Posts Tagged ‘supply chain management’

EFP Brief No. 252: Egypt’s Water Security – Future Vision 2030 Using Delphi Method

Tuesday, February 12th, 2013

This study was an activity within the framework of Egypt’s Vision 2030 project carried out by the Center for Future Studies in the Egyptian Cabinet’s Information and Decision Support Center. Using Delphi Method, the study aims at identifying, analyzing and foreseeing potentials of Egypt’s water security as ground to thinking of pilot solutions aimed at evading problems and crisis as well as developing a set of procedures whereby Egypt’s water security is attained.

Increasing Gap between Water Supply and Demand

The Nile stands as Egypt’s main source of water whereby it secures 80% of Egypt’s water yield per year-according to the 1959 Nile Agreement, Egypt’s fixed quota of Nile water comes to 55.5 billion m3/year. In Egypt, water security tops the national agenda whereby studies reveal that estimations of available water and water needs for different purposes are heading towards an increasing gap between water supply and demand, not only because of the anticipated increase of water demand, but also due to the impact of other factors on the available quantity of Nile water. The study at hand contributes to foreseeing the future of Egyptian water security, by analyzing the impact of varied factors influencing Egypt’s water security in terms of the political, economic, environmental, hydrological, legal and strategic aspects,  developing an integrated vision, and forming a new approach for further research in this area and providing comprehensive knowledge.

Combining Forecasting and Delphi

The study applied the “Delphi Technique” – an important qualitative tool of future studies – which relies on collective intelligence and scientific forecasts, by deriving knowledge from a group of experts, directing them to consensus on aspects of the issue at hand, and providing verifications for the relatively extreme positions. This technique was used to identify the main factors of uncertainty that will affect the future of Egypt’s water security, and to forecast potentials of these uncertainty factors, their different expected impacts, and proposed recommendations. A Delphi web site was developed allowing access to 25 experts in the areas of water, economic and political science.

The study also used forecasting (futures analysis) which does not seek foreseeing or planning the future, but rather conducts a set of conditional forecasts or scenarios assuming either the reality or desired ones. Hence, the research does not conclude to achieving any of the aforementioned scenarios but aims at allowing societal players to learn about the requirements of achieving one of the desired scenarios according to their relevant preference in order to work on giving it precedence over other alternative scenarios.

Main Factors Affecting Water Security

Based on the theoretical review of the issue of Egypt’s water security, the most important factors affecting Egypt’s water security were identified by applying Delphi Technique as follows:

  1. Relations between countries of the Nile basin towards either cooperation or struggle:

The regional hydrological system of the Nile basin lacks a comprehensive legal or institutional framework deemed acceptable by all Nile countries because of their conflicting outlook on the legitimacy of the existing agreements and international conventions – the 1929 and 1959 Agreements in specific. Accordingly, countries of the Nile sources divide the River Nile’s water according to the area of River Nile basin passing through the given country, and the contribution of each country to the river’s water yield. However, Egypt and Sudan refuse reviewing the distribution of water quotas in the Nile basin based on calls for justice and equity.

Additionally, some of the Nile basin source countries are calling for enforcing the principle of international water sale on the Nile basin system including that Egypt and Sudan, pay financial compensation in return for their water quotas if they wish to maintain them, while Egypt and Sudan refuse this principle on the ground that water is a socio-economic commodity that should not be subjected to market mechanisms.

On another level, countries of the Nile basin sources reject the condition of advance notification when developing water projects or taking water measures within their national borders, which is seen as necessary by Egypt and Sudan.

  1. Impact of external powers:

External powers, mainly USA and Israel play a crucial role in affecting international water interactions in the Nile basin, and carry out a motivating role for struggle. In this regard, Israel adopts two main strategies: “Quota based system” considering projects involving water that eventually aims that Israel receives fixed water quota from the Nile and “Seizure Strategy” which implies surrounding the Egyptian policy and using water as a pressure card against Egypt and Sudan. European countries, specially Italy, Holland and some Asian countries particularly Japan are playing a motivating role for water cooperation in the Nile basin putting down inclinations towards water related conflicts by providing financial and technical support for a number of water related projects in the Nile countries.

  1. The impact of the separation of South Sudan:

Opinions vary on the impact of south Sudan separation on Egypt’s water security. Some opinions perceive minimum negative impact resulting from the separation on the Egyptian water yield from the Nile and others are seriously concerned about the potential impacts.

  1. Shifts to irrigated agriculture and minimizing pressure on the blue water:

All countries of the Nile sources wish to follow Egypt’s footsteps in terms of cultivating spacious irrigated agricultural areas. However, this type of agriculture requires costly technical expertise. In this context, funding and technical assistance provided through investors, local, regional or international entities might have a hidden agenda for helping poor citizens of the Nile countries, destabilizing some countries and creating tension in a manner that impacts development plans.

  1. Change in the economic:

As a main feature of the Nile basin countries- except Egypt- extreme poverty reflects on the capabilities in terms of providing water related infrastructure. According to 2007 World Bank data, Burundi had the lowest GDP (US$0.97 billion) among Nile Basin countries, whereas annual GDP per capita growth rate was highest in Ethiopia and Sudan at 8.4% and 7.7% respectively. Egypt comes next with a growth rate of 5.2%. Nevertheless, GDP per capita share decreased in Burundi by 0.3% and in Eritrea by 2.3%.

  1. Water reservoirs or control utilities:

If dams are constructed to serve as reservoirs, it is necessary to ensure that the stored water affects Egypt’s water quota in the long term.

  1. Impact of climate change on water of Nile basin:

The most important climate changes affecting the Nile’s water are increasing temperatures which  will cause rising rates of evaporation, and changes in the rates, locations and seasons of water fall will cause the loss of quantities of rain that were to be used in agriculture and human consumption in the northern coast.

  1. Political stability of the Nile basin countries:

Continuous or aggravated forms and indicators of domestic instability in the Nile basin countries will push them to adopt struggle based foreign policies. It is projected that countries of the Nile basin sources will resort to adopting aggressive foreign policies towards both mouth and stream countries-Egypt and Sudan-every now and then. This is in an effort to divert the domestic public opinion away from internal problems and failures suffered in each country relatively.

