Chapter 6 Case Study Design
6.1 Theory (Development)
6.1.1 Constructs for SCM
Taking a step back and approaching the phenomenon at a more abstract level result in the high-level constructs described below. Inspiration is gathered from previously used SCM models, the literature reviews as well as other review articles (e.g. Burgess, Singh, &
Koroglu, 2006; Chen & Paulraj, 2004; Gibson, Mentzer, & Cook, 2005; Storey et al., 2006)4. The following six high-level constructs are considered appropriate for an exploratory study of this type.
The ‘Supply Chain Organization’
First and foremost it is of interest to investigate how the companies have organized themselves around the entity ‘supply chain’. In case the company has embraced the strategic challenge of relating to supply chains instead of market opportunities, the company will have to concurrently consider the internal organization and the up- and down-stream sides of the company (e.g. Stevens, 1989; Mentzer et al., 2001). The existence of a SCM department may signal a more credible commitment (see Chapter 5.1) to cooperate with external parties – especially if this organizational entity is interacting to obtain shared advantages. An alternative understanding is offered by RBT (see Chapter 5.3) where the consolidation of capabilities may evolve into a core competence. Implementing a SCM department may thereby increase the likelihood of establishing true inter-organizational operations.
Production Philosophy
The mode of operation is also known as the production philosophy, explaining the methods applied to produce the variety of products and overall volume. Contemporary contributions refer to concepts like Leanness or Agility (e.g. Mason-Jones, Naylor, & Towill, 2000a;
Mason-Jones, Naylor, & Towill, 2000b; Towill & Christopher, 2002) or Responsiveness (e.g.
Holweg, 2005). The underlying (operations-oriented) concepts include e.g. Push/Pull5, Modularity6, and Postponement strategies7. As described in Chapter 2 “pure” Push strategies are considered “pre-SCM” as they rely on long production series of products not “fitted to”
the customer. On the other hand the pure “Pull” strategy is considered “modern” as it relies on tight integration with suppliers, information transparency (tradeoff against inventories) and fault-free internal operations and suppliers. Participation in a Pull-type supply chain may be explained using P/A Theory (see Chapter 5.2) with the customer (or down-stream supply chain partner) being the principal and the upstream supply chain being the agent. Also in this
4 The development of constructs thereby relies on the ”critical review method”.
5 For a case study exemplifying this concept, see e.g. Hammel & Kopczak (1993).
6 Modularity - the principle of decomposing a product into sub-systems, and designing them independently.
See e.g. Baldwin & Clark (1997) or van Hoek & Weken (1998).
7 Various types of postponement strategies exist, see e.g. Pagh & Cooper (1998) or van Hoek, Commandeur,
& Vos (1998).
instance TCE may supplement the understanding through the perspective of the ‘Hybrid Governance Form’ (again: see Chapter 5.1).
Process Orientation
As documented previously process orientation is focal to SCM (e.g. Cooper, Lambert, &
Pagh, 1997; Hewitt, 1994; Lambert, Cooper, & Pagh, 1998) in order to achieve the smoothest operation and shortest lead time possible. In most (early) SCM models processes cross organizational boundaries (e.g. Stevens, 1989; Mentzer et al., 2001) but as discussed in Chapter 2 this proposition may very well be due to an immature understanding of the SCM processes. As illustrated in Figure 2-9 processes have different “lengths” and the logic of their “connectedness” vary from process to process. The “Supplier Relationship Management” does not connect to the supplier’s “Supplier Relationship Management”
process but (hopefully) to the “Customer Relationship Process”. The only process
“connected” from tier to tier in the supply chain is the “Fulfillment Process”. As process orientation thereby is an inherently company internal aspect (of SCM) the inter-company process integration is described separately (under ‘External Integration’, see below). Process orientation is thereby evaluated from the organizational setup (i.e. use of cross-functional teams) and from the list of processes supplied by interviewees8. The removal of functional silos within the company may be understood through TCE (see Chapter 5.1) as an “intra-organizational vertical integration”. Alternatively the process of organizing around a process (instead of a function) may be viewed as a P/A problem (see Chapter 5.2) – having the process owner acting as the principal and the participants being the agents (with their functional references intact).
IT Support
The use of IT is routinely claimed to be a pre-requisite for SCM (e.g. Christopher & Towill, 2001; Mentzer et al., 2001; Schary & Skjøtt-Larsen, 2001) – some even claim the use of IT may promote SCM (e.g. Jayaram, Vickery, & Droge, 2000; Stefansson, 2002). Potentially supporting internal and external integration, the role of IT must be evaluated to understand to which extend the “system” (the supply chain(s)) is automated as SCM requires information to be exchanged in a smooth and timely manner (e.g. Auramo, Kauremaa, & Tanskanen, 2005;
Bagchi et al., 2005). In case IT integration is tight (no systems de-coupling) e.g. orders “wash through” the system as a tidal wave, enabling the entire system to act as one (e.g. Boyson &
Corsi, 2001; Christiaanse & Kumar, 2000). Coordination across legal boundaries is almost cost-free up to confirmation of transactions – enabling high quality and early information sharing. Within the individual company the use of integrated applications like ERP supports transparency and enables better monitoring and control of processes (e.g. Akkermans et al., 2003; Forza, Romano, & Vinelli, 2000) thus supporting the removal of functional silos (as mentioned above). Both internally within the company and across legal boundaries the
8 As process orientation in some companies (see Appendix A) is merely a rephrasing of typical department names, a critical evaluation of the processes is needed.
impact of information transparency may be explained by means of P/A theory (see Chapter 5.2). Enabling online and (more or less) cost free access to information from the agent the monitoring cost of the principal is largely reduced thereby removing a major obstacle for this contract type.
