Umbral Inclusivo de Gestión de las OSFPS Suspensas de la Provincia de

“If you are in supply chain management today, complexity is like a cancer that de- stroys supply chain efficiency and one that you have to fight”.224

Since supply chain complexity has several impacts on the performance of companies and it is expected that supply chain complexity will increase over the next couple of years225_, supply chain managers have to think about how to manage supply chain complexity, as complexity is an inherent part of supply chains and, when not properly managed leading to unnecessary costs and risks.226 _{To manage this complexity, companies are employing} supply chain complexity moderators.227 _{Consequently the implementation of supply chain} complexity moderators has the goal to affect the outcomes.

A study conducted by Deloitte says companies that are able to manage supply chain complexity make up to 73% more in profits.228 _{According a study made by A.T. Kearny} companies are able to increase their EBIT by 3-5% when they actively manage their sup- ply chain complexity.229 _{As mentioned earlier it is important for companies to have a certain} level of supply chain complexity to remain competitive or increase performance (e.g. a company may take on customers whose demand is unpredictable – which increases sup- ply chain complexity – but sales margins are considerably higher than orders from cus- tomers with a more predictable demand230)231_{).Therefore, addressing supply chain complex-} ity with the right strategies is a vital task of every supply chain manager. To restate, sup- ply chain complexity can occur among different parts of the supply chain and is driven by various factors. Facing these aspects Kohn/McGinnis state that complexity has to be managed internally, externally, and interactively.232 _{This section should give an overview of} which factors are important when managing supply chain complexity. Additionally supply chain complexity coping strategies are presented.

There are some general approaches on how to deal with supply chain complexity. The tasks for complexity management provided by Kirchhoff et al. are:233

224 _{See Gilmore, 2008.}

225 _{See Jäger et al., 2014.} 226 See Christopher, 2011. 227 See March/Shapira, 1987 228 See Deloitte, 2003. 229

See Scheiter et al., 2007. 230 _{See Bozarth et al., 2009.} 231

See Aelker et al., 2013. 232

See Kohn/McGinnis, 1997. 233

 Considering and solving problems resulting from the variety, the range, and the dynamics of internal and external elements and relations of the company and the environment

 Observing the problems of actors subjectively dealing with complexity, expressing themselves in thinking and behavior patterns, perceptions, decisions, and actions as well as in management and organizations structures

 Integrating different individual measures of dealing with complexity into a synerget- ic framework

Kaluza et al. provide a strategy matrix. In their study the differentiation among four basic strategies for managing complexity is made, namely reducing, avoiding, controlling, and accepting complexity. The application of the strategies depends on:234

 Potential impact of integrated complexity management on supply chain perfor- mance

 Effort for realization of integrated supply chain management

Figure 7: Strategies for managing supply chain complexity by Kaluza et al.235

Although these general recommendations are good orientation points a lack for practica- bility in regard to supply chain decisions in business life exists.

A similar approach was undertaken by Serdarasan236 _{stating that the complexity in a sup-} ply chain is either necessary or unnecessary and the complexity is already in the system or will occur in the future. Derived from this the following 2x2 matrix is developed.

234

See Kaluza et al., 2007. 235

See Kaluza et al., 2007 236

Figure 8: Strategy for managing supply chain complexity by Serdarasan237

As already mentioned some authors suggest that one way to handle supply chain com- plexity is to reduce it.238239 _{Given that not all sources of supply chain complexity can be re-} duced easily, companies have to consider strategies to accommodate high levels of com- plexity.240241 _{In the literature several strategies that moderate supply chain complexity are} discussed.242 237 See Serdarasan, 2013. 238 See Childerhouse/Towill, 2006. 239 _{See Hoole, 2005.} 240

See Bozarth et al., 2009. 241

See de Leeuw et al., 2013. 242

Author Type of complexity Type of research Strategy

Funk243 _{(product) logistics}

complexity

Conceptual Co-ordination mechanisms (internal teams working together with suppliers/informal and formal communication of teams; cross- training; visible management; adequate performance measure- ment systems)

Stock et al.244 _{Logistics complexity Quantitative survey Logistics integration (internal and external)}

Manuj/Sahin245 _{Supply chain com-}

plexity

Grounded theory Strategic: scope and boundary management; cultural alignment, integration, collaboration, relationship management; eliminating non-value added steps; information systems strategy; knowledge management

Human cognitive abilities: experience; training; problem under- standing

Tactical: buffers; flexible workforce de Leeuw et al.246 _{Supply chain com-}

plexity

Case study Inventory; resource flexibility; information exchange; rationaliza- tion; outsourcing; isolate activities

Perona/Miragliotta247 _{Manufacturing and}

logistics complexity

Case study Partnerships with suppliers; product modularization; information systems for production planning and control

Blome et al.248 _{Product and supply}

complexity

Quantitative survey Internal and external knowledge transfer

Masson et al. Supply chain com- Case study Market sensitivity, postponement strategies, information-sharing

243 _{See Funk, 1995.} 244

See Stock et al., 2000.

245

See Manuj/Sahin, 2011.

246

See de Leeuw et al., 2013.

247

See Perona/Miragliotta, 2004.

plexity

Gimenez et al. Supply complexity Quantitative survey Supply chain integration (cooperative behavior, structured com- munication)

Tavares Thome et al. Manufacturing com- plexity

Quantitative survey Meetings and organization, measurement, technological integra- tion

Closs et al.249 _{Product complexity Case study Product/technology portfolio strategy; organization and govern-}

ance regarding complexity decisions; product design and deci- sion support systems

Hoole250 _{Supply chain com-}

plexity

Theoretical frame- work

Supply chain configuration (e.g. reduce distribution layers); sup- ply chain management practices (e.g. postponement); supply chain relationships (e.g. supply chain collaboration); supply chain organization (e.g. vendor managed inventory); supply chain sys- tems (e.g. information systems)

Table 5: Strategies to cope with complexity

249

See Closs et al., 2008.

In general it can be concluded that the management of supply chain complexity is an im- portant task of supply chain managers. Due to many various complexity components that make up supply chain complexity supply chain managers have to be aware of many dif- ferent strategies coping with different complexity components of supply chain complexity. To manage supply chain complexity successfully those strategies have to be evaluated and designed to manage supply chain complexity as a whole. Therefore proposition 3 of this thesis is:

P4: Supply chain complexity strategies negatively moderate the relationship be- tween supply chain complexity and effective supply chain complexity.

For future research it will be necessary to integrate strategies coping with different com- plexity components into a comprehensive model of supply chain complexity and quantita- tively investigate the relationships.