Mitigating resisting


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Mitigating resisting

  1. 1. The current issue and full text archive of this journal is available at Mitigating Mitigating resisting forces to resisting forcesachieve the collaboration-enabled supply chain 269 Stanley E. Fawcett Brigham Young University, Provo, Utah, USA Gregory M. Magnan Albers School of Business and Economics, Seattle University, Seattle, Washington, USA, and Amydee M. Fawcett Lateral Line Analytics, Woodland Hills, Utah, USAAbstractPurpose – The purpose of this paper is to address how companies mitigate existing forces to achievethe collaboration enabled supply chain (SC).Design/methodology/approach – Seven key theories were used to provide insight into thetheoretical framework for the creation of the collaboration-enabled SC: contingency theory, theresource-based view of the firm, the relational view of the firm, force field theory, constituency-basedtheory, social dilemma theory, and resource-advantage theory. An exploratory cross-sectional surveywas conducted at two different points in time – a six-year period in between. The survey targetedthree different functional areas – logistics, manufacturing, and sourcing – to compare and contrastfunctional perceptions of barriers and bridges to collaboration.Findings – Companies are beginning to pursue greater collaboration, however, managers are oftenstymied in their pursuit of collaborative business models. The data suggest that the challenge is notthe existence of a single barrier to collaboration, but one of accumulation. As the many resistorsreinforce each other, the change needed to increase collaboration is avoided. To overcome thesechallenges, the findings suggest that a comprehensive and carefully executed collaboration strategy isneeded to help a company profitably deliver high levels of customer satisfaction. Those companiesthat succeed achieve substantial, documentable benefits.Practical implications – The findings reveal that developing a collaboration-enabled businessmodel is very difficult. Therefore, managers must carefully evaluate their companies’ motivation andreadiness to pursue a collaboration-enabled SC, consider whether they can generate momentum forsustained change, and ascertain whether they can persist when benefits are slow to emerge.Originality/value – This study is both longitudinal and cross-functional and leads to a betterunderstanding of how to manage, change, and create a collaborative decision-making environment.Keywords Supply chain management, Channel relationshipsPaper type Research paperIntroductionThe essence of supply chain management (SCM) is that to improve competitiveness,companies need to proactively manage resources beyond their organizational Benchmarking: An International Journal Vol. 17 No. 2, 2010The authors wish to thank CAPS Research for its generous financial support of this research. pp. 269-293 q Emerald Group Publishing LimitedThey also acknowledge the assistance and direction provided by the editor and anonymous 1463-5771reviewers to help improve the manuscript. DOI 10.1108/14635771011036348
  2. 2. BIJ boundaries (Dyer and Singh, 1998). That is, well-managed companies possess valuable,17,2 but constrained resources and specific, but limited capabilities. Although these resource advantages may confer a competitive advantage on a firm, most companies do not possess the inimitable resources needed to compete as stand-alone entities (Barney, 1991; Dierickx and Cool, 1989; Eisenhardt and Martin, 2000; Newbert, 2007; Rinehart et al., 2008). Competitive dynamics dictate that they work with other members270 of the supply chain (SC) who possess vital resources and valued competencies. To the extent that collaboration helps bring complementary competencies together to create customer value, the collaboration-enabled SC becomes an important source of competitive advantage (Fawcett et al., 2008). Automakers Honda and Toyota exemplify the collaboration-enabled business model. Honda is particularly dependent on its SC, sourcing about 85 percent of the value of its cars from suppliers (Nelson et al., 1998). Both carmakers have developed strong relational capabilities that drive higher than average economic rents and differential firm performance (Dyer and Singh, 1998). Beyond this anecdotal evidence, research has confirmed that SC collaboration can make substantive contributions to firm performance in the areas of enhanced productivity and improved customer service and satisfaction (Dyer, 1996; Hendricks and Singhal, 2003; Hult et al., 2004; Lee, 2004; Rinehart et al., 2008). However, experience reveals that companies struggle to translate collaborative rhetoric into collaborative reality (Fawcett and Magnan, 2002). Beth et al. (2003, p. 64) noted that “despite years of technological and process advancements, an agile, adaptive SC remains an elusive goal,” suggesting that the challenge lies deeper within the fabric of the organization (Parker and Anderson, 2002; Fawcett et al., 2009a). Behavioral issues appear to be problematic. For example, low trust across organizational boundaries exacerbates the human tendency to avoid vulnerability and protect potentially idiosyncratic resources, including proprietary information (Fawcett et al., 2009a; McCarter and Northcraft, 2007). Likewise, functional organization can easily become dysfunctional silos, which engender turf conflict and dissipate value creation (Anderson, 1982; Barratt, 2004; Moberg et al., 2003; Wong and Wong, 2008). These resistant forces are somewhat intransigent and inhibit a company’s willingness and ability to collaborate. To summarize, competitive dynamics are motivating companies to seek inter-firm collaboration opportunities in an effort to build unique value-creation capabilities. Standing in the way are cultural and structural barriers that inhibit these endeavors. More often than not, the resisting forces have proven to be stronger than the driving forces, resulting in minimal meaningful collaboration. This reality motivates the following question, “Can companies mitigate existing resisting forces to achieve the collaboration enabled supply chain?” SC collaboration: a dynamic theoretical model SC collaboration is a complex phenomenon. Grasping the nuances involved in developing a dynamic collaborative capability requires that managers explore the processes that promote or hinder collaboration from a variety of theoretical lenses. Key theories that provide valuable insight are: . contingency theory; . the resource-based view (RBV) of the firm;
  3. 3. . the relational view of the firm; Mitigating . force field theory; resisting forces . constituency-based theory (CBT); . social dilemma theory; and . resource-advantage theory. 271Figure 1 combines these theoretical perspectives to present a framework for guidingthe development of a collaboration-enabled SC.The role of dynamic environmental forcesContingency theory argues that managers must identify sequential, cause-and-effectrelationships among environmental, decision-making, and performance variables(Birkinshaw et al., 2002; Lawrence and Lorsch, 1967; Luthans and Stewart, 1977;Nasrallah et al., 2003; Scott and Davis, 2006; Stonebraker and Afifi, 2004; Wathne andHeide, 2004; Wong and Wong, 2008; Moffett et al., 2008). That is, as the world aroundthem evolves, SC managers must develop a contingent response – a strategy forutilizing the firm’s resources to achieve a sustainable competitive advantage that leadsto above normal returns on investment (Guide et al., 2003; Johnson et al., 2002). Lookingthrough the contingency-theory lens raises two important questions: (1) What forces in the external environment are changing the competitive rules and thereby mandating a contingent response? The corollary: how are the rules changing? (2) What is the appropriate contingent response? Customer resources and Resisting capabilities forces borati Colla abler on ip En s rsh Performance benefits de External driving forces Co l ea nne • Intensifying competition Improved operational Differentiation Contingent response lopment c execution tivity Strategy • Customers demands performance: strategy • Globalization Build a collaboration • Lower operating costs • Enhanced customer service deve • Compressed technology cycles capability to leverage Tra firm resources! Improved competitive • An information revolution ier ni i pl ng performance: • Increasing financial pressures p Su Custom r focus e • Return on assets • Sales and market share growth Resisting forces Supplier resources Resisting forces and capabilities Constituency-based resistors: • Inconsistent performance measures • Inadequate training for new mindsets and skills • Non-aligned strategic and operating policies Figure 1. Social dilemma resistors: A theoretical framework • Inability or unwillingness to share information for the creation of the • Lack of trust among decision makers • An unwillingness to share risks and rewards collaboration-enabled SC
