Logistics for Humanitarian Crises

Introduction

Logistics for humanitarian crises is quite unlike logistics for traditional military operations: in the case of natural disasters, there is frequently no warning or preparation time, leading to what Kress (2015, p. 141) calls a "gap of pain"; the number of casualties and fatalities may be higher than in those resulting from warfare; there is a serious presence of graft and theft and lack of internal controls (the 2010 UN presence in Haiti for example); finally, humanitarian operations requires sustained interaction with civilian agencies.

This post discusses some of problems encountered by leaders working in mixed military/civilian operations. We then discuss one proposed method of bettering military logistics: Total Asset Visibility. Finally, we discuss a more radical alternative for organizing humanitarian logistics.

Cajun Navy in action!

Logistics, Operations, and Leadership for Humanitarian Operations

Logistics planning is difficult in humanitarian crises due to their unpredictable timing, varying durations, and wide variety of types of events. Further complicating the situation is that humanitarian crises can result from nearby wars. Because of these factors, a wide spectrum of agencies usually responds, including military forces, government agencies such as FEMA, and nongovernmental organizations like the International Committee of the Red Cross.

Because of the number of relief agencies involved, differing operational styles and protocols are to be expected. In the civilian world, emergency incidents of all sizes and levels are almost all managed using the Incident Command System (ICS). If one of the responding organizations, like the military, does not use ICS, then this could result in miscommunication between the military and the civilian organizations, and this would result in a less effective response.

Another source of contention is the different leadership styles used in civilian and military organizations: militaries are hierarchically organized, whereas civilian organizations require leaders to "herd cats." As described in Kress (2015, p. 143), "the strict hierarchical chain of command and the culture of discipline and obedience of orders that characterize the military are not always present in civilian organizations." The ICS addresses this "cat herding" by using what is called a "modular organization": the management hierarchy is flexible, expanding and contracting as needed; positions within the modular organization are created on an as-needed basis, and the hierarchy is created in a bottom-up manner.

Total Asset Visibility

Kress (2015, p. 101) describes the concepts of Total Asset Visibility (TAV) and In-Transit Visibility (ITV) as representing a possible feature of future military logistics. The idea of TAV and ITV is to use various technologies (RFID tagging, GPS tracking, and supporting information technologies) to gather near-real-time information about the location and status of all logistic assets, and to present this information to commanders and other relevant parties.

One advantage of a TAV system is that it would allow asset delivery using dispersed travel as opposed to convoy travel. According to Kress (2015, p. 185) a convoy is a long train of vehicles that travels as a unified entity, which can result in considerable delays at intersections. No vehicle is permitted to overtake another unless ordered. Stalled vehicles will slow down the rest of the convoy, which means that the speed of the convoy is limited to that of the slowest vehicle. This slower speed exposes the convoy to hostile activities for an extended period.

With dispersed travel, small groups of vehicles travel independent of other missions. Vehicles moving dispersed would have a higher average speed than convoys. The higher speed and smaller number of vehicles makes dispersed travel a less tempting target to enemies.

TAV would overcome two perceived weaknesses in dispersed travel: it would allow commanders to observe and control the location of assets; also, it would allow accumulation rates of logistic supplies to be easily predicted (Kress, 2015, p. 185).

There are several problems with TAV including the related problems of granularity and information-overloading. The granularity refers to the level of detail that inventory is to be tracked: do we track ammunition by the truckload, by the case, or by individual shell? Tracking inventory at the most granular level possible makes receiving, inventorying, and issuing a very time-consuming chore. Thus, while the time needed to move supplies from point to point would decrease with dispersed travel, that saved time could be lost due to the longer time spent on transferring ownership, which is what receiving, inventorying, and issuing are.

A second problem with TAV is the amount of information presented to a commander about the status of needed assets. A commander really doesn't need to know the location of a particular individual shell, and that information would be a distraction. This problem of information-overload can be solved, however, by the judicious presentation of data to the commander.

Information-overload is not an insurmountable problem. If the issue of TAV granularity can somehow be solved, or if TAV can be implemented only in a restricted manner, like for "last mile" delivery, then TAV will be a viable future tool for the military logistician.

Logistics Swarms

Swarms of arial drones or other physical agents can be applied to both military and humanitarian operations to solve the last mile problem. Unmanned Arial Drones (UAVs) have proven to be useful in combat operations in Ukraine, and it makes sense that UAVs can be used to deliver relief supplies. Thornton and Gallasech (2018) have considered usage of UAVs as replacements for air drops and crewed supply vehicles, finding that conventional delivery methods are expensive, do not necessarily deliver directly to desired locations and require equipment recovery. Small UAVs would avoid these problems, and in addition would shorten delivery time as they wouldn't need to raise to the higher altitudes required by conventional air drop systems.

Lai and Tseng (2022) have extended the idea of logistics-based swarming to include not only delivering supplies over the last mile, but along the entire logistics network. They further develop a method of placing logistic nodes based on system reliability considerations. Their work has all been theoretical, however.

A very successful real-world example of swarming for humanitarian relief operations has been displayed by the Cajun Navy. This is an informal group of volunteers that first emerged in 2005, rescuing thousands of people stranded in New Orleans by the floods caused by Hurricane Katrina. They have repeated their successes in rescuing flood victims in subsequent hurricanes and tropical storms, even as far away as Texas and Florida. In contrast to other civilian disaster response organizations, the Cajun Navy does not use the ICS in any significant manner (Ezor, 2020).

Conclusion

Humanitarian relief missions present unique challenges, primarily because both civilian and military organizations are involved. As can be expected, there are culture clashes – in particular clashes of leadership styles - but these clashes are mitigated through management systems such as the Incident Command System (ICS).

The importance of military and humanitarian operations means that they need to be constantly improved. Two methods for doing just that are Total Asset Visibility (TAV) and logistic swarms. TAV has yet to be realized in military organizations, but swarms of small UAVs or swarms of individuals rescuing flood victims show considerable potential.

References

Ezor, Z. (July 2020). "Calling forth" the Cajun Navy? Legal frameworks for ad hoc disaster relief. Center on Law, Ethics and National Security. Essay Series, Number 4. Duke Law. https://law.duke.edu/sites/default/files/centers/lens/Ezor_Cajun_Navy_Formatted_w_Cover.pdf

Kress, M. (2015). Operational logistics: The art and science of sustaining military operations, 2^nd edition. Springer.

Lai, C-M and Tseng, M-L. (July 2022). "Designing a reliable hierarchical military logistic network using an improved simplified swarm optimization" Computers & Industrial Engineering, Volume 169, July 2022. https://doi.org/10.1016/j.cie.2022.108153

Thornton, S. and Gallasech, G. E. (September 2018). “Swarming logistics for tactical last-mile delivery”. International Conference on Science and Innovation for Land Power 2018. Australian Government Department of Defense. https://www.dst.defence.gov.au/sites/default/files/basic_pages/documents/ICSILP18_IntSes-Thornton_Gallasch-Swarming_Logistics_for_Last-Mile_Logistics.pdf

Joseph as a Supply Chain Manager

Introduction

The overall theme of the story of Joseph as found in Genesis 37-50 is that of forgiveness: Joseph’s brothers threw him down a cistern then sold him into slavery, then convinced their father that Joseph was eaten by a wild animal. Later, after Joseph rises to power in Egypt, he invites his brothers and the rest of the family to live there. This was not unlimited forgiveness, however: he verified that the brothers were indeed remorseful before inviting them to Egypt. For purposes of this paper, the story of Joseph and how he overcame famine in Egypt will be interpreted through the lens of supply chain management.

Joseph's Coat Brought to Jacob
by Domenico Fiasella, c. 1640

Story of Joseph from the Book of Genesis

Joseph, son of Jacob, lived in Canaan with ten half-brothers, one full brother, and at least one half-sister. Joseph was Jacob’s favorite son, and two things made his brothers jealous. First, Joseph told them about two dreams he had that suggest his brothers will bow down to him. Second, Jacob gives him a "coat of many colors."

Joseph's brothers are mad enough to kill him when he comes looking for them in Dothan. The eldest brother, Reuben, instead suggests that they throw him into a cistern, with intentions to come back for him later. They follow through with this plan: they take his coat of many colors and then throw him down one of the cisterns.

The brothers see a caravan of Ishmaelites carrying spices and oils en route to Egypt. Judah (one of the brothers) says "we could kill our brother and hide his body. But then we will not get anything for ourselves." The brothers agree to this plan. They pull Joseph out of the cistern and sell him to the Ishmaelites for twenty silver coins (Genesis 37:28). The Ishmaelites took Joseph with them to Egypt.

