Supply Chain Management: Solving the World’s Most Pressing Problems

Supply chain management strives to add fundamental value to society by working to provide needed products and services. To facilitate the delivery of these products and services, organizations form relationships, and these relationships represent a valuable managerial resource that give organizations competitive advantage. The Oxford Handbook of Supply Chain Management considers such managerial issues in supply chain management and captures them across the five categories of people and welfare, data and technology, moving goods and services, structure and strategy, and growing and sustaining. As such, this handbook is intended to provide supply chain researchers further motivation to investigate how they can contribute to solving the world’s big and pressing issues.

Supplier Development at LG Electronics

Supplier development has been a critical supply management practice since the 1990s. In many instances, it has even become imperative for buyer firms to support and prepare their supply bases for uncertain economic and market environments, socially and environmentally conscious customers, advances in digital technologies, and increasing competition. Yet, research that approaches supplier development with the objective to advance all these dimensions in an integrated fashion is scarce. This study fills this void by exploring how a buyer firm may address these emerging challenges in its supply base. Specifically, an in-depth case study of LG Electronics explores how the firm designs and operates multidimensional supplier development activities to foster the stability and sustainability of its supply base while enhancing its core suppliers’ competitive capabilities. This chapter illustrates how supplier development can be taken to the next level, presents implications for managerial practice, and outlines promising future research avenues.

Humanitarian Operations and Supply Chain Management

The need for humanitarian assistance is documented in the news on a daily basis. Functioning supply chains are a critical factor in providing disaster relief and humanitarian aid to people in need. Therefore, the humanitarian sector has developed organizations, processes, procedures, and tools that support the specific situation facing this sector, which is in several ways different from a commercial setting. This chapter discusses some challenges of humanitarian operations and supply chain management (HumOSCM) for humanitarian assistance, provides an overview, and lays out some good practices and recent developments of HumOSCM. Better scholarship and practice of HumOSCM will contribute to solving grand challenges as conveyed in the Sustainable Development Goals.

Artificial Intelligence in the Supply Chain

While artificial intelligence (AI) in supply chains (SC) has become a popular topic, there is a distinct lack of conceptual frameworks with which to categorize and review how various subtopics of AI can help in subfields of supply chain management. To address this gap, this chapter conceptualizes the new topic of SC AI through a human-mimicking intelligent agent that exhibits “smart” SC behavior. It then develops several SC AI capability blocks for the intelligent agent and reviews and synthesizes studies to date within these capability blocks. The chapter concludes by highlighting several industrial use cases and extant challenges reported in the literature that need to be tackled to move this exciting new field forward.

Sustainable Food Logistics Systems

Food supply chain management is becoming a critical management and public policy agenda. Climate change, growing demand, and shifting patterns of food production, delivery, and consumption have elicited a series of new challenges, such as food security, safety, and system resiliency. This chapter first introduces the typical players in a food supply chain and examines the global food system characterized by consolidation and industrialization. It then discusses some critical topics of the sustainable food supply chain that aim to address these challenges. These topics include traceability, transparency, certification and standards, and alternatives to industrialized food systems, including cooperatives, community-supported agriculture, and roles of small and medium-sized growers in regenerative agriculture. The chapter ends with a discussion of several important emerging logistics management topics, including last-mile delivery, new technology, and cold chain management.

More Sustainable Supply Chains

Management efforts to design, develop, and operate more sustainable supply chains encompass an increasingly complex variety of social and environmental issues. More sustainable supply chains must now consider how product, operations, natural resources, technologies, and multiple tiers of organizations collectively create value for a diverse set of stakeholders. For multiple reasons, research and practice have tended to adopt an outcome-based perspective, whereby these efforts focus on a sustainability “destination,” which suffers from several shortcomings. Drawing from research in operations management, stakeholder theory, institutional theory, and innovation, this chapter posits how more sustainable supply chains might be co-defined and co-developed by emphasizing a journey that engages multiple stakeholders beyond supply chain partners. Design thinking is a very promising approach, with its iterative steps of empathy, defining the problem, ideate, prototype, and test. This journey-based perspective provides a framework for structuring engagement and encouraging openness to new observations and insights. Finally, the breadth and depth of collaboration with stakeholders, the nature of governance mechanisms, and the form and scale of resource investment all provide the means to assess the journey as it occurs.

