the case company”.

Two universal negotiation types emerge:

The distributive negotiation strategy is used by those negotiators, who believe that they and their counterpart have fundamentally opposed interests. As a result, negotiators believe that negotiations essentially can be described as win-lose situations, in which one should try to argue as aggressively and intensively as possible in order to convince the other party of price reductions, reduced delivery time, etc. In negotiation literature, it has been paralleled to one-off relationships, e.g. arm’s length relationships.

On the contrary, the integrative approach seeks to reconcile the parties’ divergent interests and provide both parties with joint benefits as an outcome of the specific negotiation. This approach emphasises the need for trust, mutual understanding, openness and a sense for empathy. As such, the integrative approach attempts to capture synergistic advantages in the form of mutual gains, and therefore believes in win-win relationships.


Figure 1 shows the resulting framework to structure different supplier-buyer-relationships and the corresponding negotiation strategy. Overall four cases can be distinguished.

A differentiated perspective on the use of negotiation strategies
Figure 1: Relationship Type vs. Negotiation Strategy Matrix (Zachariassen, 2008)

In the ritual case a arms-length relationship is met with a distributive/competitive negotiation approach.

As an arm’s length relationship has relatively low-switching costs compared to the more strategic partnership, both parties expressed an indifference towards the other party when considering the outcome of the negotiation. That is, should the counterpart in the negotiations demand a too unrealisable price when compared with the market price, the negotiator would simply exit the negotiation and contact other suppliers/buyers. […] Here, buyers and suppliers would often manipulate numbers and statistics by presenting them in Excel spreadsheets that were at best confusing for the counterpart, only to be briefly presented in the negotiation setting. Graphs of for instance the recent price development of a standard good would often be manipulated, so that curves would be represented as flatter or steeper depending on the point, buyers or suppliers wanted to make.

In a exploitation setting greater integration is sought in a arms-length-relationship setting. This combination is seen very critical:

Buyers and suppliers remarked that taking the chance of being completely open and trusting towards the other party would be too high considering the risk of the other party exploiting the other party. One supplier remarked that that would at best be naive and would be inexpedient insofar as negotiating the best deal for their respective firms.

For the partnership approach the manipulation category represents the case where companies used more subtile techniques to enforce their competitive pricing ideas, example:

The buyers resided in a larger and more powerful firm that all things being equal had more negotiation power than the suppliers. During the participant observations of strategic partnership negotiations, it quickly became apparent that the buyers opted for a distributive negotiation strategy. It differed, however, from the arm’s length relationship one by employing more subtle, rhetorical devices in order to argue towards the suppliers that prices should go down. The subtlety lied in the buyers’ sophisticated approach to bargaining.

Lastly, in a partnership relationship a more integrative approach could be used, leading to a alignment categorization:

This was characterised as a more of a hypothetical situation by buyers and suppliers. That is, both would not opt for this approach when considering strategic partnerships. […] both buyers and suppliers would express concern regarding the disclosure of strategically relevant information, loss of power and loss of control in strategic partnerships due to a too open approach to negotiating and cooperating.


In this study the author analyzed two distinct negotiation approaches in supply chain management within two separate relationship settings.

Core implication of this practice-view on this questions is that neither in a arms-length nor in a partnership relationship, the strategic partnership negotiation strategies are considered as an viable option.

Of course, this is a quite interesting finding, which I would have loved to see questioned by the author a little bit more.
There are definitely case studies proving that a close and integrative relationship can work and on the other hand SCM literature often complains the lack of strategic integration on the supply chain but also the individual level.

So the real question is: what are the core drivers to an integrative negotiation approach and what are the external factors influencing this decision?


Zachariassen, F. (2008). Negotiation strategies in supply chain management International Journal of Physical Distribution & Logistics Management, 38 (10), 764-781 DOI: 10.1108/09600030810926484

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This week I received my first full-version feedback on my PhD-thesis. A big thanks to my reviewer! Luckily I do not have too many adjustments to make, so I will use time during the easter holidays to commit the changes. I hope to be done by Tuesday, and I already got an appointment with my Professor on Wednesday, to officially hand over the dissertation.

  • The Bangkok Post rethinks the supply chain and supplies a few measures to reduce risks. ( Bangkok Post)
  • Greg Duncan explores a real life case study of two U.S.-based manufacturing companies and the differences in the impact of last years tsunami in Japan. ( Risk Management Magazine)
Conference – sponsored message

IQPC’s Supply Chain Risk Management Summit is set to take place May 14 to 16, 2012 in Boston. This event will provide you with the tools and techniques you need to ensure business continuity, implement risk mitigation strategies and minimize financial implications of supply chain glitches. Other topics to be covered include emergency reaction plans, protection against currency fluctuation, and cumulative energy prices.

