Issues in Supply Chain Management

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Abstract

Successful supply chain management requires cross-functional integration and marketing must play a critical role. The challenge is to determine how to successfully accomplish this integration. We present a framework for supply chain management as well as questions for how it might be implemented and questions for future research. Case studies conducted at several companies and involving multiple members of supply chains are used to illustrate the concepts described.

Introduction

One of the most significant paradigm shifts of modern business management is that individual businesses no longer compete as solely autonomous entities, but rather as supply chains. Business management has entered the era of internetwork competition. Instead of brand versus brand or store versus store, it is now suppliers—brand—store versus suppliers—brand—store, or supply chain versus supply chain. In this emerging competitive environment, the ultimate success of the single business will depend on management's ability to integrate the company's intricate network of business relationships 1, 2, 3.

Increasingly, the management of multiple relationships across the supply chain is being referred to as supply chain management (SCM). Strictly speaking, the supply chain is not a chain of businesses with one-to-one, business-to-business relationships, but a network of multiple businesses and relationships. SCM offers the opportunity to capture the synergy of intra- and intercompany integration and management. In that sense, SCM deals with total business process excellence and represents a new way of managing the business and relationships with other members of the supply chain.

Thus far, there has been relatively little guidance from academia, which in general has been following, rather than leading, business practice 4, 5, 6. There is a need for building theory and developing normative tools and methods for successful SCM practice. The exploratory empirical findings reported here are part of a research effort to develop a normative model to guide future research. Executives can use the model to capture the potential of successful SCM.

The Global Supply Chain Forum (GSCF), a group of non-competing firms and a team of academic researchers, has been meeting regularly for the past 6 years with the objective to improve the theory and practice of SCM. The definition of SCM as developed and used by The GSCF is as follows:1

Supply Chain Management is the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders.

This broader understanding of the SCM concept is illustrated in Figure 1, which depicts a simplified supply chain network structure; the information and product flows; and the key supply chain business processes penetrating functional silos within the company and the various corporate silos across the supply chain. Thus, business processes become supply chain business processes linked across intra- and intercompany boundaries.

This paper is organized as follows: First, there is a brief literature review relating SCM to logistics and to marketing channels research. The case methodology that provides the basis for our findings is described. Next, we report some of the findings and key issues related to each of the three elements of the SCM framework. For simplicity, each element will be dealt with separately; although, in practice, they are closely interrelated. Issues regarding how to map business processes across the supply chain are briefly described. Finally, suggestions for future research and conclusions are outlined 7, 8, 9.

Section snippets

Literature review

SCM has received considerable attention in the popular business press and in some academic literatures. This section is divided into two parts. First, the emergence of SCM from the logistics literature is described. Then, selected marketing literature is related to the SCM concept.

Methodology

In order to better understand SCM, a case-study approach is used involving the supply chains of members of The GSCF. Thus far, over 90 in-depth interviews, in 15 companies covering 9 different supply chains, have been conducted with managers representing various levels, functions, and processes. The processes covered in the interviews included customer relationship management, customer service management, demand management, order fulfillment, procurement, and product development and

A conceptual framework of scm

The conceptual framework emphasizes the interrelated nature of SCM and the need to proceed through several steps to design and successfully manage a supply chain. The SCM framework consists of three closely interrelated elements: the supply chain network structure, the supply chain business processes, and the supply chain management components (Figure 3).

The supply chain network structure consists of the member firms and the links between these firms. Business processes are the activities that

Mapping the supply chain

In the companies studied, the business processes were not linked across the same firms. In other words, different business processes had different looking supply chain network structures. An example is a focal company that involves supplier A, but not supplier B, in its product development process, whereas the demand management process is linked with both suppliers. Thus, we found that the companies choose to integrate and manage different supply chain links for different business processes.

Suggestions for future research

A top priority should be research to develop a normative model that can guide managers in their efforts to develop and manage their supply chains. It is much easier to write a definition for SCM than it is to implement. Selected research opportunities include the following:

  • 1.

    What are the operational definitions of the key business processes and what are the relationships among these processes? How do you obtain buy in from the functional areas in order to implement a process approach within the

Conclusions

Executives are becoming aware of the emerging paradigm of internetwork competition and that the successful integration and management of key business processes across members of the supply chain will determine the ultimate success of the single enterprise. Managing the supply chain cannot be left to chance. For this reason, executives are striving to interpret and to determine how to manage the company's supply chain network, and thereby achieve the potential of SCM.

Our research indicated that

Acknowledgements

The authors would like to acknowledge the contribution of the members of The Global Supply Chain Forum, whose practice, insight, ideas, and comments have contributed significantly to this paper. The member companies in The Global Supply Chain Forum include: 3M; CEMEX; The Coca-Cola Company; CSX Corporation; Fletcher-Challenge; Goodyear Tire and Rubber Company; Hewlett-Packard Company; Limited Distribution Services, Inc.; Lucent Technologies; McDonald's; New Holland of Mexico; Texas Instruments,

DOUGLAS M. LAMBERT is the Raymond E. Mason Professor of Transportation and Logistics, and Director of The Global Supply Chain Forum, Fisher College of Business, The Ohio State University. He is also the Prime F. Osborn III Eminent Scholar Chair in Transportation, Professor of Marketing and Logistics, and Director of The International Center for Competitive Excellence, University of North Florida, Jacksonville, Florida.

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    DOUGLAS M. LAMBERT is the Raymond E. Mason Professor of Transportation and Logistics, and Director of The Global Supply Chain Forum, Fisher College of Business, The Ohio State University. He is also the Prime F. Osborn III Eminent Scholar Chair in Transportation, Professor of Marketing and Logistics, and Director of The International Center for Competitive Excellence, University of North Florida, Jacksonville, Florida.

    MARTHA C. COOPER is Professor of Marketing and Logistics, Fisher College of Business, The Ohio State University. She has worked in brand management and in sales. Her research interests include supply chain management, partnership and other interfirm relationships, the role of customer service in corporate strategy, international logistics, strategic planning for logistics, and cluster analysis.

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