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Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 1

Supply Chain Management: theory and

practices

Dr. Ir. J.G.A.J. van der Vorst

Contents

1. Introduction ........................................................................................................................ 2

2. What is a supply chain? ....................................................................................................... 2

2.1. Definition of a supply chain .............................................................................................. 2

2.2. Hiccups in the traditional supply chain: the bullwhip effect ................................................. 3

2.3. Causes of the bullwhip effect and potential solutions ......................................................... 5

3. What is Supply Chain Management? ..................................................................................... 6

3.1. Definition of Supply Chain Management?........................................................................... 6

3.2. Key decisions in Supply Chain Management....................................................................... 7

3.3. The trade-off between efficiency and responsiveness ......................................................... 9

3.4. Benefits of Supply Chain Management ............................................................................ 12

4. Practices in Supply Chain Management............................................................................... 12

4.1. An overview .................................................................................................................. 12

4.2. Collaborative demand planning and replenishment........................................................... 13

4.3. Collaborative production................................................................................................. 16

4.4. Collaborative logistics planning ....................................................................................... 16

5. Concluding remarks ........................................................................................................... 17

6. References ....................................................................................................................... 18

In: Theo Camps, Paul Diederen, Gert Jan Hofstede, Bart Vos (eds) (2004), The Emerging

World of Chains & Networks, Elsevier, Hoofdstuk 2.1

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 2

Supply Chain Management: theory and

practices

Dr. Ir. Jack G.A.J. van der Vorst

1. Introduction

Fierce competition in today's global markets, the introduction of products with short life

cycles, and the heightened expectations of customers have forced business enterprises to invest in,

and focus attention on, the relationships with customers and suppliers (Simchi -Levi et al., 2000).

Supply Chain Management (SCM) has become part of the senior management agenda since the

1990s. Executives are becoming aware that the successful coordination, integration and management

of key business processes across members of the supply chain will determine the ultimate success of

the single enterprise (Van der Vorst, 2000). According to Christopher (1998) businesses no longer

compete as solely autonomous entities, but rather as supply chains. The increased interest in SCM

has been spurred by developments in Information and Communication Technology (ICT) that enable

the frequent exchange of huge amounts of information for coordination purposes. Consequently,

there is a need and an opportunity for a joint approach of chain partners towards the establishment

of more effective and efficient supply chains.

This chapter presents an overview of the background, theory and current practices of SCM in

primarily industrial supply chains that produce, trade and distribute merchandise. First, we explore

the concept 'supply chain' and discuss its hiccups and potential improvements. Section 3 discusses

the key decisions and benefits of SCM. Section 4 presents an overview of current practices in SCM.

We end this chapter with some concluding remarks.

2. What is a supply chain?

2.1. Definition of a supply chain

In this chapter we take a process view, which means we look at a supply chain as a sequence of

(decision making and execution) processes and (material, information and money) flows that aim to

meet final customer requirements and take place within and between different supply chain stages.

The supply chain not only includes the manufacturer and its suppliers, but also (depending on the

logistics flows) transporters, warehouses, retailers, and consumers themselves. It includes, but is not

limited to, new product development, marketing, operations, distribution, finance, and customer

service (Chopra and Meindl, 2001). Figure 1 depicts a generic supply chain within the context of the

total supply chain network. Each firm belongs to at least one supply chain: i.e. it usually has multiple

suppliers and customers.

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 3

Figure 1. Schematic diagram of a supply chain (shaded) within the total supply chain network.

The traditional view on a supply chain is the cycle view (Chopra and Meindl, 2001). In this view

the processes in a supply chain are divided into a series of cycles, each performed at the interface

between two successive stages of a supply chain. This means that each cycle is decoupled from other

cycles via an inventory so it can function independently, optimise its own processes and is not

hindered by 'problems' in other cycles. For example, a cycle that replenishes retailer inventories by

delivering products from the manufacturers end-product inventory and a cycle that takes care of

replenishing the manufacturers inventory by producing new end-products. A cycle view of the supply

chain clearly defines the processes involved and the owners o f each process (hence roles and

responsibilities). Although this might seem a satisfactory situation, the next section will discuss some

negative effects from a supply chain perspective.

Box 1. Example of a food supply chain

Albert Heijn (AH), one of the leading retailers in the Netherlands, has to provide over 650 stores with the right

products at the right time depending on the needs of the customers. Each of these stores receives daily

deliveries from a national (for non -fresh products) and from one of the four regional distribution centres (for

fresh products). On average each store carries about 15.000 different kinds of articles. Therefore, a large

number of manufacturers is required to replenish inventory levels at the distribution centres. And again , each

manufacturer has many suppliers who deliver key components for the manufacturing process. Often, the

transport is arranged via a third -party logistic service provider.

2.2. Hiccups in the traditional supply chain: the bullwhip effect

The Beer Distribution Game is a management game developed at MIT's Sloan School of

Management in the USA (Forrester, 1961) to give managers and students insight in the consequences

of managerial actions in successive stages of a supply chain. It provides an exceptional means of

illustrating the impact of a supply chain view on supply chain performance and it is often referred to

in SCM literature as the starting point of supply chain research.

The Beer Distribution Game is a role-playing game in which the participants have to minimise

costs by managing inventory levels in a production-distribution chain. The game consists of four

supply chain stages: retailer, wholesaler, distributor and producer (Figure 2). Each sector has its own

small buffer stock to protect it against random fluctuations in final consumption. All a sector has to do

is to fill the orders it receives from its direct customer, and then decide how much it wants to order

from its supplier. The game is designed so that each sector has good local information but severely

Supplier Consumer

Consumer

Manufacturer

Supplier

Manufacturer

Supplier Manufacturer

Distributor

Retailer

Distributor

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 4

limited global (chain) information about inventory levels and orders. This means that only the retailer

knows real end customer demand. It takes two weeks to mail an order and two weeks to ship the

requested amount of beer from one sector to the next. It is not possible to cancel orders. Stock out

costs (associated with the possibility of losing customers) are twice as high as inventory carrying

costs. The objective of the game is to minimise the total sum of costs of all sectors in the beer supply

chain.

Figure 2. The beer supply chain.

The results of this game after 50 weeks of play are remarkable. Although consumer demand

is only doubled once in week 5, huge order fluctuations and oscillations take place in the SC. Usually

when playing the game, the producer receives demand patterns with 900% amplification compared

to end consumer demand fluctuations (see Figure 3). Furthermore, huge stock outs occur at the

retailer. When this game is played with different people (students or managers) but the same

structure, similar results are produced. Even though the participants act very differently as individuals

in ordering inventory, the overall (qualitative) patterns of behaviour are still the same: oscillation and

amplification of order patterns and a phase lag in reaction time resulting in bad delivery performances

and high costs. The further upstream the supply chain, the larger the variation in demand.

Figure 3 The Forrester or bullwhip effect.

This phenomenon in which orders to the supplier tend to have larger variance than orders from

the buyer, and the distortion propagates upstream in an amplified form (i.e. variance amplification) is

called the Forrester effect (Towill, 1997), named after the person who discovered it, or the Bullwhip

effect (Lee et al., 1997) , named for the variations in reaction down the length of a whip after it is

cracked. The effect has serious cost implications. The increased variability in the order process (i)

requires each facility to increase its safety stock in order to maintain a given service level, (ii) leads to

Retail Store Retail Store

Producer Distributor Retailer

orders

goods

Wholesaler

orders

goods

orders

goods goods

Order pattern

Weeknr

Order quantity

Wholesaler

Retailer

Distributor

Factory

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 5

increased costs due to overstocking throughout the system, and (iii) can lead to an inefficient use of

resources, such as labour and transportation, due to the fact that it is not clear whether resources

should be planned based on the average order received by the facility or based on the maximum

order (Chen et al., 1999). Furthermore, material shortages can occur due to poor product forecasting.

