Effective Food Supply Chains: Generating, Modelling and Evaluating Supply Chain Scenarios

329 Pages·2000·2.72 MB·English

Effective Food Supply Chains
Generating, modelling and evaluating
supply chain scenarios
Jack G.A.J. van der Vorst
Effective Food Supply Chains
- Generating, Modelling and Evaluating
Supply Chain Scenarios –
Promotoren: Ir. A.J.M. Beulens
Hoogleraar Toegepaste Informatiekunde
Dr. P. van Beek
Hoogleraar Operationele Research en Logistiek
Effective Food Supply Chains
- Generating, Modelling and Evaluating
Supply Chain Scenarios –
Jacobus Gerardus Adrianus Johannes van der Vorst
Proefschrift
ter verkrijging van de graad van doctor
op gezag van de rector magnificus
van Wageningen Universiteit,
dr. ir. L. Speelman
in het openbaar te verdedigen
op vrijdag 22 september 2000
des namiddags te vier uur in de Aula.
Druk: Grafisch Bedrijf Ponsen & Looijen B.V., Wageningen
CIP-Data Royal Library, The Hague
Vorst, J.G.A.J. van der
Effective Food Supply Chains: Generating, Modelling and Evaluating Supply Chain Scenarios
/ J.G.A.J. van der Vorst
PhD-thesis Wageningen University – With ref. – With summary in English and Dutch
ISBN 90-5808-261-X
Subject headings: Supply Chain Management, supply chain redesign, supply chain modelling
and simulation
Abstract
The research described in this thesis aimed at ! obtaining insight into the applicability of the
concept Supply Chain Management (SCM) in food supply chains (SCs) from a logistical point
of view, and " finding an efficient and effective method to analyse and redesign the SC to
improve SC performance. Via a multidisciplinary literature research the concept of SCM was
defined and a generic list of SCM redesign principles was generated. Three case studies were
used to devise a research method on the generation, modelling and evaluation of SC scenarios.
Central elements in this method are ! the focus on the identification and management of the
sources of uncertainties in SC decision making processes, and " the use of simulation and
field tests to evaluate SC scenarios. A modelling framework was developed in this research
that captures the relevant concepts of the SC system needed to adequately model and simulate
the dynamic behaviour of food SCs. In each case study a new SC scenario could be identified
that performed considerably better than the current scenario.
 2000, J.G.A.J. van der Vorst
All rights reserved. No part of this publication may be reproduced in any form or by any means
without prior permission of the author.
Preface
This thesis presents a step-by-step approach to generate, model and evaluate supply chain
scenarios in food supply chains. By applying the approach in actual supply chains the
competitiveness, that is the effectiveness, of those chains can be improved, thereby
explaining the title of this thesis. It is the result of a multi-disciplinary research on which I
look back with great pleasure. Many people have contributed to the completion of this thesis.
This seems the ideal place to express some words of thank.
I started this research in 1994 with only a project-title: Logistic control in chain perspective –
planning in uncertainty. Although the words are closely related to the current contents of this
thesis, the intended outcome of the research was very unclear at the start. Especially in that
first year I experienced the necessity of having a clear and scientific founded research
proposal. I was very fortunate to have two members of my supervisory board to ‘pick up’ and
help focus the research after some ‘start-up problems’. Also becoming an Assistant Professor
in 1996, with all associated educational activities, helped me in finding my way. Chapter
three, for example, is for a great deal the result of preparing lectures for the IGB-course.
I would like to express my gratitude to Adrie Beulens and Paul van Beek for taking the effort
and having the enthusiasm to guide me through the PhD-research and making the ‘end of the
tunnel’ visible for me. Adrie, thanks for the elaborate and fruitful discussions (amongst others
on ‘ontology’ issues), the many laughs, and the interesting experiences in doing the ECR-
project together. Paul, thanks for the contributions you made in shaping my thoughts during
the past twelve years and the constant interest in my personal and professional well-being.
You both have become more than just thesis advisors to me.
