The Exploration of Attributes Aligning Supply Chain Strategy & Resilience Execution
By
Alexander Randon Cope
B.S. Mechanical Engineering, Oregon Institute of Technology, 2006
M.S. Mechanical Engineering, Portland State University, 2014
MASSACHUSETTS INSTITUTE
OF TEC-NqCLCGY
And
JUL 17 2014
Liqing Yuan
B.S. Management, Shanghai Jiao Tong University, 2008
LIBRARIES
Submitted to the Engineering Systems Division in Partial Fulfillment of the
Requirements for the Degree of
Master of Engineering in Logistics
at the
Massachusetts Institute of Technology
June 2014
02014 Alexander Randon Cope and Liqing Yuan. All rights reserved.
The authors hereby grant to MIT permission to reproduce and to distribute publicly
paper and electronic copies of this thesis document in whole or in part in any medium now
known or hereafter created.
Signature of Author
redacted .........................................................
Signature
S....
Mastefr of Engineering in Logistics Program, Engineering Systems Division
May 7, 2014
Signature redacted
Signature of A uthor .......................,........................-V.........4.............................................................
Master of FEngineering in Logistics Program, Engineering Systems Division
Signature redactedMy7,24
..........................................................................
Certified by ................
James Blayney Rice, Jr.
Deput y Director, Center for Transportation and Logistics
Thesis Supervisor
Signature redacted
A ccepted by ...
.................................................................................
Yossi Sheffi
Director, Center for Transportation and Logistics
Elisha Gray II Professor of Engineering Systems
Professor, Civil and Environmental Engineering
The Exploration of Attributes Aligning Supply Chain Strategy & Resilience Execution
By
Alexander Randon Cope
And
Liqing Yuan
Submitted to the Engineering Systems Division in Partial Fulfillment of the
Requirements for the Degree of
Master of Engineering in Logistics
at the
Massachusetts Institute of Technology
ABSTRACT
This research aims to characterize and measure hierarchical, functional and geographical
alignment within an organization in an effort to understand the individual's attributes of
resilience within the broader organization's business strategy.
In partnership with a multinational chemicals manufacturer, data was collected from product
supply organizations through interviews, surveys and case discussions, in an effort to understand
resilience awareness and strategic alignment. The results are primarily used to quantify
differences between strategic direction set by executives and the tactical execution of individual
contributors. Secondary analysis examines correlations in responses, and further compares
results by segmenting respondents by level within the organization, tenure with the company,
functional role and cultural background. Data collected through this study identifies a difference
between the attitudes and perceptions of executives and those of individual contributors.
Understanding this misalignment is important as external research has found that there can be a
permanent market capitalization loss of 5-10% after an announcement of a major supply
disruption. Whether the disruption is due to a geological event or a political uprising, being
prepared to respond to such disruptions is critical in today's complex business environment.
Corporate culture, strategy, and people are the fundamental building blocks to ensuring
alignment across all levels of an organization, enabling a unified, systematic and effective
approach when responding to supply disruptions.
Thesis Supervisor: James Blayney Rice, Jr.
Title: Deputy Director, Center for Transportation and Logistics
2
ACKNOWLEDGEMENTS
We would like to thank the entire CTL faculty for a very challenging yet extremely motivating
year in the SCM program. Specifically, thank you to Dr. Bruce Arntzen, Jennifer Ademi, Mark
Colvin and Allison Sturchio for coordinating and guiding the entire cohort through this
whirlwind process.
We thank Jim Rice for advising our research, Josh Merrill, Mauricio Velasquez and the
entire Dow AgroSciences team for their corporate sponsorship, and Lenore Myka for helping to
ensure that this paper both complies with APA formatting guidelines and is presented in the most
concise and impactful way possible.
On behalf of Alexander Cope: Thank you to my beloved parents, Thomas Charles Cope
and Molly Alexander, for raising me with a sense of pride, thoroughness, accountability, and
most importantly the self-realization of the importance of dedication, in all aspects of life. To
Ruben Rodriguez-Torres and William Berry, for your guidance, coaching, and mentorship over
the past 10 years - You were taken far too early, but you imprinted my life with your kindness
and friendship. I miss you both dearly. And finally to Debby Green, thank you for your love and
support through this challenging year, I wouldn't be here without you.
On behalf of Liqing Yuan: Thank you to my parents, Peizhu Chen and Xiaoming Yuan
for your continued love and support throughout my life; I wouldn't be where I am without you. I
would also like to thank Xieshan Li, your support over the last ten years has had significant and
positive impacts on my life. Finally, last but not least, I want to thank my dear friend Xiaoqi
Jiang for your academic guidance and sincere friendship.
3
TABLE OF CONTENTS
ABSTRACT................................
-. ---------.............
---.................................................................
ACKNOWLEDGEMENTS.....................................................................................................
3
LIST OF FIGURES........................................................................................................................
6
LIST OF TABLES..........................................................................................................................
7
2
1. INTRODUCTION............................................
........ 8
1.1 - Problem Statement & Motivation: .....................................................................................
8
1.2 - Research Scope:..........................................................................................................
9
1.3 - Limitations of Research:...............................................................................................
11
1.4 - Thesis Structure:...............................................................................................................
12
2. LITERATURE REVIEW ......................................................................................................
13
2.1 - Business Trends Increasing Uncertainty ......................................................................
2.2 - Identifying and Mapping Vulnerabilities:....................................................................
13
2.3 - CTL's Global Supply Chain Professional Survey: ......................................................
2.4 - Creating a Resilient Supply Chain:...............................................................................
15
3. M E TH O D S ..............................................................................................................................
13
16
19
3.1 - Critical Behavioral Attributes:......................................................................................
19
3.2 - Supply Chain Professional Interviews: ........................................................................
3.3 - Internet-Based Product Supply Effectiveness Survey: .................................................
20
3.3.1 - Survey Design & Segmentation: ............................................................................
3.3.2 - Data Analysis Overview: ...........................................................................................
3.4 - Supply Disruption Case Analysis: ...............................................................................
4. R E SULT S ................................................................................................................................
22
23
28
29
30
4.1 - Internet Survey Response Statistics:.............................................................................
4.2 - Executive Strategy versus Tactical Execution:.............................................................
30
4.3 - Secondary Findings & Data Correlations: ...................................................................
4.3.1 - Role Importance and the Value of Proactive Planning: ........................................
41
4.3.2 - Product Supply Disruption Distribution:...............................................................
42
4.3.3 - Proactiveness versus Reactiveness by Function & Geography:............................
4.3.4 - Communication Comfort and the Frequency of Disruptions: ...............................
43
4
33
41
45
5. D ISC U SSIO N ..........................
.. . . . ----........... . ..........................................................
5.1 - Exploring Variations between Segments:....................................................................
5.2 - Hypotheses Disproved: ....................................................................................................
46
46
49
5.3 - The Blueprint of a Resilient Employee:.........................................................................
6. CONCLUSIONS & SUGGESTIONS......................................................................................
52
REFEREN CE S ........................................................................................................................
57
GLOSSARY OF TERMS.............................................................................................................
APPENDIX A - Supply Chain Professional Interview Questionnaire
..................
59
61
APPENDIX B - Interview Results Summary Report ...............................................................
APPENDIX C - Export of Internet-Based Survey ....................................................................
62
APPENDIX D - Heatmap and Dendrogram in R....................................................................
72
5
54
65
LIST OF FIGURES
FIGURE 1 - Survey Response Count and Response Rate by Geographic Region................... 31
FIGURE 2 - Response Count by Function and Level...............................................................
32
FIGURE 3 - Response Count by Tenure and Service Region .................................................
33
FIGURE 4 - Attitudes & Perceptions of High versus Low-Level Employees ........................ 34
FIGURE 5 - Current versus Expected Proactiveness of High and Low-Level Employees......... 35
FIGURE 6 - Percent of Time Spent Working on Product Supply Improvement Projects........ 36
FIGURE 7 - High versus Low-Level Employee Control over Phases of Product Supply .....
FIGURE 8 - High versus Low-Level Employee Influence over Phases of Product Supply........
FIGURE 9 - Effectiveness of Product Supply Leader by Scope of Group..............................
FIGURE 10 - Business Continuity Plan Documentation by Employee Level.........................
37
37
39
39
FIGURE 11 - Comfort in Communicating with External and Internal Organizations ............ 40
FIGURE 12 - Role Importance versus the Value of Planning Ahead....................................... 42
FIGURE 13 - Distribution of Respondents Product Supply Disruption Risk Results............. 43
FIGURE 14 - Current versus Expected Proactiveness Ratings by Function ........................... 44
FIGURE 15 - Current versus Expected Proactiveness Ratings by Geography........................ 45
FIGURE 16 - Comfort in Communicating versus the Frequency of Disruptions.................... 45
FIGURE 17 - Comparison of Expected Prevention versus Response ...................................... 49
FIGURE 18 - Prevention and Planning Ahead by Service Region...........................................
51
6
LIST OF TABLES
TABLE 1 - Job Descriptions of Interviewed Employees.........................................................
TABLE 2 - DAS Job Titles Mapped to Function and Level Segments....................................
21
TABLE 3 - Highest Frequency Disruption by Employee Level.............................................
TABLE 4 - Correlation of Respondent's Characteristic Attributes of Resilience...................
41
7
26
53
1. INTRODUCTION
1.1 - Problem Statement & Motivation:
As corporations continue to evolve and mature, physical supply networks become increasingly
complex, making business risk management critical to ensuring product supply. The concept of
risk management, however, is not new. Take for example the 14t century Byzantine farmer
who, in preparation for market considered multiple risk factors: the weather's impact on his
ability to sell product, how much inventory to carry given consumer demand, and the
competitive threat of similar producers/retailers. All of these, and many more, are tradeoffs that
the farmer managed while making decisions about how to run his business. Today, however,
business is increasingly complex, both in physical supply/distribution networks and
organizational structures. As complexity increases, discontinuities between strategy and
execution become evident and the alignment between corporate strategy and tactical execution is
reduced.
Post-industrial economies are those that generate more wealth from the service sector
than the manufacturing sector. As countries shift into the post-industrial age, product design,
development, and manufacturing introduce supply risk through complexities such as
globalization, horizontal integration, and rapid product obsolescence. In the 2 1st century an array
of both internal and external complexities are converging, making supply chain risk management
and uncertainty mapping important considerations for the management of physical goods
manufacturing and distribution companies. To underscore this importance, data published by the
World Economic Forum (2013) suggests that a company's total market capitalization decreased
by 7% on average during and immediately after a significant product supply disruption (p. 33).
8
This research, sponsored by Dow AgroSciences (DAS), a subsidiary of the Dow
Chemical Company, evaluates challenges associated with supply chain risk management,
including common uncertainties and best-practice approaches that government, corporations, and
academic institutions are taking to effectively manage and minimize risk exposure. Specifically,
this research explores attributes of employees, teams, and broader organizations to understand
differences between executives who set strategic direction and tactical employees who execute
executive strategy. The result will be both a qualitative analysis of DAS's supply chain risk
management practices and a series of suggestions to be used to enhance or create a more
balanced and resilient supply chain.
