The analysis and mitigation of risks in FMCG supply chain: the case of British American Tobacco Eastern Europe

This work investigates the Bullwhip Effect, which is one of the most important phenomena in contemporary supply chain management. The author uses most recent theoretical apparatus to analyze operational activities of a leading FMCG company British American Tobacco Eastern Europe. This paper investigates and describes the process in BAT supply chain management and considers the impact of the Bullwhip Effect together with the potential risks threatening company's operations. Emergence of the Bullwhip Effect leads to supply chain inefficiency. This paper contains methodological supply chain risk mitigation recommendations, description of a real case study and an analytical study of internal and external supply chain processes

Activation of supply relationships : a study of main providers in the Turku logistics cluster

Företag inom industri och handel väljer allt oftare att låta ett logistikföretag sköta stora delar av sina logistiska processer. Logistikföretagen i sin tur överlåter utförandet av enskilda tjänster, som t.ex. olika typer av transport, till olika samarbetspartners inom branschen. I avhandlingen studeras hur logistikföretag går till väga då de väljer vilka av deras samarbetspartners som ska engageras för att delta i utförandet av ett logistiktjänstepaket, en arbetsprocess som här kallas aktivering. Fokus ligger på aktiveringens innehåll och de faktorer som inverkar på hur den går till och vilka samarbetsparter som kommer att engageras. Arbetet bygger på nätverksansatsen för studier av företagsrelationer på industriella marknader. Aktiveringsprocessen uppfattas som en rätt ordinär, rutinmässig verksamhet i företaget, men den kan också förväntas inverka på hur företagets samarbetsnätverk utvecklas över tiden, genom att vissa relationer förstärks medan andra försvagas. I den empi riska undersökningen deltog 29 logistikföretag i Åboregionen som utgående från ett diskussionsunderlag fick berätta om hur de går till väga vid aktivering.

Role of Capabilities in Purchasing and Supply Management Performance

The objective of this thesis was to study the role of capabilities in purchasing and supply management. For the pre-understanding of the research topic, purchasing and supply management development and the multidimensional, unstructured and complex nature of purchasing and supply management performance was studied in literature review. In addition, a capability-based purchasing and supply management performance framework were researched and structured for the empirical research. Due to the unstructured nature of the research topic, the empirical research is three-pronged in this study including three different research methods: the Delphi method, semi-structured interview, and case research. As a result, the purchasing and supply management capability assessment tool was structured to measure current level of capabilities and impact of capabilities on purchasing and supply management performance. The final results indicate that capabilities are enablers of purchasing and supply management performance, and therefore critical to purchasing and supply performance.

The Dark Side of International Business? Stakeholder Approach to Human Trafficking in Finnish Construction and Service Sectors

Human trafficking is not a new phenomenon. It has existed in various forms for ages around the world. Some researchers have even compared it to slavery, calling it the modern form of slavery in the 21st century. This study is particularly interested in the role of work-related human trafficking in Finnish business. In order for something to be called work-related human trafficking, the concepts of forced labour and human trafficking have to overlap. From the economic point of view, human trafficking is governed by the laws of supply and demand. In many countries the global pressure on cutting costs has created two trends: the increased supply of migrant workers and the deregulation of labour markets. These competitive pressures can have an adverse impact on the conditions of employment and, in the worst cases, can lead to forced labour and trafficking. In fact, trafficking has become one of the most profitable illicit industries worldwide, generating tremendous profits due to its low costs and huge profits. Therefore, it is important to investigate the phenomenon from the business point of view. This study is a qualitative research conducted by using theme interviews as a research approach. Altogether 13 interviews have been conducted and some secondary data has been used in order to find out what the role of human trafficking is in Finnish business. The special sectors investigated are the Finnish construction and service sectors. The theory framework used in this study follows the stakeholder approach. The relevant stakeholder groups for this study are: ‘institutions and authorities’, ‘law enforcement’, ‘management’ and ‘employees – potential victims’ of trafficking. With the help of these stakeholder groups, a holistic picture of the phenomenon is formed. It can be concluded that the role of human trafficking is complicated but it does exist in Finnish business. It appears in low-cost business sectors where the demand for cheap labour is high. Thus, often the victims are foreigners who do not know the culture or the Finnish conditions of employment. Especially smaller Finnish companies are at risk of getting involved in human trafficking or related exploitation cases since monitoring is much more scarce in these firms than in larger companies. The risk of human trafficking and exploitation is also higher at the bottom of the complicated subcontracting chains or when using foreign recruitment agencies. Thus, the study believes that active and intensive collaboration between the company’s different stakeholder groups is needed in order to prevent work-related human trafficking from flourishing in Finland.