Egyptian Water Security Scenarios

Given the aforementioned main factors affecting Egypt’s water security, the future of water in the Nile basin will likely be shaped according to three alternative scenarios as follows.

Business as Usual Scenario

The current situation of struggle relations between Egypt and the Nile Basin Countries, will continue but will not escalate to war because of political expertise,  and countries of the Nile basin maintain a reasonable margin of rationality with their neighbours. Furthermore, the domestic political, economic and social circumstances of the Nile basin countries will not permit potential escalation of conflicts.

According to the outcomes of Delphi survey, a change in the current situation of cooperation or struggle regarding water is unlikely (there were no sharp deviations regarding the potential full cooperation or struggles that may escalate to war over water), where 46%, 38% and 50% is the probability of increasing the normal yield of Nile water before 2030 via cooperation where Egypt develops projects in the Ethiopian Plateau, Equatorial Lakes Plateau and Bahr el Ghazal. But the probability of reaching an agreement on some of the conflict areas by amending the existing legal agreements of the Nile basin countries is 48%.

Also, lack of current sufficient funding will affect the ability of benefiting from green water and relieving the pressure off blue water in Nile Basin countries. And in light of the outcomes of Delphi survey, Egypt’s probability of developing projects -in cooperation with donor international organizations-aimed at assisting other countries in benefiting from green water is 49%, 52% and 53% respectively in the Ethiopian, Equatorial Plateaus and Bahr el Ghazal.

It is unlikely that the basin countries will experience an economic boom on the short term, since economic development requires stable political regimes and local, regional and international capital, capacity building, technical calibres and improvement of institutions and laws.

There is low probability of an impact from the separation of south Sudan on Egypt’s yield of the Nile water, as the new State will be bound by all past conventions related to the River Nile. Needless to mention, South Sudan is advantaged with abundant rain which spares it the need for this water. According to Delphi Survey, the probability of a relevant impact on Egypt’s Nile water supply is 45%.

It is likely that climate changes will continue without an impact on the normal yield of Nile water in Egypt, at least during the coming twenty years. According to a study by the Organization of Economic Cooperation and Development (OECD) in 2004, there is limited confidence regarding changes in amount and direction of rainfall on the future on the Nile basin countries. Based on the survey results, the probability that climate changes will move the rain belt far from the Ethiopian, Equatorial Lakes Plateaus or Baher Al Gazal are 40%, 35% and 44% respectively.

Optimistic Scenario (Regional Cooperation)

This is the scenario of optimization of available opportunities for developing shared water resources and building a regional water system capable of securing the needs of the region’s countries without undermining the fixed historical and legal rights of some of the countries.

This scenario involves the potential of expanding cooperation areas among Nile basin countries within the Nile Basin Initiative, which includes all ten Nile basin countries, provides an institutional framework for collective cooperation, receives governmental and political support, and pays great attention to projects and mechanisms aimed at building mutual trust among basin countries, as well as capacity building and training projects.

There is an increased possibility of establishing water related projects in collaboration with the basin countries via building and connecting dams on a unified electricity network in those countries, aimed at generating power for agriculture and industrial production purposes rather than storing water and assist in regulating water supply to Egypt. Survey results indicate that probability of completing Gongli Canal is 56%, in addition to the possibility of redirecting Congo River to benefit from its water is 60%.

Pessimistic Scenario (Conflict)

This scenario is based on the possibility that variables motivating struggle will lead to raising chances of conflict of national interests in the Nile basin countries to an extend of inter struggle. The struggle inclination might rise given the following variables:1) A strong and sharp inclination of the Nile basin sources countries towards enforcing the principle of “selling Nile water” to the two countries of the mouth and stream will cause an eruption of international water struggle and wars among the countries.2) Escalated role of the external motivating powers for Nile-Nile struggle based on the following considerations:

Israel will play a motivating role for water struggle in the Nile basin in addition to the indirect role of the USA, where it will work on besieging and pulling the parties of Egyptian policy, on the regional level, in a way that serves coining the American power on the political and strategic levels in preparation for an effective Israeli role.

Countries of the upper Nile basin will seek to constitute external coalitions aimed at changing the current situation; these are mainly Ethiopia, Kenya, Tanzania, and Uganda.

Separation of south Sudan will be at the expense of projects dedicated to exploiting the wasted Nile water in the Egyptian and joint upper parts, such as the Gongli Canal project.

The political tensions in the Ethiopian Plateau will negatively affect the Egyptian water yield as well as failure to implement any proposed projects. According to the survey, the probability of the eruption of a civil war (due to ethnicity, religion, political or tribal affiliation) in the Ethiopian Plateau and bearing an impact on water projects and management is 53% and 57% respectively.

Based on the Delphi Survey outcomes, the probability of increased Nile basin countries’ demand for Blue water for agricultural, industrial, drinking, tourism, and fish wealth purposes by 2030 in the Ethiopian, Equatorial Plateaus and Bahr El Gazal Region are 60%, 61% and 59% respectively. As for the probability that those countries construct dams or other projects in the Ethiopian, Equatorial Plateaus and Bahr El Gazal Region-to meet the increased demand for water -that will eventual-ly affect Egypt’s Nile water quota by 2030 are 63%, 59% and 54% respectively.

Cooperation for Water Security

  1. Cooperation among the Nile Basin Countries

Regional cooperation should depend on balancing the distribution of benefits and duties in the context of a cooperative Win-Win Approach, which will eventually lead to optimizing the benefits among all Nile countries enabling a relevant improvement and development.

  1. Endorsing the Soft and Diplomatic Instruments

This ensures avoiding the struggle scenario, and can be supported by developing the mutual dependency mechanism between Egypt and Ethiopia via joint projects where Egypt provides the technical expertise in irrigation currently being provided by Israel.

