Tag: supply chain management

Teaching Tip: Forget Finance–OM/SCM is the Degree to Have

The toilet paper aisle at a Florida pharmacy.

Stores with no toilet paper. Colossal cargo ships run aground in the Suez Canal. Factory shutdowns in Vietnam. Ports closed in China. It almost seems that not a day goes by without reports of another supply-chain snafu wrought by the pandemic, which dismantled JIT inventory systems that couldn’t cope with massive, simultaneous disruptions of supply and demand–topics we cover in Chapter 11 and Supp. 11, SCM and SCM Analytics.

Companies have struggled to adapt, with some taking unusual steps. Walmart and Home Depot are chartering their own private cargo vessels so they don’t get caught short as the holiday season approaches, as disruptions from congested ports won’t end anytime soon. The tumult has forced companies to lavish more attention on their SCM professionals, writes Bloomberg Businessweek (Sept.3, 2021). It’s also prompted B schools to refresh their OM/SCM curricula to make sure the next generation of logistics managers are prepared for future crises. “For years, we had sort of taken logistics for granted,” says the dean of Harvard Business School. “The pandemic caused us to rethink it.”

Incoming business students who once defaulted to finance or marketing now want to explore OM/SCM. This academic year more than 400 juniors in Penn State’s undergrad program have declared their intent to major in it, up from 270 the previous year.

Students who pursue OM/SCM degrees this fall are certain to get an earful about the limitations of JIT inventory systems, which grew in popularity during the 1990s. For some companies, though, getting lean became a religion and their undoing when the pandemic hit and there was no surplus stock to be found. Covid-19 exposed the weaknesses of legacy inventory systems, which typically emphasize cost reduction above all else. At Walmart, U.S. inventory rose 20% last quarter as it doesn’t want product shortages come Christmastime. Still, shuttered factories, port congestion, and trucker shortages have brought more chaos to already overtaxed supply chains, raising prices on groceries and jeopardizing the delivery of millions of presents for the holidays.

Classroom discussions may now delve into the downsides of sourcing too much from China or any single country, while they also explore the role that new technologies like machine learning and AI can play in manufacturing and inventory decisions. “Any company that says they fully understand their supply chain is lying,” says one Harvard prof. “The 20th century was about finance. The 21st century should be about supply chains.”

 

 

Good OM Reading: Five Books on Supply Chains Worth Reading

Leadership books which focus on supply chain management were recently reviewed by Supply & Demand Chain Executive (Aug. 23, 2019). This is the list of five books they recommend:

Managing Supply Chain Operations (by Lei, DeCandia, Oppenheim, and Zhao)
Key factors of efficient supply chain performance – demand forecasting, sales and operations planning, inventory control, capacity analysis, transportation models, supply chain integration, and project management and risk analysis. The book offers real-life examples, best practices and case studies.

Single Point of Failure: The 10 Essential Laws of Supply Chain Risk Management (by Lynch)
Taking risks is an inevitable part of the business. The author explains what he calls the “risk parasite” and supplies dozens of case studies that prove his point.

Strategic Supply Chain Management: The Five Core Disciplines for Top Performance (by Cohen and Roussel)
According to the authors, there are five crucial SCM disciplines to focus on: (1) Aligning the supply chain with business strategy; (2) Developing an end-to-end process architecture; (3) Designing a high performing supply chain organization; (4) Building the right collaborative model; and (5) Using metrics to drive performance.

The Supply Chain Revolution: Innovative Sourcing and Logistics for a Fiercely Competitive World (by Sarkar)
The book provides innovative approaches to sourcing and logistics. Leading companies such as Zara, TJX, Amazon, Starbucks, and Airbus are highlighted.

The Forklifts Have Nothing To Do! Lessons in Supply Chain Leadership (by Walden)
The author, with 25 years of experience in leading supply chain operations in the military, provides useful examples from civilian industry and military operations.

Teaching Tip: How Microsoft Sells Supply Chain Management and ERP

ms scm graphicHere is proof that SCM has turned into a field that every student needs to understand. The following is from Microsoft’s web site called the Dynamics of SCM, which promotes its product, called Microsoft Dynamics ERP :

Supply chain management is the oversight of the entire lifecycle of a product or service: from its infancy as a raw material or idea, to the manufacturing of the product, to its distribution, to the retailer, and then ultimately, to the consumer. Each of these stages of the product or service is a link in a chain. Each step is fastened to the next, interconnecting to facilitate the creation of a product.

