Visionary Supply Chain Paper Recognized by Decision Sciences Journal

FACULTY RESEARCH IMPACTS

M. Johnny Rungtusanatham

Schulich Professor, M. Johnny Rungtusanatham, co-authored “Historical Supplier Performance and Strategic Relationship Dissolution: Unintentional but Serious Supplier Error as a Moderator” with Yi-Su Chen from the University of Michigan-Dearborn and Susan Meyer Goldstein from the University of Minnesota. The paper was recognized as a 2019 Best Paper Finalist from Decision Sciences.

Decision Sciences Journal is a premier business research publication with international visibility and impact which addresses contemporary business problems primarily focused on operations, supply chain and information systems and simultaneously provide novel managerial and/or theoretical insights. Decision Sciences, the flagship journal of the Decision Sciences Institute, a global society of business school academics creating and disseminating knowledge to improve managerial decisions, is considered an A* journal on the ABDC Journal Quality List.

Rungtusanatham is a Tier 1 Canada Research Chair in Supply Chain Management, Professor of Operations Management and Information Systems, and Fellow of the Decision Sciences Institute. He is considered to be one of the top 50 authors of research in operations and supply chain management, according to a 2021 Decision Sciences article titled, “OM Research: Leading Authors and Institutions” (Volume 52, Issue 1, pp. 8-75) as well as a 2019 article appearing in Supply Chain Management: An International Journal titled, “SCM Research Leadership: The Ranked Agents and Their Networks” (Volume 24, Issue 6, pp. 821-854). A 2015 article published in the International Journal of Production Research titled, “Twenty-Six Years of Operations Management Research (1985–2010): Authorship Patterns and Research Constituents in Eleven Top Rated Journals” (Volume 53, Issue 20, pp. 6161-6197), identifies Rungtusanatham in a listing of Top 100 individual researchers with the greatest overall contribution to the field of Operations Management.

According to Rungtusanatham, conventional wisdom based on research from various business disciplines urges sourcing firms to develop, foster, and maintain strong relationships with strategic suppliers. However, strategic buyer-supplier relationships, not unlike marriages, do fail. For critical-component sourcing situations, it is thus important to understand how and why sourcing firm versus supplying firm decisions and actions may weaken strategic relationship ties unintentionally and put these ties on a path to being prematurely broken.

“This article is one publication from my ongoing research into managing for supply disruptions. It focuses squarely on decisions that sourcing firms should not take because these decisions may trigger interruptions in the flow of physical supply,” says Rungtusanatham. The research itself is a follow-up to the 2013 article Rungtusanatham published in the Journal of Operations Management,

Rungtusanatham explains that this Decision Sciences article also motivated research published in another Journal of Operations Management article in which Rungtusanatham and colleagues examine the role that anger plays in supplier termination decisions after occurrences of supply disruptions triggered by supplier-controllable events.

in which he and his co-authors invoked ‘divorce’ as a theoretical metaphor to better understand strategic buyer-supplier relationship dissolution. Rungtusanatham explains that this Decision Sciences article also motivated research published in another Journal of Operations Management article in which Rungtusanatham and colleagues examine the role that anger plays in supplier termination decisions after occurrences of supply disruptions triggered by supplier-controllable events. The Journal of Operations Management, also an A* journal on the ABDC Journal Quality List, is on the Financial Times 50 journal list used to rank MBA, EMBA, and Online MBA Programs.

The research deploys a scenariobased role-playing experiment using vignettes, an under-used data collection method in the supply chain management discipline. It took approximately eight months to design the experiment properly and another eight months to recruit 256 actual sourcing professionals to complete the experiment. Rungtusanatham is grateful, saying, “The Institute for Supply Management supported our research logistically and financially. The experiment was conducted in 10 different cities in the US in faceto-face settings.”

One key finding is the positive supplier performance penalty effect. Consider a critical-component supplier with a history of stellar supply performance (A) and one with a history of marginally acceptable supply performance (B). Suppose Supplier A commits an error that impacts the sourcing firm negatively (e.g., product failure harming consumers). Suppose Supplier B commits the same error with the same negative impact for the sourcing firm. For such a situation, Supplier A and Supplier B are likely to face termination by the sourcing firm. But, interestingly, the likelihood of being terminated is markedly higher for Supplier A than for Supplier B. A history of stellar supply performance may be driving up sourcing firm expectations and setting them up for greater disappointment when a supplier with an excellent track record unexpectedly makes an honest mistake.

Rungtusanatham concludes with this advice, “Our research cautions sourcing firms to avoid falling into the trap of escalating supply performance expectations. When these expectations are not met, the wrong decision to terminate a critical-component supplier with stellar past supply performance may be prematurely reached. Criticalcomponent suppliers who consistently exceed sourcing expectations, of course, must avoid mistakes and be proactive in managing sourcing firm expectations about their performance.”