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.

APUS Collaborates with APICS to Close the Skills Gap in the Logistics and Supply Chain Field

Guest Post by Dr. Stacey Little
American Public University, Faculty, Transportation and Logistics Management

Almost daily, all of us have some experience with transportation and logistics. They are the distribution elements of the supply chain that bring the products we desire to the places we shop or dine, or directly to our door. Logistics is a fundamental component of most businesses. Consumer demand, coupled with globalization, has boosted related career opportunities.

Logistics and supply chain are among the fastest-growing job markets in America, creating a high demand for qualified individuals to fill those positions. Given this rise in demand in the sector, American Public University System recognized the need to expand its Transportation and Logistics Management program to keep pace with industry needs. As a result, APUS recently announced a partnership with APICS, the global association offering highly respected and industry-recognized certifications. Through this partnership, APUS will offer an instructor-led online preparation course for the APICS’ Certified in Logistics, Transportation, and Distribution (CLTD) designation.

Logistics professionals seek the CLTD designation because it “sets the global standard for best practices in logistics, transportation, and distribution.” The credential provides a distinct advantage in an increasingly competitive global market as many employers give preference to applicants with industry certifications. In fact, the 2018 APICS Supply Chain Survey not only found that compensation continues to rise for supply chain professions, but also that practitioners place great value in such industry-related certifications.

APUS stays abreast of industry needs and has an ongoing commitment to help prepare the transportation, logistics, and supply chain management workforce. The CLTD preparation course will benefit current APUS students by complementing several APUS learning paths at both the certificate and degree level. Organizations seeking to improve performance and add to the bottom line can also benefit from employees with CLTD designations since these individuals are equipped with knowledge of resource optimization to reduce costs and improve profitability. We’re proud to collaborate with APICS to offer this additional element as part of our flexible, career-relevant programs.

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Autonomous Freight Vehicles: The Impact on Supply Chain Management

Guest Posting By Russell Parker

Student, Transportation and Logistics Management, American Public University

 

Automation in the transportation industry has been around for years, mostly in public transportation and in-house transports within company grounds. Autonomous freight vehicles, a new level of automation, will soon put driverless freight vehicles on public roads and highways. 

Vehicle automation adds value to transportation because it reduces the normal costs associated with moving goods. Automated freight transportation will change the global supply chain industry in value added, outsourcing requirements, congestion, environmental concerns, safety, and lead-time.

Is There a Need for Automation in Freight Transportation?

According to the American Trucking Association, 70 percent of goods consumed in the United States are moved by truck, but the industry needs to hire almost 900,000 additional drivers to meet the rising transport demand. And as current drivers retire, newcomers are hard to find. The result is retailers delay non-essential shipments or pay higher prices for delivery. The shortage of truck drivers motivated Alex Rodrigues, the CEO, and co-founder of Embark, to pursue self-driving technologies.

Autonomous vehicles can assist drivers or operate on their own without human interaction.

Autonomous drones are used by the military and private industry. With the aim of improving safety, reducing environmental impacts, increasing efficiency and relieving the shortage of drivers, numerous companies are now involved in the race toward this technology because the demand and profitability are high.

Autopilot technology would require truck drivers to work as airline pilots do. The autopilot would control aspects such as acceleration, braking, lane-centering, and cruise control, as well as a myriad of certain traffic situations and conditions. Truckers would still be required to monitor these functions while maintaining high alertness should something go wrong with the system.

Embark has worked with technology that allows its trucks to move highway exit to exit without any human interaction. This technology uses artificial intelligence (AI) with a combination of radars, cameras, and depth perception sensors, but the technology still requires an operator to take control of the vehicle once it exits the highway and starts operating within city limits.

One advanced automation system currently in testing is driver-assisted truck platooning (DAPT). With this technology, one driver operates a truck, and its sensors, radar, and vehicle-to-vehicle communications operate several trailing trucks in convoy acting as a single unit.

