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Solutions to strategic supply chain mapping issues


M. Theodore Farris II
University of North Texas, Oak Point, Texas, USA
Abstract
Purpose The development of strategic supply chain mapping techniques has been slowed by four critical issues. The purpose of this paper is to answer a call to address supply chain mapping techniques and issues. It offers recommendations for more readable and useful strategic supply chain maps. Design/methodology/approach The paper utilized executive MBA, traditional MBA, and graduating logistics undergraduates applied economic input/output data to rene mapping techniques. Findings The paper addresses strategic supply chain mapping issues to serve as the next step in advancing the evolution of strategic supply chain mapping techniques. It utilizes geovisualization to provide useful guidance to individuals trying to map their current supply chain and seeking potential improvements. Research limitations/implications The paper is limited in that strategic supply chain mapping is in its infancy. Future research may consider use of the technique comparing alternative approaches to a supply chain, as well as the application of Pareto analysis and other metrics to focus on critical components for mapping. Practical implications The use of input/output analysis initiates mapping at the macro industry level as a key starting point. Geovisualization techniques allow those mapping to offer a great amount of detail in a simple, easy-to-read format to identify the critical components of the specic supply chain. Originality/value This paper is the critical next step to help further advance the evolution of strategic supply chain mapping techniques by both practitioner and academic. Keywords Knowledge mapping, Supply chain management, Strategic management Paper type Research paper

164
Received June 2009 Revised October 2009 Accepted November 2009

International Journal of Physical Distribution & Logistics Management Vol. 40 No. 3, 2010 pp. 164-180 q Emerald Group Publishing Limited 0960-0035 DOI 10.1108/09600031011035074

Introduction Gardner and Coopers (2003) Journal of Business Logistics article Strategic supply chain mapping approaches offered ten compelling arguments supporting the benets of strategically mapping the supply chain: (1) To link corporate strategy to supply chain strategy. (2) To catalog and distribute key information for survival in a dynamic environment (in order) to direct the focus of the managers. (3) To offer a basis for supply chain redesign or modication. (4) Current channel dynamics can be displayed in a supply chain map. (5) The process of building the strategic supply chain map, in itself, will help dene the perspective of the supply chain integration effort. (6) Both the process of developing the map and the process of disseminating the map should lead to a common understanding of the supply chain.
The author would like to thank the University of North Texas for nancial support of the strategic supply chain mapping development through their Research Initiation Grant program.

(7) Provides a communication tool to reach across rms, functions, and corporate units. (8) Facilitates monitoring of supply chain integration progress. (9) New individuals or rms can be oriented to their role in the supply chain. (10) Finally, a well-documented supply chain mapping approach can lead to an improved supply chain management procedure. They were adamant that strategic supply chain mapping reach across rms, functions, and corporate units (p. 40) instead of a highly detailed, internal focus. They reviewed mapping types and attributes offering a solid primer on cartography. While leaving the nal decision of the proper mix of attributes to the reader, they identied the characteristics of a good map as: . interpretable; . recognizable; and . in an easy-to-disseminate format. They also suggested a good map utilizes standardized icons but point to the absence of anything of this nature in strategic supply chain mapping. They identied four issues which must be addressed to further the development of strategic supply chain mapping: (1) proprietary information; (2) inadvertently changing channel dynamics; (3) getting lost in too many details; and (4) providing an ineffective perspective for management use. Gardner and Cooper concluded their paper calling for development of a managerial mapping procedure:
There needs to be research focused on the processes for building the map so that it is useful for strategic planning purposes [. . .] it could be a conceptual map or a diagram. The map should capture multiple levels of the supply chain, cover more than logistics and manufacturing functions, and should be information rich without reaching information overload.

