Electronic copy available at: http://ssrn.

com/abstract=2056331
DEALING WITH COMPLEXITY IN THE SUPPLY CHAIN:
THE EFFECT OF SUPPLY CHAIN MANAGEMENT INITIATIVES
SEYDA SERDARASAN
1

Department of Industrial Engineering, Istanbul Technical University, Maka, 34357 Istanbul, Turkey
MEHMET TANYAS
International Trade and Logistics Management Department Maltepe University, Istanbul, Turkey
Abstract
Purpose The study examines the supply chain complexity concept and discusses how current
supply chain management initiatives (in terms of activities, tools, and information technologies)
contribute to complexity management in the supply chain.
Design/methodology/approach A literature review was conducted regarding complexity
management in the supply chain. This was followed by a questionnaire survey that focused on
the current efforts of companies regarding supply chain management initiatives and complexity
in their supply chain.
Findings The literature review shows that supply chain management initiatives contribute to
the efforts of companies to deal with complexity in the supply chain, especially in managing
interactions, and reducing uncertainty. The survey results support these findings.
Practical implications The results of the survey provide insight into the capabilities to focus
on when dealing with supply chain complexity.
Originality/value The study reflects how current supply chain management activities, tools
and enabling technologies contribute to dealing with complexity in the supply chain and
provides a starting point for further research in complexity management in the supply chain.
Keywords Supply chain complexity, Supply chain management, Integration, Information
technologies, Complexity management
Paper type Conceptual paper
1. INTRODUCTION
Supply chain is a complex network of business entities involved in the upstream and
downstream flows of products, services, finances and information (Beamon 1998; Lambert et
al. 1998; Mentzer et al. 2001). Supply chain management (SCM) is the systemic and strategic
coordination of these flows within and across companies in the supply chain with the aim of
reducing costs, improving customer satisfaction and gaining competitive advantage for both
independent companies and the supply chain as a whole (Cooper & Ellram 1993; Cooper et al.
1997; Mentzer et al. 2001).
The importance of SCM as a competitive strategy has long been recognized by the
companies. Consequently, companies undertake SCM initiatives to maintain and improve their
competitive position. However, there is little evidence of how these initiatives affect the
complexity of the supply chain. It is clear that supply chain is a complex system and it is almost
common sense to say SCM is about managing the complexity inherent in the supply chain. This
paper tries to shed some light on the contribution of SCM initiatives to deal with complexity in
the supply chain. There may be certain difficulties in dealing with complexity in a supply chain,

1
*Corresponding author: serdars@itu.edu.tr (S. SerdarAsan)
Electronic copy available at: http://ssrn.com/abstract=2056331
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

2
however when managed correctly it leads to achieving better supply chain performances, which
is supported by numerous studies (see, among others, van der Vorst & Beulens 2002; Vachon &
Klassen 2002; Perona & Miragliotta 2004; A.T. Kearney 2004; PricewaterhouseCoopers 2006;
Kersten et al., 2006; Koudal & Engel 2007, Bozarth et al. 2009).
The aim of this paper is twofold. First, it reviews the studies regarding complexity
management in the supply chain and discusses the contribution of SCM initiatives to deal with
supply chain complexity (SCC) from three major areas: key SCM activities, SCM tools, and
information systems and technologies that enable SCM. Second, it reports the findings of a
survey research designed to reveal the current efforts of companies in the above mentioned
areas and in dealing with the complexity in their supply chain.
2. LITERATURE REVIEW
2.1. Complexity in the supply chain
Adapting Yates(1978) definition, we can say that supply chain is a complex system since
we can observe one or more of the following features in it: (a) there are various companies; (b)
there are high number and variety of relations, processes and interactions between and within
the companies (c) these processes and interactions are dynamic; (d) many levels of the system
are involved in each process; and (d) the amount of information needed to control the system is
large.
Borrowing from Casti (1979), we can distinguish between two aspects of SCC: static and
dynamic. While static complexity describes the structure of the supply chain, the variety of its
components, and strengths of interactions, dynamic complexity represents the uncertainty in the
supply chain and involves aspects of time and randomness. This distinction has been primarily
used to study complexity in manufacturing systems (see, among others, Deshmukh et al. 1992;
1998; Frizelle & Woodcock 1995; Calinescu et al. 1998). In the same vein, studies dealing with
SCC distinguish between structural and operational complexity (Sivadasan et al. 1999,
Sivadasan et al. 2002a). Structural (static) complexity refers to complexity of the structure of a
product and the structure of the processes to supply, produce, and market that product.
Operational (dynamic) complexity in supply chain is associated with the uncertainty of
information and material flows within and across organizations, which is generated by internal
sources (e.g. how well the facility is controlled) and by external sources (e.g. the effect of
customers and markets) (Frizelle & Woodcock 1995; Calinescu et al. 1998; Calinescu et al.
2000). Other classifications of SCC can be found in the literature; such as technological,
organizational, environmental and output complexity (Zhou 2002), technical and flow
complexity (Kaynak 2005), internal and external complexity (Blecker et al. 2005; Grler et al.
2006; Kersten et al. 2006).
In short, complexity in the supply chain is characterized by numerousness, variety,
connectivity, uncertainty, non-linearity, and dynamism in the supply chain and its environment.
S. Serdarasan & M. Tanyas

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Figure 1 illustrates the characteristics of the supply chain as a complex system, which are
grouped into static and dynamic aspects.

