Management of processes in chains : a research framework

Problem description and goal

Chain research, strongly related as it is to management sciences, involves many interrelated aspect systems. No research, however, is able to take into account the whole diversity of aspects that are generally related to chain problems. The choice of what aspects to take into account in what situations is therefore a crucial one.

This thesis has two goals:

• It aims to demarcate areas for research on chains. The areas resemble different perspectives on chains. Various scientific approaches to chains will be related to these areas.
• It aims to develop theory and a method for chain research. Because of the broadness of chain research, the focus here is limited to one important area: analysis and (re)design of chain processes.

Perspectives on chains

With regard to the first aim, three basic research perspectives on chains are recognized:

• The institution perspective focuses on the possible ways of linking chain participants together and on the relation between the chain and its environment.
• The process perspective focuses on chain processes. These encompass primary processes which are directly linked to the product flow in the chain (such as production and distribution processes).
• The performance perspective focuses on the chain output as it is perceived by its stakeholders. Performance concerns several dimensions: quality, time, costs, flexibility and environment.

This division offers a tool to relate various scientific approaches to chains to practical chain problems. The following scientific approaches are related to the perspectives:

• Transaction Cost Theory, Agency Theory, Strategic Management, Network Theory, and Resource Dependency Theory view chains from an institution and a performance perspective.
• Supply Chain Management, information technology approaches and cost approaches view chains from a process and a performance perspective.

Research framework

The second aim of this thesis is achieved through the design of a research framework for chains from the process perspective.

The framework consists of four essential elements answering the following questions:

• Why?: in what context are chains studied, for what kind of problems, and what is the view of the researcher on chains?
• What?: which variables should be considered?
• How?: how are these variables related and what method is used to approach practical chain problems.
• Who?, Where?, When?: concern how the framework can be tested/validated.

The framework is applied to one area of research, logistics. The empirical domain in this thesis is food chains.

The box below depicts the components of the research framework (specified for food chain logistics). 

Why? (general research objective and view of chains):

The goal of chain research is chain performance improvement related to practical chain problems . The view of the research object is the starting point of any research. In this thesis the view is: a chain consists of a network of customer oriented and cross-functional processes with precedence relationships. In chain research the focus is on primary processes which are most closely linked to the product flow in the chain. Non-primary processes are designed to support primary processes and can or should be deduced from primary processes. A chain process is managed through its interfaces by the chain managing system. It also has its own managing system, however, which allows for autonomous decision making up to a certain degree.

 

What? (variables):

The variables of the framework can be divided into two groups: managing system variables and managed system variables. (The chain managing system manages the chain managed system). Managed system variables are object system (defined by typical characteristics of product and process), infrastructure (defined by the configuration of processes and goods flow characteristics) and operations (defined by performances). Managing system variables are decision levels (strategical planning, management control and operational planning), type of decision making (e.g. rational versus political) and coordination mechanisms (e.g. hierarchy verus autonomy). The variables depicted below are specified for logistics processes in food chains. Managed system (typical points of attention in food chains) Typical object system characteristics:  Typical product characteristics of food chains are supply uncertainty, quality variations between lots, perishability of produce.  Typical process characteristics of food chains are unpredictable production yields, conditioning of products (cooling/freezing), diverging production processes, recycling of products.  Typical infrastructure aspects:  The position of chain decoupling points in food chains is constrained by production lead times, supply/demand uncertainties, perishability, divergent product flow. (A chain decoupling point, CDP, is the process/link in the chain up to where the customer order penetrates).  The process configuration must enable fast movement of products.  There is a tendency to increase ordering and delivering in product categories.  Typical operational aspects:  Major attention goes to speed of the product flows and flexibility in production and distribution processes.  Managing system (typical points of attention in food chains) Integrated multi-level planning/decision systems:  Diverging processes, that can be found in many food chains, are especially suited for the design of multi-level planning systems.  Uncertainties in demand and supply constrain the design of planning systems.  Perishability of products is an important point of attention in many decisions in food chains (e.g. ordering, delivering, stock keeping). It is an important constraint for the design of a planning system.  Transparant information exchange is a major coordination mechanism.

 

How? (Method for analysis and (re)design of chains):

Steps in the method are performed iteratively to move from the current situation to a future one: Step 1: definition of research objective, based on the chain's improvement strategy.  Step 2: definition of chain customer and links involved Step 3: definition of primary chain processes (e.g. the order flow for logistics processes) Step 4: decomposition into chain processes, iteratively focusing on the relevant variables of managed and managing system. The relevance of variables is related to the research objective. Step 5: analysis and development of chain managed and managing systems and chain process interfaces, iteratively focusing on the relevant variables. The relevance of variables is related to the research objective. To support the method, three modelling tools are designed: A modelling tool for analysis and (re)design of chain infrastructures (Event Process Chain (EPC) modelling). A modelling tool for analysis and (re)design of chain decision structures (GRAI modelling). A modelling tool to analyse and (re)design chain process interfaces (Chain Process Modelling, CPM). The first two models are derived from adaptation of existing models for analysis and (re)design of processes on a company level.

 

Who?, Where?, When? (application):

Application of the research framework is performed in cases.  Case 1 focuses on (re)design of a managed system. The focus is on the variables process network, stock points and chain decoupling point. In the case EPC modelling is applied. The case aims at throughput time reduction, which might lead to lower stock, fresher products and more efficient use of resources. Case 2 focuses on (re)design of a managing system. Here special attention is paid to the variables decision levels and coordination mechanisms. In the case GRAI modelling is applied. The case aims at gearing of (decision) processes, which leads to improved information exchange and coordination, which again might improve efficiency of logistics processes. Case 3 focuses on (re)design of interfaces of chain processes. Process interfaces belong to the managing system of chains. Special attention is paid to the variables coordination mechanism and type of decision making. In the case Chain Process Modelling is applied. The case aims at building responsive chain links, which might lead to greater efficiency in the chain and improves flexibility of processes. Case 4 focuses on design of a managing system in a chain assembly and distribution point. Just as in case 2, special attention is paid to decision levels and coordination mechanisms. The same modelling method as in case 2 is applied. The case aims at effective management of an assembly and distribution point in a chain, which might lead to finetuning of flows of products, fewer losses and less handling.

Although not all variables in the framework are equally exposed in the cases, the framework proves to be valuable for analysis and (re)design of chains. Its practical use is shown in the cases. Further use of the framework will lead to its further elaboration.

Opportunities for further research

Three groups of major research opportunities are recognized:

• Use of the framework to identify opportunities for logistics management in chains. Examples are research into technologies to alter object system characteristics (such as lead time reduction), design of information systems to support customer order translation upstream in the chain, and design of methods and models for decision making in complex chain environments.
• Use of the framework to support decision making concerning the logistics strategy of chains. Two extremes are identified: lean production and distribution and agile production and distribution. 'Lean' focuses on efficiency of operations. 'Agile' focuses on flexibility of operations.
• Use of the framework for multi-perspective research on chains, integrating elements of various scientific approaches to chains. Examples of relations between chain governance structure, chain control philosophy, chain strategy and chain logistics are given.