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Quantitative modelling of sustainable supply chains under major disruptions

Final Report Summary - DISRUPT (Quantitative modelling of sustainable supply chains under major disruptions)


Executive summary (not exceeding 1 page)

The research project terminated at 7.25 months (instead of 24 months), due to the personal circumstances of the fellow and the conditions of the grant that would not allow him to continue working for the project from his home country (Colombia). So, the summary reports the results in respect to the above timeframe as follows.

The purpose of this project was to advance knowledge and management practice on supply chain approaches to managing sustainability and responding to natural disruption. Three dimensions as used in literature to categorize sustainability: social, environmental and economic were taken into account. Sustainable enterprise management can be understood as a decision making process looking to simultaneously achieve goals on these three dimensions. Among them, this project intends to present a formal methodology to measure the environmental impact of operational decisions when natural disasters affect the defined synergy of supply chains. Our focus was on globalized supply chain networks for manufacturing of goods. These are prone to high levels of turbulence and uncertainty since the customer order fulfilment process is no longer controlled by a single integrated organization, but by a number of decentralized and independent firms collaborating together; which enhances risks and vulnerabilities in the supply chain.

The research methodology was composed of conceptualization and theoretical modelling, as well as quantitative techniques (optimization and computer simulation). The focus was on developing a combined measure of sustainable responsive performance within a global supply chain context.

Summary description of project context and objectives (not exceeding 4 pages)

• The project context

On the one hand, the European Commission is highly concerned with environmental issues such as greenhouse gas emissions (GHG) and their impact on climate change. The GHG inventory report is annually published as a response to the Council Decision No. 280/2004/EC concerning a mechanism for monitoring Community greenhouse gas emissions and for implementing the Kyoto Protocol[1]. In fact, the fight against climate change has become one of the main topics of international debate, and is now identified as one of the greatest challenges humanity has ever faced[7]. Together with the international community’s increased attention on this matter, consumer behaviour has begun to change: consumers have started to assess the environmental impact of the products and services they buy[4,7]. Hence, organizations now play a key role in the achievement of GHG reduction goals. For manufacturing organizations to progress they need to become embedded in sustainable supply networks. Adopting a policy for the reduction of emissions, when introduced within the wider management context of the environmental aspects of an organization can lead, in addition to substantial benefits for the environment, to a reduction of production costs and an increase in market share and technological leadership[6]. In light of these considerations, it is important for an organization to introduce the management of sustainable operations into its corporate strategy.

On the other hand, given the context of today’s economy, marketplaces are characterized by intense competitive pressures as well as high levels of turbulence and uncertainty. Organizations require agility in their supply chains to remain competitive as well as to manage disruption risks and ensure uninterrupted service to customers[1]. As a result, manufacturing organizations have outsourced non-core activities to the cheapest locations in the world to focus only on their core (value-adding) operations resulting in increased globalization of supply chains. Globalization also leads to the customer order fulfilment process being less likely to be controlled by a single, integrated organization, but instead more likely by a number of decentralized and independent firms collaborating together[5]. The profitability of any organization within a supply chain is very much dependent on the successful alignment of its decisions and strategy with their customer requirements. This interconnectivity in the contemporary business context leads supply chains to be vulnerable to major disruptions. Recent occurrences, such as earthquakes, floods, terrorist attacks and epidemics have demonstrated this fact. In a business context, such major disruptions may lead to blocked distribution of goods within supply chains. Hence, contemporary industry trends and business practices, such as global sourcing, decentralized production, reduced number of suppliers, etc. make supply chains more susceptible to major disruptions than in the past[3].

Under this context, the research question of this project is: How can we define a methodology to improve, or at least maintain, the sustainable performance of supply chains affected by major disruptions? Considering the unpredictable characteristic of disruptions (i.e. natural disasters) and that the primary focus of most of the existing researches is on ex ante forecasting, future studies will lie in the quick and optimal responses to the major disruptions. In other words, academia and practitioners will tend to respond to disruptions as quickly as possible, and obtain an optimal emergency strategy and supply chain plan, while maintaining the supply chain’s environmental performance that was exhibited before the disruption. Among different types of major disruptions, the research is based on the assumption that there exist supply nodes in a supply chain which fail completely and/or partially due to the major disruption and that after some time they may recover to their normal state after the major disruption. The processes of a manufacturing supply chain include: product/process design development, procurement, production operations, distribution/transportation, and reverse logistics (recovery, remanufacturing and recycling), however, in order to bound the research, our focus was only on the distribution problem.