Figure 1. Main characteristics of supply chain as a complex system
2.2. Complexity management in the supply chain
Complexity in a supply chain grows, as customer requirements, competitive environment
and industry standards change, and as the companies in the supply chain form strategic
alliances, engage in mergers and acquisitions, outsource functions to third parties, adopt new
technologies, launch new products/services, and extend their operations to new geographies,
time zones, and markets The growth of SCC seems to accelerate with trends such as
globalization, customization, outsourcing, innovation, and flexibility (Deloitte Touche
Tohmatsu 2003; BCG 2006).
Before developing and implementing strategies to deal with SCC, it is important to
differentiate between necessary complexity and unnecessary complexity. Necessary complexity
adds value to the customer/company/supply chain and the customer/market is willing to pay for
it, whereas unnecessary complexity brings no additional benefits to the company/supply chain,
and involves additional costs (Frizelle & Efstathiou 2002; Apostolatos et al. 2004; A.T.
Kearney 2004). Only after understanding the nature of complexity being faced, it is meaningful
to develop and implement strategies to deal with complexity. In the literature, efforts dealing
with complexity are discussed mainly under two topics: complexity reduction and complexity
management. When dealing with complexity, the common approach would be to eliminate or
reduce the unnecessary complexity and manage the necessary complexity. As a long-term
strategy in dealing with complexity, a third item can be added to the list, which is complexity
prevention (see, among others, Wildemann 2000; Sivadasan et al. 2002b; 2004; Kaluza et al.
2006).
As an initiative to deal with SCC, Towill (1999) specifies twelve rules as a means to
simplify material (and information) flows in a supply chain. The rules highlight the needs for
streamlining material flows, synchronization, elimination of uncertainties, visibility, use of

Interactions /
Connectivity Variety
Number of elements
Non-linearity
Static
Dynamic
Dynamism
Uncertainty
Supply
Chain
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

4
robust decision support systems, and supply chain integration (Childerhouse & Towill 2003).
Table I gives a categorization of the twelve rules according to the approaches to dealing with
complexity: complexity reduction, complexity management, and complexity prevention.
Table I. Categorization of twelve rules for simplifying material flows, adapted from Childerhouse and Towill (2003,
p.20)
Rule Description
[R]eduction/
[M]anagement/
[P]revention
1 Make products those can be quickly dispatched to customers. R
2 Minimize work-in-progress stock levels. R
3 Streamline material flow and minimize throughput time M/P
4 Use the shortest planning period R
5 Take deliveries from suppliers in small batches R
6 Synchronize time buckets throughout the supply chain. M/P
7 Form natural clusters of products M
8 Eliminate all uncertainties in all processes. R/P
9 Understand, document, simplify and only then optimize (UDSO). M/P
10 Make all information flows visible throughout the chain. M/P
11 Use robust decision support systems. M
12 Achieve seamless supply chain (supply chain integration) M/P

According to Wildemann (2000), complexity reduction must precede complexity
management, which should be followed by complexity prevention. Complexity reduction is a
short-term strategy, which aims to minimize the existing variety, through product and process
elimination, standardization, and modularization. Complexity management, the mid to long-
term strategy, aims at managing the necessary complexity and involves determining methods
and metrics for SCC. The long-term strategy, complexity prevention involves all long-term
activities to avoid unnecessary complexity, e.g. redesigning organizational structure, and/or
redesigning supply chain configuration (Wildemann 2000).
Similarly, Sivadasan et al. (2002b; 2004) suggest four policy categories for operational
complexity management: to export complexity to other organizations, to charge for imported
complexity, to invest in resources to absorb complexity, and to take precautions to avoid
complexity generation. Exporting complexity means transferring the complexity within the
company to its suppliers and customers. Yet, it is not an effective response when dealing with
SCC, while it does not meet the holistic view of SCM. Charging for imported complexity can
be taken as a precautionary approach. These two categories (exporting and charging for) have
an external focus, where the remaining two categories (to absorb and to avoid) have an internal
focus. Sivadasan et al. (2002b; 2004) state that an organizations ability to absorb and avoid
(manage and prevent) complexity is determined by its resources such as stock, capacity, time,
IT systems, and decision-making systems.
In the same vein, Perona and Miragliotta (2004) distinguish between two actions to deal
with static complexity: complexity reduction and complexity management. They discuss that
complexity reduction is reducing the complexity, and complexity management is reducing the
impact of complexity on systems performance. Perona and Miragliotta (2004) present a
S. Serdarasan & M. Tanyas