External Integration
As already described above (early) models of SCM relies on external process integration even if evidence of process integration per se is scant (e.g. Bask & Juga, 2001). Most agree integration of the physical flow and the information flow are essential to SCM (e.g. Morash &
Clinton, 1998; Frohlich & Westbrook, 2001) and case studies document how IT integration speeds up the fulfillment process within various industries (e.g. Ferdows, Lewis, & Machuca, 2004; Towill, Childerhouse, & Disney, 2002; Wilson & Clarke, 1998). Besides process and IT integration “the network effect” is often mentioned as a primary driver for supply chain integration – often using trust-based relationships as the integrative mechanism (e.g. Bagchi et al., 2005; Sahay, 2003). The “traditional” determinant for trust in relationships is
“relationship length” – even if evidence compromising this proposition exists.
The concept Collaborative Planning, Forecasting, and Replenishment (CPFR) may enrich the understanding of the integration of supply chains (e.g. Fliedner, 2003; Simatupang &
Sridharan, 2005; VICS, 2004). Albeit CPFR is normally considered a concept emerging from a certain practice (like e.g. ECR) it might be used to describe the level of collaboration between supply chain partners. The concept draws on a number of constructs, see Table 6-1 below. The reliance on IT integration is obvious as the information sharing (at least on a continual basis) would be impossible without automation. The second and third dimensions in the table above might be translated into ‘Coordination’ whereas the fourth and fifth are oriented towards alternative goals/outcomes of the collaboration. The last two dimensions do not describe the practice but are the output or explanation of the model proposed.
Table 6-1: Dimensions of different levels of CPFR9
Dimensions Basic CPFR Developed CPFR Advanced CPFR
1. Shared information Sales orders and confirmation Inventory data
Demand data Order planning data Promotion data Production data
Demand data Order planning data Promotion data Production data
2. Degree of discussion No Some Frequently
3. Co-ordination/synchronisation No Some All activities
4. Competence development No No Knowledge
5. Evaluation No No Experiences
6. Type of relationship Transactional Information sharing Mutual learning
7. Theoretical explanation TCA Network Resource- and
competence-based
Combining the dimensions as discussed above and introducing a time perspective, the model might be further developed, see Table 6-2 below.
9 Source: Table I in Skjøtt-Larsen, Thernøe, & Andresen (2003), p. 537.
Table 6-2: Collaboration Model
Dimension No CPFR Basic CPFR Advanced CPFR
Information Sharing None Periodic Online/Continual
Coordination None Periodic Continual
Alternative Goals N/A No (Secondary) Yes (Primary)
The categories are renamed changing the lowest level to ‘No CPFR’. This category denotes relationships where no information sharing and no coordination take place (and therefore no alternative goals can exist). The next level of collaboration is characterized by periodic (e.g.
monthly) exchange of information and coordination between supply chain partners. At this level alternative goals (e.g. competence building, network sharing) is secondary as the focus is on fulfillment (only). The highest level of collaboration in contrast is characterized by alternative goals as companies are tightly integrated through continual information sharing and coordination.
Each of the two suggested constructs (length of relationship and collaboration) may be explained in theoretical terms. The former may be understood through IA, see Chapter 5.4) which relies on the social interaction and resulting adaptation/integration to explain network structures. Trust plays an important role within this framework as it explains the (slow) integration of network members – and the absence of contracts within closely knitted networks. This explanation may be supplemented by P/A theory – as the closeness of the network may enable cost-free monitoring. The latter construct is explained in Table 6-2 above by references to three of the four frameworks reviewed in Chapter 5.
Inter-organizational Management
Borrowing from the before mentioned models by Stevens and Mentzer et al. (and many others) it seems evident the inter-organizational component has to be investigated as well.
The extent of the “extraprise” (e.g. Karlsson, 2003; Geary, Childerhouse, & Towill, 2002) might be explained in a number of ways, here it is chosen simply to investigate if/how management and control is performed in union with suppliers and customers. The traditional
“stand-alone” production unit will communicate through orders only, whereas the network-oriented company might share production plans, strategic information and perhaps even capacity and employees with participating companies. In a sense this element might also describe “the boundary of the network”.
The Resulting Set
From the categories described above the following list of high-level constructs are derived:
Table 6-3: SCM Constructs Construct Description
Supply Chain Organization Describes how the company has organized around the task of performing SCM.
Production Philosophy Describes the production philosophy (or philosophies) in place.
Process Orientation Describes the process (or processes) in place as well as the related organizational set-up (e.g. cross-functional teams etc.).
IT Support Describes the IT systems supporting the internal and external integration.
External Integration Describes the (type of) integration with external parties.
Inter-organizational Management
Describes the practice of planning, control and/or management across legal boundaries.
The content of each construct is developed through inducing the empirical data collected from the case companies, thereby creating a multi-level hierarchy (as in Appendix A).