References

1. Braunscheidel MJ, Suresh NC (2009) J Op Mgmt, 27, 119-140.
2. EEA (2010) Annual European Union greenhouse gas inventory 1990–2008 and inventory report 2010. EEA Technical report No 6/2010. http://www.eea.europa.eu/
3. Nakamura D, Uchida A, Asahi H, Takahata K, Hashimoto K, Shibata Y (2003). 17th International Conference on Advanced Information Networking and Applications.
4. Nyborg K, Howarth RB, Brekke AK (2006). Res & Energy Economics 28, 351-66.
5. Piplani R, Pujawan N, Ray S (2008). Int. J Prod Ec, 111, 193-194.
6. Porter ME, Van der Linde C (1995). J. Ec Persp 9, 97-118.
7. Scipioni A, Mastrobuono M, Mazzi A, Manzardo A(2010). J Cleaner Prod 18, 4, 299-306.

• The following research objectives were completed at 7.25 months:

Objective 1: To model conceptually complex globalized supply chains in order to measure the level of synergy between a set of economic and environmental performance metrics.

Task 1: Identify the supply chain(s) under study: Characterize the nodes of the supply chain.

Task 2: Define performance metrics: economic and environmental.

Task 3: Define relationships between decision variables and performance metrics.

The timescale for objective 1 is 6 months.

Objective 2: To propose efficient and effective solution procedures based on mathematical modelling approaches and heuristic procedures in order to quantify the causal relationships between the different elements of a sustainable supply chain.

Task 4: Propose mathematical model(s). Validate and verify the model(s): Adjust models accordingly.

The following objectives/tasks which were not completed due to early termination are:

Task 5: Propose heuristic procedures: Define programming of heuristics models.

Task 6: Validate and verify the mathematical models and heuristic procedures. Preliminary experiments to verify the models are to be carried out; data from literature is to be used.

The total timescale for objective 2 is 6 months. This objective is the most achievable since it directly builds on the fellow’s current experience. We expect to submit a manuscript to a ranked academic journal (e.g. the Journal of the Operational Research Society) at the end of year 1.

Objective 3: To carry out a set of computer experiments so as to validate the proposed modelling and solution approaches in order to analyse how major disruptions may (or may not) cause changes in the environmental performance of the supply chain.

Task 7: Select data (from literature and/or realistic enterprise-based data).

Task 8: Carry out computer experiments: Collect data from experiments.

Task 9: Perform analysis of results: Improve proposed solution procedures.

The final objective will take 15 months beginning in month 9 of the project. The tasks become progressively more challenging than the previous tasks, however if successful each will lead to novel results and another submision of a manuscript to an academic journal (e.g. Supply Chain Management: An International Journal).

The following were the objectives for knowledge transfer of this research project (all of which were progressed to some extent during the 7.25 month period):

• KT Objective 1. To transfer knowledge on the measure of environmental impacts in supply to UK/European researchers.
• KT Objective 2. To transfer knowledge to UK/European researchers on how major supply chain disruptions affect sustainability metrics of supply chains.
• KT Objective 3. To train the researchers in UK/Europe on the professional academic activities, such as writing and reviewing academic papers and editorial activities.

Outreach activities: Including: school visit, website updates, press releases. These are detailed in Table 2.

Table 2. Plan for monitoring outreach activities

At 7.25 months Outreach activities 1, 2 and 6 were completed to some extent (up to 7.25 months). The others were not completed due to early termination.

