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To cite this article: Steven A. Melnyk, Ram Narasimhan & Hugo A. DeCampos (2014) Supply chain design: issues,
challenges, frameworks and solutions, International Journal of Production Research, 52:7, 1887-1896, DOI:
10.1080/00207543.2013.787175
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International Journal of Production Research, 2014
Vol. 52, No. 7, 1887–1896, http://dx.doi.org/10.1080/00207543.2013.787175
Truly effective supply chain management is planned and purposive. A value-driven supply chain that is coupled to the
strategic priorities of the firm is the result of deliberate management action and strategic corporate investments aimed to
procure, develop and configure the appropriate resources, processes and metrics that define that firm’s supply chain. A
framework of supply chain design is proposed that comprehends three key levels of factors critical in understanding
supply chain design: influencers, design decisions and building blocks. Influencers are higher-level considerations such
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as the business and political environment, the business model employed, the firm’s desired outcomes and the supply
chain life cycle. Design decisions include the social, behavioural and physical/structural design elements that define a
supply chain. Building blocks include the inventory, transportation, capacity and technology decisions that are used to
implement the supply chain. Supply chain design needs to comprehend these three levels of analysis. The articles in this
special issue are introduced in the context of these levels of analysis and a research agenda is suggested that can be
pursued in light of this framework, highlighting areas that are covered in this special issue and areas where research
opportunities exist.
Keywords: supply chain design; supply chain architecture; integration; life cycle design; research framework
1. Introduction
1.1 Why focus on supply chain design?
The last 20 years have seen the emergence of the supply chain as a critical competitive force in today’s increasingly
turbulent marketplace (Lee and Billington 1992; Lee 2004; Melnyk et al. 2009). By drawing on the capabilities (i.e.,
capacity and skills) offered by the supply chain (the set of upstream and downstream entities who work either directly
or indirectly with the firm) and by developing and fostering appropriate ties with both customers and suppliers, firms
can realise significant benefits in the form of reduced inventories, lower costs, enhanced responsiveness, and improved
strategic focus in terms of design, execution and capital investments (Harvard Business Review 2006). Providing further
support for the supply chain’s impact on performance, AMR (a leading supply chain research organisation) stated that
in 2008 the top 25 companies with best supply chain practices reported an average return of 17.89% compared with
6.43% for the Dow Jones Industrial Average (DJIA) and 3.53% for the S&P 500 (Reuters January 10, 2008).
Yet, in reviewing these findings, it is important to recognise that although supply chain management is not new, it is
still evolving. The term was first coined in 1982 when Keith Oliver, a consultant at Booz Allen Hamilton, used it in an
interview with the Financial Times (Kransdorff 1982). Since then, its development and growth as a discipline has
occurred primarily in the industrial sector. Supply chain management is a concept that has been born of practice, grown
through need, and changed in response to various challenges, threats and opportunities. Consequently, until recently, it
has largely not been theoretically grounded. Rather, attention has been devoted to understanding what supply chain man-
agement is (and is not), how it is related to similar approaches such as logistics, operations management and purchas-
ing/sourcing management (e.g., Cooper, Lambert, and Pagh 1997; Skjoett-Larsen 1999; Larson and Halldorsson 2004),
and how it affects performance. The knowledge base on which supply chain management is based is still in flux and
surrounded by controversy. For example, there is disagreement over the very nomenclature applied – are we dealing
with supply chains, supply chain networks or value chain networks? For the purposes of this note, we shall conform to
common usage by using the term ‘supply chain management’.
As supply chain management continues to grow in prominence across both practitioner and academic communities,
we observe that truly effective supply chain management is planned and purposive. Recently, Melnyk et al. (2010) noted
a transition taking place from the strategically decoupled/price-driven supply chain to the strategically coupled/value-
driven supply chain. This transition is not simply a ‘happy accident’. Rather, it is the result of deliberate management
action and strategic corporate investments aimed to procure, develop and configure the appropriate supply chain
resources that will allow the firm to compete successfully in the marketplace. The concept of supply chain design lies at
the very heart of these investment decisions.
