A supply network configuration perspective on international supply chain development

Purpose - The purpose of this paper is to explore the impact of configuration on supply network capability. It was believed that a configuration perspective might provide new insights on the capability and performance of supply networks, a gap in the literature, and provide a basis for the development of tools to aid their analysis and design. Design/methodology/ approach - The methodology involved the development of a configuration definition and mapping approach extending established strategic and firm level constructs to the network operational level. The resulting tools were tested and refined in a series of case studies across a range of sectors and value chain models. Supply network capability assessments, from the perspective of the focal firm, were then compared with their configuration profiles. Findings - The configuration mapping tools were found to give new insights into the structure of supply networks and allow comparisons to be made across sectors and business models through the use of consistent and quantitative methods and common presentation. They provide the foundations for linking configuration to capability and performance, and contribute to supply network design and development by highlighting the intrinsic capabilities associated with different configurations. Research limitations/implications - Although multiple case networks have been investigated, the configuration exemplars remain suggestive models. The research suggests that a re-evaluation of operational process excellence models is needed, where the link between process maturity and performance may require a configuration context. Practical implications - Advantages of particular configurations have been identified with implications for supply network development and industrial policy. Originality/value - The paper seeks to develop established strategic management configuration concepts to the analysis and design of supply networks by providing a robust operational definition of supply network configuration and novel tools for their mapping and assessment. © Emerald Group Publishing Limited.

The intelligent product driven supply chain

Establishing connectivity of products with real-time information about themselves can at one level provide accurate data, and at another, allow products to assess and influence their own destiny. In this way, the specification for an intelligent product is being built - one whose information content is permanently bound to its material content. This paper explores the impact of such development on supply chains, contrasting between simple and complex product supply chains. The Auto-ID project is on track to enable such connectivity between products and information using a single, open-standard, data repository for storage and retrieval of product information. The potential impact on the design and management of supply chains is immense. This paper provides an introduction to of some of these changes, demonstrating that by enabling intelligent products, Auto ID systems will be instrumental in driving future supply chains. The paper also identifies specific application areas for this technology in the product supply chain.

Improving the safety and security of the pharmaceutical supply chain

This paper discusses various techniques that may be used to combat counterfeiting in the pharmaceutical supply chain. These include the use of electronic pedigrees (to ensure the integrity of the supply chain), together with mass-serialization (to provide for a unique lifecycle history of each individual package) and authentication of the product (to check for any discrepancies in the various attributes of the product and its packaging are as intended for that individual package). Management of the pedigree process and product authentication is discussed in some detail, together with various other learnings from the Drug Security Network, including identification of some remaining vulnerabilities and suggestions for tightening these loopholes. © 2008 Springer-Verlag Berlin Heidelberg.

Competing manufacturers in a retail supply chain: On contractual form and coordination

It is common for a retailer to sell products from competing manufacturers. How then should the firms manage their contract negotiations? The supply chain coordination literature focuses either on a single manufacturer selling to a single retailer or one manufacturer selling to many (possibly competing) retailers. We find that some key conclusions from those market structures do not apply in our setting, where multiple manufacturers sell through a single retailer. We allow the manufacturers to compete for the retailer's business using one of three types of contracts: a wholesale-price contract, a quantity-discount contract, or a two-part tariff. It is well known that the latter two, more sophisticated contracts enable the manufacturer to coordinate the supply chain, thereby maximizing the profits available to the firms. More importantly, they allow the manufacturer to extract rents from the retailer, in theory allowing the manufacturer to leave the retailer with only her reservation profit. However, we show that in our market structure these two sophisticated contracts force the manufacturers to compete more aggressively relative to when they only offer wholesale-price contracts, and this may leave them worse off and the retailer substantially better off. In other words, although in a serial supply chain a retailer may have just cause to fear quantity discounts and two-part tariffs, a retailer may actually prefer those contracts when offered by competing manufacturers. We conclude that the properties a contractual form exhibits in a one-manufacturer supply chain may not carry over to the realistic setting in which multiple manufacturers must compete to sell their goods through the same retailer. © 2010 INFORMS.

Improving supply chain performance: Real-time demand information and flexible deliveries

In some supply chains, materials are ordered periodically according to local information. This paper investigates how to improve the performance of such a supply chain. Specifically, we consider a serial inventory system in which each stage implements a local reorder interval policy; i.e., each stage orders up to a local basestock level according to a fixed-interval schedule. A fixed cost is incurred for placing an order. Two improvement strategies are considered: (1) expanding the information flow by acquiring real-time demand information and (2) accelerating the material flow via flexible deliveries. The first strategy leads to a reorder interval policy with full information; the second strategy leads to a reorder point policy with local information. Both policies have been studied in the literature. Thus, to assess the benefit of these strategies, we analyze the local reorder interval policy. We develop a bottom-up recursion to evaluate the system cost and provide a method to obtain the optimal policy. A numerical study shows the following: Increasing the flexibility of deliveries lowers costs more than does expanding information flow; the fixed order costs and the system lead times are key drivers that determine the effectiveness of these improvement strategies. In addition, we find that using optimal batch sizes in the reorder point policy and demand rate to infer reorder intervals may lead to significant cost inefficiency. © 2010 INFORMS.

Trade credit linkages along the supply chain: evidence for the Italian textile sector

We examine the trade credit linkages among firms within a supply chain to reckon the effect of such linkages on the propagation of liquidity shocks from downstream to upstream firms. We choose a sample appropriate for this task, consisting of a large data set of Italian firms from the textile industry, a well known example of a comprehensive manufacturing cluster featuring a large number of small and specialized firms at each level of the supply chain. The results of the analysis indicate that the level of trade credit that firms provide to their suppliers is positively related to the level of trade credit granted to their clients: when the level of trade credit granted to clients divided by sales goes up by 1, the level of trade credit provided to suppliers divided by cost-of goods-sold goes up by an amount that varies between 0,22 and 0,52. Since all firms along the chain are linked by trade credit relationships, an increase in the level of trade credit granted by wholesalers generates a liquidity cascade throughout the chain. We designate the overall increase in the level of trade credit among all firms in the chain as a result of a unitary impulse in the level of trade credit granted by wholesalers as the multiplier effect of trade credit for the industry chain. We estimate such multiplier to vary between 1.28 and 2.04. We also investigate the effect of final demand on the level of trade credit sourced by firms at various levels of the chain and, in particular, whether such effect is amplified for firms further up in the chain as a result of liquidity propagation via trade credit linkages. We uncover evidence of such amplification when the links of liquidity transmission along the chain are individually modeled and estimated. An unitary increase in wholesalers’ sales is found to produce an effect on trade payables among firms at the top of the chain (i.e., Preparers and Spinners) that is more than twice as big as the corresponding effect among firms at the bottom of the chain (i.e., Wholesalers).