Supply Chain Design Decisions Research Articles

Building supply chain resilience in small and medium-sized clothing retailers in Australia: an empirical study

Purpose In today’s complex and globalised business setting, Australian clothing retailers are ever more vulnerable to supply chain disruptions. Supply chain resilience reduces the effect of a disruption, which permits the members of a supply chain to respond aptly to disruptive events. This study, hence, aims to uncover the details of how the small and medium-sized enterprises (SMEs) of clothing retailers in Australia build supply chain resilience and what are the major issues experienced by the SMEs while building resilience. Design/methodology/approach This study is carried out using a descriptive qualitative research design, and data are collected from semi-structured interviews with key informants from managerial levels within the Australian clothing retailers’ businesses. Findings This study identifies five enablers, namely, collaboration, multi-sourcing, visibility, flexibility and information systems, that the SMEs of clothing retailers mostly consider to achieve resilience in the supply chain. This study also finds that SMEs’ capabilities, cost and financing, lack of managerial autonomy and the inability to create redundancy are the key impediments hindering SMEs from attaining the expected level of resilience. Originality/value To the best of the author’s knowledge, this study contributes to the body of knowledge by being one of the first empirical studies to explore the SMEs of clothing retailers’ supply chain resilience in the Australian business context, which can add valuable insights for academics and practitioners in guiding supply chain design decisions for the SMEs in other sectors.

Supply Chain Risk Management in a Digital Era: Evidence from SMEs of Clothing Retailers in Australia

With the increased globalisation and disruptions faced by businesses in this digital era and the occurrence of natural disasters such as floods and disease outbreaks in the world, supply chain risks and management of those risks are major challenges for businesses, especially for SMEs of clothing retailers in Australia. This study, hence, is carried out using an exploratory case study research method, and the data have been collected through semi-structured face-to-face interviews with key informants from managerial levels of 20 Australian SMEs of clothing retailing businesses to identify various supply chain risks and their management processes. This study finds five supply chain risks, namely supply risk, demand risk, financial risk, environmental risk, and operational risk, that the SMEs of clothing retailers mostly face in the supply chain. This study also finds that most of the investigated retailers lack a formal risk identification approach, though they informally use the reactive and proactive methods of risk identification. Furthermore, the assessment methods are not well established in most of the participating firms, and supplier monitoring receives more attention compared to their own performance to deal with their supply chain risks. This study contributes to the body of knowledge by being one of the first empirical studies to explore the SMEs of clothing retailers’ supply chain risks and their management processes in the Australian business context, which can add value in guiding supply chain design decisions for SMEs in other sectors.

An optimization approach for sustainable and resilient supply chain design with regional considerations

Regional and geographical differences between facilities is of paramount importance in supply chain design. However, the impact of the regions' performance on supply chain design decisions remains a relatively under-researched subject in the literature. This paper presents a hybrid methodology for designing a sustainable supply chain that is resilient to random disruptions. We propose a multi-period multi-objective optimization model that utilizes a k-means clustering method to evaluate the regions' sustainability performance. The model aims to determine sourcing and network design decisions as well as resilience strategies. To manage the operational risks associated with the supply chain, we employ a new robustness measure that eliminates the need to estimate the probability distribution of random parameters. Finally, a Benders decomposition algorithm is developed to solve the model. Practical insights are drawn from an actual case study of a downstream petrochemical industry in Iran.

Evaluation of a ceramic enterprise regarding a scope of strategic management as a part of supply chain

Purpose- The purpose of this study is to analyze the only 100% Turkish capital company, which has a significant place in the world in terms of its ceramic production capacity, in terms of strategic management, to guide other companies in the sector and thus increase the share of the ceramics industry in the Turkish economy by further increasing its share in exports. Methodology- Strategic situation analysis was carried out in the study. In this context, the definition of the business, the situation analysis, the market definition, business external environment analysis, business environment analysis, business internal environment analysis, SWOT analysis and financial situation analysis were carried out. The new strategies were examined. Findings- The shipping group company established by the firm has strengthened its brand perception in both domestic and export sectors with a new product introduced to the market and the product it created in the sector. At the same time, it has reached a low opportunity cost with the Italian brand. It is possible to say that the leading company of the sector, which has significant investments abroad, is on the right track with the investments made by the company, new products and new strategies. As a matter of fact, it is possible to see this with the increase in gross profit and operating profit in the annual report. Conclusion- Supply chain design, planning, and operations decisions play an important role in a firm's success or failure. To remain competitive, supply chains need to be well-managed supply chains that adapt to changing technology and customer expectations. In addition to the companies in the ceramics industry, which has a significant share in exports, to make strategic situation analyzes, some changes must be made by the state.

