Unravelling the Complexity of Supply Chain Volatility Management

Abstract

Managing supply chain volatility (SCV) is often identified as one of the major challenges of modern supply chain management. While research has predominantly focused on describing the multidimensional areas of SCV and its negative impacts, clear guidelines on how to manage SCV for efficiency, and prioritize the areas on which to focus, are sparse. This study seeks to fill this gap in the research by: (1) assessing the relative impact of SCV sources, and (2) proposing means to deal with them. Based on an Analytical Hierarchy Process conducted with 17 SCM practitioners, the paper assesses the relative impact of sources of SCV, and further contextualizes them according to factors such as product lead time and production strategy, providing more fine-grained insights for SC managers seeking to manage SCV. Subsequently, the paper applies the Nominal Group Technique with the same group of practitioners in order to identify and condense strategies for dealing with the most impactful sources of SCV (intra-organizational misalignment, inaccurate forecasting, long lead times, erratic behavior of decision makers in the supply chain, erratic behavior of customers, and high level of competition), leading to a set of 44 SCV-management strategies.

Assessing the current state of supply chain volatility: development of a benchmarking instrument

“…Therefore, the study builds upon the conceptualization of Nitsche & Durach (2018) with the aim of assessing the state of volatility for the first four dimensions of SCV. The fifth dimension of SCV -institutional and environmental volatility -was excluded from the benchmarking instrument due to its high context dependency, as argued by Nitsche (2018). Moreover, to make the practical application of the instrument more feasible, we decided to limit the number of variables for each dimension.…”

“…Moreover, to make the practical application of the instrument more feasible, we decided to limit the number of variables for each dimension. Therefore, the measurement of each dimension focuses on the most pressing sources of volatility in the respective dimension, as proposed by Nitsche (2018). Development of the model followed an iterative process.…”

“…Organizational volatility is mainly caused by intra-organizational misalignment and inaccurate forecasting (Nitsche, 2018). Based on a survey among 88 manufacturing companies, Wagner et al (2014) investigated how companies can align their organization by means of sales and operations planning (S&OP).…”

“…Behavioral volatility is induced by erratic behavior of customers as well as erratic behavior of decision makers in the SC (Nitsche & Durach, 2018). Both sources have been ranked among the most pressing sources of SCV by SC managers (Nitsche, 2018). To assess both sources, qualitative measures have been defined for the user of the benchmarking instrument to rate via a self-assessment exercise.…”

“…Since volatility has been a challenge across several decades, researchers have, on the one hand, focused on describing the multidimensional sources of SCV and, on the other, developed management strategies for dealing with it. However, to efficiently manage volatility, SC managers need to assess the impact of those SCV sources on their particular SC first, before initiating management strategies (Nitsche, 2018).…”