Reuben returns to the cistern and sees that Joseph was not there - he's very upset. Reuben finds his other brothers and says: "Joseph is not in the well! What can I do now?" The brothers kill a goat and put its blood over the coat of many colors. They take the coat back to Jacob. Upon seeing the coat Jacob says: “It is my son's coat! A wild animal must have eaten him! The animal has torn Joseph's body into pieces.” His children tried to comfort Jacob, but he was inconsolable: “I will be sad until the day that I die, because my son is dead.”

Meanwhile, the caravan took Joseph into Egypt, where he was sold to Potiphar, captain of the Pharaoh's guards. Joseph eventually becomes the superintendent of Potiphar’s house.

Potiphar’s wife falsely accuses Joseph of sexual harassment, and he is imprisoned. God is with Joseph even while he's in prison, and as such the warden puts him in charge of all the other prisoners.

Joseph meets the Pharaoh's cupbearer and chef, both imprisoned for offending the Pharaoh. Both the cupbearer and the baker have disturbing dreams on the same night. Joseph interprets the cupbearer’s dream, learning that in three days the cupbearer will be released from prison and the Pharaoh will restore him to his former position. Joseph asks the cupbearer to remember him to the Pharaoh to get him out of prison. Joseph next interprets the baker’s dream, but the interpretation is grim: in three days, the Pharaoh will have the baker executed.

Three days later, on the Pharaoh's birthday, the events foretold by Joseph occur: the baker is executed, and the cupbearer is released and regains his position in the court. Unfortunately, the cupbearer forgets to ask the Pharaoh to release Joseph.

Two years after that, the Pharaoh has two disturbing dreams. In the first, seven lean cows eat seven fat cows. In the second, seven healthy heads of grain are devoured by seven thin, scorched heads of grain. The Pharaoh's wise men cannot interpret the dreams. The cupbearer then remembers Joseph and how he correctly interpreted the dreams while in prison.

Joseph is released from prison and credits God for his ability to interpret dreams. The Pharaoh's dreams, Joseph explains, mean the same thing: there will be seven years of abundance followed by seven years of famine. Joseph recommends that the Pharaoh appoint someone to oversee the collection of a fifth of the produce produced all throughout Egypt and store it for the famine. Joseph is recommending emergency preparedness (Martinez, 2022, p. 177-181).

Impressed with Joseph’s interpretations, the Pharaoh gives Joseph the role, making him second in command of Egypt: “I hereby put you in charge of the whole land of Egypt” (Genesis 41:41). Joseph, who is now 30, travels throughout Egypt, organizing the collection and storage of food during the seven plentiful years. Egypt is thus prepared for the famine.

When the famine strikes, Joseph opens the storehouses and sells grain back to the Egyptians. The famine was so severe that people from other countries came to Egypt to purchase grain, too. The inhabitants of Egypt, except the Egyptian priests, run out of money. “Then bring your livestock,” said Joseph. “I will sell you food in exchange for your livestock, since your money is gone.” (Genesis 47:16). The result was that the people sold their properties and themselves into slavery to Joseph for food. As the famine ended, Joseph mandated that 20% of all the food that the people grow will go to the Pharaoh. This condition will last until the time of Moses.

Lessons Learned from Joseph

First, Joseph based his plans upon forecasts – in this case, forecasts based on dreams interpreted through Divine knowledge. This continues to the present day, except that historical records, data science, and machine learning are potential sources of information. The important part is that the plans were knowledge-based, and following those plans would today be called “strategic planning” and “emergency preparedness.” Joseph’s overall approach was similar to what would now be called an anticipatory business model (Quigg, 2022, p. 16), except that instead of buying components and materials then manufacturing products from them. The food or grain was sent to storage for later sale.

Anticipatory Business Model (Quigg, 2022, p. 16)

Second, Joseph used storage to overcome the seven years of famine. This was done by collecting 20% of the people of Egypt’s grain during the previous seven plentiful years. The impact of this is to “smooth out” the available supply of grain, decreasing it during times of plenty and increasing it during the famine.

Third, Joseph used what we would now call warehouses to store the grain. This is important because warehouses are not just places of storage, but they are buildings that can be defended from looters as well as rodents.

Fourth, the warehouses were distributed throughout Egypt. This reduced the distance that people would have to travel to get their grain, but also minimized the risks of fires or floods to the overall food supply.

Joseph thus took a very rational, very modern, approach. By planning for the long term and executing those plans in a continuous and incremental manner (Parris & Pope, 2020, p. 29), he was able to get the people of Egypt through the seven-year famine.

References

Martinez, J. (2022). “Developing a resilience mindset: Joseph and his coat of many sufferings.” In B. E. Winston (Ed.), The mind of a leader: A Christian perspective of the thoughts, mental, and perceptions that shape leadership behavior. Palgrave Macmillan, pp. 175-198. https://doi.org/10.1007/978-3-031-07206-2_12

Parris, A. & Pope, D. (2020). “What Christian leaders can learn from lean.” Management Sciences 21, pp. 26-34. https://digitalcommons.acu.edu/mgt_sciences/21

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Review of "Effect of Supply Chain Integration on the Ppuri Industry"

Abstract

This is a review of “The Effect of Supply Chain Integration on Supply Chain Risk Management Capability and Firm Performance in the Ppuri Industry” (Jung et al, 2022). The background concepts as well as the relevant concepts from supply chain management necessary to explain this research are defined. The research model they study is described, a research model they are unable to verify. Some of the reasons the authors give for this failure are listed. The managerial applications (or lack thereof) are described. We conclude with comments about the follow-up research they expect to conduct.

Authors’ Purpose

The ppuri industry is a niche industry in South Korea (Dongki, 2021) involved in creating or finishing metal parts used in the making of automobiles, industrial machinery, household appliances, etc. The ppuri industry is also in trouble: ppuri companies have not expanded in any significant manner in recent times, and in fact many of the companies investigated by the authors in this paper went out of business during their research. The authors attempt to explain this by looking at the operation of the supply chain of ppuri companies. They examine the relationship between supply chain integration, supply chain risk management capability, and firm performance. The expected relationships do not hold, and the authors interpret why this happens.

Summary of the Article and its Context

This paper is a study of the ppuri industry in South Korea, an industry that produces or finishes metal parts for large manufacturers. The industry has been struggling in recent years, and the authors attempt to understand the cause of this in terms of supply chain operation. In their study, they find that the relation between supply chain integration and firm performance is not what the authors expected.

They admit that their study suffered from some problems (it used a small sample size and was conducted during COVID-19) but are unable to explain this counterintuitive situation. They make some observations about the conditions in the ppuri industry that may explain this, the most striking one involves the significant difference in size between ppuri companies and the manufacturers they supply. They leave this investigation for future research.

Background of the Issue

The ppuri industry, also called the "root industry," in South Korea is the industry of making metal parts using casting, molding, plastic working, and welding, or finishing those parts using heat or surface treatment (Jung et al, 2022, p. 32-33). These parts are then assembled by manufacturers into automobiles, appliances, industrial or restaurant equipment, etc. (Dongki, 2021). It is called "root" because those parts are of fundamental importance to the manufacturers, and that the parts find their way into many industrial and consumer products.

The ppuri industry has been struggling as illustrated by the facts that ppuri companies are small companies that remain small, that companies have difficulties in finding employees, and that the companies are unable to be competitive due to lack of R&D activities. A South Korea-Japan trade dispute in July 2019 only intensified these problems (Yung et al, 2022, p. 33).

Attempts have been made to strengthen the competitiveness of this industry using strategies that involve increasing supply chain integration. It is expected that tightening SC integration would improve the performance of ppuri companies. But does it?

The authors attempt to investigate the relationship between supply chain integration, the capacity to manage supply chain risk, and overall firm performance. They do this by surveying managers working in ppuri companies and arrive at some counterintuitive observations.

Application of Relevant Supply Chain Management Theory

Modern supply chain management (SCM) has long recognized the fundamental importance of supply chains in company operation, and SC managers understand how well-run supply chains can add value to the products that customers purchase. Because of this, risks to the supply chain must be well understood.