Integration of product architecture and supply chain under currency exchange rate fluctuation

Various studies have discussed the coordination of product and supply chain design decisions for global supply chain management. However, the impact of currency exchange rate uncertainty on the selection of product architectures and their suppliers has not been sufficiently addressed. As a response, this study proposes a two-stage stochastic optimization model in which the first stage determines the product architecture, and the second stage identifies suppliers for the modules and components in an optimal fashion based on the product architecture and uncertain currency exchange rates. The overall objective of two-stage stochastic programming is to determine the optimal product architecture that minimizes the expected total supply chain cost over uncertain currency exchange rate scenarios. The proposed model is applied to a bicycle supply chain case study for three global marketplaces associated with multiple currency exchange rates. The results demonstrate that optimal product architecture and its suppliers should be varied based on currency exchange rates and their uncertain fluctuation levels. Also, a product architecture for the supply chain of each marketplace maintains its optimality in the total supply chain cost, up to a specific exchange rate. The findings show the importance of joint integration between product and supply chain design when considering currency exchange rates. Additionally, the benefit of stochastic modelling is demonstrated by comparing the solution quality of the model with its deterministic counterpart.

Management of animal fat-based biodiesel supply chain under the paradigm of sustainability

The ever-increasing energy demand and harmful environmental and social impacts instigated by fossil fuels have led to the development of sustainable energy resources. Biodiesel has been introduced as an alternative owing to its wide commercial applications. It can be produced from various types of biomass including vegetable oil, used cooking oil, and animal fat. Of these, animal fat is a promising option because of its low cost and easy availability. For a speedy transition toward large-scale commercially viable biodiesel production, the efficient design of a biodiesel supply chain is very important. Moreover, because biodiesel supply chain (SC) design decisions directly influence social and environmental aspects, hence SC optimization within the sustainability paradigm is necessary. This research proposes a waste-animal-fat-based biodiesel SC optimization model that minimizes environmental impact and SC cost while maximizing social wellbeing. The complex and dynamic environment of biodiesel production brings a high level of uncertainty, which compromises the effectiveness of SC decisions; thus, a modified robust possibilistic chance-constrained programming solution methodology is developed. To validate the proposed model and solution methodology, a computational analysis of a case study is performed. The results demonstrate that by paying 1.13% higher costs, a desirable level of social and environmental protection can be achieved for the proposed supply chain. It is also found that with an increase of 5% in the economic objective, 6% increase in the environmental objective, and 7% decrease in the social objective, the risk of epistemic uncertainty can be completely ruled out. Further, from the numerical analysis it is inferred that among all tiers of biodiesel SC, the decisions of the biorefinery tier play a crucial role in achieving sustainable development goals. Furthermore, a higher priority of economic and environmental objectives makes the SC decisions more centralized, whereas a higher priority of the social objective makes them more decentralized. The proposed model can be useful to investors and policymakers involved in biodiesel production and distribution.

Cost‐raising internalization in supply chain design

AbstractWe investigate the supply chain design decisions faced by a focal retailer that participates in a two‐tier supply chain with another competing retailer and a common upstream supplier. The operations literature has traditionally approached supply chain network design with the objective of minimizing the overall costs from a centralized standpoint. We study the strategic consequences of the focal retailer's supply chain design decisions, and demonstrate how pursuing “cost‐raising” internalization could be beneficial. We build a stylized game‐theoretic model that captures the cost implications of the focal retailer's internalization decisions, and analyze the impact of these decisions on the equilibrium outcome. Under various assumptions on the nature of retail competition and supply chain contracts, we obtain simple and intuitive sufficient conditions for the profitability of cost‐raising internalization. Moreover, we study how the intensity of horizontal and vertical competition, respectively, may influence the focal retailer's supply chain decisions. Finally, we examine the impact of cost‐raising internalization on consumer surplus and channel performance, and find that welfare may increase under certain conditions. Our results challenge the presumption that supply chains always benefit from lowering their costs and highlight the fact that strategic considerations can sometimes lead a firm to make cost‐raising decisions within its supply chain.

