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T. Russell Crook
Assistant Professor of Management
University of Tennessee
Larry Giunipero
Professor and I.S.M. Professor of Supply Management
Florida State University
Taco H. Reus
Assistant Professor of Management
Florida Atlantic University
Robert Handfield
Bank of America Distinguished University Professor
North Carolina State University
Susan K Williams
Assistant Professor of Management
Northern Arizona University
Supply chains are groups of organ- 1998; Glisby and Holden, 2005). This
izations that collectively process raw increased attention appears merited
materials into finished goods (Hult et for at least two reasons. First, pur-
al, 2002). Such collaborative rela- chased inputs can account for up to
tionships have garnered increased at- 75 percent of a firm's operating
tention in management research over budget (Quinn, 1997). And second,
the last several years (e.g., Artz and firms that find ways to lower input
Norman, 2002; Cool and Henderson, costs or increase input quality gain
We gratefully acknowledge the help of Louella Holter and the support of Northern Arizona Uni-
versity and CAPS Research.
(161)
162 ANTECEDENTS AND OUTCOMES OE SUPPLY CHAIN EEEECTIVENESS
supply chains. Indeed, the role of tive is thus to improve our under-
SCM skills and knowledge (e.g,, Giu- standing of supply chains and how ef-
nipero and Pearcy, 2000) is critical in fective SCM contributes to focal firm
"obtaining the product at the right performance. Considering the nas-
cost in the right quantity with the cent stage of this research stream, we
right quality at the right time from used an inductive exploratory ap-
the right source" (Sarkis and Talluri, proach by interviewing 46 experi-
2002: 18). Beyond the identification enced supply chain executives in four
and possession of skills and knowl- focus groups. The executives placed
edge as key SCM resources, the KBV an extraordinary weight on knowl-
also asserts that it is critical to identify edge-related topics, which led us to
activities facilitating the transfer of triangulate findings with extant re-
such resources. search on the KBV, The focus group
Although the central focus of stra- findings reveal the importance of sev-
tegic management research is identi- eral enabling factors as well as impor-
fying the determinants of firm per- tant outcomes of SCM. Drawing on
formance (Rumelt et al., 1994), these findings and extant research,
historically, most research has relied we develop propositions and a testa-
on firm- and industry-level determi- ble model oudining several antece-
nants (Rumelt, 1991). In the 1990s, dents and outcomes of effective SCM.
strategy researchers focused more on This research should equip those in-
the performance implications of in- terested in supply chains with several
ter-organizational relationships, such practical implications and offer guid-
as alliances and joint ventures (Bar- ance regarding how to improve sup-
ringer and Harrison, 2000). More re- ply chain effectiveness.
cendy, researchers have tackled the In the subsequent sections, we de-
question of whether supply chain par- scribe the research method used for
ticipation can shape firm perform- this study and the characteristics of
ance (Hult et al, 2002, 2004). Yet our sample. Second, we report the
these studies have principally exam- key findings from execudves regard-
ined how supply chain participation ing acdvities that enable effective
and SCM can reduce cycle times, SCM as well as the outcomes of effec-
which is the amount of time the pur- tive SCM. We blend these findings
chasing process takes from start to with extant research to propose a test-
finish (e.g., Hult et al., 2002). While able model. The final secdon oudines
increasing our awareness of the de- implicadons, limitations, and future
terminants of reduced cycle times, research directions.
these studies offer limited insights
into how supply chains shape other RESEARCH METHOD AND
dimensions of firm performance, as SAMPLE
well as identifying key enablers of
supply chain effectiveness. When a research area is entering
Because of the increasing impor- uncharted territory, the understand-
tance of SCM and supply chains in ing of complex reladonships is aided
general, a study exploring the ante- by exploratory research grounded in
cedents (i.e., enablers) and outcomes theory (Simmonds et al, 2001; Weis-
of effective SCM seems both timely inger et al, 2006; Weitz and Jap,
and warranted. Our overriding objec- 1995). Because most exisdng work on
and knowledge to belp firms achieve bow to use logistics to good advan-
maximum supply cbain effectiveness. tage."
