International Journal of Physical Distribution & Logistics Management

C.S. Lalwani; S.M. Disney; M.M. Naim

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610642904

Purpose – The design of distribution networks is prone to risks due to the uncertainties associated with factors that change over time. The purpose of this paper is to present a new method to identify those factors that the structure of a distribution network is most sensitive to. Design/methodology/approach – A new method presented in this paper combines simulation and the Taguchi technique to allow a wide range of factor uncertainties to be evaluated without excessive computation time and effort. The simulation model developed is based on real world data of a European after‐sales business in the automotive industry. Findings – The optimum design is most at risk due to the uncertainties associated with stock holding costs and delivery frequencies rather than customer volume changes and transport tariffs. This was found to be counterintuitive by the business managers and fore‐warned them of the likely future risks. Practical implications – The analysis indicates that when developing the network a careful consideration has to be given to reliably estimating the inventory holding costs and the mechanism for determining the capital holding charge. The model is sensitive to these variables and hence a company is prone to higher risk of designing the wrong network if these variables are incorrectly estimated. Furthermore, the analysis suggests that higher customer expectations on delivery frequency have an impact on total logistics costs and therefore, companies should consider charging customers different rates for different levels of customer service. Originality/value – A useful generic method has been presented in this paper for investigating the sensitivity of a scenario. This novel approach combines the use of simulation, brainstorming, Taguchi technique and ANOVA with distribution design modelling.

Stanley E. Fawcett; Jeffrey A. Ogden; Gregory M. Magnan; M. Bixby Cooper

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610642913

Purpose – To examine the nature and extent of commitment to supply chain collaboration. Also, to explore the state of supply chain governance structures. Design/methodology/approach – A multi‐method survey and in‐depth interview methodology was employed to gather data. Content analysis was then used to identify the types and extent of managerial support for supply chain initiatives. Findings – Four types of managerial support are needed to achieve the highest levels of supply chain success: top management support, broad‐based functional support, channel support, and infrastructural/governance support. None of the interview companies have put all four types of support in place. Leading‐edge governance relies on cross‐functional/inter‐organizational teams, executive governance councils, customer advisory boards, supplier advisory councils and a modified reporting structure that overseas all value‐added activities from product conceptualization to customer relationship management. Again, none of the interview companies have established all aspects of an effective supply chain governance structure. Originality/value – Much has been written on the need to focus on supply chains and create more cooperative and integrative relationships with key organizations in the supply chain; however, little has been written concerning the commitment levels among those involved in the supply chain or the types of governance structures that should be utilized within a given organization or along the supply chain. This paper bridges this gap, providing a benchmark for managerial commitment and presenting a composite governance structure based on observed best practices. Both academics and practitioners can use the insights provided to work toward a better understanding of supply chain commitment and governance.

Amrik S. Sohal; Marcia Perry

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610642922

Purpose – The purpose of the paper is to provide a contextual basis for the supply chain activity of the generic Australian cereal products supply chain. It identifies the business‐environment factors underpinning the cereal products supply chain efficiency. It also further highlighted the complex nature of the extended supply chain and all the factors to be considered in its management. The approach to the topic is that of developing a holistic overview of the extended supply chain, its networks and its business‐environment influences in order to understand the complex reality of issues that a supply chain manager must deal with in order to optimise efficiencies. Design/methodology/approach – A qualitative methodology was used in the study, involving an examination of supply chain practices throughout the cereal product supply chain, determined through interviews with players at all stages from seed to supermarket supply. Identification of key business‐environment influences impacting on the cereal products supply chain was achieved through thematic examination of the responses and comparison of the findings with literature relating to the Australian business‐environment. Field research activity included semi‐structured interviews throughout the supply chain for mapping and examining the status of supply chain networks and practices. Findings – The business‐environment factor findings, depicted in a model, concerned the impact of globalisation and demand trends; industry complexity and realignment; power relationships; delivery imperatives; the competitive supply chain imperative; the information economy; industry accountability requirements; freight challenges; supply chain labour requirements and climatic conditions affecting crop yields. Research limitations/implications – The research was limited in that it represented a sample of viewpoints/supply chain activity in the Australian cereal products industry and lacked the comprehensiveness of a full industry study covering the entire gamut of regional, crop‐wide and circumstantial influencing factors. Practical implications – The paper highlights the influence of the identified business‐environment factors on supply chain activity and points the way for supply chain managers in the cereal product industry to be aware of broad contextual factors as well as their own immediate operating environment. The identified business‐environment influences present strategic challenges to players throughout the cereal products supply chain. A globally responsive cereal products supply chain will need to strategically align itself with the wider Australian grain industry, food industry and government to meet future market requirements. It will also need to maintain a constant supply chain dialogue focusing on common goals, being aware of constraints and future challenges. Originality/value – This research paper is original and of value to supply chain management theory in presenting a wide contextual view of the supply chain and hence supply chain management.

Faizul Huq; Kenneth Cutright; Vernon Jones; Douglas A. Hensler

2006 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600030610642931

Purpose – This paper aims to discuss a simulation study for a multi‐product, two‐echelon inventory replenishment system. The paper compares a one‐warehouse N ‐retailer replenishment system to a two‐warehouse, N ‐retailer system with cost per unit of distribution and delivery lead‐times as the performance measures. The purpose is to demonstrate that under specific circumstances a two warehouse N ‐retailer inventory replenishment system provides better customer service without significant changes in the cost. Design/methodology/approach – Mathematical modeling and simulation methodology is used to test the performance of the proposed two warehouse N ‐retailer system and statistical analysis is used to compare the performance of several scenarios. Findings – The two warehouse replenishment system indeed reduces delivery lead‐times, used as a measure of customer service, under specific conditions such as controllable freight costs. Research limitations/implications – Caution should be exercised when interpreting these findings as the historical data used was from a single source. The paper did not investigate the effects of variable shipping costs from the manufacturing plant, warehouse and retailer. Future research could also consider multiple second level warehouses. Practical implications – The findings provide a persuasive argument for manufacturers struggling with performance issues and channel relationships. Moreover, in addition to contributing to efficiency of distribution, two level systems can also enhance ability to adapt to local market conditions and to unexpected demand variations. Originality/value – The model examined in this paper addressed a specific case for one company. While freight costs and warehousing costs will vary across companies, the cost represented here may be used as a gauge for evaluating systems with cost structures in the vicinity of those for the company represented in this paper. Additionally, the model is amenable to substitution of other firms' cost structures.