Entries by Daniel Stengel

For researchers and practitioners alike it is important to differentiate supply chain strategies.

Introduction
Not only Fisher (1997) showed, that there is no one-fits-all supply chain. But what are the criteria for should be used for supply chain segmentation?
Fisher focusses on on the product only, and he concludes, that a standard/functional product should be processed by a lean supply chain and innovative products by agile supply chains.

Today I start an irregular series on doctoral dissertations on Supply Chain Risk Management. An immense effort and dedication is spent on these works only to find the results hidden in libraries. So the goal is raise interest in their research.

Author / Topic
The first dissertation was written by Ingo Schneider in 2009 as his doctoral thesis at the Helmut Schmidt University in Hamburg, Germany. It was published by Shaker, Aachen and can be ordered here from amazon.de or your local library. The title translates in:
Risk as Strategic Part of the Supply Chain Design: Analysis and Case Study in the German Automobile Industry

In his fourth video podcasts Professor Richard Wilding talks about Supply Chain Strategies. I found it quite interesting, so I would like to give you a short summary of it here. If you are interested you can just download the podcast for free, you find a link in the reference section.

Hierarchy
Strategies are usually broken down into smaller pieces so that every function within a company has its own individual goals. This leads to some kind of hierarchy like:

• Corporate Strategy
• Competitive Strategy
  for each market segment, mostly driven by marketing
• Supply Chain Strategy
  derived from the competitive strategy, has to be developed together with marketing to secure alignment

The bullwhip effect in supply chains has been around for some time now. The term "bullwhip effect" originated at Procter & Gamble, and is defined as: demand amplification across echelons within a supply chain. This describes the effect that end customer demand may be very static (as for "Pampers" by Procter & Gamble), but the demand experienced by the manufacturer or supplier shows amplified demand variations. (Fransoo and Wouters (2000))

Causes of the Bullwhip Effect
Lee et al. (1997) first analyzed the causes of the bullwhip effect:

• Demand forecast updating
  Demand forecast usually are based on the orders of the preceding echelon and not on the actual customer demand
• Order batching
  Orders are usually aggregated to batches to save cost.
• Price fluctuations
  Promotions and other effects can lead to price fluctuations of the product. When the price is perceived to be lower, orders go up and vis-versa.
• Rationing and shortage gaming
  For some products (eg. new iPhone) which may be short in supply, game theory suggests that it might be rational to order more than actually needed, since the number of delivered products usually is a percentage of the number of products ordered.

The Supply Chain Operations Reference (SCOR) model has been developed by the Supply Chain Council to provide a best-practice framework for supply chain management practices and processes with the goal to increase performance.

SCOR
The SCOR model consists of five major process categories: Plan, Source, Make, Deliver and Return
Starting from that best practice processes are defined up to level three.