Mastering the Supply Chain

Principles, Practice and Real-Life Applications

Ed Weenk

• Publisher: Kogan Page
• Year: 2019
• ISBN:
  9780749484491
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

Mastering the Supply Chain is an introduction to supply chain management. The book integrates theory with practice and aims to create a cross-functional mindset in students and practitioners. It provides a wide overview of relevant supply chain concepts and sets out the challenges that need to be overcome in order to find practical ways of implementing these in a real company situation. Readers are continuously asked to actively reflect on the choices they make, thus experiencing first-hand the many challenges that good and effective supply chain management presents. Mastering the Supply Chain presents a different way of learning that puts the reader at the heart of a life-like situation, so that they experience the impact of every decision they make, not just in their own 'silo' but across the business. In this way, they will learn that many supply chain concepts are relatively simple to understand, but not so easy to apply in reality. Chapter 6 helps students to pull everything they've learned together and see how the concepts play out in the real world by guiding them through an interactive demonstration of the online business simulation game The Fresh Connection (free access is included with the book). This is a key text for students on supply chain management BScs and MScs as well as background reading for students playing the full version of The Fresh Connection Business Simulation game.

Preface: Simple but not Easy (1)

Many students learn best when they are actively doing things and not only studying ideas in the abstract: when their curiosity is aroused, when they are asking questions, discovering new ideas, and feeling for themselves the excitement of these disciplines.

KEN ROBINSON AND LOU ARONICA (2015)

Truth be told, there are already many books about supply chain management and very good ones too, but it has not been our objective to add yet another textbook to the list. On the contrary, we wanted to create a textbook with a clear and strong focus on practical application by students. Albert Einstein supposedly used to say that instead of focusing on teaching and explaining theories and concepts, he preferred to put emphasis on providing the conditions in which students can practise and learn. Following suit, this book wants to provide a solid basis for students to practice and learn how to master the supply chain. Mastering the Supply Chain is written for people studying supply chain management. It can be used as part of courses within specialized supply chain or logistics programmes, but also links well to courses within programmes of a more generalist nature, from Bachelor level up to (Executive) MBA, as well as in-company training courses.

There are three main desires behind the topics chosen for the book and the strong emphasis on practical application:

1. The desire to put the increasing need for developing 21st-century skills such as critical thinking, complex problem solving and coordinating with others into the practical context of supply chain management.
2. The desire to actively address the recurring theme of simple but not easy, ie to provide a way to make students feel first-hand the many complexities of actually applying the often relatively straightforward concepts and frameworks in supply chain management.
3. The desire to combine the multiple dimensions of supply chain management into one coherent and holistic view on the topic, focusing in particular on the business, technical and leadership dimensions and the way these interact.

Simple but not easy

The phrase ‘simple but not easy’ is one of the central threads running through the book. It refers to the fact that many of the underlying concepts and frameworks in supply chain management are relatively straightforward and therefore ‘simple’ to understand, but that there are a number of reasons why their application in practice is ‘not easy’.

First, the supply chain area is full of concepts that describe the elements at play in certain topics. For example, when talking about outsourcing, there are frameworks that highlight the factors to be taken into consideration when a company wants to decide whether or not to outsource a particular activity. Application of such a framework will lead to a list of arguments in favour of, or against, outsourcing. Some of those arguments are quantifiable, but there are also some parts which are more qualitative in nature, and this combination of quantitative and qualitative arguments brings in the (subjective) dimension of judgement. In other words, the elements of the framework are simple to understand, but making a concrete decision on the basis of applying the framework might not always be that easy and straightforward.

Second, even though the individual concepts might be simple to understand, it is the sheer number of those at play at once and with an infinite number of interdependencies between them that makes it a very challenging area to manage, especially from a global holistic perspective. For example, we can speak about the main considerations of inventories, or the physical aspects of warehousing, or developments in transportation, all relatively straightforward at the conceptual level, but when we have to come up with an integral distribution network solution for a particular company, suddenly the puzzle becomes quite a lot more complex because we need to bring all of those aspects into the equation.