5
normative complexity model where the system under study (a company/supply chain) possesses
a basic complexity. Given this basic complexity, the system adopts complexity reduction levers
and reduces its basic complexity to a level, which is called actual complexity. Next, it adopts
complexity management levers that reduce the impact of actual complexity on the systems
performance. This new level of complexity is defined as perceived complexity and leads to
observed performances of the system. The study concludes that managing and reducing
complexity have an impact on both efficiency and effectiveness. The model of Perona and
Miragliotta (2004) enables us to understand the logical connections among complexity,
complexity reduction, complexity management and performance in a supply chain.
The positive impact of complexity management on supply chain performances is supported
by PRTM studies (Hoole 2004; 2005; 2006). The results show that success of industry leaders
stems from their ability to deal with complexity. The most important abilities are to use metrics
to track complexity, to limit the number of product offerings, and to design products to simplify
planning, supply, manufacturing, and distribution (Hoole 2006). Besides these transferable
abilities, Hoole (2004; 2005) provides a complexity reduction matrix whose dimensions are the
four of the SCOR (Supply Chain Operations Reference-model) process elements (i.e. plan,
source, make, deliver) and the supply chain performance levers (i.e. configuration, management
practices, relationships, organization, and information systems). The cells involve complexity
reduction activities such as supplier reduction, outsourcing, collaboration, and implementing
SCM tools and technologies. In line with PRTM studies results, five reactionary actions to deal
with complexity are listed in A.T. Kearney Report (2004): standardization, supplier/customer
reduction, eliminating non-value adding processes and activities, sharing information, and
provide flexibility. The first three actions can be categorized as complexity reduction efforts,
and the last two as complexity management.
The efforts to deal with complexity in the supply chain follow the order reduce-manage-
prevent complexity. The initial effort is to eliminate or reduce the unnecessary complexity in
the system, and then to manage the necessary complexity and prevent additional (unnecessary)
complexity when possible. Understanding the inherent complexity of the supply chain and
taking necessary actions to reduce-manage-prevent it would lead to higher quality, lower costs,
increased responsiveness, which means better performances and higher customer satisfaction. It
is also important to identify how current SCM initiatives, the companies widely undertake,
facilitate complexity management. The next section reviews the SCM initiatives and discusses
their contributions when dealing with SCC.
2.3. Supply chain management initiatives and complexity
Research findings support that reducing and managing complexity in supply chain results
in improved performance (van der Vorst & Beulens 2002; Vachon & Klassen 2002; Perona &
Miragliotta 2004; A.T. Kearney 2004), reduced costs (Perona & Miragliotta 2004; A.T.
Kearney 2004; Hoole 2005; Kersten et al. 2006; PricewaterhouseCoopers 2006), and increased
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

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supply chain integration (Childerhouse & Towill 2003; Sivadasan et al. 2002a). In order to
reduce or manage SCC, various studies emphasize the importance of SCM activities, i.e. supply
chain integration, coordination, synchronization, visibility, standardization, automation,
elimination of non value adding processes, and use of robust decision systems. Additionally,
dealing with complexity in supply chains becomes relatively easier with the use of advanced
SCM tools (e.g. SCOR, CPFR, Lean-Agile), which facilitate supply chain integration. Along
with these, recent developments in information and communication technologies improved the
abilities of the companies to cope with complexity in supply chains. In this respect, SCM
initiatives can be categorized into three major areas: key SCM activities, SCM tools and
enabling technologies. Next, how each category contributes to dealing with complexity in the
supply chain is discussed.
2.3.1. A review of key supply chain management activities
SCM research emphasizes the importance of integration, coordination, information sharing,
visibility, sharing risks and awards, and long-term relationships (Ganeshan et al. 1999; Mentzer
et al. 2001; Min & Mentzer 2004). These activities strongly support managing dependencies
within a supply chain, thus managing complexity of the supply chains. The studies in SCC
highlight the following activities to manage and reduce complexity:
Supply chain integration,
Increased coordination,
Information visibility,
Synchronization through the supply chain,
Standardization,
Process automation,
Elimination of non value adding processes,
Use of robust decision systems.
As Maloni and Benton (1997) put, SCM efforts are directed to increase the financial and
operational performance of each supply chain member through sharing information, technology
and planning efforts, thus reducing costs and inventories. Today many companies are trying to
break down both intra and inter company barriers with the aim of enhancing integration and
reducing complexity of their supply chains.
Integration is the key to SCM, as emphasized in the first article with the phrase supply
chain management by Oliver and Webber (1982, p.66). Supply chain integration embraces all
activities needed to achieve a seamless supply chain (Towill 1997), where all functions and
processes within and between companies constituting the supply chain are managed as a single
entity. Fawcett and Magnan (2002) state that true integration means alignment of objectives,
open communication, pooling of resources, and sharing of risks and awards between supply
chain partners. In line with Harrigans (1985) vertical integration dimensions, three dimensions
S. Serdarasan & M. Tanyas