  1. Enhancing Cooperation between Egypt and Sudan

The mutual dependency mechanism between Egypt and Sudan, in light of separation, can be achieved through establishing strong ties with both north and south via joint cooperation in agriculture, power production, health, education and industrial projects in addition to military. This entails developing railways, river naval lines and unified electricity networks, and that Egypt grants southern citizens all advantages equal to Sudanese citizens in terms of education, work, residence, and entry into Egypt, and redrafting the projects to exploit wasted water in the upper Nile in Bahr El Gabal, Bahr El Gazal, and Mashar Swamps situated in south Sudan.

  1. Benefiting from Green Water

This entails that Egypt: cooperates with the international donor organizations for developing projects in the source countries, transfers agriculture technologies to all Nile basin countries by availing technically qualified irrigation and agriculture engineers, and developing rain harvest technologies and introducing selected seeds and chemical fertilizers.

  1. Creating a social, economic, political observatory

This should be in charge of monitoring changes immediately, analysing indicators and presenting relevant plans. In the event of any internal political tensions in the Nile basin countries, Egypt should adopt a neutral position, stimulate mediations in ethnic and border conflicts taking place in the Great Lakes and African Horn regions to evade the potential sensitivities that might emerge due to aligning with any of the conflicting parties.

  1. Egypt’s Role in Developing Economies

It is recommended that Egypt carries out development projects in Nile Basin countries and cooperates with international organizations in areas of improving health care, and eradicating Endemic diseases that affect public health and consequently productivity.

  1. Forecasting the Impact of Climate Changes

Developing a local model for forecasting the impact of climate change on the Nile basin water yield, in cooperation with the British Meteorology Office.

Authors: Dr. Nisreen Lahham   nisreenlahham@idsc.net.eg

Dr. Mohamed Saleh   msaleh@idsc.net.eg

Sahar Sayed Sabry    saharsayed@idsc.net.eg

Sponsors: Egyptian Cabinet’s Information and Decision Support Center (IDSC)
Type: National Technology Foresight Exercise based on desk research and expert opinion.
Organizer: Dr. Nisreen Lahham, Executive Manager, Center for Future Studies, www.future.idsc.net.eg
Duration: 2009 – 2010
Budget: n.a.
Time Horizon: 2030
Date of Brief: August 2011

Download EFP Brief No. 252_Egypt’s Water Security

Sources and References

Ayman Alsayed Abdul Wahhab (editor), “River Nile Basin: Cooperation opportunities and problems” (Cairo, Al Ahram Center for Political and Strategic Studies, 2009).

Mohammad Salman Taye`a, Water Security in the Arab Gulf in a Changing World: between Prerequisites of National Interest and Addressing External Threats, Middle East papers, National Center for Middle East Studies, Vol. 38 October 2007.

Atlas of international agreements on fresh waters, UNEP, FAO, and Oregon University, 2002.

H.J.Brans (ed.), The Scarcity of Water: Emerging Legal and Policy Issues, London, The Hague, Boston, Kluwer International, International Environmental Law and Policy Issues, 1997, 21-39.

Theodore J. Gordon, The Delphi Method, future research methodology – V2.0, AC/UNU Millennium Project.

World Bank, World Development Indicators, Washington, 2007

 

EFP Brief No. 245: Trend Database Design for Effectively Managing Foresight Knowledge

Tuesday, January 29th, 2013

In 2010, the German Federal Government launched one of its largest research initiatives in the area of logistics and supply chain management with the central aim to secure tomorrow’s individuality, in the sense of mobility and distribution, with 75% of today’s resources. One of the projects, the ‘Competitiveness Monitor’ (CoMo) develops an innovative, webbased foresight platform, which supports strategic decision-making and contingency planning as well as competitive and environmental intelligence.

Sophisticated Architecture to Support Foresight Processes

The development of an innovative Trend Database (TDB) is part of an extensive cluster initiative that was launched by the German Federal Ministry of Education and Research in June 2010. The ‘Effizienz­Cluster LogistikRuhr’, synonym for leading-edge cluster in logistics and mobility in the German Ruhr area, aims to boost innovation and economic growth in Germany by bridging the gap between science and industry (BMBF 2010). The cluster involves 130 companies and research institutes that cooperate in a strategic partnership in order to shape a sustainable future for the region and beyond. The determined challenges of future logistics (e.g., urban supply) are currently being addressed in more than 30 joint research projects. In this way, the cluster contributes to finding new ways to growth and employment that gear not only Germany’s but the European Union’s economy towards greater sustainability (see, e.g., Schütte 2010).

One of the joint research projects is developing an innovative foresight tool, the Competitiveness Monitor (CoMo), which will contribute to the validity and robustness of foresight activities by digitally combining quantitative and qualitative forecasting methods. The CoMo aims to enhance cooperation in multi-stakeholder environments through a fully integrated web-based software solution that utilises existing knowledge and users’ conceptions. The tool links several applications for forward-looking activities as well as the development, processing and storage of foresight knowledge. The goal is to provide decision-makers from business, academia and government institutions with a valid knowledge base for future-robust decision-making.

 

The CoMo consists of three innovative foresight tools – Trend Database, Prediction Market app and a Future Workshop (“Zukunftswerkstatt”) app – which are implemented in an IT-based Futures Platform (Figure 1). The Futures Platform will serve as login portal in form of a dashboard and can be adapted by each user according to his or her individual interest. Within the TDB, future-oriented numbers, data, and facts on specific logistics-related topics or technologies can be stored or collaboratively developed by its users. Furthermore, the TDB shall not only include trend-related data but also handle weak signals, wildcards and disruptive events. The high practicability of the Trend Database is planned to ensure filtering of the query results through an intelligent algorithm.
245_bild1
Figure 1: Conceptual framework of the Competitiveness Monitor

Development of Trend Database Requirements

In the beginning of the TDB development process, we analysed and evaluated eight relevant TDBs in order to identify the state of the art. After that, we conducted several creative workshops and interviews with more than 40 interdisciplinary cluster partners and futures researchers to identify further requirements.

