Research in the decision sciences for innovations in global supply chain networks

He has published academic articles in a number of journals such as Journal of Operations Management, Journal of Supply Chain Management, Supply Chain Management: An International Journal

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Global Supply Chain Network

Innovations Best Papers from the 2014 Annual Conference

European Decision Sciences Institute

Edited by Jan Stentoft, University of Southern Denmark

Antony Paulraj, University of Southern Denmark

Gyula Vastag, National University of Public Service

(Budapest, Hungary) and Széchenyi University (Gy r, Hungary)

For questions about sales outside the U.S., please contact international@pearsoned.com.Company and product names mentioned herein are the trademarks or registered

trademarks of their respective owners

All rights reserved No part of this book may be reproduced, in any form or by any means,without permission in writing from the publisher

To my wife, Mona Stentoft, for your always positive mind and strong support on all aspects of life.

Acknowledgments

References

Part 2 Global Distribution of Production and Sourcing

Chapter 6 Manufacturing Back- and Near-Reshoring: A Comparison of European and North American Evidence

References

Chapter 12 Integrating Domains in Supply Chains: Development of Requirements for Interdisciplinary Decision Support Based on an Integrative Framework of Production, Logistics, and Traffic

Types of Interrelations in the Integrative Framework of Production, Logistics, andTraffic

The compilation of articles in this volume represents some of the interesting articles thatoffer new insights and directions for future research Successful pursuit of innovation byleveraging the unique capabilities and knowledge assets of the supply network is at onceimportant and difficult to achieve As firms pursue global competitiveness, the ever

present and concurrent demands for economies of scale and scope have necessitated aglobal presence Consequently, most transnational manufacturing firms have a globalfootprint Engaging a global supply network in the innovation process requires that thefocal firm pursue network design and network integration with specific strategic

imperatives in mind Recent events as well as the global footprint of supply networks havealso underscored the importance of inherent risks of extended supply networks and theneed for sustainability of global operations I am delighted to see a compendium of papers

in this volume of the proceedings that address topics in these important areas pertaining toinnovation in global supply networks

The papers in this volume address a diversity of interesting topics They have been

grouped into supply chain strategy, global distribution of production and sourcing, supplychain integration, and sustainability The papers in the strategy section pertain to a variety

of thought-provoking issues The papers in the global distribution of production and

sourcing address issues relating to offshoring and insourcing The papers identify

important antecedents of these two trends currently in place in a variety of industrial

contexts In addition, this section includes a paper on a comprehensive literature review ofsourcing innovation, which would be invaluable to researchers The section on supplychain integration features papers that deal with the offshore wind industry and integrativedecision processes for effective integration The last section features two papers on

sustainability and its impact on performance and methodological approaches to evaluation

of sustainability effects These papers collectively reflect the core philosophy of the

Institute to promote multidisciplinary research that addresses organizational problems Thepapers contribute to the knowledge and serve to expand the domain of research in theirareas I am sure you will find the papers in this volume intellectually stimulating

—Ram Narasimhan, University Distinguished Professor and John H McConnell

Professor of Business, Eli Broad Graduate School of Management, Michigan State

University, East Lansing, Michigan, President, Decision Sciences Institute (2009-2010)

www.decisionsciences.org/europe#europe

http://edsi.uni-nke.hu

Jan Stentoft, PhD, is Professor in Supply Chain Management (SCM) at the Department

of Entrepreneurship and Relationship Management, University of Southern Denmark,Kolding, Denmark His research and teaching areas are within SCM, supply chain

innovation, enterprise resource planning, and corporate social responsibility Jan was

among the founding members of the European Decision Sciences Institute (EDSI) and waspresident of EDSI from 2013 to 2014 He has more than 15 years of teaching experienceand teaches primarily postgraduate, PhD, and MBA levels He is head of a strategic

research program focusing on supply chain innovation in the offshore wind energy sector(ReCoE—www.recoe.dk) Jan has been published in many international peer-reviewedjournals, books, book chapters, and practical articles in trade press journals and

newspapers He has published academic articles in a number of journals such as Journal of Operations Management, Journal of Supply Chain Management, Supply Chain

Management: An International Journal, Supply Chain Forum: An International Journal, Journal of Cleaner Production, International Journal of Physical Distribution & Logistics Management, European Business Review, Journal of Purchasing & Supply Management, Operations Management Research, Logistics Research, Journal of Enterprise Information Management, and Industrial Management & Data Systems He has practical industry

experience from positions as director (Programme Management Office) at LEGO SystemsA/S, ERP project manager at Gumlink A/S, and as a management consultant in a number

of public and private enterprises

such as Journal of Operations Management, Journal of Supply Chain Management,

Journal of Business Logistics, International Journal of Production Research, International Journal of Operations and Production Management, and Journal of Purchasing & Supply Management among others He has also received several awards in research He was the

winner of the Institute for Supply Management’s Doctoral Dissertation Grant in 2002 forhis outstanding doctoral research in the field of supply chain management One of his

articles received the 2007 Journal of Purchasing and Supply Management (JPSM) Best Paper Award Additionally, another of his articles received the 2004 Journal of Operations Management (JOM) Best Paper Finalist Award.

