A quality function deployment approach to improve maritime supply chain resilience

Transportation Research Part E xxx (2016) xxx–xxx

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A quality function deployment approach to improve maritime supply chain resilience Jasmine Siu Lee Lam ⇑, Xiwen Bai School of Civil and Environmental Engineering, Nanyang Technological University, Singapore

a r t i c l e

i n f o

Article history: Received 1 October 2015 Received in revised form 11 January 2016 Accepted 25 January 2016 Available online xxxx Keywords: Maritime supply chain Maritime logistics Supply chain resilience Maritime risk Shipping line Quality function deployment (QFD)

a b s t r a c t Being international and involving numerous organizations as the basic nature, maritime supply chains are exposed to various natural and man-made risks. This paper aims to develop an original quality function deployment approach to enhance maritime supply chain resilience, taking both customer requirements and maritime risks into consideration. The empirical analysis is carried out through in-depth studies of three major shipping lines and their respective major shippers. The top three resilience measures are contingency plan, monitoring and maintenance, and supply chain relationship management. The study also unveils the relatively low visibility and integration in maritime supply chains. Ó 2016 Elsevier Ltd. All rights reserved.

1. Introduction In today’s global economy, organizations are required to work together in networks, instead of competing as isolated entities (Carvalho et al., 2012). Being international and involving numerous organizations as the very basic nature, maritime supply chains (MSCs) are exposed to various natural and man-made risks (Lam, 2012). The current increasing interdependency between organizations, coupled with fierce market competition and growing requirements from shippers, has made modern MSCs more vulnerable and augmented the potential effects of disruptions to be proliferated throughout the supply chains (SCs). Once a SC is affected by a disturbance, the SC performance would be jeopardized, in terms of profitability, cost structure and inventories among others (Carvalho et al., 2012). In addition, SC disturbances also affect the overall satisfaction rate of its downstream firms and end-customers (Ji and Zhu, 2008). To survive, the SC needs to be resilient. SC resilience is about the ability of SCs to return to its original state or to a more desirable state after a disturbance and to avoid the occurrence of failure modes (Azevedo et al., 2008). SC resilience empowers companies’ proactive response to changing market demand and disruption ahead of their competitors (Sheffi, 2006). However, the literature focuses more on operations and has not incorporated the voice of customers in the study of SC resilience, even customers are crucial users and income generators of a SC. Furthermore, to the authors’ knowledge, scientific literatures provide only few specific studies proposing a structured framework to implement SC resilient strategies. We also hardly find any contributions regarding MSC resilience. In view of the importance of MSCs’ resilience, this paper fills in the research gaps by adopting the quality function deployment (QFD) approach to prioritize resilience measures for shipping lines from a SC perspective, taking both customer requirements and maritime risks into consideration. Shipping lines are chosen as the main research object due to their

⇑ Corresponding author. Tel.: +65 67905276. E-mail address: [email protected] (J.S.L. Lam). http://dx.doi.org/10.1016/j.tre.2016.01.012 1366-5545/Ó 2016 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Lam, J.S.L., Bai, X. A quality function deployment approach to improve maritime supply chain resilience. Transport. Res. Part E (2016), http://dx.doi.org/10.1016/j.tre.2016.01.012

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J.S.L. Lam, X. Bai / Transportation Research Part E xxx (2016) xxx–xxx