2.3. Causes of the bullwhip effect and potential solutions

The amplification is not caused by external factors (e.g. consumer demand) but created by the

parties in the supply chain themselves. The main causes are the perceived demand, the quality of

information and the inherent delays that may be found within the supply chain (Lewis and Naim,

1995). There is no timely information on changes in demand and one has to deal with a long lead

time between placing an order and receiving the products. Because of this long lead time, the

reaction time is too long; in the game it takes over 4 weeks to respond to sudden changes in

demand. This also leads to 'misperceptions of feedback', i.e. subjects tend to disregard the inventory

in the pipeline they ordered earlier and keep on ordering more (Sterman, 1989). Next to these

aspects Lee et al (1997) found a number of additional causes in real-life supply chains:

?? order batching due to economies of scale in ordering (quantity discounts) and transportation

(full truck loads) and the use of periodic planning systems;

?? price fluctuations driven by promotions; and

?? rationing and shortage gaming; i.e. the incentive to increase orders during shortages, place

orders with multiple firms, and cancel orders once inventory arrives.

Several redesign strategies are proposed to reduce demand amplification and improve supply

chain performance:

?? Eliminate all time delays in goods and information flows from the supply chain;

?? Exchange information concerning true market demand with parties upstream the supply

chain;

?? Remove one or more intermediate echelons in the supply chain by business take-over;

?? Improve the decision rules at each stage of the supply chain: modify the order quantity

procedures or their parameters.

Evans et al. (1995) quantified the impact of these improvement options and showed that the

performance could be drastically improved if the configuration and operational management of the

supply chain, the essence of SCM, is changed (Table 1).

Table 1. Implications of redesign strategies for the Beer Distribution Game (Evans et al., 1995)

Scenario Total chain cost Costs index Demand amplification (%)

Base case Beer Distribution Game 3358 1.47 900

No ordering delays 1944 0.85 500

No intermediaries between producer - retailer 939 0.82 350

Producer has access to consumer demand data 2295 1.01 425

All stages have access to consumer demand data 1293 0.57 200

Current research shows that the bullwhip effect is still present in all kinds of supply chains (food,

health, insurance, and so on). Current designs of supply chains are still causing inefficiencies and

inflexibility. To improve supply chain performance, a new way of managing the supply chain is

required that focuses on the alignment of supply chain processes: i.e. SCM.

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 6

3. What is Supply Chain Management?

3.1. Definition of Supply Chain Management?

The term 'Supply Chain Management' is relatively new. It first appeared in logistics literature in 1982

as an inventory management approach with an emphasis on the supply of raw materials (Oliver and

Webber, 1982). Around 1990, academics first described SCM from a theoretical standpoint to clarify

how it differed from more traditional approaches to managing the flow of materials and the

associated flow of information (Cooper and Ellram, 1993; see Table 2). Literature on SCM stresses the

need for collaboration among successive actors, from primary producer to final consumers, to better

satisfy consumer demand at lower costs (see, for example, Bechtel and Jayaram, 1997; Lambert and

Cooper, 2000). A driving force behind SCM is the recognition that sub-optimisation occurs if each

organisation in a supply chain attempts to optimise its own results rather than to integrate its goals

and activities with other organisations to optimise the results of the chain (Cooper et al., 1997). SCM

focuses on the management o f relationships. We define SCM as follows:

SCM is the integrated planning, co-ordination and control of all business processes1 and activities in

the supply chain to deliver superior consumer value at less cost to the supply chain as a whole whilst

satisfying requirements of other stakeholders in the supply chain (e.g. government and NGO's) .

Value is the amount consumers are willing to pay for what a company provides and it is

measured by total revenue. The concept 'value-added activity' originates from Porter's 'value chain'

framework and characterizes the value created by an activity in relation to the cost of executing it

(Porter, 1985).

Table 2. Characteristics of SCM according to Cooper and Ellram (1993)

Element Traditional Management Supply Chain Management

Inventory management approach Independent efforts Joint reduction in channel inventories

Total cost approach Minimise firm costs Channel-wide cost efficiencies

Time horizon Short term Long term

Amount of information sharing and

monitoring Lim ited to needs of current transactions

As required for planning and monitoring

purposes

Amount of co-ordination of multiple

levels in the channel Single contact for the transaction

between channel pairs Multiple contacts between levels in firms

and levels of channel

Joint planning Transaction-based On-going

Compatibility of corporate philosophies

Not relevant Compatible at least for key relationships

Breadth of supplier base Large to increase competition and

spread risk Small to increase co-ordination

Channel leadership Not needed Needed for co- ordination focus

Amount of sharing of risks & rewards Each on its own Risks & rewards shared over longer term

Speed of operations, information and

inventory flows 'Warehouse' orientation (storage, safety

stock). Interrupted by barriers to

flows. Localised to channel pairs

'DC' orientation (turnover speed).

Interconnecting flows; JIT, Quick

Response across the channel

It is worth noting that a growing number of terms are being utilized by individuals and

organisations that are presented as being more appropriate, comprehensive and/or advanced than

SCM. Such terms include demand chain management (to distinguish it from the type of management

in which 'supply' begins and drives the chain of activities), and value c hain management or value

1 A business process can be defined as a structured measured set of activities designed to produce a specified

output for a particular customer or market (Davenport, 1993). For ex ample, order fulfilment, demand

management or product development.

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 7

networks (to emphasise the value-added focus on processes). Since in our view the essence of these

terms is alike, we will employ the most commonly used term SCM in this chapter as a representative

for all these terms.

3.2. Key decisio ns in Supply Chain Management

Lambert and Cooper (2000) distinguish three key decisions in SCM, summarised in Figure 4. The

conceptual framework emphasizes the interrelated nature of SCM and the need to proceed through

several steps to design and successfully manage a supply chain. Each step is directly related to the

supply chain objectives, i.e. the degree to which a supply chain fulfils end -user requirements

concerning the key performance indicators at any point in time, and at what total cost. Key

Performance Indicators (KPIs) refer to a relatively small number of critical dimensions which

contribute more than proportionally to the success or failure in the marketplace (Christopher, 1998).

KPIs compare the efficiency and/or effectiveness of a system with a norm or target value. A well-

defined set of supply chain performance indicators will help establish benchmarks and assess changes

over time. A good example is the Supply Chain Operations Reference-model (SCOR) developed by the

Supply-Chain Council (SCC) as the cross -industry standard for SCM (see www.supply -chain.org ).

SCOR provides an integrated, heuristic approach for supply chain improvement via (i) the modelling

of business processes, (ii) the definition of SCM metrics for evaluating the supply chain and rapidly

identifying high value opportunities and (iii) the identification of best practices to provide a candidate

list of improvement options.

Figure 4. Key decisions in SCM (adapted from Lambert and Cooper, 2000).

Supply chains can be managed as a single entity through the dominant member or, alternatively,

through a system of partnerships requiring well-developed co-operation and co -ordination.

Formulating supply chain objectives is therefore not an easy task since all partners have to agree on

the selection of indicators, the definition of the indicators and the target values. The present

performance measures used in most companies have several problems that prevent them from

effectively measuring total supply chain performance. Supply chain participants should start with

jointly identifying order winners and satisfiers for the supply chain, because these provide the

intended direction of control actions to improve supply chain performance. By analysing the goals of

Supply Chain

Business

Processes

Supply Chain

Network

Structure

Supply Chain

Management

Components

Supply Chain Management

Supply Chain

Business

Processes

Supply Chain

Network

Structure

Supply Chain

Management

Components

Supply Chain Management

2) What processes should be

linked with each of these

key supply chain members?