Service (Budapest, Hungary) and Professor at Széchenyi University (Gy r, Hungary) Heearned PhD and Doctor of Sciences degrees from the Corvinus University of Budapest andfrom the Hungarian Academy of Sciences, and finished habilitation at Corvinus

University From the late 1980s, he spent almost two decades in the United States on thefaculties of the Kelley School of Business (Indiana University), the Eli Broad GraduateSchool of Management (Michigan State University), and the Kenan-Flagler BusinessSchool (University of North Carolina at Chapel Hill) Between 2005 and 2007, he was avisiting professor (part-time) at the University of Groningen (The Netherlands) He spentthe 2000-2001 academic year in Stuttgart, where he was Professor and Dean of SupplyChain Management Programs and held a visiting professorship afterward Dr Vastag

coauthored two books, wrote eight business cases, and has contributed chapters to 15books His papers (30+ refereed journal publications) were published in a variety of peer-reviewed academic and professional journals in the United States and in Europe Gyulareceived several research awards, most recently the New Central Europe DistinguishedSenior Researcher Scholarship (2014) He is a founding member and member of the

executive board of the European Decision Sciences Institute, Vice President for GlobalActivities, and member of the executive board of the Decision Sciences Institute, where hehas also served as program chair and track chair of DSI conferences

Networks

The Fifth Annual Conference of the European Decision Sciences Institute (EDSI) washosted by the University of Southern Denmark in Kolding, Denmark The University ofSouthern Denmark has more than 27,000 students and more than 3,500 employees Theuniversity offers teaching and research at six campuses situated on Funen in Odense; inSouthern Jutland in Kolding, Esbjerg, and Sønderborg; in West Zealand in Slagelse; and inthe capital city, Copenhagen

The Department of Entrepreneurship and Relationship Management, based in Kolding,hosted the conference It has approximately 85 employees Important research areas arewithin the spearheads of entrepreneurship and relationship management The departmenthas a longstanding tradition of problem-oriented cooperation that transcends the

traditional boundaries between research areas This is realized through a long line of

externally financed research projects Part of the research activities are carried out

individually and part in cooperation with other national as well as international researchgroups

The Conference

The conference was held at Hotel Koldingfjord, located in delightful country surroundingsright by the water’s edge of Kolding Fjord There was a great interest for the 2014 EDSIconference When the deadline for revised full papers and work-in-progress papers

became a reality, 43 full papers were accepted for the conference The conference had atotal of 56 participants from 15 different countries, including the United States, Finland,Sweden, Morocco, Spain, Portugal, Germany, Turkey, Australia, Hungary, Italy, China,England, Switzerland, and Denmark The conference started June 28, 2014, with a

Doctoral Consortium On June 29, an optional trip to LEGO Land was organized,

followed by the welcome reception The conference with keynote speeches, plenary

discussions, and paper presentations took place on June 30 and July 1 On July 2, an

optional company trip to Siemens Wind Power was organized

The European Decision Sciences Institute’s Doctoral Student Consortium was held at theUniversity of Southern Denmark in Kolding, Denmark The EDSI Conference is one ofthe premier venues for empirically focused operations management (OM) and supplychain management (SCM) research in Europe This year, the consortium adopted a newformat that focused more on research-related activities The highlight of this new format isthat a group of OM and SCM scholars served as faculty mentors for the participatingdoctoral students Given this intensive incubator format, the doctoral students had theopportunity to present their research proposals to a panel of faculty who provided one-on-one feedback and guidance on each proposal This year, 14 PhD students participated inthe doctoral consortium The students were from countries including Denmark, Sweden,the United Kingdom, and Brazil The consortium coordinators were Professor AntonyPaulraj and Professor Constantine Blome In addition to these coordinators, ProfessorAsoo Vakharia, Professor Gyula Vastag, Professor Ram Narasimhan, and Professor VaidyJayaraman served as faculty mentors

Keynote Speakers

Henrik Stiesdahl, Chief Technology Officer, Siemens Wind Power, provided a keynotespeech on June 30 with a presentation titled “Supply Chain Innovation in the OffshoreWind Industry.”

Mads Nipper, Chief Marketing Officer, The LEGO Group, provided a keynote speech onthe morning of July 1 with a presentation titled “Joint Innovation with Suppliers,

Customers, and Consumers.”

Company Visit at Siemens Wind Power

During the visit to the Siemens Wind Power plant in Brande, EDSI participants had theopportunity to see the assembly process of the two offshore turbines manufactured bySiemens Wind Power (the geared 4 MW and the direct-drive 6 MW) Additionally, theyalso saw one of the blades manufactured by the company, which uses a patented processthat fabricated the whole blade as a single piece with no joints or welding points Thismakes these blades the biggest single-piece components manufactured in the world

Additionally, the participants had the chance to observe how the assembly of modulestakes place and how the machines move through the assembly line The purpose of thevisit was to provide EDSI participants the opportunity to witness the supply chain

innovations taking place at the company

The Papers in This Book

In all, 15 papers are included in this book Based on the focus of research, these papers aredivided into four parts: Part 1, “Supply Chain Strategy,” Part 2, “Global Distribution ofProduction and Sourcing,” Part 3, “Supply Chain Integration,” and Part 4,

“Sustainability.”

