Exploring internal and external supply chain linkages: Evidence from the field

In their pursuit of improved operational performance, organizations in supply chains have sought to develop external information-based linkages with their customers and vendors. Has this course of action been at the expense of developing similar internal information-based linkages? This research explores the specific roles of internal and external information-based linkages in achieving improved operational performance. Based on a single case study that comprises a supply chain containing twenty-four internal and fourteen external linkages this research develops a series of propositions. We find that the individual internal linkages may be useful for extending externally derived visibility, and for addressing to some extent, “structural holes” in the supply chain. Additionally, to extend visibility across the entire supply chain, organizations need to recognize the combining role of internal and external information-based linkages. Finally we offer some thoughts for future research in this area.     

Levels of strategic purchasing: Impact on supply integration and performance

The growing importance of supply chain management has led to an increasing recognition of the strategic role of purchasing, which has recently evolved and expanded from “buying” to “procurement” and “supply management”. In this study, we chart our sample firms’ advance in strategic purchasing, characterized by the strategic focus, strategic involvement of the purchasing function and the status and visibility of the purchasing professionals, into three stages.This study provides strong empirical support for the importance of strategic purchasing by showing that, by moving towards the more advanced stages, firms at the nascent stage of strategic purchasing can achieve better supply integration, a second-order construct composed of four facets of relational, process, information, and cross-organizational team integration. Our analyses further reveal that strategic purchasing can have a profound impact on supply chain performance for both buyer and supplier firms.     

The effects of innovation–cost strategy, knowledge, and action in the supply chain on firm performance

Despite the importance of supply chains within today's economy, we know little about how the knowledge of supply chains can contribute to superior performance at the firm level. Building on the resource-based view, knowledge-based view and strategic choice theory, we develop hypotheses linking two knowledge-driven supply chain phenomena (i.e., knowledge development capacity and intellectual capital), innovation–cost strategy, and action to firm-level performance. Using survey and archival data from 489 firms, we found that performance is influenced by how well knowledge development capacity and intellectual capital efforts complement alternative chain strategies. More specifically, each strategy type requires different constellations of knowledge development capacity and intellectual capital to enhance action and create superior firm performance. These results highlight the importance of supply chain phenomena for firm-level performance, and more broadly, the value of supply chains as a competitive weapon in contemporary firms.     

Drivers and outcomes of open-standard interorganizational information systems assimilation in high-technology supply chains

In recent years, firms in high-technology supply chains have established internet-based electronic linkages with their trading partners. As a result, they have improved their ability to coordinate and synchronize shared business processes by using more complete, accurate, and timely information. These electronic linkages are based on open-standard interorganizational information systems (OSIOS), which are fundamentally different from traditional electronic data interchanges. OSIOS capture not only the technical specifications for data interchange but also the sequential steps for the execution of shared business processes. Because OSIOS are still at an early diffusion stage, it remains unclear why firms would assimilate such an innovation and whether assimilation provides firms any benefits. In this research, we develop a framework grounded on the economics of standards, institutional theory, and strategic interorganizational information systems literatures to investigate the drivers and outcomes of OSIOS assimilation in a focused context. In order to test our hypotheses based on this framework, we used data from a high-technology supply chain and employed econometrics techniques. We found that both competition asymmetry across supply chain echelons and OSIOS assimilation within supply chain echelons predict individual firms’ OSIOS assimilation. The results also suggest that firms’ supply chain dominance is both a driver and an outcome of OSIOS assimilation, highlighting a mutually reinforcing process. In addition, our study reveals boundary conditions of the hypothesized relationships. The use of multiple theoretical perspectives, a unique dataset, and innovative statistical techniques to investigate OSIOS assimilation in high-technology supply chains contributes to the body of knowledge in both the supply chain management and management of information systems disciplines.     

Demand chain management theory: constraints and development from global aerospace supply webs

This paper develops an empirical and theoretical approach to where strategic capabilities should lie within global aerospace supply chains. Theory from transaction cost economics (TCE) and the resource-based view (RBV) of the firm are applied to the aerospace sector and used to underpin a theory of demand chain management (DCM). A two-stage research process was used to generate and validate data from aerospace supply chain case studies. Demand chain driver and resource-based response categories were identified from these data and are presented. Concluding comments concern current limits of a demand chain theory and implications for practitioners.     

The frontiers of eBusiness technology and supply chains

This article is an Introduction to this Special Issue on “eBusiness and Supply Chain Management.” It also provides a vision for eBusiness and supply chain for the future.     