First of all, we compiled an extensive list of requirements and constraints in several participatory workshop sessions, which are considered relevant to our TDB. After conducting a requirement analysis according to the ‘Volere Requirements Specification Template’ (Robertson and Robertson 2006), we derived four categories and adapted them to the CoMo project concerns: (1) functional requirements, (2) non-functional requirements, (3) design requirements and (4) constraints. Whereas functional requirements describe the fundamental functions and processing actions a product needs to have, non-functional requirements are the properties that they must have, such as performance and usability. We clustered the final long list of 160 collected requirements in 9 categories as presented in the following:
245_bild2

In the next step of the TDB development process, we conducted a stakeholder analysis in order to generate possible use cases. Different use cases were defined according to the specific needs and organisational structures of the CoMo project partners and members of the EffizienzCluster involved. In doing so, we were able to conceptually test and complement the identi-fied requirements and constraints.
Finally, we revised the results of the trend database analysis and specification analysis and summarised our research results in a specification sheet, which now provides a clear and structured collection of TDB features for the programming process of a prototype.

Challenges and Differentiators

For the identification of the key challenges, we evaluated best practices and innovative features of existing TDB concepts regarding their applicability and efficiency. For this purpose, we focused on the surrounding conditions and primary objectives of the presented TDB, determined by its purpose within the CoMo and the cross-project objectives of the leading-edge cluster. We identified four main challenges of utilising a TDB, which we will discuss in the following: (1) extent and quality of trend information, (2) cooperation within the TDB community, (3) linking mechanisms and (4) creating incentives for users.

Extensiveness and Quality of Trend Information

Most of the TDBs analysed provide an extensive set of opportunities to describe and evaluate a certain trend or future signal. Since it is hardly possible to decide without further knowledge about the user’s purpose or what the right amount of information is, we continued to compare the ways in which future knowledge is contributed to the TDB. We see two main strategies within the examined sample of TDBs: (1) input from experts and futures researchers or (2) active participation of the user community. In the latter strategy, information is revised and complemented by the community, which more accurately meets the CoMo objectives of realising cluster potentials. However, in case of low interest in a certain trend, the information may remain fragmentary and lack reliability.

The combination of both strategies seems to be promising since it ensures certain quality standards as the information provided is subject to scrutiny from two sides: an expert review process, on the one hand, and user participation, on the other. Against the background of all our analyses, we propose that providing a certain amount of trend specifications (e.g., short description, key words, time horizon etc.) should be obligatory when entering a trend into the TDB. In addition, the CoMo TDB is planned to offer a regulator for the ‘level of aggregation’, which will enable users to constrain the trend search results regarding time, geography, economic scale and further aspects.

Cooperation within the TDB community

The so-called “wisdom of the crowds” is based on the logic that many people (a “crowd”) know more than single individuals (Surowiecki 2004). Consequently, the sharing of knowledge can improve the knowledge basis of different stakeholders as well. Therefore, it is useful – particularly in dealing with future-relevant knowledge – to motivate users to co-operate and to develop their knowledge further.

Regarding our TDB architecture, users shall therefore evaluate trends in terms of impact or likelihood, participate in surveys or add further evidence or aspects to existing future-oriented knowledge (Kane and Fichman 2009). Especially the stakeholders of the leading-edge cluster, who are aiming to improve their competitive situation through collaboration, are interested in sustaining topicality, validity and relevance of future-relevant knowledge in the trend database. Our TDB is expected to contribute to an improved quality of data and provide a more accurate basis for decision-making processes.

Linking Mechanisms

The CoMo TDB will be linked in three dimensions. First, the trends within the TDB will be linked among each other. This supports users by providing a more comprehensive causal picture of the future and allows decision-makers to identify early warnings and weak signals. Second, the trend database is linked to two other CoMo apps: the Prediction Market and the Future Workshop. Both apps require raw data from the TDB for purposes of evaluation (i.e. prediction markets) or analysis (i.e. future workshops). Furthermore, they define data sources by providing new or evolved future-oriented knowledge, which needs to be re-imported into the TDB. Third, the trend database will be linked to external data pools. Facilitating the idea of linked data, relevant external information can be included, increasing the basis to be drawn on in making future-relevant decisions (Auer and Lehmann 2010). Thereby, we aim to link our dataset intelligently by attaching metadata using the Semantic Web approach. This not only facilitates the process of finding relevant and recent data but also enables identifying related topics.

Motivation of Users

In contrast to the traditional World Wide Web, the application of a Semantic Web offers information that can be sorted by relevance, topicality and quality (Berners-Lee, Hendler et al. 2001). However, the Semantic Web requires the linkage of datasets first. Therefore, users have to be encouraged to tag, for instance, the trend information as good as possible, and the community needs to be motivated to edit and complete the tagging process.

In the process of developing the CoMo TDB, we discussed several concepts and ideas to address the challenges involved in motivating users. One concept that is planned to be applied in the CoMo is the lead users approach (Leimeister, Huber et al. 2009) in which users are incentivized by an awareness of the measurability of their contributions. Considering that most of the existing trend databases use an expert-based concept instead, we infer that this was thought to be the only efficient way of providing and processing future-oriented knowledge so far. However, current tendencies, such as the disclosure of previously protected data (i.e. open source/innovation) or the increasing activity in social networks, suggest that existing concepts need to be adapted to the new requirements forward-looking activities must meet.

Metadata Approach Using the Semantic Web

Future-oriented knowledge as a basis for decision-making is always critical due to its inherent uncertainty. Therefore, innovative concepts and tools need to be developed in order to provide users with the most valid, relevant and up-to-date information possible. With our new TDB concept, we try to acknowledge current challenges such as motivation and collaboration of users, usability of information and modern linkage methods. To meet these challenges, we aim to link our dataset intelligently by attaching metadata using the Semantic Web approach. This not only facilitates finding relevant and recent data but also enables identifying related topics. However, the linkage of the data has to be conducted manually. Thus, motivating users to share their knowledge within the community is essential to provide an accurate and comprehensive picture of the future reflecting the wisdom of the crowd. Finally, we will design our TDB to present future-oriented knowledge in a sufficiently comprehensive and detailed manner with an emphasis on clarity and thereby aim to contribute significantly to the robustness and quality of future decisions.

