Tag: supply chain



Amid a pandemic when limitations on disinfecting wipes, toilet paper and drugs brought attention — and disruption — to supply chains, new research involving Washington University in St. Louis delivers something of an answer to improving these lines of business:

Work with who you know.

While most of the business world builds success from existing relationships, four scientists including Xiumin Martin from the Olin Business School crunched data to find that personal connections between suppliers and vendors particularly improves the efficiency of the supply chain. To be precise, such rapport results in better overall performance, less restrictive and longer-lasting contract terms, and crystallized communication.

Martin

“Recent years witnessed significant increase in the complexity of supply-chain relationship due to outsourcing,” said Martin, professor of accounting. “Such increased complexity pushes my co-authors and me to think about how some fundamental issues concerning information asymmetry are addressed in this new regime. We examined this question by focusing on personal connections because the world has also become increasingly connected.”

The research team — Martin along with Ting Chen of the University of Massachusetts Boston, Hagit Levy of the City University of New York and Ron Shalev of the University of Toronto — studied 2000-11 data from public companies, though private businesses may even more keenly rely on personal, existing relationships.

College and work connections

In their paper, forthcoming in The Review of Accounting Studies, the researchers focused on previous education and work connections between suppliers and vendors. They showed such a personal relationship proved a successful way to select suppliers in a chain that has become more complex amid outsourcing and this global economy/information age.

In compiling their 12-year-long data set, they used a database called BoardEx — listing universities, employment histories, charitable involvements and board memberships — to try to find supplier-customer connections. Through another database, Compustat Segment, they were able to determine long-running business relationships between 1,430 suppliers and 2,630 customers.

Ultimately, they focused on just two relationships: university and work connections. They found 7.4% of the sample had educational connections and 21% had either educational or past-work relationships. Looking at the organizational charts, they discovered 0.5% connections between CEOs and 15.2% between non-C-level executives.

Such personal connections increased the likelihood a vendor will select a supplier by 60% over baseline probability, the scientists learned. Connections between C-Level executives show statistically stronger effects than those between lower-level executives, though the COO — who oversees most firms’ supply chain — has a more pronounced effect on supplier selection than a CEO or CFO.

They also studied when that connection was broken — say, one of the parties in the relationship leaves their employer or retires. There, they found that the supplier-customer relationship ended earlier after a departure of a connected executive than after a departure of an unconnected executive.

Boiled down, these prior college or work connections:

  • increased a vendor’s chance of being selected as a supplier;
  • relaxed procurement-contract terms;
  • improved firms’ operating efficiency;
  • expanded geographical areas to choose supplier-chain partners when there are limited choices nearby; and
  • smoothed out exchanges of information.

Simply put, these businesses know one another. And that enabled them to make more accurate assessment of supply-chain risks, helped to reduce costs, facilitated more timely updates and improved the effectiveness of monitoring the supplier along the chain.

Longer-lasting contracts

They found the utility of the relationship by breaking down such factors as: product quality and reputation; delivery reliability/on-time delivery; competitiveness of cost; manufacturing capability; management leadership; technical capability; research and development; financial risk; and production flexibility to customer requests.

The data showed that 27% — or one in four — contracts were between connected parties, and on average, the contracts lasted six months longer (48 months vs. 42 months) in duration than two parties with no connection. The less restrictive contract terms translated into product warranties, the ability to inspect supplier’s plants, supplier-paid liability or property insurance, and pre-scheduled periodic meetings often used to address risk and moral-hazard issues.

“The COVID-19 crisis has significantly disrupted supply chains,” Martin wrote in the paper. “It will be interesting and important to examine whether personal connections have an influence in counteracting such disruptions and fostering a more resilient and robust supply chain network.”




A day hardly passes without an urgent headline focused on the economic transformation underway wrought by blockchain technology. The software is the power behind bitcoin and other cryptocurrencies, but Olin experts have been plumbing the deeper implications of the technology.

Here are five things business leaders should know right now about blockchain from Panos Kouvelis, director of Olin’s Boeing Center for Supply Chain Innovation, and Ohad Kadan, H. Frederick Hagemann, Jr. Professor of Finance and Associate Dean for Global Degree Programs. Then, watch for a way to learn more.

Peer-to-Peer Transactions—Like Cash

Blockchain technology has been developed as an efficient method for completing financial transactions, based on the principle of peer-to-peer involvement and fully decentralized and shared networks. It functions as a distributed ledger that provides visibility of all transactions to all parties in the chain, and it is built on an immutable database.

Early Applications

Beyond cryptocurrencies such as bitcoin, etherium, and litecoin, the blockchain has been used in supply chain finance in areas such as clearing financial payments, using digital ledgers, and executing “smart” contracts.

Digital Inventory Tracking

Key inventory and asset resources can take on a digital footprint, which provides additional security and tracking capabilities. Applications have been built, relying on the blockchain, to track and trace goods involved in the supply chain for industries such as the diamond trade, food, and pharmaceuticals.