Integration in project business : mechanisms for integrating customers and the project network during the life-cycle of industrial projects

This thesis focuses on integration in project business, i.e. how projectbased companies organize their product and process structures when they deliver industrial solutions to their customers. The customers that invest in these solutions run their businesses in different geographical, political and economical environments, which should be acknowledged by the supplier when providing solutions comprising of larger and more complex scopes than previously supplied to these customers. This means that the suppliers are increasing their supply range by taking over some of the activities in the value chain that have traditionally been handled by the customer. In order to be able to provide the functioning solutions, including more engineering hours, technical equipment and a wider project network, a change is needed in the mindset in order to be able to carry out and take the required responsibility that these new approaches bring. For the supplier it is important to be able to integrate technical products, systems and services, but the supplier also needs to have the capabilities to integrate the cross-functional organizations and departments in the project network, the knowledge and information between and within these organizations and departments, along with inputs from the customer into the product and process structures during the lifecycle of the project under development. Hence, the main objective of this thesis is to explore the challenges of integration that industrial projects meet, and based on that, to suggest a concept of how to manage integration in project business by making use of integration mechanisms. Integration is considered the essential process for accomplishing an industrial project, whereas the accomplishment of the industrial project is considered to be the result of the integration. The thesis consists of an extended summary and four papers, that are based on three studies in which integration mechanisms for value creation in industrial project networks and the management of integration in project business have been explored. The research is based on an inductive approach where in particular the design, commissioning and operations functions of industrial projects have been studied, addressing entire project life-cycles. The studies have been conducted in the shipbuilding and power generation industries where the scopes of supply consist of stand-alone equipment, equipment and engineering, and turnkey solutions. These industrial solutions include demanding efforts in engineering and organization. Addressing the calls for more studies on the evolving value chains of integrated solutions, mechanisms for inter- and intra-organizational integration and subsequent value creation in project networks have been explored. The research results in thirteen integration mechanisms and a typology for integration is proposed. Managing integration consists of integrating the project network (the supplier and the sub-suppliers) and the customer (the customer’s business purpose, operations environment and the end-user) into the project by making use of integration mechanisms. The findings bring new insight into research on industrial project business by proposing integration of technology and engineering related elements with elements related to customer oriented business performance in contemporary project environments. Thirteen mechanisms for combining products and the processes needed to deliver projects are described and categorized according to the impact that they have on the management of knowledge and information. These mechanisms directly relate to the performance of the supplier, and consequently to the functioning of the solution that the project provides. This thesis offers ways to promote integration of knowledge and information during the lifecycle of industrial projects, enhancing the development towards innovative solutions in project business.

