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Understanding and Defining Supply Chain Complexity: A Mixed Method Approach for Basic and Applied Research

Final Report Summary - SCCOMPLEXITY (Understanding and Defining Supply Chain Complexity: A Mixed Method Approach for Basic and Applied Research)

A supply chain (SC) is a network of entities involved in the upstream and downstream flows of products, services, finances, and information between a source and customers. SCs are becoming more challenging to manage as product life cycles shorten, product variety and customization levels increase, customers demand more, and SC entities become geographically dispersed. These challenges lead to an increase in number and variety of interactions between the elements of products, processes and relationships that make up a SC and the uncertainty and constraints surrounding these elements. This numerousness and variety of elements, inter-relationships between them, and constraints, and uncertainties surrounding them is referred to as Supply Chain Complexity (SCC) (Manuj and Sahin, 2011). The objective of this research project was to investigate how supply chains manage the multitude of links and interactions between these links for lower costs, better service, and sustainable competitive advantage.
To achieve the objectives of this research, following work was carried out:
1. Extensive cross-disciplinary literature review was conducted and a comprehensive conceptual model of SCC comprising of antecedents, components, moderators, and outcomes of SCC was developed.
2. Case Research and empirical modelling was employed to investigate supplier complexity. A paper from this effort is under review at the Journal of Business Logistics.
3. A theoretical model of SCC was developed. The theoretical model includes components of SCC, as well as moderators (e.g. human cognitive abilities) and outcomes (e.g. business performance) of SCC.
4. A measurement model of SCC and related constructs was developed and pilot test was completed.
5. The work so far includes six presentations, one manuscript under review, and two manuscripts under progress, and other publications such as academic case, whitepaper, and web releases.

The following work is currently under progress:
1. Refinement of measurement and theoretical models of SCC based on pilot results. The questionnaire will be finalized and deployed by Nov 30, 2015.
2. Preliminary work on development of a discrete-event simulation model of SCC.

The main results from this research are as follows (see also the figure at the end):
(a) Identification of components of SCC: SCC may be operationalized as comprising of parts of a system (number of elements or numerousness and their interrelationships) and uncertainty due to interaction of these parts (extent of uncertainty). Examples of parts include suppliers, manufacturing plants, customers, and other SC entities. Examples of uncertainties include variations in demand, transportation times, material quality, production times, and other variations.
(b) Identification of components of supplier complexity: Extensive data collection and analysis, and numerous and iterative discussions with SC and purchasing managers led to the emergence of three concepts related to supplier complexity: Supplier Criticality (comprising of supplier importance and supplier dispensability), Supplier Reliability (comprising of perfect deliveries) and Supplier Manageability (comprising of geographical and cultural manageability).
(c) Perceived and objective complexity: While most of the existing research relies on objective complexity, the results of this study suggest that there is value in measuring perceived supplier complexity. By definition, complexity relates to non-linear, unpredictable changes in the system. The intuitive understanding by managers is important for decision-making as perceptions help capture elements that may not necessarily be included or included accurately in purely objective models.
(d) Decision making: Only a limited number of people in a given organization typically possess in-depth knowledge about the individual suppliers and the overall impact of suppliers in a SC. Only the other hand, mathematical models provide objective insights into the complexity of suppliers. The results from this research suggest that, to capture the impact of supplier complexity, both objective and perceived complexity must be included for robust decision-making models.

Socio-economic impact of the project
LOGISTIKUM Steyr, UASUA aspires to be a top research program and to create a socio-economic impact in Austria. As an outcome of this project, several research projects and collaborations are underway between multiple institutions. A few examples are as follows:
1. Several research collaborations were undertaken or are underway between UASUA and UNT:
o A research associate spent one semester at UNT.
o A colleague from UNT spent 3 weeks to train UASUA researchers in Total Cost of Ownership.
o Guidance to Master and Doctoral students which has resulted in publication and presentation opportunities for the students.
2. The researcher introduced the UASUA researchers to several leading academics in Europe as well as the US. In addition to SCC, multi-country collaborative research projects include other topics such as SC innovation, SC resilience, and SC disruption modelling. A few specific outcomes are:
o Form consortium to jointly develop knowledge to contribute to the to the “innovative supply chain design” milestone in 2030 in the Alice roadmap
o Proposal for FWF DACH (with a researcher from Germany) as a follow up from Marie Curie will be submitted by end of the year
o International Supply Chain Risk Management (ISCRIM) network is a worldwide, by invitation-only think-tank of researchers engaged in SC risk management research. Due to the support of the researcher who is a long-standing member, ISCRIM 2016 will be hosted by UASUA.
o ISCRIM is expected to not only increase international visibility of UASUA but also contribute to the to the “secure supply chains” milestone in 2040 in the Alice roadmap.
3. Several efforts were made to transfer the research into the classrooms; a few examples are:
o Development of academic case and publication in the CSCMP database.
o Use of case in Italy, Germany, Austria, and the US by UNT and UASUA researchers.
o Presentation related to using academic cases at an international conference.
4. One pilot company has already gained from this research. Using our model, the company is better able to identify critical suppliers and significantly reduce the number of customer complaints due to better understanding of complexity.
5. Several outcomes of this research will help companies become more competitive: The article based on supplier complexity is under review, and once published will provide insights on supplier complexity to additional companies. An industry white paper is made available in on open access mode to general public. After the results of the survey research are available and published, it will help companies in assessing their level of SCC, identify strategies to cope with SCC, and link SCC to specific outcomes.
The publications from this project are targeted at better journals which will allow UASUA to be competitive for prestigious grants with higher funding levels.

FH-Prof. DI(FH) Dr. Markus Gerschberger
Professor Supply Chain Management

Logistikum – University of Applied Sciences Upper Austria
Wehrgrabengasse 1-3
4400 Steyr/Austria
phone.: +43 50804 - 33265
fax: +43 50804 - 33299