Peloton, a pioneer in this technology, conducted a live demonstration of DAPT on December 1, 2017, in Michigan. The technology worked successfully and reduced fuel costs. This technology is also being tested by the United States Military with the Oshkosh Terramax Unmanned Ground Vehicle Technology. One operator can direct up to five vehicles in a single convoy.

What Are the Impacts of Autonomous Freight Vehicles on Supply Chains?

Autonomous vehicles will change supply chains globally. This new method will encourage new outsourcing requirements and companies, enhance the flow of materials, cut back on highway congestion and add value to transportation.

Automated freight vehicles mean more electronics and fewer engines and fuel consumption. Also, this autonomous technology would assist the supply chain industry to meet the International Kyoto Protocol’s 60 percent reduction in carbon emissions by 2050.

Autonomous freight carriers are the way of the future for supply chain operations. As the driver population decreases and demand increases, and costs rise for both suppliers and consumers, autonomous vehicles will offset those conditions and allow the industry to continue operations.

Logistics companies need to prepare for automation sooner rather than later because this emerging technology is moving ahead quickly and those who fail to adapt will find themselves overrun by new suppliers and logistics providers who do embrace autonomous vehicles.

About the Author

Russell Parker is a Marine Corps Captain logistics officer and currently stationed at 29 Palms, CA. A Cleveland, Ohio native he has deployed four times in support of Operations Iraqi and Enduring Freedom as a motor transportation platoon commander, company commander, and a joint staff officer. 

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Supply Chain Excellence Requires Maturity

Guest Post by Dr. Ernest L. Hughes, Associate Professor, Transportation & Logistics Management American Public University System

Excellence in supply chain performance is often characterized in terms of a capability or maturity model. The Merriam-Webster Dictionary defines excellence as “extremely high quality,” and mature as “having reached a final or desired state,” that is to say, fully developed. In addition to providing a framework for understanding and managing the inherent detailed and dynamic complexity of an organization’s supply chain, a maturity model can provide a roadmap for improvement.

Typically, an organizational assessment is utilized to determine the level of supply chain maturity, identify performance gaps, select appropriate improvement factors, and plan a course of change to reach the next level. Gartner’s logistics maturity model has five stages.¹ The maturity model developed by IBM’s Institute for Business Value has five stages, too: (1) static supply chain; (2) functional excellence; (3) horizontal integration; (4) external collaboration; and (6) on demand supply chain. This model reflects the movement supply chain performance toward the goal of synchronized supply - changes in customer demand automatically adjust purchasing, manufacturing, and logistics plans.²

In his doctoral dissertation, Dr. Heriberto Garcia developed and validated a Supply Chain Capability Maturity Model, abbreviated S(CM)2, and a methodology to apply it. Dr. Garcia developed his model from an extensive literature review of enterprise modeling frameworks and industry supply chain models, and multi-round Delphi surveys of industry experts. The supply chain maturity levels in S(CM)2 are: (1) undefined; (2) defined; (3) manageable; (4) collaborative; and (5) leading. Each stage has from one to seven prioritized key improvement factors. The table below summarizes these levels and factors.

The methodology utilizes questionnaires that Dr. Garcia asserts can be used even by non-experts to assess an organization’s supply chain maturity from seven different views or processes: (1) Suppliers; (2) Production systems; (3) Inventory; (4) Customers; (5) Human resources; (6) Information systems & technology; and (7) Performance measurement systems. Each of these views of a supply chain can be, and most likely would be, at different levels. Each view can be analyzed from three abstraction levels: operational, technical, and strategic. Garcia integrated maturity levels, improvement factors, views, abstraction levels, and useful tools in a framework, and also defined a short-hand notation for a supply chain assessment report to quickly state the levels of each view. Utilizing a maturity model like S(CM)2, Supply Chain Leaders have a straightforward, systematic way to know where their organization’s supply chain has been, where it is today, and where it should be headed in the future.

 

References

Aimi, G., Lisica, J., & Gonzalez, D. (2014, August 25). Apply the five-stage maturity model to drive logistics excellence within the supply chain. Gartner, http://www.gartner.com/document/2831020.