Authors: Christoph Markmann                christoph.markmann@ebs.edu

Stefanie Mauksch                     stefanie.mauksch@ebs.edu

Philipp Ecken                           philipp.ecken@ebs.edu

Dr. Heiko von der Gracht          heiko.vondergracht@ebs.edu

Gianluca De Lorenzis                G.DeLorenzis@dilotec.de

Eckard Foltin                           eckard.foltin@bayer.com

Michael Münnich                       M.Muennich@brainnet.com

Dr. Christopher Stillings                        christopher.stillings@bayer.com

Sponsors: German Federal Ministry of Education and Research
Type: National foresight project
Organizer: EBS Business School / Center for Futures Studies and Knowledge Management (CEFU)
Duration: 2010 – 2013
Budget: € 2,300,000
Time Horizon: Long-term
Date of Brief: October 2011

Download EFP Brief No. 245_Foresight Trend Database Design

Sources and References

Auer, S. and J. Lehmann (2010). “Creating Knowledge out of Interlinked Data.” Semantic Web Journal 1.

Berners-Lee, T., J. Hendler, et al. (2001). “The Semantic Web.” Scientific American 284(5): 34-43.

BMBF (2010). Germany’s Leading-Edge Clusters. Division for New Innovation Support Instruments and Programmes. Berlin, Bonn, Bundesministerium für Bildung und Forschung / Federal Ministry of Education and Research (BMBF).

Kane, G. and R. Fichman (2009). “The Shoemaker’s Children: Using Wikis for Information Systems Teaching, Research, and Publication.” Management Information Systems Quarterly 33(1): 1-22.

Leimeister, J. M., M. J. Huber, et al. (2009). “Leveraging Crowdsourcing: Activation-Supporting Components for IT-Based Ideas Competition.” Journal of Management Information Systems 26(10): 187-224.

Robertson, S. and J. Robertson (2006). Mastering the Requirements Process, second edition. Amsterdam, Addison-Wesley Professional

Schütte, G. (2010). Speech by. Germany’s Leading-Edge Cluster Competition – A contribution to raising Europe’s profile as a prime location for innovation. State Secretary at the Federal Ministry of Education and Research framework of the European Cluster Conference. European Cluster Conference. Brussels.

Surowiecki, J. (2004). The Wisdom of Crowds, Random House.

Note: The content of this publication is based on the joint research project “Competitiveness Monitor”, funded by the German Federal Ministry of Education and Research (project reference number: 01IC10L18 A). Joint research project partners are Bayer MaterialScience, BrainNet, dilotec, EBS Business School. Responsibility for the content is with the author(s).

EFP Brief No. 233: A Foresight Approach to Reshape Bogota’s Food Supply and Security Master Plan

Friday, December 21st, 2012

This forward looking exercise suggests a new approach to better structure Bogota’s fruit, vegetable and tuber supply chain by reviewing and reinforcing certain strategies stated in the Food Supply and Security Master Plan (FSSMP) in order to promote actions by the public sector and the stakeholders involved in this supply chain.

Food Supply at Affordable Prices

Bogota’s fruit, vegetable and tuber supply chain involves multiple actors, business models and interests, which are not yet aligned and can hardly be coordinated without both public and private involvement. In 2003, the City of Bogotá commissioned the CPTCIPEC Consortium to conduct a diagnostic study of the food supply chain system and the nutrition of the city’s inhabitants. This study served as input to the Food Supply and Security Master Plan (FSSMP) in 2006. From a nutritional perspective, it identified significant gaps in the intake of some foods, in particular fruits and vegetables, compared to an ideal diet. Concerning the operation of the supply system, it suggested eliminating massive product loss along the supply chain to increase the offer of these foods and reduce the number of middlemen in food markets as a means of lowering prices and making the products more affordable to the general public.

Logistics and Virtual Trade Platforms to Increase Food Supply

The FSSMP suggested the creation of a new food supply system that facilitates direct exchange among producers and retailers. The new organisation would be bolstered by introducing a virtual trade platform for products, a regional network of food consolidation centres and five logistics platforms in Bogota whose main role would be to facilitate cross-docking operations rather than product storage. Therefore, the FSSMP suggested to undertake efforts to establish groups of producers (supply) and retailers (demand) and advance the design and construction (or implementation) of a logistics and e-commerce platform. Despite all efforts, it has been difficult to convince producers and retailers to shift from traditional supply chains to the new scheme proposed in the FSSMP.

A Foresight Approach to Review FSSMP Strategies

New advances in logistics strategy and the first results of implementing the FSSMP show a lack of effectiveness of the strategies originally stated. Therefore, the current study reviewed the initial statements in the FSSMP based on a foresight approach. The foresight methodology used in this study consisted of five stages: pre-foresight, recruiting, generation, action and renewal (Miles, 2002; Popper, 2008b). First, the Master Plan served as input to define the objectives and scope of the exercise. Then, stakeholders and their relationships were identified. Later, system dynamics (SD) was used to model product, information and money flows along the fruit, vegetable and tuber supply chain.

As a result, two scenarios, for five products, are presented that discuss actions by the public sector and reactions to be expected throughout the whole food supply system. Finally, these outcomes are compared to the Master Plan’s objectives and some recommendations are made to improve its implementation. For this exercise, we consulted 247 market storekeepers, 15 experts in the production and trade of fresh products and urban logistics, 5 industry experts, personnel from the Corporación Colombia Internacional (CCI – the trade association of tomato, banana and plantain farmers), 5 managers from the Secretaria de Desarrollo Económico (SDDE) and researchers from MIT-CTL. More specifically, the stakeholders identified in the fruit, vegetable and tuber supply chain are represented in Figure 1:

System Dynamics Inputs: Material, Financial & Information Flows

The metrics of the SD model, such as flows, costs and prices, were defined from secondary sources such as regional and national studies, statistics, polls and governmental reports. Initially, the FSSMP included only material flows and nine scenarios that focused on identifying capacity problems in production, transport, distribution and inflows to Bogota. However, the new SD model developed in this study went further by including, to some extent, the flow of products, money and information of the five most important products (bananas, oranges, potatoes, plantains and tomatoes) in the fruit, vegetable and tuber supply chain.