Five papers are included in this section The first paper is written by Graham Heaslip,Gyöngyi Kovács, and Ira Haavisto and is titled “Supply Chain Innovation: Lessons fromHumanitarian Supply Chains.” The paper argues that supply chain innovation (SCI) is anunder-researched and elusive concept, especially when it comes to innovation practices inthe supply chain The innovation in focus is the move from delivering materials in aidtoward cash transfers, and how this innovation impacts the supply chain Based on theseinsights, the paper contributes a refined SCI model and subsequently outlines avenues forfurther research within supply chain innovation

The second paper is written by Marco Antonio Viana Borges and Luciana Marques Vieiraand bears the title “Global Supply Chain Capabilities: A Framework Proposal.” Based onextant literature, this paper presents a conceptual framework showing the capabilitiesrequired by companies to move up in a global supply chain The paper presents a

framework that proposes it is important to develop productive, innovative, and interactivecapabilities Eight supply chain processes are presented as the means to achieve thesecapabilities

The third paper is authored by Yavuz Acar, Sukran N Atadeniz, and Faiza Zalila and hasthe title “An Empirical Study of Volume and Storage Flexibility in a Global Supply

Chain.” The purpose of this empirical paper is to investigate the combined effect of

volume and storage flexibility on the operational performance of a global specialty

chemicals company The supply chain is modeled using both optimization and simulationtechniques The paper provides valuable insights for the company management by

displaying the degree of flexibility that would be most beneficial and be achieved with theleast amount of investment

The fourth paper is written by Roberto Garcia-Castro and Claude Francoeur and is titled

“When More Is Not Better: Complementarities, Costs, and Contingencies in StakeholderManagement.” In this empirical paper, the authors rely on set-theoretic methods and alarge international dataset of 1,060 multinational companies to theoretically and

empirically explore some of the complementarities, costs, and contingencies likely to arise

in stakeholder management The results show that stakeholder investments are more

effective when done simultaneously across all the relevant stakeholder groups and whenthere are no disproportionally high investments

The fifth paper, written by Thomas Poulsen, is titled “Changing Strategies in Global WindEnergy Shipping, Logistics, and Supply Chain Management.” Based on extensive casestudies, this paper reviews different wind energy markets globally Within the global windenergy market, a number of derived industries—such as shipping, logistics, and supplychain management—support the continued expansion of the ever larger onshore and

offshore wind farms Subsequently, a number of supply chain setups serviced by the

shipping, logistics, and supply chain management industry are reviewed, and the winningbusiness models and strategies of current and emerging supply chain constituencies arediscussed

Five papers are included in this section The first paper is written by Luciano Fratocchi,Alessandro Ancarani, Paolo Barbieri, Carmela Di Mauro, Alessio Troiano, Matteo

Vignoli, and Andrea Zanoni Their paper is titled “

Manufacturing Back- and Near-Reshoring: A Comparison of European and North American Evidence.” The paper

explores the recent back-reshoring and near-reshoring trends in global manufacturing.Further, it summarizes as well as discusses empirical evidence emerging from a widerange of countries Drawing on a database of secondary data, the paper contrasts the

motivation for reshoring in the United States and Europe The research findings suggestthat the reduction in labor and logistics cost differentials between offshore and home

The third paper is produced by Mário Gomes Augusto, João Veríssimo Lisboa, and

Mahmoud M Yasin and has the title “The Nature of the Relationship Between ContinuousImprovement Techniques and Business Performance in the Portuguese ManufacturingEnvironment.” Using a sample of 122 Portuguese manufacturing organizations, this paperutilizes a structural equation modelling procedure to assess the impact of continuous

improvement techniques on business performance in the Portuguese manufacturing

cultural context The results point to a direct effect of lean production techniques on

operational performance and an indirect effect on organizational financial performance.The fourth contribution in this subsection is delivered by Christopher Rajkumar with apaper titled “Sourcing Innovation: A Systematic Literature Review.” Sourcing innovationhas become a prevalent topic in recent years, and various descriptions have been offered

as it has gained distinction The main contribution of this conceptual paper is to develop adefinition for sourcing innovation within the supply chain management context through asystematic literature review Further, this paper presents the various descriptions of

sourcing innovation as well as the various factors that could underpin the notion of

sourcing innovation

The final paper in this subsection is written by Lone Kavin and is titled “How to Design

an Appropriate Supply Network Structure to Reduce the Cost of Energy in the DanishOffshore Wind Power Industry.” The importance of supply network structure has beendiscussed since the birth of SCM and is still a major challenge for firms Through a

systematic review of the literature on supply network structures, this conceptual paperidentifies different supply network classifications, typologies, and taxonomies

Additionally, it also explicates how these classifications, typologies, and taxonomies can

be used to empirically describe and design an appropriate supply network structure for the

Supply Chain Integration

This third subsection contains three papers The first paper in this section is a contributionfrom Ivan Martinez Neri, Ole Stegmann Mikkelsen, and Jan Stentoft titled “Supply ChainIntegration in Engineering, Procurement, and Construction Projects: An Explorative Study

in the Offshore Wind Power Industry.” The paper explores the supply chain integration(SCI) of industries in which recurrent engineering-procurement-construction (EPC)

projects are set to play an important role in the long term This empirical paper is based oninterviews with key players in the offshore wind industry The findings show that

information sharing and the level of collaboration are important dimensions to be studied

in further stages of research regarding SCI in EPC projects

The second paper is written by Christian Zuber, Hans-Christian Pfohl, and Ulrich Berbnerand titled “Integrating Domains in Supply Chains: Development of Requirements forInterdisciplinary Decision Support Based on an Integrative Framework of Production,Logistics, and Traffic.” The paper is concerned with decision making within value-addednetworks as they are not only becoming increasingly complex, but also often

counterproductively interfere with each other The paper contributes with the integrativeframework of production, logistics, and traffic To enable interdisciplinary decision

theory, and they validate it using a large-scale survey data The paper contributes by

highlighting the importance of improving e-loyalty in not only attracting new customers,but also retaining existing ones

