DOI: http://dx.doi.org/10.15446/dyna.v83n198.44532

Characterization of supply chain problems

Caracterización de las problemáticas de la cadena de abastecimiento

 

Rafael Guillermo García-Cáceres ^a & John Wilmer Escobar ^b

 

^a Universitaria Agustiniana - Uniagustiniana, Bogota, Colombia. rafael.garcia@uniagustiniana.edu.co
^b Departamento de Contabilidad y Finanzas, Universidad del Valle, Cali, Colombia. john.wilmer.escobar@correounivalle.edu.co

 

Received: July 22^th, 2014. Received in revised form: January 16^th, 2016. Accepted: April 12^th, 2016.

 

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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Abstract
The current contribution intends to identify, characterize and provide context to the most usual supply chain problems. One hundred and twenty three SC problems were identified and addressed in a specific area that locates them within the context of the fundamental SC components. The conceptual framework developed here identifies different degrees of similarity among SC problems. Finally, as a practical example, the production scheduling problem is characterized. By making the interactions among SC problems and the implications of the available decisions that are likely to solve them clear, the present contribution is not only a useful scorecard for decision makers, but it is also an upgraded conceptual development for theoreticians on the topic. As they are the central object of business competitiveness, SC improvements such as the present one are greatly valuable in terms of the social and economic profit of more efficient chains, sustainable organizations and wealthy stakeholders.

Keywords: supply chain management; logistics.

Resumen
El trabajo identifica 123 problemáticas cada una de las cuales es vinculada en la estructura mediante una notación. Para ilustrar el desarrollo de trabajos futuros se usa como ejemplo de caracterización el problema de programación de la producción. La estructura aquí definida establece una base que facilita el despliegue teórico de nuevos desarrollos en gerencia de la cadena de abastecimiento y a su vez facilita la labor de los tomadores de decisión. El trabajo representa un esfuerzo por establecer una visión holística para el estudio de la cadena y su mejoramiento en términos de competitividad y sostenibilidad en pro del beneficio de sus stakeholders.

Palabras clave: gerencia de la cadena de abastecimiento; logística.

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1. Introduction

The Supply Chain (SC) can be seen as an integrated process in which raw materials are transformed into a final product that is delivered to the consumer through distribution centers, retailers or by both [1]. The SC has traditionally been understood as having three stages, namely suppliers (related to procurement), manufacturers (production) and retailers - consumers (delivery). Each of these stages may take place at several facilities or companies distributed in echelons, which are homogeneous groups of specific facilities [2]. Companies and materials within the SC, as well as the information and financial resources flowing through them, are integrated in such a way that changes in one of them affect the performance of the whole chain [1,3].

The importance of the SC lies in its comprehensive and holistic character, which intends to generate and add value. The possibilities of improving the SC are related to effectively managing competitiveness, an aspect the remarkable impact of which has made it object that is sought to constantly be improved. SC management seeks to impact value generation by promoting both efficiency and customer service, which implies component operation and coordination improvement.

Supply chain management (SCM) promotes the efficient planning, execution and control of these systems' operations. The SC is currently becoming more and more complex because of continuous changes in customer needs, the emergence of a global economy and, overall, because the demands set on its performance have been increasing due to rapid escalation of competitiveness; all of these constitute a major management challenge. SCM encompasses raw material storage and movement, stock processing, and finished product handling until final delivery [4,5]. It always wants to benefit the stakeholders and efficiently fulfill the chain's purpose.

One of the main objectives of SCM is promoting SC performance improvement. Deficiencies in problem identification and in measuring the performance of solutions have been recognized as being some of the main current limitations of the management processes [6,7]. Conversely, improvements in troublesome areas have been found to improve the whole system [8].

SCM requires a deep understanding of the problems and implications of the SC. Thus, establishing an effective SCM system requires the fundamental characterization of an adequate decision framework to face SC problems, which is actually a basic scorecard that allows for broad contextual vision and controlled and effective management. From this current work's standpoint, the control of SC processes implies that the relation between the different problems they deal with be determined [9]. The SC problems are present at three decision levels, namely strategic, tactical and operational. Strategy influences higher decision levels, frequently requiring thorough research into areas such as business policy, financial planning, competitiveness and organizational goal achievement. Tactical problems deals with two functions: the assignation of resources and the development of strategic objectives. Problem solving at this level requires valuable information about middle level decision management. In turn, the solution to operational problems requires precise data to evaluate the impact of those decisions taken by low-level administrative personnel. This paper intends to develop a comprehensive framework for the decision-making of specific SC problems. This framework allows not only for SC problems to be determined together with their implications and interrelations, but also it identifies gaps in the literature on SCM and provides an new approach to solving them. After a thorough literature review, the first part of the paper defines the fundamental units of the SC, while the second part introduces the characterization of potential SC problems within the framework mentioned.