2) What processes should be

linked with each of these

key supply chain members?

1) Who are the key supply

chain members with whom

to link processes?

3) What level of integration

and management should be

applied for each process link?

Supply Chain

Objectives Supply Chain

Performance

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 8

each individual organisation and by identifying market requirements, integrated KPIs can be defined

and norms established. We will now discuss the three key decisions in more detail.

1. Who are the key supply chain members with whom to link processes?

The first step in analysing and redesigning a supply chain is to determine the organisations

that are part of the supply chain under investigation. For most manufacturers, the supply chain looks

less like a pipeline or chain than an uprooted tree, where the branches and roots are the extensive

network of customers and suppliers. The question is how many of and how intensive these branches

and roots need to be managed. Management will need to choose the level of partnership appropriate

for each particular supply chain member knowing that firm capabilities in time and effort are limited

(Lambert & Cooper, 2000). With some suppliers partnerships are required since the raw materials

they deliver are crucial; others are less important and only have to be monitored. The key is to sort

out which members are critical to the success of the company and the supply chain – in line with the

supply chain objectives - and, thus, should be allocated managerial attention and resources.

2. What processes should be linked with each key member?

Successful SCM requires a change from managing individual business processes within one

organisation to integrating activities over organisations into key supply chain processes. Lambert and

Cooper (2000) have identified eight key business processes that could be integrated with the key

members in the supply chain (see table 3). It is usually not necessary to integrate all processes; e.g.

if the order winner is responsiveness focus should be on order fulfilment, whereas if t he order winner

is innovation focus should be on joint product development.

Table 3. Business processes that could be integrated in the supply chain.

Business process General description

Customer relationship management Specifying service level agreements with key customers

Customer service management Providing the customer with real -time information on promised shipping dates and

product availability through interfaces with the organizations' production and

distribution operations

Demand management Balancing the customer's requirements with the firm's supply capabilities

Order fulfilment Delivering products and meeting customer need dates

Manufacturing flow management Pulling product through the plant based on customer needs

Procurement Developing s trategic plans with suppliers to support the manufacturing flow

management process and development of new products

Product development and

commercialisation Customers and suppliers must be integrated into the product development process in

order to reduce time to market

Returns process Aligning processes to realise an efficient return of re-usable items

SCM literature suggests several redesign strategies to improve the effectiveness and efficiency of

these business processes in the supply chain. Van der Vorst and Beulens (2002) have identified a

generic list of SCM redesign strategies to facilitate the redesign process and accomplish joint supply

chain objectives. These are the following:

?? Redesign the roles and processes performed in the supply chain (e.g. change or reduce the

number of parties involved, re-allocate roles and eliminate non-value -adding activities);

?? Reduce customer order lead times (e.g. change the position of the decoupling point (see the next

section), implement ICT systems for information exchange and decision support, reduce waiting

times, increase manufacturing flexibility);

?? Create information transparency (e.g. establish an information exchange infrastructure in the

supply chain and exchange demand/supply/inventory or WIP information, standardise product

coding);

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 9

?? Synchronise logistical processes to consumer demand (e.g. increase execution frequencies of

production and delivery processes, decrease the lot sizes); and

?? Co-ordinate and simplify logistical decisions in the supply chain (e.g. co-ordinate lot sizes,

eliminate human interventions, differentiate and simplify products, systems and processes).

Van der Vorst and Beulens (2002) propose that in order to identify the most effective strategies in a

specific supply chain one should focus on the identification and management of the sources of

uncertainties in the supply chain's decision -making processes. We refer to their article for an

elaborated discussion.

3. What level of integration and management should be applied to each process linkage?

The literature on business process reengineering and SCM suggests numerous possible

components that must receive managerial attention when managing supply relationships. Lambert

and Cooper (2000) distinguish two groups of management components; see table 4. The first is the

physical and technical group, which includes the most visible, tangible, measurable and easy -to -

change components. The second group, the managerial and behavioural components, defines the

organizational behaviour and influences h ow the physical and technical management components can

be implemented. If the managerial and behavioural components are not aligned to drive and reinforce

an organizational behaviour supportive to the supply chain objectives and operations, then the supply

chain will likely be less competitive and profitable. If one or more components in the physical and

technical group are changed, then management components in the managerial and behavioural

group likewise may have to be re-adjusted. Especially the managerial and behavioural components

are well-known obstacles to SCM as they might hinder the development of trust, commitment and

openness between supply chain members (as we will discuss in section 4).

Table 4. Two groups of management components that have to be aligned in the supply chain.

Physical and technical components Managerial and behavioural components

?? planning and control methods (e.g. push or pull control);

?? work flow/activity structure (indicates how the firm

performs its tasks and activities);

?? or ganisation structure (indicates who performs the tasks

and activities, e.g. cross-functional teams);

?? communication and information flow facility structure

(e.g. information transparency);

?? product flow facility structure (e.g. location of

inventories, decou pling points).

?? management methods (i.e. the corporate

philosophy and management techniques);

?? corporate culture and attitude;

?? risk and reward structure;

?? power and leadership structure.

Concluding remark

The groundwork for successful SCM is established by an explicit definition of the supply chain

objectives and related key performance indicators and, successively, by taking the three key SCM

decisions. The optimal supply chain design will differ for each supply chain depending on the

competitive strategy and the market, product and production characteristics. To illustrate this, the

next section will discuss in more detail one of the main trade-offs to be made in SCM, that is, the

trade-off between efficient and responsive supply chains.

3.3. The trade-off between efficiency and responsiveness

Marshall Fisher (1997) suggests that the nature of the demand for a product should be carefully

considered before a supply chain strategy is (re)devised. Fisher divides products into two categories:

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 10

?? primarily functional products satisfying basic needs which have stable, predictable demand and

long life cycles typically with high levels of competition resulting in low profit margins;

?? primarily innovative products with higher profit margins, have unpredictable demand and sh ort

life cycles and, usually higher levels of product variety.

Fisher states that the root cause of the product availability problem in present-day supply chains is a

mismatch between the type of product and the type of supply chain. Supply chains that deal with

functional products should focus on efficiency / leanness to minimise the physical costs related to

production, transportation and inventory storage. On the other hand, supply chains that deal with

innovative products should be designed focussing o n responsiveness / agility to minimise market

mediation costs (i.e. the cost that arise when the variety of products reaching the marketplace does

not match what consumers want to buy resulting in lost sales opportunities and dissatisfied

customers). Table 5 compares both types of supply chains.

Table 5. Physically efficient versus market -responsive supply chains (Fisher, 1997).

Physically efficient (lean) process Market-responsive (agile) process

Primary purpose ?? Supply predictable demand efficiently

at the lowest possible cost ?? Respond quickly to unpredictable

demand in order to minimise stock

outs, forced markdowns, and

obsolete inventory

Manufacturing focus ?? Maintain high average utilisation rate ?? Deploy excess buffer capacity

Inventory strategy ?? Generate high returns and minimise

inventory throughout the chain ?? Deploy buffer stocks of parts or

finished goods

Lead -time focus ?? Shorten lead time as long as it does

not increase cost ?? Invest aggressively in ways to reduce

lead time

Approach to choosing

supplie rs ?? Select primarily for cost and quality ??Select primarily for speed, flexibility

and quality

Product -design strategy ?? Maximise performance and minimise

cost ?? Use modular design in order to

postpone product differentiation for

as long as possible

What we have seen in the last 15 years is that consumers and retailers have become much more

demanding and product-life cycles have shortened significantly in all kind of sectors (e.g. computers,

food, automotive). In today's marketplace the keys to long-term competitive advantage are flexibility

and customer response. This has resulted in functional products becoming innovative products. The

problem is that the supply chains that produce those innovative products are still efficient. According

to Fisher they should transform towards responsive customer-driven supply chains in order to be

competitive again; see figure 5.