fundamental role as an actor connecting various parts of a MSC (Berle et al., 2011). QFD is a flexible system that could translate customer requirements (CRs) into company’s design requirements (DRs) at each stage from product design and manufacturing to distribution (Bottani and Rizzi, 2006). The House of Quality (HoQ) is a commonly used tool in QFD and identifies the correlations between CRs and DRs. QFD originated in 1972 in Japan, put forwarded by Akao (1990) with the aim to evaluate new product design based on customer inputs, and was first applied in the shipbuilding industry for improving the design of new oil tankers for Mitsubishi Heavy Industry (Hauser and Clausing, 1988). Shortly, QFD gained increasing popularity and expanded its scope to manufacturing and service industries, including supply chains (Behara and Chase, 1993; Dursun and Karsak, 2013; Büyüközkan and Cifci, 2013; Liao and Kao, 2014; Lam and Dai, 2015a). The function of QFD has also broadened, from purely product design to now various applications, for example, to enhance customer service levels. The objective of this study is to develop an original QFD approach to enhance MSC resilience, by identifying the major CRs of shipping lines, common risks that would affect the satisfaction of customers and then resilience measures to mitigate the risks. The aim is also to investigate the relationships between these three groups of variables and in the end prioritize resilience solutions for shipping lines. This study provides a practical contribution for shipping lines to implement a flexible and resilient MSC. The business and performance of other actors and stakeholders involved in a MSC are affected by its resilience level so they would also be interested in the results of this study. These actors and stakeholders include shippers as customers, ship supply agencies and port operators as service providers, and policy makers overseeing a country’ trade facilitation. After the introduction, the next section reviews the related literature and highlights the research gaps. Section 3 presents the methodology, while Section 4 explains the results and provides discussions. Section 5 is the last section which outlines the main conclusions and contributions of the study. 2. Literature review Maritime logistics as an emerging discipline has gained more attention recently among researchers. Major research fields, as classified by Panayides and Song (2013), include (1) performance in maritime logistics, (2) maritime logistics networks, integration and risks, (3) quality and services in maritime logistics and (4) environmental performance and corporate social responsibility in maritime logistics. These fields are in fact interconnected, and we draw the link between services and risks in the current paper. 2.1. Quality and services in maritime logistics The long-term goal of logistics strategic planning is to enhance customer satisfaction. Identification of proper CRs is essential for a firm to gain competitive advantage by improving customer satisfaction level and delivering quality services is about conformance to these CRs. A number of studies have investigated service attributes in the maritime context (e.g. Brooks, 1990; Lu, 2003; Celik et al., 2009; Lam and Zhang, 2014). Previously, cost was regarded as the most important criterion for selecting ocean carriers, followed by frequency of sailings, reputation, transit time, and directness of sailings (Brooks, 1985). At a later stage, the improvement in transit-time became the most important requirement of shippers (Brooks, 1990). More recently, the focus has gradually shifted to the quality of customer service. Requirements like courtesy of inquiry and prompt response to claim have appeared on the top of shippers’ requirements for ocean carriers (Lu, 2003). In these studies, shippers are the customers. We also mean shippers when we mention customers in MSCs throughout this paper. The list and classification of CRs vary among different researchers and there exists no standard classification. For example, Lam and Zhang (2014) include cost control, reliability, responsiveness, public image, and value-added services as shippers’ major criteria. Liao and Kao (2014) list lead-time, flexibility, reliability, regularity, completeness, accuracy, fill rate, correctness, organization accessibility, and complaints management as key logistics requirements. 2.2. Maritime supply chain risks Risk is an event that may adversely affect the enterprise. Many researchers have revealed that modern SCs are at greater risk than their SC managers could identify (Sheffi, 2006). Supply chain risk management related literatures are substantial (Harland et al., 2003; Azevedo et al., 2008; Ji and Zhu, 2008; Ivanov and Sokolov, 2013). The risk sources could include unfavorable weather conditions (storm, tornado, etc.), information technology breakdown or telecommunication systems and failure in service provided by an outsourcer, loss of talent/skills, civil unrest/conflict, industrial dispute, fire, and cyberattack. Nevertheless, literatures on supply chain risks in a maritime logistics context are limited. Chang et al. (2014) provide an inclusive analysis of the risks in container shipping operations that may cause maritime safety and security related damages. Among all the risk factors, Vilko and Hallikas (2012) conclude that employee strikes in ports, information systems, ice conditions in water, and fire are the most significant maritime risks, while Gurning and Cahoon (2011) rank port congestion, equipment breakdown, cleanliness, insufficient empty containers, and customs as the top five risks. Chang et al. (2014) point out the importance of risks associated with piracy and terrorist attacks and shipper hiding cargo information. Researchers Please cite this article in press as: Lam, J.S.L., Bai, X. A quality function deployment approach to improve maritime supply chain resilience. Transport. Res. Part E (2016), http://dx.doi.org/10.1016/j.tre.2016.01.012

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have also pointed out the common issue of limited visibility in MSC and inadequate awareness in supply chain related risks (Lam, 2012). UNCTAD (2006) argues that a strong focus was given on environmental and organizational risks and little emphasis on network-related disturbances. So far there exists no unified approach for risk classifications. This study adopts UNCTAD (2006)’s classification method and specifies three risk groups: (1) External risks (environmental risks): uncertainties resulting from external sources such as natural disasters and terrorists. (2) Supply-chain risks (network-related): risks that are outside the organization but within the supply chain. (3) Internal risks: risks which arise from the organization. This classification method is further supported by Juttner et al. (2003).