Sustainability

The last subsection consists of two papers The first paper is written by Rick Edgeman andZhaohui Wu and is titled “Anthropocene Age Wicked Challenges: Yin, Yang, and

Sustainable Enterprise Excellence.” This conceptual paper addresses grand global

challenges, including wicked human caused or influenced ones key to sustainability, thatcharacterize the Anthropocene Age Wicked challenges are discussed in relation to

enterprise excellence, sustainability, resilience, and robustness (SEER2) where these are inpart enabled by supply chain proficiency The paper discusses the Springboard to SEER2Model and assessment of SEER2 and specific enablers and outcomes of SEER2

The last paper is written by Yuan-Sheng Lee, Hsu-Shih Shih, and David L Olson and istitled “Sustainability MCDM Model Comparisons.” This paper contends that

sustainability is a key societal factor that inherently involves multiple and conflictingobjectives This paper applies basic MCDM models (weighting methods and

Acknowledgements

We are indebted to many people and organizations who contributed to the success of thisconference and the publication of this book under such a short time We would like to sayspecial thanks to

Department Secretary Pernille Holst Christensen at the Department of

Entrepreneurship and Relationship Management, University of Southern Denmark Professors Antony Paulraj and Constantine Blome for coordinating the doctoralconsortium

Professors Asoo Vakharia, Ram Narasimhan, Gyula Vastag, and Vaidy Jayaramanfor serving as mentors in the doctoral consortium

Henrik Stiesdahl for giving a keynote speech on supply chain innovation in theoffshore wind industry

Mads Nipper for giving a joint innovation with suppliers, customers, and consumerskeynote speech

Part 1: Supply Chain Strategy

1 Supply Chain Innovation: Lessons from Humanitarian Supply Chains

—Graham Heaslip (graham.heaslip@nuim.ie), School of Business, NUI Maynooth, Ireland

—Gyöngyi Kovács, HUMLOG Institute, Hanken School of Economics, Finland

—Ira Haavisto, HUMLOG Institute, Hanken School of Economics, Finland

Abstract

Supply chain innovation (SCI) is an under-researched and elusive concept, especiallywhen it comes to innovation practices in the supply chain This research therefore aims tofurther develop current SCI models, drawing on insights from innovation in the

humanitarian supply chain The innovation in focus is the move from delivering materials

in aid toward cash transfers, and how this innovation impacts on the supply chain Based

on these insights, the paper suggests a refined SCI model and outlines avenues for furtherresearch in supply chain innovation

Introduction

Innovations are dynamic processes that focus on the creation and implementation of new

or improved products and services, processes, positions, and paradigms (Francis and

Bessant, 2005) Successful innovations are those that result in improvements in efficiency,effectiveness, quality, or social outcomes and impacts In their recent special topic forumeditorial, Arlbjørn and Paulraj (2013, p 8) outline future research directions particularlyfor scholars to “bridge the research-practice gap by focusing their attention on all threeaspects of ISCN [innovations within the supply chain network]—process, technology, andstructure.”

Innovations are most often discussed in the commercial sector, yet as of late, research hasalso turned its attention to social innovations Although the concept is not new per se—Taylor (1970) conceptualized it as a social movement that has an impact on the

help groups, sharing economy, micro-financing, and so on (Mulgan, 2006) While

community—social innovation has gained renewed interest through trends such as self-business innovation may have implications for social innovation, often, social innovationtakes place in areas with underinvestment, that is, in those areas in which business

innovations may not be profitable (Pol and Ville, 2009) Little attention though is paid tothe implications of social innovation to supply chain management, not to speak of supplychain innovation in this context, with the notable exception of Klassen and Vereecke’s(2012, p 113) proposition that “social innovation capabilities focus on developing newaspects of social and financial performance in the supply chain by building bridges to newstakeholders, paradoxically outside the current supply chain.”

An area in which innovation has a social purpose is the humanitarian context Albeit

humanitarian supply chains are attested to being highly dynamic and agile (Oloruntobaand Gray, 2006), innovation research in this context has focused on access to innovation,

innovations in this context include new types of ready to use therapeutic foods, new

templates for needs assessment, the use of social media for needs assessment and for

matching supplies with demand, to name but a few Rather, these innovations have notbeen researched as to their implications for the humanitarian supply chain, and neither hasresearch focused on supply chain innovations in this context

In a seminal article on supply chain innovation (SCI), Arlbjørn et al (2011) explore theconcept and identify its key elements Their resultant model provides the foundation fortheory building within SCI, yet as identified by the authors and restated in their specialtopic forum (Arlbjørn and Paulraj, 2013), the next step is to refine the model for SCI

through its application In this study, we apply the SCI model as well as other innovationmodels to better understand how the move from material to cash flows in the humanitariancontext alters the humanitarian supply chain We then revise the SCI model through thisapplication

The remainder of this article is structured as follows The literature review begins withintroducing the context of humanitarian supply chains before providing an overview ofSCI We then discuss, in greater detail, the five stages of innovation and the 4P model ofinnovation Next we propose the refined SCI model We then introduce the case of cashtransfer programs, based on which we exemplify the various parts of the SCI model

