How Supply Chain Management is Affected by Human or Natural Causes

Guest Post By Dr. William Oliver Hedgepeth

Faculty Member, Transportation and Logistics Management, American Public University

If you are not into logistics, supply chain management, manufacturing or warehousing, you might not ever think about where products begin. Each element is important and a part of the often invisible supply chain for all products. The items you purchase in a grocery store, for example, represent the end product of a complex spider web of raw materials and finished products in constant motion.

The Vanilla Shortage and Supply Chain Management

Our food supply chains can be affected by manmade incidents and Mother Nature’s disasters. If you love to visit your favorite bakery, you may have noticed the price of donuts increasing over the past few years due to the rising cost of vanilla.

The price of vanilla beans was $100 per kilogram in 2015. By the end of 2017, vanilla cost $500 per kilogram and its price is likely to increase further in 2018.

The problem for vanilla is that 80% of the crop comes from a special orchid grown in one place, Madagascar. It takes five or more years for the crop to replenish itself before it can be harvested again.

The collapse of the vanilla supply chain was compounded by another supply chain element, the living things that pollinate the orchid. In all parts of the world, a key worker in the fields is the bee. The enemy of the vanilla flower were the rains that ripped across Madagascar and destroyed acres of plants, creating a shortage of vanilla beans.

Honey Bees Offer Lesson in Proper Supply Chain Management

Dr. Wayne Surles has studied the honey bee for over 20 years, looking into what helps and what hurts the bees in the making of honey. He examined pesticides that affect honey production as well as other agricultural products. Dr. Surles says that 30% of the honey bee population is lost each winter and in the summer months. 

The Richmond Beekeepers Association keeps statistics and information on how to protect honey bees so they can do their job of pollination and produce honey. Currently, there appear to be nearly two and a half million beehives in the U.S.

When it is time to pollinate fruit trees and other crops, bees are often shipped around the country to do the all-important job of fertilizing crops. However, it seems that bees are dying from a lack of the proper amount of nectar and pollen that sustain them.

Also, a mysterious illness known as Colony Collapse Disorder (CCD) has destroyed untold numbers of beehives. A survey of nearly 5,000 beekeepers across the United States found a third of the bees they managed died from this disorder between April 2016 and March 2017. 

As a result, the natural swarming of bees in time for the growing season is in decline and a new supply chain has emerged. If the honey bee was the beginning of that jar of honey in its supply chain, now we have to extend that supply chain to a new origin – the beekeeper. 

Beekeepers now travel around the county to the farms with hives of honey bees, the starting point of so many agricultural products, the Virginia Department of Agriculture and Consumer Services reports. Those transportation costs and the upkeep of beehives must then be added to the cost of gathering that honey or other foods. The extension of the supply chain starting point for honey is now longer and more complex. 

Pesticides Also Affecting Supply Chain Management

But there is another enemy of this new starting point besides CCD. It comes in the form of pesticides that are resistant to insects, including the honey bee. Currently, companies that produce great agricultural products, such as Bayer and Monsanto, also continue to manufacture pesticides to control weeds and kill bugs that destroy crops.

There is a large and growing chorus of people against the increased use of such pesticides and herbicides, which could also contribute to the spread of CCD. The starting point of the new fruit and vegetable supply chain in the U.S. is under attack from a manmade enemy, even more so than from too much rain, wind, and sun.

I own an old farm with fruit trees. The farm used to have a huge blackberry bush that attracted bees and bugs. I killed the bees and bugs with pesticides and sprayed so much Roundup on the weeds that the blackberry bush died and the pesticide got into the soil. As a result, my fruit trees have not produced but a handful of apples, peaches, and pears in the past five years.

I am part of the man-made problem responsible for the new food supply chain beginning. Have I learned my lesson? Yes.

But others need to earn to be careful too. Supply chains are useful, but they are vulnerable to the whims of Mother Nature and human actions.

 

About the Author

Dr. Oliver Hedgepeth is a full-time professor at American Public University (APU). He is the former program director of three academic programs: Reverse Logistics Management, Transportation and Logistics Management and Government Contracting. Dr. Hedgepeth was a tenured associate professor of Logistics and chair of the Logistics Department at the University of Alaska Anchorage. He has published two books, RFID Metrics and How Grandma Braided the Rain.

Individual Consideration Leadership Style Obtains Positive Results in Supply Chain Management

Guest Post By Emmet (John) Fritch, Ph.D

Associate Professor, School of Business, American Public University

The shipping company DHL reports that 58 percent of supply chain and operations companies have trouble finding the right combination of leadership and analytical skills in employee candidates. These companies experienced particular difficulties locating qualified candidates for supply chain management positions.

According to university professors Stanley Fawcett, Gregory Magnan and Matthew McCarter, “People are the key bridge to successful collaborative innovation and should therefore not be overlooked as companies invest in supply chain enablers such as technology, information, and measurement systems.” 