2.3. Supply chain resilience and resilience measures Considering the SC context, resilience is the ability to tackle unexpected disturbances across the SC. There is an increasing volume of literature on SC resilience, while we find almost no studies in the maritime context. Some scholars employ quantitative methods to assess resilience, including Henry and Ramirez-Marquez (2012) who describe resilience as the time dependent ratio of recovery over maximum loss. Azevedo et al. (2013) adopt an ecosilient index to assess the resilience of the upstream automotive supply chain. The index is proposed by the aggregation of a set of SC management practices related to the resilient paradigm. Pant et al. (2014) further introduce the stochastic measures of resilience to measure uncertainty and propose a model including a function of vulnerability and recoverability based on Henry and Ramirez-Marquez (2012)’s model in the context of container terminals. However, the analysis has not extended to the realm of SC. Qualitative discussions include the conceptualization of the ‘‘resilience triangle”, considering factors like robustness (initial impact to the system) and rapidity (recovery speed) (McDaniels et al., 2008). Scholars have introduced some ways to increase SC resilience. According to Carvalho et al. (2012), resilience needs to be designed. The paper further proposes that collaboration, flexibility and visibility should be created among multiple ties of suppliers and customers. Collaboration includes increasing the level of information sharing; as in a SC, if one company is affected, then the negative effects would ripple across the SC (Carvalho et al., 2012). Flexible SCs are able to adapt effectively to disturbances maintaining the same output level (Stevenson and Spring, 2007). Specific examples of flexible capabilities include flexible contracts with flexibility of changes in terms of quantity and delivery, a multi-skilled workforce, as well as strong customer and supplier relationships. Carvalho and Cruz-Machado (2007) also consider visibility an important factor to minimize the negative effects of disturbances. Harland et al. (2003) uncover that less than half of the risks are visible to the company in SCs they study. Another possible way to avoid disturbances is to create a redundancy of SC structures. Redundant capacity is the additional capacity that can replace the loss of capacity during unexpected events (Ivanov and Sokolov, 2013). Redundancy is essentially about safety stock, while redundant transportation capacity and IT systems represent other forms (Berle et al., 2011).

2.4. QFD application in the maritime area QFD related studies in the maritime field are relatively new. Celik et al. (2009) extend QFD principles toward shipping investment process with respect to the customer satisfaction level of shipping charterers in crude oil tanker market. Their research embeds the recent statistical data of different tanker size markets and incorporates the Fuzzy Analytic Hierarchy Process (FAHP) algorithm and Fuzzy Axiomatic Design (FAD), which provides a quantified approach in analyzing charterers’ routing investment decision. Liang et al. (2012) apply QFD to prioritize knowledge management solutions for an international port in Taiwan, while Ding (2009) uses the same method to identify solutions of service delivery system for the port of Kaohsiung. Recently, QFD is increasingly applied to sustainability studies. Lam and Dai (2015b) develop a QFD model combined with the Analytic Network Process (ANP) for enhancing the environmental sustainability of logistics service providers. Lam (2015) uses a similar approach to design a sustainable maritime supply chain. There is also an application of QFD in service quality assessment of Asian liner shipping firms (Huang et al., 2015). In these studies, QFD is adopted to tackle problems including investment (Celik et al., 2009), knowledge management (Liang et al., 2012), service delivery/quality (Ding, 2009; Huang et al., 2015) and sustainability (Lam, 2015; Lam and Dai, 2015b). QFD has not been applied to risk or resilience research in the maritime area.

2.5. Research gaps Resilience, as discussed above, is an important factor in achieving an organization’s long-term performance. However, the QFD approach has seldom been used to enhance an organization’s resilience. We find only two related studies in the literature. A fuzzy group QFD model is applied to achieve agile manufacturing (i.e. strategic, operational and functional agilities) (Zandi and Tavana, 2011). Bottani (2009) links competitive bases with agile attributes and agile enablers and constructs a two-stage HoQ to enhance agility of companies. Resilience has not been addressed in QFD literatures, let alone maritime supply chain resilience. Importantly, supply chain risks in a maritime logistics context are under researched. This paper aims to fill in the gaps and apply the QFD approach to prioritize resilience solutions in the shipping industry. Please cite this article in press as: Lam, J.S.L., Bai, X. A quality function deployment approach to improve maritime supply chain resilience. Transport. Res. Part E (2016), http://dx.doi.org/10.1016/j.tre.2016.01.012