Outreach activity Milestones and due date Measure of impact

1 Project website (including blog and multimedia releases) Blog: Monthly from Month No. 1

Multimedia release: months 6, 12 and 24 Number of visitors to the website

2 Practitioner Publications Months 6, 18 and 24 Number of copies distributed
3 Co-production of Industrial Workbook Months 18 to 24 A selected focused group of 10-15 practitioners will be engaged.
4 Distribution of Industrial Workbook Month 24 Number of copies distributed
5 Public engagement: Science Week at Primary Schools Depending on School calendar year (e.g. PI’s contact occurs mid-March) Number of schools and people at each event
6 Universities PR and Alumni: newsletters, magazines Months 1, 12 and 24 Number of people reached

A description of the main S&T results/foregrounds (not exceeding 25 pages)

The research project terminated at 7.25 months, so the results are reported in respect to this timeframe as follows. A systematic literature review was carried out in parallel to all the activities of the project, this was to position the research project and refresh the state of the art that had been included in the research proposal.

We completed Objective 1 by identifying the candidate supply chains (task 1) where our study could have more impact. These were the Automotive and the Fast Moving Consumer Goods (FMCG) sectors. The reasoning behind these choices was that we needed to study global supply chains with complex topology and potential access to more than one node within the same supply chain by targeting a big organisation.

The selection of performance metrics (task 2) as well as the relationship between decision variables and performance metrics (task 3) was carried out in as follows. First, it was done through a conceptual framework (Montoya-Torres et al., 2012) and then through experimental design. The experimental design consisted of preliminary computer simulations (Montoya-Torres et al., 2013), related analytical solutions (Santibanez-Gonzalez et al., n.d.) and finally the combination of analytical solutions with computer simulations (Montoya-Torres et al., n.d.). It is worth mentioning that we considered all three dimensions of sustainability (i.e. including the social dimension, which was not explicitly stated in the proposal).

Objective 2 (task 4) was completed by developing a mathematical model, and solving it analytically using theoretical data/from previous work experience of the fellow.

Throughout the project, key dissemination events were attended to present the findings of the work carried out so far.

Regarding knowledge transfer, which was the main remit of the grant (MCIIF), the first KT objective consisted on four visits (Oxford, Troyes, Lyon and Barcelona) and three exchanges (Leeds, Cranfield and USA) between the fellow and UK/Europe researchers.

Regarding the second KT objective, it consisted of two seminars (e.g. Leeds and Oxford) and three conference presentations (Montoya-Torres et al., 2012 and 2013, Huaccho Huatuco et al. 2013).

Finally, the third KT objective consisted of

• two student co-supervisions with the PI: one MBA Student dissertation during Summer 2013 and the first two months of the Year in Research UG Student.
• Guest-editorial of three special issues/volume for academic journals: one completed (International Journal of Productivity and Performance Management) and two ongoing (Journal of Cleaner Production, and Logistique and Management).
• Organisation of two special invited sessions: one completed (Quebec conference) and one ongoing (Cardiff conference)
• Paper peer-reviewing of conference and journal papers: e.g. IJPR, EJOR, CAIE, COR, IJPPM, ANOR, CiLOG 2013, ICMR2013
• Membership of programme committees: e.g. CiLOG2013, ICORES 2014, ILS 2014, Simultech 2013 & 2014, ISC2013 & 2014, SDM 2014, ICEIS 2013 & 2014.

About the outreach activities, the project website was developed straightaway in Month 1, the first newsletter was produced and delivered through the website and distributed at the seminars/conferences the fellow and the PI attended. The multimedia release of a video clip about the project aims and objectives took place in month 6, as well as a practitioner piece was produced and they were both together publicized through the project website.

The 6-month internal report was given through a presentation to the research group/centre with attendance from Prof. Chee Wong (Head of Centre for Operations and Supply Chain Research) and Dr Tom Burgess (Head of the Technology and Innovation Group) for provision of feedback. The progress was deemed satisfactory and some useful suggestions were made to improve the work.

References

Peer-Reviewed Conference Papers

Huaccho Huatuco L, J Montoya Torres and T F Burgess (2013). Modelling of complex globalized supply chains: Synergy between economic, social and environmental performance metrics. 26th European Conference on Operational Research, Rome 1-4 July 2013.

Montoya Torres J, L Huaccho Huatuco and T F Burgess (2013). Simulation analysis of sustainable supply chains with disruptions. 11th International Conference on Manufacturing Research ICMR 2013, Cranfield, September 2013.