  4. 4. BIJ For managers, the key is to recognize the environment is changing and then correctly identify the forces driving the changes and their influence on competitive strategy. As17,2 they evaluate their companies’ strategic positioning, managers are likely to find that globalization, heightened customer demands, and compressed technology cycles are increasing competitive intensity, putting tremendous pressure on cost management (Friedman, 2005). Greater focus on financial performance is further inducing managers272 to strive to increase asset returns and reduce concept-to-market lead times (Simatupang and Ramaswami, 2004). Interestingly, an information technology revolution is accelerating these competition drivers (Hammer, 1990, 2004; Hult et al., 2004; Mabert and Venkataraman, 1998). The seemingly unavoidable reality that today’s marketplace is dynamic and evolving at a rapid pace leads to our P1: P1. Managers are cognizant that the environment is dynamic and that a variety of forces are driving the need to cultivate a collaboration-enabled SC. Collaboration as a contingent response A firm’s contingent response is defined by its differentiation strategy, which answers the business-model-design questions, “What strategic capabilities do we need?” and “How can we best develop them?” The RBV of the firm provides insight into a firm’s contingent-response options. RBV argues that a firm is “a collection of productive resources” that can be used to create value and advantage (Wernerfelt, 1984). The more valuable, rare, and inimitable the resources, the greater the advantage the firm may attain (Barney, 1991, 2001). As important as the firm’s resources are, how it configures them may be more important (Teece et al., 1997; Eisenhardt and Martin, 2000). That is, combining and structuring resources to create a dynamic capability can lead to even greater, more difficult-to-replicate advantage (Newbert, 2007; Zhu and Kraemer, 2002). RBV thus encourages managers to pursue a contingent response that uses firm resources to build a valued dynamic capability. Importantly, companies now source a large percent (typically 50-80 percent of cost of goods sold) of their value-added capability from materials and service suppliers (Monczka et al., 2008). Thus, the quest to establish a non-imitable dynamic capability extends beyond the firm’s boundaries. This reality is supported by the relational view of the firm, which argues that the most powerful sources of advantage may be embedded in inter-firm resources and routines (Dyer and Singh, 1998). Collaborative routines that identify and integrate complementary competencies up and down the SC have been shown to improve firm performance by both reducing costs and improving customer satisfaction (Fawcett et al., 2008; Fine, 1998). Yet, relatively few firms have learned how to collaborate effectively, suggesting that a collaboration capability is rare, valuable, and hard to replicate (Frohlich and Westbrook, 2001; Fawcett et al., 2009b). The need to improve resource leverage combined with the possibility of creating unique value through collaboration defines our P2: P2. Companies recognize the value of collaboration as an important strategic response to a changing environment and are actively pursuing SC collaboration initiatives. The strategy execution chasm Although many firms have espoused the development of a collaboration capability as a central component of their competitive strategies, few have been able to execute to plan.
  5. 5. For example, Boeing adopted a collaboration-enabled business model to design and Mitigatingmanufacture the Boeing 787, dubbed the dreamliner. Suppliers were given resisting forcesunprecedented responsibility for major components of the plane. Unfortunately,governance issues exacerbated SC breakdowns forcing multiple delays in the plane’slaunch. Boeing’s credibility and cash flow were severely damaged (Lunsford, 2008a, b;Sanders, 2009). Like the majority of firms that have pursued intense collaboration,Boeing discovered that integrating complementary competencies across the SC is a very 273difficult task. The question is, “Why do firms struggle to implement a collaborativecontingent response?” Force field theory suggests that as managers pursue a collaboration capability, theymust consider two types of forces that will affect implementation success – drivingforces and resisting forces (Lewin, 1951). As discussed above, driving forces such asdemanding customers may dictate a need to rely on the strengths of other SC members.Resisting forces such as a lack of top management support make it difficult to executethe collaborative differentiation strategy. The drive for collaborative change oftenstalls when it collides with well-entrenched resisting forces. In effect, resisting forcesfreeze an organization into non-collaborative behavior, imperiling companies thatcompete in a dynamic environment. Unable to change faster than the externalenvironment or collaborate more effectively than agile competitors, “frozen” companiesbecome irrelevant (Friedman, 2000; Grove, 1996; Lee, 2004). Lewin identified athree-phase process for effective change management and strategy implementation: (1) The unfreezing process: an external shock or emotional event such as the loss of market share unfreezes the organization, making change possible. Management resolve (Jim Collin’s Level 5 leadership) can at times lead to organizational thawing. (2) The movement phase: driving forces and resisting forces collide, leading to implementation failure or success, depending on: . the relative strength of the forces; and . management’s ability to enact and leverage collaborative change enablers. (3) The refreezing tendency: most companies settle into a new equilibrium state after a period of dramatic change.A closer look at collaboration resistors and collaboration enablers is needed to betterunderstand the dynamics of moving from the development of a collaborative strategyto the effective execution of a collaboration capability. Collaboration resistors. Forcing resisting collaboration vary in strength andinfluence, might exist anywhere within an organization or SC, and may include people,policies, or processes (Dent and Goldberg, 1999; Kotter, 1995). Inadequate technologyhas often been blamed for impeding collaborative initiatives (Barratt, 2004; Moberget al., 2003; Tyndall, 1998; Cassivi, 2006). However, despite massive investments ininformation and process technologies, collaborative capabilities have not dramaticallyimproved (Beth et al., 2003). This reality suggests that other forces are blockingcollaboration’s emergence. Fawcett et al. (2008) found that organizational structure andculture are among the most intractable barriers to more effective collaboration withinthe firm and across the SC.