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3. Methodology A QFD model is employed to translate CRs into shipping companies’ DRs, with reference from Bottani (2009). The major advantage of this model is the ability to build resilience with a link to customers’ desire. Specifically, we propose an original approach to exploit HoQ to first relate CRs to maritime risks associated with the achievement of the CRs, then maritime risks, in turn, to resilience measures for risk mitigation. Fig. 1 provides the detailed structure of the two HoQs. Details on how to build the HoQs are stated in the following. CRs and DRs for each HoQ were identified based on literature surveys and preliminary consultations with industry professionals. DRs in our study are the resilience measures. We then conducted in-depth interviews with a liner shipping company and a cargo shipper to validate the CRs and DRs. The HoQs were then constructed based on the importance and correlations of each CR and DR as derived from the data obtained in the interviews. As noted, there are two HoQs in the QFD model. The first HoQ links CRs and maritime risks (MRs). It aims at identifying the relevant MRs that affect a company’s competitiveness according to the defined CRs. Hence, CRs appear as ‘‘whats” in the HoQ, since companies should first identify and appropriately rank what the customers want, while MRs appear as ‘‘hows”, since they directly affect the way by which CRs are satisfied. Modifying from Dursun and Karsak (2013), the first HoQ is built following 5 major steps in Appendix A. Then the second HoQ attempts to identify resilience measures that could mitigate maritime risks defined in the first HoQ. Hence, MRs represent company’s requirements with the aim to mitigate, and appear as ‘‘whats” in the HoQ, while resilience measures (RMs) are listed as ‘‘hows”, since they are practical measures the company can use to mitigate risks. Moreover, as shown in Fig. 1, the absolute importance AIj of MRs calculated in the first HoQ is the starting point to build the second HoQ and could be directly exploited as importance weights in the second HoQ. Thus the second HoQ could be built following similar steps as the first HoQ, as outlined in Appendix A. A questionnaire was designed for the use in conducting structured interviews with container liners and cargo shippers in order to collect data and validate the QFD framework. The purpose of the structured interviews was to assess the importance ranking of CRs, relationship between CRs and MRs, as well as between MRs and RMs, thus in the end, to prioritize resilient solutions. Conducting interviews or having direct discussion with professionals is a common way of data collection in QFD studies, such as in related literature about liner shipping companies (Huang et al., 2015; Lam, 2015) and logistics service (Bottani and Rizzi, 2006). Since the research object is container liners at the firm level, it is appropriate to interview the decision makers of individual companies. In particular, these decision makers will be the users of the QFD model, face-to-face discussion represents a comprehensive mode of communication to truly understand the concerns of the model users. The seminal work of Jick (1979) and other scholars (e.g. Akao, 1990; Seidman, 2013) outline the value of performing interviews. In an interactive communication environment, concepts could be explained and questions could be clarified thus data misinterpretation was minimized. In contrast, some QFD studies use survey to collect data. For example, González et al. (2004) analyze the customer satisfaction of banking service users to obtain the general customer requirements. Their study scope is different from ours since there are many more customers of individuals in banking service. Hence, conducting structured interviews is an adequate and a more focused way of measuring the importance of CRs and DRs and their relationships in our research. The empirical analysis of the research was performed for three of the top 20 largest container liner companies in the world. Each of the three companies has a global scale of shipping network and operation so the findings should be representative of international MSCs in practice. The same research method and processes were conducted for the three companies. The findings do not show major differences among the three shipping lines. On one hand, this implies that the QFD model

Fig. 1. Structure of the first and second houses of quality. Source: Drawn by Authors with reference to Bottani (2009).

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would be applicable to other firms. On the other hand, it is appropriate to present only the outcomes of one liner company. Also, this meets the main study objective which is to demonstrate an original QFD approach to enhance MSC resilience. 4. Results and discussions The paper focuses on detailing the results of Liner Shipping Company A, which prefers to be kept anonymous. In-depth structured interviews were conducted with five managers from different departments of the company’s Singapore office, namely Operations, Storage plan, and Marketing departments. The departments were chosen since they were the most relevant to the topic of maritime supply chain resilience and their connections with customers/shippers. Then the respective personnel-in-charge of the departments were invited for an interview. The designation and department of Company A’s representatives are shown in Table 1. Operations and Storage plan team are under Global Operation Centre Group (GOC), while Marketing team is under Liner Trade Management Group (TMG). Both GOC and TMG are under the company’s container business, which is our focus of the study. Views from different departments were gathered in order to make a holistic judgment. To obtain the view of the company’s customer, a major cargo shipper was also interviewed. The interviewees are suitable participants since they are experienced and knowledgeable in the subject matter. The data obtained were translated into the QFD model. 4.1. The first HoQ linking customer requirements and maritime risks Step 1 – ‘‘Whats – Identifying the customer requirements (CRs)”: According to the review in Section 2, coupled with consultation with managers in the shipping industry during the preliminary interviews, six dimensions were appraised. The list as shown in Table 2 was then confirmed with a major shipper. Step 2 – ‘‘Prioritizing CRs”: The relative importance of CRs and their respective ranking as given by the shipper are shown in Table 3. Among the six CRs, ‘On-time and hassle-free shipment delivery’, ‘Easy real-time shipment tracking’, and

Table 1 Designation and department of liner shipping Company A’s representatives. No.

Designation

Department

1 2 3 4 5

General Manager Deputy Manager Marketing Manager Storage Planner Operation Manager

Global Operation Centre Group (GOC) Global Operation Centre Group (GOC) Marketing Team, Liner Trade Management Group (TMG) Storage Plan Team, Global Operation Centre Group (GOC) Operation Team, Global Operation Centre Group (GOC)

Table 2 List of customer requirements and description. Source: Authors. Customer requirements

Description

Reference

Fast service

Capability to provide service in a fast manner

Lu (2003)

On-time and hassle-free shipment delivery

Capability to deliver orders within the due date & avoidance of mistakes in orders delivered

Celik et al. (2009) and Bottani and Rizzi (2006)

Easy real-time shipment tracking Shipment safety and security

Capability to trace shipment on a real-time basis

Huang et al. (2015)