As first recognised by Fine (1998), supply chain design is a rich aspect of supply chain management that goes
beyond issues of make/buy, buyer–supplier relationships, or vertical integration. In recognition of this richness, Fine
talked in terms of supply chain architecture, rather than supply chain design. As we shall see subsequently, there is a
significant difference between these two terms. To Fine, supply chain architecture enfolds considerations such as
geography, organisation, culture and technology. We are now starting to recognise that to maximise the benefits offered
by supply chain management, we must design appropriate types of supply chain that vary according to the complex set
of considerations listed above.
Yet, supply chain design presents managers and researchers with its own set of issues, concerns and obstacles. As
this concept is relatively new, the salient issues that define its content, scope and boundaries are still emerging. We now
recognise that ‘one size’ does not fit all when it comes to supply chain design. What works well in one setting may not
work well in another. For example, Hull (2005) and Hussain, Assavapokee, and Khumawala (2006) have shown that
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supply-driven supply chains, such as those encountered in the energy/petroleum industries, require different practices if
they are to be deployed most effectively and that practices that work well in demand-driven supply chains (e.g.,
Wal-Mart and Toyota) will not necessarily be appropriate when deployed in supply-driven environments. Humanitarian/
disaster relief systems represent another environment that requires unique configurations of supply chain resources and
investments (e.g., Apte 2009; Kovacs and Spens 2009; Tatham and Spens 2011).
Given the relevant yet nascent level of this stream of enquiry, it was determined that an appropriate next step would
be to solicit research from the broader academic community, thus leading to this call for papers.
(1) Influencers: These are very broad-based environmental factors that constrain and significantly influence the over-
all nature of the resulting supply chain. Included are life cycle considerations, desired supply chain outcomes,
business models/critical customers, and the overall environment (e.g., political, economic, technology, industry
and adjacencies). This is the domain where supply chain architecture is most evident.
(2) Design decisions: These are the specific decisions that must be made regarding the overall structure and design
of the supply chain. These decisions are constrained by the influencers discussed above. Included are decisions
regarding physical network design (capacity positioning, transportation network and geographic dispersion of
sites), sourcing strategies (component/subsystem sourcing, global sourcing, spend allocation decisions), social
network design (contract flows, information flows, relationship flows, etc.), relationship governance mechanisms
(contractual versus collaborative governance), and behavioural management strategies.
(3) Building blocks: At the lowest level, building blocks are the specific investments required to implement the above
listed design decisions and are the necessary inputs into building the desired supply chain. These building blocks
include investments such as physical structures (storage and manufacturing capacity), modes of transportation
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(logistics capacity), Enterprise Resource Planning (ERP) systems, sourcing decision tools and procedures, contracts,
inter-firm process development and investments in social capital.
While much supply chain research has delved into the relevance of design decisions and building blocks, there is a
paucity of robust empirical and analytical research that explicates the role of influencers in the supply chain design
process – particularly research that ties the concept of influencers together with the appropriate design decisions and
ensuing building blocks that should be procured or developed. Additionally, to the best of our knowledge, research has
not yet explored the role of transitioning supply chains in the presence of a dynamic set of influencers. How does a sup-
ply chain successfully transition when the desired outcome shifts from one dimension to another? How and when should
certain design decisions be triggered for a given product that is undergoing a transition in its life cycle?
Each of these three dimensions (influencers, design decisions and building blocks) must be explored and understood
in concert in order to appreciate and manage the richness and complexity inherent in supply chain design. Furthermore,
this framework enables us to position each paper published in this special issue according to the proposed three-level
supply chain design framework so that the reader can better understand what areas have been addressed and what areas
merit future research.