Benefits and challenges of supply chain finance business process automation : A case study in ING Bank

Supply chain finance, a financial product provided by the bank, has gained increasing attention and popularity over the last few years. Supply chain finance helps the corporate clients to optimize their financial flows along the supply chain. One characteristic of supply chain finance is that it aims to provide automated solutions. Therefore, the business process automation of supply chain finance is a very interesting and important topic for study. In this study, the business process automation of supply chain finance within the case organization, ING, is analysed. The purpose is to: (1) Identify the benefits to understand the importance to automate supply chain finance business process; (2) Find out the existing automation degree in the supply chain finance business process within the case bank to see what’s the situation now and how to improve in the future; (3) Discover the challenges in the further automation of supply chain finance business process. Firstly, the study finds out that supply chain finance business process automation can bring many benefits to the bank. Automation can improve productivity by using less time and human labour in the business process, and by providing scalable solutions. Automation can also improve quality of the service by reducing the human errors. Last but not least, automation can improve internal governance by providing enhanced visibility of the business process. Because of these potential benefits, many banks are actively seeking solutions to automate their supply chain finance business process. Then, the current automation situation with the case bank is analysed with the help of business process modelling. The supply chain finance business process within the case bank can be further divided into several sub processes: daily transaction, buyer sales and setup, supplier onboarding, contract management, customer services and supports, and contract termination. The study finds out that the daily transaction process is already a highly automated, which is carried out through the web-based trading platform. However, for other business the automation degree is relatively low. Among these business processes, supplier onboarding is most needed for further automation. Then, some solutions are also suggested to automate the supplier onboarding business process. In the end, the study also foresees some challenges during the further automation of supply chain finance business process in the case bank. Some suggestions are also given to deal with these challenges.

Towards Inter-organizational Working Capital Management

Working capital is an investment which is tied up into the inventories and accounts receivable and which is released with accounts payable. Due to the current business landscape with tightened financial conditions and finance markets, organizations emphasize efficient working capital management. With efficient working capital management, a company can reduce the need of finance, free up cash, increase profitability, improve liquidity, increase the efficiency of operations, and decrease (financing) costs. From the perspective of an individual company, efficient working capital management means decreasing inventory levels by shortening the cycle time of inventories, decreasing accounts receivable by shortening the trade credit terms and effective collection procedures, and increasing the level of accounts payable by paying the suppliers later. From an inter-organizational perspective, however, working capital should not be sub-optimized by a single company but holistic view to working capital management through the supply chain should be adopted to create value and improve performance together. The purpose of this research is to take academic research as well as practical management towards inter-organizational working capital management. The thesis discusses the benefits as well as mechanisms of working capital management in the inter-organizational context and has two main objectives: (1) to examine the effect of inter-organizational working capital management on performance in the value chain context and (2) to develop models of working capital management for internal as well as inter-organizational value chains. The results of the archival research conducted in the value chain of the pulp and paper industry and the value chain of the automotive industry indicate that companies can increase relative profitability by managing working capital comprehensively by taking into account all three components, and holistically though the value chain. Companies in the value chain benefit from different strategies in working capital management depending on the position of the company in the value chain. This can be taken into account in inter-organizational working capital management. The effects of inter-organizational working capital management actions on the financing costs of working capital were studied via simulations. Simulations also show that the value chain and individual companies benefit from an inter-organizational view to working capital management. Inter-organizational working capital management actions include for example: shortening the cycle time of inventories, reducing product costs, shifting inventories, shortening payment terms, and considering the cost of capital. The thesis also provides solutions for the practical requirements for tools to control working capital. The design science part of the research introduces the adjusted cash conversion cycle (ACCC) model for internal value chains, as well as models for working capital management in the inter-organizational value chain context: the working capital management model (WCMM) and the financial cycle time model (FCTM) designed in corporation and product levels respectively. This research contributes to literature on working capital management and interorganizational accounting. The research gives a holistic, inter-organizational view to the management of working capital. It advances the knowledge in working capital management on operational level, increases knowledge in the recently risen theme of supply chainoriented, collaborative working capital management, combines management accounting research with supply chain management research, and contributes to the demand of practical inter-organizational accounting methods. In addition, the research has strong practical focus as new managerial methods are introduced.