Finally, the conclusions summarize the contributions of the research and provide

suggestions for future research as well as outline managerial implications

The Context of Humanitarian Supply Chains

Humanitarian supply chains exist for the purpose of delivering aid in various types ofdisasters Depending on the context they can be called relief supply chains, disaster reliefsupply chains, or emergency supply chains The disasters in question can vary from

natural disasters such as earthquakes, tsunamis, tornadoes, droughts, and floods to medicalemergencies such as the 2014 Ebola crisis, to man-made disasters such as the Syria crisisthat has been ongoing since 2012 Disaster statistics show that the number of people

affected by disasters is steadily on the rise (Guha-Sapir et al., 2014), and in line with this,the cost of humanitarian aid also shows an upward trend Disturbingly, the increase inglobal humanitarian spending still does not meet global requirements In 2013, 22 billionUSD was spent on humanitarian aid, which corresponded to 65% of funding appeals

(GHA, 2014)

From a broader perspective, humanitarian supply chains even encompass developmentaid There are many overlaps between disaster relief and development aid, as well as areassuch as the serving of refugee camps that fall between humanitarian and developmentmandates (Haavisto et al., 2013) The commonality of all the above is the delivery of aid,and serving of beneficiaries

Humanitarian logistics and supply chain management is a growing area of research: In thelatest literature review in this area, Leiras et al (2014) show a dramatic increase of thenumber of articles in humanitarian supply chain management/year, particularly in the last

business supply chains, with perhaps the best summary being provided by Balcik andBeamon (2008, p 102) who list the unique characteristics of humanitarian supply chains

to consist of an unpredictability of demand in terms of timing, location, type, and size; thesuddenness of the occurrence of demand in very large amounts and short lead times for awide variety of supplies; and the high stakes associated with adequate and timely delivery,combined with a lack of resources in terms of supply, people, technology, transportationcapacity, and money Furthermore, humanitarian supply chains serve a not-for-profit aim,and show the same duality between recipient (the beneficiary) and the origin of the

financial flow (donors) as, for example, public health care, or many public educationprograms—that is, other areas of social innovation

Supply Chain Innovation (SCI)

In supply chain literature there is no single agreed upon definition of innovation, not leastbecause of the different disciplinary stances (political, economic, sociological, and

managerial/organizational) from which innovations are viewed Research on innovations

is complicated because they influence and are influenced by so many factors and actors,and there are multiple dimensions that deserve consideration in any systematic

investigation Arlbjørn and Paulraj (2013, p 4) put forward the most accepted definitionfor supply chain innovation, being “an incremental or radical change in process, structure,and/or technology that takes place in the supply chain network so as to create value for allstakeholders.” Overall, innovation has traditionally been linked to agile supply chains andflexible procurement practices (e.g., Fisher, 1997) In conclusion, Arlbjørn et al (2011, p.8) identified the following elements, almost steps, to supply chain innovation (SCI):

1 Recognize a need for change in business model (performance gap).

2 Develop solutions for new business model.

3 Implement new business model.

The SCI model suggests these stages form a loop It further identifies three interactingcontent elements of SCI:

positions, or paradigms (the 4P model of innovation) that might enable either reductions incost or improved features Table 1.1 applies the 4P model to the humanitarian context

Table 1.1 4P in the Humanitarian Context

This is different from the SCI model in that it adds the aspects of positioning and

paradigm to the subject of innovation—which, arguably, are encompassed in the supplychain network element of the SCI model However, supply chain networks do not

recognize the importance of the position of an organization and its work in relation to keystakeholders (Markides, 2006; Francis and Bessant, 2005; Grawe, 2009) Furthermore, interms of paradigms, innovations often require supporting innovations in the other areas ofposition, process, and product (Hamel, 2000; Christensen and Raynor, 2003; Bessant andTidd, 2007) This could include mental models such as organizational rationale,

assumptions, and frameworks or business models including organizational and businessstrategies and designs, and the workings of the relationship between deliverers and

recipients (Patterson et al., 2003; Hazen et al., 2012), in other words supply chain design.Furthermore, other models portray innovation as a five stage process, running through(Francis and Bessant, 2005; Bessant and Tidd, 2007):

organization (Hazen et al., 2012 and 2014) Diffusion is crucial for adaptation on the

market, and also, for setting de jure or de facto standards, for example, bicycle chains, orthe MS Office package Diffusion of innovation seeks to explain the process and factorsthat influence the adoption of new innovations (Rogers, 2003) Peres et al (2010, p 91)suggest that innovation diffusion is “the process of the market penetration of new productsand services that is driven by social influences, which include all interdependencies

among consumers that affect various market players with or without their explicit

knowledge.” Exploring these ideas in the context of humanitarian work gives a new way

of understanding and harnessing organizations’ creative potential

The case of cash transfers is used to illustrate innovation in the humanitarian supply chain(HSC) As an illustrative case, it is based on secondary data from recent cash transferprograms (see Table 1.2) The use of secondary data in research is often criticized as thisdata has not been collected for the purposes of the study at hand Yet secondary data isoften used in the area of HSCs due to limited empirical access—which is also otherwisethe prime reason for the use of archival and secondary data in supply chain management(SCM) research (Rabinovich and Cheon, 2011)

Table 1.2 Data Sources (All for West Bank and Gaza)

Cash transfer programs have been recently evaluated by the Global Humanitarian

Initiative (GHI, 2012) but are still not very common in humanitarian aid Instead of

delivering aid in terms of material flows, they change the delivery to handing out cash orvouchers We review the different methods of cash transfer programs in the next section,before turning to the illustrative case of a rather well documented cash transfer program inPalestine, based on documents published by the World Bank in 2013 (all are availablefrom http://documents.worldbank.org/curated/en/docadvancesearch)