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Perhaps, because the four issues appear to be insurmountable obstacles, in the six years since this paper, no one has responded with potential solutions. This paper begins by addressing the problem of nding actual data for use in the development of strategic supply chain mapping procedures. Economic input-output data were utilized to develop macro industry supply chain maps in the classroom laboratory to rene mapping techniques. The issue of mapping complexity, getting lost in too many details, is analyzed and recommendations are offered. The paper concludes with nal recommendations to help advance further evolution of strategic supply chain mapping techniques. Creating a macro map as a foundation for developing mapping techniques Gardner and Cooper offer a hypothetical example strategic supply chain map. Uncertain if a real strategic supply chain map actually existed from which one could develop a mapping procedure, the author tried to obtain actual strategic supply chain

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maps through various industry contacts as well as through interaction at logistics and transportation related trade shows. Claims of the existence of actual strategic supply chain maps turned out to be sales promises or often the simplest one-tier up and one-tier down value chain diagrams, such as the one shown in Figure 1, which offered no meaningful information. (Note that throughout this paper the terms supply chain and value chain have been used interchangeably.) It became quickly evident that strategic supply chain maps either have yet to evolve beyond anything other than representing dyadic relationships, or, if strategic maps exist, their release is limited, potentially guarding proprietary data. Without an available precedent to help guide the development of a mapping procedure, an alternative approach was required. The mapping functions available from internet mapping engines such as Mapquest (www.Mapquest.com), MSN Maps Live (Bing Maps) (www.bing.com/maps), or Google Maps (maps.google.com/) offer a technique which helps further strategic supply chain mapping efforts. These mapping engines all follow the same heuristic; create an initial map at a higher strategic mapping level, even if the user inputs a specic address. Then, as shown in Figure 2, it allows the user to zoom in for a closer view, or shift the map, redirecting the view to an area of higher interest. The rst obstacle in developing a strategic supply chain mapping procedure was the ability to obtain actual data spanning the supply chain. The solution came from raising the mapping effort to a macro level. A macro map identies the overall structure of the supply chain at the industry level to serve as a basis for exploring more detailed mapping of concentrated areas. Using the same principle as the internet mapping heuristics, the macro map technique facilitated development of mapping techniques. Using publicly available economic input-output data A commodity-by-commodity economic input/output model is available from the US Federal Government which identies nancial ows through the value chain at the industry level. The data may be accessed at the US Department of Commerce web site (www.bea.gov/) and uses standard industrial classication codes to identify the economic exchange among 66 industries as shown in Table I. These data quantify the exchange of funds among industries and allows the user to determine the magnitude of purchases and sales. The input-output make-use data identies how much each industry made for, or used from, other industries. For example, the mining, except oil and gas industry purchased (used) $2.590 billion from the machinery industry and $1.575 billion from the petroleum and coal products industry. The development effort utilized 2002 make-use economic data. An analysis was conducted comparing 1992 economic input-output data with 2002 input-output data

Focal company

Figure 1. One-tier up/one-tier down value chain

Supplier

Customer

50,000 perpective

Strategic supply chain mapping issues 167

Initial starting point

Desired end result

Note: Reproduced from the only available original

Figure 2. Internet mapping process

to see if relative industry trading relationships differed over time, for example, had increased use of electronic components by the automobile industry signicantly changed the mix of commodity ows for that industry. It was concluded that there were no signicant differences. Technological innovation is more likely to occur within an industry and replace like commodities instead of signicantly changing the trading relationships between industries. Therefore, industry-level macro maps should not change dramatically.

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PubComCode comLabel 27,163.3 13,106.5 14,358.5 2,057.9 1,172.9 2.1 384.1 5,873.6 800.8 17,069.0 337.0 50.3 884.5 713.6 60.2 6,692.6 11,076.4 1,219.5 523.6 576.8 1,055.2 3,400.9 0.8 476.4 634.1 5.4 56.3 0.7 195.8 1,035.5 54.0 3.7 0.0 53.7 65.6 5.2 2.0 10.5 6.3 135.2 1.1 1.8 90.1 1.5 646.7 1,367.1 435.3 249.8 855.2 1,189.4 1,068.8 3.1 11.1 309.1 99.9 14.0 1.4 34.4 52.0 1.6 1,575.7 677.2 550.5 126.9 392.9 609.6 2,590.3 1.4 31.8 232.7 84.3 94.5 14,666.7 1.1 1.2 0.5 251.8 4,595.6 816.0 1,234.7 0.8 863.7 0.1