Supply chain performance management system

The purpose of the study is to determine general features of the supply chain performance management system, to assess the current state of performance management in the case company mills and to make proposals for improvement – how the future state of performance management system would look like. The study covers four phases which consist of theory and case company parts. Theoretical review gives understanding about performance management and measurement. Current state analysis assesses the current state of performance management in the mills. Results and proposals for improvement are derived from current state analysis and finally the conclusions with answers to research questions are presented. Supply chain performance management system consists of five areas: perfor-mance measurement and metrics, action plans, performance tracking, performance dialogue and rewards, consequences and actions. The result of the study revealed that all mills were quite average level in performance management and there is a room for improvement. Created performance improvement matrix served as a tool in assessing current performance management and could work also as a tool in the future in mapping the current state after transformation process. Limited harmonization was revealed as there were different ways to work and manage performance in the mills. Lots of good ideas existed though actions are needed to make a progress. There is also need to harmonize KPI structure.

Value added logistics in supply and demand chain : COSTFIX : New operation model for maintenance material logistics in paper industry

This research report illustrates and examines new operation models for decreasing fixed costs and transforming them into variable costs in the field of paper industry. The report illustrates two cases – a new operation model for material logistics in maintenance and an examination of forklift truck fleet outsourcing solutions. Conventional material logistics in maintenance operation is illustrated and some problems related to conventional operation are identified. A new operation model that solves some of these problems is presented including descriptions of procurement and service contracts and sources of added value. Forklift truck fleet outsourcing solutions are examined by illustrating the responsibilities of a host company and a service provider both before and after outsourcing. The customer buys outsourcing services in order to improve its investment productivity. The mechanism of how these services affect the customer company’s investment productivity is illustrated.

Assessment of purchasing maturity in spare parts supply chain

To describe the change of purchasing moving from administrative to strategic function academics have put forward maturity models which help practitioners to compare their purchasing activities to industry top performers and best practices. However, none of the models aim to distinguish the purchasing maturity from the after-sales point of view, even though after-sales activities are acknowledged as a relevant source of revenue, profit and competitive advantage in most manufacturing firms. The maturity of purchasing and supply management practices have a large impact to the overall performance of the spare parts supply chain and ultimately to the value creation and relationship building for the end customer. The research was done as a case study for a European after-sales organization which is part of a globally operating industrial firm specialized in heavy machinery. The study mapped the current state of the purchasing practices in the case organization and also distinguished the relevant areas for future development. The study was based on the purchasing maturity model developed by Schiele (2007) and investigated also how applicable is the maturity model in the spare parts supply chain context. Data for the assessment was gathered using five expert interviews inside the case organization and other parties involved in the company’s spare parts supply chain. Inventory management dimension was added to the original maturity model in order to better capture the important areas in a spare parts supply chain. The added five questions were deduced from the spare parts management literature and verified as relevant areas by the case organization’s personnel. Results indicate that largest need for development in the case organization are: better collaboration between sourcing and operative procurement functions, use of installed base information in the spare parts management, training plan development for new buyers, assessment of aligned KPI’s between the supply chain parties and better defining the role of after-sales sourcing. The purchasing maturity model used in this research worked well in H&R Leading, Controlling and Inventory Management dimensions. The assessment was more difficult to conduct in the Supplier related processes, Process integration and Organizational structure –dimensions, mainly because the assessment in these sections would for some parts require more company-wide assessment. Results indicate also that the purchasing maturity model developed by Schiele (2007) captures the relevant areas in the spare parts supply as well.

Improving the Supply Chain Performance Management System in a Finnish paper mill

This Master’s Thesis studies performance management system and its benefits, risks and costs. Objective of the thesis is to describe and evaluate currently used supply chain performance management system (SCPMS) in a Finnish paper mill and its interfaces with its business unit’s SCPMS. As a result, the host company has improvement road map for improving its SCPMS. Used SCPMS in the host company and its interfaces to business unit’s SCPMS are described based on interviews held in the host company and the business unit. Evaluation of the host company’s SCPMS is based on literature study. For improvement road map, three areas in need of improvements are chosen. The study shows the need of high level top management commitment in successful performance management system implementation and usage, especially when the system is deployed to lower levels in the organization.