Yossi Sheffi

Massachusetts Institute of Technology | MIT · Center for Transportation and Logistics

Under a relational contract the value placed on expected future business must outweigh the short-term temptations to deviate for the buyer-supplier relationship to persist. Operational and relational factors that influence this trade-off have been explored, however there is a considerable lack of research on the moderating effects of supplier and m...

Much has been made recently about the rise of artificial intelligence (AI) in the workplace — often accompanied by apocalyptic predictions about what that means for human jobs. This paper discusses job displacement in the face of advancing technology; technological advancement has always rendered certain jobs obsolete, but it has also always genera...

Traditionally, logistics decisions have been driven by minimizing cost, maximizing profitability, or achieving customer service targets. As companies have added sustainability goals to their business objectives, there has been an increased interest in mitigating the social and environmental impact of their products and operations. Green logistics r...

In the for-hire truckload market, firms often experience unexpected transportation cost increases due to contracted transportation service provider (carrier) load rejections. The dominant procurement strategy results in long-term, fixed-price contracts that become obsolete as transportation providers' networks change and freight markets fluctuate b...

This chapter introduces scenario planning. It begins with its historical background, provides a brief overview of variations of the technique, and describes the widely used variant—i.e., the Intuitive Logics School—proposed in this book. The chapter emphasizes that scenario planning is a method for foresight and organizational learning, not a forec...

This chapter presents a generic seven-step process for creating scenarios for a particular organization and its strategic supply chain decisions. It also defines the terms used in the scenario creation process throughout this book. To help the reader understand the terms and the process better, each process step is illustrated using the case of a m...

This chapter explains that organizations play three distinct roles in supply chains that are relevant for their strategic supply chain planning decisions. The first is the functional role where the supply chain function oversees the production and distribution of goods for a manufacturer or a retailer. The focus of strategic supply chain planning i...

This chapter presents a systematic, six-step process for using scenarios to make strategic supply chain decisions. The process recognizes that scenarios can influence users’ judgment concerning strategic decisions. Thus, scenario application requires a methodological approach that begins with immersion in one scenario at a time, followed by underst...

The book covers three in-depth cases. These cases are purposefully chosen from the projects the MIT Center for Transportation & Logistics (CTL) team completed to highlight different perspectives on strategic supply chain planning and frameworks for scenario creation and application. Cases are presented in conjunction with the scenario frameworks su...

This chapter details the applications of the scenario creation process (described in Chapter 4) in each of the three cases that run throughout this book. Each case pertains to one of the three roles organizations play in supply chains: Hoppy Brew (functional role), Medford (business model role), and Future Freight Flows (infrastructural role). The...

This chapter concludes the book with a discussion of learning from scenarios. It also explains how the effect of a scenario planning intervention may be evaluated to answer the question “does it work?” The chapter presents our evaluations of learning observed in each of the three cases used in the book. The chapter concludes with guidelines for ens...

This chapter illustrates the scenario application process (described in Chapter 6) as practiced in the three in-depth cases woven throughout the book. Each detailed case application is presented in terms of the specific supply chain capabilities evaluated, methods used for the evaluation, and the resulting assessments of the supply chain capabiliti...

Zadie Smith, the celebrated English novelist, is quoted in the New York Times as saying, “people who believe in fundamental and irreversible changes in human nature are themselves ahistorical and naïve.”

Consumers choose economic development over serious climate initiatives. Corporations don’t invest in meaningful change because consumers won’t pay for it. And governments cannot lead if citizens won’t follow. The battle to prevent climate change through behavior modification, regulation, or personal deprivation has already been lost. Yossi Sheffi e...

Dynamic macroeconomic conditions and non-binding truckload freight contracts enable both shippers and carriers to behave opportunistically. We present an empirical analysis of carrier reciprocity in the US truckload transportation sector to demonstrate whether consistent performance and fair pricing by shippers when markets are in their favor resul...

Purpose In line with the knowledge-based view of organizations, this paper aims to analyze how supply chain (SC) employees contribute to the creation of competitive advantage through knowledge acquisition and utilization activities. The authors consider SC employees' skills and competencies, their external network of relationships, their job satisf...

Dynamic macroeconomic conditions and non-binding truckload freight contracts enable both shippers and carriers to behave opportunistically. We present an empirical analysis of carrier reciprocity in the US truckload transportation sector to demonstrate whether consistent performance and fair pricing by shippers when markets are in their favor resul...