111CA 113FF

211 212 213 22 23 311FT

313TT

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321 322 323

324 325 326 327 331 332 333 334 335

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Table I. Input-output make-use economic data Farms 111CA Forestry, shing and related activities 113FF Oil and gas extraction 211 Mining, except oil and gas 212 Support activities for mining 213 Utilities 22 23.2 16.2 26.8 352.8 166.5 29.9 46,482.2 14,025.0 358.9 5,445.6 7.7 18.3 31.4 1.3 975.1 564.1 128.6 412.6 475.6 845.9 843.4 84.0 51.0 119.5 3.8 567.3 243.1 80.3 3,596.0 428.3 916.1 1,311.9 749.2 1,999.2 823.3 217.7 2,594.1 147.5

Farms Forestry, shing and related activities Oil and gas extraction Mining, except oil and gas Support activities for mining Utilities Construction Food and beverage and tobacco products Textile mills and textile products mills Apparel and leather and allied products Wood products Paper products Printing and related support activities Petroleum and coal products Chemical products Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metal products Machinery Computer and electronic products Electrical equipment, appliances and components Motor vehicles, bodies and trailers, and parts

Developing mapping techniques Armed with real data reecting actual relationships among industries, it was possible to begin developing mapping techniques by creating industry macro maps to reect the exchange of business between industries. Over the last ve years, the author utilized undergraduate senior students, graduate MBA students, and executive MBA students from logistics and supply chain management courses to hone mapping techniques and applications in the classroom laboratory. In developing mapping techniques, the classroom laboratory was an ideal setting to try a variety of different approaches and test potential solutions. There is no single way to create an effective map, but there are many ways to create an ineffective map. The cost of failure in the classroom laboratory was low and the degree of innovation high as the students offered a wide range of solutions and results. Issue of complexity As the mapping techniques were being developed, one of the rst issues to arise was that of complexity. The complexity of mapping the value chain may make the task overwhelming and dilute the strategic usefulness of the map. The quantity of the number of relationships expands exponentially as the value chain is extended beyond the rst tier. As shown in Table II and Figure 3, mapping two primary relationships two tiers forward in each direction (customers, customers-customers, suppliers, suppliers-suppliers) results in a map containing 13 total companies with 12 relationships. Add just one backward tier (customers suppliers, customers customers suppliers, suppliers customers, and suppliers suppliers customers) to include the next two largest suppliers for each Tiers 1 and 2 customer and the next two largest customers for each Tiers 1 and 2 supplier and the map will contain 37 total companies with a minimum of 36 relationships as shown in Table III and Figure 4. Expand the map to three relationships per entity forward and three relationships per entity backward for just two tiers and the number of companies jump to 97. Mapping can very quickly get too complicated to be useful. Initial mapping efforts attempted to incorporate many trading exchanges simply because data was available. Maps, such as the one shown in Figure 5, were too complicated to guide strategic management decisions, conrming Gardner and Coopers (p. 41) cautionary warning:
[. . .] there is no way to include enough information in a supply chain map to manage the supply chain and still have the map useful for strategic purposes.

Strategic supply chain mapping issues 169

Eventually the classroom laboratory effort settled on mapping the three largest relationships forward (customer, customers-customer, supplier, suppliers-supplier)
Number of forward relationships per entity 1 2 3 4 5 Total companies 5 13 25 41 61 Table II. Mapping complexity primary entities forward per tier

Tier 2 1 4 9 16 25

Tier 1 1 2 3 4 5

Tier 0 1 1 1 1 1

Tier 1 1 2 3 4 5

Tier 2 1 4 9 16 25

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C S S C C

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S

C Focal company

C S S S C C C

Figure 3. Three primary entities forward

Number of backward relationships per entity 2 Table III. Mapping complexity primary entities forward and backward per tier

Number of forward relationships per entity 2 3

Total Tier 2 Tier 1 Tier 0 Tier 1 Tier 2 companies 4 ! 8 9 ! 18 9 ! 27 2 ! 4 3 ! 6 3 ! 9 1 1 1 2 4 3 6 3 9 4 8 9 18 9 27 37 73 97