A supply chain risk (Son, 2018, p. 2296-2297) is any event that diminishes the operation of the supply chain. These risks can include buyer-related risks (distortion of demand information or demand volatility), supplier-related risks (poor raw material quality or supplier bankruptcy). Finally, there are internal-process risks such as change in production costs. Supply chain risk management (SCRM) (Son, 2018, p. 2297-2300) are the steps needed to reduce risks or vulnerabilities to the supply chain.

Supply chain integration, one of the holy grails of contemporary supply chain management (Quigg, 2022, p. 24-52), is the degree of cooperation within and between participating organizations. The authors classify integration as being internal or external, and external integration is further broken down into supplier integration and buyer integration.

Supplier integration is an organization’s ability to develop, maintain, and manage long-term relationships with suppliers (Jung, 2022, p. 35). Buyer integration is the practice of managing customer relationships and improving overall customer satisfaction.

External integration allows for cost reduction, productivity and agility improvements, and ease of obtaining resources (Quigg, 2022, p. 373). It also improves operational performance measured by quality, cost, delivery, and flexibility. This improved operational performance should eventually lead to increased company performance (Jung, 2022, p. 35).

In contrast, internal integration are organizational practices that encourage various departments to share knowledge (Jung, 2022, p. 35-36). This knowledge supports external integration and allows the company to achieve company goals. It also allows sharing and cooperation among departments thereby reducing conflict and promoting corporate stability.

Managerial Implications of Article Findings

Based off all this, the authors propose the following hypotheses about the relationships between the above types of integration and overall company performance:

H1a: Supplier integration improves firm performance.
H1b: Buyer integration improves firm performance.
H1c: Internal integration improves firm performance.

Internal integration also makes the supply chain more agile, enabling faster and more effective responses to environmental changes. Further, it also improves the company’s ability to identify internal risks in the supply chain. Integration is thus expected to improve SCRM capability, and the following hypotheses are posited by the authors:

H2a: Supplier integration improves SCRM capability.
H2b: Buyer integration improves SCRM capability.
H2c: Internal integration improves SCRM capability.

Finally, improvement of SCRM capability should have a positive impact on corporate performance, so the authors propose one final hypothesis:

H3: SCRM capability improves firm performance.

Combining these hypotheses together generates a research model where each of the three types of integration (supplier, buyer, and internal) positively bolster firm performance and SCRM capability, and that SCRM capability improves firm performance.

Research Model from (Jung et al, 2022)

The authors are unable to verify this research model, however common-sensical it may seem. In particular, supply chain integration does not improve firm performance, at least when it comes to supplier and buyer integration. Supplier and internal supply chain integration were shown to have a positive impact on SCRM capability, but buyer integration was not. Finally, SCRM capability was shown to positively impact firm performance.

The authors were thus unable to verify three of the seven hypotheses stipulated above. In summary:

H1a: Supplier integration → firm performance – not supported.
H1b: Buyer integration → firm performance – not supported.
H1c: Internal integration → firm performance – supported.
H2a: Supplier integration → SCRM capability – supported.
H2b: Buyer integration → SCRM capability – not supported.
H2c: Internal integration → SCRM capability – supported.
H3: SCRM capability → firm performance – supported.

How can this be explained? The authors specifically note that their study may suffer from a small sample size: surveys were sent to 928 ppuri companies, seventy-five responded, but one was rejected because it was incomplete. The authors used the remaining seventy-four responses as the base of this study. They also state that many of the unreturned responses were caused by the ppuri companies going out of business.

Another flaw in their study noted by the authors is that it was conducted during the COVID-19 plague. They did not investigate how the plague specifically hampered their investigation.

The authors do propose an explanation for the unexpected relationships between supply chain integration, firm performance, and SCRM capability:

Firms in the Ppuri industry play a role as suppliers of large companies in the supply chain, and most of them perform simple manufacturing and processing tasks at the request of buying companies. Therefore, even if the level of buyer integration increases, firms in the Ppuri industry might not fully achieve the advantages of buyer integration, including cost reduction, productivity improvement, and ease of securing resources, due to the power imbalance between supply chain partners. (Jung et al, 2022, p. 43)

In other words, the great difference in size between ppuri companies and the manufacturers they supply somehow explains the lack of expected relationships. They do not investigate this explanation, either statistically or through deductive logic. If they do investigate it in a future paper, they should check to see if a similar phenomenon occurs in other situations where this “power imbalance” is in effect.

The authors recommend that ppuri companies do take steps needed to integrate suppliers and buyers into their supply chain, and they expect that this will improve SCRM capability and firm performance. These recommendations are not borne out in this paper, and verifying their recommendations would require A/B testing.

Because of the quality of the research and the very niche nature of the ppuri industry, implementing their unproven recommendations in another industry is justified only because having an integrated supply chain makes sense.

Conclusion

The authors have established that supply chain integration doesn’t necessarily improve supply chain risk management capabilities nor firm performance. Because of the counterintuitive nature of that statement – as well as problems executing this study – further research is certainly needed.

References

Bax, J. & Ruel, S. (2021). “Can supply chain risk management practices mitigate the disruption impacts on supply chains’ resilience and robustness? Evidence from an empirical survey in a COVID-19 outbreak era.” International journal of production economics, 233, 107972. https://doi.org/10.1016/j.ijpe.2020.107972

Dongki, L. (2021). “What is PPURI industry?” Korea National PPURI Industry Center. Retrieved 8 October 2021 from https://www.techconnect.kr/html/?pmode=UserAddon&smode=ajax&fn=ViewFile&fileSeq=6724

Jung, J., Shin, J., & Yang, H. (2022). “The effect of supply chain integration on supply chain risk management capability and firm performance in the ppuri industry.” Seoul Journal of Business, 28 (2), 31-48. https://doi.org/10.35152/snusjb.2022.28.2.002

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Son, C. (2018). “Supply chain risk management: A review of thirteen years of research.” American Journal of Industrial and Business Management, 8 (12), 2294-2320. https://10.4236/ajibm.2018.812154

Cloud- Based Hosting and Supply Chain Reliability

One technology that plays a crucial role in supply chain management (SCM) is cloud-based supply chain management systems. As will be described, cloud-based SCM systems can both mitigate and cause supply chain disruptions.

Cloud-based SCM systems can be either self-hosted by a company or are hosted by a cloud service provider. The primary advantage of self-hosting is data privacy: data is stored on the company’s own servers. The disadvantages are costs as well as vulnerability to physical disruptions (Temjanovski et al., 2021, pp. 28-30).

Hosting by a cloud service provider is the usual way companies host their SCM systems. While the company no longer “owns” their data, the problems of scaling and of IT and security maintenance are transferred to the cloud service provider. This is usually less expensive than self-hosting. In addition, supply chain visibility is generally available to supply chain partners (Temjanovski et al., 2021, p. 30).

The largest cloud service provider is Amazon Web Services (AWS). They provide services to most parts of the world, the major exceptions include Russia, Iran, and North Korea.

Within the United States, AWS has servers located in four regions (large geographic areas) for private or commercial use plus two separate regions dedicated to government use (AWS Documentation, n.d.). Each region has anywhere from two to four availability zones (distinct locations within a region), and within those availability zones are one or more data centers. AWS documentation notes that each datacenter has “redundant power, networking, and connectivity, and housed in separate facilities” (AWS Documentation, n.d.). At each level (region, AZ, datacenter), a failure at one level is isolated from other levels. Data is mirrored between the different AZs in a region, ensuring redundancy.

Because of all this, data loss is extremely rare. Permanent service outages are even rarer, requiring the serious faults at geographically dispersed locations. Service interruptions are possible, however, even with AWS’ level of redundancy and fault tolerance.

For example, an outage in US-EAST-1 Region on 30 July 2024 made Ring home security cameras and doorbells unusable. Numerous web services went down, including Goodreads. This outage wasn’t limited to online services: Whole Foods registers were down, and Amazon delivery drivers couldn’t complete their routes because the app they use when delivering packages was unavailable (Harris, 2024).

Cloud-based SCM software is certainly cost effective, permits visibility to supply chain partners, and data loss is avoided through periodic backups as well as redundant storage. Service outages do occur, and the 30 July 2024 outage shows that these outages have grave consequences to both online and real-world services.

