Framework for discovering supply chain complexity drivers

June 20, 2016, Trondheim Norway

The Supply Chain Complexity Canvas

Said Afandi (Implement Consulting Group/DTU) &

Zaza Nadja Lee Herbert-Hansen (DTU)

2

The journey of today

• Our contribution

• Next step…

• The Supply Chain

Complexity Canvas

• How we did

• What we found

• Introduction to the research

• Research Questions

3

Introduction to the topic and what we researched

Complexity management

“a condition of interconnectedness

and interdependency across a

network” Christopher 2011, p. 160

Supply chain management

The systematic coordination of a

network of business entities that is

involved in an organisations up-

and down stream activities.

Supply chain complexity

The connectivity and

interdependency of business

entities in a system and that

system’s connectedness to other

systems

4

Research Question

1. How does literature define supply chain complexity?

2. How can managers identify main drivers of SCC and their interdependencies?

The research aims at answering the following questions:

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How we proceeded

Semi-structured interviews

Company observations

Qualitative approach

Company Marketplace Industry

A B2B Service provider to Healthcare

B B2C Consumer goods

C B2B Energy

D B2B Healthcare

E B2B Industrial goods and services

F B2B Building technology

Interviewees were selected based on

experience with complexity reduction

programmes

Organisations were selected based on:

• Large organisations with extensive SCs

• International reach

• Struggling with both value-added and

non-value added complexity

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What we learned from literature

Complexity types Meaning

Static Product, Process and Organisation complexities

Dynamic Uncertainty of randomness and time

Decision Making Managerial Habits

Environment Complexity type

Author, Year Internal Interrelated External Static Dynamic Decision Making Interconnectivity

Ashkenas, 2007 ● ● ● ● ●

Bozarth et al. 2009 ● ● ● ● ● ●

Christopher, 2000 ● ● ● (●)

Christopher, 2011 ● ● ● ● ●

Kearney, 2003 ● ● ● ● ● ●

Perona & Miragliottta, 2004 ● ●

Serdarasan, 2013 ● ● ● ● ● ● ●

Siling, 1998 ● ● ●

Wilson & Perumal, 2009 ● ● ● ● ● ●

Winkler, 2006 ● ● ● ●

What the most influential articles discussed (table 2)

The complexity types described in literature (table 1)

Good vs. Bad

Complexity

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Our empirical findings

Types of complexity our case

companies experienced (table 3)

Concrete examples of complexity related problems (table 4)

Com

pany

B2B

/ B2C

Indu

stry

Stock

kee

ping

Produ

ct p

ortfol

io

ERP

Cos

t to s

erve

A B2B Service provider to Healthcare ● ● ● ●

B B2C Consumer goods ● ● ●

C B2B Energy ● ● ●

D B2B Healthcare ● ● ●

E B2B Industrial goods and services ● ● ●

F B2B Building technology ● ● ● ●

Com

pany

B2B

/ B2C

Indu

stry

Produ

ct p

ortfol

io

Produ

ct m

odula

risatio

n (R&

D)

Unc

erta

inty

Proce

ss re

late

d (org

anisat

ional

)

IT/E

RP sy

stem

s

Supplie

r rel

ated

Distri

butio

n net

wor

k

Mönlycke A B2B Service provider to Healthcare ● ● ● ● ● ● ● A B2B Service provider to Healthcare ● ● ●

B B2C Consumer goods ● ● ● ● ● ●

C B2B Energy ● ● ● ● ● ●

D B2B Healthcare ● ● ● ●

E B2B Industrial goods and services ● ● ● ● ● ● ●

F B2B Building technology ● ● ● ● ● ● ●

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The effect of interconnectivity

Environment Complexity type

Complexity driver Internal Interrelated External Static Dynamic Decision Making Interconnectivity

Product portfolio ● ● ● ●

Product modularisation (R&D) ● ●

Uncertainty ● ● ● ● ● ●

Process related (organisational) ● ● ● ● ●

IT/ERP systems ● ● ● ● ●

Supplier related ● ● ● ● ●

Distribution network ● ● ●

Looking into the theoretical drivers of complexity in our case companies

• Company findings vs theory. combining table 2 and 3 that most

complexity drivers are linked to other parts of the internal environment.

• To accommodate the strong interconnectivity, we are required to look at the

big picture.

Comments

𝐶𝑜𝑚𝑝𝑙𝑒𝑥𝑖𝑡𝑦 𝑐𝑜𝑠𝑡 = 𝐴𝑙𝑙 𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑐𝑜𝑚𝑙𝑒𝑥𝑖𝑡𝑦 𝑐𝑜𝑠𝑡

So why haven’t we looked into the interconnectivity before?

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Interrelations of the SCC drivers

Because this is the simple view on the organisation

• Built in Vensim PLE

• Illustration show how

different activities and

drivers are interrelated.

• The relationships create

interdependencies and

thereby feedback loops

• The model consist of a

total of 7 feedback loops

• The business areas

marked green are used in

the SCC Canvas

Comments

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The Supply Chain Canvas

SUPPLIER

CAPABILITIES

UP

STREAM

LOGISTICS

CUSTOMER

DEMANDS

DOWN

STREAM

LOGISTICS

OPERATION

IT SYSTEM

ORGANISATIONAL STRUCTURE AND GOVERNANCE

R & D

VALUE

PROPOSITION:________________________________________________________________________________________

____

PURCHASING SALES

PARTNER-

SHIPS PARTNER-

SHIPS

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Conclusion

• Three types of complexity: Static, Dynamic and Decision making

• All types exist in internal and external environment an in different industries

• Interconnectivity between drivers are key to relieving overall complexity

Contemporary understanding of complexity

• All industries of the study was affected by complexity

• Several drivers are found in multiple industries

Case study

• Provide a structured approach

• Helps highlight the complexity drivers

• Connect the different drivers to locate

interconnectivity

• Helps distinguish between

value adding and non-value adding

• Facilitate discussions in organisations

Introduction of a new framework

Appendix

June 20, 2016, Trondheim Norway

The Supply Chain Complexity Canvas

Said Afandi (Implement Consulting Group/DTU) &

Zaza Nadja Lee Herbert-Hansen (DTU)

14

Illustration of the feedback loops

This example consist of three loops:

1. Procurement Inventory Production plan

2. Inventory Procurement

3. Inventory Production plan

Explanation

Appendix?