2014 Cambridge Conference Business & Economics
ISBN : 9780974211428
Dr. Kumaraguru Mahadevan
Adjunct lecturer
Sydney Graduate School of Management (SGSM)
University of Western Sydney
Sydney, Australia
Supply Chain Visibility, Supply Chain Integration and Information Sharing – The
antidote for Supply Chain Myopia.
Purpose: This paper aims to report on the findings of industry based empirical study of
supply chain integration, supply chain visibility and information sharing in minimising SC
myopia.
Design/methodology/approach: The research was taken with the realist tradition. It begins
with the research is based on a deductive approach with rigorous and systematic analysis of
research material.
Findings: The findings confirm that level of supply chain integration, supply chain visibility
and information sharing are affected by organization dimensions and a number of situation
factors.
Research limitations/implications: This research paper is limited to the logistics and
manufacturing industries. The use of statistical analysis with only non parametric tests for
this research.
Practical implications: The work provides some insights for supply chain practitioners
Original/value: This paper draws on empirical research.
Keywords: Supply chain myopia, Supply chain integration, supply chain visibility and
information sharing
Paper type: Research Paper
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Abstract
The aim of this paper is to gain insights into the current directions to date taken by academia
and practitioners to incorporate SCV (Supply Chain Visibility), and IS (Information Sharing)
in organisations through SCI (Supply Chain Integration) if it can reduce supply chain (SC)
myopia.
This paper presents three key areas of interest to SC practitioners. Firstly, it highlights there
is evidence that increasing the level of SCI will reduce SC Myopia. Secondly, the limited
research on the management aspects of SCI, IS and SCV that raised three research questions.
Thirdly, the investigation of the three research questions will provide academics and
practitioners both the static and dynamic position of SCI, IS and SCV. The findings of the
study are recommended as antidotes to practitioners to reduce SC myopia
Key words: Supply Chain Myopia, Supply Chain Management, Supply Chain Visibility,
Supply Chain Integration, Information Sharing.
INTRODUCTION
In recent times, supply chain management (SCM) has attracted significant interests among
researchers, academics, and practitioners. According to Gundlach et al. (2006), Bowersox et
al. (2007), Simchi-Levi et al. (2000), Tan et al. (2002) and Speier et al. (2008), SCM has
increased in prominence as a field of inquiry and practice with evolving sophistication. The
terminology “supply chain management” (SCM) is used frequently in today’s materials
management environment are separated into two distinct substructures: physical flow and
storage of goods, and information associated with those goods, thus raising the question of
SCV (Lewis & Talalayevsky 2004). On the other hand the term “Supply Chain Myopia” or
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supply chain “short-sightedness” though not widely discussed in SC literature, although Hertz
(2006) in her study discusses about its effects on SCI within a SC and between overlapping
SC networks. Further, Hertz (2006) found according to Ludvigsen (2000) SCI would involve
IS, common standards, common cultures, joint planning, joint mission and increase in social
contract. Whilst literature review does not provide a clear definition of SC myopia Hertz
(2006), it may be interpreted as having limited or insufficient knowledge of the products,
processes, operations and sales volume of its upstream or downstream SC partners. Hence, it
can be argued that SC myopia is linked to SCI, IS and SCV. Further Hertz (2006) stated that
increasing SCI will reduce SC myopia and the study itself did not specify the impact of IS
and SCV on SC myopia. Moreover, the study did not reveal if SC “short sightedness” implied
as the lack of knowledge of products, processes, operations and sales volume between the
immediate SC partners, or amongst the SC partners in a SC.
On the contrary, there is a wide range of research publications available on SCI, SCV and IS
in the context of SCM. However, the available research mainly focuses on areas such as
technology/framework development, SC modelling and theory based studies, although
limited numbers of researchers have focused on hypothetical studies in areas of SCI and SC
performance. Based on these findings, it was observed that research in the areas of SCI, IS
and SCV to date mainly focused on technology related, but limited in the arena of
management issues relating to SCV, SCI and IS. On the contrary, Chapman et al. (2007),
Pearcy & Giunipero (2008), Cagliano et al. (2005), Wong & Wei (2007), Kwon & Suh
(2004), Vereecke & Muylee (2006) and Johnson et al. (2007) have carried out investigative
studies with some aspects of SCI and SC collaboration but lack in addressing SC myopia.
Likewise Clements & O'Loughlin (2007) conceptualised a supply chain myopia model,
however, their work was not linked to SCI, IS and SCV. Hence, there is a justification for a
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comprehensive literature review to establish the current position of the research focussing on
the management aspect of SCI, SCV and IS.
LITERATURE REVIEW
The literature review is structured into four major areas of investigation which comprises of:
state of global SC; emerging SC processes and strategies; current techniques, tools and
systems; and current integration practices in industry.
Current state of global supply chains
The state of SC represents the current issues, developments and emerging trends of SC.
Traditionally SCM has been an accepted terminology in manufacturing industries although
non-manufacturing groups such as the banking, finance and transport industry are
increasingly leveraging the concept. Rajib et al. (2002) found information flow or IS will not
be restricted to logistics chain, and simultaneously it is increasingly being used freely
between different enterprises with banks, government enterprises and other organisations
making a SC very dynamic. Although SC managers are familiar with mantra “supplier’s”
suppliers to “customer’s” customers linked by means of SCI Fawcett & Magnan (2002), on
the contrary only a few companies are actually engaged in such extensive SCI (Akkermans et
al. 1999; Harps & Hansen 2000; Kilpatrick & Factor 2000;Thomas. 1999;Whipple et al.