Take advantage of our early bird registration by calling IQPC now on 1-800-882-8684, email or visit for more information.

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  • RT @KennionGroup: Sourcemap, an MIT-Incubated Startup, Offers Solution to National Security Risk Posed by IT Supply Chain
  • The Dirty Little Secret Of Overnight Successes | Fast Company
  • PwC Finds “Critical” Need for Younger Supply Chain Managers – Article from Supply Chain Management Review
  • How Strategic Risk Management Improves a Company’s Competitive Standing
  • IPCC Climate Change Report Highlights Managing the Risks of Extreme Events and Disasters

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This is a review of another chapter of the book by Zsidisin and Ritchie (Supply Chain Risk). The book can be bought at, if you are interested in reading more.
I already reviewed chapter 15 on Behavioral Risks in Supply Networks.

The title of this weeks article is “Assessing the Vulnerability of Supply Chains” and since the author works for a consulting firm you can expect a more practice oriented approach to risk analysis.

Goals and definitions

There are three main questions to be answered in this article:

  1. Understand the nature and types of factors that may pose threats and risks to the achievement of the supply chain system’s short and long term mission.
  2. Understand the scenarios (processes and mechanisms) through which these threats, risks and vulnerabilities may evolve.
  3. Understand how through the use of vulnerability scenarios, the likelihood and consequences of such threats may be reduced and managed in a cost- and service effective manner, whilst achieving an acceptable vulnerability level.

A vulnerability of a supply chain in this context is defined as

the properties of a supply chain system; its premises, facilities, and equipment, including its human resources, human organization and all its software, hardware, and net-ware, that may weaken or limit its ability to endure threats and survive accidental events that originate both within and outside the system boundaries.

Vulnerability analysis is seen as an extension to risk analysis.

Risk analysis is focused towards the human, environmental and property impacts of an accidental event, while a vulnerability analysis is focused towards the system mission and the survivability of the system.

In a risk analysis three questions make up the basis of the analysis: (i) what can go wrong, (ii) how likely is it to happen, and (iii) what are the consequences.

A vulnerability analysis, on the other hand, focuses upon (a) an extended set of threats and consequences, (b) adequate resources to mitigate and bring the system back to new stability, and © the disruption time before new stability is established [figure 1].

Regaining stability after an accidental event or disruption
Figure 1: Disruption Sequence (Asbjornslett, 2009)

Vulnerability Analysis

Based on this definitions the author builds his approach on a generic approach for risk assessment. The flow chart in figure 2 highlights the seven steps.

Flow-sheet of the vulnerability analysis
Figure 2: Vulnerability Analysis Process (Asbjornslett, 2009)

These steps fall into three categories:

  1. Understanding the context-specific threat and risk picture of the given supply chain and SCM context, and structure this into a taxonomy of the vulnerability factors [steps 1 to 3].
  2. Analyse and rank the vulnerability scenarios, resulting in a criticality ranking of the scenarios [steps 4 and 5].
  3. Handling of the vulnerability through cost- or service-effective likelihood or consequence reducing measures, bringing the vulnerability down to an acceptable level [steps 6 and 7].

The goal of the first step is to have a common understanding of the specific objectives of the vulnerability analysis, the level of analysis and setting the levels of acceptable risk.
In the second step the processes and infrastructure has to be mapped. Flows of money, information and goods are highlighted. Here, “it is recommended not to make the context description too fine-grained, but rather make notes of how the context could further be detailed if required.”
In the third step factors which lead to vulnerabilities are collected in a structured manner. Figure 3 shows a fishbone diagram with several different categories which can lead to vulnerabilities.

Fishbone diagram of internal and external factors contributing to vulnerability
Figure 3: Example of Factors Contributing to Vulnerabilities (Asbjornslett, 2009)

Based on these vulnerabilities adverse scenarios are developed in the next step.

A scenario is a sequence of possible events, originating from an accidental event, where the events may be separated in time and space, and where barriers to prevent the sequence are part of the scenario.