  6. 6. BIJ Focusing first on structure, CBT provides insight into why functional structures are17,2 so common and so resistant to change (Anderson, 1982). CBT suggests that companies organize along functional lines to take advantage of in-depth knowledge that arises from specialization. Deep functional skills are needed to manage specific value-added activities. They are also the building blocks of core competencies (Prahalad and Hamel, 1990; Stalk et al., 1992). CBT does, however, warn that specialization has a dark side –274 “specialists” tend to pursue their own goals. Rewarded on disparate metrics and operating with distinct lines of authority, functionalists possess strong incentives to protect their own domain. Silos are built and fortified. As tension and conflict emerge across organizational boundaries, collaborative efforts are preempted. Unfortunately, many practices from hiring and training to measurement and office space allocation reinforce the dysfunctional organizational structure (Ellinger et al., 2006). Turning to organizational culture, social dilemma theory heightens our understanding of the conflicts that undermine collaboration. Social dilemma theory posits that collaboration can enhance value, but uncertainty and risk regarding value dissemination leads to competition for scare resources (Zeng and Chen, 2003). Managers must manage the tension that exists between these two contending forces. That is, members of a SC alliance have no incentive to invest in collaborative capabilities if another member of the chain is likely to use asymmetrical power to expropriate any collaborative gains (Dawes, 1980; Diekmann, 1985; Olson, 1965; Cassivi, 2006). In essence, the existence of power asymmetry and opportunistic behavior deters the commitment of resources needed to initiate meaningful collaboration (Kollock, 1998; Komorita and Parks, 1996; Murnighan et al., 1993). McCarter and Northcraft (2007) conceptualized SC collaboration as a social dilemma where trust and fear determine how members of a chain will interact with one another. Concerns regarding the excessive pursuit of self-interest must be mitigated to promote the behaviors – e.g. information exchange, trust, sharing of risks and rewards – needed to achieve collaboration capability (Celly et al., 1999; Luo, 2007). These challenges suggest our P3: P3. Traditional organizational structures and cultures inculcate a variety of behaviors that impede the creation of a collaboration capability. Collaboration enablers. Force field theory suggests that once an organization is unfrozen, management enters a tenuous period where driving and resisting forces are weighed in the balance (Kale et al., 2000). Managers can tip the balance toward collaboration by investing in appropriate enablers (Frohlich and Westbrook, 2001; Min et al., 2007). Research has identified a variety of collaboration enablers including the following: aligned objectives, a shared customer-oriented vision, technological connectivity, relationship trust, supplier development, and process redesign and integration (Barratt, 2004; Drucker, 2001; Funk, 1995; Grzeskowiak et al., 2007; Lambert and Knemeyer, 2004; Lee, 2004; Stonebraker and Afifi, 2004). Unfortunately, establishing these diverse and often complex enablers can be difficult and resource intensive (Moberg et al., 2003). Our P4 emerges from the need for managers to actively promote collaboration: P4. Companies have learned that collaboration is not the natural state or behavior and therefore are actively engaged in building structural enablers to bridge or mitigate existing collaboration resistors.
  7. 7. Desired performance benefits MitigatingThe fundamental goal behind strategic management theories is to explain differential resisting forcesfirm performance. For example, contingency theory argues that an appropriatecontingent response effectively executed improves firm performance. Similarly, RBVclaims that cultivating a rare, valued, and inimitable capability leads to better marketperformance. The question thus arises, “What are the performance benefits of a strongcollaboration capability?” 275 Working collaboratively with a network of capable customers and suppliers providesaccess to skills, resources, and markets unavailable to industry rivals that do notcultivate collaborative business models (Brady, 2003; Humphrey and Schmitz, 1996;Premaratne, 2001). Moreover, collaborative relationships are able to solve problemsquickly while generating new and novel ideas and transferring technology efficiently(Jones, 1996; Han et al., 1993; Cook et al., 2005). Ultimately, a collaboration-enabled SCreduces lead times, minimizes inventories, increases asset utilization, lowers costs,raises quality, facilitates faster innovation, and enhances flexibility (Corsten and Felde,2005; Hadley, 2004; Wisner, 2003; Denkena et al., 2006). A collaboration-enabled SCcapable of increasing revenues and lowering costs is an ideal formula for sustainedcustomer satisfaction and profitability (Lee, 2004). Importantly, each of the theories discussed above implies a time component withoutexplicitly discussing the mechanism through which time influences managerialdecision-making’s effect on firm performance. Resource-advantage (R-A) theoryaddresses this gap, extending the RBV by looking at it through the lens ofheterogeneous-demand theory (Hunt and Davis, 2008). In essence, R-A theoryevaluates how the process of competition contributes to organizational learning. Ascompanies adopt a collaborative contingent response, they should learn from theirexperiences – whether successful or not. The ability to learn should lead to strongerand more innovative collaborative capabilities, creating a performance gap with lessadaptable and agile competitors. From this perspective, R-A theory suggests that in theintensely competitive and dynamic environment of recent years, collaborativecapabilities should be increasing. The idea that competition drives learning leads toour P5. P5 therefore states: P5. Appropriately pursued, a collaboration capability delivers meaningful operational and firm performance benefits. Moreover, companies are learning to obtain higher levels of benefits from their collaboration initiatives.Research methodsTo assess the evolution and influence of a collaboration capability, an exploratorycross-section survey was conducted at two different points in time. As the initial studybegan, the notion of SC collaboration had been raised in the literature, but notfully explored. Nor had an effort been made to empirically evaluate its evolution –thus, the decision to replicate the study. A six-year interval between Periods 1 and 2provided sufficient time to evaluate the emergence of a collaboration capability. Threesteps were undertaken to ground the research: (1) A comprehensive literature search going back to the early 1980s was conducted. This review provided insight needed to design a meaningful survey instrument.
