What situational corporate factors need to be considered to successfully implement an SCRM?

To successfully implement an SCRM, situational factors should be considered. These will be presented in the following blog posts. The grouping of these situational factors was made in accordance with Ritchie & Brindley (2004) and evince from the respective company’s characteristics: supply chain, environment, etc. The following characteristics were derived from the literature. Here, the focus was on characterizing the companies as clearly as possible. Particular attention was paid to the needs of small and medium sized enterprises, or SMEs.

Situational Factors

For the size of the company, subdivision by cash flow turnover based on company size — small (under 10 million Euros), medium (10 million to 125 million euros), and large (over 125 million euros) — is encouraged by the European Commission 2006 and the AiF 2013.

To determine the vertical integration of manufacturing, the entire production process of a company should be considered. A rough quantitative estimate should be made to distinguish between low and high vertical integration. According to Eberle (2005), low vertical integration (less than 50 per cent own creation of value) in manufacturing is a reason for a systematic risk management in the procurement logistics; whereas, such involvement is less necessary for high integration classifications (50 per cent or more own creation of value). Detailed analyses of value chains for individual products and their manufacturing integrations are meaningful in the actual SCRM process and can be accomplished using special methods. For the manufacturing type, a distinction between order-based, make-to-stock and program-based manufacturing is useful.

In addition to situational factors that characterize the company, factors that characterize the supply chain should also be considered when implementing SCRM. According to Sydow (2010), complexity in supply chains can be determined with the help of various cooperating partners, and high connectivity with information partners. However, Lammers (2012) shows that a number of other factors can be used to measure complexity in supply chains. There are also several other drivers, such as the number of locations or the degree of information asymmetry, which influence the complexity of supply chains (cf. Lammers 2012). Therefore, for a practical self-assessment, a subjective assessment is used, which is based on the empirical results of Kersten et al. (2012b). In practice, “variety” and “connectivity” are most frequently used to determine complexity, and these factors are, therefore, also used as explanations for a subjective assessment. An assessment on supply chain partner intersections by Ziegenbein (2007) indicates that when dealing with fewer than 1,000 direct supply chain partners on one side can be considered normal and controllable for medium-sized companies. Accordingly, above 1,000 direct partners is considered to be a high number of suppliers. Since the coordination effort in SCRM increases due to the internationality of direct supply chain partners, a simplified classification into national and international supply chains is selected in accordance with Trippner (2006). If cooperation with national partners takes place primarily at the first supply chain level, the logistics constitute a national supply chain; otherwise, it is considered an international supply chain.

The third category of situational factors is the environment, which should be taken into account when implementing an SCRM. General conditions play a crucial role, as a short-term reaction to trade barriers is particularly problematic. Therefore, a distinction is made between volatile and stable framework conditions. “Volatile” environmental framework conditions are when the supply chain is exposed to many uncertain changes or trade barriers. On the other hand, stable framework conditions represent the possibility of aligning one’s supply chain with existing conditions. When using established standards for self-assessments, a distinction should be made as to whether such standard approaches for describing, measuring, and evaluating supply chains have already been implemented or not

Excerpt from Kersten, W.; Feser, M.; Schröder, M. (2013): Situationsadäquate Implementierung eines Supply Chain Risk Managements, Bundesvereinigung Logistik e.V. (BVL) – Schlussbericht des geförderten Vorhabens 17234N.

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