In the next step the mentioned scenarios have to be documented. The author suggests the worksheet in figure 4.

documenting vulnerability scenarios
Figure 4: Template for Scenario Documentation (Asbjornslett, 2009)

To get a better grasp of the actual criticality of the revealed vulnerabilities, each scenario has to be evaluated according to its likelihood and consequences ( step 5). Figure 5 has a sample sheet.

ranking criticality of scenarios
Figure 5: Assessment of the Scenario’s Criticality (Asbjornslett, 2009)

Step 6 is about ranking the different vulnerabilities to best align risk mitigation efforts (figure 6).

Presenting scenarios of importance in a likelihood/consequence diagram
Figure 6: Likelihood/Consequence Diagramm (Asbjornslett, 2009)

As such we have ‘low-criticality’ scenarios in the lower left corner (white), and ‘high-criticality’ scenarios in the upper right corner (dark grey shading). The ‘criticality areas’ should be based on the acceptance criteria developed in step one, both for the un-mitigated and the mitigated consequences.

The last step deals with finding mitigation strategies for selected scenarios. Figure 7 shows the template.

evaluating measures with potential to reduce likelihood and consequence
Figure 6: Mitigation Activities to Reduce Likelihood or Consequences of a Vulnerability (Asbjornslett, 2009)


This article presented a really business oriented approach to vulnerability analysis. In a similar manner how it could be found in a presentation of a business consultant.
This business orientation can be also seen in the structure of the article: A conclusive derivation of the process is missing completely at least the definitions are mentioned.

Nonetheless, from experience I can tell that this process contains several important steps which are also known from scientific literature. And it really is immediately applicable.
Why not include some of the insights and steps presented here in your next risk-management-meeting?

If you want to have a more scientific view on vulnerability analysis have a look at this article.


Asbjornslet, B. E. (2009). Assessing the Vulnerability of Supply Chains Supply Chain Risk - A Handbook of Assessment, Management, and Performance, 15-33 DOI: 10.1007/978-0-387-79934-6_2

Originally posted by Daniel Dumke at

This week we keep it short and simple.

  • Enterra Insights discusses the use of information for risk reduction in a broad context, referencing also one of my articles on knowledge-based supply chain risk management ( Enterra Insights)
  • Supply Chain Quarterly links to a white paper on “Collaborative Outsourcing: Preparing for a Successful Logistics Outsource” ( CH Robinson)
  • This article at the National Alliance for Advanced Technology Batteries ( NAATBat) talks about the implications of supply and demand disruptions of the battery supply chain ( NAATBat)
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Some say that tablet computers are a great fit, not only for games and surfing the web, but for business applications as well.
But since the tablet computer is not much more than a big screen, software is key to a productive use of the pad.
To test this hypothesis I picked the iPad as an example for a tablet computer, because:

  • I own one,
  • there are more apps available than for any other platform,
  • the apps quality is often better.


First, there are several apps by magazines, which often can also be read in paper or online. I picked three supply chain related examples:

  • Supply Chain Quarterly: The app features free issues of the CSCMP. The navigation performs ok (tested on an iPad 2). But the pages seem to be just rendered images. So loading takes a while and compression artifacts are clearly visible, which is distracting and not business-like. Furthermore it contains a lot of ads. But I like the contents journal. ( App Store)
  • The E&Y Performance Journal: The journal sometimes features articles on logistics and supply chain management as well. Furthermore it is graphically stunning and uses the features of a touch-screen-display. ( App Store)
  • Supply Chain Digital: The issue took the longest to download (probably about 5 minutes on a 25MBit connection). When I wanted to switch apps to get some distraction, the download was interrupted (even though it could have downloaded the issue in the background). Since I dislike badly written apps, I deleted it immediately.

Supply Chain Quarterly
The Supply Chain Quarterly Journal on the iPad

EY Performance
The Article Overview in the EY Performance Journal

Business applications

There are a few supply chain production apps as well, even one for selecting supplier management strategies based on related risks ( app store USD 0.99). But other than this one I did not find any real business-applications worth mentioning.

Supplier Management Evaluation
Supplier Management Evaluation


So, it seems that supply chain specific apps are still missing on the app store. Of course you can always use Numbers as a spreadsheet and Pages for doing some writing, but I really was expecting more of this research…
At least at the moment there does not seem to be many business, let alone supply chain, related applications, which would make an iPad a useful device for business purposes.

If you find other useful apps, just let me know an I’ll post them here as well.

Originally posted by Daniel Dumke at

This week we keep it short and simple.

