Offshoring and outsourcing under demand uncertainty -a supply chain management analysis

Outsourcing and offshoring or any combinations of these have not just become a popular phenomenon, but are viewed as one of the most important management strategies due to the new possibilities from globalization. They have been seen as a possibility to save costs and improve customer service. Executing offshoring and offshore outsourcing successfully can be more complex than initially expected. Potential cost savings resulting from of offshoring and offshore outsourcing are often based on lower manufacturing costs. However, these benefits might be conflicted by a more complex supply chain with service level challenges that can respectively increase costs. Therefore analyzing the total cost effects of offshoring and outsourcing is necessary. The aim of this Master´s Thesis was to to construct a total cost model using academic literature to calculate the total costs and analyze the reasonability of offshoring and offshore outsourcing production of a case company compared to insourcing production. The research data was mainly quantitative and collected mainly from the case company past sales and production records. In addition management level interviews from the case company were conducted. The information from these interviews was used for the qualification of the necessary quantitative data and adding supportive information that could not be gathered from the quantitative data. Both data collection and analysis were guided by a theoretical frame of reference that was based on academic literature concerning offshoring and outsourcing, statistical calculation of demand and total costs. The results confirm the theories that offshoring and offshore outsourcing would reduce total costs as both offshoring and offshore outsourcing options result in lower total annual costs than insourcing mainly due to lower manufacturing costs. However, increased demand uncertainty would make the alternative of offshore outsourcing more risky and difficult to manage. Therefore when assessing the overall impact of the alternatives, offshoring is the most preferable option. As the main cost savings in offshore outsourcing came from lower manufacturing costs, more specifically labour costs, the logistics costs in this case company did not have an essential effect in total costs. The management should therefore pay attention initially to manufacturing costs and then logistics costs when choosing the best production sourcing option for the company.

Droit du transport intermodal international de marchandises : une perspective « supply chain management ».

La thèse propose d’introduire une perspective globale dans le traitement juridique du transport intermodal international qui prendrait racine dans la stratégie logistique des entreprises. La conception juridique se heurte, en effet, aux évolutions opérationnelles et organisationnelles des transports et aboutit à une incertitude juridique. Les transporteurs ont dû s’adapter aux exigences d’optimisation des flux des chargeurs dont les modes de production et de distribution reposent sur le supply chain management (SCM). Ce concept est le fruit de la mondialisation et des technologies de l’information. La concurrence induite par la mondialisation et le pilotage optimal des flux ont impulsé de nouvelles stratégies de la part des entreprises qui tentent d’avoir un avantage concurrentiel sur le marché. Ces stratégies reposent sur l’intégration interfonctionnelle et interoganisationnelle. Dans cette chaîne logistique globale (ou SCM) l’intermodal est crucial. Il lie et coordonne les réseaux de production et de distribution spatialement désagrégés des entreprises et, répond aux exigences de maîtrise de l’espace et du temps, à moindre coût. Ainsi, le transporteur doit d’une part, intégrer les opérations de transport en optimisant les déplacements et, d’autre part, s’intégrer à la chaîne logistique du client en proposant des services de valeur ajoutée pour renforcer la compétitivité de la chaîne de valeur. Il en découle une unité technique et économique de la chaîne intermodale qui est pourtant, juridiquement fragmentée. Les Conventions internationales en vigueur ont été élaborées pour chaque mode de transport en faisant fi de l’interaction entre les modes et entre les opérateurs. L’intermodal est considéré comme une juxtaposition des modes et des régimes juridiques. Ce dépeçage juridique contraste avec la gestion de la chaîne intermodale dont les composantes individuelles s’effacent au profit de l’objectif global à atteindre. L’on expose d’abord l’ampleur de l’incertitude juridique due aux difficultés de circonscrire le champ d’opérations couvert par les Conventions en vigueur. Une attention est portée aux divergences d’interprétations qui débouchent sur la « désunification » du droit du transport. On s’intéresse ensuite aux interactions entre le transport et la chaîne logistique des chargeurs. Pour cela, on retrace l’évolution des modes de production et de distribution de ces derniers. C’est effectivement de la stratégie logistique que découle la conception de la chaîne intermodale. Partant de ce système, on identifie les caractéristiques fondamentales de l’intermodal. La thèse aboutit à dissiper les confusions liées à la qualification de l’intermodal et qui sont à la base des divergences d’interprétations et de l’incertitude juridique. De plus, elle met en exergue l’unité économique du contrat de transport intermodal qui devrait guider la fixation d’un régime de responsabilité dédié à ce système intégré de transport. Enfin, elle initie une approche ignorée des débats juridiques.

