As consumers become more aware of the health and environmental implications of how food is grown and produced, demand for local food has increased considerably. This paper examines the operational tradeoffs in fresh produce supply to gain insights on what drives the structure of the supply chain and how "local food" can become a viable sourcing strategy for a large retailer. HBS professor Deishin Lee and coauthors show that there are complementary operational synergies when retailers and farmers increase scale and specialize. This implies that when small farmers are capacity constrained, they can be squeezed out of the supply chain. Technological advances in farming practices, efficiency gains in transportation, and space constraints in retail stores result in supply chain members mutually benefitting from their decision to increase scale, leading to specialization. The study characterizes the conditions under which vertical differentiation and operational scope can increase the viability of the small local farmer. This paper contributes to work on supply chain design and environmental sustainability.
Published in 2011
Managing a company's risks and opportunities associated with climate change—including its physical and regulatory implications—requires focusing not only on internal operations, but also on supply chains, especially since greenhouse gas (GHG) emissions in supply chains typically exceed those from a company's own operations. But this requires obtaining climate change information from suppliers, which some are reluctant to share. In this paper, Chonnikarn (Fern) Jira and Michael W. Toffel examine proprietary data from the Carbon Disclosure Project's Supply Chain Project, a collaboration of multinational corporations asking their key suppliers to share information about their GHG emissions and their vulnerabilities and opportunities associated with climate change. Jira and Toffel find evidence that a supplier is more likely to share this information when it faces several buyers requesting the information, when its buyers appear committed to actually using this information, and when the supplier is in a relatively competitive industry and is thus particularly vulnerable to being replaced by its rivals. These findings can help managers better predict which suppliers will be more willing to share climate change information, and which might require more incentives or pressure to share this information.
The recent natural disaster in Japan brought to light the fragile nature of the global supply chain. Professor Willy Shih discusses how companies should be thinking about their supply-chain strategy now.
The Obama administration and US companies do not have to wait for Japanese suppliers to recover from earthquake damage, argues Harvard Business School professor Rosabeth Moss Kanter. Action can be taken now to ensure that America invests in growing our domestic stock of world-class suppliers.
Harvard Business School faculty share their views and insights about the challenges that lie ahead for Japan's business leaders and for global companies operating there.
Published in 2010
"Supply learning" is the process by which customers predict a company's ability to fulfill product orders in the future using information about how well the company fulfilled orders in the past. A new paper investigates how and whether a customer's assumptions about future supplier performance will affect the likelihood that the customer will order from that supplier in the future. Research, based on data from apparel manufacturer Hugo Boss, was conducted by Nathan Craig and Ananth Raman of Harvard Business School, and Nicole DeHoratius of the University of Portland.
Published in 2009
In an industry setting, classic supply chains display strict hierarchy, whereas clusters of firms have linkages going in many different directions. Previous theory has often assumed the existence of the hierarchical relationships among firms, and empirical industry studies tend to focus on a single-layer industry, or a two-layer structure comprising buyers and suppliers. And yet, some industries have a multilayer structure with a multistep supply chain. Others comprise a cluster of complementary firms producing different parts of a large system. HBS professor Carliss Y. Baldwin and colleagues use network analysis to study multilayer industries both empirically (in the case of Japan) and theoretically and to explore how industries are organized at the sector level in an attempt to reveal the underlying rules that determine how industry architectures form and change.
Published in 2008
Cutting the wrong employees can be counterproductive for retailers, new research from Harvard Business School professor Zeynep Ton concludes. One suggestion: Pay attention to staff who handle mundane tasks such as stocking and labeling. Your customers do.
Published in 2007
Organizational behavior has become an increasingly important aspect of operations management. In this paper, alignment refers to an organization's sales and manufacturing groups working toward the same target for the sales of a particular product. What are the best conditions in supply chain planning for alignment across functions and across the firm? Kraiselburd and Watson push the frontier of theory with their use of mathematical modeling and game theory. They show that seemingly behavioral and psychological effects may still occur if both parties are rational profit maximizers in an economic sense.
Self-regulation has been all over the news, but are firms that adopt such programs already better on important measures like labor and quality practices? Does adopting a program help companies improve faster? In this Q&A, HBS professor Michael Toffel gives a reality check and discusses the trends for managers.
In research surrounding inventory policies, there is a prevailing assumption of completely rational agents. In practice, however, deviations from the optimal policy abound, and analytical models to understand the effects of inventory dynamics on practice may require ways to model these deviations. Modeling deviations from the optimal policy is also important for better understanding inventory systems and supply chains. The term "perceptions" in Watson's research is not meant in its conventional sense, as in the perceptions of individual managers, but rather forms the basis for a framework for modeling and categorizing a range of inventory policies, including optimal inventory policy. This paper, which is a technical article meant more for an academic audience, explores the usefulness of his framework for categorizing the range of inventory policies that can be employed in a single-stage supply chain.
Published in 2006
By their very nature, consensus forecasts contain subjective elements that can compromise forecast accuracy. In this case study of the implementation of a sales and operations planning process in a consumer electronics company, Oliva and Watson studied the organizational and political dimensions of forecast generation and improvement. Ultimately, consensus forecasting constructively managed the influence of biases (such as overconfidence) on forecasts.
Why do companies have such a hard time getting various functions to coordinate? Leitax, the pseudonym for a consumer electronics company studied by the authors, was suffering major supply-chain planning problems in 2002. The chief reason was typical to organizations: poor integration among the various functions. In response, the company introduced a system (rather than just a set of mechanisms) to better coordinate all processes and functions. The new system led to better collaboration from all participants, improved information-sharing, accurate and validated plans, and alignment in the execution of those plans.
Too often channel strategies develop at the last minute--when a product is ready to go to market. But this haphazard approach leaves a lot of efficiencies and synergies by the wayside, says V. Kasturi Rangan. Enter the concept of the "channel steward."
Published in 2004
Surprise: Managers are not always rational decision makers. In this interview, professors Rogelio Oliva and Noel Watson discuss how human behavior affects supply chain coordination.
Published in 2003
How do you turn short-term transactions into long-term relationships? Harvard Business School professor Narakesari Narayandas finds answers in mature industrial markets.
Operational problems are a drag on business and often can be traced to poor controls in interorganizational settings, says HBS professor V.G. Narayanan. Here are his suggestions for tightening up those controls.
Suddenly your supply chain is full of weak links, everything from terrorism to political instability to dock strikes. Could you and your customers withstand a disruption?
Published in 2001
Published in 2000
Dramatic change is taking place in today's supply chain, say HBS professors Ananth Raman and Roy Shapiro, and it's up to the general manager to assemble a team that can implement the new principles and practices the change requires.
