Projects

Study of MRO supply Chain

Project Description

The focus of the proposed research is to examine the MRO supply chain for paper mills. The proposed research will span a two-year period and be carried out in two phases. We will employ multiple research methods; each selected to best exploit the problem domain under investigation while also enabling the development of generalizable results and managerial insights. We propose to follow a classic research approach wherein the researchers 1) gain an in-depth understanding of the phenomenon to be studied, 2) conduct an empirical and analytical investigation of the phenomenon, and 3) combine the qualitative understanding with the empirical and analytical results to advance the field's knowledge concerning that phenomenon.

Phase 1 of the study will involve qualitative data gathering and analysis through field studies. Based on the field investigations, we will develop a full understanding of the nature of the MRO supply chain relationships for the paper mills. These relationships will provide the necessary foundation allowing us to begin to conceptualize a survey instrument. The initial thrust of Phase 2 will be development of the survey instrument that will drive the collection of quantitative data to be used in our empirically based study. The survey design will reflect the relationships uncovered in Phase 1 as well as state-of-the-art knowledge of supply chain management principles. This latter feature is desirable so that we may leverage our knowledge of best practice supply chain approaches in other process industry domains.

Each phase is described in more detail below.

Phase 1: Qualitative Information Gathering Through Field Studies (12 Months)

The purpose of this phase of the project is as follows:

• Gather information about the critical relationships and characteristics pertaining to the operation of the supply chain under investigation. First, we will field study three paper/pulp mills, each of which typifies a different capability prevalent in the industry. Second, we will also conduct field visits to some of the critical MRO suppliers. Our unit of analysis is at the mill level. The mills participating in our study will be identified through our industry liaison members.

• Understand the involvement, role, and incentives of various stakeholders in the efficient functioning of the MRO supply chain. This will be accomplished by extensive and detailed discussions with appropriate mill personnel at all levels. We envision seeking information and inputs not only from mill managers but also from hourly and production workers as well as workers involved in the maintenance functions. This will ensure that our recommendations take into consideration the issues that affect the interests, well-being, morale and motivation of various groups of people within the mill.

• Using the cross-functional process mapping method, we will organize the above information in a structured manner to fully understand the current business practices in the operation of the MRO supply chain for paper mills, the key supply chain performance measures, and the key drivers of these performance metrics.

• Identify the major factors that could influence the amount of MRO dollars spent and the effectiveness of this expenditure. Examples of such factors could include the major processes in the mill, the various grades of paper being produced, the skill levels of production and maintenance workers, the age of the equipment, the extent of outsourcing of maintenance activities. These factors are also likely to affect the frequency of interruptions in the MRO supply chain, which could affect lost mill production time and quality of paper produced. To the extent possible, we will attempt to establish the relationship between MRO supply chain interruptions and mill performance.

• Analyze and interpret the qualitative data obtained from the field study visits to identify the critical elements of the operations of the supply chain that impact the performance of the paper mills and the MRO suppliers.

• Use the insights gleaned from the field studies as well as our knowledge of best-practice approaches to supply chain management in the process industry to begin conceptualization of a survey instrument for empirical data collection that will be the basis of the second phase of the study.

The initial step in Phase 1 of the research proposed would be to develop a structured interview protocol that can be used to study the current practices employed in the MRO supply chain for paper mills. The interview protocol will reflect the preliminary understanding we will have developed based on paper mill site visits organized by CPBIS, input from industry experts (McNutt (2001)), as well as from a comprehensive review of the related literature. The site visits will be designed to gain an in-depth understanding of the salient features and characteristics related to current business practices of the supply chain under investigation. The site visits will provide us with the opportunity to ascertain the perceived impact of these practices on the relationships between the paper mills and their MRO suppliers. More specifically, the interviews will be designed to identify who are the typical stakeholders in the supply chain, what are the critical MRO items, why each business practice is being undertaken, and how it is being carried out. Lastly, the interviews will enable us to identify the key measures and drivers of performance of the MRO supply chain for paper mills.

The detailed steps in Phase 1 of the proposed research are given below.

Phase 1 Project Plan

Phase 1 will be conducted in the following sequence:

• Selection of the paper mills and MRO suppliers for field study.
  
• Construction of structured interview protocols
  
• Site visits of paper mills and MRO suppliers.
  
• Content analysis of data collected on site visits.
  
• Collection and evaluation of the necessary supplemental company records and documents.
  