This special issue publishes a set of papers that shed greater light on how supply chain design can help describe,
explain, and predict supply chain activities and outcomes at both the corporate and supply chain levels. The papers collec-
tively employ a myriad of tools and methodologies across various industries and countries to achieve this end, including
conceptual, empirical and analytical analysis. Table 1 provides an overview of the contribution that each paper provides in
the context of the three-level factor framework just discussed. Section 3 summarises each article in this special issue.
3. Article summaries
3.1 An examination of multi-tier supply chain strategy alignment in the food industry
Andrew C. Lyons, Azanizawati Ma’aram
The Fisher (1997) framework advocates an efficient supply chain for functional products and a responsive supply chain
for innovative products. The authors empirically test this framework in the context of the food industry using a survey
of 170 food companies across the UK and Malaysia. Respondents are sampled from multiple tiers in the food industry
supply chain, including retailers, distributors and manufacturers. Findings support that an efficient supply chain is, as
expected, typically aligned with functional food products across all levels of the supply chain. Innovative food products,
however, are aligned with responsive supply chains predominantly with downstream partners while upstream partners
such as manufacturers continue to pursue an efficient supply chain, even with innovative food products. These results
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bring up interesting questions regarding the concept of decoupling a supply chain versus purposeful design from cradle
to grave. Are there natural decoupling points in supply chain designs? Can one part of the supply chain be designed to
optimise cost while other parts are designed to optimise innovation output, or should one purposefully design an entire
supply chain to focus on a single outcome? In terms of the proposed framework, this article addresses design decisions
(physical design) and building blocks (physical design).
3.3 The complex adaptive supply network of disaster relief: fostering emergent resilience
Jamison Day
In this paper, complexity research in science and findings regarding system resilience are applied to a supply chain con-
text. Complex adaptive supply networks are introduced and used to analyse conceptually disaster relief supply chains
and the system properties that emerge as a function of three key elements: (1) topology (path lengths, redundancies,
Table 1. Supply chain design research agenda – this special issue and opportunities.
Influencers Design Decisions Building Blocks
Business
Model/ Social
Desired Critical Physical Network Sourcing Relationship Behavioral
Life Cycle Outcome Customer Environment Design Design Strategy Governance Management Inventory Transportation Capacity Technology
X X
Lyons & Ma'Aram
X X X
Inman & Blumenfeld
X X X
Day
X X X X
Askin, Baffo & Xia
X X
von Massow & Canbolat
X X X
Wilhite, Burns, Patnayakuni & Tseng
1892 S.A. Melnyk et al.
clustering, etc.); (2) entities (non-governmental organisations, donors, volunteers, media, etc.); and (3) environment. In
particular, this paper focuses on the emergence of a resilience capability in disaster relief supply chains and posits
various relationships that may arise when considering the impact of these three key elements on that supply chain. This
article is a good example of cross-disciplinary study where patterns observed in other fields of research may enable
insight into similar phenomena that occur in other settings. In terms of the proposed framework, this article addresses
influencers (environment) and design decisions (physical design and social network design).
3.4 Multi-commodity warehouse location and distribution planning with inventory consideration
Ronald G. Askin, Ilaria Baffo, Mingjun Xia
Analytical supply chain optimisation models typically focus on either strategic decision-making (warehouse capacity,
warehouse location) or on operational decision-making (service levels, order size, lead time, mode of transportation).
This paper, however, integrates the operational and strategic decision-making into a single model of a three-echelon sup-
ply chain, and does so while allowing non-linear shipping costs. The authors demonstrate the model’s capabilities while
using a genetic algorithm to solve the sample problem. In terms of the proposed framework, this article addresses design
decisions (physical design) and building blocks (inventory, transportation and capacity).
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supply chains (e.g., a supply chain designed around energy or petroleum). Similarly, humanitarian/disaster relief supply
chains (e.g., Day et al. 2012) impose their specific demands on supply chain design.