Many thanks to all organisations involved in the case studies without whose co-operation this
thesis would not have been possible. A special word of thanks to Henk and Erwin; the
enervating discussions resulted in useful outcomes (also in follow-up student projects) and
inspired me to find solutions which could help you do your business even better! Related to
the ECR-project I would like to thank Wim de Wit for the pleasant co-operation; you were
always at ease and never a question was left unanswered. I really enjoyed working with you
all. I would also like to thank the students, whose work contributed in one way or another to
the completion of this thesis. Fred, Niels, Geert, Hilbert, Eva, Maarten and, especially,
Stephan .. many thanks. Will Bertrand, thanks for the interesting discussions and useful
suggestions on several draft versions of this thesis.
One of the main factors that made me start this research in the first place, were the colleagues
of the Management Studies Group. I must say that I really enjoy(ed) working with you all;
especially the lunches, diners and trips with many good laughs stimulated me to keep on
Preface i
going. Thanks for keeping the educational work load at an appropriate level. Also the co-
operation with all enthusiastic lecturers in IGB was very motivating as well as the co-
operation with Frans Ruffini, with many interesting ‘walks and talks’ at international
conferences in Padova, Dublin, and Venice.
A lot of thanks to my father and mother for supporting me all those years in many ways and
for giving me the opportunity to study. Furthermore I would like to thank my family and
friends (especially the ‘Pistols’) for their interest in my research.
Last, but definitely not least, … Sascha … many thanks for being there all the time, for your
confidence and understanding (especially in the last year) and for reminding me every now
and then what life’s all about.
Wageningen, July 2000 Jack van der Vorst
ii
Summary
The overall objectives of the research described in this thesis were to obtain insight into the
applicability of the concept Supply Chain Management (SCM) in food supply chains (SCs)
from a logistical point of view, and to find an efficient and effective method to analyse and
redesign the SC to improve SC performance.
Background
The background and rationale of this thesis are discussed in Chapter 1. Interest in SCM has
been spurred by recent socio-economic developments. Because of demographic and socio-
economic developments (e.g. strong increase of the ageing population, more double-income
families) there is a growing demand for fresher products and products with higher added
values. Furthermore, the effects of globalisation, the market entrance of new competitors, and
stricter governmental requirements for food safety and environment-friendly production place
increasing demands on management. These developments have resulted in a change in
performance requirements for food SCs as a whole and, consequently, for all stages in the SC.
Managers realised that sub-optimisation occurs if each organisation in a SC attempts to
optimise its own results rather than to integrate its goals and activities with other organisations
to optimise the results of the entire chain. This holds true especially in food SCs where
particular actors in the SC can damage all the efforts taken in another stage to preserve high
product quality. There has been growing recognition that it is through logistics and SCM that
the twin goals of cost reduction and service enhancement can be achieved. The recent
developments in Information and Communication Technology facilitate this process.
Research objective and questions
The main questions food companies face are whether, how, and with whom they should start
SCM activities. They should be able to analyse what SCM can do for them and find out what
the consequences might be if a SC view is taken together with one or more supplier(s) and/or
customer(s). An extensive literature research did not reveal any integral method to generate,
analyse and evaluate SC redesigns, i.e. SC scenarios (Chapters 2 and 4).
Our research objective was therefore to contribute to the body of knowledge on SCM by
developing a step-by-step approach that could generate, model and evaluate SC scenarios in
specific food SCs. That is, we aimed to develop:
Summary iii
! a research method to analyse a food SC and to generate a number of SC scenarios that
are estimated to improve the current SC performance;
" a research method to assess the impact of different SC scenarios for a particular food SC
on SC performance and to identify a ‘best practice’ SC scenario.
A ‘best practice’ SC scenario refers to a feasible SC scenario that achieves the best possible
outcome for the whole system with respect to predefined SC performance indicators. Both
methods should assist managers of food companies in evaluating their current position in a
food SC and in deciding whether and how they should redesign the SC.