As one participant put succinctly, sup- Sucb skills and knowledge seem to
ply cbain professionals need to be increasingly important today, es-
"think tbrougb tbe wbole life cycle of pecially since one of tbe most sub-
designing for manufacturability, new stantial business trends is tbe move
product introduction, look at tbe life from adversarial to collaborative
cycle management, obsolescence risk buyer/supplier relations (Bowersox
and implications, whether to deploy et al, 2000). Today, supply chain pro-
and how to position inventory, and fessionals possessing higb levels of
Table 1
Executive Responses for Each Factor
Technology
Electronic Research 13 9
Translation Software 2 2
Integrated Systems for E-business Scheduling 2 2
Trust
Risk-sharing 19 16
Sharing Lead-time Information 2 2
Supplier Consolidation 2 2
Sharing Cost Information 1 1
Co-location 1 1
Gain Sharing 1 1
Table 1 (Continued)
Executive Responses for Each Factor
Knowledge Sharing
Comment Frequency" Participant Frequency''
Cross Functional Product Development Teams 27 22
Virtual Teams and Net Meetings 13 11
Customer Meetings 4 3
both broad and specific supply chain sucb, the executives pointed to what
skills and knowledge can help lever- Cook and Brown (1999) have called
age tbeir firms' supply chains (Das the generative dance between organ-
and Narasimhan, 2000), knowing izational knowledge and organiza-
that selecting and collaborating witb tional knowing. Executives look for
strong supply chain partners can ben- tbe knowledge possessed by them-
efit tbeir firm, especially wben knowl- selves and supply chain partners and
edge is shared. the way in which together they can
Since the supply cbain manage- contribute to the supply chain. But
ment function is at the center of these perhaps more important is the em-
efforts, it is perhaps not surprising phasis on supply chain members'
that one supply cbain executive skills to work together in the chain.
stated tbat the function is no longer Tbis could be referred to as supply
"viewed as a tactical department cbain knowing, as the members to-
where purchase orders are just gether learn bow to use the knowl-
rubber stamped and otber employees edge tbey bold collectively. Tbe result
offer no respect. Tbat bas changed." of increased skills and knowledge is
Instead, supply cbain professionals tbat tbe supply cbain collectively can
possessing specialized knowledge better share this knowledge. Thus,
wbo are capable of implementing SCM involves tbe development of
successful sourcing and knowledge- skills and knowledge of the various
sharing tactics are recognized as stra- supply cbain members in order to en-
tegic assets, which can ultimately im- able knowledge sharing across the
prove their firm's performance. As cbain.
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that "when you have a basic under- ships and, consequently, shapes the
standing of what the profit margins extent of knowledge sharing across a
are with suppliers, you can negotiate chain.
around them rather than just guess- Proposition 3: Trust enables knowledge
ing." Another trust factor was co-lo- sharing along supply chains.
cating with other chain participants. Knowledge Sharing. When exchange
As one participant put it, "co-location partners nurture close, collaborative
creates intimacy," which enables in- ties, they can learn innovative new
formation and knowledge to be trans- practices from one another (e.g..
ferred more readily. In addition, the Dyer and Nobeoka, 2000; Hamel,
most important trust factor was shar- 1991; Powell et al, 1996). At the core
ing risk along the chain, such as in of the KBV is that a key source of com-
joint investments. petitive advantage is knowledge shar-
Research also supports the notion ing because it allows for the effective
that trust is important in collaborative combination of knowledge that
exchange. Downey and Cannon makes the creation of new knowledge
(1997) view trust as a two dimensional possible (Kogut and Zander, 1992).
construct. The first dimension in- Similarly, knowledge sharing im-
volves perceived credibility and be- proves supply chain effectiveness. As
nevolence (i.e., that the exchange revealed by focus group interviews
partner is credible and tbat their and highlighted in Table 1, there are
word or written statement can be re- several available methods to imple-
lied upon). The second dimension ment knowledge sharing. These tech-
involves the extent to which one part- niques include cross-functional prod-
ner is genuinely interested in the uct development teams, virtual teams
other party's welfare and motivated and net meetings, as well as regular
to seek joint gain. The knowledge- meetings with other chain partici-
based view emphasizes that trust is pants (particularly customers).
