Supply Chain Frontiers issue #39
As the field of supply chain management evolves, managers are constantly confronted with an increasing menu of practices. The importance of selecting the “right” set of supply chain practices has been recognized by academics and practitioners as fundamental to improving long-term supply chain performance. But how exactly can a manager make this choice?
The MIT Center for Transportation & Logistics (MIT CTL) Supply Chain 2020 project identified “strategy alignment” as a key pillar for making any effective supply chain decision. However, there are still myriad relationships and trade-offs that need to be explored before a strategic goal can be transformed into an effective supply chain practice.
MIT CTL, in collaboration with the Centre for Management Studies of the Technical University of Lisbon, Portugal, has been trying to understand how managers select supply chain practices and their real impact in supply chain performance improvement. The first part of the research focused on characterizing observable supply chain dynamics that adversely influence supply chain performance. The long list was summarized in seven key phenomena: waste, vulnerability, uncertainty, congestion, bullwhip, diseconomies of scale, and self-interest. Managers might not know which practices suit their businesses, but they certainly know that they should keep the impact of these phenomena as small as possible in their supply chains.
The phenomena are not independent of each other, which means that efforts to reduce one may increase others, reducing the overall supply chain performance. When a company implements a set of practices that create an overall decrease of the seven phenomena, supply chain performance will certainly increase.
Using this basic insight, the researchers propose the seven phenomena framework as a robust methodology for the selection of supply chain practices. This will help managers to select a set of practices that are in alignment not only with the business strategy, but with a broader understanding of the potential performance impacts (positive and negative) of their supply chain.
The seven phenomena framework is still evolving. If you would like to learn more about the framework and actively participate in the research process, please contact Ana Barros or Edgar Blanco, eblanco@mit.edu .