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Development of futuristic supply chain risk management pilot strategies for achieving loss reduction in
manufacturing organisations
D. Elangovan G. Sundararaj S.R. Devadasan P. Karuppuswamy
Article information:
To cite this document:
D. Elangovan G. Sundararaj S.R. Devadasan P. Karuppuswamy, (2011),"Development of futuristic supply chain risk
management pilot strategies for achieving loss reduction in manufacturing organisations", World Journal of Entrepreneurship,
Management and Sustainable Development, Vol. 6 Iss 1/2 pp. 39 - 51
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of supply chain activities are essential to stay in this section. Recently, it is increasingly
in the fierce competitive environment. Today observed that supply chains compete with
manufacturing organisations are ready to focus other supply chains in the same organisation
and adopt newer techniques, principles and (Christopher, 1992). The increasing global
strategies to achieve an overall effectiveness competition, the changing customer’s
in the entire system. The introduction of expectations and technological innovations
variety of products from various competitors challenge organisations to aim for business
insists manufacturing organisations to focus agility through process-focused thinking. The
better alternative strategies in the internal as global performance of business processes
well external supply chains to timely meet the is however constrained by unpredicted
customer expectations and due date demand events, which cause deviations from the
requirements. expected purpose. By anticipating these
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are used in these approaches have led an A model ‘predictive control methodology’
increasing number of researchers to address is proposed with a stochastic optimisation
several types of problems encountered in the approach and adopts a scenario-based
area of manufacturing systems (Pierreval et multistage stochastic mixed integer linear
al., 2003). programming model is introduced to
address the problem of dynamic SCM.
Fast and dramatic changes in customer The study also incorporates uncertainty
expectations, competition and technology and process dynamics into enterprise wide
are creating an increasingly uncertain models which also contemplate cross-
environment. To respond this, manufacturers functional decisions. It is emphasised that
are seeking to enhance flexibility along the the significance of merging uncertainty
supply chain activities. It is strategically treatment and control strategies improve
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important for enhancing competitive position the supply chain performance (Puigjaner
and winning customer orders. It also has and Lainez, 2008).
strong, positive and direct relationships with
customer satisfaction (Zhang et al., 2003). A Trkman and McCormack (2009) have
framework was proposed for prioritising lead pointed out that uncertainties ultimately
time reduction to achieve desirable levels of cause time delay in the manufacturing cycle.
market mediation performance explored Supply risk or supply chain disruptions
(Treville et al., 2004). When an organisation are caused due to time delays, which
faces the global market, they would have to are key challenges to supply chain risk
reengineer their processes and reorient their management (SCRM). Further, in recent
operations by adopting strategies such as years, the challenges are experienced while
‘supply chain positioning’ to achieve better managing supply chains due to external
performance. This refers to actions taken by factors as well as the turbulent environment
organisations to respond to satisfy customer’s existing within the organisation. This often
demand requirements (Sen et al., 2004). A dominates system dynamics and affects the
framework which defines ideal profiles of dynamic operability of the organisation.
products and markets for manufacturing A major challenge for an organisation to
and investment decisions that relate to stay in today’s highly competitive market
alternative process choices of priorities have environment is to be able of capturing
been explored (Silveira, 2005). and handling the dynamics of its entire
supply chain (Puigjaner and Lainez, 2008).
Six dimensions of SCM practices Hence it is essential to identify and address
(strategic supplier partnership, customer the reasons and associated root causes
relationship, information sharing, of disruptions occurring along supply
information quality, internal lean practices chains. For this purpose, assessment of
and postponement) were conceptualised, loss producing events (LPEs) with a view
developed and validated to provide a to reduce and prevent them in future using
precise measurement instrument to assess appropriate SCRM strategies is needed.
the performance of the overall supply chain Thus manufacturing organisations must
(Li et al., 2005). Integrating the parts of the pay more attention to futuristic SCRM
supply network will create operationally strategies for achieving better, systematic
outperforming business models that further and dynamic executions of supply chains,
boost the inherent dynamics of supply using risk mitigation coupled with
chain activities (Hameri and Paatela, 2005). appropriate strategies.
