There is no such thing as Supply Chain Management. Let’s abandon the field.

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I have wanted to write this text for a long time but delayed it ‒ for about ten years. There is not much to win in criticizing established concepts or institutions; it will annoy people, creates negative vibes… Anyway, eventually I decided it’s worth it. Academic freedom is granted not to appease the mainstream, but to disagree with it.

Here is the thing: There is no such thing as Supply Chain Management (SCM). The term is as flawed as the concept it intends to represent. It is one of these bullshit terms which are happily adopted by the industry and then eagerly get picked up by the media. Industry loves bullshit terms: companies talk about Supply Chain Management, Big Data or Industry 4.0 without ever defining what these terms mean, without ever defining how they are different from the previous batch of terms they had used. You know what? That’s alright. There are plenty of people in management positions who are not able to make any substantial contribution whatsoever, so they need some fancy terms to fill the void. There are plenty of people in need of selling management consultancy, and they need to create the illusion that the next big thing is around the corner and companies (their prospective customers) need to be prepared. And there are plenty of journalists without any technical education who have to feed the 24/7 news stream and who are grateful for buzzwords which they can use to impress the few people who are left for their traditional media channel and to create a sense of importance of their work.

It’s not alright, however, if academics equally uncritically adopt ill-defined terms, teach them to students, name courses and even entire study programs after them. Technical terms serve as a shortcut reference to concepts which otherwise require many words to explain. Also, technical terms serve to increase clarity. In the case of Supply Chain Management, neither function is adequately performed. “But if thought corrupts language“, George Orwell warns in his 1946 essay “Politics and the English Language“, “language can also corrupt thought. A bad usage can spread by tradition and imitation, even among people who should and do know better”. Hence, we have good reason to assess terms we frequently use, especially in education, so we can use “language as an instrument for expressing and not for concealing or preventing thought”.

Supply Chain Management does not exist

“Supply Chains” do not exist

The first reason why there is no Supply Chain Management is that there are no supply chains. The metaphor ‘chain’ in ‘supply chain’ creates the mental model of a linear, sequential association of organizations which in supply relationships does not exist. In fact, it is as far away from the truth as it gets. Instead, what we typically deal with is a complex web of interactions: Normally, any one company, be it a manufacturer or a retailer, has many suppliers, each of which, again, has many suppliers, and so on. This cascade of supply relationships does not resemble a chain.

If you think this differentiation is just an example of academic hairsplitting: it is not. It has real implications on the “management” part of “supply chain management”. Because not only do companies compete for business and new customers in the market, they also compete for their suppliers’ attention and their resources. They compete for supplier capacity. The reason why a company can run short of supply often is not necessarily general scarcity of raw material or general scarcity of supplier capacity, but prioritization decisions of suppliers in response to pressure from some of their (other) customers with particularly strong market power. These customers can be direct competitors (e.g., Samsung vs. Apple, Volkswagen vs. Daimler…) or may come from entirely different industries (Apple vs. Daimler). When a company exercises its market power to nudge suppliers into reallocation of resources, then companies with less relative market power are at disadvantage. In earlier research (first in my Master’s project, later in my PhD project), I found strong evidence for this effect in the automotive industry, in chemical processing, and in raw material trading. And I believe it is safe to assume that this pattern can be found in other industries where some buyers are powerful enough, and where some suppliers are dependent enough (dependency can be understood as the reverse of power) so that reallocation decisions on part of the suppliers can be enforced.

This effect, the impact on supply from outside the direct dyadic relationship between buyer and supplier which I call non-adjacent power regimes, cannot exist in “supply chains”, since the simplistic supply chain model does not allow for lateral impact. One of the reasons the automotive industry (the mighty OEMs, which supposedly should be able to “manage” their “supply chains”) suffers from shortages of semiconductors these days is, just like 12 years ago during the last severe semiconductor shortage, that Apple is more important a customer for semiconductor producers than automotive firms. Lateral impact does exist, and supply chains don’t. The supply chain model is not only useless, but it is misleading.

“Management” of “Supply Chains” does not exist

Alright, then: if we replace “chain” with “network”, will all be good? Is supply network management a better term?