References

AWS Documentation. (n.d.). “Regions and Availability Zones.” Retrieved 15 September 2024 from https://aws.amazon.com/about-aws/global-infrastructure/regions_az/

Harris, D. (2024). “AWS outage hits Amazon services, Ring, Whole Foods, Alexa.” CRN. Retrieved 15 September 2024 from https://www.crn.com/news/cloud/2024/aws-outage-hits-amazon-services-ring-whole-foods-alexa

Temjanovski, R., Bezovski, Z., & Apasieva, T. J. (2021). Cloud computing in logistic and supply chain management environment. Journal of Economics, 6(1), 23-32. Retrieved 15 September 2024 from https://eprints.ugd.edu.mk/27861/2/4191-Article%20Text-6939-1-10-20210224.pdf

Supply Chain Disruptions: Boycotts

Concept

A supply chain disruption is an unexpected interruption in the flow of goods or services. Supply chain disruptions can be caused by demand volatility, transportation issues, supplier issues, talent shortages, political instability, pandemics, and various other reasons. For each of these categories, there are several specific types of causes. For example, demand volatility can be caused by seasonal demand variations, competitor actions, etc.

A source of demand volatility is through consumer boycotting. One can easily predict the effects a boycott would have on the targeted company: loss of revenue, tarnishing of corporate reputation, and erosion of customer loyalty. With the latter, the customer will consider using competing goods and services. The practical consequence of this is that if the customer happens to like the competitor better, that customer is potentially lost forever to the boycotted company. These are the immediate effects of a boycott. What are the consequences to the targeted company’s supply chain?

Research into the effects of boycotts on supply chain logistics crosses many academic lines including marketing, politics, and business management. A quick scholarly literature review on the effects of boycotts on supply chains frequently also include the effects of sanctions. These published texts tend to focus on multinational supply chains and evaluate the boycotts and sanctions through the criteria of DEI, ESG, corporate social advocacy, circular supply chains, and sustainability using the attendant leftist political philosophy. The overall thrust of this research is: "first world company boycotted - third world hardest hit."

A typical example of the effects of sanctions and boycotts is the research by Shalpegin and Kumar (2023). They do not supply concrete definitions of “sanctions” and “boycotts”, though they do differentiate them by stating that sanctions are mandated by authorities (governments, multinational organizations, or NGOs) whereas boycotts are implemented voluntarily. It is interesting to note that they do not consider the consequences to the boycotted company and its “local” supply chain but instead focus on the consequences to offshore suppliers that participate in the company's supply chain.

Shalpegin and Kumar (2023, pp. 3-5) state that suppliers are impacted through direct relationship with the targeted company (meaning that suppliers may also be boycotted or sanctioned). In addition, the suppliers may be unable to access foreign markets or certain forms of technology, as the supplier relied on the targeted company for access. Finally, there may be logistics failures for the supplier in the forms of bottlenecks and reduced capacity (See discussion in Quigg (2022, pp. 59-77)). These are the ways sanctions and boycotts travel among supply chain members, “jeopardizing the principles of diversity, equity, and inclusion in supply chains.” (Shalpegin & Kumar, 2023, p. 1).

One of the solutions to the problems (real or imaginary) that Shalpegin and Kumar (2023, p. 5) identify is to shorten the supply chains, i.e., to use local sourcing. Local sourcing is not a complete solution, however. The ultimate form of local sourcing, nationalism, will obviously impact multinational enterprises (MNEs). Charpin (2021, p. 4) finds that “nationalism could engender supply chain disruptions via discriminatory practices toward all foreign MNEs and how national animosity may generate additional risks for the MNEs of nations in conflict with one another.” Charpin (2021, p. 8) is apparently comfortable with the concept of corporate nationality, but notes that this option is not legally supported. The solution Charpin (2021, p. 8) proposes is for MNEs to relocate their supply chain activities from offshore locations to home country locations. This activity protects a company from sanctions but still leaves them open to boycotts.

How damaging are boycotts to companies? King (2017) holds that “[w]hile boycotts rarely hurt revenues, they can threaten a company’s reputation, especially by generating negative media coverage.” Meanwhile, there seems to be no uniform agreement on the average duration of consumer boycotts. Levesque & Nam (2019) note that a boycott of Nestle lasted for seven years, while a boycott of Star-Kist lasted “almost no time at all.” Lasarov, Hoffman, and Orth (2023) also do not predict the duration of consumer boycotts, but they do note that during what they call the “heat-up phase” of a boycott, there is a sharp decrease of interest after two weeks. King (2017) notes that “we can’t pay attention to any single controversy for very long.” King recommended that “targeted companies might do better to simply “wait it out” rather than taking action in response to a boycott that might be in the news one day and out the next.”

Combining these two lines of research, one can conclude that boycotts – regardless of duration – have a minor negative impact on corporate revenue, and that “waiting it out” is a viable strategy. Thus, the consequences to the targeted company’s supply chain are negligible. Is this really the case?

Applications and Examples

With this as background, we examine two recent examples of boycotts. These boycotts show that “customer satisfaction” is more complicated than presented in Quigg (2022, pp. 103 – 110).

The first case we consider is the 2020 boycott of Goya, a large Latin food brand with markets in North America and Europe. Goya CEO and co-owner Robert Unanue praised President Donald Trump’s Hispanic Prosperity Initiative in July of 2020. Several Latino politicians and artists, most notably Alexandria Ocasio-Cortez and Julian Castro, called for a boycott of the brand. Almost immediately a counter-boycott or “buycott” was started by supporters of Trump and Goya. At the end of 2020, Unanue sarcastically named Ocasio-Cortez as “employee of the month,” claiming that the boycott/buycott expanded Goya’s customer base resulting in a sales spike and prompted the opening of a new food production facility in Texas to meet increased demand.

Research by Liaukonytė et al (2022) pegged the sales spike at 22% overall, with an increase of 56.4% in Republican counties and no decrease in Democrat counties. In addition, there was no sales decrease among Goya’s core customer base. The sales spike dissipated within three weeks. Liaukonytė et al (2022) provide no information on the effects of the buycott on Goya’s supply chain, unfortunately.

The second boycott we consider is the 2023 boycott of Bud Light, which was caused by two events. The first event was the widespread recognition of comments by Alissa Heinerscheid, Bud Light’s vice president of marketing, stating the need to “evolve and elevate” the brand to be inclusive, stating that existing marketing was “fratty and [used] out-of-touch humor.”

The second event was the decision to use “trans-influencer” Dylan Mulvaney as a representative of this brave new inclusive world. At the time, Mulvaney was participating in a self-promotion campaign called “365 Days of Girlhood” which of course did not sit well with conservatives as well as members of the “LGB without the TQ” and “trans-exclusionary radical feminists” groups.

The resulting backlash was a boycott of Bud Light products (but not all AMBev products). Three months after the boycott began, Bud Light sales had decreased 28% compared to the same time in previous years. Analysis by Liaukonytė et al (2024) (the same researchers who investigated the Goya boycott) found that sales decreased 32% in Republican counties and 22% in Democrat counties.

Bud Light went silent on the issue, and the boycott continued. In the summer of 2023, the Human Rights Campaign excoriated Anheuser-Busch (Bud Light’s owner) stating that:

In this moment, it is absolutely critical for Anheuser-Busch to stand in solidarity with Dylan and the trans community. However, when faced with anti-LGBTQ+ and transphobic criticism, Anheuser-Busch’s actions demonstrate a profound lack of fortitude in upholding its values of diversity, equity, and inclusion.

This started a secondary boycott that may have resulted in the above-noted sales decrease in Democrat counties.

According to Liaukonytė et al (2024), sales of Bud Light were persistently down for at least eight months, with sales down by 32% in Q4 2023. Heinerscheid and other members of the marketing team left the company, though the exact dates and details of their departures have not been made public.

Liaukonytė et al (2024) did consider the effects this boycott had on Bud Light’s supply chain, stating that the ongoing decline resulted in:

retailers and distributors reducing shelf space for Bud Light, illustrating how boycotts can lead to a negative feedback loop. What started as a consumer-led boycott generated downstream adjustments from retailers and distributors. These supply-side adjustments hurt the brand’s visibility and further exacerbated the negative impact on Bud Light’s performance.

These two examples – the Goya boycott/buycott and the Bud Light boycott – fly in the face of the “conventional wisdom” on boycotts: they need not be the short-term affairs, the effects on company profits is not always negative and negligible, and it is not always best to “wait it out”.