1.2 - Research Scope:
As businesses and organizations mature, operations professionals help to realize efficiencies and
cost savings through efforts such as integrated demand planning (S&OP), distribution network
optimization, stock keeping unit (SKU) rationalization and other targeted activities. In most
cases these activities' primary objective is to lower total cost; however, oftentimes the side
effects are not thoroughly considered prior to implementation. One of the unintended
consequences of a supply chain optimization or cost savings activity can be an increased
vulnerability to costly disruptions. Of course, this is not always the case and a company's
susceptibility to risks could in fact be greater prior to a supply chain project. However, research
and experience suggests that as companies assess their supply chains, they often do not look at
them through the lens of risk management and are prone to make decisions that sacrifice longterm health and stability for short-term profits.
9
One hypothesis as to why this occurs is due to the lack of a standardized risk assessment
tool, a tool used to measure, assess, compare and project the risk exposure of a company and the
financial impact of these risks. While many cross-industry organizations and academic
institutions have developed models by which to assess supply chain resilience and risk
management, research suggests that corporate adoption is limited and often overlooked in favor
of more tangible activities that produce almost immediate value.
A competing hypothesis is simply that the complexity of assessing a multi-disciplinary
problem and implementing a solution is not within a single individual's scope of control.
Today's organizations have sales leaders, information technology leaders, supply chain leaders
and manufacturing leaders, but product supply continuity requires that all of these organizations
are aligned when too often they are not. The Supply Chain Risk Leadership Council' (SCRLC)
suggests that there are five critical areas of focus when establishing a world-class resilient supply
chain. Those five areas are: Leadership, Planning, Implementation, Evaluation, and
Improvement. Affecting change across all of these areas can be overwhelming and requires an
individual commissioned to drive this change.
While researching this contribution to the topic of supply chain resilience, it has become
increasingly apparent that the single most important element of a resilient supply chain is the
people that form it. People are the building blocks of a corporation, and the culture, traditions
The Supply Chain Risk Leadership Council (SCRLC) is an industry consortia focused on developing tools and
processes to manage risks that can materially disrupt a supply chain. SCRLC is comprised of more than 30 member
companies and includes key partnerships with leading academic research institutions.
10
and processes that are developed are analogous to the mortar that holds the company together
through challenging times. In an. effort to evaluate the human component of supply chain
resilience, this research assesses the following attributes as a proxy for elements critical in
understanding human factors of resilience.
1. Employees' Perceptions & Attitudes Towards Their Employer
2. Corporate Leadership Structure & Communication Efficacy
3. Corporate Culture, Proactivity Versus Reactivity, & Employee Accountability
1.3 - Limitations of Research:
This research does not aim to explicitly address other facets of supply chain resilience in detail.
For example, protection against inventory stock-outs can be achieved by carrying more
inventories. While this concept and others are important to know when broadly assessing
product supply resilience, they are not within the primary scope of this research.
In addition to the aforementioned limitation, this research will not compare or benchmark
results found at DAS with other companies. Results collected and presented are independent of
any and all other data sets, whether or not they are referenced herein. This data will, however,
provide a directional assessment of the positivity or negativity of any one attribute, or a
combination of attributes assessed.
Finally, the data presented here will not attempt to quantify the resilience of DAS's
supply chain. Qualitative assessments with external data sets, as well as relative assessments
made within internal data sets may be prepared in an attempt to construct a scenario by which
DAS could improve their supply chain resilience.
11
1.4 - Thesis Structure:
This thesis is organized as follows: Chapter 2 reviews key pieces of supply chain resilience
literature that help to establish the context for our specific research focus. Chapter 3 outlines and
discusses the three primary methods by which data was collected and analyzed; this section also
provides the justification for methodologies employed. Chapter 4 details our research results by
addressing the primary research question, as well as examining corollary attributes within the
population or segment of the population. Chapter 5 presents an informed interpretation and
potential scenarios leading to results obtained. Chapter 6 offers a summary of the research and
key observations, as well as suggestions on how to improve and/or overcome challenges
associated with building a resilient supply chain.
12
2. LITERATURE REVIEW
2.1 - Business Trends Increasing Uncertainty:
A number of leading academic researchers, including Sheffi (2005), Christopher and Peck
(2004), and Croxton (2010) attribute supply chain uncertainty to external environmental factors,
including economic, geographic, political, and consumer related impacts. Unexpected events
and changes in these areas can quickly develop themselves into significant disruptions inhibiting
product supply. While not an all-encompassing list, common disruptions occur from natural
disasters, financial uncertainties (including currency devaluation), terrorist attacks, and shifts in
consumer demand. While most disruptions are not controlled by a specific group or
organization, the organization's ability to sense and respond quickly can be significantly
improved through investments in redundancy and flexibility (Sheffi, 2005).
Current research, however, does not adequately focus on internal factors affecting an
organization's ability to react to aforementioned uncertainties, specifically, those attributes that
are intrinsic to an organization and the individuals that comprise the organization. Research
conducted under this body of work will more thoroughly evaluate the individual within the
corporation and work to understand his/her critical decision making factors in context with the
broader corporation.
2.2 - Identifying and Mapping Vulnerabilities:
Maintaining business continuity throughout a disruption is critical to an organization's ability to
return to normal operation. The term "business continuity" for many years has been used to
describe a proactive planning process which can, at the time of a disruption, be utilized to
maintain a semblance of stability until normal operations have returned. The process of
13
proactive planning is important, and is used to identify vulnerabilities to potential disruptions.
Of the different planning phases, evaluating risks with a cross-functional team and classifying
them accordingly is one of the most valuable exercises. Identification and awareness often
prompt specific risk reduction activities, and having members from varying functional teams and
cultural backgrounds helps to provide a comprehensive assessment of vulnerabilities.
There are many processes that mature organizations use to both identify and classify
potential impacts. Both the military and NASA are credited with adopting and instituting Failure
Mode Effect Analysis (FMEA) as early as the 1950's ("Failure Mode and Effects Analysis",
n.d.); Nassim Taleb coined the term Black Swan Analysis which has developed a similar process
for corporate risk planning ("Black Swan Theory", n.d.); and Stanford's Albert Humphrey
developed the Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis tool in the 1960's
("SWOT Analysis", n.d.). Although the origins of these processes are different and typically are
applied to a specific business element, when used to identify risks they require the team to step
through common phases:
Identification - The most basic phase where a team, including subject matter experts that
may reside outside of the team, work together throughout an extended period to brainstorm
any and all potential risks affecting their ability to reach their common goal.
Impact Analysis - Once risks are identified, the team undergoes a guided process to assess
both the probability or the likelihood and the severity of the risk occurring. Categorization of
likelihood and severity occur on a weighted scale, which when multiplied together provide a
combined rating for each potential risk analyzed. It is important to note that this assessment
14
results in a quantitative ranking derived from qualitative analysis suggesting that this exercise
is highly objective and dependent on multiple environmental factors.
Ranking and "Drawing the Line" - The list of rated risks achieved through the impact
analysis process are then placed in ascending rank order. The mechanics of ordering risks is
straightforward, but defining what is above and below the line can be a challenge. Items
below the line refer to risks that the team acknowledges being exposed to but do not justify
investment in mitigation, due to the team's risk tolerance. Items above the line are staffed
and then mapped into specific projects which aim to reduce the likelihood, severity, or both,
and in turn increase the team's resilience in the event that the impact occurs.
Mature manufacturing and operations-minded organizations, characterized as "resilient"
by the SCRLC, employ an even more extensive process of evaluation. Specifically, a method for
quantifying resilience as a function of an organization's vulnerabilities and capabilities has been
developed and presented through the Ohio State University (Pettit, Fiksel, Croxton, 2010).
Although less mature and of course more time intensive, the process of assessing attributes,
vulnerabilities, and capabilities is an important complement to traditional product or operation
specific impact analysis.
2.3 - CTL's Global Supply Chain Professional Survey:
A study commissioned by the Massachusetts Institute of Technology, Center for Transportation
and Logistics (CTL) surveyed over 1,400 supply chain professionals across 70 countries
(Arntzen, 2010a). One component of the study's analysis focused on where companies should
invest their risk management resources: risk prevention through proactive planning versus risk
15
resilience, achieved through reactive response exercises. Twenty-nine percent of respondents
indicated that investment in prevention was more important than exercises in response, which
achieved 8% of responses (p. 5). While the majority of respondents acknowledged the
importance of proactive assessment, only 32% of respondents indicated that risk management
and continuity planning were embedded within their organization (Arntzen, 20 1Ob, p. 5). While
there are many reasons behind individual responses, the data viewed in aggregate suggests that
the concept and approach of supply chain risk management is still in its infancy, and in turn can
provide an opportunity for organizations to develop a competitive advantage in their supply
chain (Christopher, Peck, 2004).
2.4 - Creating a Resilient Supply Chain:
While identifying and mapping potential impacts is an important component in creating a
resilient supply chain, practical implementation is where the value of planning investments are
realized. Resiliency and redundancy come at an expense and it is important that an organization
balance risk and cost to maximize revenues and profitability. According to Sheffi (2005),
common approaches to build resilience in traditional supply chain networks are as follows:
Inventory Safety Stock - Buffer against fluctuations in consumer demand by carrying
increased product inventories.
Strategic and Dual Sourcing - Limit exposure to supplier vulnerability through strategic
sourcing, thoroughly vetting a supplier, or through dual sourcing where a backup supplier is
enabled and qualified at additional expense to the customer.
16
Intentionally Low Utilization - Design production facilities with capacity headroom, so that
fluctuations in local production capacities can be shifted in response to a disruption.
Insurance Policies - Liability, property, and other hazard insurance policies assist in
financial recovery from significant impacts, such as natural disasters or other accidents.
In addition to traditional risk mitigation techniques, corporate culture is becoming
increasingly important to fostering and developing employees who make thoughtful decisions
related to product supply. Lee and Whang (2003) suggest that "higher quality [employees and
products] can be obtained at lower costs through proper management [techniques] and
operational design" (p. 290). Edelman (2013) suggests that a positive and healthy corporate
culture can be explained with five C's: Core values, Co-creation, Celebration, Communication
and Commitment, and suggests that companies who focus on these attributes while seeking
employee engagement and feedback are significantly more likely to be successful. However,
research regarding the human component of supply chain resilience is, in our opinion,
undervalued relative to traditional risk mitigation techniques. Although Lee and Whang (2003),
and Benson (2005) have begun to assess the impact of organizations on supply chains, this thesis
will extend to understanding the individual within the supply chain.
While it is difficult to prescribe a "one size fits all" approach to risk management, it is
safe to say that today's successful resilience strategies are a convergence of traditional risk
management techniques with evaluative processes led by engaged and accountable employees.
Identifying and cultivating responsible employees that make thoughtful decisions with the best
interest of the organization in mind is extremely important to navigating today's uncertainties.
17
Where previous research has fallen short in understanding the individual within the supply chain
system, this work aims to uncover and interpret within the broader system, differences in an
individual's background, culture, and geographic location.
18
3. METHODS
3.1 - Critical Behavioral Attributes:
When observing a person within any environment, there are at any given time a multitude of
factors affecting their response to the environment or situation. Likewise, there are many factors
that affect how an individual interacts and operates within an organization, factors that are a
product of the person's past experiences and present disposition. The following, while not
exhaustive, outlines and explains the core attributes assessed when collecting data throughout
this research. This list was generated by reviewing relevant literature and discussing it with
DAS.
