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, , 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 Model Management Support Structure HR Strategy:  Measurement—Rewards  Job Rotation  Cross-functional Teams Communication  Formal  Informal 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-, , 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