Supply Chain Transparency- Benefits & Transformational Barriers

Abstract

Background

Transparency of a supply chain is the extent to which all its stakeholders have a shared understanding of, and access to, the product-related information that they request, without loss, noise, delay, and distortion. Having access to accurate and timely information is a challenging issue in global supply chains. Therefore, this research aimed at identifying barriers that could act as limiting factors towards Supply Chain Transparency (SCT) transformation. Also, the study intended to identify several benefits of SCT which could be used as enablers to spread knowledge amongst IKEA co-workers during the transformation.

Purpose

The master thesis aimed to deliver a conceptual framework for IKEA’s supply chain to identify the benefits and address the barriers in order to enable supply chain transparency.

Methodology

The methodology of this study was divided into three phases. The first phase was to conduct a literature review that helped the authors develop the theoretical framework. In total twenty research articles were studied for identifying SCT barriers and twenty-three articles for identifying benefits of the SCT transformation. The theoretical framework provides insights on (i) SCT concepts (Network mechanisms, Conditions when transparency is strongly suggested, types, Perspectives, Degree, Direction and Distribution of transparency), (ii) numerous benefits of SCT, and (iii) barriers that could limit the SCT transformation at IKEA. The second phase was conducting interviews at the Supply Chain Development (SCD) and Supply Chain Operations (SCO) functions of IKEA. Twelve semi-structured interviews were conducted with representative people from these functions. A survey questionnaire built from the theoretical framework and insights from the interview was sent out to IKEA co-workers with an intention to reach out to as many people as possible complementing the interview. A total of thirty-four responses were obtained through the survey. In this thesis, a single case study was followed and explanation building and pattern matching analysis were performed to compare theory and empirics. A root cause analysis was performed on the identified barriers which indicated five major causes like (i) Information sharing processes, (ii) Organisational silos, (iii) Change management (iv) IT infrastructure, (v) Supply chain complexity. Later, based on critical findings from theory and empirics a final framework was developed.

Conclusions

The final framework is divided into three sections. The first section "SCT concepts'' reflects the current scenario of SCT at IKEA. The second section " SCT Benefits'' highlights multiple benefits SCT could bring to sharing of information, IKEA co-workers, IKEA and its supply chain, and finally to its customers and society. The barriers that might come along IKEA’s SCT transformation are categorised as people, organization, IT, and supply chain characteristics highlighted in the third section “SCT Barriers”. IKEA can overcome these barriers by parallelly addressing the major root causes indicated in the “Causes” section of the framework. Overall, IKEA has identified the need for SCT transformation and meets all the conditions that strongly recommend SCT. Looking at the current scenario, IKEA has limited transparency across its value chain. Today it lacks track and trace capabilities and with the current ways of working in a siloed manner, IKEA does not have fully integrated IT platforms that can enable sharing explicit and relevant information at the right time.

Popular Abstract

As the world is continuously transforming and the customer demands are changing rapidly, the business demands new models and new technological solutions to retain in the global cut-throat competition. To adapt and sustain with the changes, global organisations today aim to enhance their supply chains towards a connected and customer centric supply chains.

To achieve a connected global supply chain, Supply Chain Transparency (SCT) is a key enabler, identified by researchers and global businesses today. SCT enables the free flow of information within the organization and between its stakeholders and helps in visualising what is happening in real-time across the end-to-end supply chain and beyond.

The SCT platform generates transparency across the supply chain (from sub-suppliers to customers and back) and enables real-time tracking and tracing of products, enhances the collaboration amongst supply chain partners and makes the supply chain more responsive. This transformation helps the global businesses in meeting the ever-changing market requirements and creates a sense of preparedness and readiness for future.

Despite evolving significant interest in the SCT transformation, having access to accurate and timely information is a challenging issue in global supply chains. There are barriers to information sharing which limit and pose problems for supply chains to achieve full transparency along their global network.

IKEA, a multinational conglomerate, and world’s largest furniture retailer is a perfect example of a world class global supply chain. Touching lives of million people and providing affordable products to its customers, the multinational firm has an ambition to enhance their supply chain and make it more transparent. As IKEA is in the preliminary stages of its SCT transformation journey, this study aimed at studying how can IKEA benefit from SCT, what potential barriers might come along their way limiting the transformation and how IKEA should address these barriers to achieve success.

A single case study was conducted with an internal supply chain focus in Supply Chain Development (SCD) and Supply Chain Operations (SCO) functions complementing with a survey. These functions were the mere representation of IKEA’s supply chain and the insights derived from the study could be used by IKEA and similar organisations to realise benefits of SCT and address potential barriers that could limit the SCT transformation.

The study identified several barriers in categories like people, organisation, technology & information quality, and supply chain characteristic barriers which must be addressed to achieve a customer centric, end-to-end connected supply chain. The main causes to these several barriers in different categories were identified to be information sharing processes, organisational silos, change management, IT infrastructure and complexity of IKEA’s supply chain.

It is important to address these causes parallelly as they are inter-related. Despite these barriers, the SCT transformation will enhance the information quality, benefit the employees, the organisation & its supply chain, and eventually its customers and the society. The proposed framework indicates the SCT concepts, numerous benefits of SCT, SCT barriers and causes that can impede the SCT transformation journey, which will help IKEA to understand the current scenario and prepare for the transformation in the long run.

• author: Sridharan, Charanya and Shrimali, Yash
• supervisor: Abbas Mohammedjamal A Batwa
• organization: Engineering Logistics
• course: MTTM02 20211
• year: 2021
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: Supply Chain Management, Supply Chain Transparency, Supply Chain Visibility, Digitalisation, Supply Chain Integration
• report number: 5948
• language: English
• id: 9054957
• date added to LUP: 2021-06-16 11:18:22
• date last changed: 2021-06-16 11:18:22