 

References

Charpin, R. (2022). “The resurgence of nationalism and its implications for supply chain risk management.” International Journal of Physical Distribution & Logistics Management. 5(1), 4-28. https:// 10.1108/IJPDLM-01-2021-0019

King, B. (2017). “Do Boycotts Work?” Northwestern Institute for Policy Research. Retrieved 12 September 2024 from https://www.ipr.northwestern.edu/news/2017/king-corporate-boycotts.html

Lasarov, W., Hoffmann, S., & Orth, U. (2023). Vanishing Boycott Impetus: Why and How Consumer Participation in a Boycott Decreases Over Time. Journal of Business Ethics 182(4), 1129–1154. https://doi.org/10.1007/s10551-021-04997-9

Levesque, A. & Nam, J. (2019). “The Effect of Consumer Boycotting on the Stock Market.” https://digitalcommons.pace.edu/honorscollege_theses

Liaukonytė, J., Tuchman, A. & Zhu, X. (2022, August 11). “Spilling the Beans on Political Consumerism: Do Social Media Boycotts and Buycotts Translate to Real Sales Impact?” Marketing Science 42(1), 11-25. https://doi.org/10.1287/mksc.2022.1386

Liaukonytė, J., Tuchman, A. & Zhu, X. (2024, March 20). “Lessons from the Bud Light Boycott, One Year Later.” Harvard Business Review. Retrieved 12 September 2024 from https://hbr.org/2024/03/lessons-from-the-bud-light-boycott-one-year-later

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Shalpegin, T. & Kimar, A. (2023). "Undiversity, inequity, and exclusion in supply chains: The unintended fallout of economic sanctions and consumer boycotts." Production and Operations Management, 00, 1–7. https://doi.org/10.1111/poms.14001

Review of “Exploring the Potentials of Automation"

Abstract

This is a review of Nitsche’s “Exploring the Potentials of Automation in Logistics and Supply Chain Management: Paving the Way for Autonomous Supply Chains.” The article is the introduction to a special issue of the journal Logistics devoted to the automation of logistics and supply chain management. It describes the motivations for doing so and the particular areas of logistics most amiable to automation. The article then describes five levels of automation that are available for supply chain managers, then concludes with brief summaries of the other papers in this special issue.

This review begins with an outline of the major concepts used in the paper, then examines how supply chain management theory applies to these concepts. The managerial implications of this paper are explored, and the article is summarized. Finally, the coverage of the issues surrounding automation is appraised.

Author’s Purpose

The purpose of "Exploring the Potentials of Automation in Logistics and Supply Chain Management: Paving the Way for Autonomous Supply Chains" (Nitsche, 2021) is to serve as an introduction to a special edition of the Logistics journal devoted to how and why logistics and supply chain management systems should be automated. As it is an introduction, it defines some of the concepts used in the other six papers in the special issue. Based on these six papers, the author derives a five-level system describing the degree of automation present in any logistics or supply chain management system. This five-level system is sequential, meaning that it describes a progression pointing to the ultimate state of automation, which the author believes to be completely autonomous self-directed systems. The author completes this introduction by providing brief summaries of the other papers contained in the special issue.

Background of the Issue

Logistics and supply chain automation is defined as “the partial or full replacement or support of a human-performed physical or informational process by a machine. This includes tasks to plan, control or execute the physical flow of goods as well as the corresponding informational and financial flows within the focal firm and with supply chain partners.” (Nitsche et al., 2021, p. 225).

Prior to the COVID-19 pandemic, the motivations for automating logistics and supply chain systems were to improve supply chain responsiveness and resilience while minimizing operating costs. COVID-19 provided another motivation: eliminate the dependency on human control and input. COVID-19 thus moved the goalpost from automation to being fully autonomous. (Wuest et al., 2020, p. 6-7)

Automation comes in many forms, and Nitsche (2021, p. 5) defines five levels of automation. Ranking these from most amount of human involvement to least, these levels are:

Remote control – this is the least amount of automation necessary for remote work; humans are involved with every decision.

Systems for assisting the user – all steps in the process being automated are predefined; there is no ability to adapt to unforeseen circumstances.

Semi-automated systems with no self-learning – the ability to manage new situations is through “if-then” decisions, but the decisions themselves are predefined.

Semi-automated systems with self-learning - human intervention is only necessary in complex situations, and intervention becomes less frequent the longer the system is online.

Autonomous systems - human intervention is extremely rare; the system is self-learning, and is integrated into other relevant systems.

The author notes that fully autonomous systems are best able to overcome situations such as the COVID-19 pandemic, since fully autonomous systems remove the impact that ill employees had on supply chain responsiveness and resilience.

Application of Relevant Supply Chain Management Theory

There are several goals for automating logistics and supply chain management. Of course, there are the desires to minimize costs and increase productivity. This latter desire is expressed through the concepts of supply chain resilience and supply chain responsiveness.

Supply chain resilience is the ability of the supply chain to “heal from disruptions.” The company must be able to respond to various types of disruptions and to quickly return to pre-disruption levels of throughput. One way of doing this is to use multiple suppliers and to trace dependencies among these suppliers – in other words, use a contemporary supply chain which involves multiple partners.

For an automated supply chain to be resilient, the company must have insight into the activities of its supply chain partners. This can hinder the conversion to automation, for it requires the company’s logistics automation system to work with those of its supply chain partners. This problem is not addressed in (Nitsche, 2021).

Supply chain responsiveness is the speed at which a supply chain can deliver demand. It can be calculated as the time needed to fulfill orders. In a sense, resilience is the opposite of responsiveness: responsiveness is the speed at which a supply chain operates under normal circumstances whereas resilience is the speed at which the supply chain recovers from abnormal circumstances.

There are numerous ways an automated supply chain furthers the goal of responsiveness. For example, the automated system can track items as they move through the supply chain. When a bottleneck occurs (Quigg, 2022, p. 59), depending on the level of automation the system can alert workers or interface with the appropriate supply chain partner’s supply chain system, thus resolving the bottleneck before this responsiveness issue becomes a resilience issue.

Responsiveness is a process performance metric (Quigg, 2022, p. 63), and automated supply chain systems should be able to calculate this metric since, again, it tracks items as they proceed through the supply chain. This is done by barcodes, RFID tags, etc. The automated system should present this information in the forms of dashboards or reports.

Managerial Implications of Article Findings

There are several important lessons a manager can extract from this paper. The paper includes a comprehensive definition of logistics and supply chain management automation, and a list of the advantages that automation can bring to the supply chain is provided (improved responsiveness, improved resilience, and minimized costs). All these advantages are the results of the successful completion of an automation process, but where to start the process?

For companies that have not yet begun logistics automation, the paper includes a wealth of information. While the paper does not include a step-by-step explanation of the process, it does describe the portions of logistics systems that are most amenable to automation (fulfillment, data exchange, and management). These are places to start. Automating a supply chain can be a lengthy process, and the process is described by various levels of automation (remote control, user assistance, semi-automated systems without self-learning, semi-automated systems with self-learning, and ending with fully autonomous systems). While the author recommends targeting a fully autonomous system, many benefits can be achieved at an earlier level.

The article explains some of the ways to measure the qualities of a proposed automation solution (technical maturity, system interoperability, data security, and quality). Finally, the article lists the people whose commitment is essential for the successful automation of their logistics system (top management, affected employees, and other stakeholders).

None of the disadvantages of automation are addressed in this paper. There are no estimates of either the total cost of ownership, or the financial benefits that come with automation, or the completion time. Also left unmentioned are the advantages and disadvantages to performing the automation using internal resources (software engineers, etc.) versus external contractors.

Given that modern supply chains consist of multiple partner companies acting in concert, the automation systems of the partner companies must be compatible. If not, human intervention is required for data entry or software engineers must develop “adapters.” Finally, there is no discussion of the need to thoroughly evaluate automation solutions before they go into production. Such systems are prone to hysteresis (feedback loops), which is the bane of many automated financial trading systems.

Finally, the paper makes a serious assumption about the abilities of fully autonomous systems. Can a fully autonomous system really anticipate black swan events and respond appropriately? We cannot expect fully autonomous systems to be omniscient, nor would we want them to be.

Summary of the Article and its Context

This article serves as the introduction to a special issue of Logistics devoted to logistics and supply chain management automation. The motivation for logistics automation lies in the need to reduce costs while increasing supply chain resiliency and responsiveness. The COVID-19 pandemic only increased the desire to not only automate logistics systems but to make them fully autonomous.

While automation can be applied throughout logistics, there are three fundamental dimensions that show the most improvement in operational effectiveness: fulfillment, data exchange, and management. For a company with no logistics automation, these three areas are considered the best places to start.