  • I was made aware of this fact sheet on warehouse safety, with some statistics and several tips and tricks to prevent accidents. ( Storage Solutions)
  • Supply Chain Quarterly has a summary of a Dell case study on “Supply chain segmentation: 10 steps to greater profits”, which probably is a shortened text version of the upcoming webinar announced last week. ( SCQ )
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  • RT @AccentureAcdmy: March 27: Live webinar on Becoming a Customer of Choice as a strategy for mitigating supply chain risk! More info:
  • Operational Risk Management…: Product Innovation: Individual Responsibility for Risk Management.

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Today will be a one-article-long-excursion in the world of production planning models.
Supply chain management of course should take a high level view of the supply and demand networks, nonetheless there is probably no supply chain which will work without physical products and most even have one or more at their core.

So production planning is a key part of a companies success.
Even in a world where companies focus on their core competencies, and may even outsource all of their production processes, knowledge about how the products are manufactured is still a vital component for understanding the supply chain and the associated risks.

Understanding the models used in production planning supports the awareness of the decision processes, which are applied in production management.

The full article can be downloaded here


In their 2006 article the authors employ a literature review to gather information on which production management models are used.
First, the authors lay the foundations for their work by proposing a classification for models of manufacturing systems (figure 1, for general models; figure 2, for models including uncertainty). For basic model types are distinguished: conceptual-, analytical-, artificial-intelligence-based- and simulation-models

Classification for the general types of uncertainty models in manufacturing systems
Figure 1: Classification for General Uncertainty Models (Mula et al., 2006)

Classification scheme for models for production planning under uncertainty
Figure 2: Classification Production Planning Models under Uncertainty (Mula et al., 2006)

Next, in figure 3 the papers are classified according to the model type used and the decade.

References by modelling approach and year
Figure 3: References by Modelling Approach and Year (Mula et al., 2006)

Overall 87 papers are gathered from 1980 until 2004.


Using the categorization suggested above as a frame the authors go through all the papers and add a short description for each of the 87 models. Afterwards the authors conclude:

The analytical modelling approach, in particular stochastic programming was the most frequently encountered. In the case of dynamic programming, few models were found and were mainly theoretical. Most of the analytical models addressed only one type of uncertainty, and assumed a simple structure of the production process. For more complex processes, with many different final products and more than one type of uncertainty, the analytical approach is replaced by methodologies based on artificial intelligence and simulation.
Although many works use simulation approaches to model uncertainty, very few studies exist on the comparative evaluation of the advantages and inconveniences of different simulation languages. With respect to artificial intelligence models, those based on fuzzy set theory represent an attractive tool to aid research in production management. Lastly, conceptual models with different approaches complete the taxonomy.


This article is a great basis to get a short (15 pages) and concise overview on production modelling under uncertainty within the last 22 years.

I was however was surprised to see that the authors did not include clues on how they selected the 87 papers. Or should we really believe that within a 22 year period there were only 87 papers published on production planning?
The authors included also a very short section on supply chain planning models, starting in 1994 with a few papers and I can therefore confirm that there are definitely gaps.

But, as said before, this really is a great overview. And if you are interested in more papers on supply chain planning just have a look here in the blog.


Mula, J., Poler, R., GarcÃa-Sabater, J., & Lario, F. (2006). Models for production planning under uncertainty: A review International Journal of Production Economics, 103 (1), 271-285 DOI: 10.1016/j.ijpe.2005.09.001


Originally posted by Daniel Dumke at

Week 11, one fifth of 2012 is already gone and there is even less time until the end of the world, I just hope this will not effect supply chains for the holidays too much…
I did find some interesting articles, so have a look and let me know what you think on Twitter.

  • Again we start with CSCMP’ Supply Chain Quarterly. They just announced a webinar on “Segmenting Your Supply Chain for Success”, which is free and will take place on April, 4th. ( Sign Up)
  • I just stumbled on a recent master thesis published in January on “Quantifying Default Risk in Supplier Portfolios”, which I wanted to recommend here. ( University of Twente, NL)
  • Continuing in this vein: The supply chain standard summarized some results of a study on how supply chain risks are quantified in practice. ( Supply Chain Standard)
  • Forbes CIO Central has a really nice guest post by Linda Conrad of Zurich Financial Services on the implications of the Japan tsunami. ( Forbes)
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  • Supply chain managers must be trained to “visualize” risk – via SCMR

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Originally posted by Daniel Dumke at
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A supply chain risk management framework should help to define the cornerstones of risk related supply chain problems and give hints on how to take actions to mitigate impending disruptions.