This scope was chosen since Palestine has received cash transfers since 2010 funded bythe World Bank and can thus be considered one of the longest ongoing cash transfer pilots.What is more, this is the only cash transfer program on which also procurement planswere published, increasing the visibility in the supply chain

adaptation and problem-solving (Balcik et al., 2010; Kovács et al., 2012)

We examine the adoption of cash transfer programs in the humanitarian sector The

traditional form of humanitarian operations is to provide the people in need with goods,but assistance in the form of materials is shifting toward providing cash based assistance(Kovács, 2014) The humanitarian assistance in the form of cash based assistance is a newconcept and growing rapidly While $2 million was provided as international humanitarianassistance in the form of cash based assistance in 2006, the sum grew to $47.4 million in

2011 as shown in Figure 1.2 (GHI, 2012) Cash donations and vouchers were first

implemented by the International Federation of Red Cross (IFRC) in the aftermath ofHurricane Mitch (1998) Cash transfer is “The provision of cash with or without

conditions to a person or household in need of goods or services in order to enable

beneficiaries to purchase these goods or services in the market place” (ECHO, 2012)

Figure 1.2 Development initiatives based on UN Office for the Coordination of

Humanitarian Affairs Financial Tracking Service (UN OCHA FTS) (GHI, 2012)Cash transfers are perceived as a more cost efficient alternative to developing aid, thoughfrom the perspective of humanitarian organizations and their implementing partners only.They have though not been proven to contribute to objectives such as food security anymore than other ways of delivering humanitarian aid That said, results have shown thatunconditional cash transfers can be a most efficient method to improve the outcome for apopulation even in a non-function state (Aker, 2013) A precondition is still that there arefunctioning markets on location and that the beneficiary has access to that market Thisform of humanitarian assistance has since become more popular, and new

telecommunication solutions for cash transfers such as “mobile money” launched by

When humanitarian organizations choose to implement cash based programs either asdirect cash transfer or via vouchers, the supply side is left to the private sector The

demand side on the other hand is leveraged with a direct provision of cash While thepurchasing power empowers the beneficiary, the downside is the distrust of the marketsfunctioning in the benefit of the beneficiary Traders (suppliers) are seen to put their

financial interest over the interest of the beneficiary in need (Gentilini, 2007) Such anexample occurred in Ethiopia, where “traders” according to the United Nations missionreport delivered food either too late or not at all, depending on where a financial gaincould be realized In spite of differences of opinion between donors, aid providers, andacademicians of whether cash transfers are efficient, cash transfers are a growing

proportion of humanitarian aid distribution today (GHI, 2012) The question is whethercash transfers are changing the structures and process of humanitarian assistance

The use of vouchers and cash empowers beneficiaries to make active purchasing choices

to cover their needs This means that beneficiaries have changed from being passive toactive members of the HSC It further eliminates the need for costly transportation,

storage, and other similar activities In short, a shift from material to financial flows

diminishes the total cost of aid while simultaneously empowering beneficiaries (Kovács,

2014) This implies a reconfiguration of the HSC with consequential important

contributions to the reinstatement of the local economy How to “determine the point ofshifting from material to financial flows—if material flows are needed at all” is according

to Kovács (2014) a key question of the future

Cash transfers can support the response and recovery from an emergency since this form

of assistance is flexible and can be well adapted to suit the situation at hand GHI (2012)lays out the following arguments for the benefit of moving from providing physical goodstoward cash-based assistance Cash-based assistance can

Address the immediate consequences of a humanitarian crisis

Be planned in the short term

Support households’ livelihood better than the provision of physical goods

Support local trade and the provision of basic services better than the provision ofphysical goods

Several counterarguments have likewise been provided The biggest concern of cash

transfers is the question of security Humanitarian assistance today is heavily regulatedparticularly in the form of procurement regulation implemented by donors These

regulations include supplier due diligence and antiterror compliance checks for all

suppliers This form of control is difficult to impose on cash based assistance since thebeneficiaries themselves make the choice from whom to purchase goods or services

Another counterargument put forth is how to ensure that the most vulnerable in society,for example, children, the elderly, and the handicapped, benefit from cash-based assistance(Aker, 2013) For example, a pilot case of cash-based assistance in Afghanistan uncoveredgender issues: Women had a hard time accessing banks and could not cash their vouchers.The distribution of physical goods in the HSC is commonly performed by local partners,

distribution of cash-based assistance, as seen in pilot cases (e.g., the World Bank in

Palestine), there is a shift in the role toward an actor that can better handle the financialflow The successful dissemination of cash-based programming was indicated as a keyelement in the repositioning of a major actor in global emergency food aid (WFP, 2008, p.3)

Next, we address innovation in the HSC Particularly, we examine the process of cashtransfer programs and analyze them from the perspective of the proposed SCI model Weanalyze documentation related to cash transfers published by the World Bank in 2013 Weanalyze particularly the process of cash transfers in Palestine This scope was chosen sincePalestine has received cash transfers since 2010 funded by the World Bank and can thus

be considered one of the longest ongoing cash transfer pilots

The Case of Palestine

The World Bank has funded cash transfer programs in the Palestinian territories since

