Supply Chain Processes

Developing Competitive Advantage through Supply Chain Process Excellence

Peter W. Robertson

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000392524
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Operations

Supply Chain Processes introduces readers to the view that genuine supply chain competitive advantage is achieved via supply chain excellence which in turn is underpinned by supply chain process excellence. The ultimate supply chain goal is to deliver the right product, of the right quality, in the right quantity, to the right place, at the right time and for the right cost. The author identifies four core supply chain processes – strategy, design, execution and people – to which the process improvement techniques explained can be applied to ensure superior supply chain performance.

Key topics are addressed, including supply chain risk, resilience, sustainability, challenges confronting modern-day supply chains and developing an elegant supply chain design. Each chapter starts with a section that explores learning opportunities and is followed by detailed chapter content. Carefully explained examples are provided, as well as end of chapter case studies, review questions and written assignments. A full suite of teaching aids is also provided for lecturers and tutors.

Providing both management expertise and technical skills, which are essential to decision-makers in the supply chain, this textbook should be essential reading for undergraduate and post-graduate students, post-experience students studying for professional qualifications, and operating supply chain leaders and supply chain professionals.

Online resources include chapter-by-chapter PowerPoint slides, tutorial exercises, written assignments and a test bank of exam questions.

1 Introduction and context

1.1 What you will learn in this chapter

The chapter firstly introduces the development of Supply Chain Management (SCM) including typical Supply Chain (SC) types and the complexities involved in the management of modern-day SCs.

Next, the four key SC processes used extensively throughout the book are listed.

Supply Chain Excellence (SCE) is then introduced along with the complications of managing for SCE in the modern-day business environment of increasing Volatility, Uncertainty, Complexity and Ambiguity (VUCA).

The context of the book is then described, including how the development and application of effective SCM methods and practices over recent decades have delivered market leadership to those companies embracing the methodology.

An introduction to the United Nations (UN) Sustainable Development Goals (SDG) is then provided, including a listing of the SDG most relevant to SCM.

The objective and value-add of the book is described, followed by a pertinent history of SCM presented as a case study.

The chapter ends with review questions and written assignment options.

1.2 Introduction to supply chain management and supply chain excellence

Supply Chain Management (SCM) has developed quite rapidly in a formal way since the early 1980s when the term was first used in literature (Laseter and Oliver, 2003).

In an informal way, however, SCM has been evolving for centuries. The ancient Egyptians, for example, utilised SCM in the building of their pyramids. By default, they were managing supply chains which involved quarrying large rectangular blocks of rock and transporting them to a pyramid construction site – such as Giza on the outskirts of Cairo – and then erecting them into the famous polyhedron shape. These were major supply chain activities, building royal tombs involving thousands of people mining and transporting large stones, followed by pyramid construction carried out over a one-thousand-year period, over 4,000 years ago (c. 2649 BCE to c. 1640 BCE).

Every enterprise since that time, involved in the sourcing of materials and services, transforming them in some way, transporting them to an end consumer and working with partners along the way, has been undertaking some form of SCM.

Over those many years of informal use and recent decades of formal development, SCM activities and management techniques have become quite complex and, in some cases, considerably advanced technically. Additionally, SCM techniques are varied and there is no ‘one-size-fits-all’ as an approach that may work well in one particular supply chain may not work so well in a different chain.

Figure 1.1 Giza Pyramids Main Material Supply Chain

SC requirements also vary dependent upon the nature of the chain being operated. Examples include military SCs, humanitarian relief SCs (e.g. in response to disasters), critical health supplies (e.g. blood, body parts, medicines, vaccines, protective equipment), perishable goods supply chains (sometimes called ‘cold-chains’, mostly used for perishable foods but not exclusively), food SCs (perishable and non-perishable), fashion SCs (e.g. apparel, clothing), energy SCs (e.g. gas, oil, electricity) and mass transit SCs (e.g. planes, trains, trams, buses and ferries).