Integrating performance and risk aspects of supply chain design processes

Supply chain design is a complex and relatively poorly structured process, involving choosing many decisional parameters and it usually requires consideration of numerous sources of uncertainty. Many conventional processes of supply chain design involve taking a deterministic approach, using point estimates, on important measures of supply chain effectiveness such as cost, quality, delivery reliability and service levels. Supply chain disruptions are often separately considered as risks, both in the research literature and in practice, meaning that a purely traditional risk management and risk minimization approach is taken. We have developed and applied an approach that combines the intellect and experience of the supply chain designer with the power of evaluation provided by a Monte Carlo simulation model, which uses decision analysis techniques to explicitly incorporate the full spectrum of uncertain quantities across the set of alternative supply chain designs being considered. After defining and setting out the general decision variables and uncertainty factors for 16 distinct supply chain design decision categories, we then apply that approach to combine the decision-makers’ heuristics with the probabilistic modeling approach, iteratively, to achieve the best of both elements of such an approach. This novel approach to fully integrating performance and risk elements of supply chain designs is then illustrated with a case study. Finally, we call for further developmental research and field work to refine this approach.

Disruption tails and revival policies: A simulation analysis of supply chain design and production-ordering systems in the recovery and post-disruption periods

Abstract We study production-ordering behaviour in a supply chain (SC) with disruption risks in recovery and post-disruption periods and the influence of severe disruptions on production and distribution network design. A real-life case-study of a disruption in a SC is considered and investigated with the help of discrete-event simulation blended with network optimisation in anyLogistix. Two novel findings are presented. First, disruption-driven changes in SC behaviour may result in backlog and delayed orders, the accumulation of which in the post-disruption period we call “disruption tails”. The transition of these residues into the post-disruption period causes post-disruption SC instability, resulting in further delivery delays and non-recovery of SC performance. Second, a smooth transition from the contingency policy through a special “revival policy” to normal operations mode partially mitigates the negative effects of disruption tails. The results show that isolated production and distribution network design optimisation can lead to severe decreases in performance in the event of SC disruptions. Contingent recovery policies need to be applied during the disruption period along with a revival policy in the post-disruption period to avoid disruption tails. These revival policies must be developed for the transition from the recovery to the disruption-free operations mode. A revival policy is meant to mitigate the negative impact of disruption tails and stabilise the ordering control policies and performance in the SC. Thus, recovery policies should not be limited to the disruption period only. They should also consider the post-disruption period and be included in SC design decisions. The revival policy should be included in the SC resilience framework.

Managing risks in sustainable supply chains

Purpose of the paper : The aim of this paper is to discuss the emerging challenges that modern supply chains face from the perspective of sustainability, highlighting the opportunities and the risks that these organizations encounter. Methodology : The paper is theoretical, and provides an analysis of trends and challenges for sustainable supply chains and the management of related risks, highlighting some gaps in the literature. Findings : The paper categorizes the priorities for modern sustainable supply chains and provides a clear differentiation between the concept of ‘sustainability risk management’ and the categorization of ‘risks in sustainable supply chains’. Implications and originality/value of the paper : The paper addresses different gaps in the literature of sustainable supply chains and provides the managers with helpful directions for their supply chain management agenda. In detail, authors identifies trends that seem to make supply chains more vulnerable and exposed to the risk, key risk-related questions for managing sustainable supply chain, suggesting a number of important issues which need to be weighed when supply chain design decisions are taken. Research limitations : The theoretical approach of the paper can benefit from future in-depth analyses based on case studies.

