Study finds successful supply chain disruption strategies include integration with suppliers, customers and other supply chain entities

Source: Iowa State University

Oct 19, 2010

Supply chain management can go a long way in determining the fate of a business. Just ask any businesses that were impacted by the disruption of seafood supply during the BP oil spill in the Gulf of Mexico.

And yet according to three Iowa State University (ISU) College of Business professors who have studied supply chain security and its effectiveness in businesses nationwide, research shows that large companies encounter a major supply chain disruption every four to five years on average. That's why businesses have been taking even greater strides to protect their supply chains since the 9/11 terrorist attacks, according to three Iowa State University College of Business professors who have studied supply chain security and its effectiveness in businesses nationwide.

Their new study of managers from 69 companies, which will be published in an upcoming issue of the Journal of Business Logistics, found that having a clear strategy is far more valuable in perceived effectiveness than either availability of resources or management support. So don't just throw money at the security problem, they say.

"We definitely thought we would find results saying, 'the more resources you have, the better you're going to feel about perceived effectiveness,'" said Bobby Martens, an ISU assistant professor of supply chain management and lead author in the study. "One of the things that this perhaps says is that companies may be struggling more with how to deploy those resources to enhance their supply chain security."

Martens collaborated with fellow Iowa State supply chain management professors Mike Crum and Dick Poist on the study.

The researchers first identified businesses to survey from among the membership of both the National Cargo Security Council and the Warehouse Education and Research Council. Their final sample of companies included manufacturers (35), wholesale distributors (23) and retailers or direct-market companies (11). Approximately half of the respondents had food-grade product.

Martens says they surveyed the perceived highest ranking official in the company who had knowledge of his or her firm's supply chain.

"There's been a lot of theory and thought on what factors influence the establishment of effective security for the supply chain, but it's never been empirically tested — in any way like we did, at least," Martens said.

"One of our major findings was the role of internal and external integration in security — that is, how firms include other areas within the organization when developing their security plans and how firms work with their suppliers, customers and other supply-chain entities," he continued. "The more companies exhibited internal and external integration, the happier they were with their security."

The researchers also found that "proactive motivation" had a significant influence on companies' satisfaction with their supply chain security.

"Effective security initiatives more often than not produce non-security benefits for the firm as well, such as improved operating efficiencies and more dependable and responsive service to customers," said Crum, who also serves as associate dean of graduate programs in the College of Business. "A good example of this is increased visibility and better monitoring activities across the supply chain."

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