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characterizing supply chain integration can be identified: direction, scope, and level. The
direction of integration can be upstream with suppliers and downstream with customers
(Frohlich & Westbrook 2001; Fawcett & Magnan 2002). The proportion of functions involved
in supply chain integration efforts determines the scope of integration (van Donk & van der
Vaart 2005). The level of integration presents the extent of integration from a supply chain
made of functional silos to one that is fully integrated (Stevens 1989; Frohlich & Westbrook
2001). Supply chain integration leads to sustainable competitive advantage for the whole supply
chain over competing supply chains (Lummus & Vokurka 1999; Bowersox et al. 2000; Stank et
al. 2001).
A critical prerequisite to effective supply chain integration is coordination (Fawcett and
Magnan 2002). Since a supply chain is made up of many interconnected organizations and
activities; managing the supply chain entails managing the interdependencies among these
activities to achieve the ultimate goal of a supply chain, which can be to satisfy customers,
increase throughput and lower costs. The act of managing the interdependencies between
activities is called coordination (Malone & Crowston 1990; 1994). According to Lee and
Billington (1993), the concept of supply chain is about managing coordinated information and
material flows, operations, and logistics. There is a distinction made in the supply chain
literature between cooperation, coordination and collaboration, each reflecting progressive
levels of trust, commitment, and sharing of information, resources, as well as goals (see
Spekman et al. 1998; Wang & Archer 2004). However, for the purposes of this study these
three terms are subsumed under the umbrella term coordination. In order to achieve supply
chain coordination all parties in the supply chain should cooperate, coordinate their efforts and
resources, and share information.
Coordination and integration across the supply chain can be attained through
synchronization of processes and data (Chandra & Kumar 2001). Effective synchronization
enables the parties in the supply chain to interact in real time. To ensure synchronization, the
effect of a change occurring in a process, plan or data should be transferred throughout the
supply chain in real time. To achieve this, automation along with standardization of data and
processes is required.
Automating the supply chain processes enables the parties in the supply chain to
communicate faster and free from error with each other. In order to automate processes,
information systems must follow pre-agreed business data exchange mechanisms within an
enterprise and among multiple supply chain partners. These data exchange mechanisms are
usually prescribed in business process definitions.
This leads us to another crucial aspect of electronic integration: data and process
standardization. In support of data standardization initiatives, supply chain partners must agree
upon the data exchange protocol, the format, structure, and semantics of the business data they
communicate, so that their computer systems can understand and process the data precisely.
Data exchange is facilitated by standardizing processes, which involves pre-specification of
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

8
processes and their coordination. Consortiums of manufacturers, distributors, and system
integrators are working to define and standardize e-business processes. In addition,
standardization of materials, parts, interfaces, packaging, processes, tools, rules, and so forth
is considered as a common complexity reduction approach (Child et al. 1991; Wildemann
2000).
Visibility is another key element of constructing the electronic supply chain. It is through
visibility the ability to monitor processes and activities across a supply chain in real time
that the parties in the supply chain are notified of significant deviations from plans and provided
with estimates that are more realistic. Thus, the parties can take action to reduce the effects of
uncertainty across the supply chain. Visibility to orders, inventory, and shipments across the
supply chain drive sustainable improvements in lead times, delivery reliability, and inventory
reductions (Enslow 2006). In order to achieve better visibility, supply chain partners need to
invest in the technology required to achieve it.
At this point, it is necessary to mention the contribution of information sharing to supply
chain activities. Studies show that sharing information and using information technologies have
a positive effect on both information and material flows (Cachon & Fisher 2000; Sahin &
Robinson 2002; Zhou & Benton 2007; ). That is, information sharing facilitates integration,
coordination, visibility and other key supply chain activities and in turn facilitates managing
SCC. Information sharing between parties in a supply chain becomes less demanding owing to
modern information technologies (Paulraj et al. 2006).

Figure 2. Relating integration, coordination, synchronization, standardization, automation, and visibility from SCM
aspect
On the road to a fully integrated supply chain, where complexity becomes manageable,
effective coordination of physical and information flows between supply chain partners is
necessary. For a coordinated supply chain, it is essential to standardize, automate and
synchronize the business functions and processes, and achieve end-to-end visibility. Elimination
of non-value adding processes and use of robust decision systems are prerequisite actions for
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the success of any complexity management initiative. Figure 2 illustrates the relationship
between SCM activities.
2.3.2. A review of supply chain management tools
The more complex the system becomes, the greater is the need for a model to manage its
complexity. Therefore, to improve the flows in a supply chain, advanced tools and methods are
developed and widely adopted in the practice such as the Supply Chain Operations Reference-
model (SCOR), Collaborative Planning, Forecasting and Replenishment (CPFR), Quick
Response (QR), Efficient Consumer Response (ECR), Vendor Managed Inventory (VMI), as
well as Lean-Agile initiatives.
Since its introduction in 1996 (Cohen 1996; Stewart 1997), the SCOR model has been
improved on a regular basis by the Supply-Chain Council (1996; 2001; 2006; 2008)
(www.supply-chain.org) and is widely adopted by industry (Cohen & Roussel 2005, p.xii). The
model is based on five core supply chain management processes: plan, source, make, deliver,
and return; and its scope spans three levels of supply chain process detail: process, process type,
and process element (Stewart 1997; Supply-Chain Council 2008). The SCOR model provides a
common framework to capture supply chain processes and helps companies to communicate
supply chain practices, measure performance objectively, identify supply chain performance
gaps and develop improvement objectives (Supply-Chain Council 2008). In turn, it enhances
the ability of the companies to understand and cope with the dynamic and complex behavior of
supply chains.
QR, ECR and VMI are time based competition methods (Mentzer 1999; Zacharia &
Mentzer 2004) that focus on reducing the level of inventory in the supply chain and improving
the replenishment accuracy and frequency based on actual product usage and stock level
information provided by the buyer (Daugherty et al. 1999). They encourage the collaborative
management of information flows and information technologies (Daugherty et al. 1999; Angulo
et al. 2004). These automatic replenishment tools contribute to complexity management efforts
in that they reduce the number of decision levels and conflicts.
An advanced automatic replenishment initiative is the CPFR, which provides a formalized
guideline for creating collaborative relationships between parties through co-managed processes
and shared information with the aim of increasing the overall efficiency in the supply chain
(VICS 2004). Different from other automatic replenishment tools CPFR unites demand
planning and supply planning under a coordinated business plan, thus it promotes end-to-end
visibility, collaborative planning, and collaborative decision-making (Barratt & Oliveira 2001).
Doing so, CPFR reduces uncertainty in the supply chain processes and creates an opportunity
for reducing complexity.
The main idea behind these tools is the need to be responsive, where agility seems to be the
answer (Lee 2004; Christopher 2000). Agility and leanness cannot be thought in isolation. Thus,
Naylor et al. (1999) introduced leagility, which positions the decoupling point according to the
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