Employees' Perceptions & Attitudes Towards Their Employer - Topics within this
attribute focus on two primary areas. The first is centered on an individual's ability to add
value and be perceived to be critically important to the corporation. This can be measured
many ways and is important to helping ensure that an employee is satisfied with his/her work
and feels that his/her effort is appreciated. The second is the employee's satisfaction with
his/her employer, which includes many things but most importantly the corporation's
alignment with personal values, recognition, and compensation.
Corporate Leadership Structure & Communication Efficacy - This topic explores the
level of alignment between corporate leaders who establish a strategy and those who are
employed to execute the strategy. Communication is paramount in ensuring that the goals of
any group or organization are known and are receiving support, through decision making, at
all tiers of the organization.
19
-
Corporate Culture, Proactivity versus Reactivity & Employee Accountability
Corporate culture is critically important when working to understand how individuals are
motivated, recognized and incentivized. For example, is someone rewarded for fixing a
problem quickly after it has occurred or are they rewarded for ensuring that the problem
never occurs in the first place? The tension between being proactive and being reactive is as
much a trait of the corporate culture as it is a function of a company's balance sheet. A
healthy corporate culture reinforces positive employee values, such as transparency,
accountability, humility and confidence. Assessing an employee's perspective of his/her
company's culture is an important exercise in helping to determine the level of alignment
between an employee's perceptions and their expectations.
Data supporting each aforementioned attribute and contributing each in part to this thesis
was gathered during one of the following activities: Interviews of supply chain professionals, an
Internet-based survey of supply chain, procurement, manufacturing, and quality professionals,
and the detailed analysis of a specific disruption case. These data, in addition to external
research, represent the entirety of information informing this thesis and will each be detailed in
the following sections.
3.2 - Supply Chain Professional Interviews:
We began our collaborative research with DAS by conducting telephone interviews with six
supply chain professionals. The intent of the interviews was to gain employee perspective on the
following topics; the interview questionnaire in its entirety can be found as Appendix A.
20
1.
Example risks and risk management practices at DAS
2. Risk management tools and processes used by DAS and DAS employees
3. The level of objective alignment between management and individual contributors,
including communication across levels
Although all interviewed employees were located in the United States, individuals
selected for interviews were chosen to represent a variety of functions and levels across the
corporation. The following table outlines the individuals interviewed, blinded as subjects one
through six, their roles as defined by DAS, and a generalized description of their position. These
descriptions are presented to provide context to results discussed in Section 4.1.
TABLE 1 - Job Descriptions of Interviewed Employees
Subject
Number
1
2
DAS Job Title
Generic Job Description
Supply Chain Planning
Specialist (SCPS)
Responsible for 1-24 month production planning horizon.
Works closely with raw materials planners, and detailed
production schedulers.
Logistics Specialist
Responsible for procuring, planning and scheduling
transportation to move raw materials and/or finished
goods.
Detailed Production
Scheduler (DPS)
Detailed daily and weekly factory production planners
(tactical planning).
4
Procurement Manager
Manages procurement for a set of materials or services in
support of a specific product or portfolio of products.
5, 6
Molecule Supply Chain
Manager (MSCM)
Responsible for global product supply related work for a
specific product portfolio, based on an individual
molecule.
21
This process of initial data collection was used because it is relatively inexpensive, not
only from a monetary perspective but more importantly from a time-to-information perspective.
The interview questionnaire was developed and ratified within a week, interviews were
coordinated and scheduled over two days, and results (Appendix B) were summarized at the
conclusion of the discussions. Taking advantage of this opportunity acted as a catalyst when
working to refine research scope and plan more detailed data collection activities.
3.3 - Internet-Based Product Supply Effectiveness Survey:
In an effort to both quantify our research and increase the audience and therefore the
representation of data, an Internet-based survey was developed and deployed. Sections 3.1 and
3.4 of this thesis discuss important methods also used to collect data; however, these results tend
to be more qualitative in nature. It is important to emphasize that these qualitative concepts and
findings are translated into quantitative questions with scalar ranking schemes in the Internetbased survey.
The survey was designed and deployed using Survey Monkey, a well-known online
survey tool. Survey Monkey allows for customization of the survey template, question types,
and even respondent reminders if and when a required question is incomplete or incorrect.
The survey was designed, reviewed and edited multiple times. Finally, at the conclusion
of the design and development process, the survey comprised of four main sections and 17
questions; an export of the survey can be found in Appendix C. Once final agreement for the
survey design was achieved, the survey was "published" and deployed by DAS as an active link
that was embedded in an email communication from the "Crop Protection Supply Chain
22
Director." The survey was sent to a total of 380 individuals that work in one of the following
supply chain functions at DAS: Manufacturing, Procurement, Quality, Supply Chain,
Technology, Operations, and Planning. Of the 380 invitations, 270 people started the survey,
and 228 people completed the survey; a response rate of 60%. When a person entered the survey
via the email-distributed link, Survey Monkey generated a unique session that was associated
with the respondents' Internet Protocol (IP) address; this ensures that a person can, at a later date,
resume a survey previously left incomplete. When a respondent completed the survey, the
results were captured and stored in Survey Monkey's databases. The survey was open and
collecting responses for a total of three weeks during the month of January 2014. At the
beginning of the three-week period, an email was sent introducing the activity; it was then
followed-up with two reminder emails throughout the duration of the survey.
At the conclusion of the survey the results were analyzed; this is discussed thoroughly in
Section 3.3.2, Data Analysis Overview.
3.3.1 - Survey Design & Segmentation:
Survey design is an important consideration when working to maximize the ease of responding
to a survey, which in turn increases the survey response rate. Although not discussed in detail
here, it is worth noting that the art of survey design is a highly researched field with extremely
detailed recommendations to optimize each survey opportunity and increase data integrity. Our
research included understanding and implementing the most important survey design
considerations which we summarize as follows:
23
Appreciate Your Audience's Time - Be sure that the survey is concise; questions are clear,
rating scales are easily understood, and that the survey is not exhaustively long. Survey
length is a function of the topic and the audience, specifically if they are paid, voluntary, or
captive. Regardless, it is important to give consideration to the length of the survey and
respect the effort you are asking from your audience. Our survey was designed, tested and
refined to be completed in eight minutes or less. As iterations of the survey were completed,
individuals with supply chain knowledge but outside of the survey's target audience at DAS
tested the survey and provided feedback.
Anticipate Respondents' Confusion - Avoid the use of acronyms, colloquialisms, or
definitions that are not broadly understood by the audience being surveyed. Because DAS,
as with many large corporations, has its own set of terms and acronyms, our sponsoring
partners reviewed the survey prose to ensure alignment with DAS speak. This helped to
decrease confusion anticipated by respondents because they were familiar with the terms and
tone of the topics and questions.
Combine Topics & Questions - Focus on having a clear structure to your survey, one that
outlines topic sections, question types, rank definitions, and any other expectations. Unless
intentionally designed as a social experiment, structure the flow of questions such that like
topics are grouped. Context shifting can give the impression that the survey is not well
thought out, and that the author may not be overly interested in the quality or quantity of
results. We focused on making the survey structured and clear by explaining the outline of
the survey in the survey introduction. Respondents knew ahead of time the primary sections
of the survey and the total number of questions. Further, as they progressed through the
24
survey each section had a specific heading and detailed explanation; the four primary
sections of the survey are:
1. Introduction & Respondent Information
2. Product Supply Questionnaire - Attitudes & Perceptions
3. Product Supply - Leadership & Communication
4. Product Supply - Disruptions & Effectiveness
Segmentation, including analytics expected to be performed on the resulting data, is also
an important consideration to be made at the onset of survey design. Respondent segmentation
has roots in the initial problem statement and needs to be designed in anticipation of results that
can be compared and analyzed against each other, either to prove or disprove a given hypothesis.
Based on our initial problem, and through subsequent conversations with DAS, the following
segments were defined:
1. Level/ranking within the organization: low, medium, high.
2. Job function: manufacturing, procurement, quality, supply chain, technology,
operations leadership.
3. Service region: local, regional, global.
4. Years of service: less than one year, one to five years, six to 15 years, longer than 15
years.
25
5. Geographic location: Australia/New Zealand, Brazil, Eufrasia 2 , Europe, Greater
China/ASEAN3 , India, Japan/Korea, Meso Andean 4, North America, Southern Cone.
Levels within the organization are classified based on type of work, strategic versus
tactical. High-level employees often set strategic direction and focus on the business over a
longer period of time. Low-level employees are typically focused on near-term tactical
execution, working to meet commitments over a three month time horizon. Table 2 outlines the
classification of roles within the Function and Level segmentation schemes.
TABLE 2 - DAS Job Titles Mapped to Function and Level Segments
Level
Sgetto
DAS Job Title
Function Segmentation
Global External Manufacturing
Manufacturing
High
Global Operations Leadership Team
Operations Leadership
High
MSCM (Molecule Supply Chain Manager)
Supply Chain
High
RSCM (Regional Supply Chain Manager)
Supply Chain
High
Improvement Leader
Technology
High
FTL (Technology)
Manufacturing
Medium
Segmentation
Eufrasia, not to be confused with Eurasia, is a term used at DAS to represent the geographic region of Russia,
Eastern Europe, the Middle East, and the entire continent of Africa.
2
ASEAN is the Association of Southeast Asian Nations, an organization of ten countries including Indonesia,
Malaysia, the Philippines, Singapore, Thailand, Brunei, Myanmar (Burma), Cambodia, Laos and Vietnam.
3
4 The Meso Andean region represents a geographical area consisting of countries in Central America and northern
South America. At the north of this region lie Guatemala, Nicaragua, Costa Rica and Panama, and to the south lie
Ecuador, Columbia and Venezuela, among other countries.
26
Level
DAS Job Title
Function Segmentation
Production Manager
Manufacturing
Medium
Reliability Manager
Manufacturing
Medium
Site Management
Manufacturing
Medium
External Manufacturing
Procurement
Medium
Raw Material Supply
Procurement
Medium
Manufacturing Quality
Quality
Medium
Molecule Technology Leader
Technology
Medium
Production Coordinator
Manufacturing
Low
Reliability Engineer
Manufacturing
Low
Site Logistics
Manufacturing
Low
Regional External Manufacturing
Manufacturing
Low
Other Manufacturing
Manufacturing
Low
Supply Chain Improvement
Supply Chain
Low
ITO / Logistics
Supply Chain
Low
Supply Chain Planning Specialist
Supply Chain
Low
Short Term Planning (DPS, DRP, MPS)
Supply Chain
Low
Other Supply Chain
Supply Chain
Low
Other Quality
Quality
Low
Other Technology
Technology
Low
Segmentation
Data segmentation was captured by asking respondent classification questions at the
beginning of the survey. Questions one through five, which are classification questions, can be
viewed on the first pages of Appendix C in the "Introduction & Respondent Information" section
of the survey.