Material Flow

The actors, represented in boxes, exchange food products. They will send – or ask for – a greater quantity of products through a certain channel depending on supply, demand, prices and costs (Figure 2). Every actor’s purchase and sales prices are determined by adding the previous actor’s costs per unit sold, fixed costs, variable costs, waste costs and expected monthly profit.

Financial Flow

The cash flows represented are costs of transportation, costs of distribution, costs of selection and prices. In addition, delays are depicted as money flows from purchases of middlemen, stores, wholesalers and supermarkets, which are paid in cash (Figure 3). Half of the money from wholesalers’ purchases is given at the moment of product delivery while the remaining half is due one month later. Supermarkets apply a 90-days payment policy to their suppliers, which means that total payment is completed three months after receiving the product.

Information Flow

We observed an exchange of information among stakeholders before the pricing point (represented by a dotted line in Figure 4). There is an exchange of information about purchase prices with the producers, on the one hand, while sales price information flows to the actors forward in the supply chain, on the other. The interaction of actors after price formation produces flows in two senses: information on demand that goes to wholesalers and logistics platforms and information on sales prices that goes to stores and customers.

Scenarios of Producers’ and Storekeepers’ Associations

After identifying these three flows that affect the supply chain under study and including them in the new SD model, eleven new scenarios were defined, but only four were elaborated in the SD model. However, in this work we present only two scenarios for the top five products in order to show the impact of storekeepers’ and producers’ associations. A set of variables in the SD model (tables 1 and 2) was grouped in the following categories: flow changes in distribution channels and variations in product volume, profits and prices. Thus, the model was run to observe the behaviour of these variables for the five selected products.

The first scenario measured the impact of producers’ associations on the supply system (Table 1). It revealed a reduction of transportation costs due to better use of transportation capacity, a wider distribution of products’ consolidation costs since they are divided among all producers and an increase in productivity because producers’ orders are centralised. The producers’ association scenario presents favourable results for the various variables along the supply chain for bananas, oranges and potatoes. However, the variables for plantains and tomatoes show no changes, which is explained by the fact that producers of these products generate enough profits to organise transportation to forward actors in the chain on their own.

The second scenario measured the impact of storekeepers’ associations on the supply chain (Table 2). In this scenario, there are cost reductions in the selection and distribution of products and reductions in sales prices across all five products sold by storekeepers to customers. The main obstacle to achieving an association of storekeepers is the creation of a scheme for stores that allows an agent to delegate the process of sorting fruits and vegetables to the storekeepers selling the products to the final consumers.

Reshaping FSSMP Strategy to Anticipate the Future

This forward looking exercise allowed the SSDE to better understand and implement the FSSMP. The two main scenarios depicted here as well as the SD model for the five products show, to some extent, the relationship between the actors, their interaction, and the structure and performance of Bogotá’s food supply system. The limitations of the model suggest that the food supply in Bogota cannot be studied without considering demand in the rest of the country or the economic feasibility of production. The following conclusions were drawn from the outcomes of this exercise:

1) The priority for products such as bananas and plantains should be to increase production to supply the city instead of reducing prices. The models reveal that the production of these two foods is quite low compared to demand. Nevertheless, food supply of the city should not be considered isolated from demand in the rest of the country.

2) Middlemen and wholesalers do produce value especially in case of products and trade channels with low trade volumes. The study showed that direct supply from producers to stores is more expensive than when other actors are involved. Higher costs arise because of the additional work involved in selecting the products required to replenish the stores. A detailed analysis showed that the cost gap between direct channels and other channels results from the selection costs incurred by stores when
buying directly from producers and from the size of the purchase order to be managed by the seller in-house.

3) Prices tend to even out between different channels. A balance of prices sets in because producers, looking for higher profits, will attempt to supply the channel that represents the highest profit, increasing the products offered through the respective channel. As a result, we can expect this not only to encourage a reduction in prices in this channel but also to reduce or increase existing shortages of products and costs in the other channels accordingly.

In order to reinforce the strategies and recommendations stated in the initial FSSMP and respond to the reality of food supply in Bogota, it is highly recommended

1) to acknowledge the diversity of stakeholders along the supply chain and develop operational or contractual schemes that allow to align efforts and deal with risks;

2) to tackle problems in the fruits and vegetables supply chain by individual product since each product responds to different dynamics of supply and demand;

3) to further develop and improve the SD model as a tool to collect and analyse information regarding the food supply system and further pursue the different research initiatives to accomplish the objectives stated in the Food Supply and Security Master Plan (FSSMP).

Download EFP Brief No. 233_Reshaping Bogota’s Food Supply and Security Master Plan.

Sources and References

Alimenta Bogota Program (2009a): Plan Maestro de Abastecimiento – SDDE. Recuperado el 17 de Febrero de 2011, de Plan Maestro de Abastecimiento – SDDE: http://www.alimentabogota.gov.co/index.php/sobre-alimentabogota/plan-maestro.

Bogota Program (2009b); Biblioteca | Caracterizaciones. Recuperado el 18 de Febrero de 2011, de Plan Maestro de Abastecimiento: http://www.alimentabogota.gov.co/index.php/biblioteca/cat_view/11-Caracterizaciones

Miles, I. (2002): Appraisal of Alternative Methods and Procedures for Producing Regional Foresight.

Popper, R. (2008b): How are foresight methods selected? Foresight 10 (6): 62-89.

EFP Brief No. 203: Competitiveness Monitor: an integrated Foresight Platform for the German Leading-edge Cluster in Logistics

Monday, December 5th, 2011

In 2010, the German Federal Ministry of Education and Research launched Germany’s biggest research initiative in the area of logistics and supply chain management. A broad range of companies and research institutes are participating in a cluster aimed at shaping a sustainable future for the region, the logistics industry and beyond. We will present the current concept of the joint research project Competitiveness Monitor, its planned architecture, and its expected contribution to the cluster, the foresight field, and the community involved.