Avoidance of damages in orders delivered

Bottani and Rizzi (2006) and Lam and Zhang (2014)

Error-free B/L and invoices

Avoidance of mistakes in paperwork required

Drewry (2009)

Professional and helpful customer service

Capability of staff to equip with professional knowledge and to provide helpful advice to customers

Lu (2003) and Lam and Zhang (2014)

Table 3 Importance weight, relative weight and ranking of customer requirements. Customer requirements (CRs)

Importance weight

Relative weight (Wi)

Ranking

On-time and hassle-free shipment delivery Easy real-time shipment tracking Professional and helpful customer service Shipment safety and security Error-free B/L and invoices Fast service

5 5 5 4 4 3

19.2 19.2 19.2 15.4 15.4 11.5

1 1 1 4 4 5

Note: Scale of importance weight is 1–5 with 5 being the most important.

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‘Professional and helpful customer service’ are the most important CRs. By contrast, the shipper puts less focus on speed. Liner Company A agreed with the outcome. As explained by the manager of the marketing department during the interview, under the current freight market, slow-steaming is prevalent. Step 3 – ‘‘Hows – Developing/defining the design requirements (DRs)”: Based on literature review and preliminary interviews, we came up with the list of specific risks (see Table 4). The list was then verified by the liner company. Step 4 – ‘‘Correlation matrix”: The correlation matrix is constructed taking the average of the five data sets from the managers of the liner company as in the center of Table 5. Step 5 – ‘‘Prioritizing DRs”: The importance and relative importance of each maritime risk type are calculated following Eqs. (2) and (3), respectively. The results, as shown at the bottom of Table 5, reveal that risks associated with IT system, operational risks, and human resource management risks are top concerns perceived by the liner company. 4.2. Constructing the second HoQ linking maritime risks and resilience measures Steps 1 and 2 are the MRs and the relative importance from the first HoQ which are directly used in these two steps. Step 3 – ‘‘Hows – Developing/defining the design requirements (DRs)”: According to the literature review, preliminary interviews and subsequently the verification by the liner company, we identified six resilience measures to mitigate maritime supply chain risks for shipping lines as presented in Table 6. Step 4 – ‘‘Correlation matrix”: The correlation matrix was constructed taking the average of five structured interview results as shown in the center of Table 7. Step 5 – ‘‘Prioritizing DRs”: The importance and relative importance of maritime risks are shown in Table 7. Following Eqs. (4) and (5), we obtained the absolute importance and relative importance of each resilience measure as illustrated at the bottom of Table 7. The results show that the three best feasible resilience measures are contingency plan, monitoring and maintenance, as well as supply chain relationship management. 4.3. Implications and recommendations Through the systematic procedures in a QFD model, companies can gain detailed knowledge concerning how maritime risks could affect customer requirements and what resilience solutions should be prioritized in order to mitigate risks. This implies that the mitigation of these maritime risks should first seek to incorporate a contingency plan. The implications of risk rankings associated with each CR are discussed below, with reference to the first HoQ (Table 5). Fast service – As shown in Table 5, fast service could be affected by all types of risks listed, most substantial being congestion in port. It is understandable, as Vilko and Hallikas (2012) point out, that the main effect of risks is a time delay, especially in a supply chain context. For instance, if a truck arrives 1 h over its time window in a terminal, the whole downstream supply chain would be affected. The risk effect in this case also hinges largely on the nature of the cargo. For example, perishable food is time and temperature sensitive. A delay in transportation of such cargo will result in huge losses. On the other hand, a week’s delay of spare parts to a warehouse would bring about lower economic consequences. On-time and hassle-free shipment delivery – Though speed is not highly demanded by shippers, on-time delivery is essential to them as also found by Bottani and Rizzi (2006). Again, all risk types could pose a potential threat on the performance of on-time and hassle-free shipment delivery, with most risk factors marked as having a strong relationship with this CR. Moderate relationship was given to piracy and terrorism, due to its low likelihood of occurrence.

Table 4 List of maritime risks and description. Source: Authors. Potential risk types

Potential risks

Description

Reference

External risks

Natural disaster

Notteboom (2006)

Piracy/terrorism

Environment risks, such as adverse weather (windstorm, tornado), fire and ice conditions in winter Piracy/terrorism

Congestion in port

Capacity problems in port area

Port state control Technical downtime Operational risk

Port state inspections, vessel detention risk Downtime resulting from periodical dry-docking and technical maintenance

Notteboom (2006) and Lam (2012) Gurning and Cahoon (2011) Gurning and Cahoon (2011)

Supply chain risks

Internal risks

Human resource management IT system

Vilko and Hallikas (2012) and Tan et al. (2015)

Ship collision or sinking, the condition of cargo-handling equipment and problems with document interpretation

Drewry (2009)

Lack of skilled workers, carelessness and a lack of motivation among the workforce Cyber-attack, IT system breakdown

Vilko and Hallikas (2012) Vilko and Hallikas (2012)

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Table 5 First HoQ linking customer requirements and maritime risks. Source: Authors.