  8. 8. BIJ (2) A series of half a dozen preliminary, informal managerial interviews were17,2 conducted to ensure managerial relevance. (3) An advisory board consisting of managers and academics was assembled to provide feedback on the research content and process. These efforts provided context to interpret the survey findings regarding how driving276 forces, collaboration resistors, and collaboration enablers are influencing the emergence and impact of a contingent collaboration capability. The cross-functional and inter-organizational nature of a collaboration capability together with the desire to perform the study longitudinally required careful and consistent selection of the survey’s key informants. Therefore, senior-level managers (e.g. director, vice-president, chief executive officer, etcetera) with broad organizational accountability, cross-functional interactions, and access to overall firm-level performance data were targeted. Because three distinct groups of SC managers – logistics managers, production managers, and supply managers – define a company’s collaboration capabilities, mailing lists were compiled with the assistance of three SC professional associations: the Council for Supply Chain Management Professionals, the Institute for Supply Management, and APICS: the Association for Operations Management. Managers were randomly selected from industries actively involved in SCM. The research team removed contact information for managers who did not meet the selection criteria, yielding a list of seasoned managers with ample experience as members of cross-functional and SC teams. In both time periods, the survey process followed Dillman’s total design method; that is, three mailings of a cover letter, an instruction sheet, and the survey were performed. To increase the response rate, pre-notification phone calls were made to invite managers to participate. Managers were also offered a copy of the study findings and the opportunity to be entered into a drawing for one of several iPod Nanos. Overall, 980 usable surveys were returned for a response rate of 14.13 percent. Table I provides detailed response rates broken down by time period and professional organization. Importantly, the relative sample sizes and proportions from each of the three professional associations were consistent across the two time periods suggesting sample equivalence. Further, an independent t-test was performed on the control variable of firm size as measured by number of employees. No significant difference was found, which again indicates sample comparability. Non-response bias was evaluated in both time periods. A total of two methods were used. First, a comparison of early versus late responses revealed no problematic response patterns (Armstrong and Overton, 1977). Second, to more clearly verify that the respondents and non-respondents were not uniquely different, the demographic Period 1 Period 2 Professional Completed Response Percent of total Completed Response Percent of total association surveys rate (%) P1 sample surveys rate (%) P2 sample APICS 171 12.1 36 159 17.9 31 ISM 138 10.6 29 156 19.0 31Table I. CSCMP 166 11.6 35 190 19.3 38Survey response rates Overall 475 11.4 100 505 16.7 100
  9. 9. profiles of the two groups were compared. In Period 1, because responses were Mitigatinganonymous, we called managers on the mailing list until we had spoken with resisting forces300 non-respondents (100 from each managerial group) to gather basic demographicdata so that respondent and non-respondent profiles could be compared. No significantdifferences in demographic profile were found. In Period 2, respondents were trackedso that mailing and survey administration costs could be minimized. Non-respondentscould also therefore be identified. Demographic profiles for 100 randomly selected 277non-respondents were develop using Dun and Bradstreet databases. These profileswere compared to those of the respondents. No significant differences were found.Findings and discussionThe following discussion evaluates the theoretical propositions identified above fromtwo perspectives. First, the longitudinal changes in the aggregate or overall responsesfrom the two time periods are presented. Second, the most recent perceptions (Period 2)of the three distinct groups of managers are presented for comparison purposes.Similarities and differences in the way that these materials managers approach SCcollaboration are identified and discussed.Understanding environmental driving forcesDo managers really perceive that the competitive environment is changing in waysthat require higher levels of collaboration? To answer this question, we askedmanagers to indicate the relative strength of six driving forces on a seven-point Likertscale (1 – not a factor; 7 – critical factor). The data in Table II show that two forces aredriving SC collaboration: (1) a desire to improve productivity; and (2) a desire to improve revenue through increased customer satisfaction.This finding is consistent over time although the emphasis placed on these two forcesdecreased significantly over time. Of note, whereas the desire to improve customersatisfaction was the most important driver in Period 1, the desire to improveproductivity has moved into a statistical tie in the Period 2 study. Competitivepressures appear to have raised the relative emphasis on promoting collaboration tomitigate cost pressures. Such a response is not unexpected in an environment whereChina has become the “world’s factory floor” and India has become the “offshoringdestination of choice.” However, non-collaborative initiatives such as online auctionsand the threat of outsourcing to Asia have also been employed to drive costs down. Comparing functional perspectives reveals that logisticians are significantly moreproductivity focused than their counterparts. As logistics is typically a cost center, it isnot surprising that logistics professionals are focused on productivity. Otherwise thefour managerial groups are generally in agreement regarding the forces driving SCcollaboration. Overall, SC managers pursue greater collaboration in response to a select group ofenvironmental driving forces. They appear to be very profit-and-loss statementoriented; that is, their primary concern is to respond to intense competition by focusingon customer satisfaction while driving costs down (Table III).