However, adversarial relationships are common among companies in supply chains. In 1998, professor Edward Morash documented a progression from silo organizations, moving from independent organizations such as production, logistics, and marketing to integrated organizations combining each organization into an intra-organizational process. Morash also noted the presence of inter-organizational collaborative structures connecting multiple company organizations into one integrated supply chain.

Supply Chain Performances Suffer When Traditional Management Techniques Are Employed

Many companies rely on conventional management styles using techniques such as planning, organizing, implementing, and control. In intra-organizational structures, such as supply chains consisting of several companies, traditional methods do not achieve the same degree of cooperation and performance as organizations with transformational leaders. As a result, supply chain performance suffers.

Supply chain managers control internal company relationships through a position of power. Managers with this power have direct authority over employees.

In multiple-company supply chains, this power is not as effective. Managers do not have control over those employees who are not reporting in the same company chain of command. A different dynamic is in play with outside supplier organizations.

Where managers do not possess a position of power, leaders must be capable of motivating employees across multiple company organizations. Transformational leaders should achieve results through personal motivation instead.

Literature over the past decades supports the idea that CEOs of companies with a dependency on strong supply chain management benefit when the leadership style of senior supply chain management contributes to company success. However, understanding the type of leadership style associated with supply chain performance has not been widely reported. Additionally, there are few empirical studies on the effectiveness of supply chains based on leaders’ styles.

The Importance of Transformational Leadership in Supply Chain Management

According to Bruce J. Avolio and Bernard Bass, transformational leadership is a leadership style in which followers form an emotional attachment to leaders and are motivated to perform as a consequence of the way leaders behave. Transformational leadership has long been recognized as an effective way to lead organizations.

In 1985, Bass defined three types of leadership styles: transformational, transactional, and laissez-faire. Each style has its own characteristics and sub-categories. The five elements of transformational leadership are described in the following table.

Summary of Transformational Leadership Styles

Leader Trait	Characteristics	Description
Individual Consideration	Leaders who understand the personal and professional needs of employees.	Leaders in this category typically go out of their way to support both personal and professional needs of employees. They strive to change cultures and improve performance.
Idealized Influence (Attributed)	Leaders who stress to employees the need to achieve goals.	Leaders in this category typically stress a sense of organizational mission and encourage the use of power to accomplish department objectives.
Idealized Influence (Behavior)	Leaders who encourage pride of the department and stress the importance of demonstrating strong commitment.	Leaders in this category use role modeling to demonstrate expectations. Microsoft’s CEO Satya Nadella is an example.
Inspirational Motivation	Leaders with inspirational motivation traits provide employees with a set of shared goals and the vision necessary to attain them.
Intellectual Stimulation	Leaders with intellectual stimulation traits motivate employees to rethink prior situations and problems in new ways.	Employees are encouraged to examine they how they feel about prior assumptions and are encouraged to work with leaders in identifying new ways to address problems. Intellectual stimulation is in contrast to traditional management styles that rely on Fredrick Taylor’s scientific method of job definition by industrial engineers.

Source: Langston University study on transformational leadership

Survey Assessed How Supply Chain Performance Improves with Leaders Using an Individual Consideration Leadership Style

A survey of supply chain professionals that I conducted revealed supply chain performance improves when the leaders conduct their leadership with individual consideration. For this study, professors Kenneth J. Peterson, Gary Ragatz, and Robert Monczka established the supply chain performance variables. These included:

• Product costs – measured by comparing actual prices paid over time
• Delivery – measured by the degree on-time shipments improved or did not improve over time
• Quality – the degree suppliers did or did not improve on meeting specifications

How the Research Survey Was Administered

Eight hundred participants were selected from the Council of Supply Chain Management Professionals (CSCMP) membership. Eighty-two fully completed surveys were returned and assessed by a systematic sampling technique.

The study involved two different questionnaires. One questionnaire provided participants’ perceptions of supply chain management leaders’ styles. The second questionnaire assessed supply chain members’ perception of their company’s performance.

Company performance was based on participants’ perception of their company performance for product cost, delivery, and quality. A correlation and regression test was applied to establish relationship values and statistical significance.

Results of the Survey

The results indicated relationships between each of the five transformational leadership sub-categories. The survey found that leaders exhibiting individual consideration could be expected to achieve 17% better supply chain management results than leaders not exhibiting individual consideration.

Overall, according to the perceptions of supply chain professionals, CEOs who appoint top-level supply chain leaders scoring high on individual consideration will see increased supply chain performance.

About the Author

Dr. Emmet Fritch is a full-time associate professor in the School of Business at American Public University. He holds an M.S. in technology management from Pepperdine University and a Ph.D. in business administration from Northcentral University.