Note: N = 1, weak relationship; O = 3, moderate relationship; H = 9, strong relationship.

Easy real-time shipment tracking – As revealed by the finding, the capability of easy real-time shipment tracking is most influenced by internal risks, IT system in particular. Any deficiencies in the design of IT software or breakdown of IT system could affect the real-time tracking capacity. Shipment safety and security – This attribute is mainly affected by external risks (like natural disaster and adverse weather condition) and internal risks (like seafarers’ awareness) which support the study of Lam and Zhang (2014). A key concern is piracy. High-speed ship transit in piracy-prone regions is emphasized by industry recommendations for self-protection. Notably, the burden of responsibility for tackling piracy should not rest only upon the shoulders of the shipping lines who are directly impacted by it, rather it should be treated as an international effort, as the economic interests for trading countries in safeguarding security for shipping are significant. Error-free B/L and invoices – Accurate document also plays a part in a smooth shipment. Internal risks associated with human resource management and IT system have strong relationships with the attainment of this CR. With a proper IT system and cross-checking in place, this item, relative to the above CRs, is more controllable by shipping lines. Professional and helpful customer service – As in a recent trend, shippers put more emphasis on the service quality, while shipping lines also recognize the need to progressively improve the quality of the services in order to sustain a competitive advantage (Panayides and Song, 2013). Again, internal risks have the most impact on the customer service level. Insufficient training of employees could lead to unprofessional staff, which may hamper the firm’s competitiveness in retaining customers. During the interviews, the company highlighted long-term relationships with customers in order to achieve the goal of securing a stable source of earnings. Such a relationship could only be built through high quality customer service. Therefore, the empirical results unveil that among all risk factors, internal risks are deemed the most important compared to external risks and supply chain risks. The outweighing of internal risks over supply chain risks implies the relative inward looking of this international shipping line. This finding echoes previous studies as discussed in Section 2. UNCTAD (2006) concludes that a strong focus was given on environmental and organizational risks and little emphasis on networkrelated disturbances in the maritime security context. Most shipping lines are not integrated in the SC. As a study done by Lam and Van de Voorde (2011) shows, full SC integration does not exist in container shipping. Furthermore, liner shipping companies generally engage their SC partners at the operational level, rather than tactical and strategic levels. However, potential risks could occur at both operational and strategic levels. More importantly, resilience measures should be designed in the SC at the strategic level. The reluctance of other SC parties, such as shippers as customers, to share information also hampers the improvement of SC resilience.

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Table 6 List of resilience measures and description. Source: Authors. Resilience measures

Description

Reference

Contingency plan

One way to achieve redundancy, which is concerned with maintaining response capacity to disruptions in the supply network, such as providing capacity in excess of requirements and prior to the point of need, as well as establishing a contingency plan Increasing forecast accuracy can reduce the level of inventory needed along the SC, increase SC visibility and responsiveness The establishment of collaborative programs with counterparties could reduce uncertainties

Berle et al. (2011)

Forecast accuracy Strategic alliance Supply chain relationship management Advanced IT system (real time tracing capability) Monitoring and maintenance

Development and maintenance of a good supply chain relationship with both customers and suppliers Advanced IT systems such as Enterprise Resource Planning (ERP), Electronic Data Interchange (EDI) play a significant role in synchronizing the flow of goods with the flow of information, which increases the flexibility along SC Organizations shall take control and monitoring activities to ensure that their suppliers, partners and employees perform as expected. Periodical maintenance needs to be done to lower the risk of technical breakdown

Bottani and Rizzi (2006) Huang et al. (2015) Berle et al. (2011) Huang et al. (2015) Büyüközkan and Cifci (2013)

Table 7 Second HoQ linking maritime risks and resilience measures. Source: Authors.

Note: N = 1, weak relationship; O = 3, moderate relationship; H = 9, strong relationship.

In terms of risk management and resilience measures, three items are found to be the most important: contingency plan, monitoring and maintenance, and supply chain relationship management. The implications of resilience measure rankings associated with each risk type are discussed below, with reference to the second HoQ (Table 7).