The iron cage exposed: Institutional pressures and heterogeneity across the healthcare supply chain

The healthcare industry has been known to operate in a strong institutional environment (i.e. government regulations), and the implementation of inter-organizational systems (IOS) has followed an institutional process. Extending this perspective across different tiers in the healthcare supply chain, we investigate how organizations in different tiers in the supply chain (i.e. hospitals, distributors and manufacturers) respond to institutional pressures when implementing IOS. How institutional dynamics unfold across multiple tiers of a supply chain is an uncharted area of research, and we take the theory-building case study approach using data collected from ten organizations. Because organizations are embedded in their respective tiers, our within-tier analyses are equivalent to cross-organization analyses. In this regard, the cross-case analyses occur at two different levels: at each tier level (i.e. across multiple hospitals, multiple distributors and multiple manufacturers) and across the supply chain (i.e. across all three tiers). The study shows how different institutional pressures such as coercive, mimetic, and normative manifest across the tiers. It also demonstrates how a differential mix of endogenous and institutional pressures lead to mixed organizational responses across the tiers. The propositions developed from the study enrich institutional theory arguments within the information systems and supply chain management disciplines. They highlight how the IOS implementation dynamics within and across different tiers in a supply chain result in heterogeneous rather than isomorphic consequences, thereby exposing the “iron cage” of institutionalization.     

Integrating sustainable development in the supply chain: The case of life cycle assessment in oil and gas and agricultural biotechnology

It is widely accepted that firms play an important stewardship role in addressing sustainable development concerns. A key challenge in this role is to balance the often conflicting pressures created by sustainable development—firm-level economic performance versus environmental degradation and social disruption. Drawing on complexity theory, risk management, stakeholder theory and the innovation dynamics literature, we discuss the problems of integrating sustainable development concerns in the supply chain, specifically the applicability of life cycle assessment (LCA). Many authors have emphasized the importance of the “cradle to grave” approach of LCA in optimizing closed-loop supply chains, improving product design and stewardship. Based on two case studies (an agricultural biotechnology and an oil and gas company) with supporting data collected from key stakeholders, we argue that sustainable development pressures have increased complexities and presented ambiguous challenges that many current environmental management techniques cannot adequately address. We provide a framework that addresses these deficiencies and discuss implications for practitioners and management theory.     

Explicit filters and supply chain design

Due to the complexity of present day supply chains it is important to select the simplest supply chain scheduling decision support system (DSS) which will determine and place orders satisfactorily. We propose to use a generic design framework, termed the explicit filter methodology, to achieve this objective. In doing so we compare the explicit filter approach to the implicit filter approach utilised in previous OR research the latter focusing on minimising a cost function. Although the eventual results may well be similar with both approaches it is much clearer to the designer, both why and how, an ordering system will reduce the Bullwhip effect via the explicit filter approach. The “explicit filter” approach produces a range of DSS designs corresponding to best practice. These may be “mixed and matched” to generate a number of competitive delivery pipelines to suit the specific business scenario.     

Theoretical perspectives on the coordination of supply chains

Supply-chain coordination relies on the availability of prompt and accurate information that is visible to all actors in the supply chain. However, new demands on the supply-chain system require changes to information flow and exchange. We undertake a case study of three automotive supply chains that face such new demands resulting from the introduction of an order-driven supply-chain strategy. We use our case study findings to evaluate the applicability of three different theoretical lenses on the multi-faceted interactions between information, physical flow, and the complex rationales driving supply-chain evolution: the resource-based view (RBV), the concept of complex adaptive systems (CAS), and adaptive structuration theory (AST). We find that each theory has a separate realm of applicability and while complimentary in nature, provides distinct insight on the structural shift in the supply-chain system. More specifically, we find that AST, a theory prominent in the social sciences, provides novel insights to supply-chain research at the firm level, particularly with respect to the difficulties in using IT systems to drive systemic change. It complements both the system-level perspective offered by the complex adaptive systems theory, as well as the concept of dynamic capabilities originating in the resourced-based view. The paper concludes with wider implications for future research in supply and value chain management.     

Managing business processes across supply networks: the role of coordination mechanisms

The theory of network coordination provides a theoretical basis to explain how companies can overcome organizational boundaries and constraints to jointly manage business processes across supply networks. In particular, this paper focuses on Collaborative Planning, Forecasting and Replenishment (CPFR), a collaboration process whereby supply chain trading partners activate inter-firm coordination mechanisms to jointly plan key supply chain activities, from production and delivery of raw materials to production and delivery of final products to end customers.By discussing three case studies of CPFR implementation in supply networks of different industries–i.e. pharmaceutical, automotive and mechanical–the paper provides a theoretical framework that contributes to explaining the relations between inter-firm coordination mechanisms and the characteristics of interdependence among the actors involved in CPFR implementation.     

