Due to the pressure to reduce costs, companies have become increasingly vulnerable to chain disruptions. A four-year research project seeks to find answers to the question how businesses can arm themselves against this without loss of efficiency. The special thing about this project is that it combines knowledge from operations management and behavioural sciences.
A significant characteristic of the business community today is a high degree of integration, both within businesses and between the links of logistic chains. Due to the emphasis which companies increasingly put on lean, more efficient operations and - among other things because of the crisis - inventory reduction, buffer stocks in chains have dropped significantly. This means that a disruption in one link can affect the rest of the chain sooner and more intensely than it did in the past. While natural disasters, riots and strikes are compelling examples, a production line failure and delays in transport may cause disruptions too.
These disruptions require immediate solutions and interventions, which often calls for extra manpower, resources and materials to mitigate any adverse consequences. In the worst-case scenario, these disruptions may jeopardise continuity of operations. Therefore, businesses should reduce their impact. They can do this by correcting any disruptions as rapidly as possible and by mitigating the severity of the consequences. The question remains how businesses can manage that without increasing their inventory buffers.
This research is being conducted by the University of Groningen's Operations research group and the Centre for Operational Excellence (COPE), in cooperation with the Organisational Behaviour & Human Resource Management (HRM & OB) department. It is a four-year research project which aims to strengthen the resilience of businesses without loss of efficiency. It is a multi-disciplinary research which combines knowledge of supply chain management with insights derived from the behavioural sciences, in particular in regard of group decision-making. The example of a supplier who spots a disruption and may not be able to meet his delivery obligations towards a major customer as a result proves how important this is. Should the supplier report the potential delivery problems to the customer immediately or would it be better to wait until he is sure that he will be unable to supply? Alongside formal contacts in chains which may impact the way in which disruptions develop, there are also informal ones.
The research project has two aims:
Among other things, this research will answer the question whether, from the perspective of efficiency, it would be better for businesses to select one supplier (single sourcing) or contract various suppliers for the purpose of risk reduction (multiple sourcing). Another question is whether it is better to make decentralised or centralised decisions (in the form of 'control towers').
The research project has a four-year duration and will be conducted by one PhD student and two postdoctoral researchers. It is largely financed by the Dutch Organisation for Scientific Research (NWO) in the framework of the research programme Sustainable Logistics. Besides that, there are four companies which are participating in the project. FrieslandCampina would like to gain a greater insight into how this dairy company can act on the variety and unpredictability in milk supply. Waterbedrijf Groningen (the provincial water company) is taking part in the project because it wants to reduce the time households are forced to do without water during disruptions. Variass Electronics and Bosch Thermotechniek are manufacturers who aim to reduce the impact of disruptions in their supply chains, thanks to this research.
The research aims to bring about new coordination and decision-making structures which can be incorporated in designing supply chains. For this purpose, the research includes behavioural experiments in both laboratory and practice situations which answer the question how certain conditions, such as the distance between those involved, influence the decisions that businesses make. The outcomes will be taken on board in the development of a training tool which TNO will use for the purpose of training people how to react to disruptions.
Thom de Vries is conducting doctoral research at the University of Groningen on coordination processes in complex organisations. Part of his research focuses on the cooperation between the main rail operating company in the Netherlands, NS, and the company that manages Dutch railways, ProRail, in case of railway emergencies, including a defective switch or signal trouble. It is ProRail's job to correct such disruptions as quickly as possible, while NS must ensure that consequences for passengers are appropriately mitigated by making timetable changes and deploying buses, where applicable. 'A command & control centre in Utrecht has been set up for that purpose, which accommodates both ProRail and NS staff. The idea is that decision-making processes develop more smoothly when the people involved who work for these organisations are in close physical proximity', Mr de Vries said.
Mr De Vries interviewed twenty ProRail and NS employees and observed command & control centre staff during a week. He used video to conscientiously map the interaction patterns he saw. 'Analysis of disruption data has shown that the set-up of the command & control centre caused an average drop of 30% in the duration of disruptions. The observations show, though, that new problems arise when people work in closer proximity. This creates so much interaction that people are distracted from their core task, which is to solve disruptions. NS and ProRail acted on these observations by appointing a number of instructors who discuss the main measures that must be taken before the experts from both sides enter into consultations', Mr De Vries explained. When he has obtained his doctorate, he will start working as a part-time postdoctoral researcher and make a contribution to the research into strengthening logistic chain resilience. ‘In doing so, I am sure I will use the outcomes of this doctoral research again.’