2010 in collaboration with the European Union The World Bank funded cash transferprograms had until May 2013 reached almost 100,000 households (WB 80247, 2013) Thepartner for implementation of the program is the Palestinian Ministry of Social Affairs.The background reasons for the implementation of the cash transfer program was that inspite of high levels of donor funding, there was a lack of coordination and a noneffectivepoverty-targeting mechanism to promote the health and well-being of Palestinians Thecash transfer programs funded by the Word Bank aimed at targeting first and foremostextremely poor households (WB 80247, 2013) According to a cash transfer programinformation document (WB AB7257, 2013), 26% of Palestinians lived in poverty in theyear 2011

The cash transfer programs funded by the World Bank and documented in policy briefs,procurement plans, and project information documents published in the year 2013 (refer to

Table 1.2) indicate that the cash transfer programs are successful overall in achieving theintended impact (WB, 2013) The documentation does not, however, indicate how theoperational side of the cash transfer program is conducted The operational side is onlybriefly touched upon in the published procurement plans (WB 81387, -80238, -81384).The procurement plans indicate that the division of cost in the cash for transfer program issuch that 10% is required for technical assistance, including project management supportand implementation, including continued maintenance, training, home visits, and datacollection (WB AB7257) The procurement plans further indicate that the distribution ofcash transfer programs is considered distribution of goods, since all costs are accountedfor in the Category: Goods (WB 81384)

The process of World Bank funded cash transfer programs is described as follows (WB77503):

1 The Ministry of Finance (MOF) Financial Controller checks the list of proposed

beneficiaries and confirms their eligibility

2 The Financial Controller advises the MOF Treasury Department to transfer the cash

benefits

Discussion

We discuss the findings from the case study through the lens of the revised SCI model.Recall that the model proposes five stages to innovation: recognition of a problem,

challenge, or opportunity; invention of an idea or solution to the problem, or a way toexploit an opportunity; development of the innovation by creating practical plans andguidelines; implementation of the innovation in terms of changed operating practice (oftenusing pilots and then scaling up); and diffusion of the innovation to ensure its wider

Invention Once the problem has been recognized, analyzed, and interpreted, the next step

is to invent a new way of doing things (Christensen and Raynor, 2003; Bessant and Tidd,

2007) This is usually through some combination of analysis, interpretation, discussion,and the generation of ideas With cash-based programming, the solution itself was notnew, but it was freshly articulated in terms appropriate to the framework of humanitarianassistance—challenging negative perceptions of passive “beneficiaries” and showing thesimilarities between cash programming and other approaches such as vouchers (ECHO,

2012; Global Humanitarian Initiative, 2012) Given the inventiveness of relief

practitioners, much of the invention process here was actually documentation of thingsalready done This was not so much an invention as the consolidation of previous efforts

Development Despite longstanding theory and positive field evidence, the application of

cash-based programming was limited for many years (Peppiatt et al., 2000) Changingenvironmental factors, particularly the steady rise in food prices and the availability offunds in the tsunami response, encouraged the development of cash-based programming(ECHO, 2012) Also important was the emergence of a dispersed group with field based

program (WB AB7257)

Implementation After the Indian Ocean tsunami, the Thai, Sri Lankan, Indonesian, and

Indian governments provided cash grants to those affected in response to internationaldonations that were largely in kind (Harvey, 2007, p 7) Some cash projects were

implemented as part of the international response, and some were very large—such as theMercy Corps project in Indonesia, which distributed over $1 million a month to nearly18,000 people at its peak (Doocy, et al., 2006) One particularly valuable mechanism was

a tsunami-based cash learning initiative, forming a community of practice connectingthose implementing cash programs in several countries (Collinson and Elhawary, 2012).Elsewhere, international responses have included cash as an alternative to food aid or totemporary shelter in camps, or as support for families hosting displaced people; large-scale cash-for-work projects and cash grants have been used to enable people to rebuildlivelihoods (Harvey, 2007; ECHO, 2012; Kovács, 2014) In the case of Palestine, cashtransfer programs were also perceived to increase the flexibility of programming, beingmore responsive to the current situation (WB AB7257) Also, the existent banking systemsupported the possibility of implementation in this case

Diffusion The spread of cash-based programming demonstrates a particular facet of the

dissemination process: that an innovation is constantly modified and shaped as differentgroups adapt it for their needs or circumstances (Peres et al., 2010) Innovation diffusion is

participants) Cash programming can also be applied within every sector of humanitarianrelief—food, shelter, health, and water and sanitation

Conclusions and Managerial Implications

The aim of this paper has been to increase the understanding of SCI, by building upon thework of Arlbjørn et al (2011) We reviewed the extant literature to identify relevant stagesand elements of innovation before adapting to SCI Reviewing the SCI literature gapsemerged in the classification of the stages of SCI and in the key elements of SCI

Specifically, invention and diffusion were missing from the stages of innovation Similarlywhen examining the key elements of SCI we found that the current classification needsrefinement to take into consideration two of the 4Ps of innovation: position and paradigm.Therefore we propose that it is more appropriate to have supply chain design as a keyelement to SCI