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Natural Disaster – Contingency plan is most effective in coping with natural disasters as stated by the company. A contingency plan could incorporate ship re-routing as a specific measure, which is also suggested by the literature such as Berle et al. (2011). Forecast accuracy has the least relationship with this risk attribute, since natural disasters are usually force-majeure and difficult to forecast. Piracy/Terrorism – Contingency plan is again most operative as a counter-piracy measure, which includes ship re-routing and increasing speed. Monitoring and maintenance is also beneficial as detailed reporting of each attack could assist to discover attack patterns and high risk areas. An advanced IT system with global outreach could warn nearby vessels of the recent attack, thus giving coming vessels enough time to reschedule the route. Congestion in port – Forecast accuracy could effectively reduce congestion in port. We provide support to the finding of Lam (2015) that cooperation with port operators could enhance information sharing, such as berthing schedule, which could augment the transparency along the supply chain, thus leading to reduced port congestion. Port state control – When a vessel is detained in a port due to port state control, it may take weeks for the vessel to be released as surveys, inspections, and documentation take time. A contingency plan by a liner company needs to be developed to ensure that the cargo could reach the destination on time or with the least time of delay. Technical downtime – The forming of strategic alliances with other shipping lines could minimize the risk of technical downtime, through a larger pool of vessels. It is especially beneficial for small-sized liners, as by putting their vessels in the shipping pool, they could maximize their revenue days through joint profits. Operational risk – The risk associated with conditions of cargo equipment could be reduced through close monitoring and periodic maintenance. Frequent communication with supply chain partners could reduce the risk of document interpretation problems. Human resource management – Both shore-based staff and seafarers are included in this aspect. A multi-skilled workforce should be built up. Staff training should also be provided to ensure that the workers are equipped with required skill sets, particularly in dealing with risks and uncertainties. IT system – Monitoring and maintenance should be carried out to ensure the proper function of IT systems. In case of IT system breakdown or cyber-attack, a contingency plan should be developed to ensure the normal operation of the shipping company. As a recommendation, shipping lines should pay more attention to SC risks and implement appropriate strategies to mitigate such risks. Measures such as strategic alliances and SC relationship management should be adopted, apart from contingency plans, where shipping lines place most emphasis on. The results have shown the relatively low level of integration in the MSC under study. Efforts to increase the level of SC transparency and visibility should be made by SC players. Shipping lines’ effort alone would not substantially change the current situation. Organizations should focus on SC profit maximization instead of merely the organization’s own profit (Stevenson and Spring, 2007). On the firm level, shipping lines could take the initiative to promote more collaboration by demonstrating the practical mutual benefits. The starting point could be their major shippers. For example, both risks and costs can be reduced by both liners and shippers when cargo damage is minimized. On the international level, international organizations such as ship owners’ association should play their role by promoting best practices. Many industries have mature SC integration strategies, such as the electronics industry. Companies like Samsung have turned their SC management into one of the core competences and have developed a sound relationship with a family of suppliers. Such kind of practice could be applied in shipping. Specifically, for instance liners and ports could enhance their collaboration through measures on information sharing such as virtual ship arrival and real-time notice on berth availability. The findings and implications should be interpreted in light of the study’s limitations. The empirical research was mainly conducted with the container shipping sector, which may not serve as a comprehensive representation of other sectors in the maritime industry. The study also has limitations in terms of generalizability considering the sample size. In Section 3 when the research methodology was presented, we explained that conducting structured interviews with professionals was a suitable approach of data collection for the analysis at the firm level. Even the three companies’ results did not show significant differences, it is more robust to confirm the findings by collecting the industry-wide data via a survey in addition to interviews. Obtaining a high number of responses was a major challenge that this study encountered. Nevertheless, the main objective of developing an original QFD approach to enhance maritime supply chain resilience has been achieved. The empirical case primarily served as a practical application and verification of the approach. 5. Conclusions Under a competitive global market, increasing customers’ demand and maritime risks, shipping companies have recognized the necessity of creating a flexible and resilient organization. This research widens the perspective on resilience management in the maritime industry by considering both the principal customer requirements and risk factors from a supply chain’s viewpoint. We developed a QFD approach to investigate the relationship between different variables. Through an empirical investigation of one of the top 20 container liner companies in the world, the key findings were as follows:
The top three customer requirements are respectively On-time and hassle-free shipment delivery, Easy real-time shipment tracking, and Professional and helpful staff.

