Dr. Etinder Pal SinghFeb 24, 2012

Presented at MDP organized by Center for Management Development & UPES Dehradun

Consequences of Supply Chain Disruptions

•Impact of disruptions on supply chain performance:–Disruptions in the supply chain supply chain performance decreases

–Higher costs, lower delivery dependability, lower service level etc.

•Impact of disruptions on stock-related metrics and financial-statement metrics:–10% decrease in shareholder wealth –40% decrease in stock returns–107% drop in operation income–114% decrease in return on sales–93% drop in return on assets

Source: Hendricks and Singhal (2003, 2005a, 2005b) , Wagner and Bode (2008)

The consequences of disruptions are severe but are they the same for all firms?

We need to answer the following

• How do you design a supply chain for a specific desired outcome?

• When can outcomes be blended and under what conditions should they not be?

The Emergence of the Blended Outcomes

EnterpriseChallenge – How to achieve multiple objectives• Solution

– Blended Outcomes

Blending Outcomes

• Blending outcomes means making tradeoffs

• When blending outcomes,one should stand out

• Emphasis on the alignment of incentives within supply chain

• It complicates the outcome measurement process

• Some outcomes should not be blended (cost and innovation)

Success depends on• Critical SC drivers

– Demand driven (Walmart/Dell)– Supply driven (oil/gas)– Technology driven

• Global Cultural Differences• Location• Corporate culture (when boss is away)• Stage of product life

– Early stages (responsiveness, innovation,security)– Maturity (cost and resilience)

• “The only constant is change.”– Heraclitus, 600 BC, Greek philosopher

• “It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” – Charles Darwin

Final Comments

• If we shift from old view of supply chains to the new view, we have to rethink the supply chain.

• To understand the new supply chains, we need to understand outcomes.

• The new supply chain must be designed to make the blended outcomes inevitable.

Thank you for listening!

Any questions?