By examining humanitarian operations, specifically cash for transfer programs, we

illustrated the proposed SCI model We believe that the model provides a clearer

At the same time, cash for transfer programs provide an interesting description of supplychain innovation, especially as they impact on so many of the dimensions of innovationmodels There are vast managerial implications of implementing a cash for transfer

program, or especially, of moving from a material flow focus to a financial flow one in thehumanitarian supply chain These implications manifest themselves on a number of

different levels: They impact on supply chain design, both in terms of focus and strategy,but also in terms of the organizations involved in such a supply chain Humanitarian

organizations would need to be able to quickly assemble knowledge about the markets thatcontinue to exist in the aftermath of a disaster Cash for transfer programs require a

functioning market for the items beneficiaries are to purchase for themselves The need fordelivering products as humanitarian aid is still necessary if such items are not available onthe market, or beneficiaries cannot gain access to them To be able to determine underwhich circumstances cash for transfer programs are most appropriate, more research isneeded on how to assess the continuity of market mechanisms in the immediate aftermath

of a disaster

At the same time, managing cash for transfer programs requires a different skill set fromthe typical humanitarian logistician While there is already ample research on the skillsrequired for humanitarian logistics and supply chain management (e.g., Allen et al., 2013;

Kovács et al., 2012; Kovács and Tatham, 2010), such an innovation requires a rethinkingfrom functional logistics skills and needs assessment to managing financial flows andassessing the banking capabilities of a region after a disaster

Acknowledgements

The authors would like to thank the Academy of Finland for its kind support of the project

“Resilience in Disaster Relief and Development Supply Chains” and Näringslivets Fondfor its support of research visits that benefited this project We would furthermore like tothank all the reviewers of this chapter

http://www.cgdev.org/publication/cash-or-coupons-testing-impacts-cash-versus-vouchers-Allen, A., Kovács, G., Masini, A., Vaillancourt, A and van Wassenhove, L (2013),

“Exploring the link between the humanitarian logistician and training needs,” Journal of Humanitarian Logistics and Supply Chain Management, Vol 3, No 2, pp 129-148.

Arlbjørn, J S and Paulraj, A (2013), “Special topic forum on innovation in business

Agricultural Innovation: A Handbook of Best Practices, Volume 1, pp 47-61 MIHR,

Oxford, UK, and PIPRA, Davis, California Available online at www.ipHandbook.org

Christensen, C and Raynor, M (2003), The Innovator’s Solution: Creating and Sustaining Successful Growth Harvard Business School Press, Boston.

Collinson, S and Elhawary, S (2012), “Humanitarian space: A review of trends and

issues,” Humanitarian Policy Group, Report 32, pp 1-25.

Doocy, S., Gabriel, M., Collins, S., Robinson C and Stevenson, P (2006), “Implementingcash for work programmes in post-tsunami Aceh: Experiences and lessons learned,”

Fisher, M L (1997), “What is the right supply chain for your product?” Harvard Business Review, March-April, pp 105-116.

http://www.globalhumanitarianassistance.org/wp-(accessed Nov 5, 2014)

Global Humanitarian Initiative 2012, GHA Report 2012, at:

Harvey, P (2007), “Cash-based responses in emergencies,” Humanitarian Policy Group, Report 24 Overseas Development Institute, London.

Kovács, G (2014), “Where next? The future of humanitarian logistics,” in: Christopher,

M and Tatham, P (eds.), Humanitarian Logistics: Meeting the Challenge of Preparing for and Responding to Disasters, 2nd ed., Kogan Page, London, pp 275-285.

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management: The start of a new journal,” Journal of Humanitarian Logistics and Supply Chain Management, Vol 1, No 1, pp 5-14.

(accessed March 5, 2015)

—Marco Antonio Viana Borges (maborges@unisinos.br), Management

Postgraduate Program, Unisinos Business School São Leopoldo, RS, 93022 000, Brazil

—Dr Luciana Marques Vieira (lmvieira@unisinos.br), Management Postgraduate Program, Unisinos Business School São Leopoldo, RS, 93022 000, Brazil

Abstract

One important issue that must be pursued by companies, especially in developing andemerging countries, is the development of global supply chain capabilities Based on

previous literature, this paper presents a conceptual framework showing the capabilitiesrequired by companies to move up in a global supply chain The framework proposes that

it is important to develop productive, innovative, and interactive capabilities Eight supplychain processes are presented as the means to achieve these capabilities

Introduction

In the current global competitive environment, operations management is characterized byagility in operations and value added orientation This scenario, along with the constantadvances in communication technologies and transportation, motivates the continuingevolution of supply chain management and different techniques for managerial efficiencyand demand orientation (Simchi-Levi et al., 2007, p 1) Thus, supply chain management(SCM) has been an important approach of operations management, and it is at the core ofsuccess of most leading companies (Sanders, 2012, p xv) Different factors can be

considered to represent this new scenario, such as the necessity of mass customization, thepresence of global consumer segments, time and quality competition, advances in

communication and information technology, and a strong dependence on governmentpolicies (Mentzer et al., 2007) In this business environment, competition is no longerbetween organizations, but between supply chains (Wu et al., 2014) It involves

management of technology and innovation, streamlining processes, insourcing and

outsourcing, and managing complex relationships (Ellram and Cousins, 2007, p 253),with the need to align different firms and interorganizational processes to bring productsand services to the market

Considering global chain operations, the complexity not only is inherent in organizationsgenerally, but also is created due to the fact that many organizations are embedded indifferent national cultures, regional business norms, economic situations, and regulatoryenvironments (Flint, 2004) One important issue that must be pursued by companies,

especially in developing countries, is how to gain access to the skills and capabilities

required to participate and to upgrade in global chains (Bair, 2005) The development ofstrategic capabilities can influence companies’ success factors directly in their operations

in a global supply chain; that is, capabilities are potential behavior modes that can supportand shape corporate strategy and help a company to succeed in the marketplace The

development, nurturing, and abandonment of strategic capabilities are major tasks of