Adapting Product and Supply Chain Systems under Severe Uncertainty

Currently, adaptation in a virtual enterprise is mostly reactive in response to variations that have already occurred. In order to remain profitable in the highly competitive global market, it is highly desirable to proactively adapt in anticipation of unplanned, but foreseeable high impact events, while still maintaining competitive product quality, cost, and lead-time. This paper approaches the problem by developing a unified model of product-supply chain systems based on networks of design-supplier pairs, and decision models of adaptation in the event of a jump based on real options theory. Application to a single component, single echelon supply chain is discussed.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/87248/4/Saitou59.pd

Food security, risk management and climate change

This report identifies major constraints to the adaptive capacity of food organisations operating in Australia. This report is about food security, climate change and risk management. Australia has enjoyed an unprecedented level of food security for more than half a century, but there are new uncertainties emerging and it would be unrealistic – if not complacent – to assume the same level of food security will persist simply because of recent history. The project collected data from more than 36 case study organisations (both foreign and local) operating in the Australian food-supply chain, and found that for many businesses,  risk management practices require substantial improvement to cope with and exploit the uncertainties that lie ahead. Three risks were identified as major constraints to adaptive capacity of food organisations operating in Australia:  risk management practices; an uncertain regulatory environment – itself a result of gaps in risk management; climate change uncertainty and projections about climate change impacts, also related to risk management

An integrated approach to supply chain risk analysis

Despite the increasing attention that supply chain risk management is receiving by both researchers and practitioners, companies still lack a risk culture. Moreover, risk management approaches are either too general or require pieces of information not regularly recorded by organisations. This work develops a risk identification and analysis methodology that integrates widely adopted supply chain and risk management tools. In particular, process analysis is performed by means of the standard framework provided by the Supply Chain Operations Reference Model, the risk identification and analysis tasks are accomplished by applying the Risk Breakdown Structure and the Risk Breakdown Matrix, and the effects of risk occurrence on activities are assessed by indicators that are already measured by companies in order to monitor their performances. In such a way, the framework contributes to increase companies' awareness and communication about risk, which are essential components of the management of modern supply chains. A base case has been developed by applying the proposed approach to a hypothetical manufacturing supply chain. An in-depth validation will be carried out to improve the methodology and further demonstrate its benefits and limitations. Future research will extend the framework to include the understanding of the multiple effects of risky events on different processe

Supply chain uncertainty:a review and theoretical foundation for future research

Supply-chain uncertainty is an issue with which every practising manager wrestles, deriving from the increasing complexity of global supply networks. Taking a broad view of supply-chain uncertainty (incorporating supply-chain risk), this paper seeks to review the literature in this area and develop a theoretical foundation for future research. The literature review identifies a comprehensive list of 14 sources of uncertainty, including those that have received much research attention, such as the bullwhip effect, and those more recently described, such as parallel interaction. Approaches to managing these sources of uncertainty are classified into: 10 approaches that seek to reduce uncertainty at its source; and, 11 approaches that seek to cope with it, thereby minimising its impact on performance. Manufacturing strategy theory, including the concepts of alignment and contingency, is then used to develop a model of supply-chain uncertainty, which is populated using the literature review to show alignment between uncertainty sources and management strategies. Future research proposed includes more empirical research in order to further investigate: which uncertainties occur in particular industrial contexts; the impact of appropriate sources/management strategy alignment on performance; and the complex interplay between management strategies and multiple sources of uncertainty (positive or negative)

Climate change, agriculture and Fairtrade: identifying the challenges and opportunities

This paper presents the findings of a study commissioned by the UK's Fairtrade Foundation on the implications of climate change for agricultural producers in Fairtrade value chains

Decision Support for Optimal Adaptation of Product and Supply Chain Systems based on Real Options Theory

In order to remain profitable in the highly competitive global market, a manufacturing enterprise is expected to proactively adapt itself in anticipation of unplanned, but foreseeable high impact events. This paper presents a decision model for optimal adaptation of product and supply chain systems subject to sudden, severe changes in the operating environment. Extending our previous work, decision-tree based framework is developed for optimally choosing design-supplier alternatives in multi-product, multi-echelon product and supply chain systems based on the real options theory. A case study on a two-component, two-echelon supply chain is presented which highlights unique characteristics of product quality as compared to cost and time.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/87256/4/Saitou57.pd

Systemic Failure in the Provision of Safe Food

Many deficiencies in the capacity of a food system to deliver safe products are systemic in nature. We suggest a taxonomy of four general ways in which a systemic failure might occur. One relates to the connectedness, or topology, of the system. Another arises from mistrust on the part of downstream parties concerning signals on product attributes, production processes, and the performance of regulatory mechanisms. A third arises when asymmetric information leads to low incentives for preserving food quality. Finally, inflexibilities in adapting to different states of nature may leave the system vulnerable to failures. Innovations in information technology and institutional design may ameliorate many problems, while appropriate trade, industrial organization, science, and public infrastructure policies also may fortify the system.

Understanding the adaptive capacity of Australian small-to-medium enterprises to climate change and variability

Abstract Small-to-medium enterprises (SMEs) comprise 96 per cent of all private businesses in Australia. The SME sector is the economy’s largest employer and the largest contributor to GDP. Moreover, SMEs play a significant role within socio-economic systems: they provide employment, goods and services and tax revenue for communities. Climate change may result in adverse business outcomes including business interruptions, increased investment and insurance costs, and declines in financial indicators such as measures of value, return and growth. After natural disasters, SMEs face greater short-term losses than larger enterprises, and may have lower adaptive capacity for various reasons. This study examines the underlying factors and processes shaping adaptive capacity of Australian SMEs’ to climate change and associated sea level rise. Specifically, the research asks the following questions: 1) How have SMEs considered and integrated adaptation into business planning? 2) What are the key underlying processes that constrain and influence the adaptive capacities of SMEs? and 3) What types of support are required to promote SME business continuity under a changing climate? The study adopts theories from Political Ecology and draws on literature on vulnerability and hazards to understand the processes that mediate the adaptive capacity of SMEs. The empirical research involved an online survey targeting SMEs, attending business engagement events hosted by chambers of commerce, 30 semi-structured interviews with secondary stakeholders, five case studies involving SMEs and secondary stakeholders, and finally a stakeholder workshop which brought together participants from both groups. The central conclusion of this study is that underlying contextual processes are critical to enhancing the adaptive capacity of SMEs. These processes include: the social relationships between SMEs and support organisations; the relationships within support organisations themselves; the agency of SMEs to direct resources toward building resilience into business continuity; SMEs’ perceptions of climate risks; and power struggles between support organisations. Unfavourable combinations of these processes have the potential to limit the adaptive choices that SMEs can adopt in order to overcome climate change and other related stresses on business continuity. These processes generate vulnerability and often occur at scales external to the SMEs;including relationships between different tiers of government as well as between various support organisations working with SMEs. These contextual processes have been largely overlooked in formal programmes that aim to build business resilience. The programmes have tended to be reactive and have tended to focus on business recovery during and after disasters rather than on altering the vulnerability context of SMEs through anticipatory prevention and preparedness or adaptation planning. This study suggests that the success of efforts to build the adaptive capacity of SMEs to future climate and related stresses will depend on how they address these underlying processes to facilitate the ability of SMEs to exercise their agency in pursuing adaptive choices that they value