1999).
Therefore, only a few companies have adopted and disseminated formal SCM
definitions; and further even fewer have meticulously mapped out their supply chains to gain
visibility of their “supplier’s” suppliers or “customer’s” customers in an end to end fashion.
Consequently, Fawcett & Magnan (2002) raised legitimate question, “How do companies
define and approach SCI?”
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Whilst a plethora of definitions are available for SCI, the integration approach deployed by
organisations is of significance. Integration between organisations is an emerging trend
supported by technologies, whilst integration within organisations is in its mature stage
(Sandoe et al. 2001). Whilst there has been extensive research publications in the area of SCI
within the organisation focusing on ERP systems and business improvement a number of
researchers (Wang & Wei,2007;
Koh et al. 2006 and Mortensen & Lemoine, 2008)
established there is limited work of similar magnitude in the arena of integration between
enterprises. These researchers added most of the research focused on technical integration
with limited coverage on the management aspects or “softer side” of such as processes,
philosophies, strategies and policies.
Subsequently, there is a significant level of activity in the spectrum of mergers and takeovers
of the transport/storage businesses within the space of LSPs (Logistics Service Providers)
Lieb (2005). This industry has an estimated value of USD 76.9 billion according to Bowersox
et al. (2007), however the level of academic research related to SCI, IS and SCV was found
to be insignificant. In the midst of a growing trend of SCI on one hand, and simultaneous
increase in use of LSPs according to Fabbe-Costes et al. (2009) there is limited SCI research
that focuses on the role of LSPs and the role LSPs might play in the integration of their
client’s SC. Lieb & Bentz (2005) added LSPs today have become collaborative hence
advantageous for the big users of these services with a shift in power bases as they become
more selective who they do business thus, forcing small and mid-size customers to scramble
to find the logistics services they need. Additionally, there is evidence that control of the SC
is shifting amongst the SC partners, and further this shift in power bases has been enabled by
the application of the Internet (O'Toole & Robinson, 1999).
Whilst the research in relation to LSPs indicates a growing trend in SCI among SC partners,
on the contrary Fabbe-Costes et al. (2009) found it is still in its infancy. On the other hand,
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the term SCV has become a popular buzzword in SC literature Barratt & Oke (2007) and it
could be argued that it is possibly a “by-product” of SCI. However, these researchers further
added that SCV is viewed as an ill defined, poorly understood concept and assumed if
companies across SC have visibility of demand, inventory levels and processes that it will
improve organisational performance. On the contrary, Francis (2008) found the term
‘Supply Chain Visibility’ (SCV) to be ubiquitous, nevertheless within the spectrum of
emerging trends of SCM other researchers have pointed out its definition is still unclear.
There is also evidence that in the absence of supply chain visibility, trading partners have to
carve out data from their ERP (enterprise resource planning) or legacy systems (Katunzi
2011). Further, the data is sent to another organisation where it has to be uploaded to other
systems prior to the data being shared and evaluated which inevitably results in time loss for
end customers and higher costs across the supply chain. Based on Katunzi (2011)’s work it
appears that organisations value the importance of SCV.
Whilst SCM professionals consistently rank SCV as one of the most important issues
confronting them today, Francis (2008) and Anonymous (2009) reinforce this important issue
with an investigative study titled as “the smarter SC of the future” that describes SCV as the
biggest challenge for Chief SC officers. In contrast, Langley (2002) identified there is limited
value in researching on SCV for achieving SC improvement. Whilst SCV reviewed in a
standalone position highlighted limited development of the concept between organisations,
on the contrary Krishnamurthy (2002) investigated the fundamentals of SC velocity, SC
viscosity and further identified (IS) information sharing as a key element for gaining SCV.
In order to function in the current competitive times, SC partners need to be more informative
about other partners in a SC Wisner et al. (2005), hence the importance of IS. Further Wisner
et al. (2005) added, in order to manage the flow of information and materials organisations
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will need to share strategic level information at a corporate and business level. In recent
times, the benefits of SCI, IS and SCV in the supply chain environment have been noted by
many researchers (Priesmeyer et.al.2012; Power 2005; Sandoe et al. 2001; Swaminathan and
Tayur 2003; Wisner et al. 2005). These researchers posit that foremost tangible benefit of
integration is cost reduction, whilst process integration can also result in better quality.
Priesmeyer et al. (2012) found in recent years, business environments have dramatically
increased in dynamic complexity, requiring organizations to adapt more quickly and
frequently. Currently, organisations share mainly demand information between manufacturers
and retailers (Davenport & Brooks,2004). On the contrary, there are many reasons why
business enterprises in a SC are unable to gain visibility of demand information and some of
the impediments include: lack of communication of demand information throughout the SC
Fliedner (2003); lack of trust over complete IS between SC partners Hamilton 1994,
Stedman (1998) and Stein (1998); and an unprecedented level of internal and external
cooperation is required in order to attain the benefits offered by collaboration McLaren et al.
(2002).