The article then lists five levels of automation (remote control, user assistance, semi-automated systems - no self-learning, semi-automated systems - with self-learning, and autonomous systems) with decreasing levels of human interaction. It is the last stage, fully autonomous systems, which provides the most durability against situations like the COVID-19 pandemic.

As mentioned above, this article is the introduction of a special issue of Logistics devoted to logistics automation, and there are six other papers in that special issue that address a wide range of subjects, from the impact of cloud storage and the internet of things on automation to the use of autonomous trucks for last mile delivery. This article concludes with brief summaries of those other six papers.

Conclusion

Nitsche’s paper (Nitsche, 2021) includes valuable information about logistics automation, most importantly on the various levels of automation. The paper is one sided in that it covers the advantages of automation while glossing-over the disadvantages. The lack of discussion on the drawbacks of automated systems, especially fully autonomous systems, is troubling, and thus this paper cannot be recommended as a reliable source of information for supply chain managers considering automation.

References

Nitsche, B. (2021). Exploring the potentials of automation in logistics and supply chain management: Paving the way for autonomous supply chains. Logistics 5(51), 1–9. https://doi.org/10.3390/logistics5030051

Nitsche, B., Straube, F., & Wirth, M. (2021). Application areas and antecedents of automation in logistics and supply chain management: A conceptual framework. Supply Chain Forum Int. J. 22(3), 223–239. https://doi.org/10.1080/16258312.2021.1934106

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Wuest, T., Kusiak, A., Dai, T., & Tayur, S.R. (2020, May 5). Impact of COVID-19 on manufacturing and supply networks—The case for AI-inspired digital transformation. SSRN Electron. J. 2020. https://dx.doi.org/10.2139/ssrn.3593540

Review of “A Cloud-Based Supply Chain Management System"

Abstract

This is a review of “A cloud-based supply chain management system: effects on supply chain responsiveness” by Giannakis, Spanaki, and Dubey. Their paper illustrates the shortcomings of traditional enterprise software in the face of modern supply chains, supply chains that involve multiple partners working collaboratively to regularly produce goods and services. To address these deficiencies, they design a cloud-based supply chain management system.

This review begins with an overview of the major concepts used in the paper (supply chain responsiveness and cloud computing), then examines the inadequacies that Giannakis, Spanaki, and Dubey find in traditional enterprise software. We next examine their architecture for a cloud-based alternative and verify that their proposed system does satisfy and enhance the three criteria they claim makes for a responsive supply chain. We demonstrate how supply chain management theory applies, and then conclude with the managerial implications of the findings in that paper.

Authors’ Purpose

Modern supply chains are no longer single-company affairs, and instead frequently involve competing suppliers of materiel and services. Giannakis, Spanaki, and Dubey seek to answer the following two questions about this situation. First, are enterprise IT solutions for supply chain management sufficient to supervise these modern supply chains with extension into the enterprise? Second, can cloud-based supply chain management systems resolve any of the shortcomings of enterprise IT systems?

Their answer to the first question is no: IT solutions that are not usable by external participants in the supply chain do not support the desired goal of a responsive supply chain, the main difficulty being that supply chain participants do not have visibility into the supply chain.

The answer to the second question must be justified by at least a description of a cloud-based supply chain management system. The authors do this by presenting a somewhat detailed architecture of such a system. They then show that their proposed architecture addresses all the criteria for a supply chain to be responsive.

Background Concepts

The goal which Giannakis, Spanaki, and Dubey seek to achieve is supply chain responsiveness (SCR), which can be defined as the speed at which a supply chain can deliver demand and can be measured in terms of the time needed to fulfill orders. (Quigg, 2022).

Software systems available to a single company, such as enterprise resource planning (ERP) software, all fail to satisfy at least one of those qualities. ERP and similar solutions do not allow the multiple participants in a modern supply to be interoperable – the systems fail to make relevant information visible to the participants.

Cloud computing moves the creation and maintenance of computing resources to a specialized department or, more commonly, to a third party. Moving to a third party allows for the commercialization of networks, servers, applications, storage, etc., so that they can be leased and released by users on-demand. Cloud service features include on-demand services, resource pooling, rapid elasticity (change in size or capacity on an as-needed basis), broad network access, and measured and rate-limited service. The benefits of all this include dynamic scalability, outsourced management, and lower total cost of ownership.

The business model of cloud computing involves service providers (owners of the cloud infrastructure such as Amazon Web Services, Microsoft Azure, etc.), customers (users), and brokers (e.g., AWS resellers who provide additional support). Thus, a customer may use a service provider directly, or use a broker for specialized consulting, additional technical support, etc.

The services provided by cloud service providers can be grouped into three broad layers: SaaS, PaaS, and IaaS. Software as a service (SaaS) involves licensing software and making it available via subscription. Platform as a service (PaaS) is a complete development and deployment environment that allows users to execute and manage custom applications. Infrastructure as a service (IaaS) is on-demand cloud-based hosting of servers, network resources, and storage. Cloud service providers can certainly run a wide variety of software applications, but the application type that most interests Giannakis, Spanaki, and Dubey is cloud-based supply chain management (C-SCM).

Summary of Article and its Context

After defining the criteria a responsive supply chain must possess, Giannakis, Spanaki, and Dubey evaluate enterprise software in light of the fact that contemporary supply chains involve multiple suppliers of goods and services. They come to the decision that ERP and other enterprise applications are not up to the task, the primary weakness being that the applications do not provide visibility into the supply chain partners.

The alternative they propose is a cloud-based solution. To demonstrate this, they propose an architecture for this solution. There are six separate modules in their system.

First is a pool of traditional SCM applications, deployed as loosely coupled services, each designed according to a service-oriented architecture paradigm. Second is one or more databases for storing relevant information about orders, inventories, etc. Next is a business process management system (BPM) that allows business rules to be enforced and reconfigured as needed. Fourth is one or more business intelligence applications which provide visibility into the supply chain in the form of dashboards and reports. All of these are connected using an enterprise service bus (ESB) for signaling low inventory warnings, new orders, etc. Finally, there is an application developer’s kit that allows software developers to modify the code. As shown in the following diagram from (Giannakis, Spanaki, & Dubey, 2019), modules will exist in the three levels of cloud architecture: as software as a service, platform as a service, and infrastructure as a service:

Giannakis, Spanaki, and Dubey then demonstrate that their architecture permits visibility into the supply chain (via SCM applications and business intelligence applications), rapid detection and response to risks (via the database and BPM rules operating on it), and the ability to adapt to demand uncertainties (via SCM applications, the ESB, and ultimately the application developers’ kit). Thus, the three qualities they claim make a supply chain responsive are satisfied.

Application of Relevant Supply Chain Management Theory

As stated above, Giannakis, Spanaki, and Dubey wish to apply cloud computing to bring about supply chain responsiveness (SCR), something they claim ERP solutions have failed to accomplish. SCR can be measured in terms of the rate at which a supply chain allows orders to be fulfilled (Quigg, 2022), but this can be difficult to measure when a supply chain produces products/outcomes of widely varying complexity, or when a statistically insignificant number of products are produced. A different approach is needed.

In the literature reviewed in (Giannakis, Spanaki, & Dubey, 2019), three qualities of a responsive supply chain are identified: visibility of information, rapid detection and response to supply chain risks, and flexibility to adapt to demand uncertainties by altering operations, capabilities, and strategic objectives.

While a single company may have complete visibility into its supply chain, a modern supply chain involves multiple providers of materiel and services, and visibility is not always available to all the participants. Visibility into a supply chain is fundamental to the other two qualities.

For a supply chain to continue operations, a system must be in place to rapidly detect risks and overcome them. Detecting and overcoming risks involves visibility into the supply chains and stock levels of partner companies, at least.

Finally, responding to demand uncertainties can involve increasing or decreasing orders from supply chain participants, increasing or decreasing the number of competing participants, or changing expectations. Visibility into supply chain participants again is crucial.

Conclusion - Managerial Implications

Supply chain responsiveness is crucial to a company’s success, since rapidly and consistently fulfilling customer orders is the determining factor of success. Giannakis, Spanaki, and Dubey show that traditional software solutions such as ERP do not provide visibility into modern supply chains, which involve multiple providers. The alternative they propose, a cloud-based supply chain management (C-SCM) system, addresses the problems of ERP systems that can degrade a supply chain’s responsiveness.

Creating a C-SCM first involves choosing a cloud service provider, which can be either internal to the company or a separate provider dedicated to the task. There are advantages and disadvantages to either approach.