2 3 3

and two relationships backward (customers other suppliers, customers customers suppliers, suppliers other customers, and suppliers suppliers customers) for two tiers in each direction. The largest nancial relationships were selected for mapping in order to capture as much of the supply chain as possible. Concept of geovisualization The concept of geovisualization is a key element in creating effective strategic supply chain maps. Minard (1844 1870) (Tableaux graphiques et cartes guratives) has been credited as one of the earliest geovisualists (MacEachren and Kraak, 1997). Minard was

C C C C C C C C C C C C C C C C S C S S C S C S S S C S C S S S S C S S Focal company S S C C S S S C S C C S S

S C S S S S S C S S S S S S

Strategic supply chain mapping issues 171

C C S C S

Figure 4. Three primary entities forward and two backward

renowned for including multiple variables within the same two-dimensional space on his maps. His best known map was the 1861 thematic map of Napoleons march on Moscow (Tufte, 1983) shown in Figure 6. In this map, Minard combined data about the size of the French army, daily temperature, and time of year, then overlaid it on a spatial map to identify distances traveled and geographic obstacles. In doing so, Minard was able to depict the key factors of Napoleons ill-fated campaign on a single map. Using Minards concept, strategic supply chain maps should use geovisualization techniques to effectively create maps with more, richer information. Reecting magnitude of nancial ows Supply chain management emphasizes managing ow. These ows may be inventory (nished goods and returned goods), cash (receivables and payables), or information (research and design, quality assurance data, sales projections, on-hand inventory status, and supply status). Strategic supply chain maps, therefore, should reect ow. To reect the magnitude of the ow, weighted arrows and lines were used. The map shown in Figure 7 offers a different perspective when weighted arrows and lines are used to reect the magnitude of nancial ows. It becomes easier for the viewer to identify where the largest transactions take place. In the gure, the size of each arrow to the right of the target industry reects the proportion of the target industry sales to the three largest customers and the

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Figure 5. High complexity mapping attempt

Strategic supply chain mapping issues 173

Figure 6. Minards geovisual map

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Figure 7. Reecting magnitude of ow

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proportion of sales from each customer to their largest customers. Likewise, the size of each arrow to the left of the target industry reects the proportion of the target industry purchases from the three largest suppliers and the proportion of purchases from each supplier from their largest suppliers. Reecting trading relationships As the mapping techniques continued to develop, it became evident that the ow should reect both the magnitude of the buy-from of the customer from each supplier and the magnitude of the sell-to of each supplier to the customer. Combined with weighted arrows and lines, one could start to identify key relationships in the supply chain. For example, a small purchase by a large customer may represent a large percentage of sales for a small supplier. To distinguish between buy-from and sell-to relationships we opted to use solid lines to represent sell-to transactions and dotted lines to represent buy-from transactions. Use of symbology As with any map the use of symbology is important to allow the user to easily identify the elements and also understand the ows between each element. Also consider that the map likely will be copied in black and white and must be as readily understandable with the absence of color. The use of solid and dashed weighted arrows and lines served this purpose well. For the same reason, we opted to use a triangle to represent the target industry, squares to represent customers, and circles to represent suppliers. In some of the mapping attempts there was a need to represent a key customer who was also a key supplier. In these cases we utilized an octagon, a combination of the circle used for the supplier and a square used for the customer. These geovisual techniques allow the manager to easily identify differences in relationships and where to investigate further. The end result of the classroom laboratory effort is shown in Figure 8. Using the maps for strategic management Beginning the strategic supply chain mapping process is no different than the starting point for an internet map. It should serve as a guide from which to drill down and explore in greater detail. Macro industry maps should not be considered a nal destination. They serve as a critical rst step in guiding creation of a successful value chain map. Once the initial map has been completed look for potential areas for strategic improvements or relationships which may be managed differently. Supply chain opportunities exist not only by taking advantage of the strengths and capabilities of your trading partners but also may benet from relationships with their other trading partners. To strategically manage the supply chain, rms must extend their interest beyond Tier 1 customers and suppliers. Relationships of interest were classied as shown in Figure 9. Type I (suppliers suppliers) and Type III (customers customers) relationships represent the logical extension into Tier 2 relationships. The development of the value chain map should also be expanded to include Type II (suppliers other customers) and Type IV (customers other suppliers) relationships as they also offer strategic opportunities. Mapping Type I relationships (suppliers suppliers) to understand potential shortages of supply would be incomplete without including consideration of Type II relationships (suppliers other customers). The competition for limited supply will play