Emerging SC strategies and processes
Some of the emerging trends in SCM in the arena of academic research consists of
integration of strategies, ERP 11 and Reverse Logistics (RL) in the context of SCV, IS and
SCI. The individual processes in an organisation are needed to activate the various functions
that are needed to be supported by strategies which can range from marketing, inventory
management, procurement and manufacturing Wollman et al. (1997), Hugos (2006) and
Thompson & Strickland (1998). Marketing and manufacturing strategies according to
Prabhaker (2001) that behave in a pendulum swing manner, goes from a classical
manufacturing phase to a post-industrial phase as they become market driven. Based on these
observations Prabhaker (2001) has redefined the way businesses can be managed in which
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the traditional marketing and manufacturing disappear with the emergence of a powerful
“integrated marketing-manufacturing”. The strategic and operational integration of marketing
and manufacturing further supported by the notion that the development and realisation of
these two concepts are strongly interdependent Prabhaker (2001). In addition, the theory
based strategy-structure-performance paradigm by Speier et al. (2008) was identified to
position information integration relative to the nature of relationships within the broader SC
strategies a firm employs. However, as firms become increasingly focussed on SCI as
strategic goal, the issue of information systems “fit” with overall SC strategy becomes critical
(Lee et al. 1999).
Similarly, ERP 11 has been viewed as an important concept to industry according to Moller
(2005) and until now its research has neither been consistent or conclusive as regards to the
content and status of this phenomenon. It is viewed as a “business strategy” with a set of
industry or domain specific application that build shareholder value by enabling and
optimising enterprise/inter-enterprise collaborative operational and financial processes Bond
et al. (2000). Whilst conceptually ERP 11 could support and enable SCV, there is limited
research supporting this view.
The other areas of interest where SCV and SCI are of relevance is reverse logistics (RL),
however its research is limited to process integration mainly discussed by Rogers & TibbenLembke (1998). Simultaneously, Mahadevan & Samaranayake (2006) proposed an integrated
SC framework for RL operations incorporating manufacturing processes, bills of materials
and scheduling profiles, however the approach taken can only partially address SCV.
Current tools, systems and techniques
In the current end-to-end SCM environment organisations use a series of techniques, tool and
systems to manage and optimise resources ranging from sourcing, procurement,
warehousing/distribution, manufacturing and sales. Moreover managing the various stages of
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the SC a set different tools, techniques and systems may be used. They may be summarised
as follows: tools applied such as CPFR (Collaborative Planning Forecasting and
Replenishment) and SC systems; techniques such as SCOR model and Integrated Approach
(IA); and systems including ERP and SCM systems.
Within the space of a collaborative SC, the future evolution of CPFR will permit an
automatic transference of SC partners demand forecasts into vendor production schedules
and SC planning applications such as warehousing and inventory control applications of ERP
systems Skjoett-Larsen et al. (2003). These researchers further added the next logical step in
the development or enhancement of CFPR is the inter-enterprise integration of various ERP
systems planning for SC partners. Conceptually such an arrangement could increase the
level of SCV across a SC, however, there is limited research supporting that view.
In reviewing some of the other techniques that is currently proposed for use in industries,
Samaranayake (2005) proposed the Integrated approach (IA) that combines the activities,
materials, resources and suppliers involved in a manufacturing operation which forms the
basis for development of a SCM framework. Further its main features include the integration
of individual components, elimination of interfacing steps between SC partners,
representation of relationships and whilst it addresses SCI between organisations the
approach does not specify collaborative planning among SC partners hence the limitations in
addressing SCV.
Within the space of the tools currently applied, the ERP integrates all the business functions
within an organization (Shehab et al. 2004; Davenport & Brooks 2004). Consequently the
movement towards B2B e-commerce and SCM have forced ERP system providers to reevaluate their models and thereby adopting a shift towards more flexible systems to
compensate for the need to adapt to changing business cultures (Tarn et al. 2002).
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Subsequently, Dwyer (2006) found the SCOR (Supply Chain Operations Reference) model
claims to add value to SCV through the addition of standardised metrics. In addition the
model operates within a cross functional space provides a SCV solution across the enterprise
and companies can benefit from this consolidated knowledge base. Likewise, Haydock
(2003) views the SCOR as a cross industry model that decomposes the processes within a SC
and provides a best practice view of SC processes further becomes a collaboration tool to
improve SC processes between SC partners end to end SC. Although in contrast Haydock
(2003), Scalet (2001) and Atkinson (2001) found the application of the SCOR model in SC
operations has limited support of SCV, whilst Power (2005) found the SCOR model has
failed to interface SC partners.
Integration Practices in industry
Strategies, tools, processes, systems and techniques collectively enable IS and SCV through
SCI across a SC. Consequently, SCI, if inappropriately conceptualised can have a detrimental
impact on market responsiveness and value generation capability (Rai & Bush, 2007). In
integrating competencies and resources of diverse SC to provide better service to customers,
enabling SCI requires a new way of thinking (Stank et al.,2001). Further indentifying six
competence areas that top firms deploy to achieve SCI include: customer integration; supplier
integration; material and service supplier integration; technology and planning integration;
and relationship integration. In addition Rai & Bush (2007) identified innovation in Internet
technologies, e-business and process standards, such as Rosetta Net, are challenging
assumptions to manage resources across supply chains to create value. Further, these
researchers identified five types of SCI configurations: fragmented chains; end to end
integrations; modular chains; and web solutions chains.