What these studies seem to imply is that there are certain underlying traits present in these different settings that sig-
nificantly shape and influence supply chain design decisions and features. What is needed is a series of comparative
supply chain design studies that consider various settings such as humanitarian/disaster relief, mega projects, finite
events (e.g., the 2012 London Olympics – a one-time event that has a definite ending point but which requires signifi-
cant supply chain efforts (Openshaw and Craddock 2012)), and military/defence – to name a few. These studies should
identify the supply design features that are both similar and distinct. They should also begin the process of identifying
the underlying factors that drive design and that shape the resulting systems. This research line would essentially focus
on uncovering the DNA of supply chains.
Evidence for the importance of the setting can be found in this special issue by observing the various focal
industries that are considered across different papers: military equipment, disaster relief, food and general product
manufacturing.
ular, periodic cycle of once every 5–10 years is no longer adequate. Their research, supported by numerous case studies,
directs researchers to deal with the dynamics of supply chain design. It raises a number of unresolved questions that
merit future research:
• What type of supply chain features foster supply chains that can easily adapt and change? Correspondingly,
what types of feature inhibit rapid changes in supply chain design?
• What factors signal (trigger) the need for supply chain redesign?
• What types of technique, procedure or analytics can be used to improve supply chain redesign?
This line of research on dynamic reconfiguration of supply chains is important because it recognises that supply
chains do not always remain static. Researchers therefore have an opportunity to help identify and understand the under-
lying factors that influence the dynamic supply chain transition process.
take place in isolation of others? As we apply Fine’s (1998) dimensions of supply chain architecture to these questions,
we realise that it is not enough simply to address the structural design of one’s supply chain in managing transition;
rather, it is a combination of structural and cultural initiatives that must be orchestrated in order to bring lasting and
effective change.
5. Concluding comments
There is increasing evidence of the growing importance of supply chain design. As noted by Harrington, Boyson, and
Corsi (2011), in today’s turbulent world, one of the most critical tools available to managers is that of supply chain
design (and redesign). Yet, this critical element, while frequently used, is poorly understood. Consequently, this special
issue introductory article began by proposing a three-level framework. This framework provides a structure not only for
understanding this construct but also for understanding current and future research on the topic of supply chain design.
The three levels of interdependent factors include influencers, design decisions and building blocks. These three fac-
tors are relevant to the overall strategic success of a supply chain design and have been referenced by Fine (1998) as
the supply chain architecture that defines a value chain. Each of the eight articles presented in this special issue were
briefly reviewed and placed within the proposed framework. These works included analytical, empirical and theoretical
papers across numerous industries and across various continents (Europe, North America and Asia).
While this special issue presents works of research that touch on many different dimensions of the proposed
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framework, many areas remain untouched by both this special issue and by other research in general. As such, we have
highlighted numerous opportunities for future research that can build upon that which has already been published.
Additionally, other areas of potential future research pertinent to supply chain design have been presented, including:
multi-industry studies, supply chain transition studies, the impact of differing desired outcomes, and the impact of the
supply chain life cycle.
Supply chain design is a rich concept that cannot be comprehended or generalised by any single dimension,
neither is it reasonable to expect any single study fully to test and explore all relevant factors simultaneously. Future
studies may in fact focus on only one (or a few) salient dimension(s) discussed here. These studies, however, will be
well served by placing their focus of research within this proposed framework so that appropriate control variables
and other potentially confounding factors can be taken into account. As such, knowledge and understanding on this
rich topic can proceed with a common base of assumptions, definitions and frameworks that will guide the formula-
tion of interesting and relevant research questions. The results of such efforts will enable the research community not
only to identify stand-alone factors of successful supply chain design, but also to enable the assembly of a complex
puzzle whose various pieces work together to orchestrate an overall supply chain architecture designed to meet cus-
tomers’ needs.
Acknowledgements
The authors would like to recognise the contributions of the 46 reviewers (in addition to the three special issue editors). These people
gave of their time and were willing to share their knowledge in carrying out the reviews. They also responded to telephone calls from
the editors as they sought to understand better their reviews and concerns and the perceived contributions of the submissions. Without
their help, this issue would never have been completed. Thank you.
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Robert Wiedmer