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People with the right characteristics, including communication and ‘likeability’, are vital in spotting and starting off integration opportunities

Deep thinking - By Nigel Parry

Trucks, trains and ships – they haven’t changed much. But a small number of supply chain academics are pointing their logistical lens at what we’re doing, what could go wrong, and what we need to be thinking about. Nigel Parry spoke to two of them.

Sixteen years ago, Professor Paul Childerhouse, director of quality and supply chain management at the School of Engineering and Advanced Technology, Massey University, was working on a diagnostic tool to assess supply chain health. And apparently supply chains in New Zealand are not that good.
Massey University’s Professor Paul Childerhouse: “Resellers are double-selling New Zealand’s reputation, and it’s going to turn around and bite us”

One area of more recent research is in supply chain resilience, a significant area of risk for New Zealand, separated from our major suppliers and markets by vast oceans and long distances. Working with Scion, Professor Childerhouse and colleagues focused on log exports, building a model of how they work and how we might cope when there are major port disruptions.

The warning bell rung by the results is that, despite a large number of ports for our population, we don’t have the flexibility or efficiency to manage a crisis. “Some trees will just have to stay in the ground,” Professor Childerhouse quips.

Policy advice followed, highlighting the need to invest in roads and wharfage. He claims that we could double capacity at Tauranga, close three smaller ports, and have a more efficient and resilient network.

His team had a rare opportunity to test their model in practice following the Kaikoura earthquake two years ago. With CentrePort in Wellington closed, operations closely followed what the model predicted. 

The quake also started more detailed study, looking specifically at the Hurunui area – how the area responded following the earthquake, and how it relied on a very small number of individuals and their relationships. “Probably not the ones you think they are,” Professor Childerhouse says. “They were the well-connected ones – the ones with mana.”

It’s about the people

Logistics is showing its softer side, and this has led Professor Childerhouse to one of the areas where new and interesting ground is being broken. “Ultimately it’s the people – the way they interact, the decision-makers. That set me off about a decade ago. I parked integration and good process stuff, and started to unpack what people were up to,” he says.

There are some good organisational and people theories and models that can be applied to study how we behave in the supply chain context. “I have been looking at social networks, information flow (and information is power), the way organisations are connected with each other. More recently, that has moved from a macro level (businesses) to individuals, looking at how Fred and Mary get along and actually make it happen,” Professor Childerhouse adds. “How do people’s characteristics enable integration in the supply chain?”

His research has looked at the role of interpersonal and intercompany relationships, especially with what Professor Childerhouse refers to as ‘boundary spanners’ – people who deal a lot with others outside their own organisation. And it turns out that people with the right characteristics, including communication and ‘likeability’, are vital in spotting and starting off integration opportunities. As the cooperation between organisations cements itself, individuals become less important, taken over by the working relationship between organisations.

Research has also shown there are risks in letting individuals get too close to outside organisations. “Over-embeddedness – it’s where those people at the boundaries get a bit confused and not sure who their boss is,” he adds. “You have to move people around in terms of who they interact with so ties don’t become overpowering.”

Another area of his work is in food supply chain integrity – how we can guarantee the provenance of our agricultural products, especially after they leave our shores. “We lose control once they are moved down the supply chain,” Professor Childerhouse says. “Resellers are double-selling New Zealand’s reputation, and it’s going to turn around and bite us.”

Food waste and supply chain integrity

Food supply chains are also part of the work of senior lecturer in supply chain at the University of Otago, Dr Lincoln Wood. A current study, along with fellow academics at Curtin University in Western Australia, is looking specifically at food waste and the effect produced by supermarkets’ insistence on only stocking perfect-looking fruit and vegetables.

University of Otago’s Dr Lincoln Wood: “We hope to change the debate around the expectation of our food – it has hidden consequences”

“This has a knock-on effect up the supply chain,” claims Dr Wood. “What are we doing with all the food that fails to meet those standards? How does that change the behaviours of workers who handle this food?”

Most research has been at the consumer end of the supply chain. Dr Wood and his colleagues have found the same phenomenon upstream. “As academics, we cannot change the world, but as we uncovered a bit more about this, we found it leads to quite a lot of food loss. We hope to change that debate around the expectation of our food. It has hidden consequences.”

Public sentiment around ‘ugly’ produce is changing, helped by the shift towards farmers’ markets

All that ugly stuff must have somewhere to go, and Dr Wood reckons that changing public sentiment is helping, with a shift towards farmers’ markets, for example. Other work has looked at food marketing collectives – marketing and logistics collaborations where smaller players can tap into the benefits of economies of scale. He refers to it as co-opetition – cooperating with your competitors.

“With New Zealand having so many SMEs, it’s a significant area, and we have looked at the managerial strategies behind successful operations.”

Red flags for greenwashing

But what happens when we are not as clean and green as we claim to be? Dr Wood has looked at how product recalls, and environmental claims that don’t stack up, affect a company’s value.

“We looked at the ecology behind attitude. One of the issues is greenwashing – when you make unsubstantiated or misleading claims about the environmental benefits of your products which make you appear to be more environmentally friendly than you really are. Or when you do something small and overhype it. Or what happens when you have a standard and you screw it up or admit that. Dieselgate (the Volkswagen emissions scandal) is obviously the big one, and made this issue far more visible. Volkswagen lost 17% of company value in three days,” he notes.

If you lie or do bad things, you are liable to get a hit on company value – just ask Volkswagen

“Digging in a little bit more, it affects the value to business or likeability. The market will be weighing up on the future impact on revenue and costs.”

The research concluded that if you lie or do bad things, you are liable to get a 1% hit on company value. News can be quite detrimental to your company, and the effect seems to be much more pronounced since Dieselgate.

Are we leading the edge?

There are plenty more things that academics are looking at, including the construction sector, humanitarian logistics and sustainability.

So what role is all this playing? “Sometimes we follow rather than lead; a few people, such as consultants, have ideas,” says Paul Childerhouse. “It’s more a case of bringing some precision to the discussion – like blockchain, for example, and what value it might produce.”

Research finds things out – is that actually true? And how does it fit with what we know already? What if this happens, or that? There’s a lot of insight our academics can bring us.

Award-winning journalist Nigel Parry started writing for FTD over ten years ago, and has been covering logistics and supply chain issues in a number of countries for more than two decades; he can be contacted at nigel.parry@gmail.com

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