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FINDINGS OF LITERATURE REVIEW AND RESEARCH QUESTIONS
The terminology SC myopia is not widely discussed in research publications with limited
discussions and unclear definitions. However, there is evidence that SC myopia can be
minimised through increased SCI between overlapping supply chains, although there is a lack
of similar level of discussion of similar effects as a result of SCV and IS. On the other hand,
there is a wide spectrum of findings that relate to SCI, SCV and IS in the context of SCM,
both in its current environment and its possible future expectations were identified. Both
industry practitioners and academics have recognised that businesses are being faced with
challenges in which they need to be competitive and having a highly visible SC is one of such
an important lifeline to ensure competitiveness is met. However, such a visible SC can only
be effective if SC partners are highly integrated and share information with another. On the
other hand, whilst cross enterprise integration along SC is increasingly occurring, it is
unlikely that all firms will have collaborative supply chains (Bowersox et al.,2007).
In reviewing the state of supply chains, it is evident that SCI is not discussed extensively in
terms of the current operations in industry, although SCV is frequently debated within the
spectrum of the future and emerging trends. Whilst the mergers and takeovers between SC
partners could possibly initiate and encourage SCI and IS, researchers have had minimal
focus in this area Fabbe-Costes et al. (2009). Equally, researchers have concentrated on
organisations’ requirements and directions in terms of SCV, IS and SCI in the future as a
result of mergers and takeovers. Hence, the current state of SCI, IS and SCV in practice is
somewhat inconclusive leading to the research question: What is the current state of play of
SCI, IS and SCV in organisations across a SC? The purpose of this research question
(referred to as RQ1) is to identify and position the current standing of SCI, IS and SCV
within the broader SC practices in industry and how it impacts on SC myopia.
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Whilst RQ1 aims to position the current standing of SCI, IS and SCV, the desired position on
the other hand reflected in the literature review focuses on the required degree of SCI, IS and
SCV for increasing collaborative relationships between SC partners. Although there is
extensive research publications available on the “hard” or technical aspects of collaborative
relationships, there are however limited research material on the “softer” or management
issues such as collaborative relationships across supply chains. These collaborative
relationships can exist across organisations at various levels and include forecasting, demand
planning, supply planning, network planning and distribution resource planning with SC
partners. Although collaborative relationships exists at various levels of many functional
areas, the main area for discussion in research has been collaborative demand planning
among SC partners which has metamorphosised from a simple sales consumption and
profitability analysis to a combination of many inputs including sales consumption,
profitability analysis, market estimates/knowledge and trends through collaborative
relationships. On the other hand, within the spectrum of collaborative SC relationships,
collaborative planning forecasting and replenishment (CPFR) is identified as the most recent
prolific management initiative that provides collaboration and SCV in a SC (Attaran &
Attaran,2007). Further, these researchers concluded CPFR as an enormous potential for
reducing the total cost of SC. Skjoett-Larsen et al. (2003), McLaren et al. (2002) and Fliedner
(2003) found in the CPFR process demand forecast (sales forecast) is the key information that
is exchanged, however there is limited information on whether other operating
data/information such as resource capacities (labour, production, storage and distribution
capacities) and materials/products are exchanged or shared among SC partners. Thus, it can
be argued that demand visibility alone of an organisation is not sufficient as only contributing
factor for total SCV across the end to end SC.
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Whilst research has revealed that both industry practitioners and academics have recognised
IS across businesses is a vital ingredient for SC excellence, however from a management
perspective there is no conclusive evidence on how relationships are best managed in
industry across collaborative SC partners. This leads to the research question 2 (RQ2): What
degree of SCV, IS and SCV are required by management in strategising and
operationalising the desired aspects of SCV, SCI and IS in a collaborative SC? The purpose
of RQ2 is to identify and establish what degree of SCV, SCI and IS managers need to address
in managing a collaborative relationship (reducing SC myopia) that not only exchanges and
make decisions on sales and demand information, and financial transactions but also key
operational aspects (production, storage, and distribution) of a SC. They may include, from
an operational perspective the ability to influence the planning, control and execution of
materials, resources, activities of other SC partners, understanding of operating information
of upstream and downstream SC partners. Further, the degree of SCI, SCV and IS required
by managers in their collaborative SC may vary between one SC partner to another. Prior to
establishing the degree of SCI, IS and SCV required by managers for a collaborative
environment for competitive and sustainable SC practices among partners, it is necessary to
gain a holistic view of the supporting elements such as processes, strategies, tools, systems,
policies and philosophies that play a significant role in strategising and operationalising these
practices are discussed next.
In the current SC practices, in particular SCI across SC partners, the use of ERP systems and
EAI architecture, according to Bowersox et al. (2007) are identified as systems and
infrastructure play a crucial role in enabling vital links among SC partners. However, the
focus of collaborative relationships among SC partners to date has been firstly in the
transactional space in the area of accounting or payment processing for procurement of goods
and services. Secondly, collaborative demand planning is based on sales forecasts and the
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consumption rate. Furthermore, literature review revealed there is limited research in
application of related strategies to manage these collaborative relationships, however Van
Laneghem & Vanmaele (2002) proposed a new paradigm for tactical demand chain planning
(DCP) within the space of collaborative SC planning, highlighting the necessity to integrate
market information into planning techniques that will reduce uncertainty through the use of
market information such as lead times, capacities, prices, product demand, and promotions.
Moreover, Prabhaker (2001) based on his observations on manufacturing and marketing
strategies, found traditional marketing and manufacturing strategies can be merged into a
powerful
integrated
“marketing-manufacturing”
strategy.