Hardly so. The second reason why there is no Supply Chain Management is that not only is the concept of “supply chains” flawed, but the idea that we “manage” them is pure fantasy.

To begin with, almost no organization, not even the most powerful corporations, “manage” anything beyond the first echelon of their network. If we look at the automobile industry, for instance, then OEMs, which are the most powerful actors in the network, hardly ever touch the second tier of suppliers. Why? Because it’s impractical. Because there are too many. And because the pressure they exert on their first-tier suppliers to ensure reliable supply cascades across multiple echelons. Very rarely do OEMs get involved in selection and auditing of second-tier suppliers, let alone third-tier suppliers or any deeper echelon, but even then we would hardly consider this “management”. So, companies don’t “manage” supply chains or supply networks; if anything, they “manage” suppliers, and almost always only their first tier of suppliers.

Or do they? Is “managing” even the right concept? Collins dictionary defines management as “the control and organizing of a business or other organization” (Collins, 2021). Does any company “control and organize” their suppliers? Unless the buyer owns the majority share of its suppliers, we can say with confidence that this is not the case.

Secondly, many organizations are not in a position to tell their suppliers anything. The power-dependency relationships in supply networks don’t normally play out this way. If you’re BMW or Nestlé, you can negotiate with your suppliers, maybe even exercise your market power. If you’re anybody of less significance, you cannot. You can kindly ask them if they would sell you something on their terms, but that’s about it. If they reject your request, you have few options left. This is hardly news: Harland and Knight (2001) asserted more than 20 years ago that many organizations will merely “cope” with their network, rather than actively “manage” it. So, some companies, when they are powerful and important enough, can influence how their suppliers act. The rest copes with whatever their suppliers decide to do, certainly does not “manage” them, and often can hardly influence terms and conditions for their supply relationships.

Thirdly, even when the ratio of power to dependency is favorable for the buying party, outside the world of meticulously planned supply of capital-intensive assembly processes.many supply relationships are transactional.

Now, all the above statements are based on empirical evidence from more than four years of research. However, we don’t even have to do any empirical research to get a sense of the lack of clarity and conceptual weakness of Supply Chain Management. Just have a look at the definitions and descriptions of SCM. Again, more than twenty years ago, serious researchers found the term Supply Chain Management ambiguous (Bechtel and Jayaram, 1997; Tan, 2001) and attested “considerable confusion as to its meaning“ (Mentzer et al., 2001). In college textbooks, we find unfounded fantasy claims such as “effective supply chain management involves the management of supply chain assets and product, information, and fund flows to maximize total supply chain surplus (Chopra and Meindl, 2010, p. 23, emphasis added). I have yet to come across any organization that showed any interest in “maximizing total supply chain surplus”. And has anybody ever reflected on the legal implications of that idea? Management has fiduciary responsibility towards shareholders of the company they work for, which renders the idea of intercompany-optimization pointless. Even back in 1997, the early days of the rise of SCM, it was obvious  that there is a “normative tension between the is and the ought” (New, 1997), which has not changed since but apparently has not kept academics from repeating outlandish ideas like the one about „total supply chain surplus„.

This romantic idea of selfless altruism will certainly appeal to academics and students who never spent a day in their life working in the industry, but certainly it is not a valid description of anything that’s happening in supply-relationships, which for the most part are (a) dyadically organized and (b) staffed with people who are incentivized – and legally bound – to do whatever it takes to make the deal work out well for their party. Experienced logistics professionals in interviews have shared with me that what they are reading in SCM textbooks does not resemble anything they observe in practice. As the above references to older publications show, there is much more than anecdotal evidence that indicates that the whole field of Supply Chain Management is mostly made-up nonsense. Even the Council of Supply Chain Management Professionals (CSCMP) now says that “the definition of what is a supply chain can be unclear” (Council of Supply Chain Management Professionals (CSCMP), 2021). Which is comparable to the pope saying that “the definition of what exactly we mean by ‘god’ is unclear”. Of course, it is not clear what a “supply chain” is – because it is a made-up concept without empirical roots. What else do we need to finally abandon the field and focus on real topics without fancy yet imprecise names?