Implementing organizational change in supply towards decentralization

This paper presents the findings from research in large companies investigating implementation issues faced by chief purchasing officers as their supply organization changed to greater decentralization. Once the decision was made to decentralize, responsibility for implementation was given to the chief purchasing officer (CPO). Firms changing their supply organization to a more decentralized structure faced a number of implementation issues, including the business unit concerns, role of the chief purchasing officer, top management involvement, changes to existing purchasing staff and the involvement of consultants. In the nine changes studied across seven companies, the decentralization process also required the CPO to address a number of simultaneous activities, including cost reduction objectives and implementation of information technology systems. A surprising “purchasing paradox” was also uncovered as top management still expected decentralized supply units to provide additional savings.     

Linear performance pricing: A collaborative tool for focused supply cost reduction

Supplier networks and the buyer/supplier relationships that comprise them are becoming increasingly important to effective supply chain management. Trust, collaboration, and efficient sharing of information are critical for true win/win relationships to surface in an environment where there is constant pressure to reduce costs and still maintain reasonable profitability. The use of across-the-board cost reduction demands and simple market clout may not always be the most effective approach in the long run. This paper describes linear performance pricing (LPP), a tool developed for a major automobile OEM in an attempt to effectively and efficiently provide more focused supply cost reductions. LPP is a data-driven methodology relying on a series of regression analyses that McKinsey and Company [2006. Automotive and assembly glossary. http://autoassembly.mckinsey.com/html/resources/glossary/1.asp (accessed 15.01.06)] describes as a “measurement tool that establishes a relationship between the value provided by a given part (performance) and its price.” We maintain that LPP facilitates a collaborative effort on the part of both the buyer and supplier and has the potential for leveraging the increased visibility of the buyer within the supplier network with respect to tier one or tier two suppliers. It helps by focusing cost reduction efforts of the tier one suppliers and provides lateral market visibility they may not have otherwise. Although widely used throughout the automotive industry in the US and Europe, little discussion of LPP is found in the literature. To promote a better understanding of LPP, we present a detailed example and discuss the managerial implications of the approach.     

Evaluation of supplier capability and performance: A method for supply base reduction

Development of partnership with suppliers is widely recognised today as a potent tool for supply chain improvement. To develop an effective partnership, it is necessary to have a small supply base and an effort to reduce the supply base to a manageable level. Despite its overwhelming importance, models of supply base reduction are rare. Supplier sorting methods, used for pre-selection of suppliers and sometimes seen as methods for supply base reduction, have limitations ranging from (1) requirement of an exhaustive database of historical information (case-based reasoning), (2) inability to predefine the number of elements in a cluster (cluster analysis) and (3) inability to identify suppliers who are both highly capable as well as high performers (data envelopment analysis). In the present work, we develop a systematic framework for carrying out the supply base reduction process. The study assumes two important dimensions of suppliers—performance and capability. Performance of a supplier represents short-term effects on the achievement of supply chain objectives while supplier capability indicates long-term effects. Many of the performance and capability factors are imprecise in nature. In order to account for the imprecision involved in numerous subjective characteristics of suppliers, we use fuzzy set approach to measure the imprecision of these factors and rank a potential list of suppliers against their performance and capability. We then display their ranks in a ‘capability–performance matrix’ that helps a decision maker arrange the suppliers in decreasing order of preference. The desired numbers of suppliers are finally selected on the basis of this ordered list. The suggested framework will be of immense help to the practising managers in reducing the supply base—a prerequisite for building a strong supplier partnership and developing an effective supply chain.     

Do the barriers of multi-tier sustainable supply chain interact? A multi-sector examination using resource-based theory and resource-dependence theory

In a geographically dispersed multi-tiered supply chain, managing sustainable practices throughout the entire upstream network is increasingly challenging for the lead firm. But often, it is the lead firm that is held responsible for the lack of non-sustainable practices by any of its suppliers in the network. This can potentially damage the reputation of the lead firm. Moreover, complex inter-relationship among multi-tier sustainable supply chain management (MSSCM) barriers tends to constrain the cascading of sustainability. Consequently, the strategies in overcoming the MSSCM barriers show limited impact. Thus, exploring the mutual interaction among MSSCM barriers is crucial as removing one barrier can intensify or diminish the effect of another barrier. This research unpacks the intra-firm, inter-firm, and contingency barriers for multi-tiered supplier network. A grey-based multi-criterion decision-making approach is adopted in establishing mutual relationships among MSSCM barriers. In addition, a combined resource-based theory and resource-dependence theory supports the theoretical anchoring. The MSSCM barriers are studied for supply networks which involve three lead firms, five tier-one suppliers, and ten lower-tier suppliers selected from automobile, beverage, and home appliances industries. The research provides a granularity of the MSSCM barriers’ by analysing the meaningful relationship at the individual tier-firm level and aggregated level.     