However,
successful
implementation of such an integrated marketing-manufacturing strategy requires a
fundamental rethinking of classical marketing, manufacturing economics and integration of
business functions (Prabahker, 2001). Whilst there is fundamental thinking in conjunction
with integration of strategies within an organisation, limited evidence of similar research
mirrored across a SC. Overall, there is limited research work on these key aspects and/or
addressing key issues associated with strategies, processes, tools, philosophies and systems
associated with SC practices, in particular integrated systems supporting collaborative SC
practices that will provide SC partners an end to end SCV thereby leading to research
question 3 (RQ 3): What elements (strategies, philosophies, processes, tools, systems) and
frameworks are required by management in operationalising and strategising SCI, SCV
and IS in a collaborative environment?
The purpose of RQ3 is to identify elements (information systems, tools processes, policies
and strategies) that are required to address not only demand planning but also operational
planning in a collaborative environment.
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Research methodology
In examining the theoretical perspectives supporting SCM, Storey et al. (2006) indicated that
there is substantial gap in the theory and practice in the emerging field of SCM, in addition
only a few practitioners attempted to prescribe SCM with modern theory. On the other hand,
Mentzer et al. (2004) indicated the need for a unified theory of logistics in supporting SCM
as researchers have not attempted to develop a theory of the firm that accommodates the role
of logistics. Furthermore SCV, SCI and IS are emerging topics in field of SCM which have
limited literature on the prescription of modern theory. A deductive reasoning approach is
chosen although there are limitations of the theory of the firm accommodating the role of
logistics to conclude the RQ’s derived through literature review, data collection through a
survey questionnaire and hypothesis testing.
The survey questionnaire is based on six constructs comprising of 48 variables of categorical
data include the following: organization dimensions; importance of SC operations to an
organisation; the current level of SCI, IS and SCV in an organization; understanding of SCI,
IS and SCV in an organization; development of a tool for enabling SCI; and strategies in an
integrated SC. The variables are further categorized as: “Yes or No”, single response,
multiple response, rating (Likert scale ranging from 1 to 7) and open-ended. The survey was
conducted internationally, targeting 600 organisations engaged in SCM, concentrating on 5
countries, including Australia, USA, UK, Germany, and China. There were 120 companies
targeted in each country, and were chosen with respect to size, based on volume of sales
(AUD) broken into the following categories: <50 million; 50 to 250 million; 250 million to 1
billion; and 1 billion to 5 billion. The targeted organisations were further divided into 20
categories by sales for each country. From each category based on the available contact
information the surveys were sent to the executive (CEO), senior manager (General
Manager/Vice President) and operational manager (Supply Chain Manager). A total of 64
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(10%) responses were received from the 600 survey questionnaires sent out, mainly from
large MNC with global operations involved in manufacturing, logistics, 3PL services, retail
and distribution. The response rate of 10% is as expected as it is often difficult to get senior
managers to participate in surveys of this nature due to their time constraints, and maintaining
confidentiality of an organisation’s information. The data analysis is divided into descriptive
analysis and statistical analysis. The descriptive analysis presented tabular and graphical
representations of some of the key variables from each construct.
The statistical analysis includes the formation of a series of hypotheses with variables, and
statistical tests to support each RQ. The statistical tests used include the t-tests, chi-square
test, and correlation analysis. ANOVA was not used as it does not support statistical analysis
between categorical variables. Figure 1.0 indicates the high level relationship between the six
constructs and the RQ’s that is linked by different colored arrows. Further, Figure 1 expands
into Table 1.0 by including the variables needed to support each RQ.
Constructs
Research
Questions
(B)
Importance of
SC
(C)
Current level of
SCI,IS & SCV
RQ1
(A)
Organisation
Dimensions
Common to
3 RQs
RQ2
(D)
Understanding
of SCI,IS, & SCV
RQ3
(E)
Development of
SCI tool
RQ1
RQ2
(F)
Business
Strategies
RQ3
Figure 1.0: Hypothesis Model - linking constructs to research questions
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The tests of means is conducted to examine if the categories of the variables used to support
RQ 1,2 and 3, differ statistically or have a difference in their population means (Ho: µ yes= µ
no and H1: µ yes≠µ no). In order to test these variables, four survey questions with “yes”
and “no” categories were tested using with t-tests. These questions are located in Table 1.0
(shaded in yellow) as follows: Do you currently measure your SC performance?; Does your
organization’s SC cross geographic boundaries?; Does your organization currently have a
systematic approach for SC planning (such as a framework/platform) in place?; and Has your
organisation clearly documented its business scenarios in terms of business model and SC
partners.
The t-tests indicated, whilst the results are not reported, that the categories of the dependant
variables in column 1 to 6 of Table 1.0 had a difference in their population means and
therefore further statistical analysis can now be applied. The hypotheses are formed with
variables within column 1, and in between column 1 and column 2 to 6. The hypothesis are
tested for strength of its relationship using correlation analysis and followed by further
examination of its significance using chi-square tests.