Strategic supply chain mapping issues 175

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Figure 8. Recommended strategic supply chain map

Data inside symbol identifies industry using Bureau of economic analysis identifier codes

an important role in any shortage of supply. Strategic purchasing should not only consider sources of supply but also competition for these resources by other customers of the supplier. Likewise, sales and marketing must not only look at the Type III relationships (customers customers) but also the Type IV relationships (customers other suppliers) both for the competitive analysis but also to seek potential complimentary opportunities. As a part of an Executive MBA course we required students to create strategic supply chain maps with their own companies as the target (Tier 0) rm. While most executives initially thought they had a solid concept of their value chain at the Tier 1 level (and a few at the Tier 2 supplier level), virtually all could only identify Type I (customers customers) and Type III (suppliers suppliers) relationships at a cursory level of understanding. The mapping exercise by the executives, particularly in the Type II (suppliers other customers) and Type IV (customers other suppliers) sectors

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326 Plastics and rubber products industry supply chain macro map Focal industry Sell to another industry Customer Supplier Both customer and supplier X% of total sales revenue Buy from another industry X% of total purchase spend Width of line reflects magnitude of relationship

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Supplier Your suppliers supplier Cross-tier alliance opportunities New product opportunities First-mover for new technologies Cost reduction opportunities Technological knowledge Supplier

Customer Your suppliers other customers Competition Alliance opportunities Pricing comparison Alternative channels Magnitude of profitability and sales Services or functions completed I II III Your customers customer Customer relationship management New product ideas Better channel design Alternative channels Market orientation implementation Innovation/new product uses

Strategic supply chain mapping issues 177

Your customers other suppliers Potential competitors Alliance opportunities Pricing comparison Alternative channels Identify solution selling opportunities Dependence and power Magnitude of profitability and sales Customer

IV

Figure 9. Strategic areas of interest Tier 1 to Tier 2 relationships

expanded into sound strategic and tactical questions offering potentially lucrative business opportunities. For example, as a result of what was identied in the mapping exercise, one rm pursued joint marketing efforts, bundling their products with those of other non-competing suppliers to the same customer, to jointly seek higher market share with new common customers. Recommendations Gardner and Cooper left the nal decision of the mapping attributes to the reader. The classroom laboratory effort, as described in this paper, allowed many different attempts at mapping utilizing real economic data to test various attributes and help shape the following mapping recommendations. Utilize geovisualization techniques The mapping efforts utilized a geovisual technique combining weighted solid and dashed arrows and lines, dened symbology representing different trading relationships, and the representation of nancial ow to develop maps rich in content. Start at a higher level It is highly unlikely a company would be able to, or would desire to, expend the resources required to map 100 per cent of all of their customers and suppliers. Each mapping effort must determine the economic trade-off between the level of detail of their map, the cost to gather the detail, and the benet received. Future research may help identify what level of detail offers the optimal return. Owing to the ready access to economic data, an industry macro map may offer the greatest mapping value for a