Figure 5. Supply chain design in relationship with the nature of product demand.

Match

Mismatch

Match

Efficient (lean)

supply chain

Responsive (agile)

supply chain

Functional

products Innovative

products

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 11

It is not necessarily the case that a complete supply chain sh ould be either lean or agile.

Mason-Jones et al. (2000) and Christopher and Towill (2000) expanded on the thoughts of Fisher and

also state that the supply chain strategy and structure should be in tune with the characteristics of

the marketplace. They focus on hybrid strategies by integrating the lean and agile paradigms and

introduce the concept of leagility , i.e. "the combination of the lean and agile paradigm within a total

supply chain strategy by positioning the decoupling point so as to best suit the need for responding to

a volatile demand downstream, yet providing level scheduling upstream from the decoupling point".

The decoupling point (DP) refers to the inventory point the most upstream the supply chain

at which real demand penetrates upstream in a supply chain. Downstream of the DP the material flow

is controlled by customer orders/demand and the focus is on customer lead time and flexibility

(employing small batch sizes). Upstream towards suppliers, the material flow is controlled by

forecast ing and planning, and the focus is on efficiency (usually employing large batch sizes). The DP

creates the opportunity for upstream activities to optimise independently from irregularities in market

demand. It must be determined where the decoupling point should be for each product-market

combination or product group in the company. Therefore a company can have several different DP's

and even a single product can have more than one, as it can serve multiple product-market

combinations. However, the control complexity will increase significantly when the number of DP's

increases. Hoekstra and Romme (1992) distinguish five positions of the decoupling point depicted in

Figure 6.

Figure 6. Five positions of the DP (after Hoekstra & Romme, 1992).

There are many factors exerting an upstream or downstream influence on the DP. It is a

balancing process between (i) market related factors, such as the delivery lead time requirements set

by the market, product demand uncertainty, product range and product customisation requirements;

(ii) product related factors, such as possibilities for modular product design and product customisation

opportunities; and (iii) production related factors, such as the production lead time and the flexibility

of the production process (Olhager, 2003). All these factors indicate to what extent it is possible or

reasonable to make products to order or to stock; e.g. the more unpredictable the demand, the more

Production Local warehouse

Suppliers Customers

of half

fabricats of end

products Distribution

Raw materials End product

Purchase, produce, pack and deliver on order

5Purchase, produce, pack and deliver on order

Deliver from local stock

1Deliver from local stock

Make to stock

2Make to stock

Assemble/pack and deliver on order

3Assemble/pack and deliver on order

Planning driven activities

Focus on efficiency

Produce, pack and deliver on order

4Produce, pack and deliver on order

Customer order driven activities

Focus on responsiveness

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 12

responsive the supply chain should be. And the longer the delivery lead time can be, the more

efficiently the supply chain can be managed.

The general trend for the position of the DP is to shift upstream the supply chain, i.e. the

planning and execution of activities at industrial manufacturers and primary producers are more and

more based on consumer demand information (van der Vorst et al., 2001). A good example is the

fabrication of cars; nowadays cars are assembled only after the customer order has been received

requiring very flexible manufacturing systems (see also box 2 and 5 ).

Box 2. Increasing responsiveness by relocating the decoupling point in the supply chain

15 years ago, the computer industry was characterised by delivery lead times up to multiple weeks – mainly

because the production lead time was very long. Since th en, customer requirements have changed resulting in a

request for short delivery lead times and a large product portfolio. Producers have reacted to this by shifting the

decoupling point upstream in the supply chain. In order to keep the business profitabl e they focused on (1)

internet technology to establish high-speed information exchange and have direct customer order information

(thereby eliminating the dealer network), (2) product standardisation and modularisation (by using generic or

modular inventor y the final commitment to a specific customer order is postponed), (3) close partnerships with

suppliers that deliver the requested modules at the requested time and place, (4) increased production/assembly

flexibility, and (5) fast transportation structur es. Nowadays, computers are assembled to order and the requested

configuration can be delivered within a few days (see for example, www.dell.com ).

3.4. Benefits of Supply Chain Management

The profitability of the supply chain could be improved drastically via better delivery performance

(improved responsiveness and reliability of deliveries, fewer stock outs, higher product quality, more

receiver-friendly loads) and increased information availability (better demand insight, more

predictable order cycles, accurate, real-time) at the operational level and a reduction of time-to-

market at the tactical and strategic level. The potential for improvement when applying SCM-concepts

is based on the reduction of inventory -carrying (reduced overstocks, faster inventory turns) and

transportation costs (pooling of transport), the reduction of indirect and direct labour costs and the

increase of sales and sales margins.

Many companies are re-engineering and rationalising their supply chain network to obtain these

benefits. The next section will discuss the currently most prominent SCM projects in practice.

4. Practices in Supply Chain Management

4.1. An overview

In the last ten years numerous projects on supply chain collaboration were done to analyse how

firms could use their suppliers' and customers' processes, information, technology, and capability to

enhance competitive advantage. Most projects were done in the front-end of supply chains, that is in

the interface between retailer and manufact urer. But also in the interface between manufacturers and

suppliers and/or third parties numerous enhancements were made. The last years manufacturers

have been instigated to focus on core business resulting in the outsourcing of non-core activities such

as transportation and the centralisation of manufacturing activities. The practical experiences can be

categorised into the following areas (see figure 7), which we will discuss in more detail in the coming

sections:

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 13

?? Collaborative demand planning and replen ishment: retailers and manufacturers work together to

assess consumer demand and to determine the most appropriate supply management and

replenishment approach to meet this consumer demand;

?? Collaborative production: manufacturers and suppliers work together to harmonise the supply of

raw materials and the production of end products in such a way as to minimise the stocks within

the supply chain and maximise the responsiveness;

?? Collaborative logistics planning : co-ordinating transport and warehousing between the various

parties involved, including transshippers, logistic service providers, carriers and recipients.

A precondition for supply chain coordination is the establishment of connectivity and transparency,

i.e. interconnecting the information systems of the successive partners in the supply chain and

exchange information via this infrastructure.

Figure 7. Areas for collaboration in the supply chain (after Barratt and Oliveira, 2001).

Although a lot of research and practical experience with SCM-issues has been obtained, we have

to acknowledge that few companies have actually established a management environment that

supports the integration required for effective SCM. Instead, many chains are still functionally

oriented and are characterised by a lack of trust and credibility among the supply chain organisations.

In the coming sections we will focus on companies and efforts that have excelled in SCM. The reader

should keep in mind that they are the front-runners.

4.2. Collaborative demand planning and replenishment

Vendor Managed Inventory (VMI) is a technique developed in the mid 1980s, whereby the

supplier has the sole responsibility for managing the customer's inventory policy, including the

replenishment process. VMI was adopted by many companies in different business sectors; two of the

first companies to put the theory into practice were Procter & Gamble and Wal-Mart in the USA (see

box 3). The major weakness of VMI lies in the insufficient visibility of the whole supply chain; point-

of-sale (POS) data as well as the backroom inventory level data are disregarded whilst the

replenishment process (and the inventory policy) is based in the variation of stock level in the

customer's main warehouse or distribution centre (Barratt and Oliveira, 2001). This has led the search

for alternative, more effective, techniques.