 

2. State of the art

We conducted a thorough literature search on the SC problems in question, and we found 82 relevant books from the 1993-2011 period. These are shown in Table 1.

In summary, these works present concepts, definitions, functionalities, planning processes and case developments, among other considerations. Nevertheless, none of them includes a framework that allows the problems confronted by the SC to be identified and organized.

According to the literature review presented in Table 2, the most frequent problems that are associated with the SC are: (i) customer satisfaction, (ii) delivery management, and (iii) costs/finances. The least covered areas are those dealing with markets and production.

A few works cover the three stages of the SC (delivery, manufacturing and procurement). When they do, they usually focus on a specific logistic or manufacturing area [8,10-12]. Table 3 classifies SCM contributions according to the stage of the chain they deal with, namely customers, suppliers or internal functioning of the company.

The work of [24] identifies a hierarchy of decisions within the SC and analyzes the relations between them, without specifying the associated problem. The said hierarchy, which is further developed throughout this paper through additional dimensions is comprised of: (i) necessary previous conditions for a given choice (upstream decisions); (ii) considerations on the impact of some decisions on others (downstream decisions); and (iii) an approach to the information required by the process. However, the fact it focuses on decisions and not on the challenges faced by the system certainly limits its scope. However, these authors' work constitutes part of the current development, which includes the focus of this paper.

The literature review revealed the lack of studies that seek to develop a broad and comprehensive perspective of the SC and cover a significant part of its components. Likewise, no works have been found that propose a formal structure capable of characterizing the SC's problems. Such a structure would be useful in those cases whose specificities call for a more detailed study; this is when more formal and technical decision-making proves to be useful.

 

3. Characterization of supply chain problems

The current SC problem is divided in two parts: the first one identifies a series of logistic units within the chain and proposes a corresponding notation system. The second one outlines troublesome instances and, from a SC standpoint, introduces the notation that situates a given problem within the chain.

3.1. Fundamental units

The fundamental units are the entities through which the SC actually performs, that is, the objects of their activity and decisions. In turn, these fundamental units address type, quantity and size specifications of the goods (or services) produced by the chain, as well as the location of the productive activities in question. The fundamental units identified by the current research are: the SC itself, companies, echelons, stages, links and facilities. Table 4 presents the notation system in question.

3.2. Problem set featuring notation

Pursuing the social objective of the SC implies adequate management of its constitutive units and diverse functions, as well as the timely making of decisions in terms of problematic aspects. Many of these problems are associated with each SC unit - they are organizational and functional in nature. Two concepts have been coined to characterize them, namely level of decision [25,26] and characteristic matter: product flows (both, finished products and raw materials) and information flows [27]. The independent or coupled application of these concepts modulates the approach to the specific problems faced by the SC.

Decision-making within the SC is based on a clear notion of the specific nature of the problems that are to be solved. According to Decision Theory, this implies conceiving a structure made up of alternatives and associated criteria in which the latter intends to describe and even weigh up the former. A qualified decision making process must also include a mechanism to measure or estimate the criteria and look after the internal consistency of the information and the correct selection of the Decision Support System (DSS).

Although the logistic unit, the organizational function and the characterizing concepts are the main components used to define a problem, they are not the only ones. The full set of problem featuring components is the following: the elemental unit (U), the logistic functions (F), the characterizing concept defining a given set of problems (C), the levels of decision (N) and/or the characteristic flows (L), the decision (D), the previous conditions (B), the impact (I) and the descriptive alternatives, criteria and/or assumptions (J). Among these components, U and F are independent; C depends on the latter two and D depends on all the three of these, while B, I, and J depend on all of the above mentioned components.

This set of characterizing features intends to provide a comprehensive framework to fully characterize the SC problems in their own context, through the following detailed notation: Pⁱ_{(U, F, C, D, B, I, J)},

Where super index i is the label of a particular problem P. Although not all the different fields of a particular P label (U, F, C, D, B, I, J) are always active, the first four ones must be. Table 5 shows the Ps associated with the SC's logistic functions, as reported in the literature review.

As an example, we shall analyze P71: the scheduling problem, which has been an object of study for decades and remains a very active research field. Several reviews have contributed to this field [28-32], which include more than 200 papers that featuring this P:

U: Plant
F: Production
C: Operational (associated to N: the decision level)
D: Decision (scheduling)
B: Production planning, layout, routing of materials
I: Carrier type, handling of materials, determination of Stock Keep Units - SKUs)
J: Determined from notation by [33]:

The alternatives are: - work stations combinations (and associated machines) used to undertake the works (items) that could satisfy the problem's requirements.