IJPDLM 40,3

relatively minimal investment. It is recommended that the map designer begin at a high level and then drill down. Strive to keep the maps strategic Reiterating Gardner and Coopers cautionary warning that strategic supply chain maps must maintain a strategic emphasis, any users with a desire to drill down to an operational level should utilize alternative process-related tools such as the SCOR model (SCOR, 2008) for benchmarking, or ow modeling (Farris, 1996) for mapping nancial value-added within the rm or with immediate trading partners. Keep the strategic supply chain maps at a high, strategic level and avoid undue complexity. Manage a synergistic network As value chain mapping continues to evolve, map designers may nd that the term supply chain is a misnomer. Strategic supply chain maps quickly reect a supply network as it is not unlikely that a customers customer may be a critical suppliers supplier. Recognition of these types of relationships may have far-reaching strategic impact in terms of keiretsu-type relationships or jointly benecial marketing efforts as discovered by one of the executive MBA mappers. Embrace mapping creativity One of the advantages of using the classroom laboratory was that it was determined there was no single approach to developing a strategic supply chain map. Creating a strategic supply chain map is as much an artistic endeavor as it is a dened process. As shown in the Figure 10, multiple map designers armed with identical data may create maps which reect the same data in different ways. It is recommended that rms attempting to strategically map their supply chain embrace this fact by asking multiple individuals who create a map to use the same data set. Each variation may result in components within the map which offer easier readability and should be incorporated into the nal map. Conclusion Gardner and Cooper identied four critical issues which have hampered the development of strategic supply chain mapping techniques. The rst issue of the lack of availability of proprietary data to help develop mapping techniques was addressed by raising the mapping level and using real economic industry exchange data. It is suggested that readers begin mapping efforts with high level maps in order to target areas worthy of pursuing proprietary information from key trading partners. Detailed data collection or estimation may be a costly time-consuming process. Starting with a higher-level map may help alleviate part of the cost by identifying which areas deserve more focus and then seeking to obtain the data. In the absence of available primary data, consider using secondary sources of information to estimate these numbers. The author offers an alternative perspective to Gardner and Coopers issue of inadvertently changing channel dynamics with strategic supply chain maps. The effort involved and the ability to accumulate the data for a strategic supply chain map may serve as a competitive advantage. It is unlikely this will be readily shared without a specic intent to inuence the supply chain dynamics to benet the goals of the target rm. With respect to Gardner and Cooper, the target rm should be cognizant of

178

Strategic supply chain mapping issues 179

Note: Reproduced from the only available original

Figure 10. Three different mapping perspectives using the same data

the potential inuence the release of this data may cause and is ethically obligated to act accordingly. Finally, Gardner and Coopers remaining two issues of getting lost in too many details and providing an ineffective perspective for management use, have been addressed through the classroom laboratory development of geovisual techniques using weighted arrows and lines to reect the buy-from and sell-to ows, mapping symbology to identify customers, suppliers, and the target rm, and limiting the complexity of the map to the top three suppliers or customers. These recommendations will result in a strategic supply chain map which is rich in data and informative

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without getting lost in the details. Maintaining a high level, the strategic supply chain map should serve as a guide from which to drill down and explore in greater detail. This paper reported the next step in the evolution of mapping techniques. By using real economic input-output data to develop macro industry supply chain maps, mapping techniques were rened and recommendations offered to the reader to help advance further evolution of strategic supply chain mapping techniques. This may result in closer examination, increased visibility, and understanding of trading partner relationships extending throughout the supply chain. Truly managing and strategically competing with supply chains must rst start with this visibility.
References Farris, M.T. II (1996), Utilizing inventory ow models with suppliers, Journal of Business Logistics, Vol. 17 No. 1, pp. 35-61. Gardner, J.T. and Cooper, M.C. (2003), Strategic supply chain mapping approaches, Journal of Business Logistics, Vol. 24 No. 2, pp. 37-64. MacEachren, A.M. and Kraak, M.J. (1997), Exploratory cartographic visualization: advancing the agenda, Computers & Geosciences, Vol. 23 No. 4, pp. 335-43. Minard, C.J. (1844-1870), Tableaux graphiques et cartes guratives (Collection of Graphic Works), ENPC, Parris, Fol. 109775. SCOR (2008), Supply-chain council, available at: www.supply-chain.org/ Tufte, E.R. (1983), The Visual Display of Quantitative Information, Graphics Press, Cheshire, CT. Further reading Cooper, M.C. and Gardner, J.T. (2005), Map your supply chain, CSCMP Explorers, Vol. 2, pp. 1-15. About the author M. Theodore Farris II is presently an Associate Professor at the University of North Texas. He received his PhD in Business Logistics from The Ohio State University and joined the University of North Texas in 1997 to develop the Professional Program in Logistics. He is a 2008 Austrian-American Fulbright Scholar. In addition, he has recently been named a 2009-2010 Charn Uswachoke International Scholar. M. Theodore Farris II can be contacted at: farris@unt.edu

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