The Leading-edge Cluster in Logistics

The EffizienzCluster LogistikRuhr is synonymous for the leading-edge cluster in logistics and supply chain management (SCM) in the German Ruhr area (larger Rhine-Ruhr metropolitan region of more than 12 million people in North Rhine-Westphalia). Like all leading-edge clusters, it aims to boost innovation and economic growth in Germany by bridging the gap between science and industry (BMBF 2010). Through strategic partnerships between research institutions, companies, and other stakeholders, it fosters research with innovative potential relevant for future developments. Although leading-edge clusters are regional concentrations within Germany, they contribute to finding new ways to growth and employment that gear not only Germany’s but the European Union’s economy towards greater sustainability.

The global goal of the EffizienzCluster LogistikRuhr is to secure individuality in terms of mobility and distribution in the world of tomorrow with 75% of the resources required today. Supported by the German Federal Ministry for Education and Research, the cluster aims at utilising the joint innovation capacity of scientific institutions and a variety of companies, including many small and medium size enterprises. In their work, the cluster participants address the conflict between future individuality (i.e. the demand side) and resource scarcity (i.e. the supply side).

More than 130 stakeholders from academia and business are participating in order to tackle the three central challenges: (1) efficient management of resources, (2) secure urban supply and (3) facilitation of individuality in mobility. In order to reduce the complexity associated with these challenges, each joint research project belongs to one of seven lead topics. These lead topics represent the central innovation schemes enabling the cluster to realise its ambitious target. Figure 1 illustrates the seven lead topics and their strategic position in relation to the three challenges identified.

As illustrated in Figure 1, different lead topics have different strategic roles in tackling the three central challenges. In this paper, we focus on the lead topic ‘Activation of Cluster Potentials’ as this is the area where the Competitiveness Monitor (CoMo) belongs and to which it contributes. The research project CoMo has set out to develop a foresight toolbox that builds futures knowledge around the three central challenges and supports cluster stakeholders in evaluating new strategies, processes and technologies in light of these challenges. While all innovations in the EffizienzCluster ultimately result in competitive advantages, the CoMo innovation especially intends to increase foresight potential and future robustness in decision making within the cluster. The integration of three foresight tools into a future-oriented IT platform where academia, business and politics co-operate will ensure a sustainable competitive advantage for all stakeholders in the leading-edge cluster on logistics and supply chain management.

The Need for Futures Orientation in Logistics

Logistics has developed from its role of delivering the right things at the right time to deciding how the right things get there in the right time (ECM 2010). During the past 50 years, logistics has evolved from individually managed, product-flow related activities to an integrated set of processes managed across the multiple echelons of a supply chain. The future of the logistics industry is characterised by many upcoming challenges and opportunities (e.g. Ruske et al. 2010). Due to the increased competition in the industry, its business has become more volatile and uncertain. In addition, the trend towards globalisation has steadily increased resulting in longer and more complex supply chains (Meixell and Gargeya 2005). Moreover, advancements in information and communication technology are currently revolutionising logistics processes. Intelligent solutions based on information and communication technology (ICT) are an essential operation, control and support instrument of such worldwide networks. Conclusively, logistics nowadays means acting in complex networks of independent but interdependent organisations. To manage these systems efficiently is one of the major challenges for the logistics service industry today.

Given all these facts, there is a considerable need for futures orientation and innovation in logistics. Innovation is an important driver of growth and competitive advantages across all industries, and its impact has significantly increased in the course of the current cutthroat competition in the logistics service industry. In best practice, both innovation management and futures research are linked and contribute to each other (von der Gracht et al. 2010). Futures research helps to cope with uncertainty in the business environment and enables actors to react faster to future developments to realise competitive advantages.

However, the potential of futures research in logistics has by no means been fully realised yet. As a consequence of increased uncertainty, the majority of logistics planners are currently unsatisfied with their planning and forecasting tools and feel that they have to change planning practices in the future. In fact, there is a strong demand to apply new and innovative techniques in strategic logistics planning.

The CoMo addresses the need for innovative foresight methods in strategic logistics planning. Importantly, this is facilitated in an innovative environment provided by the leading-edge cluster in logistics. Thus, the CoMo is not only an innovation in itself but establishes a direct link between the futures field, the cluster and innovation management for a hundred innovations of the future.

Competitiveness Monitor

The CoMo is, in the first instance, a joint research project aiming to create and convey future-oriented knowledge within the cluster. It comprises a future-oriented IT platform where science, business and politics cooperate to ensure a sustainable competitive advantage for all stakeholders and support innovations in the leading-edge cluster. This translates into four major challenges for CoMo:

(1) Creating, linking and processing information about future macro- and microeconomic developments in logistics and its environment

(2) Providing educative information on futures studies and teaching future skills

(3) Incentivizing stakeholders to systematically deal with their futures and foster innovation

(4) Stimulating cooperation among stakeholders

In order to address these challenges, we developed a CoMo architecture that integrates three innovative foresight tools. The structure and interrelation of the tools is illustrated in Figure 2 and elaborated on in the subsequent sections.

Since June 2010, the joint project team has been involved in intense scientific desk research and analysis, requirement analyses, conceptual development as well as multiple participatory workshop sessions with external experts. So far, a solid foundation for the CoMo joint research project has been established. Roughly 1,000 ideas (or requirements) for tool functionalities and interfaces have been identified, classified and prioritised. Requirements have been classified according to applications (Futures Platform, Trend Database, Future Workshop, Prediction Markets, or app-interlinkages), type (functional, non-functional or constraint) and categorical purpose (e.g. user collaboration). A three dimensional framework consisting of (1) feasibility, (2) innovativeness and (3) importance was developed to narrow down and evaluate requirements. The outcome and status quo of our analysis together with related theoretical foundations are discussed in the following sections.