27
3.3.2 - Data Analysis Overview:
Once the survey was deployed, completed by respondents, and results exported, we elected to
use both R and Tableau for data analysis and visualization. The data were imported into each
program separately; however the file type input into both R and Tableau was an .xlsx file. After
data was imported, standard functionality within the user interface of each program was used to
manipulate the data.
Initial analysis compared statistical results by question for predefined segments discussed
in Section 3.3.1 (Level, Function, Service Region, and Location). This was performed for all
questions that required the respondent to rank their response on a scale from one to seven; all
questions following this ranking scale can be found in Appendix C. The metric by which all
rank questions were compared was the mean and standard deviation of the dimensionless
numerical rank value. A more detailed analysis consisted of looking for [stronger] correlations
amongst segments and between questions; this data was analyzed in R using a "heatmap" plot,
(this approach is discussed in detail in Section 4, Results). Stronger correlations are determined
visually by identifying patterns of like colors, as well as by other visual representations of the
relative strength between questions and segments. However, it is important to note that when
comparing any two random variables there may be a correlation between them, but not causality
for the correlation. This is to say that two variables may both be changing together, but
practically there is no expected interaction between the variables. Discerning and making
judgments about the viability of the correlation was done through discussion sessions, both
individually, with CTL faculty, and with supply chain professionals at DAS.
28
An Internet-based survey was chosen as the primary data collection method because of its
ability to reach a large geographically dispersed audience at a minimal cost. It also
complimented initial interviews by quantifying themes and opinions that otherwise were highly
subjective based on the individual interviewed. The survey also allowed for the normalization of
response data across segments; this is because the survey was unchanging (where discussions in
an interview may be different), and because the audience was significantly larger.
3.4 - Supply Disruption Case Analysis:
Additional data was collected via interviews of individuals involved in a specific product supply
disruption, the sudden closure of a key supplier's factory in Brazil. The intention behind this
final activity was to examine an end-to-end supply disruption, observing and evaluating DAS's
plans and responses based on results of previous data collection activities. This method was very
qualitative and required us to understand the situation by asking targeted questions that allowed
us to qualify DAS's approach and quantify the disruption's impact. Three people involved in the
project were interviewed over the telephone, each for approximately one hour. Their
perspectives and insights were then used to construct and analyze the scenario.
Two important analyses of the disruption were carried out. The first focused on
processes and procedures before and after the disruption in an effort to see if the team learned
from the event. This data was collected by asking interviewees and determining whether or not
the event drove changes to required procedures. The second quantified the monetary impact of
the disruption. An average burdened headcount rate was applied to the aggregate
approximations of resources used to overcome the event, in addition to the material cost, to
create a total disruption cost approximation.
29
4. RESULTS
The primary research question posed at the onset of the study was to identify and quantify any
differences that exist between executive and tactical-level employee attitudes in DAS's
manufacturing and supply chain organizations. The team hypothesized that a difference did in
fact exist and its existence was represented as a tactical misalignment in executing executive
strategy. In other words, the stated goals of supply chain executives are not fully acted upon
because of [executives'] lack of understanding about tactical processes, challenges and risks.
In addition to the primary question, secondary goals included understanding the effects of
segmentation on the aforementioned difference, as well as determining if there exist any
corollary attributes within the population or segment of the population.
Results of the study, using an aggregation of data collection methods discussed in
Chapter 3, are presented first to address the primary research question, and secondly to address
other findings of interest in the dataset.
4.1 - Internet Survey Response Statistics:
Of the 228 responses to the Internet-based survey, 125 were from North America, 34 from
Europe, and 15 from the greater China/ASEAN region. There were 12 responses each from the
Meso Andean region and Brazil, 10 responses from South American countries in the Southern
Cone, nine responses from Australia and New Zealand, seven responses from Japan and Korea,
four responses from India and zero responses from Eufrasia. A graph showing response count by
geography on the primary vertical axis and response rate by geography on the secondary vertical
axis is presented in Figure 1.
30
Survey Responses by Geographic Region
140
100%
125
90%
120
80%
100
70%
60%
41c
80
0
C
---
----------
50%
a
CL
60
40%
30%
40
20%
20
9
11210
10%
--
7
0
0%
Australia/
New
Zealand
Brazil
Eufrasia
Europe
Greater
China /
ASEAN
India
Japan/
Korea
Meso
Andean
North
America
South ern
Con e
FIGURE 1 - Survey Response Count and Response Rate by Geographic Region
There were 98 responses from the supply chain function, 84 from manufacturing, 18 from
the technology team, 12 from procurement roles, 11 from the quality organization, and five from
the Global Operations Leadership Team (GOLT).
Of the 228 responses, 37 are classified as high-level, 62 as medium-level and 129 as lowlevel. Response count by function and level is presented in Figure 2.
31
Response Count by Function and Level
79
80
r60
0
U1S4043
o
~33
19
20
s
5
88
-
---------
-..
9
s
12
5
00
-
U
nee
epneCutbyFnto
0
FIUEL
High
2
Medium
Low
FIGURE 2 - Response Count by Function and Level
Finally, there were 23 responses from individuals that have worked at DAS less than one
year, 93 from individuals that have worked at DAS between one and five years, 57 from
individuals between six and 15 years, and 55 from individuals that have worked at DAS longer
than 15 years.
Of the 228 responses, 89 individuals service global markets, 76 service regional markets
and 63 service local markets. Response count by tenure and service region is shown in Figure 3.
32
Response Count by Tenure and Service Region
40
33
-
33
-
30
33
0
200
27
-----
2
2
16
0
10710
214
4Al
LA
I-
1A
1C4
tn-n
4Ln
U4
1A
~I
0A
L~L
4)
?
C
0
Global
10
4n
0
Regional
0
Local
FIGURE 3 - Response Count by Tenure and Service Region
4.2 - Executive Strategy versus Tactical Execution:
Using critical behavioral attributes outlined in Section 3.1 and results from the Internet-based
survey, data has been collected and analyzed to address the primary research question: Do
differences exist between executives and individual contributors?
When assessing the attitudes and perceptions of high-level versus low-level employees,
collected through Question 6 of the Internet-based survey (Appendix C), we find that high-level
employees' ratings are consistently higher than low-level employees. Across all attitude and
perception questions, high-level employees rated themselves 6.0 on average, a difference of 7%
over low-level employees who rated themselves 5.5 on average. When asked to rank their
importance to DAS, high-level employees rated themselves 6.5 on average while low-level
employees rated themselves 6.2 on average. When asked if planning ahead was valued more
33
than quickly resolving problems, high-level employees rated themselves 5.8 on average while
low-level employees rated themselves 5.3 on average. When asked if they are responsible for
preventing issues, high-level employees rated themselves 5.8 on average while low-level
employees rated themselves 5.5 on average. Finally, when asked if they are responsible for
fixing issues, high-level employees rated themselves 5.8 on average while low-level employees
rated themselves 5.2 on average. Figure 4 presents these results graphically.
Attitudes & Perceptions- High versus Low-Level Employees
7.0
-
-
-
-
------------
---
--
6.5
6.2
5.-
-
-
6.0
5.5
5.2
5.3
5.0
*r
4.0
--
2.0
0.0
Low
High
Low
High
Low
High
Low
High
Average Importance of
Role
Average Value of Planning
Ahead
Average Responsibilityto
Prevent Disruptions
Average Responsibilityto
Fix Disruptions
Question 6.1
Question 6.2
Question 6.3
Question 6.4
FIGURE 4 - Attitudes & Perceptions of High versus Low-Level Employees
When comparing the level of proactiveness versus reactiveness for both high-level and
low-level employees, we again see that there is a difference in results. Responses from Question
34
7 of the Internet-based survey result in high-level employees believing that DAS is more
proactive than reactive with a rating of 4.1 out of 7.0 (note that a rating of 3.5 would indicate that
DAS is equally reactive and proactive). For the same question, low-level employees believe that
DAS is only slightly more proactive with a rating of 3.6. However, when asked where DAS
should be on the same scale, high-level employees suggested that DAS should be at 5.8, while
low-level employees suggested that DAS should be at 5.5. On average, both groups believe that
DAS should increase its proactiveness by a rating of 1.8 or approximately 26%. Figure 5
presents these results graphically.
Current versus Expected Proactiveness of High and Low-Level Employees
Current - Reactive versus Proactive
(Question 7. 1)4.
-
Expected
-
Reactive versus Proactive
5.8
(Question 7.2)
Current
-
3.6
Reactive versus Proactive
(Question 7. 1)3.
Expected
-
Reactive versus Proactive
5.5
(Question 7.2)
0
1
2
3
4
Neutral
Reactive
5
7
6
Proactive
FIGURE 5 - Current versus Expected Proactiveness of High and Low-Level Employees
Another important indicator to the resilience of a corporation is the amount of time spent
working on prevention initiatives or contingency planning. When assessing the amount of time
dedicated to working on product supply improvement initiatives, as outlined in Question 8 of the
Internet-based survey, we again see a difference between high-level and low-level employees.
These results are presented in Figure 6, and on average high-level employees indicate that they
35
spend 39% of their working-time on improvement initiatives relative to low-level employees,
which spend 31% of their time working on improvement projects.
Product Supply Improvement Initiatives
Low
31%
R
a
High
19
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FIGURE 6 - Percent of Time Spent Working on Product Supply Improvement Projects
Control and influence over important phases in the product supply lifecycle are also
important gauges of an organization's susceptibility to disruptions. Questions 9 and 10 of the
Internet-based survey asked respondents to rank their ability to both control and influence,
respectively, the following phases of product supply: raw material supplier performance, raw
material logistics, DAS site logistics, internal product manufacturing, external product
manufacturing, finished goods logistics and customer service / customer experience. Figures 7
and 8 present these results graphically, and in all categories high-level employees feel as if they
have more control and influence than low level employees. On average, high-level employees
perceive themselves to have 11% more control and 14% more influence then low-level
employees over the aforementioned phases of product supply.
36
Product Supply Control - High and Low-Level Employees
-
7 .0
--- --------
-..
7.0
-
--
---
--
5.0
-
,
5.0
4.5
4.1
4.0
3
-
3.5
3.3
3.4
3.5
34
3.63.
-
3.1
2_
1.0K
-
-I-
0.0-Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Raw Material
DAS Site
Supplier
Performance
Logistics
Logistics
internal
Product
Manufacturing
External
Product
Manufacturing
Finished
Goods
Logistics
Customer
Service
Experience
(Question 9.1)
(Question 9.2)
(Question 9.3)
(Question 9.4)
(Question 9.5)
(Question 9.6)
(Question 9.7)
&
Raw Material
FIGURE 7 - High versus Low-Level Employee Control over Phases of Product Supply
Product Supply Influence - High and Low-Level Employees
-
- ---
-
-
-
-
7 .0--
6.0
5.4
5.0
-
4.2
4.0
4.3
-
51
-,--
4.2
4.3
4.3
4.0
3.6
5
3.3
3.0
-
R-
-
2.0
-
1ZZ
-
0.0
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Raw Material
Logistics
DAS Site
Logistics
Internal
Product
Manufacturing
External
Product
Manufacturing
Finished
Goods
Logistics
Customer
Service
Experience
(Question 10.1)
(Question 10.2)
(Question 10.3)
(Question 10.4)
(Question 10.5)
(Question 10.6)
(Question 10.7)
&
Raw Material
Supplier
Performance
FIGURE 8 - High versus Low-Level Employee Influence over Phases of Product Supply
37
Question 11 of the Internet-based survey focused on DAS's organization and their
resourcing of product supply managers, team-leaders, and business continuity plan
documentation. As one would assume, having these roles and collaterals in place and effectively
working will help an organization rebound from disruptions more easily. Again we see
differences in response characteristics between high-level and low-level employees. Results of
the questions are detailed in Figures 9 and 10; notable observations include:
1. High-level employees are more aware of product supply effectiveness initiatives than
low-level employees (based on the percentage of "I Don't Know" responses).