42 D. Elangovan, G. Sundararaj, S. R. Devadasan and P. Karuppuswamy
Table 1 Root causes for the major time delays occurring due to improper selection of materials and
suppliers
Serial Root causes for major time delays occurring due to improper selection of materials and suppliers
Number Primary root causes Secondary root causes
Failure to place orders and instructions clearly in time
Permitting the use of improper materials
1. Inadequate inventory
Permitting improper suppliers to supply materials
Not knowing the right kind of suppliers to order
Ordering more materials than necessary
2. Excess inventory Not returning excess materials in stock, when there is no
further need
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to be another reason for causing major Major time delays caused due to
time delays along the supply chains of inefficient work organisation
manufacturing organisations. The root
causes for this reason are further divided During the conduct of this research,
into primary and secondary root causes. inefficient work organisation was found
These details are enumerated in Table 3. to be another reason for the occurrence
44 D. Elangovan, G. Sundararaj, S. R. Devadasan and P. Karuppuswamy
Table 2 Root causes for the major time delays occurring due to improper use of machines and
equipment
Serial Root causes for major time delay occurring due to improper use of machines and equipment
Number Primary root causes Secondary root causes
Failure to plan full work properly so as to use all available
Improper planning and machinery
1.
scheduling
Lack of time related considerations and planning
Foreman’s lack of knowledge on possible use and capacity of
Loss due to machine various machines
2. selection and
completion of jobs Lack of knowledge on jobs to be completed using available
machines and equipment
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of major time delays along supply chains Major time delays caused due to
of manufacturing organisations. The root wrong work concept and ideas
causes of this reason are further divided
into primary and secondary root causes. During the conduct of this research, the
These details are enumerated in Table 4. wrong work concept ideas and ideas were
Development of futuristic supply chain risk management pilot strategies 45
Table 3 Root causes for the major time delays occurring due to improper manpower utilisation
Serial Root causes of major time delays caused due to improper manpower utilisation
Number Primary root causes Secondary root causes
Not considering the direct and indirect costs of employee turnover
Not keeping promises which could be fulfilled
Making promises which cannot be fulfilled with regard to wages,
Failure to control
promotion etc.
1. turnover of capable
Discharging employees without sufficient reason and improper use of
employees
the discharge slip as a penalty.
Keeping an employee on a job for which he has a violent dislike
Failure to investigate employee turnover
Too much bossing without considering the other persons’ views
Too strict or too lax enforcement of discipline
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Table 4 Root causes for the major time delays occurring due to inefficient work organisation
Serial Root causes of major time delays occurring due to inefficient work organisation
Number Primary root causes Secondary root causes
Keeping employees waiting between successive jobs
1. Lack of planning
Keeping employees waiting for the arrival of materials
Lack of knowledge regarding work content
2. Lack of knowledge
Lack of knowledge regarding full day work
Lack of foreman’s orders Failure to serve work orders to employees
3.
and instructions Lack of clarity in giving instructing the employees
Failure to insist on keeping tools, materials and portable
equipment in proper places
4. Lack of traceability
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Table 4 Root causes for the major time delays occurring due to inefficient work organisation
(… continued)
Serial Root causes of major time delays occurring due to inefficient work organisation
Number Primary root causes Secondary root causes
Failure on foreman’s part to organise his own time and work
19. Lack of work management Failure on employees’ part to organise their own time and
work
Lack of education and Inadequate communication skills
20.
