Andreas Norrman

Ericsson’s Proactive Supply Chain Risk Management-approach After a Serious Supplier Accident

Supply chain risk management (SCRM) is of growing importance, as the vulnerability of supply chains increases. The main thrust of this article is to describe how Ericsson, after a fire at a sub‐supplier, with a huge impact on Ericsson, has implemented a new organization, and new processes and tools for SCRM. The approach described tries to analyze, assess and manage risk sources along the supply chain, partly by working close with suppliers but also by placing formal requirements on them. This explorative study also indicates that insurance companies might be a driving force for improved SCRM, as they now start to understand the vulnerability of modern supply chains. The article concludes with a discussion of risk related to traditional logistics concepts (time, cost, quality, agility and leanness) by arguing that supply chain risks should also be put into the trade‐off analysis when evaluating new logistics solutions – not with the purpose to minimize risks, however, but to find the efficient level of risk and prevention.

Procurement of logistics services—a minutes work or a multi-year project?

The purpose of the article is to describe and compare the purchasing process for advanced versus basic logistics services. Further some specific observations are presented from the procurement of advanced third-party logistics services, with respect to service definitions, providers evaluations and contracts. The purchasing process of logistics services will in the future need to be more differentiated due to current business trends. Hence companies must analyse how these new procurement situations will impact on their purchasing processes in order to understand what new resources, routines and competence they need to have in order to purchase logistics services in an effective way.

Risk, information and incentives in telecom supply chains

Supply chain management involves the selection, coordination and motivation of independently operated suppliers. The central planners perspective in operations management translates poorly to vertically separated chains, where suppliers recurrently seem to object to benevolent information sharing and centralized decision rights. Seen from the suppliers perspective, such resistance may very well be rational. A downstream assembly line disclosing reliable information on actual and forecasted sales puts itself at a disadvantage when bargaining on share of chain profits. In this paper, we use a minimal agency model to contrast known optimal mechanisms with the actual practice in the telecommunications industry. A three-stage supply chain under stochastic demand and varying coordination and information asymmetry is modeled. A two-period investment-production game addresses the information sharing and specific investment problem in the telecom industry. The observed price-quantity contracts under limited commitment are shown to be inadequate under realistic asymmetric information assumptions. More a result of gradually evolving changes in bargaining power than coordination efforts, the upstream urge to coordinate may further deteriorate performance in terms of our model

Logistics integration in horizontal mergers and acquisitions

In this article, we describe the integration of logistics after Mergers and Acquisitions (M&As) of firms within the same industry and, same industry level (i.e. horizontal M&As). First, we present a review of the literature on M&As and conclude that operational issues, in general, and logistics issues, in particular, have received little attention. In parallel with the literature review, we conducted an exploratory survey of Swedish and Finnish manufacturers that had accomplished horizontal M&As during 1995‐2001. The aim of the survey was to find out how management perceives the importance of logistics issues in M&As and also, how difficult it is to realize synergies in logistics. Finally, we present a framework for further studies and the analysis of the interrelationship between logistics and M&As.

Performance-based contracting in service supply chains: a service provider risk perspective

Purpose – The performance of service supply chains in terms of service levels and cost efficiency depends not only on the effort of service providers but also on the inputs of sub-contractors and the customer. In this sense, performance-based contracting (PBC) entails increased financial risk for providers. Allocating and managing risk through contractual relationships along the service supply chain is a critical issue, and yet there is scant empirical evidence regarding what factors influence, and how, provider willingness to bear PBC-induced risk. This paper aims to address this gap. Design/methodology/approach – The paper draws on agency theory and two cases of logistics service supply chains, in the food retail and automotive industries respectively, to identify key influencing factors. Data were collected through semi-structured interviews with 30 managers of providers and sub-contractors and review of 35 documents, notably contracts and target letters. Findings – Four influencing factors were found:...

