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A network lens on supply chains

Supply chain management through a networked lens.

Companies nowadays are increasingly viewing their supply chain as an extension of their proprietary operations. Large multinational companies are forced to do so as they are increasingly under scrutiny from governments and media on reporting practices and smaller firms are using their supply chain to complement and integrate their own activities in a broader ecosystem of capabilities and expertise[i].

With the rise of the network organizations[ii], companies are more and more intertwined with their supply chain and this has implications for the way in which they choose and collaborate with suppliers. For instance, if a company is pursuing corporate social responsibility and they have balanced their internal operations accordingly, yet they source from irresponsible suppliers that use e.g. child labor or have a high carbon footprint, this indirectly impacts the focal firm and needs to be accounted for[iii].  

Viewing the supplier network as an extension of the focal firm has implications for the choice of supplier as it means adopting a more long term and collaborative perspective and considering the strategic fit in more detail to inform decisions in the supplier dimension[iv].

This makes supply chains inherently strategic in nature and begs the question; How can we make sure our supply chain decisions are aligned with our internal and external environment as well as the interface with our suppliers we manage on a daily basis. While the answer to this question will be different for each firm under consideration, the important learning point is that we can alleviate short term uncertainty, as experienced e.g. during the pandemic, through a strategic partnership approach that extends beyond short term setbacks.

[i] Holweg, M., & Helo, P. (2014). Defining value chain architectures: Linking strategic value creation to operational supply chain design. International Journal of Production Economics, 147, 230-238.

[ii] Hearnshaw, E. J., & Wilson, M. M. (2013). A complex network approach to supply chain network theory. International Journal of Operations & Production Management.

[iii] Martins, C. L., & Pato, M. V. (2019). Supply chain sustainability: A tertiary literature review. Journal of Cleaner Production, 225, 995-1016.

[iv] Halldorsson, A., Kotzab, H., Mikkola, J. H., & Skjøtt‐Larsen, T. (2007). Complementary theories to supply chain management. Supply chain management: An international journal.

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