Huettner, H., & Song, W. (2007). Follow the leaders: Scoring high on the supply chain maturity model – Mainland China perspective on forward-planning supply chain processes. 3. Garcia, Heriberto. (2008). A capability maturity model to assess supply chain performance. FIU Electronic Theses and Dissertations. Paper 191, http://digitalcommons.fiu.edu/etd/191/.  

 

 

PROFILE

Dr. Ernest L. Hughes (“Ernie”) is an Associate Professor of Transportation & Logistics with the American Public University System (APUS). He teaches courses in Logistics Management & Operations, Comparative Transportation Systems, History of Transportation, Ports & Terminal Operations, and Retail Shipping & Receiving. Dr. Hughes is also principal with Logistikos, his consulting network focused on improving supply chains through better collaboration, integration, innovation and change management. Prior to launching his teaching and consulting practices, Dr. Hughes enjoyed broad leadership responsibility in a range of organizations for more than thirty years. He was most recently Director of Technical Services for Recreational Equipment, Incorporated (REI). Before joining REI, Hughes was co-founder and Chief Information Officer for Cascadia Community College after a fifteen-year technology career with Boeing in a range of technology and management positions. Dr. Hughes earned an MS in Global Supply Chain Management from the University of Alaska Anchorage, a Doctorate in Organizational Leadership and a Masters in Software Engineering from Seattle University, an MBA in Organizational Behavior at California State University, Bakersfield, and an undergraduate degree in Computer Science from California Polytechnic University, San Luis Obispo. He is a senior member of the American Society of Quality (ASQ), vice president of the Pacific Northwest chapter of INFORMS, member of the Board of Directors for the Western Washington Chapter of the Institute of Supply Management (ISM), and a member of the Association of Change Management Professionals (ACMP).

Has the Factory of the Future Arrived?

According to Warren Bennis, “The factory of the future will only have two employees, a man and a dog. The man will be there to feed the dog, and the dog will be there to keep the many from touching the equipment.”

Years ago, when Warren Bennis came out with this statement, it seemed that he was speaking about the far future, because it seemed to be so farfetched. With the technology today, this kind of factory is closer than we think.

Cloud DMM has built a factory in the UPS hub in Louisville, Ky., that will run 24 hours a day, 7 days a week. They plan to staff the factory with only three employees, one for each eight-hour shift. One might ask how this is possible. What is the catch?

Cloud DMM is a rapid-prototyping company that will use one hundred high-tech 3D printers. Customers transmit prototype specifications electronically and printed prototypes ship out via UPS. UPS then handles the logistics so that materials arrive overnight to any location.

Several other companies are offering 3D printing services to other companies. However, these other startups have not integrated their logistics as tightly as Cloud DMM.

There is no doubt that startups like this are signaling a new generation of organization that will limit human intervention to maximize efficiency. It is clear that we are a lot closer to Bennis’s vision than we thought.

Of course, we will all have to watch how Cloud DMM fares, as they still might need to hire a dog to keep their lone employee from tinkering with the technology.

Nurturing Greener Transportation Habits

Many of us are opting for greener transportation options. The number of options of fuel efficient and alternative fuel vehicles is growing. No green idea seems too farfetched as we see momentum growing for Hyper-Loop and Air Taxis are already going into operation.

Many cities are already moving to greener mass transit, whiles others have announced that they will simply ban cars to generate a need for greener transportation alternatives. Furthermore, many tourist cities in Europe already incentivize green transportation.

We Need to Catch-Up with the World

Many nations are already ahead of the U.S. in regard to environmentally-friendly transportation. In the not too distant past, U.S. gasoline prices were $5 a gallon. Given this all-time high, one would think that this would be enough to incentivize a move to alternative fuels. However, with the fall of oil prices it seems that the U.S. has resumed wasteful habits.

Incentivizing Recycling

Resources are not infinite and preserving what we have is a very good idea. Creating awareness of the need to make the most of the resources we have will lead to greener consumer habits. Once this begins, the public will then likely become supportive of greener transportation and logistics.