Concluding Rant

It is beyond my understanding why we continue to teach such nonsense at universities around the world. As an academic field, Supply Chain Management does not have any solid foundation. As a professional field, it is the collective name of a bunch of jobs and activities that show little resemblance of the textbook definitions typically found. It has zero utility; in fact, I argue the term is harmful as it merely adds confusion and distracts from the actual tasks that can be found in (real) professional fields like purchasing, logistics, or even supplier management (where it applies). When I ask students in my lectures what they’d like to do for a living after graduation, the most frequent response (other than “I don’t know”) is “something in supply chain management”. This should ring an alarm bell. It is no surprise, however: The idea of “managing” companies, especially “globally” in the wake of the presumed “increasing globalization” that is so frequently cited in introductions to second-rate bachelor theses, naturally seems attractive.

Academics are the very people who should question the utility of fancy terms rather than uncritically repeat them. Academics are the people whose job it is to add knowledge, which requires clarity of thought, which conflicts with vacuous bullshit lingo and unfounded claims put forth by people trying to “sell management consultancy” (Johnsen et al., 2008). As Vinsel (2021) puts it, “higher education has become suffused with innovation-speak and business bullshit, using words to chase cash rather than to strive for accuracy and truth. In a real sense, such talk is a betrayal of the mission of universities.” Academia, however, it trusted by society, and therefore as academics we must make sure we don’t fall for cheap marketing tricks and add to confusion, rather than reduce it. In his criticism of politicized language, Orwell (1946) emphasizes how important it is ”to let the meaning choose the word, and not the other way about”. With SCM (and the same seems to have been the case for the equally terrible “Industry 4.0”), the impression one gets is that somebody made up a fancy expression and hundreds of academics subsequently tried to assign meaning to it, as in religious interpretation of holy scripts, thereby justifying its existence.

Obviously, Supply Chain Management is not the only nonsense term adopted by Academia, and I wish more academics would become conscious of the vague language they use and how it limits clear thinking. Anyway, it is a good place to start: Abandoning the pretentious and meaningless term Supply Chain Management will help increase clarity in logistics engineering and education.

References

Bechtel, C. and Jayaram, J. (1997), “Supply Chain Management: A Strategic Perspective”, The International Journal of Logistics Management, Vol. 8 No. 1, pp. 15–34.

Chopra, S. and Meindl, P. (2010), Supply Chain Management: Strategy, Planning, and Operation, 4th global, Pearson, Boston, MA.

Collins (2021), “Definition of ‚management’”, available at: https://www.collinsdictionary.com/dictionary/english/management (accessed 6 November 2021).

Council of Supply Chain Management Professionals (CSCMP) (2021), “CSCMP Supply Chain Management Definitions and Glossary”, available at: https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms.aspx (accessed 6 November 2021).

Harland, C.M. and Knight, L.A. (2001), “Supply Network Strategy: Role and Competence Requirements”, International Journal of Operations & Production Management, Vol. 21 No. 4, pp. 476–489.

Johnsen, T.E., Lamming, R.C. and Harland, C.M. (2008), “Inter-Organizational Relationships, Chains, and Networks. A Supply Perspective”, in Cropper, S., Ebers, M., Huxham, C. and Smith Ring, P. (Eds.), The Oxford Handbook of Inter-Organizational Relations, Oxford Handbooks, Oxford University Press, Oxford, pp. 61–89.

Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. and Zacharia, Z.G. (2001), “Defining Supply Chain Management”, Journal of Business Logistics, Vol. 22 No. 2, pp. 1–25.

New, S.J. (1997), “The Scope of Supply Chain Management Research”, Supply Chain Management: An International Journal, Vol. 2 No. 1, pp. 15–22.

Orwell, G. (1946), “Politics and the English Language”, Horizon, Vol. 13 No. 76, pp. 252–265.

Tan, K.C. (2001), “A Framework of Supply Chain Management Literature”, European Journal of Purchasing & Supply Management, Vol. 7 No. 1, pp. 39–48.

Vinsel, L. (2021), “Marketing and PR Are Corrupting Universities. The language of hype violates the language of truth.”, available at: https://www.chronicle.com/article/marketing-and-pr-are-corrupting-universities (accessed 8 November 2021).