Furthermore, as the scope of the group decreases (Corporate to Organization to Team),
the percentage of "I Don't Know" responses too decreases (Figure 9).
2. High-level employees believe that product supply effectiveness leaders and initiatives are
effective an average of 66% of the time, while low-level employees believe that they are
effective an average of 59% of the time, a difference of 7% (Figure 9).
3. As the scope of the group decreases, the percentage of "I Don't Know" responses
decrease and the percentage of "No" responses increase. The summation of these two
categories is 7.3% higher for high-level employees versus low-level employees (Figure
9).
4. Although not a difference between levels, 44% of responses from high-level and lowlevel employees suggest that they are unaware if a business continuity plan document
exists, or that it does exist and is not effective (Figure 10).
38
Product Supply Effectiveness Management
100%.
90%
80%
-
---
70%
60%
50%40%
30%
20%
-
10%
""""""
0%
High
Low
High
Corporate Level Leader
Low
High
Organization Level Leader
(Question 11.1)
*No
UYes
(Not Effective)
High
Low
individual Performance Objective
(Question 11.3)
(Question 11.5)
(Question 11.2)
1Don't Know
Low
Team Level Leader
a Yes
4 Yes (Very Effective)
FIGURE 9- Effectiveness of Product Supply Leader by Scope of Group
Business Continuity Plan Documentation by Level
100%
---- -
-
70%
60%
70%-
- --
---
- -
----
-
..-
4>0%
30%
20%
---
-
10%
0%
Low
High
N
Don't Know
ENo
N Yes (Not Effective)
EYes
2 Yes (Very Effective)
FIGURE 10 - Business Continuity Plan Documentation by Employee Level
39
-
90%
Question 12 and 13 of the Internet-based survey focused on assessing communication at
DAS by understanding an individual's comfort with delivering negative feedback or bad news,
as well as their comfort admitting to faults of their own, respectively. Figure 11 represents the
combined average of both Question 12 and 13, and proves that high-level employees are 6%
more comfortable communicating across internal and external organizations than low-level
employees. Further, it is worth noting that the aggregate average value of communication across
both levels at DAS is 75.1%, a relatively high rating.
Communication Ratings - High versus Low-Level Employees
7.0
6.2
6.0
- --5.5
5.6
5.3
-
5.0
5.2
--
4.5
4.6
Low
High
C
4.0
5.0
S3.0
00
2.0-
1.0
0.0Low
High
Low
High
Low
High
Low
High
Communication with
External Suppliers
Communication with
Peers InsideTeamn
Communication with
Peers OutsideTeam
Communication with
Management
Communication with
Customers
(Question 12.1 & 13.1
(Question 12.2 & 13.2)
(Question 12.3 & 13.3)
(Question 12.4 & 13.4)
(Question 12.5 & 13.5)
FIGURE 11 - Comfort in Communicating with External and Internal Organizations
When asked about the frequency of disruptions (Question 14), where a disruption is
defined as the inability to source, manufacture, or deliver product for two or more days, there is a
minimal difference between high and low level employees. On average high-level employees
40
reported 1.4 disruptions per year per plant, while low-level employees reported 1.5 disruptions
per year per plant, a difference of 8.6%. High and low-level employees also show alignment
when asked about the frequency of disruption types (Question 15), of which two of the top three
disruptions observed are identical between groups. The top three most frequent disruption types
are shown below in Table 3.
TABLE 3 - Highest Frequency Disruption by Employee Level
Low-Level Employees
High-Level Employees
1. DAS or external manufacturer plant quantity
shortage (various causes).
1. Raw materal supplier quality issue.
2. Raw material supplier quantity shortage.
2. Raw material supplier quantity shortage.
3. DAS or external manufacturing plant quality
issues.
3. DAS or external manufacturer plant quantity
shortage (various causes).
4.3 - Secondary Findings & Data Correlations:
As discussed in Methods, Section 3.3.2, a heatmap including all numeric survey questions and
segments was generated using R. An example of the heatmap plot and an explanation for
interpreting the plot is presented in Appendix D. The following findings and correlations with
causal justification were observed.
4.3.1 - Role Importance and the Value of Proactive Planning:
A strong correlation (R2 = 0.809) is observed between an individual's perception of their role's
importance to DAS and the value they placed on proactive planning in their role (Questions 6.1
and 6.2). This trend occurs at all levels of the organization and is presented in Figure 12.
41
Role Importance versus the Value of Planning Ahead
7.0
60
5.0
_
--
-__
s.3
4.
5.0
.CR2
= .8M
63.
2.0
1
2
4
3
5
6
7
Role Importance
FIGURE 12 - Role Importance versus the Value of Planning Ahead
4.3.2 - Product Supply Disruption Distribution:
Expanding further on analysis of Question 15, DAS product supply disruption risks, we find that
51.4% of all disruptions are attributed to raw material supplier or internal / external
manufacturing product quality or shortage risks. A distribution of product supply disruption risk
results is presented in Figure 13.
42
Product Supply Disruption Distribution
RAW MATERIAL SUPPLIER QUANTITY SHORTAGE
15.6%
INTERNAL OR EXTERNAL MANUFACTURING QUANTITY SHORTAGE
INTERNAL OR EXTERNAL MANUFACTURING
QUALITY
13.7%
ISSUES
11.1%
RAW MATERIAL SUPPLIER QUALITY
11.1%
POOR PRODUCTION PLAN
11.0%
GOVERNMENT REGULATORY CHANGES / RESTRICTIONS
7.8%
NATURAL DISASTERS / WEATHER
6.4%
PORT / CUSTOMS DELAYS
5.6%
RAW MATERIAL TRANSPORTATION FAILURE
4.6%
OTHER
4.1%
SITE LOGISTICS FAILURE
2.8%
DISTRIBUTION FAILURE - WAREHOUSE OR TERMINAL
2.2%
IT / IS SYSTEMS FAILURE
1.6%
CUSTOMER OR WAREHOUSE DELIVERY FAILURE
1.4%
IT/ IS DATA INTEGRITY ISSUES
i2
0%
5%
10%
15%
20%
FIGURE 13 - Distribution of Respondents Product Supply Disruption Risk Results
4.3.3 - Proactiveness versus Reactiveness by Function & Geography:
Question 7 asks respondents to rate their perception of DAS's current and expected product
supply disruption prevention versus response. In addition to parsing and presenting data by
level, high versus low (Figure 5), data is also presented by function and by geography, Figures
14 and 15, respectively.
After segmenting by function, we continue to see a significant difference between each
function's current and expected proactiveness rating. The minimum difference exists within the
GOLT, a delta of 1.6 or 23%, while the maximum difference exists within the Procurement team,
43
a delta of 2.4 or 35%. We also observe that after the GOLT, Supply Chain and Manufacturing
represent the highest current ratings, suggesting that prevention is more evident in those
functions versus others.
Current versus Expected Proactiveness Rating by Function
Proactive
7.0
5.9
6.0
5.5
5.4
5.0
5.0
3.5
3-5
3.0
2Z0
1.0
Reactive
0-a
Operations Leadership
Manufacturing
U
Procurement
Quality
Supply Chain
Technology
* Expected Rating (Proactive vs Reactive)
Current Rat ing (Proactive vs Re active)
FIGURE 14 - Current versus Expected Proactiveness Ratings by Function
When looking at the same data segmented by Geography we again see notable
differences. Respondents from the Meso Andean region rate themselves as being more proactive
than any other geographical region with a rating of 4.7 out of 7.0; however, they still fall short of
their expected proactiveness rating by 1.7 or 24%. Respondents from China, however, while
also rating themselves as being relatively proactive, are only 4% from their prevention
expectation. Australia and New Zealand are the only regions that rated themselves as being
more reactive than proactive with an average rating of 3.0; recall that a rating of 3.5 indicates
being equally proactive and reactive.
44
Current versus Expected Proactiveness Rating by Geography
Proactive
7.0
6.4
6.3
--
6.0
5.3
5.3
5.5
5.3
5.1
----
5.0
4.5
4.3
4.1
4.0
.
3.0
*
17
3.5
3.0
2.0
1.0
Reactive
0.0
Australia/ New
Zealand
Brazil
Europe
Greater China/
ASEAN
M Current Rating (Proactive vs Reactive)
India
Japan Korea
Meso Andean
Southern Cone
North America
0 Expected Rating (Proactive vs Reactive)
FIGURE 15 - Current versus Expected Proactiveness Ratings by Geography
4.3.4 - Communication Comfort and the Frequency of Disruptions:
Communication comfort, generated by aggregating Questions 12 and 13 of the Internet-based
survey, was plotted against frequency of disruptions and is presented in Figure 16. After plotting
and analyzing the results, no correlation was found (R2 = 0.01) between these two variables.
Comfort in Communicating versus the Frequency of Disruptions
7.0
5.63
6.0
5.0
5.41
5.15
5.27
5.21
8.01
-
4.79
040
3.0
2.0
0.0
Never
Once Every 5 Years Once Every 3 Years
Once per Year
1-3 Times per Year More Than 3Times
perYear
I Don't Know
Disruption Frequency
FIGURE 16 - Comfort in Communicating versus the Frequency of Disruptions
45
5. DISCUSSION
5.1 - Exploring Variations between Segments:
There are a number of factors which may lead to the alignment (or misalignment) of groups
within an organization or company. As complexity within an organization increases, we expect
the operational alignment between groups to decrease. By surveying employee/employer
perceptions regarding communication, control and influence we can establish a representative
picture of the overall health of an organization and its ability to work together when rebounding
from a supply disruption. In aggregate, DAS rated itself in the 70th percentile, indicating that
while there are still areas for improvement, the overall perception of DAS employees is that the
company is well-aligned, leading to effective product supply.
Despite its strategic attractiveness, complete alignment between teams and levels is not
expected due to differences in incentives, motivations and the backgrounds of employees.
Industries served and even product type will cause further differences in how individuals
approach and respond to their work. As presented in Chapter 4, Results, significant differences
were observed between high-level and low-level employees in DAS's product supply
organizations. While it is difficult to quantify the effects of the approximately 10% difference
between high and low-level employees, a qualitative assessment can point to potential
explanations. For example, the difference observed between the control of high-level employees
and that of all other employees may indicate an overly bureaucratic culture, where employees
may not feel empowered to make decisions, deferring to management to make decisions on their
behalf. Or, perhaps these results point to a common decision-design process for highly regulated
industries, such as with agricultural chemicals. Regardless, the discrepancy between levels for
46
both control and influence is noteworthy and may point to an opportunity for DAS to increase
accountability and a sense of ownership amongst lower-level employees.