Hosting a C-SCM internally provides the greatest control of the company’s data, since the data is kept within the company’s own servers. The primary disadvantage to internal hosting is that supply chain partners must be granted access to the company’s network, and partner companies must grant access to their own networks as well. Thus, security is a major concern here, and internal controls must be expanded and tightened.

Internal hosting will likely require that new hardware be purchased, because available servers may not be sufficiently powerful to operate a C-SCM system. Using separate servers increases network security because payroll and other systems not part of the C-SCM system will be hosted on different servers.

Using a cloud service provider has the advantages that no hardware need be purchased, and that the service provider has automated security and backup systems in place. The disadvantage is that, depending on the service provider’s terms of service, the company no longer owns its own data, as demonstrated by recent events at Adobe (Kaput, 2024). Also, migrating from cloud to cloud is not an easy task and is actively discouraged by cloud service providers.

The cost of operating a cloud service must also be considered. With an internally hosted C-SCM, the responsibility of maintaining the hardware, network, and software all falls on the company itself. Utilities for performing periodic backups must be configured, periodic security checks must be performed, and any security vulnerabilities must be addressed. Thus, the cost of internal hosting not only involves the initial hardware cost but also the cost of network engineers and security architects, and their salaries are dictated by Amazon, Microsoft, etc. Salaries for network engineers and basic services provided by security architects are either covered in the cloud service provider’s fees or are paid for on an as-needed basis.

A cost that remains the same when either internally hosting or using a cloud service provider is the software development cost. In both cases, software development and QA teams are necessary to write and validate the C-SCM system’s code.

Moving from an enterprise supply chain management system to a C-SCM is a daunting task, fraught with potential security vulnerabilities and cost overruns. The advantages a C-SCM provides to a modern supply chain in terms of insight and visibility into the supply chain can outweigh those difficulties.

 

References

Christopher, M. (2011). Logistics and Supply Chain Management (4th ed). Prentice Hall. Retrieved 1 September 2024 from https://www.ascdegreecollege.ac.in/wp-content/uploads/2020/12/Logistics_and_Supply_Chain_Management.pdf

Giannakis, M., Spanaki, K., & Dubey, R. (2019). “A cloud-based supply chain management system: effects on supply chain responsiveness.” Journal of Enterprise Information Management, 32(4), 585-607. Retrieved 1 September 2024 from https://www.emerald.com/insight/content/doi/10.1108/JEIM-05-2018-0106/full/html

Kaput, M. (2024). “Adobe’s Controversial AI Policy Faces Fierce Backlash.” Marketing Artificial Intelligence Institute. Retrieved 1 September 2024 from https://www.marketingaiinstitute.com/blog/adobe-terms-of-use

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Review of “The Role of Supply Chain Resilience”

Abstract

This is a review of “The role of supply chain resilience to relationships supply chain risk management culture and firm performance during disruption” by Akbar and Isfianadewi, which examines the relationship between supply chain risk management culture, three approaches to recovering from disruptive events, and the impact of all this on corporate performance. The research by Akbar and Isfianadewi takes the form of a statistical analysis of survey responses by owners or managers of Indonesian apparel manufacturers. It takes place in the context of the COVID-19 plague.

We begin with definitions of needed concepts, then explain the dependencies between those concepts as statistically demonstrated in the paper. We show how supply chain management theory applies, then conclude with managerial implications of the findings in that paper.

 

Authors’ Purpose

Akbar and Isfianadewi seek to examine the relationships between supply chain risk management culture, the various ways a company can successfully respond to adverse events, and overall company performance. After defining the relevant terms and explaining three ways a company can adapt to and overcome extremely unfavorable events, they inquire about the dependencies between supply chain risk management culture and those three ways of recovering from adverse events. To analyze the dependencies, they develop a conceptual model and propose 10 hypotheses that can (partially) test this model. To confirm or reject the hypotheses, the authors surveyed several managers and owners working in a particular segment of the Indonesian apparel industry during the time of COVID-19. The survey responses are analyzed, and the results indeed confirm the conceptual model.

Background Concepts

The authors define supply chain resilience as “the ability of the supply chain to return to its original or more desirable state following a disruption and to avoid failure.” An expanded definition of this term is as follows: supply chain resilience is the ability of a company to prepare for and respond to various types of disruptions and to quickly recover to pre-disruption levels. Methods for doing this include maintaining a buffer inventory, use multiple product suppliers and multiple logistics providers, trace dependencies among relevant suppliers, and so on. (Abeysekara et al, 2019).

Supply chain risk management (SCRM) is the process of identifying, assessing, and mitigating threats to the smooth operation of a supply chain. The immediate goal of SCRM is to improve supply chain resilience, resulting in continuity of operations in the face of disruptions as well as protecting the company’s financial well-being and reputation.

Supply chain risk management culture (SCRMC) is the values and practices a company employs to manage risks to its supply chain, thereby minimizing operational interruptions. A company with a strong SCRMC is not only able to anticipate and face disruptions but also to learn from those disruptions.

Four main activities and processes are necessary for rapid recovery of a company following a disruption: re-engineering, agility, collaboration, and the above-defined SCRMC. (Kumar & Anbanandam, 2019)

Re-engineering a supply chain requires a base understanding of the existing supply chain, supplier risk awareness, and an assessment of the trade-offs between efficiency and redundancy. (Christopher & Peck, 2004). The result of this re-engineering is a more resilient supply chain.

In the context of supply chain resilience, agility is the ability to respond to disruptions promptly, quickly, and efficiently. In the same context, collaboration is the ability to overcome barriers between supply chain partners, including informational barriers.

Application of Supply Chain Management Theory to the Paper

The most fundamental fact of supply chain management theory is that a company’s operation is initiated and continued because of a functioning supply chain. This fact is demonstrated in the paper by the importance of making a supply chain resilient as well as fallback procedures for when the supply chain fails.

The theory outlined in the paper is applicable to both anticipatory (push) and responsive (pull) business models. By allowing for collaboration among suppliers of goods and services that are part of the supply chain, the theory applies to a generalized supply chain model with extension into the enterprise where there is the very real possibility of competing suppliers of materiel and logistics services, and that these suppliers and services may be outsourced. In fact, this redundancy is part of what makes a supply chain resilient.

The concepts SCRMC and recovery procedures are applicable to each of the four parts of the supply chain value proposition (Quigg, 2022) – effectiveness, efficiency, relevancy, and sustainability. The paper is most concerned with effectiveness and sustainability, and efficiency is tangentially addressed through maintaining competing suppliers of materiel and logistics services. Even relevancy is addressed, for there is nothing more irrelevant to a customer than a product or service that isn’t consistently delivered.

The paper applies to all forms of industry disruptions, not only changes to consumer requirements and technology adoptions, but also disruptions brought about by social and economic factors as well as (more or less) unexpected events such as pandemics.

Summary of the Article

The paper examines the relationship between SCRMC, re-engineering, agility, collaboration, and firm performance. The authors’ research confirms that these five qualities are dependent on each other as shown in the following diagram taken from the paper:

These relations are confirmed by evaluating ten hypotheses, which can be grouped as follows:

H1 – H4: SCRMC has a positive effect on each of firm performance, re-engineering, agility, and collaboration.

H5 – H7: Re-engineering, agility, and collaboration each have a positive impact on firm performance.

H8 – H10: Re-engineering, agility, and collaboration each mediates SCRMC’s impact on firm performance.

These ten hypotheses are not deductively proven but are instead statistically verified by surveying 87 owners and managers in the batik clothing business in the Wedi subdistrict of Klaten, Yogyakarta, Indonesia.

Conclusion - Managerial Implications

Operational disruptions can come from sources internal or external to a company, and can not only include economic, political, and social events, but also “black swan” events such as COVID-19. To face such adversarial events, a flexible and adaptable supply chain must be established. The authors statistically demonstrate that a robust supply chain risk management culture is crucial for maintaining a resilient supply chain. Companies that are resilient in the face of disruptions are a result of resilient supply chains.

Of course, disruptive events will occur, and companies recover from them by being agile in their response, by building new relationships between their partners (even if that entails some redundancy), and re-engineering their supply chains. The authors demonstrate that agility, collaboration, and the ability to re-engineer supply chains each positively contribute to the company’s performance. Further, they show that a strong supply chain risk management culture is fundamental to a company’s agility, collaboration, and re-engineering abilities.