  10. 10. BIJ 17,2 278 Table II. comparison versus Period 2 collaboration: Period 1 Forces driving greater SC Mean Rank Percentage of five to sevenDriving force Period 2 Period 1 Difference Period 2 Period 1 Difference Period 2 Period 1 DifferenceDesire to improve SC productivity 5.34 5.71 20.37 * 1 2 1 79.67 83.30 2 3.63Desire to improve revenue through increasedcustomer satisfaction 5.33 5.86 20.53 * 2 1 21 79.12 85.90 2 6.78Intensifying industry competition 5.11 5.24 20.13 3 3 0 73.58 74.70 2 1.12Desire to build the best SC team 4.67 4.73 20.06 4 4 0 59.49 58.90 0.59Desire to focus on core competence 4.39 4.28 0.11 5 6 1 51.15 48.60 2.55Desire to reduce capital investments 4.37 – – 6 – – 48.07 – –Notes: *p , 0.01; To what extent have the following led your firm to seek greater SC collaboration? (1 – not a factor; 7 – critical factor)
  11. 11. Mitigating Combined Purchasing Logistics Production P2 P2 P2 P2 P2 P2 P2 P2 resisting forcesDriving force mean rank mean rank mean rank mean rankDesire to improve SC productivity 5.34 1 5.26 2 5.66 1 5.22 2Desire to improve customersatisfaction 5.33 2 5.36 1 5.40 2 5.30 1 279Intensifying competition 5.11 3 5.16 3 5.07 3 5.07 3Desire to build the best team ofSC partners 4.67 4 4.81 4 4.62 4 4.49 4Desire to focus on core competence 4.39 5 4.65 5 4.20 6 4.38 5Desire to reduce capitalinvestments 4.37 6 4.43 6 4.41 5 4.37 6 Table III. Forces driving greaterNote: To what extent have the following led your firm to seek greater SC collaboration? (1 – not a SC collaboration:factor; 7 – critical factor) a functional comparisonAssessing the pursuit of a contingent collaborative capabilityTo better understand the extent to which companies are pursuing collaboration as acontingent response, managers were asked to indicate the extent to which their firmsengage in each of four types of collaboration (1 – not engaged; 7 – totally engaged): (1) Cross-functional process integration within the four walls of the company. (2) Upstream integration with valued first-tier suppliers. (3) Downstream integration with valued first-tier customers. (4) Complete forward and backward integration from “supplier’s supplier to the customer’s customer.”Surprisingly, managers reported slightly lower levels of engagement incross-functional, upstream, and downstream collaboration activities (Table IV).Adding value across boundaries is not easy and most managers have little or noincentive to take the risks inherent in building collaborative relationships. Talkingabout collaboration, holding team-building activities and investing in technology areinadequate facilitators of higher levels of collaboration. Managers did, however, reportsignificant progress (P1 ¼ 3.37 vs P2 ¼ 3.68; p ¼ 0.01) in the area of complete forwardand backward integration. Investments in technology and SC mapping are beginningto provide better SC visibility, improving decision makers’ ability to track inventoryand manage lead times. While progress in this area is encouraging, the mean of 3.68 isquite low. Looking at the functional responses reveals little difference among the threemanagerial groups – the means and ranks are all similar (Table V). The highest levelof integration taking place within the firm, followed in order by forward integration,backward integration, and complete integration. The desire to integrate withcustomers to become a supplier of choice, create switching costs and grow revenues isa stronger motivator than cultivating the benefits of more collaborative supplierrelationships. This finding suggests that collaboration is more important in buildingcustomer relationships, whereas leverage and power characterize many companies’approach to managing supply relationships.
  12. 12. BIJ 17,2 280 Table IV. versus Period 2 Extent of engagement in SC collaboration: Period 1 Mean Rank Percentage of five to sevenCollaboration type Period 2 Period 1 Difference Period 2 Period 1 Difference Period 2 Period 1 DifferenceCross-functional process integration 4.61 4.67 2 0.06 1 1 0 60.38 60.55 2 0.17Forward integration with valued customers 4.29 4.33 2 0.04 2 2 0 49.61 51.07 2 1.46Backward integration with key suppliers 4.15 4.26 2 0.11 3 3 0 43.83 50.88 2 7.05Complete forward and backward SC integration 3.68 3.37 0.31 * 4 4 0 29.77 25.80 3.97Notes: *p , 0.01; How extensively is your firm engaged in the effort? (1 – not engaged; 7 – totally engaged)
  13. 13. Mitigating Combined Purchasing Logistics Production P2 P2 P2 P2 P2 P2 P2 P2 resisting forcesCollaboration type mean rank mean rank mean rank mean rankCross-functional integration withinthe firm 4.61 1 4.60 1 4.61 1 4.68 1Forward integration with valued first- 281tier customers 4.29 2 4.22 2 4.35 2 4.32 2Backward integration with importantfirst-tier suppliers 4.15 3 4.21 3 4.08 3 4.10 3Complete forward and backward SC Table V.integration 3.68 4 3.80 4 3.55 4 3.66 4 Extent of engagement in SC integration:Note: How extensively is your firm engaged in the effort? (1 – not engaged; 7 – totally engaged) a functional comparisonTo summarize, companies are not pursuing collaboration as proactively or assuccessfully as proposed. This reality highlights the need to understand the forcesresisting collaboration.Discerning collaboration resistorsThe previous findings suggest that collaboration is hard work. It requires a new way ofthinking that is reinforced by supportive practices and systems. To explore whethercompanies are overcoming the pervasive and powerful barriers to high-levelcollaboration, managers were asked to evaluate the extent to which 11 resisting forcesimpede SC collaboration (1 – not a barrier; 7 – serious barrier). The top seven forcesfrom Period 1 were included in the assessment. A total of four new items were added. The data in Table VI reveal good