One potential method to help increase accountability and responsibility is through a
quarterly objective-based management system. Management by Objectives (MBO) is a
management tool first made popular by Peter Drucker (1954), and outlines a system to develop
objectives of employees within a company, division or smaller organization. This system
requires that employees be measured on quarterly objectives that are jointly agreed upon by the
manager and the employee. Objectives are defined with the specific purpose of directly
supporting the broader organization's strategies and goals, expanding employee's opportunities
by offering diverse experiences, and supporting long term development goals of employees in
accordance with the needs of the organization. Question 11.5 of the Internet-based survey
specifically asked respondents whether or not they have product supply objectives in their
individual performance plan. Thirty-five percent of employees surveyed do not establish
objectives with their managers, or establish objectives but think that the process is not effective,
or do not know if these objectives exist at all. Interestingly, 65% of employees know that this
process exists at DAS and believe that it is effective. The discrepancy in response could suggest
that the MBO system is not managed from a centralized performance management function or
team with the human resources organization. Further, it suggests that alignment with
organizational strategies and objectives is limited at best, due to the fact that a large portion of
the organization does not establish individual goals in support of organizational strategies.
Another noteworthy observation when comparing high and low-level employees is the
alignment in their current assessment and future expectations of prevention versus response
47
(proactiveness versus reactiveness). There exists only a 7% difference in the current state and a
4% difference in the expected state; however, both groups agree that DAS needs to become 26%
more proactive in their approach to product supply. While this can be addressed in a number of
ways, the most impactful is shifting an employee's time to working on proactive projects, rather
than projects focused solely on meeting current production plans. Proactive projects can take
many forms, such as risk identification activities (as discussed in Section 2.2), executing risk
mitigation projects or developing risk planning and training procedures. The design of this work
is highly dependent on role, however, and consideration needs to be taken when assigning
projects to certain individuals.
Some questions posed to DAS product supply employees via the Internet-based survey
were designed such that the aggregate response could be compared with data collected by CTL
in a similar but broader study, originally referenced in Section 2.3. Building on the analysis of
prevention versus response, data reflecting the expected value of prevention was collected and
scaled such that it could be compared by geography with CTL survey results; the result of this
analysis is presented in Figure 17. With the exception of North America and Brazil (both
important geographies for DAS's business), trends between CTL survey respondents and DAS
employees are similar. Interestingly, DAS believes that they should be more proactive than the
average company that responded to CTL's survey, in all geographies. Presumably this is a
reflection of the culture of DAS, and again is likely based on the highly regulated nature of the
chemicals industry.
48
Expected Proactiveness of DAS versus CTL Surveyed Supply Chain
Professionals by Geography
India
Central & South Am erica (Excluding Brazil)
North America
Europe
Australia/ New Zealand
Brazil
Greater China/ ASEAN
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Proactive
Reactive
MCTL Surveyed Supply Chain Professionals
MDAS Product Supply Employees
FIGURE 17 - Comparison of Expected Prevention versus Response
5.2 - Hypotheses Disproved:
During the process of defining this research project and drafting questions for the interviews and
the Internet-based survey, a number of hypotheses were made. Of the hypotheses made, a few
were disproven and the results are quite surprising.
The first analyzes the aggregate comfort in communicating with the frequency of
disruptions observed. The initial hypothesis suggested that as communication comfort and
effectiveness increased, the frequency of disruptions would in turn decrease. However, this trend
was not observed in the results and there is no correlation between communication and
disruption frequency; these results are presented graphically in Figure 16. Research indicates
49
that communication is a core element of a positive and healthy corporate culture (Edelman,
2013), and while DAS's communication is rated above the 7 5 f percentile, the results suggest
that communication does not affect the company's ability to prevent supply disruptions. There
are a number of potential reasons for this observation, all of which would require gathering
additional data. The most likely is that the questions used to rate communication at DAS may
not be general enough; recall that Questions 12 and 13 specifically asked respondents to rate
their comfort delivering criticism and comfort admitting fault, respectively.
Another hypothesis not supported by the results of the study is the assertion that the
complexity of globalization requires employees to increase their focus on planning ahead
(prevention). When comparing an individual's responses about the importance of planning
ahead and the service region he/she serves (Global, Regional, Local), we see that global
employees value planning ahead less than other service regions. When comparing this result to
the difference between the actual and expected prevention ratings of employees that service the
global region, we again see this substantiated as global employees suggest the gap is larger than
other service regions. These results are presented in Figure 18 and visually we can see the global
regions' average value of planning ahead is the smallest (blue bar), while the prevention
difference is the largest (red bar).
50
Prevention and Planning Ahead by Service Region
7.0
-
.0
_
-
-
--
----
-
-
--
-
-
-------
- ----
7..2
C
-
-
-
-
4.0
60
I
1.0
2.25
7-
f
0.0_Global
U
Average Value of Planning Ahead
1.57
1.66
Regional
Local
N Difference between Actual and Expected Prevention versus Response
FIGURE 18 - Prevention and Planning Ahead by Service Region
Finally, after the results of the telephone interviews and the Internet-based survey were
collected and analyzed, we were surprised to find that natural disasters and weather only
accounted for 6.4% of product supply disruptions. Anecdotal information gathered during
interviews suggested that much of DAS's supply variability is due to shifting weather patterns
which establish planting and harvesting schedules. One potential explanation for this
discrepancy is the timing of the interview relative to that of the Internet-based survey.
Employees interviewed resided in the Midwest United States which encountered numerous
tornadoes in October and November 2013. While the effects of local natural disasters may not
be the primary cause for this difference, other supply chain reliability and resilience researchers
have noted perceptions being skewed after a significant natural disaster (Arntzen, 2010).
51
5.3 - The Blueprint of a Resilient Employee:
Throughout the research and analysis phases of this project, a common question was repeatedly
raised by the researchers themselves, advising faculty, and the sponsoring company: Which
attributes help to create an employee more aware of supply chain resilience?
A justified hypothesis is that a senior employee with strong communication skills, an
emphasis on proactive work, a sense of accountability, and significant experience in the industry
would make for a more resilient employee. To test this theory, all of the characteristic attributes
of individuals gathered through the Internet-based survey were compiled and analyzed. The
independent data sets were regressed and correlated amongst each other to find attributes, or sets
of attributes, whose correlation coefficient approach negative or positive one. In statistics,
correlation represents a relationship between two random variables; however, recall that
statistical correlation is not sufficient to prove a causal relationship. Correlation values from 0.7
to 1.0 are strong correlations, values from 0.3 to 0.7 are considered moderate correlations and
values from 0.0 to 0.3 are weak correlations. Correlations between characteristic attributes are
presented in Table 4; note that no pairing of attributes reaches values even considered a moderate
correlation, let alone a strong correlation.
52
TABLE 4 - Correlation of Respondent's Characteristic Attributes of Resilience
Time
Communication
Disruption
Frequency
Proactivity
Reactivity
0.166
0.011
0.145
0.057
- 0.047
0.081
- 0.231
0.004
0.106
0.109
0.035
0.110
0.173
0.091
0.105
0.119
Level
0.225
0.113
0.041
Projects
Communication
Disruption
Frequency
287 X 10~6
versus
Service
Scope
Tenure
at DAS
Spent on
Proactive
Time Spent on
Proactive
Projects
Tenure at DAS
Level
- 0.129
Service Scope
Proactivity
versus
Reactivity
Practically, these results suggest that it is difficult to predict an employee's level of
resilience based on information gathered through this study. Additional research may also result
in similar findings, or perhaps including information such as past performance, total
compensation and other information will help converge on the attributes of a more resilient
employee. However, Daniel H. Pink (2009), author of Drive: The SurprisingTruth About What
Motivates Us, suggests that motivation and workplace performance are intrinsic attributes,
attributes that are formed by past experiences and present situations. Pink's thesis is that
modem-day employees achieve satisfaction in their work through challenge and opportunity,
rather than with rewards or monetary compensation, referred to by Pink as "carrots and sticks."
However, this concept in business is relatively new and it is plausible that older and larger
corporations such as DAS might find it difficult to achieve the cultural changes necessary to
support Pink's assertion.
53
6. CONCLUSIONS & SUGGESTIONS
As DAS continues to expand its global footprint into South American and Southeast Asian
countries, among others, it is imperative that DAS maintains an integrated approach to product
supply design. The target markets and end users of agricultural chemicals differ based on the
country's location, the state of farming technology in the region, and local weather patterns.
While diverse geographies require unique supply chains to account for these differences, the
underlying approach and decisions made during the process of architecting those supply chains
should be done under a shared strategy.
As has been thoroughly discussed, supply complexities (such as globalization) increase a
company's vulnerability to costly supply disruptions. Mitigating these complexities is often a
trade-off between a company's risk tolerance and investment that they are willing to make to
reduce their risk position. Finding the optimal point on the prevention versus response
continuum, which maximizes shareholder, value can be challenging.
Throughout this research it has become apparent that DAS is taking a proactive approach
to product supply risk management and resilience, and results from this study support that
assertion. Employee attributes directly responsible for anticipation or prevention of issues such
as accountability, communication, and the self-perceived value of their position are each
independently rated above the 75t percentile. Although results suggest that DAS is excelling in
this area, there were opportunities identified throughout the study that may help DAS continue to
advance its product supply effectiveness; suggestions include:
54
Establish and support an MBO performance management system - Using an MBO
process helps to ensure that all employees in the organization are familiar with operational
strategies and understand how their role impacts the broader organization's goals. It allows
employees to grow and develop through targeted career objectives that align with
organizational needs.
Review and revise the decision making processes with the goal of empowering
employees - The differences observed between control and influence suggest that DAS
employees do not feel directly accountable for the phases of product supply. Working to
streamline the decision making process and in turn empowering individual contributors can
help to drive accountability and ownership within the organization.
Continue to proliferate cross functional product supply planning activities - As
discussed in Section 2.2, planning activities such as FMEA, SWOT and Black Swan are
important processes to help identify and prioritize planning projects. When held with crossfunctional, multi-level teams, these activities are extremely effective in helping to educate
individuals of challenges and opportunities at all levels of the organization. DAS has a
robust planning process; however, based on information gathered during employee
interviews, the process' dissemination is limited and many employees are not aware of the
initiative. In an effort to become more resilient, DAS should consider accelerating the rollout of Black Swan and the Supply Chain Resilience Assessment and Management
(SCRAMTM) processes held amongst teams at DAS.
55
The study of people and of organizational behavior has advanced significantly throughout
the 20th and 2 1 t centuries. Over the past 35 years corporate culture has become an increasingly
important consideration for both employees and employers. The philosophy of stimulating and
motivating employees to tackle challenging problems in a safe and flexible environment has
enabled some of today's greatest innovations. As these management philosophies continue to
spread through modem-day organizations, operation and supply functions are rife with
opportunity, allowing for efficient optimization founded in the principles of risk management.