Collaborative logistics planning

Connectivity and transparency

Collaborative

demand planning

& replenishment

Collaborative

production

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 14

Box 3. Wal-Mart and Proctor & Gamble

Several well-known firms involved in supply chain type relationships (e.g., Procter & Gamble (P&G) and Wal-

Mart, the US's fastest growing retailer) owe much of their success to the notion of information and the systems

utilised to share this information with one another. Through state-of-the-art information systems, Wal-Mart

shares point-of -sale information from its many retail outlets directly (via satellite) with P&G and other major

suppliers. The product suppliers themselves become responsible for the sales and marketing of their products in

the Wal-Mart stores through easy access to information on consumer buying patterns and transactions. P&G

expanded t hese working methods with a new distribution system that allowed customers to buy and receive all

P&G products together on the same truck – regardless of which business sector manufactured the brand. This

development, together with the introduction of new pricing structures, pallet standardisation, electronic invoicing

and new procedures for handling damaged products resulted in huge savings. Because of the speed of this

system, Wal-Mart pays P&G after the merchandise passes over the scanners as the consume r goes through the

checkout lane.

The first robust initiative created to enable integration in the food supply chain dates back to

1992, when Kurt Salmon Associates (1993) issued a report on Efficient Consumer Response . Supply

chain benefits could be ach ieved by excelling in four core strategies: efficient promotions, efficient

replenishment, efficient store assortment and efficient product introductions. The report proposed, for

the first time, the driving need to "develop a trust-based relationship between manufacturers and

retailers (including suppliers and customers in general), with the sharing of strategic information in

order to optimise overall supply chain results''. Having this requirement outlined, the various sectors

of the industry began to develop a number of techniques to make the ECR promise a reality. More

information can be found on www.ecrnet.org with hyperlinks to all national initiatives and currently

running projects.

The logistical branch of ECR, Efficient (or Continuous) Replenishment (ER), moves one step

ahead of VMI and reveals stock levels in retailers' stores and uses POS data to generate a sales

forecast. It aims for a.o. the establishment of responsive and efficient replenishment by shifting the

decoupling point as far upstream the supply chain as possible. ER uses concepts such as automatic

replenishment systems based on (i) the sales forecast, built from historical demand data and no

longer purely based on the variations of inventory lev els at the customers' main stock -holding facility,

(ii) high frequent deliveries with short lead times, and (iii) cross docking, i.e. eliminating product

storage at warehouses where products received are turned around for shipment to retail stores within

24 hours. The process of creating the sales pattern and then predicting future events is ER's major

weakness (Barratt and Oliveira, 2001).

Collaborative Planning, Forecasting & Replenishment (CPFR) deals with this weakness and has

been described as a step beyond ECR, because of the high level of co-operation and collaboration

needed. Rather than trying to independently project demand patterns, buyers and sellers share

information in advance and work together to develop realistic, informed, and detailed estimates that

can be used to guide business operations (Stank et al. 1999). Utilizing principles of CPFR, a retailer

and manufacturer work together to jointly create a single, combined promotion calendar in advance

of the selling period which is subsequently up-dated on a real-time basis over the Internet. The

retailer also provides point-of-sale (POS) data, longer-term promotional plans, prescribed inventory

levels, etc. for the consumer goods trading partner. Both firms create sales and order forecasts and a

collaborative system is used to compare the retailer's forecast to the consumer goods firm's own

forecast. Discrepancies or exceptions are identified and appropriate managers advised. Working

together, the "team" decides on one, i.e. collaborative, forecast extending across the supply chain.

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 15

It is clear that this intensive collaboration is not suitable for all businesses; the additional

management attention is only fruitful if the product volume in the relationship is large enough,

demand uncertainty is high and the partner (wants to!) deliver additional knowledge/information

which reduces the forecast error. If volumes are small it might be wiser to use low delivery

frequencies. This has been called Supply Chain Synchronization . It aims to synchronise t he

replenishment to the efficient production schedule facilitating full truckload (FTL) transport and shift

stocks downstream to the stores where they are needed.

Practice shows that the true benefits are realized only when collaborative plans are linked to

operational change; the information must also be used for production and distribution planning.

Accurate demand planning enables manufacturing to postpone production of anticipatory stock and

can also result in shorter, more predictable order cycles. Guaranteed sales targets allow logistics and

distribution managers to make better use of storage and delivery resources to reduce costs as well as

to increase customer service by tailoring operations. Retail receiving departments, for example, may

work more closely with a manufacturer's shipping department to allow shipments to be loaded in the

order in which products are needed, facilitating off-loading and sorting time and further streamlining

cycle times (Stank et al. 1999). For more information on CPFR we refer to www.cpfr.org .

Box 4. Shortened Fresh Collection ( www.klict.org)

Nowadays, consumers and retail demand a varied assortment of floricultural products and a year round supply of

top quality produce, all for a reasonable price. To meet the growing consumer demands the floricultural chains

will have to be reversed from product oriented (push) to market-oriented (pull). A consumer driven chain can

only be successful if the chain is organised in a flexible, efficient and responsive way. In order to speed up the

flow of goods throughout the chain, from the grower to the retailer or florist, new logistical chain concepts have

been developed in the project "Shortened Fresh Collection". These new concepts where inspired by the need to

deliver more frequent, in lower batches within a lead time shorter than the current 27 hours.

The project aimed at optimising the logistical processes of the ornamental plant cultivation network in Bleiswijk,

the Netherlands. The objective was to clarify and significantly reduce the lead time of the product range for a

supply chain, from the moment the exporter places an order to the time of actual delivery to the exporter's

premises. Participants in the project were FloraHolland Flower Auction, growers, wholesaler Lemkes and carriers.

Via chain analysis, simulation of logistical flows and a pilot study new logistical chain concepts were tested in

practice and evaluated on environmental burden, feasibili ty, total costs and lead time. The results showed that

lead times could be significantly decreased at lower costs. It requires: (1) the use of electronic ordering systems;

(2) reduction of waiting times in the supply chain implicating a change in the working methods of especially

growers; (3) collaboration in the transport of plants from specific regions.

The project showed that "people make the difference" in vertical chain partner shipping. Time is needed to build

trust and to create commitment between t he successive links in the chain. It requires the use of tools like

workshops with the partners, chain performance measurements, agreements on responsibilities and the division

of costs and revenues. In the project, trust between the partners in the chain has grown significantly. Especially

the understanding of each other's role, added value and wins for chain cooperation lead to a common

competence to act as a whole. The chain as a whole has changed their way of working, from a daily trade

operation being concerned with daily prices and orders, into a long term partner shipping in which joint

consumer concern is leading and supply performance is under control. This should be followed by scaling up by

means of developing a universally applicable solution wit h which to reduce the lead times of an ornamental plant

cultivation cluster.

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 16

4.3. Collaborative production

The second area where a lot of SCM practices are achieved is collaborative production. The need

for customer-order driven supply chains that are responsive at low cost has placed a high demand on

the flexibility and efficiency of the manufacturing processes. These are enhanced by several practices:

product standardisation, re-allocation of production and warehousing facilities, outsourcing of

production v olume, sharing capacity of a single plant, and supplier partnerships/contracting.

Especially in food industry were one has to deal with seasonality in supply and perishable products,

production capacities are often limited. Supplier contracting is a common way of assuring supply of

the right products at the right time at the right place. Several manufactures have started to cooperate

within a single plant to exchange capacities and increase manufacturing flexibility (e.g. automotive,

call centres and printing services). Others have started partnerships with its suppliers and have

integrated supplier activities within their plant – see box 5.