Service Chain Logistics Management for Increasing Equipment Uptime

Currently, as Industrial Product Service Systems (IPS2) concepts are becoming increasingly adopted by capital assets suppliers, further increase of equipment uptimes is increasingly gaining attention by academics and practitioners. Uptimes can be managed by both improving the maintenance decision making as well as considering appropriate service supply chain design decisions. Furthermore, the integration of Industry 4.0 tools can further boost the previous with its communication and connectivity ability. Knowledge on these aspects is available in academia as well as in practice, but, as this paper argues, not structured for making decisions that consider all of these aspects in an integrated way aiming at improving equipment uptime. Through literature review, we assess the existing literature on IPS2. In doing so this paper offers a two-fold contribution: On the one hand, it presents an exploratory literature review to identify knowledge gap and on the other hand, it proposes a suitable future research project.

A green supply chain network design framework for the processed food industry: Application to the orange juice agrofood cluster

Food production has put enormous strain on the environment. Supply chain network design provides a means to frame this issue in terms of strategic decision making. It has matured from a field that addressed only operational and economic concerns to one that comprehensively considers the broader environmental and social issues that face industrial organizations of today. Adding the term “green” to supply chain activities seeks to incorporate environmentally conscious thinking in all processes in the supply chain. The methodology is based on the use of Life Cycle Assessment, Multi-objective Optimization via Genetic Algorithms and Multiple-criteria Decision Making tools (TOPSIS type). The approach is illustrated and validated through the development and analysis of an Orange Juice Supply Chain case study modelled as a three echelon GrSC composed of the supplier, manufacturing and market levels that in turn are decomposed into more detailed subcomponents. Methodologically, the work has shown the development of the modelling and optimization GrSCM framework is useful in the context of eco-labelled agro food supply chain and feasible in particular for the orange juice cluster. The proposed framework can help decision makers handle the complexity that characterizes agro food supply chain design decision and that is brought on by the multi-objective nature of the problem as well as by the multiple stakeholders, thus preventing to make the decision in a segmented empirical manner. Experimentally, under the assumptions used in the case study, the work highlights that by focusing only on the “organic” eco-label to improve the agricultural aspect, low to no improvement on overall supply chain environmental performance is reached in relative terms. In contrast, the environmental criteria resulting from a full lifecycle approach is a better option for future public and private policies to reach more sustainable agro food supply chains.

Integrating biomass quality variability in stochastic supply chain modeling and optimization for large-scale biofuel production

The production of biofuels using second-generation feedstocks has been recognized as an important alternative source of sustainable energy and its demand is expected to increase due to regulations such as the Renewable Fuel Standard. However, the pathway to biofuel industry maturity faces unique, unaddressed challenges.To address this challenges, this paper presents an optimization model which quantifies and controls the impact of biomass quality variability on supply chain related decisions and technology selection. We propose a two-stage stochastic programming model and associated efficient solution procedures for solving large-scale problems to (1) better represent the random nature of the biomass quality (defined by moisture and ash contents) in supply chain modeling, and (2) assess the impact of these uncertainties on the supply chain design and planning.The proposed model is then applied to a case study in the state of Tennessee. Results show that high moisture and ash contents negatively impact the unit delivery cost since poor biomass quality requires the addition of quality control activities. Experimental results indicate that supply chain cost could increase as much as 27%–31% when biomass quality is poor. We assess the impact of the biomass quality on the topological supply chain. Our case study indicates that biomass quality impacts supply chain costs; thus, it is important to consider the impact of biomass quality in supply chain design and management decisions.

Supply chain design to guarantee quoted lead time and inventory replenishment: model and insights

Do lead time constraints only lead to re-think and re-optimise the inventory positioning along the supply chain or can they impact on the design of the supply chain itself? To answer such a question, we integrate the lead time constraints in a multi-echelon supply chain design model and challenge the difficulty of combining in the same model the long-term decisions (facility location, supplier selection) with the midterm decisions (inventory placement and replenishment, delivery lead time). The model guarantees the respect of the quoted lead time associated with each customer order and the replenishment of the different stocks (raw materials, intermediate and final products) in the different stages of the supply chain between any pair of consecutive orders. We use the model to investigate the impact of the quoted lead time and customer’s order frequency on supply chain design decisions and costs. Some of our results indicate that the lead time constraints can lead to bringing the sites of manufacturing and distribution close to the demand zone and to select local suppliers in spite of their higher cost.

