Factors that affect internal supply chain integration

Dissertation Proposal

Ana L. Rosado Feger

Clemson University

Motivation

• Competition based on Supply Chain vs. Supply Chain

• Supply chain management is a source of competitive advantage.

• Sustainable competitive advantage results from managing linkages. (Porter 1985)

Motivation

• Much has been written about the benefits of supply chain integration (external and internal), but there are few studies examining how firms can achieve it.

• This research project will develop a model of the factors that affect integration of three key SC departments.

Why Internal Integration?

• The strength of a chain is limited by the strength of its weakest link.

• Understanding the supply chain begins with understanding internal processes.

• An integrated firm presents a united front to customers, suppliers, and competitors.

• Process view is the customer’s view.

Key Internal SC Processes

• Purchasing, Operations, and Logistics are responsible for delivering the product to the customer.

• Purchasing: – Gatekeeper for process inputs

• Operations:– Transforms raw materials into final product

• Logistics:– Responsible for physical transfer and delivery

Research Question

• What factors affect the integration of the three focal departments?

• How are these factors interrelated?

• What can plant managers do to facilitate integration?

Research Model

• Starting point: Pagell 2004

• Modified to enhance generalizability

• Combined with findings of St.John et al 2001, Vickery et al 2003

Outcome Variable: Integration

• Definition: – A process of interaction and collaboration in

which manufacturing, purchasing and logistics work together in a cooperative manner to arrive at mutually acceptable outcomes for their organization (Pagell 2004)

Outcome Variable: Integration

• Shared Goals– the extent to which the manager of each focal function

(purchasing, operations, logistics) is familiar with the strategic goals of each of the other two focal functions

• Cooperation– the frequency of requests from other focal functions that

are fulfilled by the members of each focal function

• Collaboration– is the frequency at which a member of a focal function

actively works on issues with members from the other focal functions

Management Support

• Management sets the tone for the organization

• Three dimensions– Individual vs. Collective – Normative vs. Facilitative – Strategic vs. Tactical

Structure

• The structure of the firm determines the balance between differentiation and integration:– Span of control– Levels of authority

Human Resource Management

• Job rotation programs

• Cross-functional teams

• Measurement/Rewards– Departmental vs. Firm Goals

Communication

• Formal– Frequency– Content

• Informal– Frequency– Content– Mode (personal, email, telephone)

Information Systems

• Facilitators of data and information transfer (St.John et al 2001)

• Precursor to supply chain integration (Vickery et al 2003)

• Computerized production systems – MRP, MRPII

• Integrated information systems– Enterprise systems (ERP) or interfaced

function-specific systems

Research ModelManagement Support

Structure

HR Strategy:Measurement—RewardsJob RotationCross-functional Teams

CommunicationFormalInformal

Information Technology

INTERNAL INTEGRATION

Research Hypotheses

• H1: Management Support has a direct effect on plant Structure.

• H2: Management Support has a direct effect on HR Strategies

• H3: Management Support has an indirect effect on Internal Integration.

• H4: Structure has a direct effect on Communication.

Research Hypotheses

• H5: HR Strategies has a direct effect on Communication

• H6: HR Strategies has a direct effect on Internal Integration

• H7: Information Technology has a direct effect on Communication

• H8: IT has a direct effect on Internal Integration• H9: Communication has a direct effect on Internal

Integration

Methodology

• Cross-sectional survey– Web-, e-mail, mail-, and phone-based

• Domain: Manufacturing plants in the US

• Target respondents– Managers of Purchasing, Operations, and

Logistics departments– 1-3 respondents per firm

Analysis

• Structural Equation Modeling using EQS

Contributions: Academic

• Contribute to theory-building in Supply Chain Management

• Empirical tests of proposed models

• Initial look at managerial levers

Contributions: Practitioners

• Understand how factors influence internal integration

• Develop action plans to improve internal integration

• Encourage “systems thinking” to address supply chain issues