Variables
Table 1.0: Link between constructs, research questions, and variables
1
2
3
4
5
6
Constructs A
Constructs B
Constructs C
Constructs D
Constructs E
Constructs F
RQ1,2,3
RQ 1 & 2
RQ 1,2 & 3
RQ 1 & 2
RQ 3
RQ 3
Level of
management
% of SC in country
of operations
Level of SCI –
supply chain
integration
highly visible SC
beneficial
Factors for
developing a
integration tool
No supply points
% of SC in
Australia
Level of ISinformation
sharing
SCV will increase
through
reengineering of
business processes
Data an
organization
prepared to
share
No distribution
Issues and
Level of SCVsupply chain
sharing info can
Integrating
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Business
Strategy
Manufacturing
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Variabl
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1
2
3
4
5
6
Constructs A
Constructs B
Constructs C
Constructs D
Constructs E
Constructs F
RQ1,2,3
RQ 1 & 2
RQ 1,2 & 3
RQ 1 & 2
RQ 3
RQ 3
points
concerns for SC
visibility
increase SCV
strategies
Strategy
No of end to end
SC partners
Seamless SC
Planning
Type of
information
shared
Ability to influence SC
players
Outcomes of
integration
Planning strategy
Methodology in SC
planning
Key
performance
measures for SC
ability to influence SC
players
Criteria for
Sales Marketing
Industry type
sharing info
Strategy
Region of
operations
Impediments to SC
planning
level of
understanding of
other SC players info
Inventory
Management
Strategy
Business Activity
Variables for t-tests
Currently
measure SC
performance?
Procurement
Strategy
Currently measure
SC performance?
Documentation of
business
scenarios?
Systematic
approach for SC
planning?
Does your
organisation cross
boundaries?
Descriptive Analysis
The breakdown of the survey responses by industry types indicated 22% and 14% of
respondents belonged to FMCG and Pharmaceutical respectively. Moreover 52% of
respondents are senior executives made up of 39% at General Manager level and 13% at
CEO level and simultaneously 50% of the CEO’s lead transportation businesses.
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The variables included in the organisation dimensions such as sales volume, no of end-to-end
SC partners and number of employees are summarized in Table 1.0, whilst the reported levels
of SCI, IS and SCV are presented in Table 2.0. These variables form the basis of hypotheses
formation across RQ1, 2 and 3. In defining the various levels of SCV and SCI (Table 2.0) the
categories ‘High’, ‘Medium’, ‘Moderate’, ‘Limited’ and ‘No’, represented by an increasing
scale 1 to 5 where 5 is the highest and 1 is the lowest. The level of SCV were categorised as
“high visibility”, “medium visibility”, “moderate”, “limited visibility” and “no visibility”.
Whilst the level of information sharing is categorised into “in depth”, “moderate”, “some
extent”, “little” and “none”. These levels are based on the respondents perception of the
current level of SCI, IS and SCV in their respective organisations. Further there is limited
research supporting in ranking these levels, although some researchers have applied a scoring
system. Concurrently, Barratt and Oke (2007) in their studies relating to SCV have also
adopted high visibility, low visibility and medium visibility as categories describing the level
of SCV. For the purpose of this research the categories applied the variables are based on
what the responding organisation’s perceived level of SCI, IS and SCV as there is limited
research studies in this area. It is observed that majority of responding organisations have a
moderate level of SCI and level of SCV sharing only selected information amongst SC
partners.
Table 2.0: Key organisation dimensions
Sales Volume
Frequency
No of end to end SC
players
Frequency
No of employees
Frequency
< 50 mil
2
3%
3 and 5
13
20%
< 500
16
25%
50 to 250 mil
15
23%
5 and 8
15
23%
500 to 2500
16
25%
250 mil to 1 bil
12
19%
8 to 12
5
8%
2500 to 10000
13
20%
1 bil to 5 bil
15
23%
12 and 15
16
25%
>10000
19
30%
> 5 bil
20
31%
>15
15
23%
Total
64
100
Total
64
100
Total
64
100
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Table 3.0: Current Level of SCV, IS and SCI
Current Level of SCI
Frequency
Current level of IS
Frequency
Current Level of SCV
Frequency
High Integration
6
9%
All
8
13%
High Visibility
13
20%
Medium Integration
14
22%
Moderate
15
23%
Medium Visibility
13
20%
Moderate Integration
25
39%
Selected
16
25%
Moderate Visibility
18
28%
Limited Integration
16
25%
Limited
15
23%
Limited Visibility
12
19%
No Integration
3
5%
None
10
16%
No Visibility
8
13%
Total
64
100
Total
64
100
Total
64
100
Table 4.0 provides a summary (color coded) of the key variables used in the formation of
hypothesis to support RQ2. It was observed that there is a strong support for IS, SCV and SCI
in terms of redefining internal business processes to gain SCV and sharing of operating data
in an integrated environment. Further the sharing of operating information can increase an
organisation’s SCV, hence it can be argued that IS, SCI and SCV could be the key to
minimising SC myopia.
Table 4.0: Current level of understanding of SCI, IS and SCV in organisations
Variable
Strongly
Disagree
Moderately
Disagree
Slightly
Disagree
Neutral
Slightly
Agree
Moderately
Agree
Strongly
Sharing operating data in
SCI environment
2%
2%
6%
15%
20%
20%
27%
Benefit in having high SCV
0%
2%
2%
5%
20%
28%
44%
SCV requires reengineering
of business processes
0%
2%
5%
6%
17%
36%
34%
Increase in SCV will
increase SC costs
6%
31%
9%
19%
22%
9%
3%
IS will increase SCV
0%
2%
2%
3%
28%
42%
23%
Agree
In examining the key variables that support RQ3 it was found there is an existing lack of trust
between SC partners as there is a need for a formalised structure (Fig 3.0) with 72% of
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respondents supporting the need of a mechanism to monitor information flow, 78%
supporting information protection, whilst 63% highlighting the need for legal obligations and
56% valuing internet security. It may be argued that these findings indicate organisations are
willing to share information under a governance process.
