Improving firm performance through sustainable operations

Mervegül Kirci
EPFL, 2017
Thèse EPFL

Résumé

As concerns over environmental sustainability rise, corporations must extend their efforts to improve their environmental performance while at the same time realizing economic growth. The endeavor represents challenges on both strategic and operational fronts, in particular regarding supply chains. This dissertation is thus motivated by the opportunity for businesses to improve their overall performance through their supply chain strategies and operations. In the first research project, we address the strategic opportunities by developing a theoretical framework to identify the dynamic capabilities required to obtain environmentally sustainable supply chains. We break down the internal and external capabilities in three hierarchical levels of organizational structure, and illustrate an application of the framework with a case study on the "Zero waste to disposal" initiative of Nestlé. In the second research project, we focus on the operational opportunities by analytically optimizing the replenishment frequency of perishable products between two supply chain levels. We model the manufacturer-retailer relationship as a Stackelberg game and show that raw material and finished goods lifetimes are interrelated through the replenishment cycle, and that they significantly impact supply chain costs. In the final project, we address both strategic and operational opportunities by empirically modelling the drivers of spoilage for days-fresh products, in our case fruits and vegetables, using daily supply chain data from Migros, Switzerland's largest retailer. We quantify to what extent inventory, promotions, delivery type, commitment changes, order variations, order cycle, and quality issues influence spoilage, and emphasize the necessity for specialized supply chain processes, tracking inventory age, and collaboration with supply chain partners for this fundamental product category.

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https://infoscience.epfl.ch/record/230433?ln=fr

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Mervegül Kirci
EPFL, 2017
Thèse EPFL

Résumé

Official source

https://infoscience.epfl.ch/record/230433?ln=fr

À propos de ce résultat

Concepts associés (15)

Concepts associés

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Publications associées (12)

Publications associées

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Operational Decisions and Supply Chain Dynamics

Olov Isaksson

While traditional research in operations management has focused on mathematical models for improving the flow of physical goods and information, this dissertation takes a quantitative empirical approach. With three distinct research projects it revisits central topics in the field and explores how operational decisions affect the performance of the firm and its trading partners. Chapter 2 examines the financial consequences that inventory leanness has on firm performance. We conduct an econometric analysis using 4,324 publicly traded U.S. manufacturing companies for the period 1980-2008. Using an instrumental variable fixed effects estimator we find a nonlinear relationship between inventory leanness and financial performance. However, we note that the maximum point of this inverted U-shaped relationship often lies at the extreme end of the investigated sample—suggesting a decreasing return from leanness rather than an optimal level. We show that the strength of this relationship is highly dependent on both industry and inventory type (raw materials, work in process and finished goods). The main novelty and direct implication of our findings is that most firms still have much potential to increase profitability by becoming leaner and they are unlikely to cross a threshold where profitability decreases with increased leanness. We display how much the average firm could gain by becoming leaner and show how this sensitivity changes by inventory component and industry. Finally, we highlight several new econometric aspects that we believe must be addressed when empirically investigating the inventory-performance link. The bullwhip effect is said to occur when demand variability is amplified from a downstream site (buyer) to an upstream site (supplier) in the supply chain. Chapter 3 contributes to the literature that empirically investigates the bullwhip effect by providing new evidence regarding its prevalence and magnitude. In contrast to previous work, we use a two-echelon approach, which allows us to observe varia- tions at both the upstream and the downstream sites. By drawing on a financial accounting standard regarding information disclosure about major customers, we are able to link 5,494 buyers-supplier dyads between 1976 and 2009. We merge this information with quarterly financial accounting data to form a sample of 14,933 buyer-supplier dyad observations. We correct for sample selection bias using propensity score matching and estimate the average bullwhip effect in our sample to 1.90 (i.e. 90% demand variability amplification between echelons). A significant bullwhip effect is found across industries (mining, manufacturing, wholesale and retail) and is supported by several robustness checks. We investigate and discuss how these results can be generalized beyond our sample. Chapter 4 explores knowledge spillovers in the supply chain. By building on the organizational learning literature we discuss how knowledge is diffused in the supply chain. Buyers-supplier relationship data is merged with financial accounting data, patent data and publication data to create a sample of 974 buyer-supplier dyad observations in the high tech industries. Using fixed effects estimation we show that a 1% increase in patent intensity at the buyers, on average leads to a 1% increase in patent intensity at the supplier. We find that the duration of the buyer-supplier relationship positively moderates this effect, but that the supplier’s sales dependency on the buyer has a negative moderating role. The technological proximity of the two firms, however, is not found to have a significant effect on spillovers. We discuss the implications of our findings for individual firms and theory.