Governments and corporations have an opportunity to lead the transition toward sustainable consumption and production by shifting their purchasing power toward environmentally responsible supply networks. But this will require reliable information on complex global supply networks. What information and decision support tools do governments and corp...

Although the benefits of horizontal collaboration have been well documented in the literature, research has yet to offer a detailed understanding of the mechanisms that firms employ to create successful horizontal collaboration. Further, the role of logistics clusters in facilitating horizontal collaboration is crucial but not clear yet. This paper...

Investments in supply chain risk management (SCRM), like other risk management initiatives, often require an upfront investment in an initiative that has no guaranteed or even likely payoff because the value is linked to a highly uncertain contingency. Such investments in SCRM can be modeled as real options that give a company the right but not the...

Should business lead on environmental sustainability? The article argues that while there are some environmental initiatives that support the mission of the business, such as energy savings that also reduce costs, business should not go too far. On the one hand, its ability to do so is limited since most of the carbon footprint is outside its four...

An expert on business strategy offers a pragmatic take on how businesses of all sizes balance the competing demands of profitability and employment with sustainability. The demands and stresses on companies only grow as executives face a multitude of competing business goals. Their stakeholders are interested in corporate profits, jobs, business gr...

The nature of operations executives’ strategic cognition, as the antecedent to their choices about operations strategy, remains underexplored in the literature. This mixed-methods study examines executives’ thinking about supply chain strategy through the lens of managerial cognition. Our qualitative study at a pharmaceutical distributor, which exa...

Environmental disclosure and reporting can be broadly defined as the various methods that businesses use to communicate their environmental impacts, responsibilities, and mitigation activities to stakeholders. The decision of what and when to disclose is specific to each setting; companies make disclosure decisions while considering internal object...

Traditionally, logistics decisions have been driven by minimizing cost, maximizing profitability, or achieving customer service targets. As companies have added sustainability goals to their business objectives, there has been an increased interest in mitigating the social and environmental impact of their products and operations. Green Logistics r...

Changes to the strategy, context or environment of a business unit may necessitate a revision of its supply chain strategy. However, rethinking a supply chain strategy is not an easy problem, and has no clear answer in the specialized literature. Some fundamental questions about supply chain strategizing—i.e., the process of doing supply chain stra...

How important are you to your suppliers? It’s a question that companies need to ask when evaluating risk in procurement strategies. And it is especially important in today’s fast-changing commercial environment, where suppliers’ priorities can change quickly. Consider, for example, the rapidly growing market for products that take advantage of Inte...

Despite such anecdotal examples illustrating the power of scenario planning, empirical evidence of the effect of scenario planning on executive judgment is almost nonexistent. That fact is surprising, considering not only that executives use this method to make important decisions, but also that the method requires extensive resources. What’s more,...

Collaboration and the provision of value added services are key benefits for companies located within logistics clusters. We hypothesize that within the context of logistics clusters, further agglomeration within the more defined logistics parks and the availability of training opportunities enhance those benefits. We control for the effect of firm...

Purpose – The purpose of this paper is to analyze the benefits of logistics clustering, with the intent to explain their growth and popularity among private agents and policy makers during the last decade. Design/methodology/approach – Because of limited knowledge about the benefits of logistics clustering a main objective of this paper is theory...

From a purely supply chain perspective, the 2011 earthquake, tsunami, and nuclear disaster in Japan was the single largest and broadest natural disaster in recent times. The event affected companies around the world that depend on semiconductors, electronics, specialty chemicals, and other manufactured goods coming from Japan’s prodigious industria...

Globalization implies that suppliers play a growing role in the companies’ risks, disruptions, and response options. Chapter 7 delves into companies’ proactive approaches toward supplier risk management, using a segmentation of the procurement conditions. It is based, on the one hand, on the complexity and risk associated with the input purchased f...

Long-term changes in the world such as demographic trends, climate change, and disruptive innovation create permanent shifts in patterns of supply or demand. Chapter 12 explores the nature and effects of these kinds of disruptions, which create a “new normal” rather than a short-term shock that quickly reverts to the old normal. The chapter suggest...

This chapter offers a quick tour of the many kinds of disruptions confronting today’s companies. The chapter introduces the two-dimensional impact-and-likelihood framework that is often used to categorize and prioritize risks. The chapter introduces a third dimension—detection—to frame the differences between disruptions that can be forecast to hap...

In 2008, the global financial system came to the brink of collapse. Chapter 5 shows how a disruption in the money supply chain became a disruption in physical supply chains on both the supply and demand sides. The crisis created a global bullwhip that amplified the drop in consumer spending further up the supply chain. Yet as brutal as the near-dep...