Figure 2.0: Factors for developing a SCI tool
Figure 3.0: Criteria for effective integration
In developing such a framework (Fig 2.0), 88% of organisations placed importance in
information security and 78% implied costs are important. Whilst there is empirical evidence
indicating that organisations are concerned about SCV, SCI, SC flexibility and information
security, in order to be conclusive it will be necessary to statistically test them with other
variables such as the organisation dimensions. The possible outcomes of integration as a
result of IS where 45% of organisations believe that there is a moderate case for
organisational boundaries will be blurred through ongoing SCI whilst 19% indicated there
will be a shift from monopoly to oligopoly and 23% of organisations indicated there will be
a shift in power bases amongst SC partners.
Statistical Analysis
A series of hypothesis are formed to support each RQ. However, prior to conducting any
statistical analysis, the t-tests are used to determine if there is a difference in population
means between its categories and in addition normality tests are carried out to examine if the
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data is distributed normally. Following the t-tests, 88, 108 and 54 possible hypotheses were
identified to support RQ 1, 2 and 3 respectively based on combinations of variables indicated
on Table 1.0. These hypotheses incorporated key variables such management level, size of an
organisation, outcomes of integration, current level of SCV, SCI and IS between SC players.
Each hypothesis consists of a null hypothesis (Ho) in which the variables (e.g. number of
employees and the current level of SCI) had an independent relationship and alternative
hypothesis (H1) that proposed dependency between the variables. It was found that 11
hypothesis were significant (at  = <0.1) by applying Chi-square tests supporting RQ 1, 2
and 3 are reported. Further, some of the contingency tables were collapsed resulting in 3 by 4
tables due to insufficient expected number of observations in some cells.
The research work of Pearcy and Giunipero (2008), Caglianao and Spina (2005), Wang and
Wei (2007), Kwon and Suh (2004), Vereecke and Muylle (2006) and Johnson et al. (2007) in
the area of SCM were reviewed, although it highlighted there is limited relevance to meet the
needs RQ 1, 2 and 3, the approach taken is of importance, thus further strengthening the need
for this research. The following observations were made:(1) the researchers used organisation
dimensions such as size of firm, level of management and information visibility to form
hypothesis (2) hypothesis formation between non organisational dimensions such as
structural collaboration and performance improvement (3) the depth and the breadth of the
research focused on technology related issues such SC collaboration, e-procurement instead
of management issues dealing with SCV, IS and SCI incorporation in an organisation.
The following hypothesis found to be statistically significant in support of research
questions (RQs) 1, 2 and 3 are presented as follows:
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RQ1: What is the current state of SCI, IS and SCV in organisations across a SC?
1. Ho: There is no relationship between the number of employees and current level of
SCI, H1: There is a relationship between the number of employees and current level
of SCI.
2. Ho: There is no relationship between the number of employees and the current level
of SCV, H1: There is a relationship between the number of employees and the current
level of SCV.
3. Ho: The current level of SC1 has no influence the current level of SCV in an
organisation, H1: The current level of SC1 can influence the current level of SCV in
an organisation.
4. Ho: There is no relationship between level of management and the benefit of having a
highly visible SC, H1: There is a relationship between level of management and the
benefit of having a highly visible SC.
5. Ho: There is no relationship between the type of business activity and the current
level of SCV, H1: There is a relationship between the type of business activity and the
current level of SCV.
RQ2: What degree of SCV, IS and SCV are required by management in strategising
and operationalising the desired aspects of SCV, SCI and IS in a collaborative SC?
6. Ho: There is no relationship between the number of end-to-end SC partners, and the
current level of understanding of key operating data of SC players, H1: There is a
relationship between the number of end-to-end SC partners, and the current level of
understanding of key operating data of SC players.
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7. Ho: There is no relationship between redefining internal processes to gain SCV and
the increase in SCV that will in turn increase SC costs, H1: There is a relationship
between redefining internal processes to gain SCV and the increase in SCV that will
in turn increase SC costs.
8. Ho: There is no relationship between the numbers of end-to-end SC partners, and
increasing SCV can in turn increase SC costs, H1: There is a relationship between the
numbers of end-to-end SC partners, and increasing SCV can in turn increase SC costs.
9. Ho: There is no relationship between the levels of management and increasing SCV
can in turn increase SC costs, H1: There is a relationship between the levels of
management and increasing SCV can in turn increase SC costs.
RQ 3: What attributes (strategies, philosophies, processes, tools, systems) and
frameworks are required by management in operationalising and strategising SCI, SCV
and IS in a collaborative environment?
10. Ho: There is no relationship between the number of end-to-end SC partners, and the
current level of understanding of key operating data of SC players, H1: There is a
relationship between the number of end-to-end SC partners, and the current level of
understanding of key operating data of SC players.
11. Ho: The current level of SCV has no relationship on the outcomes of integration in
organisations, H1: The current level of SCV has a relationship on the outcomes of
integration in organisations .
Research findings and recommendations
The statistical tests (Table 5.0) present the results for hypothesis supporting RQ 1, 2 and 3. In
support of RQ1, the correlation analysis for hypothesis 1, indicated a significant correlation
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between the size of an organisation (based on the number employees), and the level of SCI
(p<0.05), therefore reject Ho. Hence, it can be argued that larger organisations dominate the
level of SCI, which is supported in this paper by several researchers (Chapman et al., 2007
and Frohlich, 2002), furthermore significance testing found (p=0.054) supports the case.