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Top three risks are risks associated with IT system, operational risks, and human resource management risk.
The top three of resilience measures are contingency plan, monitoring and maintenance, and supply chain relationship management, followed by advanced IT system, strategic alliances, and forecast accuracy. The study has made contributions both in research and practice. First, an original QFD approach was designed to prioritize different resilience solutions for shipping lines to achieve higher flexibility and resilience. The study is the first of its kind and has filled the literature gaps as discussed in Section 2. Second, the HoQ method was elaborated as a practical procedure for solving the ‘what’ and ‘how’ questions in the QFD model. A review of current literatures on maritime logistics performance, supply chain risks, and supply chain resilience has given a rounded understanding of the field and provides the basis for constructing the list of customer requirements, risk factors, and resilience measures to formulate the HoQ. The list was further confirmed with industry practitioners and the shipping line. Researchers can take reference from this paper as a step-by-step guide for future studies. Third, disruptions could be combated by organizations with better planning, strategies and operations even in the short run. This research therefore has also practical significance for shipping companies to devise and implement a resilient maritime supply chain. As a result, these enterprises shall be capable to accelerate the process of bouncing back after disruptions happened in the supply chain. Fourth, the study also unveiled the relatively low visibility in maritime supply chains and created awareness on this issue. Shipping lines tend to focus on operations within the organization, rather than taking the supply chain as a whole. It is suggested that more collaboration initiatives should be taken by shipping lines, shippers, and port operators. Investigating maritime supply chain resilience is still a new topic so there is much room for further research. Future research directions could incorporate more voices from various industrial players besides liners and shippers, such as port operators and logistics providers. It will be interesting to find out the similarities and differences of various stakeholders’ views. The current study focused on liner shipping. Dry-bulk and tanker shipping sectors could also be investigated in the future. Acknowledgement We acknowledge the research funding from Nanyang Technological University, Singapore. Appendix A Five major steps of building the first HoQ: Step 1 – ‘‘Whats – identifying the customer requirements (CRs)”: In this step, CRs are identified and placed on the left side of the first HoQ (Fig. 1). CRs are identified through literature surveys and industry interviews. Step 2 – ‘‘Prioritizing CRs”: CRs are compared and ranked according to their importance from the customers’ point of view in this step. The importance of CRs is rated on a scale of 1–5, following Likert’s five-point scale (1 stands for the least important and 5 stands for the most important). The relative importance Wi is calculated as follows:

Ii W i ¼ Pn

i¼1 Ii

;

i ¼ 1; n

ð1Þ

Ii being the importance score of the ith CR. Step 3 – ‘‘Hows – Developing/defining the design requirements (DRs)”: In this step, technical attributes are transformed from CRs, based on the firm’s internal resources and coordination. The important measure to define DRs is to find direct solutions to CRs as defined. In our first HoQ, the concept of DRs is extended and maritime risks (MRs) are considered as ‘‘Hows” that would have a direct impact on the satisfaction of CRs. Step 4 – ‘‘Correlation matrix”: Comparing each CR and MR, the relationship matrix shows to what extent a MR impacts CR for that attribute. Graphic symbols represent 3 degrees of relationship (weak, moderate, strong), which are translated into a rating scale of 1–3–9 (Table A1). Step 5 – ‘‘Prioritizing DRs”: The importance of each maritime risk type is computed based on the relationship matrix and the relative importance of each CR, which is calculated as the sum of each CR relative importance value multiplied by the quantified relationship between the same CR and the current MR. AIj, the absolute importance of each MR can be calculated as Table A1 Relationships, graphic symbols and corresponding scale. Source: Hauser and Clausing (1988). Degree of relationship

Graphic symbol

Quantified relationship

Strong Moderate Weak

H

9 3 1

O N

Please cite this article in press as: Lam, J.S.L., Bai, X. A quality function deployment approach to improve maritime supply chain resilience. Transport. Res. Part E (2016), http://dx.doi.org/10.1016/j.tre.2016.01.012

J.S.L. Lam, X. Bai / Transportation Research Part E xxx (2016) xxx–xxx

AIj ¼

n X W i Rij ;

j ¼ 1; . . . m:

11

ð2Þ

i¼1

Wi being the relative importance of the ith CR, Rij is the numerical value added to the position (i, j) of the matrix. The relative importance of each MR, denoted by RIj, could be derived from the absolute importance AIj, through the equation below.

AIj RIj ¼ Pm ; j¼1 AIj

j ¼ 1; . . . ; m

ð3Þ

Literature analysis has shown that design requirements are often ranked based on relative importance rather than absolute importance (Lam, 2015). Thus, RIj is used in the analysis. Five major steps of building the second HoQ: Step 1 – ‘‘Whats – identifying the maritime risks (MRs)”: MRs from the first HoQ are placed on the left side of the second house (Fig. 1). Step 2 – ‘‘Prioritizing MRs”: Relative weight RIj obtained in the first HoQ Step 5 could be exploited directly as importance weight. Step 3 – ‘‘Hows – Developing/defining the design requirements (DRs)”: Different types of resilience measures are identified as the ‘‘Hows”. Step 4 – ‘‘Correlation matrix”: Comparing each MR and RM. The measuring symbols and scales are similar to the first HoQ in the above-mentioned Table 1. Step 5 – ‘‘Prioritizing DRs”: Similar to the first HoQ, the absolute importance AIk⁄, k⁄ = 1, . . ., q of each RM can be calculated as

AIk ¼

m X RIj Rjk ;



k ¼ 1; . . . ; q

ð4Þ

j¼1

Rj being the relative importance of the jth MR, Rij the numerical value added to the position (j, k) of the matrix, k⁄ = 1, . . ., q and j = 1, . . ., m the number of RMs and of MRs, respectively. The relative importance of each resilience measure denoted by RIj⁄ could be derived as

AI  RIk ¼ Pq k ;  k¼1 AIk



k ¼ 1; . . . ; q

ð5Þ

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