news: the barriers to SC collaboration havediminished. This is a very positive finding and is evidence that efforts to mitigatecollaboration resistors are achieving some success. Looking at individual resistors,we see that despite the improvements, the four most pervasive barriers remained thesame across time periods, with inadequate information systems (mean ¼ 4.82;percentage of five to seven ¼ 62.03 percent) again leading the list, followed by a lackof clear guidelines for managing SC relationships (4.47; 53.08 percent), nonaligned goalsand measures (4.46; 52.43 percent) and an unwillingness to share risks and rewards(4.38; 52.11 percent). From a functional perspective, a high degree of consistency exists among therespondents (Table VII). However, looking at the sum of the responses reveals thatmanufacturers (4.09) are relatively optimistic – they perceive the barriers at lower levelsthan their purchasing (4.30) and logistics (4.30) counterparts. In fact, purchasers andlogisticians rated all 11 barriers as more problematic than their manufacturingcounterparts, suggesting that distance from the point of collaboration (either up ordownstream) leads to a diminished view of the challenges. That is, the professionalsclosest to the action are indicating that a gap exists between the “talk” of SC collaborationand the “walk” of building collaborative relationships. A disconnect exists betweensqueezing costs out of SC relationships and building more collaborative relationships. Looking at the results in aggregate suggests that today’s challenge is not theexistence of a single formidable and immovable barrier; rather, the difficulty is one ofaccumulation. As the many resistors – ranging from technology to organizational
  14. 14. BIJ 17,2 282 Table VI. The strength of collaboration resistors: Period 1 versus Period 2 Mean Rank Percentage of five to sevenCollaboration resistors Period 2 Period 1 Difference Period 2 Period 1 Difference Period 2 Period 1 DifferenceInadequate information systems 4.82 5.19 2 0.37 * 1 1 0 62.03 69.40 2 7.37Lack of clear guidelines for managing SCrelationships 4.47 4.87 2 0.40 * 2 2 0 53.08 60.70 2 7.62Performance measures and operating goals are notaligned 4.46 4.70 2 0.24 * 3 3 0 52.43 62.10 2 9.67Companies unwilling to share risks and rewards 4.38 4.83 2 0.45 * 4 4 0 52.11 63.90 2 11.79Turf conflicts hinder process management 4.30 4.49 2 0.19 5 8 3 47.04 50.90 2 3.86A lack of willingness to share needed information 4.24 4.56 2 0.32 * 6 7 1 46.23 54.70 2 8.47Process costs are difficult to measure 4.24 4.61 2 0.37 * 6 5 21 45.89 54.90 2 9.01Lack executive-level managerial support for SCcollaboration 4.20 – – 9 – – 45.74 – –Lack broad-based functional support for SCcollaboration 3.99 – – 8 – – 41.73 – –Lack of trust among members of the SC 3.83 – – 10 – – 34.49 – –Cultural differences among members of the SC 3.45 – – 11 – – 26.44 – –Notes: *p , 0.01; To what extent are the following barriers to your firm’s SC collaboration efforts? (1 – not a barrier; 7 – serious barrier)
  15. 15. Mitigating Combined Purchasing Logistics Production P2 P2 P2 P2 P2 P2 P2 P2 resisting forcesCollaboration resistors mean rank mean rank mean rank mean rankInadequate information systems 4.82 1 4.84 1 5.02 1 4.58 1Lack of clear guidelines for managingSC relationships 4.47 2 4.57 2 4.48 6 4.29 4 283Performance measures and operatinggoals are not aligned 4.46 3 4.47 3 4.57 2 4.35 2Companies unwilling to share risksand rewards 4.38 4 4.38 4 4.55 3 4.30 3Turf conflicts hinder processmanagement 4.30 5 4.36 5 4.53 5 4.07 8A lack of willingness to share neededinformation 4.24 6 4.30 8 4.55 3 4.19 6Process costs are difficult to measure 4.24 6 4.32 7 4.27 7 4.26 5Lack executive-level support for SCcollaboration 4.20 8 4.35 6 4.16 8 4.10 7Lack broad-based functional supportfor SC collaboration 3.99 9 4.16 9 4.02 9 3.80 9Lack of trust among members of theSC 3.83 10 3.98 10 3.86 10 3.64 10Cultural differences among membersof the SC 3.45 11 3.50 11 3.57 11 3.45 11 Table VII. The strength ofNote: To what extent are the following barriers to your firm’s SC collaboration efforts? (1 – not a collaboration resistors: abarrier; 7 – serious barrier) functional comparisonstructure and culture to human behavior – reinforce each other, the wave of resistancebecomes a tide that inundates many companies’ efforts to increase collaboration.Because these resisting forces permeate the culture, structure, and technology of theorganization, managers find it difficult to eradicate them.Evaluating collaboration enablersTo assess a company’s ability to establish behaviors and practices that are capable ofbridging the tide of implementation resistance, respondents were asked to evaluatehow well 16 different practices improve their companies’ ability to collaborateeffectively with other SC members (1 – does not improve; 7 – greatly improves).The responses in Table VIII reveal that progress is being made. Of the 16 enablers,11 are used more effectively to promote collaboration in Period 2 than in Period 1. Themean score for the bridges in Period 2 was 4.38, which compares to a mean of only 4.07in Period 1. That yields an average gain of 0.31 points, which is highly significant( p ¼ 0.01). Moreover, the level of enthusiasm toward the enablers has risensubstantially – nine of the 16 are endorsed by more than 50 percent of the respondentsas effective enablers (percentage of five to seven). This compares to only two in Period1. Companies are figuring out how to move their SC collaboration initiatives forward.Among the most effective enablers are: . Open information sharing. Establishing a culture that is promotes information sharing makes possible more effective senior-level interaction and greater sharing of technical expertise.