Assessing performance of supply chain risk management programmes: a tentative approach

This exploratory study provides initial directions about how risk management programmes could be assessed in a supply chain setting and discusses how such a measurement system could be designed. Measures are needed both for the management to evaluate the success of actions taken in supply chain risk management, as well as for the (supply chain) risk manager to communicate the value of his work. A number of indicators could show whether it is successful, for example, in reducing risk consequences, addressing the right risk sources and developing the right risk management processes. A central question within assessing risk management programmes is how to link risk management activities to outcomes. A tentative framework, based on a quality model, is proposed to assess the performance of supply chain risk management work. It highlights the importance of trying to capture both the capabilities of supply chain risk management and the results of the work.

Performance-based contracting for advanced logistics services:challenges in its adoption, design and management

Purpose – The purpose of this paper is to explore key challenges of adopting, designing and managing performance-based contracts (PBC) for advanced logistics services, as seen by providers. The shift toward performance-based solutions has proved challenging since providers often struggle to link performance to their payment. Despite such managerial challenges, empirical research in this area has been limited. Design/methodology/approach – A multi-case design was adopted. Three cases of logistics service providers were selected based on purposive sampling. Data were collected through 38 semi-structured interviews and review of 43 documents such as contracts and customer target letters. Findings – Key PBC adoption challenges include customer and provider intention to align their goals and incentives as well as their views on risk and reward sharing. Contract design challenges center around performance metric definition and weighting, designing performance monitoring systems that consider service co-producti...

Modal Shift for Greener Logistics - Exploring the Role of the Contract

Purpose – The purpose of this paper is to investigate contracts of the intermodal transport market and the incentives they create for a modal shift and thus the financial and environmental efficiency of freight transport. Design/methodology/approach – The research used a mixed-methods approach where qualitative case interviews and quantitative modeling was combined. Two cases of contractual relationships between a service provider and its intermodal train operator on a specific lane were investigated. The case findings were then consolidated and used as input for a model of the contractual relation. Findings were sought through an extensive numerical study. Findings – The cases reported that intermodal rail operators had a strong production focus, transferring the capacity risk (i.e. the risk of unused capacity) to the service provider, which the service providers argued limited the shift from truck to intermodal transportation. The paper shows that, due to the market structure, it is rational for the ope...

Legal Analysis of a Contract for Advanced Logistics Services

Purpose – This paper aims to study an advanced third/fourth party logistics (3/4PL) relationship in which the logistics service provider extended normal services by taking ownership of the goods during global distribution. It also aims to describe and analyze the approach to the legal rules a 3/4PL provider and its client company took in their contract, and present some remarks on the extent to which these contract solutions are legally sound.Design/methodology/approach – A cross‐functional (business law and logistics) approach is applied to a single case study. The main data source is a written contract, complemented by in‐depth interviews with the 3/4PLs managing director. A legal analysis is made from four perspectives of non‐mandatory and mandatory commercial legal rules.Findings – Issues between the offered service, the legal function and reaction in contracts are pointed out, e.g. doubts regarding the legal risk of sales uncertainty, the ownership of goods, the product liability, and the roles as c...

The misalignment cycle: Is the management of your supply chain aligned?

Purpose of this paper The purpose of this paper is to propose a framework for describing and analyzing misalignments in supply chain management, which relate to changes in supply chain structures, processes, and management components. Design/methodology/approach Based on the systems approach, a single-case study with embedded design including several embedded cases from the same supply chain was deployed. This was done according to the abductive research approach, which is favourable when extending existing and developing new theory. In order to describe the case study, data was collected through observations, interviews and workshops, and later analyzed through pattern matching. The case studied was the Swedish cash supply chain, which was appropriate since it has gone through several changes in its supply chain structure and management. Findings and original/value of paper A framework to describe and analyze misalignments in the supply chain was developed. The framework proposed consists of two steps: 1. Identify changes in the supply chain, and 2. Identify misalignments. For every step respectively, a specific and more detailed framework was developed in order to facilitate the identification processes. With the framework a researcher or practitioner gets a structured approach to map the management of a supply chain so that its current misalignments can be identified. (Less)