Internet technologies are now indispensable communications tools within and between companies. Yet the openness of these networks and the high potential value of corporate and personal information make these systems a tempting target for criminals, terrorists, and state-sponsored espionage. Cyber-criminals can gain access to a company’s information...

With the rise of social media and 24×7 news cycles comes a growing brand risk based on public opinions of suppliers’ actions, especially for consumer-facing companies. Chapter 11 covers corporate social responsibility risks in which the perceived misdeeds of a company or any of its remotest suppliers can turn into a public relations challenge, disr...

One of the major themes of the book, explored in Chapter 13, is the growing dependency of companies on deep-tier suppliers as well as on concentrations of supply sources that create fragile chokepoints in the global economy. Although the world has yet to see a true systemic collapse of any supply chain for a major product category, these chokepoint...

The 2011 Japanese quake affected many companies and illustrates the growing problem with deep-tier supply chain disruptions in which the suppliers of suppliers are affected. Chapter 3 examines GM’s handling of the Japan crisis and the management of what GM calls “white-space”—the gap in parts supply left between pre-disruption inventories in the su...

Whereas the first five chapters talk primarily of companies’ reactions to disruptions, Chapter 6 begins the discussions of more proactive preparations. These preparations include the fundamental steps of creating redundancy and building flexibility. Yet the maturation of risk management has also led companies to prepare other kinds of specialized r...

Whereas Chapter 3 focused on GM’s response to a single disruption, Chapter 4 uses a different lens. It looks at a wide range of short examples of different disruptions and different companies to illustrate many other elements of disaster response. These examples highlight the differences between normal operations and operations during a crisis. Cri...

The rising economies of China, India, Brazil, and others have contributed to the globalization of supply chains in terms of new markets and new sources of supply. Yet the growing global economy in the last decade has also created a new class of supply chain risks tied to price shocks and commodity shortages. Oil, grains, metals, rare earths and oth...

This chapter takes a step back from specific risk management and response tactics to the problem bedeviling every risk, resilience, and business continuity manager. How can one justify investments in these initiatives when they seem like a waste of resources when nothing happens? The chapter argues that unlike insurance, which pays off only in a cr...

This book focuses on deep-tier risks, corporate social responsibility risks, cybersecurity risks, global raw material risks, long-term disruptions, business continuity planning, risk and disruption detection, and the potential for systemic disruptions. The interconnectedness of the global economy today means that unexpected events in one corner of...

Unexpected events — ranging from extreme weather to product contamination — can easily disrupt businesses in today’s complex, interconnected global economy. The good news? A company can substantially increase its resilience by improving its ability to detect — and respond to — disruptions quickly

Growth is imperative for corporate success and yet the environmental impact of this growth is not sustainable. In this paper we offer a framework for thinking about the stages of tackling the environmental sustainability challenge. It ranges from eco-efficiency, which includes initiatives that reduce costs while reducing environmental footprint; ec...

This paper presents an axiomatic foundation for developing firm-specific scenarios in the tradition of the Intuitive Logics School (ILS), a structured scenario creation process built on that foundation, and its application to a case. The ILS outlines a high-level scenario-development process, but without a theoretical basis or prescriptions for exe...

We show that when a one-supplier/one-newsvendor supply chain is capacity-constrained, wholesale price contracts have some flexibility in allocating the channel-optimal profit. We analyze how this flexibility changes as we change the supply chain's capacity constraint and market demand. We also explore the allocation that is achieved in equilibrium...

We present the results of three field experiments demonstrating the effect of scenario planning on field experts’ judgment of several long-range investment decisions. Our results show, contrary to the past findings, that the use of multiple scenarios does not cause an aggregate increase or decrease in experts’ confidence in their judgment. Rather,...

This paper analyzes the relationship between freight accessibility and logistics employment in the US. It develops an accessibility measure relevant for logistics companies based on a gravity model. This allows for an analysis of the accessibility of US counties focusing on four different modes of transportation: road, rail, air, and maritime. Usin...

Governments around the world are investing significant resources in the development of logistics clusters. This paper develops a methodology for identifying them and applies it to answer several lingering questions in the context of the US. It contributes to a more general debate in the general industrial clusters literature: while many authors see...

What happens when fire strikes the manufacturing plant of the sole supplier for the brake pressure valve used in every Toyota? When a hurricane shuts down production at a Unilever plant? When Dell and Apple chip manufacturers in Taiwan take weeks to recover from an earthquake? When the U.S. Pacific ports are shut down during the Christmas rush? Whe...