Box 5. The Smart car (van Hoek and Harrison, 2003)

Micro Compact Car AG (MCC), a wholly-owned subsidiary of Daimler-Benz, is the company behind Smart.

Together these manufacturers have developed a new supply chain concept that went beyond existing practices.

It is characterised as follows:

?? customers can say how they want their product to be configured;

?? cars are built from about 50 modules to customer order with lead - times counted in weeks;

?? dealers/importers have been eliminated in the supply chain; smart centres can order directly at the plant;

?? suppliers have co-invested in the production location and take a greater share in the final assembly process;

?? the value added during final assembly, which takes just 4,5 hours, is just 10 per cent of the production cost

price because of the modular product layout. This enables MCC to supply customer choice with minimum

product compl exity, facilitates 'upgrading' during its lifetime, and permits engineers to renew the car or

extend the product line within short time frames. Features that might disturb production if made optional

(such as ABS, etc.) are integrated as standards in the car.

?? 7 first-tier suppliers are integrated in the assembly hall of MCC; their pre -assemble of modules is

synchronised to the planning of the final assembly process and modules are delivered on a just -in-time

basis. 16 non-integrated suppliers deliver the first -tier suppliers and MCC.

Contracts with the suppliers are intended to last the entire life cycle of the SMART car, and are based upon

single -sourced modules satisfying high-standard requirements. Each partner receives a share of the profit of

each sold car (related to the investments made) instead of being paid for the modules delivered. To facilitate

communication and the exchange of ideas among staff and partners, a central area of the factory (which in total

covers 68 hectares!) is designed as a open meeting room. Furthermore, standard performance measures for

each sub-section of the process are displayed electronically for everyone to see.

4.4. Collaborative logistics planning

The third area for SCM projects is related to the transportation of goods betw een stages in the

supply chain. Whereas in the past every actor organised its own transport, technological advances in

logistics and ICT enable the development of new paradigms based on cooperation. This facilitates the

consolidation of goods which decreases costs and increases responsiveness. A good example is the

development of Manufacturing Consolidation Centres by Lever Fabergé, Kimberly Clark, Ola and Iglo

Mora. In these centres many small incoming lots of material from different suppliers, that are to be

delivered to the same customer, are consolidated into fewer, larger loads for efficient onward

despatch.

Recently, activities have been deployed to evaluate the concept of orchestration in which a fourth

party manages the execution of business activities (e.g. transportation) on behalf of the business

owners. Logistical service providers can adopt the orchestrator role and perform the management of

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 17

logistics processes for manufacturers and retailers. This requires the support of sophisticated ICT

tools that provide product flow monitoring capabilities, resource capacity and product visibility and

flow planning and scheduling of information. See box 6 for an interesting case.

Box 6. An internet Hub for the Vos Logistics Supply Chain (Hillergersberg et al., 2003)

Vos Logistics is a third party logistics service provider that is active in adding value to its portfolio of logistics

services. Vos is one of the larger, asset based, transport and logistical companies on the European Market. The

company employs more than 4000 people working at more than 30 offices throughout Europe. The firm's long -

term strategy is to become a full logistics service provider for its customers, offering services such as

warehousing, transportation management and supply chain (re)design.

The case is concerned with the Vos sea containers transport from its Veendam terminal to the Rotterdam

harbour for customers such as Avebe, Friesland Dairy Foods, Kappa, Akzo and Dow Chemical. Dependent on the

cost and speed requirements of the customer, transport takes place over road, water and rail connections.

Several parties are involved in the supply chain such as rail operators, barge operators, charters, terminals, etc.

Current limitations in the supply chain are the following: there is lack of real-time information on the status of

containers, a large number of containers are involved in exceptions such as no shows and delays, and the same

order information is entered in the system multiple times. Although the transport of containers seems s imple,

many parties are involved, and many pieces of information from these parties need to be consolidated at the

right place at the right time in order to avoid operational problems.

Early 2000, Vos and Informore, an ICT company that specializes in providing logistics hubs, initiated a project to

create a central logistics information hub that would register and communicate data within the supply chain and

optimises the planning and monitoring of the transportation system. Using the hub, Vos can monitor the

information exchange and the activities taking place on a real-time basis. Other parties connected can monitor

part of the information in the hub of interest to them. The case showed that there were a lot of benefits to be

obtained: chain transparency and coordination resulted – via the hub – in shorter throughput times and

increased resource utilisation and productivity. For an elaborated description of the case, we refer to

Hillergersberg et al. (2003)

One of the latest trends is called Factory Gat e Pricing (FGP) – which makes the retailer the

orchestrator of transportation. The manufacturer makes its products available at its warehouse and

gets the price of goods without transportation costs. The logistic service providers that also take care

of th e distribution from retail warehouse to outlets and returns flows, can optimize the total flows by

incorporating the flows from suppliers. Whether FGP is interesting depends on demand characteristics

(volume/variability), type of replenishment (degree of responsiveness), product characteristics

(perishability/value), the geographical distances and infrastructural characteristics such as the

number of docks available. When we compare FGP with CPFR, we can conclude that FGP is

interesting when volume and demand variability are low; CPFR is interesting when the volume and

the demand uncertainty are high. The main barrier for manufacturers to implement FGP are the

required internal changes at suppliers (to facilitate the pull flow), the reduction of transport volume

(which makes the efficient planning of the remaining flows difficult) and the required transparency in

product prices and transportation costs.

5. Concluding remarks

Despite many considerable efforts SCM is to a large extent still only a promise. Most supply

chains are characterised by a lack of chain transparency and co -operation, and SCM projects usually

deal with only a part of the supply chain. Most SCM-concepts (such as VMI, CPFR and FGP) require

Supply Chain Management: theory and practices (2004) - Dr. Ir. Jack G.A.J. van der Vorst Page 18

transparency and the open calculation of costs and revenues to allocate them between supply chain

partners. However, the definition of cost drivers and the related norms is not an easy task. It requires

trust and an in-depth insight in each other processes, which is difficult, since the widely followed

competitive model suggests that companies will lose bargaining power - and therefore the ability to

control profits - as suppliers or customers gain knowledge. Although organizations perceive the

benefits of SCM, main barriers to the implementation are the lack of trust, diverging objectives,

compatibility of managerial philosophy, and reward structures that support the chain objectives.

The development of an ideal supply chain is not a one-time exercise. Each relationship has its

own set of motivating factors driving its development as well as its own unique dynamic operating

environment. Therefore, the duration, breadth, strength and closeness of the partnership will vary

from case to case and from time to time.

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... The supply chain concept emerged in the 1970s with a focus on the integration of logistics operations within companies to reduce costs [15,16]. Gradually, the supply chain began to be thought of in a broader context, i.e., going beyond the borders of a single company [15,[17][18][19]. Integration and matching lie at the heart of the supply chain concept [20,21], including the integration and adaptation of cooperating companies. ...

... In this broader sense, the term 'supply chain' was first used in the early 1980s by Oliver and Weber [22] (1982). Initially, an integrated approach to supply chain management (SCM) focused on minimising costs [15,19]. The central issue for the supply chain concept is to move away from treating its links separately and looking at them in an integrated, systemic way. ...

... Such a systemic view is also reinforced by the development of the supply chain idea of integrated governance of the activities of its links [15][16][17][18][19][20][21][22]. Chains are defined not only by the flow of the products, but also by the informational interconnections. ...