10
characteristics of the lean and agile paradigms. In leagile paradigm, upstream of the decoupling
point the processes are designed to be lean (level scheduled) and downstream of the decoupling
point the processes are designed to be agile (responsive) (Naylor et al. 1999; Mason-Jones et al.
2000; Towill & Christopher 2002). Lean and agile or leagile paradigms support the integrated
supply chain where the information and material flows are simplified, streamlined and
optimized, and lead times and waste are reduced (Naylor et al. 1999; Mason-Jones et al. 2000;
Towill & Christopher 2002). Moreover, the leagile paradigm contributes to complexity
management by enabling lean thinking, which promotes eliminating muda.
2.3.3 A review of supply chain enabling technologies
Supply chain enabling technologies (SCeT) cover a wide range of technologies and
systems that enable the smooth flow of products, services and information as well as the
integration of business processes across the supply chain. SCeT should be regarded as a
facilitator to deal with supply chain problems, and as an enabler of SCM activities (Bechtel &
Jayaram 1997; Kumar 2001; Sanders & Premus 2002; Singh 2003; Gunasekaran & Ngai 2004;
Gunasekaran et al. 2006; Singh et al. 2007). However, it should be noted that the success of
technology adoption depends on various variables (Patterson et al. 2003) and should be
undertaken after process improvement efforts (Poirier & Quinn 2003).
SCeT fall broadly in two categories: information technologies and information systems
(see, among others, Gunasekaran et al. 2006, Sassi 2006). In this section, these are regarded as
technologies and application softwares (in particular enterprise softwares), respectively.
By technologies, we mean communication, data capture, and transmission technologies
such as telephone, facsimile, EDI (Electronic Data Interchange), e-mail, internet, wireless
communication systems, GPS (Global Positioning System), PoS (Point of Sale), barcode, and
RFID (Radio-Frequency IDentification). All these technologies provide a means for efficient
communication between supply chain partners, which enables data synchronization and
information sharing across the supply chain, as well as providing a platform for data
standardization. Evidence presenting the benefits of adoption and use of these technologies can
be found in the literature (see, among others, Chao et al. 2007; Klein 2006; Power & Simon
2004; Singh et al. 2007).
The development of application softwares is accelerated by the advance of computer
technology (see, among others, Mabert 2007; Jacobs & Weston 2007). Beginning in 1960s with
BOM (Bill of Materials), the applications advanced into MRP (Material Requirements
Planning), MRPII (Manufacturing Resource Planning) and ERP (Enterprise Resource Planning)
by adding further functionalities to meet the increasing business requirements. The scope of
ERP applications extended parallel to the need to integrate all the functions within an enterprise
(Ptak and Schragenheim 2000, pp.3-13; Kumar and van Hillegersberg, 2000). Although the
advance of ERP presents a shift from being totally enterprise centered to enabling external
collaboration, the focus of ERP systems remains at the individual enterprise level.
Consequently, they have some shortcomings in managing supply chains, where the unit of
S. Serdarasan & M. Tanyas

11
analysis is a network of organizations (Akkermans et al. 2003, Verwijmeren 2004). Early
efforts to support supply chain processes produced decision support and optimization
applications called advanced planning systems (APS) (Kumar and van Hillegersberg 2000). Use
of APS resulted in remarkable improvements in supply chain efficiency and productivity. Yet a
typical APS works best in static supply chain with stable partners, which does not correspond to
todays dynamic and demand driven environment, where the coordination of supply chain
partners and the speed of execution usually become more important than the optimization of the
supply chain (Kumar 2001). Therefore, the need for the next generation softwares arises. Both
ERP vendors and SCM oriented software (Best of Breed BoB) providers undertake efforts to
fulfill this need. An important step in this direction is Supply Chain Event Management
(SCEM), which enables the monitoring of the supply chain and coordination with suppliers and
customers to resolve unpredicted events (Otto 2003). The next generation softwares should
primarily enable coordination, visibility and synchronization across the supply chain. A
secondary research conducted by Serdar Asan & Tanyas (2005) reveals that solution providers
offer various solutions regarding key SCM activities, where the main emphasis is on visibility
and synchronization. The study also shows that there is only modest attention focused directly
to complexity management in the supply chain. This can be attributed to the subjective and
abstract nature of the complexity concept. In order to indicate the improvements to the system,
next generation software providers can add functionalities to their software to measure and
monitor SCC.
SCeT facilitate more accurate forecasting and planning, as well as effective communication
throughout the supply chain. However, SCeT may add a degree of complexity to decision-
making (Disney et al. 2004, Hakkinen and Hilmola 2008) mainly due to the limited ability of
humans to cope with vast amounts of information (Miller 1956). Still, SCeT can be utilized to
reduce the complexity in the supply chain. Successful adoption of SCeT can eliminate most of
the complexity drivers originating from within the company and/or from interactions with
suppliers and customers in terms of information flows, which may be generated via operational
characteristics such as variations and uncertainties, and organizational characteristics such as
decision-making process, information and communication systems.
2.3.3. A Conceptual Framework
The above review reveals that SCM initiatives enable companies to reduce and manage
SCC. Integration efforts, information sharing, supply chain visibility and standardization of data
and processes ease managing complexity. SCM tools provide a model to manage flows in a
supply chain, and promote using a common language; in turn reduce complexity to some
degree. SCeT reduce uncertainties by facilitating accurate forecasting and planning through
using advanced techniques and visibility; enable effective communication throughout the
supply chain; and eliminate most of the complexity drivers originating from interactions with
suppliers and customers. The interactions between SCM initiatives and SCC efforts are not
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