For experienced and competent SC professionals directly involved in such challenges and SC advancements, the proper design and running of SCs is obvious and the selection of the best methods by which to manage a particular chain and how to go about developing and sustaining necessary levels of SC excellence, whilst complex, are all eminently doable.

However, for outsiders, for some senior managers and especially for new starters, the whole SCM issue can be not only confusing but also confronting. Worse, if a SC operative is unprepared and/or unsupported, SCM concepts and associated challenges can be quite overwhelming, particularly when things go wrong. This oftentimes results in high levels of stress and sometimes in burnt careers.

So just what does it take to apply SCM well? How does a single enterprise or a network chain of enterprises go about achieving, in a sustainable way, distinct competitive advantages via the application of modern SCM principles and techniques?

The purpose of this book, therefore, is to answer such questions, to capture and record decades of SCM learnings and to explain them in practical and connected ways with examples of how they can be applied to lift SC performance to levels that achieve optimum outcome results for a given set of SC circumstances.

The foundation platform for this book is a four-process (four-construct) SC framework.

The four key SC processes are:

1. iSC strategy
2. iiSC design
3. iiiSC execution (reliable delivery of customers’ value propositions)
4. ivSC people

This framework, derived empirically and tested via research, basically represents a modern SCM system; that is, it includes all of the critical elements necessary to run SCs well (competitiveness through excellence). Each process and its sub-processes are explained in detail throughout the book.

This book, thus, has been written primarily for students of SCM and SCM professionals who are looking for a reliable ‘how-to’ guide to developing and sustaining SC excellence with a strong emphasis on describing and explaining the ‘why’ for each ‘how-to’ so presented.

The book can also be utilised by SC leaders and academics wishing to present a process-based SCM subject.

The author has empirically derived the approaches to SCM recommended in this book over a combined period of some 40 years. The author has also proposed a Supply Chain Theory based on that experience and knowledge. The SC theory is presented in Chapter 2.

Supply Chain Excellence (SCE) is about building the capability to meet ever-changing customer needs, wants and desires. Such capabilities include the continuous improvement of customer value propositions and delivering them faultlessly whilst carefully managing all SC inventories and costs. SC capabilities, thus, are key enablers of long-term SC competitive success and survival.

Importantly, SCE is also about achieving long-term SC competitive success and survival in a responsibly sustainable way as discussed in detail in Chapter 7.

A significant complicating factor in the quest for SCE, of course, is a SC operating environment exhibiting increasing levels of Volatility, Uncertainty, Complexity and Ambiguity (VUCA). Low probability, high consequence events, for example, can have devasting negative impacts on SCs. Sometimes referred to as ‘black swan’ events, recent examples include the 2004 Indian Ocean earthquake and tsunami, the 2011 Japan (Fukushima) earthquake and tsunami and the 2020 COVID-19 pandemic. Techniques that can be used by SC professionals to better manage such VUCA and black swan realities are included in Chapter 2.

The compelling reason for the use of this book by both SC professionals and students is that it offers an approach to SCM that is more complete than previously available. That is, the competent application of methodical and tested SC practices to the research-derived four SC processes that matter the most to SC performance outcomes, by skilled and experienced people, is the key to achievement of sustainable SC excellence.

The four SC processes in question are shown at the top of Figure 1.2: SC strategy, SC design, SC execution and SC people. Coordinated improvement to this core set of SC processes leads to improved SC technical and cultural performance which in turn underpins sustainable SCE.

Figure 1.2 Four Crucial SC Processes as Enablers of Sustainable SC Excellence

SC technical excellence implies the capability to perform required SC functions safely and competently, thus ensuring timeliness, responsiveness, flexible order lot size, delivery reliability, suitable quality, inventory management and cost management. It also includes growth and renewal of the SC resource base.

SC cultural excellence implies many aspects including leadership quality, quality of relationships, commitment, determination and motivation of personnel, active personnel role networks, their interactions, collaboration and information sharing practices, levels of entrepreneurship, an external focus, an opportun...