Making sense of supply chain management: acomparative study of aerospace and construction

Current recipes for learning across business sectors too often fail to recognize the embedded and contextual nature of management practice. The existing literature gives little emphasis to the symbiotic relationship between supply chain management and the broader dynamics of context. The aerospace and construction sectors are selected for comparison on the basis that they are so different. The UK aerospace sector has undergone extensive consolidation as a result of the imperatives of global competitive pressures. In contrast, the construction industry has experienced decades of fragmentation and remains highly localized. An increasing proportion of output in the aerospace sector occurs within a small number of large, globally orientated firms. In contrast, construction output is dominated by a plethora of small firms with high levels of subcontracting and a widespread reliance on self-employment. These differences have fundamental implications for the way that supply chain management is understood and implemented in the two sectors. Semi-structured interviews with practitioners from both sectors support the contention that supply chain management is more established in aerospace than construction. The introduction of prime contracting and the increasing use of framework agreements within the construction sector potentially provide a much more supportive climate for supply chain management than has traditionally prevailed. However, progress depends upon an improved continuity of workload under such arrangements.

Applying supply chain management models in the banking industry: a brazilian case analysis

The study presents the results and recommendations deriving from the application of two supply chain management analysis models as proposed by the Supply Chain Council (SCOR, version 10.0) and by Lambert (1997, Framework for Supply Chain Management) on the logistics of cash transfers in Brazil. Cash transfers consist of the transportation of notes to and from each node of the complex network formed by the bank branches, ATMs, armored transportation providers, the government custodian, Brazilian Central Bank and financial institutions. Although the logistic to sustain these operations is so wide-ranged (country-size), complex and subject to a lot of financial regulations and security procedures, it has been detected that it was probably not fully integrated. Through the use of a primary and a secondary data research and analysis, using the above mentioned models, the study ends up with propositions to strongly improve the operations efficiency

Supply Chain Management practices in the electro-electronics sector in Brazil: Evolutionary approach, information technology adoption and management actions

This paper examines the current level of adoption of Supply Chain Management (SCM) practices in the electro-electronic sector in Brazil and aims to identify the management and Information Technology (IT) actions that have been implemented to support the adoption of those practices. An e-mail survey was conducted. Descriptive statistics techniques were employed for data analysis. This study makes contributions to the electro-electronics sector and to the topics related to SCM, such as identifi cation and level of adoption of SCM practices. Another contribution of this research is the investigation of whether approaches such as Enterprise Resources Planning (ERP), Workshop with Customers, Electronic Data Interchange (EDI), Workshop with Suppliers and electronic Kanban are commonly used to support SCM practices. So far, this is the fi rst research on SCM practices in the electro-electronics sector in Brazil. Copyright © 2012 Inderscience Enterprises Ltd.

Green supply chain management in local and multinational high-tech companies located in Brazil

The objective of this article is to analyse how green supply chain management (GSCM) practices are being adopted by some high-tech companies located in Brazil. The research was conducted using the case study approach, focusing on eight companies that are representative of this sector. The main results are: (a) the most adopted GSCM practices in the studied high-tech companies located in Brazil are internal environmental management, investment recovery and reverse logistics and (b) Brazilian environmental legislation and international policies are very important in driving the adoption of GSCM practices. The internationalisation of companies was also found to be a variable that interferes with the adoption of GSCM practices. This is one of the first studies that examine the relationship between GSCM and the internationalisation of companies located in Brazil. © 2013 Springer-Verlag London.