Maintaining a holistic view of your supply chain activities is essential for efficiency. You need to be able to examine your business—every inch of it—in real time. To have supply chain control, you need to know what’s going on at every stage, at all times.

An enterprise resource planning (ERP) solution will provide you the control of your supply chain you need for more efficient people and processes, better costs, happier customers and greater profits.  This automation helps reduce redundant tasks and can increase accuracy, all the way to your customer’s receiving dock. That can eliminate bottlenecks, improve order processes, and minimize both handling time and overhead.

ERP gives you the ability to find exactly the information you’re looking for so you can make smarter decisions more quickly.

  • Simplify critical purchasing and receiving processes.
  • Know what your customers want.
  • Keep inventory lean and still address demand.
  • Tools to make smarter buying decisions and to negotiate better terms.
  • Help improve customer service and improve customer relationships.

OM in the News: Vertical Integration Benefits Luke’s Lobster

The Luke’s Lobster restaurant in Tenants Harbor, Me. Fifty percent of its profits go to the fishermen’s co-op that operates at the adjacent wharf.
The Luke’s Lobster restaurant in Tenants Harbor, Me.

“It was a steamy summer day in New York in 2009 when Luke Holden, an investment banker, had a craving for a lobster roll,” writes The New York Times (Aug. 25, 2016). Not just any lobster roll, though. He longed for the “fresh off the docks” taste he enjoyed growing up in Maine. Dissatisfied and disappointed in his search, Holden decided to open an authentic Maine lobster shack in Manhattan. To replicate that fresh taste that he remembered, he would need to oversee, track and, where possible, own every step in the process.

Today, he owns 19 Luke’s Lobster restaurants, two food trucks and a lobster tail cart in the U.S., and five shacks in Japan. He holds an ownership stake in a co-op of Maine fishermen, which allows him to track where and how the lobsters are caught, and control the quality, freshness and pricing. He also owns the processing plant that packages and prepares the lobsters for his restaurants.

 This might seem obsessive. But in operations management (see Ch.11 in our text), we call it a vertical integration strategy. Oil companies have long practiced vertical integration to track and control the flow of petroleum from the oil field to the gas pump. Apple controls its flow from chip makers all the way to retail stores.

“Owning one or more levels of the supply chain is a highly effective way to maintain quality and obtain an advantage against competitors,” says an industry expert.

Classroom discussion questions:

  1. Provide other examples of companies that are vertically integrated.
  2. What are the potential disadvantages of vertical integration?

Guest Post: Future Research Themes in Supply Chain Management

andreas wielandToday’s Guest Post comes from Andreas Wieland, Assistant Professor of Supply Chain Management at Copenhagen Business School. This is his 4th posting.

What are the future dominant research themes in supply chain management? With my coathors Robert Handfield and Christian Durach, our new article, “Mapping the Landscape of Future Research Themes in Supply Chain Management” (see Journal of Business Logistics, Aug., 2016), answers the question. The results are based on survey data collected from 141 leading academics from the SCM discipline.

The respondents were presented a list with 35 topics that are potentially important in SCM. They were then asked to assess to what level they believe these topics will become important in the next years and to what level they think these topics should become important. The will– and should-become-important top 10 lists do not differ substantially. Both of them include the following topics: sustainability & green issues, analytics, risk management & disruption, health care, and innovation. Interestingly, big data, the topic ranked 1st on the will-become-important top 10 list, does not appear on the should-become-important top 10 list. Instead, the people dimension of SCM appears in the should-become-important top 10 list.

We also calculated the differences between the will- and should-become-important survey data. We find that the people dimension of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are the five topics that are expected to be most under researched in the next couple of years. So, if you are planning to start a new research project or a Ph.D. related to SCM, these topics could be good choices. On the other end, big data and analytics turn out to be the topics that are expected to be most over researched.

We also linked the topics that top the should-become-important list to each other. This has led to a table containing ideas that could lead to innovative and cross-disciplinary research questions.