Add to this the very realistic dimension of incomplete information, assumptions, ambiguity, time pressure, different opinions and a world around us which is moving on continuously, and we get an even more complex picture.

So, in the book, ‘simple but not easy’ is a recurring theme. Many of the individual concepts of supply chain management are dealt with, but always with the objective of finally arriving at the point of specific and explicit decision making within a global holistic context. Indeed, mastering supply chain management is complex, but in my opinion, that’s precisely what makes it such a fascinating area to work in.

The age of acceleration, 21st-century skills and experiential learning

Although, given its relevance, a slightly more extensive description of the age of acceleration, 21st-century skills and experiential learning can be found in the Appendix, a brief introduction seems appropriate here. We live in the age of acceleration; the world is changing faster and faster, calling for different skills from those that were valid in the past (Friedman, 2016). In this context, people also speak about the need for training 21st-century skills (World Economic Forum, 2016; Robinson and Aronica, 2015).

Experiential learning seems to be a very appropriate way of training such skills. I’d like to reference in particular the work of David Kolb, whose book Experiential Learning is a classic on the topic. Among other important contributions, for example the concept of individual learning styles, Kolb is well known for what is called the learning cycle (Figure 0.1).

Figure 0.1 The learning cycle

Source after McLeod (2017), based on Kolb (2015)

The cyclic flowchart shows arrows connecting the following topics in a clockwise manner:

• Concrete experience: ‘Feel. Undergo the experience.’
• Reflective observation: ‘Watch. Observe what happened.’
• Abstract conceptualization: ‘Think. Which are the cause-effect relationships?’
• Active experimentation ‘Do. Incorporate findings in new decisions.’

The main idea behind the learning cycle is that ‘knowledge results from the combination of grasping and transforming experience. Grasping experience refers to the process of taking in information, and transforming experience is how individuals interpret and act on that information. […] This process is portrayed as an idealized learning cycle or spiral where the learner “touches all the bases”’ (Kolb, 2015).

In experiential learning, the focus is on undergoing an experience first-hand, which allows for reflection on what happened and why, leading to forming a conceptual view of the situation, potentially reinforced by existing theories and/or frameworks. This combination will then be the basis for an improved view of the situation, which can be applied in the next experience, either in class or in another study environment, or directly in a real-world situation. In the book we will use a business simulation game called The Fresh Connection as an important tool for facilitating this experiential learning.

The multiple dimensions of supply chain management

Supply chain management has many faces and it covers a wide array of activities as far as scope is concerned. But it does have very distinct dimensions, which are very different in nature.

First, supply chain management has a clear strategic or business dimension. In the end, the supply chain is an integral part of a company, contributing together with the other areas and departments to overall business success. This implies that decision making within the supply chain must fit with the overall direction that the company has defined for the future. Here we speak more about the vital and direct links between the supply chain and corporate strategy and competitive positioning. Or, for example, the impact of market segmentation and value propositions on supply chain strategy and the relationships between the supply chain and the financials of the company, as expressed, for example, in return on investment (ROI).

Second, supply chain has a clear technical dimension, for example when dealing with aspects of manufacturing and distribution infrastructure, technology, forecasting and planning models, or supporting IT systems. This is the part that relates more to the engineering face of the supply chain.

And third, supply chain management has a clear leadership or people dimension. Because of its cross-functional nature, spanning activities from purchasing all the way down to sales and after-sales, there are many interrelationships with other functional areas in the company. In practice, many of the functional areas might have different objectives, leading to potential conflicts which need to be aligned and managed somehow. In this part, we speak about topics such as decision-making processes, key performance indicators (KPIs), team dynamics and stakeholder management.

Because of their importance and because of their differences, these three distinct dimensions of the supply chain, technical, business and leadership, will be dealt with explicitly and separately in the book. In fact, together they form the backbone of the structure of the book (Figure 0.2).

Figure 0.2 The three dimensions of supply chain at the core of the book