Applications Still Being Conceived

Blockchain has the potential to revolutionize supply chains and it requires the immediate attention of supply chain managers. Many are scrambling to understand how a technology developed to support cryptocurrencies might be applicable to supply chains and, in particular, to the supply chains of their companies. Experts say the technology will reduce friction in global shipping operations and complex supply chains that involve goods flowing across borders, through ports, and involving governmental agencies, manufacturing, and retail firms.

Kouvelis and Kadan will help business leaders get further up-to-speed on the ways blockchain technology will enhance (or disrupt) their industry in a two-day seminar May 22-23 called “Blockchain Innovation Strategies: Early Lessons from an Emerging Technology.” Click for more about this workshop.

The workshop is structured as a forum to learn more about the technology and equip attendees to know what questions to ask as they explore the implications of blockchain for their business. Coming out of the workshop, attendees should better understand the potential application of the technology in their supply chains, gain inspiration about possible immediate benefits the technology can provide, and confront obstacles and challenges in implementing it.


Jorge Calvo, Professor of Operations Strategy at GLOBIS University Management School and former President & CEO of the Global Supply Chain Management Division of Roland DG Systems, recently sat down with the Director of The Boeing Center for Supply Chain Innovation, Panos Kouvelis, to talk about Industry 4.0 and its implications on the future of global manufacturing.

Industry 4.0 was a term coined to describe a program to support the local industry in Germany and France. It is considered to be the fourth major phase of the industrial revolution, characterized by its use of emerging technologies to enhance manufacturing techniques and supply chain processes.

In his experience, Calvo has found that there are two different approaches within the scope of Industry 4.0: the German approach, focusing on machine-to-machine production practices and supply chain management (i.e., the “smart factory” and the Internet of Things), and the Japanese approach, which focuses on cloud-based technology designed for process optimization through the use of artificial intelligence and machine learning.

For more supply chain digital content and cutting-edge research, check us out on the socials [@theboeingcenter] and download our app on iOS or Android for access to exclusive content and events!


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A Boeing Center digital production

The Boeing Center

Supply Chain  //  Operational Excellence  //  Risk Management

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The Boeing Center for Supply Chain Innovation (BCSCI), in collaboration with Monsanto, has once again produced a challenging case in global supply chain and technology management for the return of the Monsanto Olin Case Competition on February 8, 2018.

Seven teams have been selected as finalists, representing institutions from across the U.S. and Canada, including:

  • Arizona State University
  • University of Cincinnati
  • Ivey Business School
  • Johns Hopkins University
  • MIT
  • Texas Christian University
  • Washington University in St. Louis

We are proud to announce that Lin Kang (Team Captain), Himanshu Aggarwal, Tyler Daniel, and Jamie Yue, all MBA 2018, will represent Olin in the case competition.

Tyler Daniel, Himanshu Aggarwal, Jamie Yue, and Lin Kang

For the final round held at WashU’s campus in February, the seven teams will each make 15-minute presentations and have a ten-minute question and answer period responding to a case on product rollover strategies, production and inventory planning challenges in seed corn supply chains.

The five judges—all from Monsanto and Olin—will be looking for depth of analysis and originality of thought. As a “warm-up,” the student teams will tour Monsanto’s campus the day before the case competition and be treated to a Monsanto panel and a reception to meet, learn more, and network.

Olin is looking forward to a great experience for the participants and wish all the teams good luck! The winners will receive $10,000 for first prize, $5,000 for second prize, and $2,500 for third prize.


One of the biggest challenges in the healthcare industry is reducing operating costs, and one area of opportunity for cost savings is through the supply chain. In part two of our interview with Jean-Claude Saghbini, Chief Technology Officer at Wolters Kluwer Health (and formerly of Cardinal Health), we focus on technology implementation in the healthcare supply chain. Be sure to check out part one of our interview with Saghbini.

Saghbini explains that although the push to utilize RFID and other inventory management technology initially came from early adopters, he is coming to find that the implementation of such resources is becoming necessary to manage all healthcare networks as they continue to grow. He finds that one of the key benefits realized by hospitals investing in new technology is significant cost savings via inventory reduction. Oftentimes, the reduction in inventory can be as high as 20-25%, which translates to millions of dollars. He also notes a decrease in expiration rates, better product tracking to patients, and an increase in patient safety resulting from enhanced technology utilization. All of these factors can add up to a 150-300% return on investment annually, not just for hospitals, but for device manufacturers as well.

Saghbini also talks about the benefit of RFID’s ability to integrate data across an entire healthcare network (for example, electronic medical records and hospitals’ material management systems). He is also exploring ways to leverage RFID in ways that allow communication with near-field communication in patients’ cell phones. If the two similar technologies are effectively integrated, it would allow the healthcare supply chain to be tracked all the way to the consumer.

For more supply chain digital content and cutting-edge research, check us out on the socials [@theboeingcenter] and download our app on iOS or Android for access to exclusive content and events!


• • •

A Boeing Center digital production

The Boeing Center

Supply Chain  //  Operational Excellence  //  Risk Management

Website  • LinkedIn  • Subscribe  • Facebook  • Instagram  • Twitter  • YouTube