  16. 16. BIJ 17,2 284 Table VIII. The strength of collaboration enablers: Period 1 versus Period 2 Mean Rank Percentage of five to sevenCollaboration enablers P2 P1 Difference P2 [16] P1 [24] Difference P2 P1 DifferenceFrequent, open information sharing among SC members 5.29 4.64 0.65 * 1 1 0 79.87 54.20 25.67A willingness to share information among SC members 5.27 4.59 0.68 * 2 2 0 76.87 55.00 21.87Efforts to establish common goals among SC members 4.97 4.31 0.66 * 3 5 2 69.11 45.70 23.41SC simplification (e.g. fewer SC participants) 4.92 4.21 0.71 * 4 6 2 67.82 42.80 25.02Collaborative efforts to adopt appropriate performance measures 4.91 4.08 0.83 * 5 12 7 67.09 42.30 24.79Use of cross-functional and SC teams 4.85 3.84 1.01 * 6 3 23 65.73 37.93 27.8Sharing of technical expertise with customers and suppliers 4.84 4.23 0.61 * 7 4 23 65.69 43.80 21.89Senior level managerial interaction among SC members 4.84 4.21 0.63 * 7 7 0 64.16 46.00 18.16Making decisions based on total cost analysis 4.83 3.85 0.98 * 9 17 8 62.00 47.50 14.5Use of clear guidelines to manage SC relationships 4.78 3.76 1.02 * 10 20 10 63.21 32.00 31.21Shifting roles and responsibilities (e.g. vendor managed inventories) 4.68 3.86 0.82 * 11 16 5 60.49 36.20 24.29Increased employee training regarding SC practices 4.58 4.09 0.49 * 12 11 21 57.05 39.40 17.65Creation of web-based linkages/portals to exchange information 4.52 – – 13 – – 54.24 – –A defined and accepted approach to sharing risks and rewards 4.50 3.83 0.67 * 14 18 4 53.06 35.60 17.46Use of enterprise resource planning (ERP)/SCM software 4.43 3.36 1.07 * 15 22 7 49.42 25.30 24.12Process development and integration initiatives 4.36 4.21 0.15 16 8 28 47.88 43.40 4.48Notes: *p , 0.01; To what extent do the following improve collaboration between your firm and other SC members? (1 – does not improve; 7 – greatly improves)
  17. 17. . Creating alignment. Companies are working to establish common goals and Mitigating jointly develop appropriate measures. resisting forces . Teaming. People drive or derail collaboration and teams are a critical mechanism for enabling collaboration. Companies appear to be improving their teaming skills.A closer look at the functional responses (Table IX) reveals that just as purchasers and 285logisticians were most sensitive to collaboration resistors, they are also the optimistsregarding the influence of enablers. The average enabler scores for the three groupswere as follows: purchasers ¼ 4.89, logisticians ¼ 4.83, and manufacturers ¼ 4.66.Focusing on the differing perceptions, several contrasting views are highlighted below.These contrasts are drawn from the comparative means as well as the relativerankings of the 16 practices: Combined Purchasing Logistics Production P2 P2 P2 P2 P2 P2 P2 P2Collaboration enablers mean rank mean rank mean rank mean rankFrequent, open information sharingamong SC members 5.29 1 5.35 1 5.31 2 5.24 1A willingness to share informationamong SC members 5.27 2 5.35 1 5.53 1 4.95 2Efforts to establish common goalsamong SC members 4.97 3 5.08 3 5.04 3 4.80 4SC simplification (e.g. fewer SCparticipants) 4.92 4 5.05 4 4.81 9 4.90 3Collaborative efforts to adoptappropriate performance measures 4.91 5 5.01 6 5.02 4 4.75 6Use of cross-functional and SC teams 4.85 6 4.98 7 5.00 6 4.06 16Sharing of technical expertise withcustomers and suppliers 4.84 7 4.93 9 4.82 8 4.80 4Senior level managerial interactionamong SC members 4.84 7 4.90 10 5.01 5 4.68 7Making decisions based on total costanalysis 4.83 9 5.02 5 4.96 7 4.49 11Use of clear guidelines to manage SCrelationships 4.78 10 4.94 8 4.71 10 4.63 9Shifting roles and responsibilities (e.g.vendor managed inventories) 4.68 11 4.89 11 4.43 15 4.66 8Increased employee trainingregarding SC practices 4.58 12 4.63 12 4.56 11 4.56 10Creation of web linkages/portals toexchange information 4.52 13 4.59 14 4.55 13 4.46 12A defined and accepted approach tosharing risks and rewards 4.50 14 4.63 12 4.56 11 4.34 14Use of ERP/SCM software 4.43 15 4.36 16 4.55 13 4.55 13Process development and integrationinitiatives/workshops 4.36 16 4.51 15 4.35 16 4.15 15 Table IX. The strengthNote: To what extent do the following improve collaboration between your firm and other SC of collaboration enablers:members? (1 – does not improve; 7 – greatly improves) a functional comparison
  18. 18. BIJ . Logisticians are significantly more willing to share information than the other17,2 managers. . Logistics professionals are the only group to rank SC simplification outside the top five enablers. Purchasing professionals gave SC simplification the highest rating. Of note, although purchasers have made real progress with supply-base rationalization, logisticians still struggle with what often appear to be intractable286 complexity challenges. . Purchasers and logistics managers evaluate the collaborative value of teaming more highly than production managers. Perhaps, this perception arises from their more frequent participation on teams. . Purchasers believe that total cost analysis is vital to evaluating inter-firm collaboration opportunities. Production managers rank total costing as one of the least effective practices. The response pattern suggests that day-to-day experience with a practice influences how managers perceive its enabling impact. Managers rank practices they deal with daily higher than their counterparts who only hear about them in meetings, through in-house newsletters and in “lunchroom” conversations. More teaming, better training, more effective rotation programs and enhanced communication of “success stories” are needed to overcome this fragmentation of experience, which promotes silo thinking. The overarching theme conveyed by the enabler data is that although much work remains to be done, real progress has been made. As the data in Table X demonstrate, in Period 1, the top five resistors had scores that were significantly higher than their corresponding enablers ( p ¼ 0.01). By Period 2, although four of the top five resistors Resistors Enablers Rank Score Practice Rank Score Practice 2001 1 5.19 Inadequate information systems 1 4.64 Frequent and regular communication 2 4.87 Lack clear alliance guidelines 15 3.97 Use of clear guidelines to select allies 20 3.76 Use of clear guidelines to manage allies 3 4.84 Inconsistent operating goals 5 4.31 Use of common goals 4 4.83 Lack shared risks and rewards 18 3.83 Approach to share risks and rewards 5 4.61 Processes poorly costed 17 3.85 Use of total cost analysis 24 3.08 Use of activity-based costing 2007 1 4.82 Inadequate information systems 1 5.29 Frequent and regular communication 2 4.47 Lack clear alliance guidelines 10 4.78 Use of clear guidelines to manage SC 3 4.46 Non-aligned measures and goals 3 4.97 Establish common goalsTable X. 5 4.91 Collaborative adoption of measuresComparison of scores for 4 4.38 Unwilling to share risks and 14 4.50 Approach to share risks and rewardstop five resistors and rewardsenablers: Period 1 versus 5 4.30 Turf conflicts 16 4.36 Process development andPeriod 2 integration