Designing a supply chain resilient to major disruptions and supply/demand interruptions

Global supply chains are more than ever under threat of major disruptions caused by devastating natural and man-made disasters as well as recurrent interruptions caused by variations in supply and demand. This paper presents a hybrid robust-stochastic optimization model and a Lagrangian relaxation solution method for designing a supply chain resilient to (1) supply/demand interruptions and (2) facility disruptions whose risk of occurrence and magnitude of impact can be mitigated through fortification investments. We study a realistic problem where a disruption can cause either a complete facility shutdown or a reduced supply capacity. The probability of disruption occurrence is expressed as a function of facility fortification investment for hedging against potential disruptions in the presence of certain budgetary constraints. Computational experiments and thorough sensitivity analyses are completed using some of the existing widely-used datasets. The performance of the proposed model is also examined using a Monte Carlo simulation method. To explore the practical application of the proposed model and methodology, a real world case example is discussed which addresses mitigating the risk of facility fires in an actual oil production company. Our analysis and investigation focuses on exploring the extent to which supply chain design decisions are influenced by factors such as facility fortification strategies, a decision maker's conservatism degree, demand fluctuations, supply capacity variations, and budgetary constraints.

Supply chain design approaches for supply chain resilience: A qualitative study of South African fast-moving consumer goods grocery manufacturers

Orientation: In today’s globalised and complex business environment, firms are ever more vulnerable to supply chain disruptions, originating both internally and externally from the supply chain. Supply chain resilience minimises the impact of a disruption through design approaches, which allows the supply chain to respond appropriately to disruptive events.Research purpose: This article investigated the supply chain risks faced by grocery manufacturers in the South African fast-moving consumer goods (FMCG) industry and explored supply chain design approaches that enable supply chain resilience.Motivation for the study: South African grocery manufacturers are faced with distinct risks. Whilst supply chain risk management studies have provided firms with certain guidelines to mitigate risk, supply chains are still vulnerable to unanticipated risks. Literature on supply chain resilience in the South African context is scant. The concept of supply chain resilience provides firms with strategies that are built into the supply chain that allow firms to react and recover swiftly from disruptions. Furthermore, supply chain resilience strategies assist firms in becoming less vulnerable to possible disruptions.Research design approach and method: This study was conducted by using a descriptive qualitative research design. Data were collected through semi-structured interviews with senior supply chain practitioners specifically within the South African FMCG grocery manufacturing industry.Main findings: The study found that labour unrest is the most common risk faced by the industry. Furthermore, strategic stock and supply chain mapping are of the most useful design approaches to enhance supply chain resilience.Practical/managerial implications: The study provides managers with new insights in guiding supply chain design decisions for resilient supply chains. Through the identification of risks and appropriate solutions linked to the various risks, the study allows managers an array of options to choose from when enforcing a resilient supply chain.Contribution/ value-add: The study contributes to the body of knowledge by being one of the first empirical studies conducted on supply chain design approaches for supply chain resilience in the South African context. The study also adds to the scarce literature on supply chain resilience in the FMCG industry, both globally and in a South African context.