Montoya Torres J R, L Huaccho Huatuco and T Burgess (2012). Towards a conceptual framework for studying the impact of major disruptions on sustainability in supply chains. 4th International Conference on Information Systems, Logistics and Supply Chain, ILS 2012 – Quebec (Canada), 26th -29th August 2012.

Peer-reviewed Journal papers

Montoya Torres, J, L Huaccho Huatuco, and T F Burgess (drafting). Sustainability metrics in supply chains subject to major disruptions, drafting October 2013 [Probably to JCP, impact factor 3.3]

Santibanez-Gonzalez, E.D.R. J. R. Montoya-Torres and L Huaccho Huatuco (submitted). A Binary Particle Swarm Optimization algorithm to solve a reverse logistics network design problem. Submitted to the International Journal of Advanced Manufacturing Technology (August 2013).

Edited Journal special issues

Gonzalez, E.D.R.S. Maculan, N., Huaccho Huatuco, L., Montoya-Torres, J., Diabat, A., de Almeida, C.M.V.B. Giannetti, B. F. and Huisingh, D. (2014). Special volume on “Decision-support models and tools for helping to make real progress to more sustainable societies”. Journal of Cleaner Production. [Impact factor 3.587].

Huaccho Huatuco, L., J Montoya-Torres, N Shaw and A Calinescu (2013). Guest Editorial: Special issue on Performance measurement of sustainable supply chains. International Journal of Productivity and Performance Management (IJPPM), Vol. 62, No.8 2 pp. [1* ABS list].

Organised Thematic Session at International Conferences (sample)
Dr Luisa Huaccho Huatuco, Prof. Jairo Montoya Torres and Dr Angel Juan Special invited session on: “Sustainability metrics for complex industrial problems”. International Conference on Sustainable Design and Manufacturing (SDM-14) 28-30 April 2014, Cardiff.

Dr. Jairo Montoya Torres, Dr Luisa Huaccho Huatuco, Didier Anciaux and Daniel Roy. Thematic session on: “Managing disruptions in sustainable supply chains” 4th International Conference on Information Systems, Logistics and Supply Chains (ILS 2012), 26th -29th August 2012 - Quebec (Canada).

The potential impact (including the socio-economic impact and the wider societal implications of the project so far) and the main dissemination activities and exploitation of results (not exceeding 10 pages).

In terms of the potential impact, this research project would contribute to the wealth creation through fostering the European and UK’s manufacturing competitiveness. This would be done by providing manufacturing organisations with advice towards becoming more sustainable in their supply chain operations even under major disruptions. The project could contribute to enhancing the efficiency and performance of manufacturing organisations, which would lead to their improved business continuity due to enhanced customers’ perception of buying a product from a greener organisation able to deliver on-time while working towards sustainable supply chain practices. It is paramount that the EU remains at the forefront to research in sustainable supply chains. This project would contribute to maintaining the UK/European profile as being the centre of cutting-edge research in sustainable supply chains, which will continue making UK/Europe an attractive base for other researchers wanting to pursue a career in this field of research.

The main dissemination activities were in the form of giving presentation at seminars and conferences both in Leeds and elsewhere. The two main highlights were the seminar that the fellow gave at the University of Oxford (June 2013), and the conference paper he presented at Cranfield University (September 2013).

The address of the project public website, if applicable as well as relevant contact details.

DISRUPT project website: http://lubswww.leeds.ac.uk/disrupt/

Contact details:

Scientist in Charge
Dr Luisa D. Huaccho Huatuco
Lecturer in Operations & Business Processes
Leeds University Business School Woodhouse Lane, Leeds, LS2 9JT,UK
T: +44(0)113 343 6821
F: +44(0)113 343 4885
E: lh2@lubs.leeds.ac.uk

MCIIF research fellow

Prof. Jairo Montoya Torres
Escuela de Ciencias Economicas y Administrativas
Universidad de La Sabana
km 7 autopista norte de Bogota, D.C.
Chia (Cundinamarca), COLOMBIA
email: jairo.montoya@unisabana.edu.co