The lack of cultural awareness is evident today in the state-by-state approach to litter recycling. Why are national problems like litter and recycling left to local jurisdictions? For example, some states have a bottle deposit and some do not; to me, this means that some states have incentivized recycling.

Wasting resources is a global, not local issue. A national recycling deposit might help improve our national awareness of reducing waste.

Incentivizing recycling would be a great first step to increasing awareness and preserving the resources of the planet. Such awareness can lead to needed support for green transportation and other logistics practices that help to optimize the use of resources. The transportation and logistics industry can have a great impact on making the U.S. a greener nation and our children will thank us for making a difference.

Logistics Customers Moving from Speed to Need

We humans are sensitive to time, which shows our preoccupation with time rather than a preoccupation with logistics. Although the distance is important, temporal information is what interests people most.

This concept of time and distance influences logistics, which is marketed and sold in units of time rather than distance. We are asked would you like that sent overnight, two-day, or ground (meaning 5-7 days, typically.) Logistics carriers know that distance most often dictates cost, but the consumer is less interested in that detail, so services are marketed in terms of time.

As another illustration, when you use Google maps to go to a location, it gives a warning if the arrival time is later than the hours of operation of the location.

Artificial intelligence and the Internet of Things have the potential to change our focus. Instead of being centered on time, we may focus on satisfying our needs. Shortly, we might see drone deliveries of items directly to our home or perhaps we will just 3D print the latest fashion clothing.

Here is an example of how logistics happens today: I want a new TV right before the release of the new season of “Orange is the New Black.” I search Amazon and order the TV I want. I want it installed and mounted as well as programmed to work with DVD and my sound system. I find a contractor through Angie’s List and schedule a time that I can leave work so I can supervise the installation. Ultimately, I have to work out all the logistics so that everything is in place in time for me to watch my program on TV.

With artificial intelligence and the Internet of Things, I would just ask my phone to arrange for a new TV. My phone will already know my preferences based upon past information, and it would then be able to handle all the logistics. The system would be able to sort through TVs on Amazon to find one that will fit and meet my needs based upon ratings and my personal preferences. The system will be able to sort through Angie’s list to find a suitable installation company based upon ratings, location, and timing.

The delivery at home would coincide with the arrival of the installation person. My phone that integrates to my home will then arrange to let in the contractor and lock up after the work is done. Ultimately, all the logistics would happen automatically to meet my individual needs.

The interesting point is that this perspective of the future is not that far away. All of the technology is available. It is just a matter of time before people start integrating everything, which is the future that the Internet of Things offers. Soon, we will wonder how we managed before everything was integrated.

City infrastructure and the Internet of Everything

Everything will soon be connected by the Internet. The Internet will be everywhere in industrialized nations, so now it is up to people to develop new ideas to apply this technology, including for the efficient operation of our cities.  

There is no question that many taxpayer dollars are wasted upon resources that are not being used.  Municipal lighting that remains on all night regardless if anyone is using it is an example of the waste that happens in cities every day.

Money can be saved with Internet-connected systems.  More efficient cities result in millions of dollars of savings.  Systems that communicate via the Internet will know when to shut down and when not to shut down.  Expert systems will be able to predict peak times and make adjustments accordingly.

Barcelona is a flagship of the SMART city of the future.  Already, by integrating technology and city infrastructure, they have been able to move to generate 47,000 more jobs and reduce costs.  For example, they already have integrated sensors in trashcans so that trash pickups are scheduled when bins are at capacity and not on a particular day. This improvement in the collection of waste and recyclables will certainly change that way people think about urban reverse logistics.

Barcelona is working to allow more shared information about traffic and parking spots in the city.  This improvement will help guide people to be able to park in the city, reducing traffic and improving efficiency for commuters.  The resulting reduction in pollution makes the city a more welcoming place to live.

Learn more by viewing Barcelona’s YouTube video explaining where this city is taking the concept.