training Lack of interest and involvement in learning
Table 5 Root causes for the major time delays occurring due to wrong work concept and ideas
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Serial Root causes of major time delays occurring due to wrong work concept and ideas
Number Primary root causes Secondary root causes
Failure to encourage when employees offer valuable
suggestions
Lack of interactions about
1. Failure to listen and make comment, when employees
work ideas
offer suggestions
Failure to receive suggestions from experts
System to investigate the lack of problem and its
2. Lack of problem solving skills associated constraints
Not asking employees’ advice on problems
Failure to read and study the work methods
3. Lack of learning
Failure to read and study the business methods
Failure to get from new employees’ helpful ideas, which
Lack of contacts and they may bring from previous employment
4.
conversations
Not consulting enough with other departments
Failure to consider or refer to the proper person having
Lack of involvement in work valuable suggestions
5.
ideas
Failure to take proper interest in conducting meetings
found to be another reason for the occurrence reason are further divided into primary and
of major time delays along the supply chains secondary root causes. These details are
of manufacturing organisations. The root enumerated in Table 6.
causes for this reason are further divided
into primary and secondary root causes.
These details are enumerated in Table 5. DEVELOPMENT OF PILOT STRATEGIES,
RESULTS AND DISCUSIONS
Major time delays caused
due to accidents The reasons of occurrence of LPEs and their
various root causes mentioned in the previous
During the conduct of this research, section were further analysed to trigger the
accidents were found to be another reason futuristic SCRM strategies. The associated
for the occurrence of major time delays root causes were analysed by studying cost
along the supply chains of manufacturing sheet, discussion with employees, discussion
organisations. The root causes for this with experts and past analysis with collected
48 D. Elangovan, G. Sundararaj, S. R. Devadasan and P. Karuppuswamy
Table 6 Root causes for the major time delays occurring due to accidents
Serial Root causes of major time delays occurring due to accidents
Number Primary root causes Secondary root causes
Failure to recognize accident prevention during
production
Failure to provide all the employees with thorough
instructions on safety
Lack of accident preventive
1. Failure to install mechanical safeguards
measures
Failure to display danger signs at proper places and to see
that they are legible
Failure to stimulate and maintain interest of employees in
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accident prevention
Keeping guards out of the reach of employees during
work
Loss due to improper Poor house-keeping
2.
handling of safety tools Allowing employees to work without necessary protective
devices such as goggles, welding helmets, safety shoes,
safety belts etc.
Failure to understand indirect accident costs thoroughly
Lack of understanding of what constitutes accident
Loss due to improper hazard
3. understanding of safety Not setting a good example in the matter of safety
measures practices
Failure of the foremen to recognise his responsibility for
preventing accidents in his department
Lack of awareness and Lack of regular and conscious safety inspection
4.
involvement in safety measures Lack of cooperation with state and insurance inspectors
Failure to keep records of accidents to analyze them and
Lack of accident database to use the information gained
5. for carrying out future safety
measures Failure to enforce consistently all safety rules and
regulations
data. Based on the results of these analyses initiatives. Recently, utilising external
and discussion, the personnel interviewed resources has been increased and these
were advised to execute preliminary actions have become a new source of business
using risk control measures on trial basis. success to ensure quality up-gradation.
These SCRM pilot strategies are enumerated At the same time, this has given rise to
in Table 7. various new risks and, therefore, the
need for collaborative risk management
The above results and discussions are has also increased (Hallikas et al., 2005).
just sample action taken. These personnel The interest of futuristic investigations in
of the organsiations had taken preliminary SCRM remains underdeveloped. In this
steps to implement these proposed actions. context, the necessity of a dynamic model
These steps were used for achieving better, for achieving loss reduction with a future
systematic and dynamic execution of scope of risk prevention was realised to
supply chain activities using the SCRM facilitate continuous improvement.
Development of futuristic supply chain risk management pilot strategies 49
Reduction of under-production
date requirements and follow-up actions
Effort to minimize the processing time and
Minor layout modification
movement of both employees and materials
Accurate estimates of material requirements and
Reduction in processing waste
follow-up actions
Reduction in transportation time Accurate estimates of internal processing follow-up
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