56
REFERENCES
Arntzen, B. (2010). Global Supply Chain Risk Management Part 1: Differences in Attitudes
[White paper]. Retrieved November 15, 2013, from http://supply-chain.org/globalsupply-chain-risk-management-part-i -differences-attitudes
Arntzen, B. (2010). Global Supply Chain Risk Management Part 2: Differences in Frequencies
and Priorities [White paper]. Retrieved November 15, 2013, from http://supplychain.org/global-supply-chain-risk-management-part-2-differences-frequencies-andpriorities
Arntzen, B. (2010). Global Supply Chain Risk Management Part 3: Differences in Practices
[White paper]. Retrieved November 15, 2013, from http://supply-chain.org/globalsupply-chain-risk-management-part-3-differences-practices
Benson, A. S. (2005). The role of organizational culture in creating secure and resilient supply
chains (Thesis). Massachusetts Institute of Technology. Retrieved from
http://dspace.mit.edu/handle/1721.1/31154
Black swan theory. (2014, February 17). In Wikipedia, The Free Encyclopedia. Retrieved 20:37,
February 22, 2014, from http://en.wikipedia.org/w/index.php?title=Blackswan_
theory&oldid=595863834
Building Resilience in Supply Chains. (n.d.). Retrieved February 22, 2014, from http://www3.
weforum.org/docs/WEFRRNMOBuildingResilienceSupplyChainsReport_2013.pdf
Christopher, M., & Peck, H. (2004). Building the Resilient Supply Chain. InternationalJournal
ofLogistics Management, The, 15(2), 1-14. doi: 10. 1108/09574090410700275
Drucker, P. F. (1954). The Practice of Management. New York, NY. HarperCollins Publishers.
Edelman - Conversations - The Five "C's" To Corporate Culture Success. (n.d.). Edelman.
Retrieved November 30, 2013, from http://www.edelman.com/post/the-five-cs-tocorporate-culture-success/
Failure mode and effects analysis. (2014, February 19). In Wikipedia, The Free Encyclopedia.
Retrieved 20:09, February 22, 2014, fromhttp://en.wikipedia.org/w/index.php?title=
Failure modeandeffectsanalysis&oldid=596189414
Lee, H.L, Whang, S. (2003). Higher supply chain security with lower cost: Lessons from total
quality management. Stanford GraduateSchool of Business Research PaperSeries, No.
1824, October.
57
Pettit, T. J., Fiksel, J., & Croxton, K. L. (2010). Ensuring Supply Chain Resilience: Development
of a Conceptual Framework. JournalofBusiness Logistics, 31(1), 1-21.
Pink, D. H. (2009). Drive: The Surprising Truth about What Motivates Us. New York, NY.
Riverhead Books.
Sheffi, Y. (2005). The resilient enterprise: overcoming vulnerability for competitive advantage.
Cambridge, Mass: MIT Press.
SWOT analysis. (2014, February 14). In Wikipedia, The Free Encyclopedia. Retrieved 20:35,
February 22,2014, from http://en.wikipedia.org/w/index.php?title=SWOT_
analysis&oldid=595501838
58
GLOSSARY OF TERMS
CTL
The Center for Transportation and Logistics at MIT - The MIT Center for
Transportation & Logistics (MIT CTL), part of the Engineering Systems Division,
is a world leader in supply chain management and transportation education and
research. MIT CTL engages in three principal activities: research, outreach, and
education.
DAS
Dow AgroSciences - Dow AgroSciences LLC is a wholly owned subsidiary of
the Dow Chemical Company specializing in not only agricultural chemicals such
as pesticides, but also seeds and biotechnology solutions. The company is based
in Indianapolis, Indiana, in the United States.
GOLT
The Global Operations Leadership Team at DAS - The Global Operations
Leadership Team is a cross functional executive management team at DAS which
spans sourcing, procurement, manufacturing operations and supply chain. This
team is responsible for setting the strategic direction for all product supply related
work.
R
R is a free software programming language and software environment for
statistical computing and graphics. The R language is widely used among
statisticians and data miners for developing statistical software and data analysis.
R2
R Squared - R2 , otherwise known as the coefficient of determination indicates
how well data points fit a statistical model. It is used to determine if variables
change together (regression) in an effort to predict how variables will change in
the future.
S&OP
Sales & Operations Planning - Sales and Operations Planning is an integrated
business management process through which the executive/leadership team
continually achieves focus, alignment and synchronization among all functions of
the organization during the process of establishing a forecast and operations plans
to meet the forecast.
SCRAMM
Supply Chain Resilience Assessment & Management - The Supply Chain
Resilience Assessment & Management tool was developed at the Ohio State
University's Fisher College of Business and the Center for Resilience. The tool
consists of a detailed questionnaire designed to highlight the vulnerabilities and
capabilities of supply chain operations and is applicable to both manufacturing
and service industries.
59
SCRLC
Supply Chain Risk Leadership Council - The Supply Chain Risk Leadership
Council is an industry consortia focused on developing tools and processes to
manage risks that can materially disrupt a supply chain. SCRLC is comprised of
more than 30 member companies and includes key partnerships with leading
academic research institutions.
SKU
Stock Keeping Unit - A Stock Keeping Unit is a distinct item, such as a product
or service, as it is offered for sale that embodies all attributes associated with the
item and that distinguish it from all other items.
Tableau
Tableau is an American computer software company headquartered in Seattle,
WA, USA. It produces a family of interactive data visualization products focused
on business intelligence.
.xlsx
.xlsx is a file extension for an open XML spreadsheet file format used by
Microsoft Excel.
60
APPENDIX A - Supply Chain Professional Interview Questionnaire
lMT SCM - DAS Reslience Interview Sirt
Interviewers:
Interviewee:
Job Function:
INTRODUCTION &OVERVIEW:
"
"
"
"
"
Introduce ourselws (AJex& ULqing). Ask interviewee to introduce themselvs, describe their role, and also
primarysupply chain functions at DAS.
In the MIT Supply Chain Management Program and we are researching supplychain risk management practices.
We hav partnered with DAS to perform an in-depth case study of risk management, and to then make
assessments of practices relatie toindustrystandards organizations and other data collected by MIT.
The interview / survey will be completelyananymous, so we appreciate your transparency.
We are going to record the interiew, do you have any issues with this?
TOPIC #1 - Risk Management Practices:
"
"
"
"
"
"
"
"
When you hear'supply chain risk' or 'risk management'what do you think of?
What are some of the generda risks that you observe in your role / function at DAS?
Can you rank these- most impactful to less impactfui?
How often do they happen? Are they usuallyinyour control or out of your control?
What are the standard approaches that you (or your team) take to addressing / mitigating risk?
Can you share with us some specific examples of recent disruptions in your supply chain?
What was the impact to product line XX, or DAS, or?
How did you work / What dd you do to mitigate the problem?
TOPIC #2 - Risk Management Tools:
"
"
"
What are some of the tools that you use to measure and assess risk?
We have heard and read that DAS is starting to use 'SCRAM' (Proactie) and'Black Swan' (Reactie) assessnent
techniques - can you tell us about this?
Hav you participated in either of these sessions? If so, do you think they are effectiw, how could the process
be better- How haw you used this information inyour role?
TOPIC #3 - Theory: Disconnect Between Management & Workers:
"
"
"
Explain the theory -make sure to emphasize that this is industry wide, not something specific to DAS.
So, from DAS'perspectie -do you think that there is a dsconnect?
If you do, whydo think that iteidsts?
CONCLUSION:
"
"
Thank you for your time today, we are going to use this information to help inform a more holistic supply-chain
risk management surveythat we'll be deploying to DAS at the endof the year.
Do you haw any questions for us? Anything else?
APPENDIX B - Interview Results Summary Report
MIT & Dow-Agro Sciences
I Supply Chain Resilience Interview Summary
Alexander Cope & Liqing Yuan I MIT Supply Chain Management Program, Class of 2014
Monday, October 28, 2013
EXECUTIVE SUMMARY:
On the
14 th
and
15 th
of October, we met with 6 individuals representing various functions of the supply
chain within Dow Agro Sciences (DAS). The interviews were focused on understanding both the
individual's and their broader group's approach to risk management and resilience processes when
considering supply chain design and operation. There were three primary areas of focus explored during
discussions:
1.
2.
Risk Management Practices
Risk Management Tools
3. Theory: Disconnect Between Management & Workers
Questions within each topic were initially vague, allowing for free-form response, and increasingly
became more specific - the goal was to get a sense of a person's thoughts & approach without biasing
their response with detailed and specific questions.
The following summary represents common questions and responses from the group of individuals
interviewed. Questions within topics are presented in bold and responses are numbered and
summarized below; there is no significance to the priority or listing of responses.
TOPIC #1- Risk Management Practices:
Discussion about risk management practices focused on an individual's acknowledgement and
awareness of operational disruptions, inhibiting the flow of materials and goods to DAS customers. The
topic explored the individual's perception of supply chain risk, general risks observed in their role, and
specific examples of recent supply chain disruptions that they had observed.
When you think of risks to your supply chain, what do you think of?
1. Having plans in place to be able to respond to disruptions with key processes or products. Focus
on documentation, personal transition designs where someone else can pick up where you left
off - documentation and training is very important.
2. Capacity - having capacity to move product to and from manufacturing plants and storage
terminals. NEVER BE WITHOUT CAPACITY - AT ANY COST!
3. Decisions to produce products (make to order vs. make to stock).
4. Inventory capacity vs. constraints.
5. Contract Manufacturers not entirely within the control of DAS, CM's are a high risk to DAS'
business.
6. Supplier management strategy: sole source vs. dual source, also quality issues have potential to
have high risk.
7. A supplier's performance against contract & performance against PO's.
8. Resilience & having backup plans.
62
What are some general risks that you observe in your role at DAS?
1. Increased rates for transportation due to numerous variables: fuel prices, weather, product
seasonality, unused transportation space, etc.
2. Strategic vendors going out of business: Tank manufacturers and rental services, transportation
carriers, etc.
3. Over capacity in the storage network - run out of room to hold product.
4. Equipment & manufacturing line goes down and stops production.
5. Demand forecast is off and affects production schedules and volumes.
6. Do not have thorough safety stock strategies for all products.
7. Sole sourcing & cost of registration - Permits to manufacture certain chemicals are very
expensive.
8. Supplier delivery performance & alternate sources of supply - regulatory approval is very
important during supplier selection and often high costs make availability of sources limited.
9. Suppliers that are not able to supply products, which could be due to a number of things:
fluctuations in demand, natural disasters, people, these are all potential risks.
Can you share with is some specific examples of recent supply chain disruptions that you've
observed in your role?
1. Supplier delivered material out of specification which resulted in significant idle line time.
Transportation and packaging caused the product to break / leak - leaky bottles were found at
time of receipt.
2. Weather was not conducive to a specific products sale due to required chemical application
conditions. Manufacturing lines continued to manufacture product, however the ability to store
the product became challenging as all storage tanks were consumed.
3. Shipped product to terminal (holding tanks) only to find that there was not enough room in tanks
due to decreased customer demand. Trucks then returned to the manufacturing facility.
4. Ran out of a specific raw material despite the fact that ERP said material was in inventory. SAP
was incorrect, the material was inexpensive but it has a long lead time (6-8 weeks). The risk
mitigation is to carry more inventories, also trying to do more frequent inventory reconciliation.
5. Equipment failure caused 3 week production line shutdown, exhausted safety stock and not able
to meet customer commits.