How to Manage Performance-Based Contracting

Peter Drucker formulated a management by objectives approach in the 1950s. That approach is a management system based on goal congruence as a means of improving performance. Since then, this management approach developed from leadership of employees to the arena of buyer–supplier relationships, where the approach is called performance-based contracting (PBC) and merges outcome goals with incentives. This chapter briefly introduces the peculiarities and differences of PBC in contrast to more traditional approaches. The chapter indicates that PBC is not just a contract, but in fact a strategic approach, and thus necessitates strategic management activities. Therefore, the focus of this work is on how to manage PBC. For this purpose, the management problem is differentiated into three management needs in two dimensions: The first dimension is the management of the supply architecture. This dimension has two relevant management needs: (a) positioning of PBC and (b) PBC subsupplier management. The second dimension addresses the need for a PBC (project) management in the buyer–supplier relationship. That dimension is further split into ten different steps. To address the management needs, insights from management control theory and new institutional economies theory are used. On this basis, this chapter conceptualizes both management dimensions. Insights about the main decisions for each dimension are given. These insights build the basis for several propositions and managerial implications.

Mitigating Shirking: Contracting Performance in Buyer-Initiated Service Triads

Buyers that operate in buyer-initiated service triads must deal with the repercussions of service suppliers failing to satisfy the buyer’s customer. Performance-based contracting (PBC) can be used to shift the risks associated with performance shortfalls to service suppliers. Attaining specified performance outcomes can, however, be highly uncertain in service triads where there are many factors outside the supplier’s control. In such situations of high outcome uncertainty, suppliers may be induced to shirk their responsibilities since the direct customer–supplier link inherent to triadic structures gives suppliers an opportunity to engage in shirking without being detected. According to established theory, PBC is less effective in such situations, and behavior-based contracting (BBC) is more effective in achieving performance outcomes that are satisfactory to buyers. However, these insights are based on the long-standing assumption that PBC and BBC are substitutes. This assumption has been criticized as not being representative of empirical reality. Therefore, this chapter studies whether combining these contracting approaches during the contract design and contract management phases mitigates shirking of responsibility by suppliers. Using a data set derived from a survey questionnaire, the chapter finds that combining PBC and BBC during the contract design phase does not reduce shirking. However, the results do reveal that responsibility shirking can be mitigated by combining PBC and BBC during the contract management phase. This study provides purchasing managers with new insights concerning how to use PBC to achieve satisfactory performance outcomes, even in uncertain contexts such as service triads.

Research on Contracting in Supply Chain Management and Related Disciplines

This chapter discusses research on contracting in supply chain management and beyond. It examines the limitations sections of research on contracting in interorganizational relationships (IORs) published in the decade 2010 to 2019. A synthesis of contracting-related limitations reveals four major sets of issues. First, current conceptualization and operationalization of IOR contracting usually build on a simplified characterization of contracts. More effort should be exerted to study a larger number and variety of provisions in relation to distinct types of contracts, functions of contracts, and contract management. Second, more attention should be devoted to studying a larger number and variety of antecedents to and consequences of contract design and management. In addition, the need for a more systematic investigation of moderators and their effects has been repeatedly indicated in the literature. Third, studies on IOR contracting should focus more on contract dynamics and its interplay with relational and other governance mechanisms as well as the link between contracts and their performance implications. These dynamics should be studied in relation to temporal factors, critical events, and learning. Finally, the chapter notes that findings to date tend to have a narrow generalizability, because studies usually draw on a limited number of theories, use data from a limited number of actors, and mostly rely on subjective and perceptual data. Building on this synthesis, fruitful opportunities for future research into IOR contracting are discussed.

Digitalization and Omnichannel Retailing

The technology trend is rapidly reshaping the retail industry. With digitalization, some traditional business rules have been altered, removing many physical barriers while at the same time adding more challenges. This chapter first discusses the fundamental changes brought by the digital trend. To begin, it investigates traditional business wisdom and the underlying mechanisms of traditional business operations. The chapter examines the barriers to retailers in the traditional business world. Then, it focuses on how the digitalization trend can transform the realization of those mechanisms in order to remove the barriers and how retailers can best adjust to the changes. The implications of digitalization apply to both current and future marketing operations. When facing the new opportunities and challenges created by the digitalization trend, retailers cannot rely only on the traditional offline channel; they also need to seek omnichannel retailing. However, merging into omnichannel retailing from a traditional offline mode is not easy. The second part of the chapter thus discusses several specific risks that omnichannel retailers must tackle.