A commentary on agility in humanitarian aid supply chains

Purpose – This paper aims to provide a commentary and an overview of developments in the field of humanitarianism that could impact theoretical understanding of agility in humanitarian aid supply chains over the past decade. Design/methodology/approach – Authors review papers published on agility in humanitarian aid supply chains from 2006 to 2015 in the four leading Emerald-published logistics and supply chain management journals. These are: Supply Chain Management: An International Journal (SCMIJ); International Journal of Physical Distribution and Logistics Management (IJPDLM); International Journal of Operations and Production Management (IJOPM); and Journal of Humanitarian Logistics and Supply Chain Management (JHLSCM). This paper presents an overview and update of developments that have the potential to influence current thinking and understanding about agility in humanitarian aid supply chains, and humanitarian aid supply chains in general. Findings – Humanitarianism and the environment of Humanitarian organisations are evolving. Such evolution has potential impacts on theoretical discussions and understanding of agility in humanitarian aid supply chains and humanitarian aid supply chains in general. Research limitations/implications – This is not a critical literature review but an overview. The paper is based on four logistics and supply chain management journals only. However, the paper is based on the work published over a decade. Practical implications – Points scholars and practitioners to the impacts of Humanitarian Organisations using the relief-development continuum on supply chain design decisions including the pursuit of agility. Social implications – It may be the time to consider the relief-development continuum in fresh light and its implications for agility in humanitarian aid supply chains. Originality/value – This paper seems to be the first paper that highlights the influence of the relief-development continuum model on humanitarian aid supply chain design strategies.

Structural quantification of the ripple effect in the supply chain

In recent years, remarkable advancements have been achieved in quantitative analysis methods for supply chain design (SCD). Typically, cost or service level optimisation has been included in the objective functions. At the same time, supply chain managers face the ripple effect that arises from vulnerability, instability and disruptions in supply chains. This research aimed to quantify the ripple effect in the supply chain from the structural perspective. The research agenda of this study includes issues of integrating operability objectives as new key performance indicators, e.g. resilience, stability, robustness into SCD decisions. The research is based on a simultaneous consideration of both static structural properties of SCD and execution dynamics subject to uncertainty and disruptions. Due to high dimensionality of real SCD problems, such integration can hardly be implemented in only one model. In this study, an original two-model multi-criteria approach is proposed in order to assess the potential ability of an SCD to remain stable and resilient. This modelling approach is based on a combined application of a static and a dynamic model. A multi-criteria approach relies on the analytic hierarchy process method. The results of this research can be used as an additional quantitative analysis tool in order to select an SCD. An additional application of the developed method is that it can be used at the control stage in order to adapt supply chain execution subject to the achievement of desired economic performance.

Agility and Proximity Considerations in Supply Chain Design

Strategic supply chain design decisions are critical to the long-term success of a business. Traditional facility location models for supply chain design focus on the trade-offs between the costs and benefits of proximity, i.e., the distance between facilities and customers. These strategic-focused models do not consider the supply chain’s agility, i.e., its ability to quickly respond to unexpected fluctuations in customer needs. In this paper, we study the problem of designing a supply chain distribution network under demand uncertainty and analyze how the optimal design characteristics of proximity and agility depend on various input parameters. We are able to draw managerial insights on how agility considerations may invalidate well-established and widely accepted qualitative results derived from traditional models. In particular, we show that it is optimal to increase the density of distribution centers (DCs) when the shortage penalty cost increases, and to decrease the density of DCs when a certain unit transportation cost parameter increases. Through these findings, our work conveys the message that traditional, proximity-based facility location models can be inadequate for designing modern responsive supply chains, and calls for the need to develop a new class of models for the task. This paper was accepted by Yossi Aviv, operations management.

Keep Your Friends Close? Supply Chain Design and Disruption Risk

ABSTRACTIn this article, we evaluate the relationship between supply chain design decisions and supply chain disruption risk. We explore two supply chain design strategies: (i) the dispersion of supply chain partners to reduce supply chain disruption risk versus (ii) the co‐location of supply chain partners to reduce supply chain disruption risk. In addition, we assess supply chain disruption risk from three perspectives: the inbound material flow from the supplier (supply side), the internal production processes (internal), and the outbound material flow to the customer (customer side) as a disruption can occur at any of these locations. We measure disruption risk in terms of stoppages in flows, reductions in flow, close calls (disruptions that were prevented at the last minute), disruption duration (time until normal operation flow was restored), and the spread of disruptions all the way through the supply chain. We use seemingly unrelated regression (SUR) to analyze our data, finding that lead times, especially supply side lead times, are significantly associated with higher levels of supply chain disruption risk. We find co‐location with suppliers appears to have beneficial effects to the reduction of disruption duration, and, overall supply side factors have a higher impact when it comes to supply chain disruption risk than comparable customer side factors.