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It is often taken for granted that the right products will be available to buy in retail outlets seven days a week, 52 weeks a year. Consumer perception is that of a simple service requirement, but the reality is a complex, time sensitive system - the retail supply chain (RSC). Due to short product life-cycles with uncertain supply and demand behaviour, the RSC faces many challenges and is very vulnerable to disruptions. In addition, external risk events such as BREXIT, extreme weather, the financial crisis, and terror attacks mean there is a need for effective RSC risk management (RSCRM) processes within organisations. Literature shows that although there is an increasing amount of research in RSCRM, it is highly theoretical with limited empirical evidence or applied methodologies. With an active enthusiasm coming from industry practitioners for RSCRM methodologies and support solutions, the RSCRM research community have acknowledged that the main issue for future research is not tools and techniques, but collaborative RSC system wide implementation.
The implementation of a cross-organisational initiative such as RSCRM is a very complex task that requires real-world frameworks for real-world practitioners. Therefore, this research study attempts to explore the business requirements for developing a three-stage integrated RSCRM framework that will encourage extended RSC collaboration. While focusing on the practitioner requirements of RSCRM projects and inspired by the laws of Thermodynamics and the philosophy of System Thinking, in stage one a conceptual reference model, The �6 Coefficient, was developed building on the formative work of supply chain excellence and business process management. The �6 Coefficient reference model has been intricately designed to bridge the theoretical gap between practitioner and researcher with the aim of ensuring practitioner confidence in partaking in a complex business process project. Stage two focused on a need for a standardised vocabulary, and through the SCOR11 reference guide, acts as a calibration point for the integrated framework, ensuring easy transfer and application within supply chain industries. In their design, stages one and two are perfect complements to the final stage of the integrated framework, a risk assessment toolbox based on a Hybrid Simulation Study capable of monitoring the disruptive behaviour of a multi-echelon RSC from both a macro and micro level using the techniques of System Dynamics (SD) and Discrete Event Simulation (DES) modelling respectively.
Empirically validated through an embedded mixed methods case study, results of the integrated framework application are very encouraging. The first phase, the secondary exploratory study, gained valuable empirical evidence of the barriers to successfully implementing a complex business project and also validated using simulation as an effective risk assessment tool. Results showed certain high-risk order policy decisions could potentially reduce total costs (TC) by over 55% and reduce delivery times by 3 days. The use of the �6 Coefficient as the communication/consultation phase of the primary RSCRM case study was hugely influential on the success of the overall hybrid simulation study development and application, with significant increase in both practitioner and researcher confidence in running an RSCRM project. This was evident in the results of the hybrid model’s macro and micro assessment of the RSC. SD results effectively monitored the behaviour of the RSC under important disruptive risks, showing delayed effects to promotions and knowledge loss resulted in a bullwhip effect pattern upstream with the FMCG manufacturer’s TC increasing by as much as €50m. The DES analysis, focusing on the NDC function of the RSC also showed results of TC sensitivity to order behaviour from retailers, although an optimisation based risk treatment has reduced TC by 30%. Future research includes a global empirical validation of the �6 Coefficient and enhancement of the application of thermodynamic laws in business process management. The industry calibration capabilities of the integrated framework application of the integrated framework will also be extensively tested.
Crowe, J. (2017) An integrated retail supply chain risk management framework: a system thinking approach. Doctoral thesis, DIT, 2017.