There is limited correlation between the size of an organisation, and its level of SCV, as
indicated by hypothesis 2 although not significant at 5% but significant at 10% (p= 0.065,
reject Ho at 10%). However, literature review indicates limited research has been carried out
to support this hypothesis. Interestingly, there is a strong correlation between the level of
SCI and SCV, corr coeff r = 0.361 and p<0.05, reject Ho, indicating that SCV increases with
SCI. The literature review found the definition of SCV itself is unclear despite the
advancement of SCI technology in organisations, hence there is a certain amount of
ambiguity. Despite these ambiguities organisations can leverage of these findings to address
issues relating to postponement
and outsourcing from other countries
minimise SC
uncertainties in these areas.
The level of management and the benefit of having a highly visible SC supported by
(hypothesis 4) indicated a negative correlation (r = - 0.161, and not significant at 5% but is at
10%, p = 0.098), hence it appears that senior management see a lesser need for a highly
visible SC than operational managers. Contrary to these findings, it is recommended to all
levels of management in organisations that a highly visibly SC is beneficial in minimising SC
myopia. There is limited correlation (r = 0.08) between (hypothesis 5) the business activity of
an organisation and the level of its SCI (p < 0.10), however there is limited research available
as other researchers have not fully explored these two components, the descriptive analysis of
this research found 36% of respondents belonged to pharmaceutical and FMCG businesses
hence the expectation of a significant correlation.
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There is significant correlation between redefining of internal processes to gain SCV and any
increase in SCV that will in turn increase SC costs, (hypothesis 7), (p=0), giving an indication
to management in organisations in relation to RQ2 that costs and benefits associated with SCI
and SCV must be closely examined prior to its incorporation in organisations, hence
management must weigh the benefits of minimising SC myopia against the incremental costs
incurred. Although (hypothesis 8) and (hypothesis 9) indicated limited and weak correlation,
there is some evidence that both the level of management and the end to end SC partners play
a key role in the case where increasing SCV can in turn increase SC costs, supported sig
(p<0.05). Hence CEOs need to justify any incremental costs in the minimisation of SC
myopia.
In support of RQ3, although a weak relationship was identified significant at 5% (p = 0.045,
hence accept Ho) and whilst other researchers have examined areas such as the relationship
of IS as a result of IT applications, (hypothesis 10) the greater the number of end to end SC
players the higher level of understanding of SC partners key operating information has not
been fully explored. However, the descriptive analysis found there is support for a
mechanism to monitor information flow, a need for information protection and Internet
security in sharing data among SC partners. Consequently with this view, it is recommended
that management/ CEOs introduce frameworks/mechanisms for their global supply chains
that will enable continuous information flow to minimise SC myopia, particularly in
managing disasters such as a September 11.
Table 5.0 Summary of test results
Chi square analysis
Correlation
Analysis
2 values
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p-value (p)
Pearson Correlation Coefficient (r)
p –value
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Chi square analysis
Correlation
Analysis
RQ1
RQ2
RQ3
H1
12.36
0.054
0.264
0.035
H2
13.994
0.065
0.120
0.344
H3
8.529
0.083
0.361
0.003
H4
7.840
0.098
-0.161
0.204
H5
12.435
0.053
0.08
0.485
H6
10.334
0.035
0.000
0.998
H7
114.129
0.000
0.605
0.000
H8
12.996
0.043
0.076
0.550
H9
12.453
0.014
0.074
0.559
H10
9.716
0.045
0.035
0.783
H11
11.705
0.069
0.099
0.435
It was observed (hypothesis 11) the higher the current level of SCV the more profound the
outcomes are such as blurring of organisational boundaries or a shift in power bases along the
SC supported by a weak relationship (r = 0.099) but significant at 10% (p = 0.069). However,
descriptive analysis indicate organisations place importance on the outcomes of integration,
such as a shift in power bases, a shift from monopoly to oligopoly and the blurring of
organisational boundaries further supported by literature review that ongoing SCI leads to
blurring of organisational boundaries. Based on this research findings senior managers in
organisations can predetermine the degree of IS, SCI and SCV required in their supply
chains. This is particularly important for organisations engaged in LSP activities where a
substantial numbers of mergers and takeovers have materialised, evidenced by literature
review to strategically position their businesses for each SC account or major customers.
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Limitations
The limitations of this research study included the use of categorical data as organisations
are usually not willing to reveal the exact amount sales volume in dollar terms or number of
employees resulting in the use of categorical data. Hence, limiting statistical analysis with
only non parametric tests for this research. In addition the survey questionnaire should have
included the academic qualifications of the respondent to gain further understanding of the
respondents’ view of their interpretation of the different levels of SCV, IS and SCI.
Furthermore additional samples are being collected with the aim getting improved statistical
analysis.
Conclusions and Further Research
SC myopia is not a popular terminology in SC research publications. However, there is
evidence that it can be reduced by increasing the level of SCI in overlapping supply chains,
although similar effects are not observed with SCV and IS. The research study found senior
or strategic managers envisages lesser need for a highly visible SC than managers at an
operational level. Moreover, industry practitioners were found to have a clear understanding
of SCI, IS, and SCV in the context of SCM although literature review found the opposite.
Further, the level of SCI, IS and SCV is influenced by the size of an organisaton, industry
type and the number of end to end SC partners.
The findings of literature review, descriptive analysis and hypothesis testing were synthesised
into a series of antidotes recommended to managers or practitioners aimed at minimising SC
myopia and uncertainties. Future researchers could add value by investigating supply chain
strategies to minimise uncertainties.
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