• Creation of a cross-functional process mapping that characterizes the current business practices of the MRO supply chain for paper mills.
  
• Establish preliminary insights on the business relationships among the MROs and paper mills and the critical factors related to the operation and performance of the associated supply chain.
  
• Determine measurable constructs of the critical factors and performance dimensions.
  
• Generate a list of measurable items to assess the above constructs and performance dimensions. Begin design of survey instrument.

Phase 2: Quantitative Data Collection and Analysis (12 months)

The purpose of this phase is as follows:

• Complete the development of the survey research instrument.
• Conduct a systematic empirical data collection of the MRO supplier chain for paper mills using the survey instrument.
• Identify and obtain supplementary and objective performance related data for the paper mills and their MRO suppliers from secondary databases, as available.
• Perform rigorous analysis of the survey data.
• Integrate the qualitative and quantitative results from Phases 1 & 2.
• Develop research insights and prescriptive recommendations.
• Write scholarly papers for publication in the academic literature as well as managerially oriented papers that contribute to the practitioner knowledge in the pulp and paper industry.

The basis of our empirical research will be the creation of a standardized and psychometrically sound research survey instrument. The research instrument will reflect the in-depth understanding developed in Phase 1 of our study and will embody state-of-the-art knowledge of best practice management of supply chains in the process industry. This research approach is necessary since it is not possible to develop generalizable managerial insights based on only the limited field studies completed in Phase 1. Rather, by employing an appropriate large-scale standardized measurement procedure, we will establish the foundation for rigorous analysis of the phenomena under study. The measures we develop will enable us to make scientific generalizations about the operation and performance of the MRO supply chain for paper mills.

More specifically, with the help of CPBIS and the contacts developed in Phase 1 of the research study, an appropriate large-scale sample of papers mills and MRO suppliers will be identified for administering the survey instrument. The survey instrument will measure issues such as the existence of specific business practices, the extent of use and criticality of these practices, the perceived impact of specific practices and supply chain characteristics on performance. Clearly, the data collection for Phase 2 will be far more comprehensive than Phase 1. In addition, supplemental data from secondary data sources (e.g., third party financial databases) pertaining to objective performance measures will be obtained to the extent possible.

Finally, we will synthesize the qualitative insights gained from Phase 1 of this study with the findings from the quantitative data analysis of Phase 2 to provide the final recommendations and prescriptions to improve the performance of the MRO supply chain for paper mills. For example, we will develop alternative process mappings depicting recommendations for change in the supply chain and the corresponding performance improvements anticipated. A managerial report summarizing the key findings will be made available to all participants of this study.

Phase 2 Project Plan

Phase 2 activities will be conducted in the following sequence:

• Complete development of the survey instrument.
  
• Conduct the empirical survey data collection.
  
• Collect objective performance data from secondary sources.
  
• Process quantitative data.
  
• Clean the data and resolve data problems.
  
• Analyze the survey data using appropriate statistical and analytical methods.
  
• Generate final research findings and recommendations.
  
• Write papers targeting publication in academic and practitioner journals.

The research study will provide new insights on how to effectively manage the operation of the MRO supply chain for paper mills. MRO purchases constitute a significant portion of the company's cost structure in the paper making business. The typical trend so far has been to regard these purchases as secondary expenses, as opposed to direct purchases. In addition, these relationships have also been badly managed, thereby missing the opportunities to significantly reduce costs. Given the current competitive environment in the paper making business and the resulting pressure to continually reduce costs, it is now particularly important to reexamine the MRO supply chain for paper mills and identify opportunities to dramatically reduce operating costs.

We will identify approaches and practices that can be employed to increase the value created in the MRO supply chain for paper mills. Furthermore, we will offer recommendations to improve the business performance of both the paper mills and their MRO suppliers. Overall, our research will make significant contributions to the theory and practice of the MRO supply chain in the paper industry in the following ways:

• Provide a deeper understanding of the current business practices in the operation of the MRO supply chain for paper mills.
  
• Provide a deeper understanding of the paper mill - MRO supplier relationships including the various goals of each link the supply chain.
  
• Identify the key characteristics and critical factors affecting the operation of the MRO supply chain for paper mills.
  
• Identify the key drivers and metrics of the MRO supply chain performance.
  
• Develop a framework to guide more effective and efficient management of the paper mill MRO supply chain. For example, we will identify the facets of the paper mill - MRO relationship that lead to conflict and we will propose a means of conflict resolution to improve industry performance.

Duration: 2 years