12
straightforward, but rather complex and subjective, which is difficult to precisely define and
evaluate. This paper suggests all three initiatives support the SCC management efforts in a
positive manner (See Figure 3).
Supply Chain
Complexity Management
Efforts
Supply Chain Activities
Supply Chain Enabling
Technologies
Supply Chain
Management Tools
+
+
+

Figure 3. Effects of SCM initiatives on SCC management efforts
3. CURRENT STATE OF SUPPLY CHAIN PARTNERS REGARDING SCM
INITIATIVES AND COMPLEXITY
SCC becomes a domain of interest for academics, practitioners, and consultants, as it
becomes more and more evident that the SCC hinders improvement of the supply chain
performance. However, current experiences of supply chain partners with regard to SCC are not
yet clear. To begin with, a survey research was conducted to describe the current state and
efforts of supply chain partners regarding SCM initiatives and SCC by means of a questionnaire
administered to companies located in Turkey.
3.1. Research method
3.1.1. Questionnaire design and features
The survey instrument was a self-administered e-mail questionnaire. The survey questions
were developed based on an extended literature review in order to reveal current state of
companies in the areas of SCM efforts in general, complexity related problems and efforts made
to overcome these, supply chain integration efforts, visibility of the supply chain and use of
SCeT. The aim was to collect descriptive data which gives us more insight into the current
efforts of companies regarding SCM and complexity management. A draft questionnaire was
initially pre-tested with academics and practitioners to check its content validity and
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13
terminology, and modified accordingly. The modified questionnaire was then administered to
the target population.
3.1.2. Type of data, measures and scales
The survey instrument involves different question structures. Besides open ended questions
there are forced-choice questions, in which respondents are asked to choose a category, or rank
the order of a given list, or to rate each definition according to how well it depicted their
perception using a seven-point scale from 1=completely disagree to 7=completely agree. To
ensure the answers are mutually exclusive the respondents were told to skip the questions they
prefer not to answer or do not know.
3.1.3. The sampling frame and the target companies
The target companies were not limited to a single industry, but open to all companies
working in various industries because the theory of SCM should be applicable to many
industries and organizations. The principal assumption of this survey was that the target
companies apply SCM principles. Therefore, the convenient sampling technique (non-
probability sampling) was used, where questionnaires were distributed to companies those are
known to be practicing SCM. The questionnaire was addressed to the employees who were
responsible for activities included in SCM, assuming that they would understand the concepts
of SCM and the inherent complexity and they were exposed to the issues of dealing with these
concepts in practice.
3.1.4. Response quality and profile of respondent organizations
Thirty-two returns were received; thirty of which were usable for analysis. 73% of the
returning companies were large companies and the rest were SMEs (according to the Small and
Medium Enterprise definition of European Union 2003). 57% of the companies were with
foreign partnership and 43% were local companies with 100% domestic capital. The respondent
companies were from different positions in a supply chain and one third of the returning
companies participated in multiple supply chains. The questionnaires were filled by executives
from various functional backgrounds, ranging from general manager, supply chain director to
logistics, planning, and quality management.
3.2. Survey findings
3.2.1. Issues related to supply chain management efforts in general
All of the surveyed companies were actively engaged in SCM and they perceive it as a
positive endeavor and are willing to launch new SCM initiatives that would contribute to
dealing with SCC. Even with their positive attitude towards SCM, companies have reported
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

14
facing several obstacles during SCM activities, including communication problems, lack of
knowledge and expertise, unclear authority and responsibility definitions and poor technology.
When they were asked how they overcome these obstacles, the emerging answers were:
establish/maintain communication within and between companies, invest on new technologies
and solutions to improve synchronization and integration, facilitate continuous improvement,
establish a common understanding of definitions and terms, and benchmarking. Although the
solutions seem to cover most of the obstacles (See Table II), there are still issues the companies
have to work on collaboratively to manage the supply chain efficiently.