The most important implication for managers is that a resilient supply chain must be established, and to ensure that the supply chain remains resilient, the company must possess and encourage a strong supply chain risk management culture. Part of this culture requires that managers must learn from disruptions – how and when they occur, and to address any problems the disruptions reveal in our plans for a resilient supply chain.

Other important implications for managers are the ways they must respond to supply chain failures: they must be agile (respond quickly and aggressively), they must shore-up any collaborations between outside companies that are part of the supply chain, and they must be willing to re-engineer their supply chain to restore services. This paper shows that each of these restorative approaches lead to resuming the company’s operations, and that a culture of supply chain risk management is fundamental to this.

Agility, collaboration, willingness to re-engineer the supply chain, and a culture of risk management when it comes to the supply chain together mitigate the impact of calamities upon business continuity. 

References

Abeysekara, N., Wang, H., & Kuruppuarachchi, D. (2019). Effect of supply-chain resilience on firm performance and competitive advantage: A study of the Sri Lankan apparel industry. Business Process Management Journal, 25(7), 1673–1695. http://dx.doi.org/10.1108/bpmj-09-2018-0241

Akbar, H.M. & Isfianadewi, D. (2023). The role of supply chain resilience to relationships supply chain risk management culture and firm performance during disruption. International Journal of Research in Business and Social Science, 12(2), 643-652. Retrieved 26 August 2024 from https://www.proquest.com/docview/2800278031/fulltextPDF/9FB3E428B04B48BCPQ/2

Christopher, M., & Peck, H. (2004). Building the Resilient Supply Chain. The International Journal of Logistics Management, 15(2), 1–14. http://dx.doi.org/10.1108/09574090410700275

Kumar, S., & Anbanandam, R. (2019). Impact of risk management culture on supply chain resilience: An empirical study from Indian manufacturing industry. Proceedings of the Institution of Mechanical Engineers, Part O: Journal of Risk and Reliability, 234(2), 1-14. https://doi.org/10.1177/1748006X19886718

Quigg, B. (2022). Supply Chain Management (1st ed). McGraw-Hill Create. https://bookshelf.vitalsource.com/books/9781307866025

Attack on the Motor Tanker Mercer Street

Descriptive Analysis

On 29 July 2021, the Motor Tanker Mercer Street was attacked twice by Iranian drones while operating in the Gulf of Oman. A third drone attack on 30 July 2021 created a 6-foot-wide hole in the pilot house, resulting in the death of the tanker’s captain and a security officer. The USS Ronald Reagan and USS Mitscher rendered aid. Evidence was collected by an American Explosive Ordnance Disposal team, and a multinational team performed forensic analysis on the debris.[1]

From an agency collaboration perspective, investigations, such as the one completed for this attack, are complicated by the multiple nations operating and crewing the vessel. In the case of the Mercer Street, the ship was flagged under Liberia, was owned by the Japanese, and managed by an Israeli company. The ship’s captain was Romanian, and the security officer killed was British.

This multi-national vessel operation is certainly not unique to the Mercer Street – a February 2024 report from the United Nations Conference on Trade and Development explained the situation as follows:

A typical ship may be built in the Republic of Korea, crewed by Filippino [sic] seafarers recruited through a crewing agency based in Cyprus, owned by a German investment fund, technically inspected by an Indian classification society, registered under the flag of the Marshall Islands, insured by a protection and indemnity club in Norway, fuelled [sic] at a bunkering station in Singapore and operated by liner shipping company in Denmark.[2]

Root Cause Analysis

Use of military forces against merchant ships operating in the Persian Gulf and Red Sea areas have gone back at least to the Tanker Wars of 1984 – 1988. This involved attacks on merchant vessels operating in the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman by both Iran and Iraq. During that time, 411 ships were attacked, 239 of which were oil tankers[3].

The attack on the Mercer Street was a continuation of Iraq’s policy of harassing any vessel not bound for an Iraqi port. It is a form of low-intensity conflict aimed at countries opposed to Iran, or at least not aligned with Iran.

The Mercer Street was attacked primarily because it was operated by Zodiac Maritime, Ltd., an Israeli company. Other recently attacked ships[4], such as the TRF Moss and the oil tanker Richmond Voyager, are either US-owned or have no clear ownership-ties with Israel or America. These attacks have led vessels to set their Automatic Identification System messages to read “norelationtoisrael” or “allchinesecrew.”[5]

Implication Analysis

The Iranian and Iranian-backed Houthi attacks in these two gulfs, together with Somali pirate attacks, is making commercial shipping in the entire area cost prohibitive. As such, traffic that once passed through the Suez Canal is now routed around the Cape of Good Hope[6].

Shift in shipping routes from the Suez Canal to the Cape of Good Hope, from UNCTAD, “Navigating Troubled Waters”

Revenue generated by the Suez Canal constituted 2.3 percent of Egypt’s GDP in 2023. This has dropped 40% because of Iranian-backed piracy[7]. In addition, foreign trade in East African countries such as Kenya, Tanzania, and Sudan have also decreased[8].

Anticipation Analysis

From the time of the Mercer Street attack, Iran has continued harassing and/or attacking merchant vessels operating in the Gulf of Omar and the Gulf of Aden, either directly or via Yemen’s Houthi rebels. It is expected that these attacks will continue in response to ongoing Israeli operations against the Gaza Strip.

The economic losses to Egypt and East African countries can lead to political destabilization of those countries. The rerouting of traffic around the Cape of Good Hope adds additional transport time, fuel costs, and crew costs to the shipped goods.

Foot Notes

[1] USCENTCOM. “U.S. Central Command Statement on the Investigation into the Attack on the Motor Tanker Mercer Street.”

[2] UNCTAD, “Navigating Troubled Waters”

[3] N/A. “Strait of Hormuz.”

[4] N/A, “U.S. Prevents Iran from Seizing Two Merchant Tankers in Gulf of Oman.”

[5] Duggal & Haddad, “Mapping the Red Sea attacks.”

[6] UNCTAD, “Navigating Troubled Waters”

[7] Dom Magli, “Red Sea crisis triggers 40 per cent drop in Suez Canal revenues.”

[8] Vreÿ & Blaine, “Red Sea and Western Indian Ocean Attacks Expose Africa’s Maritime Vulnerability.”

Bibliography

Duggal, H. & Haddad, M. “Mapping the Red Sea attacks: How Houthi attacks on one of the world’s main maritime trade routes have impacted international trade.” Interactive Al Jazeera, 22 February 2024. Last retrieved 2 May 2024 from https://interactive.aljazeera.com/aje/2024/mapping-red-sea-shipping-attacks/

Magli, D. “Red Sea crisis triggers 40 per cent drop in Suez Canal revenues.” Port Technology International, 15 January 2024. Last retrieved on 2 May 2024 from https://www.porttechnology.org/news/red-sea-crisis-triggers-40-per-cent-drop-in-suez-canal-revenues/

N/A. “U.S. Prevents Iran from Seizing Two Merchant Tankers in Gulf of Oman.” U.S. Naval Forces Central Command Public Affairs, 5 July 2023. Retrieved 1 May 2024 from https://www.navy.mil/Press-Office/News-Stories/Article/3448330/us-prevents-iran-from-seizing-two-merchant-tankers-in-gulf-of-oman/

N/A. “Strait of Hormuz: Accessing the threat to oil flows through the Strait.” Strauss Center, August 2008. Retrieved 2 May 2024 from https://www.strausscenter.org/strait-of-hormuz-tanker-war/

United Nations Conference on Trade and Development. “Navigating Troubled Waters: Impact to Global Trade of Disruption of Shipping Routes in the Red Sea, Black Sea and Panama Canal”. UNCTAD Rapid Assessment, February 2024. Retrieved 2 May 2024 from https://unctad.org/system/files/official-document/osginf2024d2_en.pdf

USCENTCOM. “U.S. Central Command Statement on the Investigation into the Attack on the Motor Tanker Mercer Street.” U.S. Central Command Press Release, 6 August 2021. Retrieved 1 May 2024 from https://www.centcom.mil/MEDIA/PRESS-RELEASES/Press-Release-View/Article/2722418/us-central-command-statement-on-the-investigation-into-the-attack-on-the-motor/

Vreÿ, F. & Blaine, M. “Red Sea and Western Indian Ocean Attacks Expose Africa’s Maritime Vulnerability.” Africa Center for Strategic Studies, 9 April 2024. Retrieved 2 May 2024 from https://africacenter.org/spotlight/red-sea-indian-ocean-attacks-africa-maritime-vulnerability/