6. A DAS plant in China went offline for -2-3 months due to not having proper license and permits
to manufacture. The plant exceeded a threshold of product manufactured, which required them
to obtain a different permit - no one was aware of this and the plant was shut down. The GM
worked exhaustively with government officials to obtain the permit and return he plant to
operation.
7. A certain chemical was sole sourced from DuPont and they had a factory shut down due to
chemical spill. This stopped delivery of product to DAS and therefore idle manufacturing line
time.
8. Due to global macroeconomic conditions certain suppliers implement more stringent contract
terms, specifically reducing DAS credit and payment terms. This made it difficult to resell in
certain countries where it can take up to 90 days to import product into the country.
63
TOPIC #2 - Risk Management Tools:
Discussion about risk management tools focused on the individual, group and functional role's
implementation of tools used to either proactively prepare for or reactively acknowledge a disruption in
the supply chain.
What tools have you or do you use to measure and assess supply chain risk?
1. Capacity planning tool - pulls demand from SAP to help schedule production.
2. Spreadsheet on SharePoint where supply chain managers log issues or disruptions that have
effected DAS ability to build / deliver a product. This tool has been used for -1 year and is not
reviewed by management.
3. Capacity planning tool to project logistics needs based on demand.
4. Modeling storage capacities given demand for a certain product in Excel.
5. FMEA, SWOT, PRAM, Financial Evaluations, Supplier Selection Process.
Have you heard of SCRAM or Black Swan, supply chain risk identification and assessment tools?
1. Three of Five people have heard about the use of both SCRAM and Black Swan at DAS. One
person had only heard of SCRAM and not of Black Swan, and one individual had not heard of
either tool. Due to time constraints with one interview, the individual was not asked this
question and therefore did not respond.
If so, have you participated in a SCRAM or Black Swan session?
1. Four of five people have never participated in a SCRAM or Black Swan session. One of the
respondents has participated in two, noting that the process "still feels new at DAS". One
individual was not asked this question.
TOPIC #3 - Theory: Disconnect Between Management & Workers:
The final topic explored the theory that there is a significant difference between supply chain strategies
as they are defined by executives in the boardroom and how they are executed by supply chain
professionals at the working level. The goal of the questioning was to objectively gage whether or not
the individual thought that there was disconnect at DAS, and if so, how significant it was.
Do you think that there is disconnect at DAS? If so, why?
1. There is good communication between management and functional teams with regards to supply
chain - annual meetings, monthly indicator meetings.
2. Commercial teams drive demand which means that there is a lot of focus on the customer.
Sometimes too much focus on the customer impacts DAS negatively. Organization sets strategies
and communicates well - people have access to leaders, flat organization.
3. Communication could use some work - sometimes it is challenging to communicate negatives to
commercial team, they don't understand the reasons for delays / slips.
4. "I think there is a gap" - Strategy is clear (reliable supply chain) - good communication, however,
there is a tradeoff between risk and costs. Good culture within teams, accountability and desire
to do a good job.
5. There is always some level of disconnect, however, there is good communication at DAS. There is
always a tradeoff between cost and risk.
6. Cost versus risk management - specifically within procurement. DAS is better at reliability than
they are at resilience. There could be increased communication & sharing of strategy.
64
APPENDIX C - Export of Internet-Based Survey
iVeneW Ut OAS. Thts siwvey is being deployed In pansu'shp wih
n pm fIr pa cong In this asmessmm & prxmut sMy ep
Heflo and
the Massachusetts IrnsMbte ofTectvoInogy iIT) CN an effrt to stuj DAS approacl 10 OptImildng prIuTct supPly effecthwemess, Ionae JIng boMt
arns of stenoth and armus tir Impuwvement
i-S Vewe tbw ft amblel This survey has 17 quesons ami shouid take you abcA 8 m Uws to compfte. When aswimein2 a QuestIbn
n boew
do not over Uiknk yow respmw often yMK Immediate reaction is the most accurae
m Weeamoblamei Became at tWis we ask far complete
Yew ameismn e
want to hear, tell us how you realty Ieel!
rnsparency
Inrsponses - cont te# us ina yOu that we
1. Tell us what you do - if the description is not perfect, choose the rate that fts best
Jo
Role:
2. TeNl us where you're located:
Job Location:
3. Is the scope of your role local, regional, or global?
Regionai
Globa
4. How long have you worked for Dow Chemical or a Dow wholly owned subsidiary?
vem ar Oenace:
S. How long have you worked for DAS directly?
Tis
of Berwee:
65
The ftsloing gestons ask you to aromde your opGn regdintg vaoius staements abold, pudxuCt Supply at DA.
6. ATTITUDES & PERCEPTIONS
Please rate the folowbug statemnets 1= strongly disagree & 7 = stroagoy agree):
2
1
3
5
A
6
7
6
7
Yaw role Is impnotai
suctcs at DAW buumne.
o the
In your posticm, plawv'l
ahead is valued more oa
bekig abe to quicay sive
problems.
In yaw pismon. you ae
responsible to preveit
*sn4W01%% In product spty.
in your position, you are
responsibie ID adress or fIt
wuptions in product sispy.
7. PROACTIVE VS REACTIVE
Please rate the following statenments (1
= reactive
& 7 Z proactive):
3
S2
45
in geurvl, cl you thin that
DAS Is more puscive
4conUngeicy plwIMgJ or
re we MM"gb
es.) when
eemewh ipudct saspiy
danrmonrs?
Role where you ta
DAS
shoul be vl3regers to
deaite with product supply
dsnWuop
. Planning (befnt
prouctie) versus fighiug tres
betnu rectie).
8. On average, about how much tme do you spend worlking on product supply
inprovement initiatves or contingency pla bing versus workiu g on cuwent Plan
expectations?
0%1-10%
11%-25%
mPvowd Sugly
66
2E%-50%
51%-75%
76%-10'b
9. CONTROL VS INFLUENCE
Rate your individual ability to CONTROL product supply performance in the following
segmnents of the value chain (1 = no control & 7 full control):
1
2
3
4
5
6
7
WA
er
s
RubM
Raw Maeral Log"i=
#intmal Product
Wnufactwung eAl, FAP)
Emb""I Rowuc
Monbuamg W. F01)
--%shed Goods uLOw3s
Warehouse, Termha or
Transportmbm
&
Cusoner Service Level
CuOmer
Empeftce
10. Rate your individual ability to INFLUENCE product supply perfonnance in the following
seginents of the value chain (1 = no inmfhence & 7= significant influence):
2
4
3
RaM MuaIs BSLPr
PWMormance
Raw Mami LOr
cs
OAS SW~i
Kwicm4
Product
MInuactwung
Al, F&PI
Exrnwl Pwodact
LtuLrfaItnf QA, FAPM
9"alse Goods Loosttcs
Wmflouse, Termin or
Transportalon
&
Cusmer Service Levei
CufwwExerence
67
5
6
iA
11. ORGANIZATiON
The following questions ask about product supply eflectiveness umanagement at DAS.
Product supply effectiveness neans meeeting ar exceeding customer expectations in
terms of quantity and quality of a product shipped, given risk amd sncertainty in the value
chain.
Yes, bt ft Is
not
emectie
Yes, wn
it is saumtal
eflicIve
Yes,
am It Is
eoectte
Ievy
OAS has a corposueevel
punoacsawy emvcameas
MMODOmert Nam or
leaderYour orgontzation or
production sWe has a
product supply etctveness
manhgemmnt team or
leader.
Yaw Wwn er go up has a
$ IP
mpansbie ir
prouct sUPPV
exetfneVeSS.
team has a proiGUCt
suppy coninuity ,uzlness
cortmutty) Om documenA.
Yoar
you 111ve specific proaduct
supply eteRvewss or
rLhiabMIy oedt" M m yaw
peufnene pi.
12. COMIMUICATION
NiA
Rate your level of confort delivering criticism or negative feedback to the following groups
of people (1 = not co nfotale & 7Z always coIfortable
5
6
W
1
2
3
4
Eslewuil Sagpilus
Peers inside of Your Team
Peers Otsidle of Your
Tewm
MUiwagement
68
VIN
69
wawaeiww
uma. Jo~,~G 514ld
i
tAimp =L V anwouo
I."# noA op alqqmi3n M041
4m
'SgI@J
*Vq~u a open inq inva AnaA jo n@A pap buarnpuIq
SIEMOIP#
*sp R!m
u W3 imI5m@ uaqM -i
14. SUPPLY DISRUPTIONS
About how oftwe does your site experience a najor product supply dmimptioa? A najor
disruption is defined w the inabity to source, -m-ufacture, or deliver product for 2 days
or more. If you manage or are involved with nultiple sites, please mawer for the site nost
strategic to DAS.
About once every S Abut once every 3 About ane time per
yeas
ye
15. In your opkion, what are the three nst
product?
CM
semd Most important
unst riportant
Raw mateial supfier
uanmty sarta
NCirwe rm%
"
er
eamer
mob"sne disaw e~
aft loitcs Wwe
DAS lor EM) ptt quality
DAB (ar EM) oat quanty
-esous
c-nftj
shortage
Poor PMmucton Plan
eor tembial)
1s
Cunomer or waret'use
celIvery failure
Pot Cu1sum
delays O
""Part I expom0
Govemment regulatory
cdmnes
/ essrns
iF .IIS syslams ilee
T 18
Iotes
important risks affecting DAS' ability to supply
quaft WSWu
carwrm
More m ni 3 te
per yer
yew
M MeWIty Issues
0wther Please specf
70
Thru Mst Iportant
16. SUPPLY EFFECTIVENESS
In the future, vqat level of product supply eflectiveness do you expect at DAS? (1 = greatly
reduced, 4 = similar to today, and 7= greatly inproved).
1
2
3
5
4
6
7
17. Please provide any final ioxugits about product supply effectiveness, reliability,
resilience, or risk anmiagemeut at DAS.
Ye.. bmemp.... a
.nrnyl
Tk
.m
*w.. aSmum* i sU m e amm yw ,pI .
71
Mad
WA
APPENDIX D - Heatmap and Dendrogram in R
The graphic shown below is a combination heatmap plot (colored sections) and dendrogram
diagram (clustered lines on the top and left side of the plot) generated in R. The heatmap is used
to visualize correlations between questions and segments (along the primary x-axis) within the
data. Each horizontal line in the plot represents a unique response of which there are 228 in
total. The dendrogram diagram illustrates hierarchical clustering between responses and is used
to visualize the strength of correlations in response. After identifying correlations, detailed
analysis can then be performed to test the strength and causality of the correlation under study.
Color Key
itT
1
3
5
Job Level:
High
LOW
Mid
7
Question rating
Function:
Manufackning
Operation
Procurement
Supply Chain
Technology
Question category
N
Service Scope:
Gobal
Local
Regional
Location:
Austrailia I New Zealand
Brazil
Europe
Greater China / Asean
India
JapanI Korea
Meso Andean
North America
Southern Cone
---
Service years (s):
1-5 Years
6-15 Years
Less than 1 Year
Longer than 15 Years
Service years (d):
1-5 Years
6-15 Yeas
Less than 1 Year
Longer than 15 Years
~A
-Won
..-
Am -wpm_
3WW-T
M
sea
-All
U72