Table II. The main obstacles the companies face during SCM efforts and their solutions to overcome these
Obstacle Solution
Internal/external communication problems
Establish/maintain communication within and between companies,
Systematic control of supply chain processes
Lack of knowledge and expertise
Provide their employees continuous training,
Receive support from consultants
Lack of employee support
Solicit employee suggestions,
Provide their employees continuous training
Not clearly defined authority and
responsibility

Lack of a common understanding of
definitions
Establish a common understanding of definitions
Not enough benchmark cases Facilitate continuous improvement, benchmarking
Poor technology
Invest on new technologies and IT based solutions to improve
synchronization and integration
3.2.2. Issues related to complexity management
The increasingly complex and dynamic nature of current business systems has created the
need to manage complexity. About three quarters of the companies we have surveyed
responded that their companies supply chains were complex, and noted that the primary drivers
of increased complexity include changing customer needs and expectations, higher number of
companies in the supply chain, national/international laws and regulations, and industry-specific
regulations and standards . 69% agreed that the complex structure of their supply chain causes
problems such as lower performance, higher costs, and lower profits (See Figure 4). Majority of
the companies indicated that they take action to manage or reduce the complexity.
S. Serdarasan & M. Tanyas

15

Figure 4. Problems caused by complexity in the supply chain

When the companies were asked to what extent they possess the capabilities for complexity
management - which are highlighted in a recent survey conducted by PricewaterhouseCoopers
(2006) - five main gaps become evident:
ability to measure complexity,
ability to identify value adding activities,
a framework for managing complexity,
effective communications,
alignment of IT with business processes.
3.2.3. Issues related to supply chain integration efforts
The companies reported that they are engaged either in integration or in cooperation efforts
with the parties in their supply chain. The gathered data indicates that although the surveyed
companies are integrated with their LSP, first-tier suppliers and customers; complete forward
and backward integration was observed very rare. Next, the companies were asked to indicate
the integrated functions with their supply chain partners. About half of the respondents reported
backward integration (i.e. suppliers) in forecasting, planning, scheduling, logistics, distribution
and warehousing, and packaging. Forward integration (i.e. customers) activities carried out are
forecasting, planning and scheduling. Logistics, distribution and warehousing are the activities
that companies cooperate with LSP. While logistics, purchasing, and sales are considered
definitely as a part of SCM, product design/engineering and customer services remain as less
integrated functional areas.
The overall data denotes that the surveyed companies have advanced beyond the initial
stages of integration (Stevens 1989). Most of the surveyed companies are placed at the third
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

16
partner collaboration level in the supply chain maturity framework (Poirier and Quinn 2003),
where cooperation between intra-company functions, LSP, suppliers and customers evolve.
Table III presents the cross tabulation of level of integration and complexity management
efforts, which tends to support a relation between integration and complexity management
efforts.
Table III. Cross tabulation of level of supply chain integration and complexity management efforts
Level of integration
First tier Extended Supply chain wide Total
Efforts to manage
SCC
low 7 2 0 9
high 11 4 5 20
Total 18 6 5 29
3.2.4. Issues related to visibility of the supply chain
With end-to-end visibility, supply chain partners can monitor and manage flows across the
entire supply chain, where supply chain maps become beneficial. (Gardner & Cooper 2003).
More than a half of the companies reported to have mapped their supply chain, which indicates
that these companies have an idea of how materials and information flow from suppliers to the
final customers, and who the key parties in their supply chain are. Thus, they can manage those
connections efficiently to increase profitability and develop a sustainable competitive advantage
(Lambert & Pohlen 2001, Fawcett & Magnan 2002). It is important to map the supply chain,
since it would allow us to see the whole supply chain that may be too large or too complex to be
seen directly (Gardner & Cooper 2003). The companies with positive responses about mapping
the supply chain were also highly involved in managing SCC (see Table IV).
Table IV. Cross tabulation of supply chain mapping and complexity management efforts
Supply chain map
absent present Total
Efforts to
manage SCC
low 6 4 10
high 6 14 20
Total 12 18 30
Information and process visibility is essential to improved integration of the supply chain.
Therefore, the parties must be ready to share information. 72% of the surveyed companies
declared that they are ready to share information within the supply chain. When the companies
were asked the extent to which they have information about the processes of the other parties in
their supply chain, the responses were relatively low. On average, only one third of the
companies achieve end-to-end visibility in their supply chain. These companies were also
highly involved in SCC management efforts (see Table V).