Mitigation of the bullwhip effect considering trust and collaboration in supply chain management: a literature review

The aim of this paper is to provide results of trust and collaboration that lead to the mitigation of the bullwhip effect in supply chain management through a systematic literature review. The criterion for its inclusion in the sample of papers was that at least two reviews of the respective subfields were published in peer-reviewed journals between 1990 and 2014. A total of 24 articles were selected. The analysis found that few studies focused on addressing behavioral aspects to reduce the bullwhip effect. Most of them focused on operational and quantitative aspects. These results indicate the need for studies on behavioral aspects in mitigating the bullwhip effect, where trust and collaboration among those involved in the supply chain need to be developed and organized.

Governance Structure Choices in Supply Chain Management Evidence from Spanish and Chinese Pork Chain Cases

The author participated in the 6 th EU Framework Project ―Q-pork Chains (FP6-036245-2)‖ from 2007 to 2009. With understanding of work reports from China and other countries, it is found that compared with other countries, China has great problems in pork quality and safety. By comparing the pork chain management between China and Spain, It is found that the difference in governance structure is one of the main differences in pork chain management between Spain and China. In China, spot-market relationship still dominates governance structure of pork chain, especially between the numerous house-hold pig holders and the great number of small slaughters. While in Spain, chain agents commonly apply cooperatives or integrations to cooperate. It also has been proven by recent studies, that in quality management at the chain level that supply chain integration has a direct effect on quality management practices (Han, 2010). Therefore, the author started to investigate the governance structure choices in supply chain management. And it has been set as the first research objective, which is to explain the governance structure choices process and the influencing factors in supply chain management, analyzing the pork chains cases in Spain and in China. During the further investigation, the author noticed the international trade of pork between Spain and China is not smooth since the signature of bi-lateral agreement on pork trade in 2007. Thus, another objective of the research is to find and solve the problems exist in the international pork chain between Spain and China. For the first objective, to explain the governance structure choices in supply chain management, the thesis conducts research in three main sections. 10 First of all, the thesis gives a literature overview in chapter two on Supply Chain Management (SCM), agri-food chain management and pork chain management. It concludes that SCM is a systems approach to view the supply chains as a whole, and to manage the total flow of goods inventory from the supplier to the ultimate customer. It includes the bi-directional flow of products (materials and services) and information, and the associated managerial and operational activities. And it also is a customer focus to create unique and individual source of customer value with an appropriate use of resources, leading to customer satisfaction and building competitive chain advantages. Agri-food chain management and pork chain management are applications of SCM in agri-food sector and pork sector respectively. Then, the research gives a comparative study in chapter three in the pork chain and pork chain management between Spain and China. Many differences are found, while the main difference is governance structure in pork chain management. Furthermore, the author gives an empirical study on governance structure choice in chapter five. It is concluded that governance structure of supply chain consists of a collection of rules/institutions/constraints structuring the transactions between the various stakeholders. Based on the overview on literatures closely related with governance structure, such as transaction cost economics, transaction value analysis and resource-based view theories, seven hypotheses are proposed, which are: Hypothesis 1: Transaction cost has positive relationship with governance structure choice Hypothesis 2: Uncertainty has positive relationship with transaction cost; higher uncertainty exerts high transaction cost Hypothesis 3: The relationship between asset specificity and transaction cost is positive Hypothesis 4: Collaboration advantages and governance structure choice have positive relationship11 Hypothesis 5: Willingness to collaborate has positive relationship with collaboration advantages Hypothesis 6: Capability to collaborate has positive relationship with collaboration advantages Hypothesis 7: Uncertainty has negative effect on collaboration advantages It is noted that as transaction cost value is negative, the transaction cost mentioned in the hypotheses is its absolute value. To test the seven hypotheses, Structural Equation Model (SEM) is applied and data collected from 350 pork slaughtering and processing companies in Jiangsu, Shandong and Henan Provinces in China is used. Based on the