Futures Platform

Our Futures Platform is intended to serve as the users’ personalised login portal. Users can interactively individualise their Futures Platform according to their interests by, for instance, saving trend favourites, displaying related information or following a certain Prediction Market. This flexible and individualised structure offers an individual decision-making environment that increases ease and encourages overall use. Furthermore, users communicate directly through the Futures Platform to elaborate on future-relevant topics. The three applications Trend Database, Future Workshop and Prediction Market are linked to the platform and can be accessed from there; users can ask experts to help them get started and assist them in applying these tools.

Since the provided tools are of an innovative kind, the platform will include an educational self-learning package, structured in a curricular form. This educational part will reduce uncertainty and assure that newcomers to strategic planning and foresight can use the platform to build foresight competencies.

Trend Database

Our Trend Database concept represents the quantitative and qualitative pool of future-relevant knowledge that is provided to and by the cluster actors. A user may query future-oriented numbers, data and facts about specific logistics-related topics or weak signals, wildcards and disruptive events. Similarly to the Futures Platform, the Trend Database embodies elements for users to cooperate. By allowing and encouraging users to share individual wisdom, overall wisdom increases (Surowiecki 2004). Another characteristic feature of the Trend Database is the linkage of its architecture in three dimensions using a semantic structure: (1) the linkage of trends among each other, (2) the linkage of the Trend Database with the tools Prediction Market and Future Workshop, and (3) the linkage of the Trend Database with external data pools.

In sum, the Trend Database will perform the function of an intelligent unit within the CoMo that generates and links future-relevant knowledge facilitating cooperation among the stakeholders of the cluster and reducing complexity. The possibility to acknowledge trends early and systematically creates significant competitive advantages for the cluster and ensures sustainable management and action in the field of logistics.

Future Workshop

The Future Workshop app represents the element of CoMo where trends are systematically projected into individual futures and recommended options and actions can be derived. The fundamental idea of a Future Workshop was developed by Robert Jungk, Ruediger Lutz and Norbert R. Muellert in the 1970s (originally termed “Zukunftswerkstatt” in German; Jungk and Muellert 1988). Our internal analysis as well as experience from the expert workshops has shown that scenario planning, roadmapping, backcasting and Imagineering provide valuable elements for a Future Workshop. This led us to consider best practices from these four approaches in designing the Future Workshop in order to establish a valid and reliable web-based foresight process.

Our Future Workshop app will allow users to use the Trend Database as a discussion basis and digitally collaborate in global or private workshop environments. Stakeholders of the cluster, for example from a certain company, are led through a process of problem identification, innovation and creativity towards problem solving while spatial boundaries are overcome. In the process, Future Workshops will facilitate a future-oriented strategic logistics planning.

Prediction Market

The requirement analysis for the CoMo Prediction Market app revealed promising applications for stakeholders in the leading-edge cluster. Our CoMo Prediction Market app will supplement Future Workshops and the Trend Database by providing an innovative foresight method that generates futures knowledge and by complementing the CoMo platform. Prediction markets originally evolved in psephology and proved to provide significantly better forecasts than classical opinion polls – for this reason, they have recently been transferred into the business world (Ho and Chen 2007). In the Prediction Market app, CoMo users will be able to bet on the outcome of future events in a virtual environment. A single stock price represents the aggregated wisdom/knowledge of all market players while competition in the market ensures efficiency in aggregating asymmetrically distributed information.

Platform to Enhance Future-oriented Decision-making

The CoMo will provide a platform that utilises the cluster’s unique combination of more than 130 partners from business, academia and politics in order to share complementary resources, specifically to share knowledge that is relevant to their future-oriented decisions. The combination of a Trend Database, a Future Workshop app, and a Prediction Market app will facilitate cooperation, will provide a shared future-relevant knowledge base, and individual future-oriented decision support. Ultimately, the CoMo contributes to the major goal of the leading-edge cluster by enhancing the quality of the stakeholders’ future-oriented decisions.

Authors: Dr. Heiko von der Gracht        heiko.vondergracht@ebs.edu

Stefanie Mauksch                   stefanie.mauksch@ebs.edu

Philipp Ecken                                                philipp.ecken@ebs.edu

Christoph Markmann               christoph.markmann@ebs.edu

Gianluca De Lorenzis                        G.DeLorenzis@dilotec.de

Eckard Foltin                                      eckard.foltin@bayer.com

Michael Münnich                   M.Muennich@brainnet.com

Dr. Christopher Stillings                      christopher.stillings@bayer.com

Sponsors: German Federal Ministry of Education and Research (BMBF)1
Type: National Foresight Project
Organizer: EBS Business School / Center for Futures Studies and Knowledge Management (CEFU)
Duration: 06/10-05/13 Budget: 2.3 m € Time Horizon: long-term Date of Brief: Oct 2011  

 

Download EFP Brief No. 203_Competitiveness Monitor

References

BMBF (2010). Germany’s Leading-Edge Clusters. Division for New Innovation Support Instruments and Programmes. Berlin, Bonn, Bundesministerium für Bildung und Forschung / Federal Ministry of Education and Research (BMBF).

ECM (2010). 100 Innovationen für die Logistik von Morgen. Mülheim an der Ruhr, Dortmund, EffizienzCluster Management GmbH.

Ho, T.-H. und K.-Y. Chen (2007). New Product Blockbusters: The Magic and Science of Prediction Markets California Management Review 50(1): 144-158.

Jungk, R. and N. Muellert (1988). Future workshops: How to Create Desirable Futures. London, Institute for Social Inventions.

Meixell, M. J. and V. B. Gargeya (2005). Global supply chain design: A literature review and critique. Transportation Research Part E: Logistics and Transportation Review 41(6): 531-550.

Ruske, K.-D., P. Kauschke et al. (2010a). Transportation and Logistics 2030 – Volume 2: Transport infrastructure — Engine or hand brake for global supply chains? Duesseldorf, PricewaterhouseCoopers.

Surowiecki, J. (2004). The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York Doubleday.

von der Gracht, H. A., R. Vennemann et al. (2010). Corporate Foresight and Innovation Management: A Portfolio-Approach in Evaluating Organizational Development. Futures – The journal of policy, planning and futures studies 42(4): 380-393.