  19. 19. remained unchanged, their scores were significantly lower ( p ¼ 0.05) and the scores Mitigatingfor the related enablers were all higher, three of them significantly. Managers are resisting forcesbeginning to grasp where and how to invest scarce resources to promote both changeand more effective collaboration.Measuring the performance benefits of collaborationDocumenting benefits is a critical part of an evaluation of the attractiveness of a 287collaboration capability. After all, anecdotal stories about SC collaboration’s benefitsabound. So too do stories about failed collaboration initiatives. A careful assessment ofbenefit achievability is therefore needed. To help quantify the benefits of SCcollaboration, we asked managers to indicate to what extent SC collaboration hasimproved their firm’s performance in ten specific areas (1 – not improved; 7 – greatlyimproved). The results reported in Table XI reveal that customer service benefitsremain collaboration’s most important contribution to firm competitiveness.Establishing more collaborative relationships enables companies not only to improvespecific service capabilities but also to insinuate themselves into customers’ keyvalue-added processes. Although collaboration’s top-line, revenue-generating impact isimportant, respondents also indicated that collaboration helps reduce a variety of costs.As a result, overall SC costs are improved and firm profitability goes up. Focusing briefly on functional perspectives reveals a relatively consistent view ofthe collaboration benefits (Table XII). This represents an interesting evolution inperception from Period 1 when the three managerial groups perceived the nature ofcollaborative benefits quite differently. That is, in Period 1, the most prevalent benefitsidentified by one functional area were viewed as relatively less important by the otherfunctions. One possible conclusion from this finding is that managers are doing abetter job of documenting and communicating the performance benefits that they areachieving. Despite the general convergence, supply managers place more emphasis oncollaboration’s ability to reduce the cost of purchased items and logisticians valueimproved on-time delivery benefits more than other managers. Evaluated holistically, these findings suggest that a well-thought-out, carefullyexecuted collaboration strategy promises to help a company profitably deliver highlevels of customer satisfaction. This combination of service and efficiency is the allureof most strategic initiatives, not just the collaboration-enabled SC.ConclusionThe data confirm that SC collaboration is a complex phenomenon. They also tell anintriguing story: as competition intensifies, some companies are responding by turningto collaborative initiatives. They are mitigating resisting forces and implementingcollaboration enablers. Their organizational structures and cultures are transformingto support their collaborative strategies. As a result, their collaborative capabilities areimproving and they are obtaining higher levels of customer service and productivity. However, success has not been universal. Many companies are struggling toleverage collaboration for competitive advantage. The barriers to success are many.They begin with managers’ understanding of the nature of SC collaboration, whichinvolves the sharing of resources – information, people, and technology – among SCmembers to create synergies for competitive advantage. Indeed, a high-levelcollaboration capability goes beyond managing transactions for efficiency to
  20. 20. BIJ 17,2 288 Table XI. Documenting collaboration benefits: Period 1 versus Period 2 Mean Rank Percentage of five to seven Period 1Collaboration benefit Period 2 Period 1 Difference Period 2 (15) Difference Period 2 Period 1 DifferenceOverall customer satisfaction 4.89 4.62 0.27 * 1 3 2 67.43 54.40 13.03On-time delivery/due-date performance 4.83 4.65 0.18 2 2 0 66.20 56.10 10.1Responsiveness to customer requests orunexpected challenges 4.82 4.58 0.24 3 1 22 66.92 57.00 9.92Firm profitability 4.69 4.51 0.18 4 6 2 60.95 49.00 11.95Overall product and SC costs (productivity) 4.67 4.38 0.29 * 5 9 4 60.10 46.70 13.4Cost of purchased items 4.65 4.58 0.07 6 5 21 59.57 54.40 5.17Inventory performance (e.g. cost, levels, turns) 4.64 4.48 0.16 7 5 22 58.78 48.40 10.38Overall product quality 4.40 4.16 0.24 * 8 11 3 50.83 40.40 10.43Transportation costs 4.16 3.89 0.27 * 9 12 3 41.60 34.70 6.9New product development capability(e.g. cost, time, uniqueness) 4.02 3.60 0.42 * 10 14 4 39.28 24.80 14.48Notes: *p , 0.01; To what extent has SC collaboration improved your firm’s performance in the following areas? (1 – not improved; 7 – greatlyimproved)
  21. 21. Mitigating Combined Purchasing Logistics Production P2 P2 P2 P2 P2 P2 P2 P2 resisting forcesCollaboration benefit mean rank mean rank mean rank mean rankOverall customer satisfaction 4.89 1 4.89 2 4.90 3 4.92 1On-time delivery/due-dateperformance 4.83 2 4.88 3 4.92 1 4.66 3 289Responsiveness to customers 4.82 3 4.80 5 4.91 2 4.86 2Firm profitability 4.69 4 4.85 4 4.64 5 4.53 5Overall product and SC costs 4.67 5 4.78 7 4.65 4 4.49 6Cost of purchased items 4.65 6 4.95 1 4.42 7 4.47 7Inventory performance 4.64 7 4.80 5 4.49 6 4.55 4Overall product quality 4.40 8 4.69 8 4.11 9 4.27 8Transportation costs 4.16 9 4.16 10 4.35 8 4.04 9New product developmentcapability 4.02 10 4.27 9 3.74 10 3.94 10 Table XII. DocumentingNote: To what extent has SC collaboration improved your firm’s performance? (1 – not improved; collaboration benefits: a7 – greatly improved) functional perspectivemanaging relationships for creativity and continuous improvement. Thus, for manyfirms, building a collaboration-enabled business model requires a transformation inthinking and practice. By failing to comprehend the character and magnitude of therequired change, these companies fail to: . leverage external driving forces; and . invest in collaboration enablers to mitigate prevalent collaboration resistors.Their structures and cultures remain frozen – or are only partially thawed – and acollaboration capability remains out of reach. The diversity of outcomes suggests that managers must carefully evaluate theircompanies’ motivation and readiness to pursue a collaboration-enabled SC. Theyshould assess managerial commitment to collaboration as well as managerialunderstanding of what is required to achieve it. Managers must then consider whetherthey can generate the momentum for sustained change. Simultaneously, they need toevaluate their companies’ abilities to implement specific collaboration enablers – theenablers that can most effectively mitigate the resistors that are present in their SC.Finally, they should ask whether or not they can persist even when the benefits areslow to emerge. Many companies simply do not have the vision or the patience to learnhow to collaborate successfully.ReferencesAnderson, P.F. (1982), “Marketing, strategic planning and the theory of the firm”, Journal of Marketing, Vol. 46 No. 2, pp. 15-26.Armstrong, J.S. and Overton, T.S. (1977), “Estimating non-response bias in mail surveys”, Journal of Marketing Research, Vol. 14 No. 3, pp. 396-402.Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal of Management, Vol. 17 No. 1, pp. 99-120.
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