The typical approach in the business strand of literature on inter-organisational forms of cooperation is based on the Porter's value chain model or on the body of literature related to the supply chain. However, there is extended research on value chains based on a different theoretical tradition, rooted in world-systems theory and commodity chain concepts, which recently tend to merge under the umbrella of the Global Value Chain (GVC). We use this eclectic approach as a theoretical framework to investigate the issue of informational asymmetries considered as a barrier in upgrading the position of local producers in the GVC by enhancing quality. As an empirical illustration, we use the Polish apple sector. Poland is one of the largest apple producers in the world with a strong export orientation and linkages with the global value chain. The study provides an insight into the barriers of upgrading the position in GVC and ways to overcome them. Responsibility for the final quality offered for the end-user is strongly dispersed across many actors in the chain, while interrelations between them are plagued by the information asymmetry problem. Therefore, the upstream transmission of end-user quality expectations within the chain fails due to the lack of orchestrating incentives and causes the misbehaviour in conducting different activities in the chain. Thus, attempts to upgrade the position of Polish apple growers in the GVC should be focused on overcoming information asymmetries. Mechanisms such as branding, standardisation and certification seem to be promising ways forward.

... E-mail: yusuf.amrozi@uinsby.ac.id why supply chain management is needed. (Van Der Vorst, 2004) Van Der Vorst defined supply chain management (SCM) as "the integrated planning, coordination, and control of business processes and activities in the supply chain to deliver superior consumer value at less cost to the supply chain as a whole whilst still satisfying requirements of other stakeholders in the supply chain". With supply chain management, supply chains can increase profitability by reducing costs and providing better delivery performance and product quality thanks to better information availability and collaboration. ...

... With supply chain management, supply chains can increase profitability by reducing costs and providing better delivery performance and product quality thanks to better information availability and collaboration. (Van Der Vorst, 2004) SCM relies heavily on information, so it also relies on ICT and information systems. Supply chain management information system (SCMIS/SCIS) is important for sustainable SCM because it benefits organization, suppliers, and customers (de Camargo Fiorini & Jabbour, 2017). ...

... This is a common issue in supply chain management, but this wastes one of the strengths and reasons to use blockchain; its transparency. That transparency itself might even be the cause of the unwillingness, because organizations might lose its bargaining power as information are revealed (Van Der Vorst, 2004). Zhang et al. (C. ...

Muhammad Rizqi Nur
Luqman Hakim
Yusuf Amrozi

Blockchain has been the hype in technology lately and supply chain management is often mentioned as one of its applications. However, it is unwise to just eat the hype. Blockchain does have weaknesses; some of its natures considered as strengths might be weaknesses or problems in some cases. There are many things to be considered and among them are the challenges. This paper presents a systematic literature review of challenges in using blockchain for supply chain management information systems. This paper aims to help stakeholders and top management of supply chains when considering on adopting blockchain. The literatures were gathered from open-access papers found on Google Scholar. A total of 76 unique papers were found and then 29 were selected. The findings were classified into 12 categories. The top three category of challenges are development and implementation, performance and efficiency, and sustainability and scalability. Apparently, although blockchain in cryptocurrency is pretty solid, there are many challenges in its usage for supply chain.

... Interestingly, blockchain got that covered! One of the prominent application of blockchain is supply chain management, which denotes the integrated planning, co-ordination and control of all business processes and activities among successive actors, to deliver superior consumer value from primary producer to final consumers, to better satisfy consumer demand at lower costs whilst satisfying requirements of other stakeholders in the supply chain (Vorst, 2004). Blockchain enabled supply chain management can be adopted to enhance library operations and services such as charging and discharging of library materials, interlibrary loan, collection development processes (selection, ordering, acquisition, supply, payment of library resources) etc. ...

This chapter explored the concept and application of blockchain technology in libraries and information centers. Blockchain is one of the emerging technologies thriving in the fourth industrial revolution. It is the application of cryptography for creating a time-stamped, immutable, and dynamic database, distributed across nodes in a network. Although its emergence began with cryptocurrencies, advancement in this technology has given birth to a fourth generation of blockchain with industrial disruptive capabilities, cutting across various fields including library and information science. Accordingly, the application of blockchain in libraries and information centers was thoroughly examined. Specifically, the chapter underscored the application of blockchain in circulation services, collection development, storage and archiving of records, research data management, cataloging and classification, indexing and abstracting, digital first right (DFR), etc. Lastly, the merits and demerits of blockchain in libraries and information centers were furnished accordingly.

Serkan demirdöğen

Bu bölümde, sırasıyla risk kavramı ve risk yönetimi, tedarik zincirinde risk yönetimi, tedarik zincirinde risk yönetim süreçleri, tedarik zincirinde risk kaynakları, tedarik zincirinde riski azaltma stratejileri açıklanmış ve son olarak tedarik zinciri risk yönetim süreci COVID-19 dönemine özgü yeniden ele alınarak atılması gereken adımlar değerlendirilmiştir.

Food supply chains increasingly rely on big-data management solutions to foster collaboration across the food supply chain and improve business performance. However, little is known about collaboration practices that actors on the digital food supply chain adopt to solve problems such as food waste, or about the drivers and barriers related to the digital transformation of the food supply chain. Most of food waste studies rely on quantitative analysis, which cannot reveal relevant details about the tensions and dynamics of collaboration. We conducted a qualitative study drawing on eighteen in-depth interviews - of managers of large multinational and local organizations covering different and relevant roles on the digital food supply chain - to investigate how organizational and food supply chain processes are affected by the digitalization of the operations along the food supply chain. By triangulating emerging findings with literature on supply chain management we discuss different views about collaborative practices for food waste prevention in the food supply chain and provide insights on how supply chain design and firms' operations have been re-conceptualized with the usage of digital technologies and on the institutional forces both limiting (barriers) and fostering (drivers) the diffusion of the digital food supply chain.

In global Supply Chain Quality Management (SCQM), there are methods to ensure continuity of supply, at appropriate prices while meeting quality standards. But they are limited by the large and fallible role of humans, especially in manufacturing and quality control. Open Manufacturing aims to establish an open network of manufacturers that enables product information sharing among others in the production chain. Realizing the goals of open manufacturing requires processing the large datasets inherent to the production chain partners. But it is difficult to comply with the trust and privacy requirements of the suppliers in a supply chain. This paper presents a comprehensive survey of blockchain and its current and potential use in the industrial context including Industrial Internet of Things (IIoT)-based sensor networks, and the impact of the blockchain technology in manufacturing related areas such as traceability. The focus of this paper is on a potential application of blockchain in SCQM with detailed analysis of its technical feasibility and the methods of transitioning between the current approaches to a blockchain-oriented platform. An innovative use of blockchain to store referral information is also discussed. The survey concludes that blockchain along with IIoT can improve SCQM in an Open Manufacturing model.