Today’s full paper has been published in 2004 and in it the authors (Gaonkar and Viswanadham) deal with this problem.

Core definitions

At the core of their framework the authors define the risk/supply chain related terms.

First, risks can be seen from an organizational-, supply chain- or industry-level.

Network- related risk sources represent the second category of risk sources, which are the primary focus of this paper. These risks are of two broad kinds:
  1. Firms are vulnerable not only to attacks on their own assets, but also to attacks on their suppliers, customers, transportation providers, communication lines, and other elements in their eco-system.
  2. Firms are also vulnerable to irregular behavior of their network partners such as a supplier sharing sensitive product design with a competitor manufacturer.

Second, there are different classes of risk problems:

  • Deviations: “A deviation is said to have occurred when one or more parameters, such as cost, demand, lead-time, etc., within the supply chain system stray from their expected or mean value, without any changes to the underlying supply chain structure.”
  • Disruptions: “A disruption occurs when the structure of the supply chain system is radically transformed, through the non-availability of certain production, warehousing and distribution facilities or transportation options due to unexpected events caused by human or natural factors.”
  • Disasters: “A disaster is defined as a temporary irrecoverable shut-down of the supply chain network due to unforeseen catastrophic system-wide disruptions.”

This classification also contains an implicit rating of the risk impact and while it is possible to create a robust supply chain which can withstand deviations and disruptions “it is impossible to design a supply chain network that is robust enough to react to disasters. This arises from the constraints of any system design, which is limited by its operational specification.”

The authors require the supply chains to be robust at three levels: the strategic, tactical and operational level. So each of these levels has to be prepared for deviations, disruptions and disasters.

For example, at the operational level, companies require decision support systems that can act on information from various partners regarding various deviations and disruptions to reschedule activities so that the business processes are synchronized and deliveries are undertaken within customer delivery windows and cost limitations. At the tactical level, plans need to have redundancies in terms of human and machine resources and also logistics and supply organizations. At the strategic level, more reliable partners with intrinsic capabilities in deviation and disruption handling, and the skills and ability to adapt to changing market conditions will be preferred and selected.

There are two distinct ways to supply chain risk mitigation:

  • “The first approach involves the time tested “just in case” way of maintaining inventories all along the chain, employing dual or multi-sourcing and manufacturing at multiple sites. This is a highly inefficient option.”
  • “A better option would be to first design a sourcing strategy taking into account the disruption costs for the most relevant failure modes and then putting in place contingency plans for each disruption that include both description of the procedures to follow and a definition of roles and responsibilities.”

The authors distinguish three analytical approaches to risk management:

  • Mathematical planning models,
  • Adaptive control, and
  • Rule-based control.
    And they continue to explain their preventive and interceptive approaches to risk management. Some of which can be found summarized in this article in the blog.


Based on their framework of supply chain risks the authors develop two strategic level (mathematical) models which include risk considerations.

  1. Strategic-level Deviation Management Model: Given the expected costs and variability (deviation) of costs for all suppliers, the first problem relates to the selection of an optimal group of suppliers such that the expected cost of operating the entire supply chain and the risk of variations in total supply chain costs is minimized.
  2. Strategic-level Disruption Management Model: Given the expected probabilities for various supplier disruption scenarios and the supply shortfalls under each of these scenarios the objective for the manufacturer is to choose a set of suppliers that minimize the expected shortfall during the operation of the supply chain.

With the models numerical example case studies are executed and the authors conclude:

Robustness is build into our supply chain design by selecting a portfolio of suppliers that minimize the variability of supply chain performance in terms of cost and output. The models we develop are preventive in nature and employ mathematical programming tools.


This article is a double publication, the models and their results have already been discussed here. Even though this is questionable behavior from a scientific point I did include this article due to the good and aggregated summary of the terms and definitions used in the field of supply chain risk management.
Using those as a minimum to analyze supply chains can already help a great deal in finding fitting mitigation strategies.


Gaonkar, R., & Viswanadham, N. (2005). A Conceptual and Analytical Framework for the Management of Risk in Supply Chains Robotics and Automation, 3, 2699-2704

Originally posted by Daniel Dumke at

This week is short but loaded with some great links.

  • CSCMP Quarterly just promoted a book called “Three Ways You’re Throwing Away Money in Your Supply Chain” which can be downloaded for free ( Amberroad)
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Enjoy the weekend!


Originally posted by Daniel Dumke at