empirical SEM model and its results, the seven hypotheses are proved. The author generates several conclusions accordingly. It is found that the governance structure choice of the chain not only depends on transaction cost, it also depends on collaboration advantages. Exchange partners establish more stable and more intense relationship to reduce transaction cost and to maximize collaboration advantages. ―Collaboration advantages‖ in this thesis is defined as the joint value achieved through transaction (mutual activities) of agents in supply chains. This value forms as improvements, mainly in mutual logistics systems, cash response, information exchange, technological improvements and innovative improvements and quality management improvements, etc. Governance structure choice is jointly decided by transaction cost and collaboration advantages. Chain agents take different governance structures to coordinate in order to decrease their transaction cost and to increase their collaboration advantages. In China´s pork chain case, spot market relationship dominates the governance structure among the numerous backyard pig farmer and small family slaughterhouse 12 as they are connected by acquaintance relationship and the transaction cost in turn is low. Their relationship is reliable as they know each other in the neighborhood; as a result, spot market relationship is suitable for their exchange. However, the transaction between large-scale slaughtering and processing industries and small-scale pig producers is becoming difficult. The information hold back behavior and hold-up behavior of small-scale pig producers increase transaction cost between them and large-scale slaughtering and processing industries. Thus, through the more intense and stable relationship between processing industries and pig producers, processing industries reduce the transaction cost and improve the collaboration advantages with their chain partners, in which quality and safety collaboration advantages be increased, meaning that processing industries are able to provide consumers products with better quality and higher safety. It is also drawn that transaction cost is influenced mainly by uncertainty and asset specificity, which is in line with new institutional economics theories developed by Williamson O. E. In China´s pork chain case, behavioral uncertainty is created by the hold-up behaviors of great numbers of small pig producers, while big slaughtering and processing industries having strong asset specificity. On the other hand, ―collaboration advantages‖ is influenced by chain agents´ willingness to collaborate and chain agents´ capabilities to cooperate. With the fast growth of big scale slaughtering and processing industries, they are more willing to know and make effort to cooperate with their chain members, and they are more capable to create joint value together with other chain agents. Therefore, they are now the main chain agents who drive more intense and stable governance structure in China‘s pork chain. For the other objective, to find and solve the problems in the international pork chain between Spain and China, the research gives an analysis in chapter four on the 13 international pork chain. This study gives explanations why the international trade of pork between Spain and China is not sufficient from the chain perspective. It is found that the first obstacle is the high quality and safety requirement set by Chinese government. It makes the Spanish companies difficult to get authorities to export. Other aspects, such as Spanish pork is not competitive in price compared with other countries such as Denmark, United States, Canada, etc., Chinese consumers do not have sufficient information on Spanish pork products, are also important reasons that Spain does not export great quantity of pork products to China. It is concluded that China´s government has too much concern on the quality and safety requirements to Spanish pork products, which makes trade difficult to complete. The two countries need to establish a more stable and intense trade relationship. They also should make the information exchange sufficient and efficient and try to break trade barriers. Spanish companies should consider proper price strategies to win the Chinese pork market

Putting supply chain management (SCM) theory into practice:the role and importance of the people dimension

This article deals with a number of supply chain management (SCM) issues: SCM’s “Big Idea” – integration, Divergence of Theory and Practice - the limitations of “hard-wiring”, The “Human Chain”, The Way Forward – asking the right question?

The rhetoric and reality of supply chain management in Irish business

A strong focus of NITL’s research activity is on monitoring the extent to which SCM principles and concepts are adopted by organisations based in Ireland. For more than a decade this work has aimed to develop a profile of SCM adoption, as well as identifying some of the critical success factors and barriers influencing firms in their attempts to improve supply chain capability and performance. This article explains the role of SCM in Ireland’s economic recovery and provides an overview of NITL’s latest findings in relation to the adoption of SCM practices by firms in Ireland.