EPFL2013

Chargement

The current business environment has become more risky and variable. In particular, the recent terrorist attacks against western economies have revealed the vulnerability of global supply chains. These events showed that companies that move cargo internationally are subjected to a broader spectrum of risks, for which they might not be yet prepared. The perception of a higher level of security risks has motivated a wide variety of efforts from the academic, public and private sectors to increase global supply chain security. First, governments, border agencies and international organizations are designing and promoting new security initiatives and regulations to force companies to take more responsibility for the security of their supply chains. Second, academics have started to apply traditional concepts of risk and security management to the supply chain context, leading to the theory of supply chain security management (SCSM). Third, companies are following the new mandatory security regulations. However, most of them are still waiting before implementing those initiatives which are not yet mandatory. At the moment, each of these parties is approaching this problem from different a perspective. However, they all face one main common challenge: Increasing security without affecting supply chain performance or creating new trade barriers. The management of security in a supply chain environment has been usually associated with the implementation of rules and activities that are obstacles for the efficient flow of goods, non-value adding operations or cost generators. It is therefore necessary for these parties, to develop security initiatives which enhance security without affecting supply chain performance or jeopardizing trade. This study builds on the theory of SCSM which is still in its infancy. The literature review shows that some of the most relevant gaps are: i) the disconnection between the governments and border agencies' security initiatives and the theory developed by academics, ii) the non-inclusion of a systematic, holistic and process perspective in the design of SCSM initiatives, and iii) the lack of adequate management tools for companies to implement and maintain the new SCSM initiatives. Based on these literature gaps and the challenges imposed by the new supply chain security risk context, the main research question of this study is: How companies and governments can develop effective (capable of reducing the probability of disruptions occurrence) and resilient ( preparing the supply chain to recover from disruptions) SCSM systems? The main goal of the study is to develop a SCSM model which can help companies and governments to make use of the most relevant lessons from the existing academic theories and the new security initiatives, by integrating them in one practical comprehensive management tool. The research study investigates the supply chain security management by companies with large experience in managing high-risk areas and products. Initially, a survey is conducted to study how some of these companies have increased their security level by implementing a voluntary security program. The analysis of this data enables the identification of some of the factors which can positively impact the success of these programs and confirms the systemic nature of supply chain security management programs. Following these results, supply chain security systems are studied from a more holistic perspective by carrying out two in-depth case studies. The analysis and comparison of these case studies allow the identification of the most relevant challenges that these companies face to manage their supply chain security. Furthermore, they show that the traditional methods of corporate security management present several obstacles to deal with these challenges. The lessons and insights obtained through the analysis of the empirical data, together with the SCSM best practices identified in the literature, are integrated into the proposed "Supply Chain Security Management Model". This model provides a concrete framework to help practitioners adding the process dimension to the management of security. The framework also allows a better understanding and managing of the interactions between the supply chain and the security systems. To complete this research study, the model is validated by applying it to the two case study companies. The results of this initial exercise show that the proposed SCSM model constitutes an innovative management tool for the evaluation of SCSM systems, which drives the attention to critical points that were neglected in the past. This practical application exemplifies how the model can be used to collect and represent in a comprehensive way the security related information that is usually spread amongst different company functions and business partners. The main advantage of such representation is that it allows for a quick identification of the areas with potential for improvement.

EPFL2007

Chargement

Collaborative working capital management in supply networks

Daniel Seifert

Supply chain management is widely accepted as a means for companies to gain competitive advantage. While product and information flows have been widely covered in the literature, relatively little attention has been paid to the management of a supply chain's finances. The objective of this dissertation, therefore, is to add to the emerging literature on financial flows. One inroad to researching financial flows in supply chains is to build on finance theory. Research in finance has analyzed financial flows from a credit point of view. Although researchers have identified more than ten motives for why firms offer and demand trade credit, a comprehensive review of this literature is missing. Following an introduction in Chapter 1, we therefore review this literature in Chapter 2 of this dissertation. We find that two explanations for the existence of trade credit receive broad support. Suppliers offer trade credit to increase product sales. Buyers demand trade credit to circumvent credit rationing. Following the review, we develop a detailed agenda for future research. We find that the relevant operations management literature builds only on a fraction of the insights from the finance literature and propose in-depth studies of capital access, transaction pooling, and control protection as promising areas for future research. Another way to researching financial flows in the context of supply chains is to leverage the methodological richness of the finance domain. In Chapter 3, we therefore investigate optimal financial flows by analyzing secondary data through multivariate regression. To test our hypotheses, we compile panel data on 3,383 groups of public United States firms from three databases. One of these databases is Revere Relationships, a relatively novel database on commercial relations. We find that our data are consistent with the causal relations and theoretical predictions of the operations management literature. Firm profitability is positively associated with payment delay. Payment delay, in turn, is positively associated with the capital cost difference between buyer and supplier and negatively associated with the price elasticity of demand and the deterioration rate of inventory. However, we do not observe any significant interactions between these factors, which raises a number of questions for future research. Another well established methodology in the finance domain is the analysis of stock market reactions to corporate events. Supply chain researchers have used this methodology to analyze the effect of corporate events such as product introduction delays, total quality management implementations, and supply chain disruptions. However, despite the fact that supply chain management is concerned with connected entities, these studies have mainly focused on single firms. In Chapter 4, we therefore study the shareholder value loss associated with disruption announcements across suppliers, customers, and rivals. Our event study finds that suppliers experience -1.24%, customers -0.07%, and rivals -0.19% abnormal stock market returns over a two-day period when firms announce supply chain disruptions. We also implement cross-sectional regression to test several hypotheses. For suppliers, dependence on the disruption announcing firm aggravates the effect. The substitutability of the disruption announcing firm, however, seems to be irrelevant in both the suppliers' and the customers' case. To facilitate the adoption of our results by practicing managers, we consolidate the previously generated insights and propose three trade credit strategies ("win-win", "follow", and "squeeze") and a decision tree in Chapter 5. Furthermore, we highlight an innovative example of a win-win strategy (reverse factoring) and examine it through a survey of 213 finance and operations managers. On average, we find that companies that use reverse factoring benefit from a reduction in working capital of 13%. The same managers report that suppliers benefit, too, by reducing working capital by 14%. However, we find that three factors distinguish successful from less successful implementations – choosing the right banking partner, ensuring CEO sponsorship, and involving at least 60% of the supply base. We complete the dissertation with a conclusion in Chapter 6.

EPFL2010

Chargement

Collaborative working capital management in supply networks

Daniel Seifert

EPFL2010

EPFL2007

Operational Decisions and Supply Chain Dynamics

Olov Isaksson

EPFL2013