Camélia Dadouchi
Bruno Agard

In recent years, recommender systems have become necessary in overcoming the challenges related to the incredible growth of information. They are used in a wide range of contexts and applications, mainly as prediction tools for customer interest, designed to help customers decide, compare, discover and explore products (Meyer in Recommender systems in industrial contexts, Sciences et Technologies de l'Information, Grenoble, 2012). Therefore, research in the field has focused on improving the efficiency of data processing for instant and accurate recommendations. Recommendation of products, accordingly, does not take into consideration supply chain constraints for deliveries. This can lead to recommendations for products that can be costly or too long to ship to the customer, resulting in an avoidable increase in the stress on the supply chain. This paper addresses the problem of considering delivery constraints in product recommendations. The objective is to shift demand toward products that can be delivered using the current network state without additional resources in a given time window, perimeter and with a minimum acceptable profit, in the context of e-commerce. To achieve this goal, we propose a methodology to adjust product recommendations in order to shift customers' interests towards particular products with consideration for remaining unit loads of scheduled deliveries. For this, quasireal-time information about the supply chain is taken into consideration to improve the number of shippable products in the recommendation list, resulting in a possible improvement in truck-load utilization, lower operation costs and reduced lead-times for delivery. This method works in two stages: the first stage is the computation of the recommendation with traditional recommendation systems, and the second stage is recommendation adjustments in four phases that consider the evaluation of active trucks, evaluation of physical constraints for transportation, evaluation of the profits associated with adding a pickup/delivery to a scheduled tour for each recommended item and adjustment of recommendation scores. A sensitivity analysis of the impact of the recommendation adjustment on the recommendation list has been conducted for each of the parameters considered in the proposed method: time window, perimeter radius and minimum acceptable profit. Various experimental results prove that the method permits increasing the number of recommended products that can be shipped using the available resources within a given perimeter radius, time window and minimum profit.

One of the arduous tasks in supply chain modelling is to build robust models against irregular variations. During the proliferation of time-series analyses and machine learning models, several modifications were proposed such as acceleration of the classical levenberg-marquardt algorithm, weight decaying and normalization, which introduced an algorithmic optimization approach to this problem. In this paper, we have introduced a novel methodology namely, Pareto Optimization to handle uncertainties and bound the entropy of such uncertainties by explicitly modelling them under some apriori assumptions. We have implemented Pareto Optimization using a genetic approach and compared the results with classical genetic algorithms and Mixed-Integer Linear Programming (MILP) models. Our results yields empirical evidence suggesting that Pareto Optimization can elude such non-deterministic errors and is a formal approach towards producing robust and reactive supply chain models.

Martin Christopher
Denis R. Towill

Shows how the lean and agile paradigms may be selected according to marketplace requirements. These are distinctly different, since in the first case the market winner is cost, whereas in the second case the market winner is availability. Agile supply chains are required to be market sensitive and hence nimble. This means that the definition of waste is different from that appropriate to lean supply. The proper location of decoupling points for material flow and information flow enable a hybrid supply chain to be engineered. This encourages lean (efficient) supply upstream and agile (effective) supply downstream, thus bringing together the best of both paradigms. The paper concludes by proposing a cyclic migratory model which describes the PC supply chain attributes during its evolution from traditional to its present customised "leagile" operation.

Dynamic demands and constraints imposed by a rapidly changing business environment make it increasingly necessary for companies in the food supply chain to cooperate with each other. The main questions individual (food) companies face are whether, why, how and with whom they should start supply chain management activities. Presents a qualitative research method for analyzing a supply chain network and for identifying effective chain redesign strategies. Presents a generic list of supply chain redesign strategies based on a multi-disciplinary literature review. Proposes that in order to identify the most effective strategies in a specific chain scenario one should focus on the identification and management of the sources of uncertainties in the supply chain's decision-making processes. The application of the research method in three food supply chains resulted in a valuable tool that can be used in supply chain redesign projects, as it indicates potentially effective redesign strategies when a specific source of uncertainty is encountered in a supply chain.

An important observation in supply chain management, popularly known as the bull-whip effect, suggests that demand variability increases as one moves up a supply chain. For example, empirical evidence suggests that the orders placed by a retailer tend to be much more variable than the customer demand seen by that retailer. This increase in variability propagates up the supply chain, distorting the pattern of orders received by distributors, manufacturers and suppliers.

Denis R. Towill

It is no longer sufficient for a winning organisation to operate in isolation, however effective it may be in performing its core business. To survive, let alone win, it must be part of one or more supply chains producing world class performance. Each company in the chain must be internally ''lean'' but additionally must operate in a ''seamless'' environment in which all information relevant to the efficient operation of the total system is available on time and in an undistorted form. The term ''predator'' has been coined in the literature to describe the supply chain leader with the vision, drive, and determination to re-engineer the entire supply chain so as to satisfy end-customer needs. The paper reviews the techniques available to ''predators'' seeking to gain competitive advantage for their supply chains, including industrial engineering, operations engineering, production engineering, and information technology. Not all conceivable improvements can be implemented overnight, however desirable they might appear, hence the advocacy of simulation models within a decision support system so that top management can prioritise proposed Improvement Programmes against the relevant performance metric. In the example used to indicate the approach, the technological, organisational, and attitudinal problems to be solved by top management in achieving the seamless supply chain are all highlighted.

Common foundations which underlie thinking in the supply chain management (SCM), Business process re-engineering (BPR) and business process improvement (BPI) philosophies are highlighted. The view that BPR is a new concept is argued against by highlighting die work performed in other fields, namely SCM from the systems perspective. It is argued that those who have already implemented the SCM philosophy will have already travelled the same path as BPR and indeed re-engineered their own processes. Once businesses have integrated their supply chain the greatest benefits will have already been achieved, however system dynamics analysis does show significant on-cost differences dependent on the redesign strategy implemented. A generic structured model for SCM is enhanced through this comparison with BPR with the following characteristics being added; do not be afraid to be radical with respect to internal integration and continually search for step change improvement ideas which can be strategically phased in to positively impact the marketplace.

Rachel mason-jones
Ben Naylor
Denis R. Towill

Notes the importance of new internal supply chains being properly interfaced with the marketplace. Suggests that the appropriate way forward is to design and implement a "leagile supply chain". Whereas leanness may be achieved by eliminating non-value added time, agility usually requires the additional reduction of value-added time via production technology breakthroughs. Demonstrates how the "lean" and "agile" paradigms may be integrated. This requires evaluation of the total performance metric and development of a route map for integrating lean production and agile supply in the total chain. Presents results achieved in a re-engineered real world supply chain serving the electronic products market.

Christian Bechtel
Jayanth Jayaram

In order to respond to competitive pressures, managers need to know more about the strategic aspects of supply chain management. This paper addresses this need by critically reviewing the supply chain management literature and by suggesting a research agenda for the future. A conceptual model is provided which helps to identify certain assumptions made in the literature that must be challenged. The model also provides a tool for identifying the major contributions in the literature. Finally, a research agenda is developed.

M. L. Fisher

Bief-the core idea The Idea in Practice-p utting the idea to work 3 What Is the Righr Supply ChaiD fo. your product? 15 Further Readilg A iist ofrelated materials, with annotations to guide further exploration of the articlds ideas and applications Product 8509 Are you frequently saddledwith exces5 in-ventory? Do yoir suffer poduct sholtages that have cultorner5 leaving sioles in a hufi Do these supplychain headaches pet' ti{ despite your investments in technolo-gies such as alnornated walehousing and Gpid logirtics? lf so, you rnay be using the wrong supply chain forthe type of poduct you sell.sup-pose your offering is funational*it sati{ies basic,unchanging needt and has a long life cycle, Iow margins. and stable demand. {Think paper towels or lighl bulbs) In this case, you need an efRcienl 5u pply chain-which minimizes productron, transpona-tion, and Storaqe coJts. BLn what il your product is mnovolive-il has great vanety, a short life cycle, high profit rlargins,and volatile denEnd? (A line oflaptopswhh a lange of novel features is one example) Forthis offering, you require a responsive supplychain. Fast and flexi' ble, i helps)lcu rnanage uncenainty through strategiet trJch as cutting lead tirnes and establishinq inventory or excess-capacny buffers. Design the right supplychain for your prod_ uct, and youl profrt! soal Forexample, by building responsiveness into lls chain, inno-vative skrwear comFEny Spon obetrmyet Rduced t5 o/er-Bnd underpoduc(ion .o!ts by half-boosling prcfits 60%.