Objective (makespan criteria to be optimized): total finishing time, total delay, total weighted delay (taking into account the relative importance of the client).

Parameters:

• Number of stations
• Number and homogeneity of parallel machines per station.
• Processing times

Assumptions and restrictions:

• Any work that can only be executed by one machine at a time.
• Any machine that can only execute one work at a time.
• Machines are constantly available.
• Any work that can and should only be processed once at any station.
• No work can be dismounted from the machine before it has been finished.
• Storage capacity among stations is unlimited.
• All works must follow the same route: from station 1 to station 2, and so on.
• The sequence in which works are processed must be the same at all stations.
• From time zero, all works are available to enter the sequence
• DSS has traditionally corresponded to heuristics and metaheuristics that have adequate CPU time solutions but only moderate acceptable optimality gaps.

The following section presents the decision framework in which each one of the problems is characterized. For practical purposes, Table 5 does not include elements B, I and J, which can be found in [24]. The table shows that the most frequent characterizing concept is "level", while "flow" is rarely taken into account. Through the literature review we detected 123 Ps that are associated with five fundamental units (that are in turn related to facilities), three decision levels, 12 logistic functions and the 48 decisions determined by [24]. Table 5 shows the problem featuring framework that was determined:

Table 5 also shows how any given decision is often associated with the same logistic function (column 4), but not always with the same decision level (column 3). Only 11 decisions (8, 19, 20, 23, 28, 29, 30, 31, 37, 38 and 42) hold univocal relations with Ps, whereas the rest are associated with more than one P, but never exceed five. Table 6 shows the relation between the Ps and their components. Columns 1 and 3 show the SC components, while columns 2 and 4 present the typologies of each component, their labels, and the number of related problems.

Finally, the concept of supply chain orientation (SCO) has been recently introduced as a philosophical approach to the implications of flow management in the supply chain [34]. However, flow management has been addressed independently of this philosophical approach, as can be observed in Arrupindi et al.'s work (1999). This can also be seen in Li et al.'s (2011) work on financial flow risk. SCO has been conceived as "the recognition, on the part of companies, of the systemic and strategic implications of the activities and processes involved in the management of the diverse flows of a supply chain". This concept has been slowly making its way in practical contexts, and has ended up becoming a significant SCM support. In this regard, one of the most relevant achievements has been the study of the implications of SCO on the procurement function through Key Supplier Relationship Management (KSRM). This approach has led to better Organizational Buying Effectiveness (OBE) as a way of measuring effective procurement behavior. SCO has also been incorporated to the supply chain structure through emphasizing the willingness of the companies to conceive the structure as an integrated entity [36]. Additionally, SCO has been used to manage uncertainty in business environments, in which it has been applied to the development of more efficient and flexible supply chains [37]; and to promoting a better willingness to "satisfy its needs by traveling along a common path" [38] among the supply chain agents. The Supply Chain Orientation concept and its framework have been developed since twenty-first century [39]. To summarize, the study of supply chain flow issues identified in the current work corresponds to the SCO paradigm. Finally, the characterization of supply chains as a research tendency has only emerged in the last decade [40].

 

4. Conclusions

The current paper proposes a SC problem featuring a holistic framework that is intended as a SC management and organization support tool, in which each P conveys an issue to be dealt with in the SC. This particular notation system not only allows the P in question to be specified within the context it shares with other SC aspects, but it also synthesizes its most outstanding features and sets the foundations for future developments in technical decision-making. This implies that the development of information parameterization systems allow adequate links between the inputs and outputs that modulate the SC P featuring framework. Future research perspectives are the following: the characterization of the Ps that are studied here or that may be identified in the future; the introduction of new Ps and elements into previously defined Ps; the development of specialized DSSs for SC issues; and the development of methodologies to identify P featuring parameters.

 

Acknowledgements

The work presented in this paper was supported by the Colombian Department of Science, Technology and Innovation (Colciencias) under grant 369-2012 (project # 1220-569-35242) and by the Escuela Colombiana de Ingeniería Julio Garavito.

 

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R.G. García-Cáceres, is Ph.D, MSc, II., Vice-president for Research - Universitaria Agustiniana (UNIAGUSTINIANA), Bogota Colombia. ORCID: 0000-0003-0902-1038

J.W. Escobar, is Ph.D., MSc, II., Associated professor, Universidad del Valle, Cali, Colombia. ORCID: 0000-0001-6175-955