In Chapter 1 we developed a proposition to guide our research. Because of rapid changes in
markets, products, technology, and competitors, managers must make decisions on shorter
notice, with less information, and with higher penalty costs than in the past. Decision making
uncertainty has increased regarding what developments managers should react to and what
impact possible actions may have. By breaking down the walls that are present between
successive SC stages, decision making uncertainties may decline, since more information and
control possibilities will become available to the decision-makers in each stage. This led us to
the following proposition:
To identify effective SC scenarios one should focus on the identification and management of
the sources of uncertainties in SC decision making processes.
On the basis of this proposition the following three research questions were formulated:
! What is the relationship between uncertainty in SC decision making processes and SC
performance in food SCs?
" How can we identify potentially effective SC scenarios for a particular food SC?
(validation of the proposition)
# How can SC scenarios be assessed with regard to SC performance and the individual
performance of the SC participants?
Research design
Considering the research objectives and type of research questions to be answered, we used
the multiple-embedded case study design. This research followed the inductive/deductive
research cycle, in which literature and case studies were used to devise a research method on
the generation, modelling and evaluation of SC scenarios. Three case studies were selected.
Case I was conducted in a fresh food SC, comprising growers, auctions, an exporter of
vegetables and fruits, and foreign retailers. Case II comprised a salad producer and a retail
organisation (made up of a retail distribution centre and retail outlets). Finally, case III
comprised two suppliers of desserts, a cheese producer and a retail organisation. We used the
chosen case studies in two ways:
• All three exploratory case studies were used for theory building, addressing ! the
relationship between uncertainty and performance and " the identification of potentially
effective SC scenarios.
iv Effective Food Supply Chains: generating, modelling and evaluating supply chain scenarios
• The two latter case studies were further elaborated upon to explore the area of # assessing
the impact of SC scenarios on SC performance, in order to identify a ‘best practice’ SC
scenario for that particular food SC.
Main definitions
Chapter 2 showed that there is no generally accepted definition of a SC and SCM. The dispute
mainly focuses on the level of analysis. Based on the findings in literature, we defined a
supply chain as the series of (physical and decision making) activities connected by material
and information flows that cross organisational boundaries. SCM was defined as follows:
Supply Chain Management is the integrated planning, co-ordination and control of all
logistical business processes and activities in the SC to deliver superior consumer value at
less cost to the SC as a whole whilst satisfying the requirements of other stakeholders in the
SC.
Our system and process view on SCs was presented in Chapter 3, resulting in a definition of a
SC scenario:
A SC scenario is an internally consistent view of the settings of all SC redesign variables
concerning the managed, managing, and information systems and organisation structure in
the SC.
The four descriptive system elements comprising a SC scenario were described in detail in
Chapter 3. A SC redesign variable is defined as a management decision variable at strategic,
tactical or operational level that determines the setting of one aspect of the SC configuration
or management and control. Furthermore, we identified Key Performance Indicators (KPIs)
for food SCs that are needed to assess the effectiveness of SC scenarios, i.e. the degree to
which the SC objectives are fulfilled. Finally, Chapter 3 concluded with a conceptual model
that can be used to describe, analyse and typify a SC in detail to facilitate the SC redesign
process.
Approach for SC analysis and redesign
In Chapter 4 we developed a preliminary research method for generating potentially effective
SC scenarios. First, a review of literature in several areas (SCM, Logistics Management,
Business Process Re-engineering and Operational Research) led us to a generic list of 22 SCM
redesign principles that are thought to be able to improve performance on one or more SC
KPIs. Each redesign principle refers to alternative settings for one or more of the SC redesign
variables, thereby representing various SC scenarios. Second, by linking the list of redesign
principles to potential sources of SC uncertainty in a SC, we found a means of identifying
potentially effective SC redesign variables for that SC. Those sources of SC uncertainty that
impact the SC KPIs are the first candidates for the redesign process. This approach was tested
and further elaborated in Chapter 5, in which we discussed the findings of three exploratory
case studies.
Summary v