key to developing an atmosphere
conducive of sharing knowledge Assembling product development
(Dhanaraj et al, 2004; Kogut and Zan- teams that contain people not just
der, 1992). While the availability of from different departments within
knowledge and skills foster the ability the same firm, but also from key func-
to share knowledge, and technology tions of other firms, can be an impor-
creates the opportunity to share tant knowledge-sharing and learning
knowledge through supply chain mechanism for a chain. One partici-
links, trust is key for developing a mo- pant said that "we need to bring our
tivation to share knowledge among partners into the design process early
supply chain members (cf Adler and enough so they can see what the par-
Kwon, 2002). Trust is, thus, a key an- ameters of a particular piece of equip-
tecedent to information and knowl- ment are, understand what the cost
edge sharing (Handfield and Be- issues are, understand what our target
chtel, 2002), especially since sensitive pricing is, and what we have to do to
information is not shared with firms get to that target cost." Doing so "can
or individuals lacking trust (William- free up a great deal of creative energy
son, 1985). Accordingly, we contend where our partners can contribute to
that trust ultimately paves the way for solutions that can reduce costs."
collaborative supply chain relation- Some participants go so far as to
(Barney, 1991; Porter, 1980; Tan, itations merit attention. First, al-
2002). The ultimate measure of an ef- though tbe 46 focus group interviews
fective supply chain is tbe firm's per- provided exposure to diverse organi-
formance. These SCM executives re- zations from several industries, tbe
alized tbat reduced costs was one of antecedents and outcomes of supply
tbeir most important goals. Indeed, cbain effectiveness could be studied
reduced costs was a major goal toward in a larger sample. Such efforts would
improved firm performance as indi- likely identify additional antecedents
cated by the 58 responses by 31 ex- and outcomes as well as increase
ecutives. This indicates that these ex- some aspects of our study's general-
ecutives operate under a continuous izability. Second, our study simply of-
mandate from tbeir top management fers propositions and a testable
teams to continually reduce costs. model. If we had empirically tested
Tbe increased competitiveness tbe model, then we could have made
gained tbrougb reduced costs ena- stronger assertions about tbe find-
bles increased market share and im- ings. Tbis, however, opens up a po-
proved customer satisfaction. Tbe ul- tentially fruitful avenue for future re-
timate result of these improvements search.
is typically increased profits for all In spite of these limitations, we be-
chain members (Tan, 2002). lieve this study provides several im-
Reducing costs and increasing portant contributions. Tbe study's
profits along the supply chain bas cre- core implication supports extant re-
ated new market opportunities. In search—^when independent firms col-
fact, some have argued tbat compe- laborate and share knowledge witb
tition is now "chain-to-cbain" rather others, tbey can achieve advantages
than between individual firms (Vick- beyond what could be achieved in
ery et al, 1999). Providing evidence arm's length exchange (Dyer and
for this assertion, our focus groups re- Singh, 1998; Dyer and Hatch, 2006).
vealed that tbe majority of firms in In many supply chains, the advan-
our study now view the world differ- tages accrued by tbe entire cbain
ently, and participants mainly view translate into higher profits for all
supplier relations as "win/win" cbain participants (Crook and
tbrougb "co-development and de- Combs, 2007). But, wbat is required
sign, resource sbaring, and risk and to increase supply cbain effectiveness
reward sharing." Tbrougb knowl- and, thus, obtain higher profits from
edge sbaring, supply chain members tbe cbain? Our results suggest tbat
can more effectively manage tbeir the answer lies, in part, within the
chains and, as a result, reduce costs cbain participants' specialized knowl-
for focal firms and increase the value edge, aided by technology and trust.
tbey can deliver to their partners up- If this is tbe case, a key managerial
stream in tbe chain. implication is tbat organizations must
Proposition 5: Supply chain effectiveness be willing to make investments in
enables improved focal firm performance. training and development geared to-
wards creating a more diverse and
IMPUCATIONS AND knowledgeable workforce (Huselid,
CONCLUSION 1995; Ricbard and Johnson, 2001). A
Before outlining tbe implications related implication is that organiza-
of our study's findings, two main lim- tions should also be willing to make
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