This paper looks at the environmental effects of shifting from road to rail freight transportation. Little data is available to shippers to calculate the potential CO2 savings of an intermodal shift. In this paper we analyze a data set of more than 400,000 intermodal shipments to calculate the CO2 intensity of intermodal transportation as a distinc...

Logistics intensive clusters are agglomerations of several types of firms and operations: (1) firms providing logistics services, such as 3PLs, transportation, warehousing and forwarders, (2) the logistics operations of industrial firms, such as the distribution operations of retailers, manufacturers (in many cases after-market parts) and distribut...

The Panama Canal extension project is, arguably, the most important current transportation project in the world today. It will allow most Post-Panamax vessels to use the canal and is likely to change transportation flow patterns throughout North and South America, as well as port loads and transportation flows inland in the Americas. This paper giv...

Several large scale disasters have focused the minds of corporate executives and the media on the increasingly important role of supply chain disruptions and their management. Specifically, a lot of attention is centered on the technology to help corporations to effectively manage disruptions. As a result, several companies have developed tools for...

Thesis. 1978. Ph.D.--Massachusetts Institute of Technology. Dept. of Civil Engineering. MICROFICHE COPY AVAILABLE IN ARCHIVES AND ENGINEERING. Bibliography: p. 119-124. Ph.D.

Digital Piemonte is a visionary project to create a rich digital technology infrastructure that enables dynamic management of mobility and transactions for social and commercial benefits at a regional scale. A new regional system requires new approaches to effectively integrate the numerous platforms and organizations that manage the physical, info...

and man-made disruptions have increased companies'awareness of the need for active risk management. Governments in the West also have realized that more than 85% of the infrastructure in their countries is owned and/or operated by the private sector. At the very least this means that governments need to better understand how resilient private secto...

In this article we offer an equivalent minimization formulation for the traffic assignment problem when the link travel times are flow-dependent random variables. The paper shows the equivalency between the first-order conditions of this program and the stochastic equilibrium conditions as well as the uniqueness of the solution. The paper also desc...

This chapter reports on the use of combinatorial auctions (CA) for the procurement of commercial freight transportation services in the truckload (TL) market in the U.S. It also explores how CA in the transportation sector, consisting of shippers and carriers, are affected by the nature of shipper– carrier relationships. The chapter begins with a d...

The range of potential high impact-low probability (HILP) disruptions to the operations of retailers, manufacturers, transportation carriers, and all others involved in the supply chains of goods and services is infinite. They can be classified as follows: random phenomena, accidents of all kinds, and international disruptions. Each type of disrupt...

Many companies leave risk management and business continuity to security professionals, business continuity planners or insurance professionals. However, the authors argue, building a resilient enterprise should be a strategic initiative that changes the way a company operates and increases its competitiveness. Reducing vulnerability means both red...

Jack Emmons, the CEO of Voici Brands, knew his apparel company needed a supply chain overhaul. Over the past couple of years, sales had dropped because of late deliveries, stock-outs, and other supply problems. Meanwhile, a major competitor had significantly reduced its time to market and boosted its bottom line by out-sourcing all its product line...

Most shippers go through an annual auction process of procuring transportation services, leading to an annual contract. This paper argues that the use of combinatorial auctions in this procurement can unlock significant reductions in operating costs for shippers, while protecting carriers from "winning" the lanes that do not fit their network, thus...

On the morning of September 11th, 2001 the United States and the Western world entered a new era – one in which indiscriminate terrorist acts of all kinds must be expected. Many, if not most, of the expected consequences of the new era will be reflected in supply chain management challenges: relations with suppliers and customers, transportation di...

In this paper, several “disruptive” technologies are considered and the paths they have taken from the early innovation phase to full implementation are traced. The technologies include: refrigeration; the automobile and highway system; incandescent lighting; the television; and, the personal computer. Each technology is traced through several step...

Demand variability is the controlling factor in supply chain design. This paper looks at the design of flexible supply chain built to for resilience so they are able to withstand random supply/demand imbalance. Product shortage can result either from unex pected demand increase or from an unexpected disruption in the supply of goods or material.

This paper presents the concept of optimization-based procurement for transportation services. The approach allows both the shipper and carriers to benefit through the use of a collaborative approach to securing and managing a strategic relationship. Because the shipper's assignment problem involves a combinatorial number of choices and cannot be e...