Combatting RFID Security Risks

Guest Post by Dr. Mario Vaccari, faculty member, Transportation and Logistics Management at American Public University

Radio Frequency Identification (RFID) technology has become popular in global supply chain operations, but not without risk. Pairing long-range readers with scannable RFID tags presents an opportunity for unauthorized scanning by malicious readers and to various other attacks, including cloning attacks. In addition, many of the tags remain with products after they reach customers, presenting security threats to consumers.

Several security measures have been implemented to reduce the risk of attacks in global supply chains and to combat the issue of consumers’ increasing privacy concerns. Some of these security measures include XOR Operation, mutual authentication protocol, random hash-lock protocol, and RIPTA-DA RFID authentication protocol.

There are basically two types of RFID tags: active tags and passive tags.

• An active tag is driven by a power source and broadcasts its own signal. The signal’s reach differs based on some variables.
• A passive tag does not have a power source and is not capable of broadcasting its own signal.

Both types of tags provide benefits and challenges such as cost, size, range, security risks, and applications. In the case of passive tags (mostly found in consumer goods), the tags are inactive until activated with a reader/scanner. This condition is called residual RFID and this is where many privacy concerns begin.

Nowadays, privacy concerns are on everyone’s minds. The average consumer will quickly demand protection from perceived risks, yet few know how technology works to process data. This is the case with consumer knowledge of the privacy risks associated with RFID technology.

Organizations should offer consumers facts about some of the perceived security risks, as well as what is being done to diminish such risks. Organizations must take a proactive approach so consumers are educated on facts, not perceptions. The likelihood of a negative perception remaining constant in people's minds is a risk that should not be overlooked.

As RFID technology continues to evolve and its use increases in global supply chains, security risks will need to continue to be addressed. While measures are being taken by supply chain organizations and technology developers to reduce overall risks, organizational leaders must take a proactive approach to keep consumers abreast of what is being done to protect private information. Consumers have concerns and companies that use the technology have an obligation to provide accurate information to address those concerns.

Related article: http://www.dcvelocity.com/articles/20150910-has-rfid-found-a-home/

 

 

 

 

 

 

 

 

 

 

 

 

Will Volkswagen Survive?

When the news broke that Volkswagen had installed cheat devices to attain reduced emissions on their diesel engines, fewer than a million cars were initially affected.  However, as the investigation progressed, additional vehicles and brands were impacted. 

As the situation unfolds, the resale price of these vehicles has dropped dramatically. The stock price of Volkswagen has also dropped by a third. Given all the uncertainty about what will happen no one wants to risk buying one of these vehicles. Will Volkswagen survive?

Shortly after the situation was revealed, CEO Martin Winterkorn stepped down, claiming he had no knowledge of the situation. The new CEO, Matthias Mueller, was appointed and soon cheat devices were found in over eight million cars worldwide (mostly in the U.S. and Europe).

Though Volkswagen initially resisted, overwhelming pressure from many governments and organizations led it  to announce a recall. It will be the largest ever and how and when the repairs will take place has yet to be announced. The company is working with authorities to engineer a solution that will meet the requirements of regulating agencies.

While a fix is possible, any change will certainly affect the performance of these vehicles. How much of an impact it will have, and when the solution will be implemented, are also unknown. 

Volkswagen has gone from the world’s largest car producer to a company whose existence and fate are unknown.  As Germany’s largest employer, it wields both economic and political power in that country.  There will also be an impact on the global marketplace as consumers seek alternative vehicles. 

How Volkswagen will engineer and implement this massive recall will be a milestone for the organization if it survives the process. If so, it will represent one of the most instructive recalls and comebacks in history, rivalling the turnaround at Chrysler.

The estimated cost of the recall will easily be in the billions. CEO Matthias Mueller will need to build a team of the best to pull off this miracle. A likely course of action will be to sell off some assets. 

We will need to wait to see if Volkswagen will manage to navigate the rocky road ahead. Either way, the event is likely to become a valued case study for global businesses in the years to come.