S. Serdarasan & M. Tanyas

17
Table V. Cross tabulation of supply chain visibility levels and SCC management efforts
Level of visibility
Internal First tiers Extended Total
Efforts to manage
SCC
Low 3 6 1 10
High 1 11 8 20
Total 4 17 9 30
3.2.5. Issues related to SCeT use
To manage the complexity in the supply chain and to achieve integration SCeT are
indispensable. First, the companies were asked to rank the means of communication they use to
communicate with their partners: e-mail, phone and fax were ranked top. The technology and
software use was mainly limited to barcode technology and ERP software. The reason behind
the relatively low satisfaction (see the mean values) with the SCeT use presented in Table VI
can be attributed to low rate of overall software and technology use. Despite this, most of the
companies report positively (percentage of 5 to 7) that SCeT help them to manage complexity
and improve performances.
Table VI. Supply chain related SCeT use and satisfaction
Mean % 5-7
We utilize the SCM softwares fully and effectively 5,0 69%
We utilize the SCM technologies fully and effectively 4,6 59%
Use of SCM software and technologies helps us to solve problems caused by SCC 4,9 71%
Use of SCM software and technologies simplified our SCM efforts 5,2 76%
Use of SCM software and technologies improved our supply chain performances 5,3 83%
Question: Indicate your opinion (1=completely disagree, 7=completely agree)
%5-7 indicates the percentage of positive responses
3.3. Discussion of survey findings
Supply chains are complex systems where the integration and coordination of the parties
are of superior importance. Although our sample of companies is neither random nor
representative of supply chains, the survey findings give an insight into how companies view
complexity in the supply chain and which supply chain initiatives they undertake. Due to the
descriptive character of the collected data and the relatively small sample size, the results of the
survey serve as a proof of concept rather than a validation of the relationships presented in
Figure 3. However, the results of the survey can be viewed as initial evidence that the SCM
initiatives contribute to the efforts of companies in dealing with SCC.
Most of the companies reported utilizing CPFR and lean approaches to improve flows; yet
use of advanced tools for SCM is not widespread. The cross tabulations of survey data in Table
Dealing with complexity in the supply chain: the effect of supply chain management initiatives

18
VII presents a difference between companies using and not using SCM tools with respect to the
level of their complexity management efforts.
Table VII. Cross tabulation of SCM tools usage and SCC efforts
Using SCM tools
low high Total
Efforts to
manage SCC
low 4 6 10
high 4 16 20
Total 8 22 30
Information sharing is an important concept in the success of complexity management
efforts. The surveyed companies were ready to share information with their supply chain
partners. However, the end-to-end visibility, which is the advanced level of information sharing,
has not yet been achieved. In order to progress to an advanced level of visibility, the companies
need to utilize the information systems and technologies more efficiently and/or invest more on
these.
There are certain obstacles the companies are facing in their effort to manage complexity in
the supply chain, such as communication problems, lack of knowledge and expertise as well as
unclear authority and responsibility definitions. In addition, the survey reveals the main gaps in
the companies ability to deal with complexity: complexity measurement, identification of value
adding activities, effective communications, and alignment of information with business
requirements. Although some efforts are undertaken to overcome the obstacles and close the
gaps, there is a lack of a common framework to guide companies in dealing with SCC.
In todays dynamic environment, the successful companies will be the ones who recognize
the nature of the complexity in their supply chain and attempt to manage it. The surveyed
companies were aware of the complexity and indicated that they take actions to manage or
reduce the complexity. However, there is a long way to go for the companies to achieve a fully
integrated supply chain, where complexity becomes manageable.
4. CONCLUSION
Studies in the literature support that dealing with complexity results in improved supply
chain performance. Most companies consider the impact of complexity on supply chain
performances and undertake initiatives to overcome the negative effects associated with SCC,
either consciously or unconsciously. In this paper, we discuss the contribution of SCM
initiatives to management of complexity in supply chains with respect to three areas: key SCM
activities, SCM tools and SCeT.
This paper suggests that SCM initiatives enable companies to reduce or manage SCC. SCM
activities support management of complexity in the supply chain by information sharing,
visibility and standardization. In the same vein, SCM tools provide a model to manage flows in
a supply chain, thus simplifying the decision making process and eliminating some levels of
decision. Additionally SCM tools promote using a common language, in turn they reduce
S. Serdarasan & M. Tanyas

19
complexity to some degree. SCeT reduces uncertainties by facilitating accurate forecasting and
planning through using advanced techniques and by enabling visibility. SCeT also enables
effective communication throughout the supply chain and eliminate most of the complexity
drivers originating from interactions with suppliers and customers. Empirical findings also
provide evidence that SCeT supports the efforts of companies to manage the complexity in their
supply chains while complementing the other SCM initiatives. The interactions between the
SCM initiatives and supply chain complexity management efforts are not straightforward, but
rather complex and subjective, which is difficult to precisely define and evaluate.
The literature review and empirical evidence reveal current gaps, which can be used to
guide future work in the area of SCC management. There is the need to distinguish between
necessary adding and unnecessary complexity. This should be accompanied with the ability to
develop a common understanding of terms and rules of the supply chain in order to
communicate effectively, which in turn minimizes conflicts. A common framework to measure
and manage the complexity would maintain the balance between the internal, interface and
environmental varieties; and assist companies in dealing with SCC.
In order to manage complexity the companies need to be able to communicate effectively,
understand inner rules of the system, balance the internal, interface and environmental varieties,
and identify and eliminate non-value adding activities,. These capabilities would enable the
companies to deal with SCC emerging from variety (e.g. by eliminating non-value adding
activities, maintaining the balance of varieties), interactions (e.g. through communication,
sharing a common language, understanding cause effect relationships), uncertainty (e.g. by
measuring complexity, understanding rules and regularities), and dynamism (e.g. via a
framework to understand cause effect relationships) in the supply chain.
This study was performed to provide a basis from which a conceptual framework would
emerge. The next phase will include investigating case histories to reveal how companies deal
with SCC, what kind of effects do SCM initiatives have on these efforts, and how these
eventually affect the supply chain performance, as well as to identify the cause effect
relationships among the critical factors.
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