A behavioral study of supply manager decision-making: Factors influencing make versus buy evaluation

This paper investigates behavioral factors influencing a supply manager's decision to insource or outsource the manufacture of a product component. To do so we posit a theoretical framework that integrates the heretofore distinct operational make–buy literature and the behavioral decision-making literature. Within the framework three factors influencing the make–buy decision are brought into account: the decision-maker's perception of supply risk or “strategic vulnerability”, the degree of core competency represented by the product component under consideration and the formality of the information about supply alternatives. The results of a controlled experimental survey show that: strategic vulnerability and core competency do influence the make–buy decision, strategic vulnerability has greater influence than core competency and information formality moderates the make–buy decision when the strategic vulnerability and core competency conditions are mixed. The practical implications of these results include the notion that management can ensure a more rational make–buy decision if they understand the biases that influence the decision and point these biases out to the decision maker.     

Critical human and behavioral factors on the adoption of sustainable supply chain management practices in the context of automobile industry

Built upon the resource-based view, the study examines the critical human and behavioral factors (HBFs) on adopting sustainable supply chain practices in the automobile sector (AS). The Interpretive Structural Modeling (ISM) and Decision-Making Trial and Evaluation Laboratory (DEMATEL) method is applied to understand the causeeffect relationships between (HBFs), evidenced by a case study in the automobile industry of India. The causeeffect relationships are informed by an expert team consisting of 18 members working in academia, the automobile industry, and professional consulting companies. The experts provided their inputs based on their direct experience and expertise in this subject matter. The research findings highlight that sustainable supply chain cost (end to end) is a critical success factor. Mangers in the AS should prioritize and focus on sustainable supply chain costs (end to end) to pursue sustainable practices because such critical success factors can foster information sharing behavior. The firms could develop both hard and soft critical HBFs such as Information technology (IT) infrastructure and employee training to build up HBFs to integrate a supply chain. The study provides insight to academicians, policymakers, and practitioners about critical HBFs and develops sustainability goals and policies accordingly.     

B2B seller competence: Construct development and measurement using a supply chain strategy lens

In less than a decade, Internet-enabled business-to-business (B2B) commerce has become central to supply chain management. But little is known about the infrastructural competencies required for manufacturers engaged in Internet-enabled activities with downstream business customers. This paper aims to take a first step in operationalizing a set of new, multi-item measures that tap into infrastructural (or “soft”) competencies required for leveraging B2B commerce.We use a structured, two-stage approach to develop and refine a set of constructs, items, and new multi-item measurement scales in order to rigorously evaluate their measurement properties. By drawing upon the literature as well as extensive interviews with expert practitioners, we define and measure the salient infrastructural competencies – termed B2B seller competence (B2B-SC) – associated with the seller-side of Internet-enabled commerce. We find that the conceptual domain of B2B-SC comprises seven theoretically important dimensions: (1) technical skills, (2) change disposition, (3) conflict management, (4) market acuity, (5) coordinated logistics, (6) knowledge channels, and (7) fluid partnering. Operational indicators that tap into constructs pertaining to each B2B-SC dimension are developed through an iterative process.In the second stage, we conduct a field study to more fully assess the measurement properties of item and scale reliability and validity using a covariance structure framework. The results indicate that our new scales exhibit sufficient psychometric properties, which make them useful for theory building, testing, and the refinement of supply chain strategy paradigms in the emerging area of B2B commerce.     

Analysing the interaction of supply chain synchronisation and material flow stability

Empirical evidence created a commonly accepted understanding that supply chain synchronisation and material flow stability impact supply chain performance. This crucial link between synchronous and stable material flows is at the heart of lean thinking. Therefore it is necessary to reach a finer understanding of these dynamics based on quantitative modelling. The specific contribution of this paper is to investigate the interrelated impact of synchronisation and stability on supply chain performance. To do so, we consider a multi-stage supply chain and analyse different synchronisation/stability scenarios with respect to its potential impacts. Numerical simulations demonstrate that by combining high levels of material flow stability with a synchronous supply chain, it is possible to actually achieve low inventory levels whilst maintaining high customer service. More interestingly, numerical simulation revealed that if stability falls below a certain threshold, supply chain performance gets dramatically worse when synchronisation levels decline. This nonlinear interaction verifies the importance of performing material flow stability in supply chain management.