Challenges and opportunities for supply chains in turbulent times

Citation

Hong, P., Dobrzykowski, D. and Won Park, Y. (2012), "Challenges and opportunities for supply chains in turbulent times", Benchmarking: An International Journal, Vol. 19 No. 4/5. https://doi.org/10.1108/bij.2012.13119daa.001

Challenges and opportunities for supply chains in turbulent times

Article Type: Guest editorial From: Benchmarking: An International Journal, Volume 19, Issue 4/5

Introduction

Turbulence is characterized with enormous uncertainty, radical changes and dynamic complexity that require organizations to develop flexibility, ambidexterity and network capability (Shamsie et al., 2009; Autry et al., 2010; Liao et al., 2010; Pavlou and El Sawy, 2011). As the scale of such dynamic and complex requirements are extended to global market, the degree of challenges and opportunities to businesses is beyond description.

Key questions in relation to turbulent environment include:

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  how can meaningful challenges and opportunities be captured and translated into improved performance at the national, organizational and project levels (Chan et al., 2008; Elbanna and Child, 2007; Hong et al., 2011);

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  how can new conceptual research models motivate the development, application and testing of new management theories (Gao and Li, 2010; Miller and Tsang, 2011) and finally; and

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  what empirical evidence of supply chain practices exists in this turbulent environment to support or refute these beliefs (Fry et al., 2005; Roh et al., 2011; Yang et al., 2011)?

This double special issue includes 13 papers that cover a broad range of challenges and opportunities related to supply chains in turbulent times. The impetus for this special issue is the growing recognition of the dominant role of emerging benchmarking issues in all of its forms in today’s turbulent global economy. This special issue includes three sets of papers. The first set (three papers) contains review and conceptual papers on benchmarking and types of supply chains. The second set (four papers) primarily features case studies which examine emerging business practices of Korean and Japanese firms. The third set (six papers) primarily provides empirical (survey-based) studies which explore a broad operational and supply chain issues that cover enterprise resource planning (ERP) implementation, trust-based and IT-enabled supply chain management, cross-functional business process issues including procurement, sustainability and corporate reputation practices.

Benchmarking practices, supply chain management types and integration (3)

The first set of three papers provides broad research frameworks on benchmarking, two types of supply chains and supply chain integration.

The opening paper, “Evolving benchmarking practices: a review for research perspective” by Hong et al. reviews literature on benchmarking practices and provides new research perspectives. Benchmarking is an important business practice. As firms operate in turbulent today’s business environment, it is more critical to define effective benchmarking practices of firms in the context of the global market. Authors identify research streams based on the Benchmarking: An International Journal papers 2001-2010. They also propose a research framework for the comprehensive study of benchmarking practices and also discuss future research issues related to sustainable practices and issues related to how to make the supply chain suited to a sustainable structure.

The second paper, “Extending the efficient and responsive supply chains framework to the green context” by Youn et al., develops two types of green supply chains based on Fisher’s seminal work. This paper shows how Fisher’s perspective of efficient versus responsive supply chains can be a stepping stone to the development of two green supply chains: eco-efficient and eco-responsive supply chains. Toward the this end, the authors selected case studies of two Korean global companies, Pohang Iron and Steel Company (POSCO) and Samsung Electronics (SEC). Through a rich analysis, the authors suggest that:

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  POSCO tends to stress process technology innovation as a means to address green pressures, while SEC accentuates the green product strategy.

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  Although an eco-efficient supply chain focuses on maintaining an environmental standard across the supply chain, an eco-responsive supply chain centers on the collaboration of suppliers and distributors in greening the supply chain.

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  SEC takes more initiatives to educate and encourage consumers to engage in recycling activities than POSCO does.

The third paper, “Supply chain management integration: a critical analysis” by Näslund and Hulthen attempts to determine the existing benchmark level in terms of supply chain management integration, define the concept and develop a framework that depicts the topic area. Based on an extensive three step literature review and a series of interviews of leading supply chain management consulting firms, authors propose a unifying definition of supply chain management integration.

Business practices in Asia and the Pacific Rim (4)

The next four papers examine business practices in Korean and Japanese contexts. These four papers cover topics on complexity control, open and cluster innovation, risk management and governance that are regarded as serious business concerns in a turbulent environment.

The fourth paper “Complexity and control: benchmarking of automobiles and electronic products” by Fujimoto and Park analyzes how complexity of an artifact affects designing processes of its mechanical, electric, and software sub-systems. The authors argue that products and artifacts tend to become complex (often with integral architecture) when customers’ functional requirements become more demanding and societal/technological constraints become stricter, and that complex mechanical products are often accompanied by electronic control units with complex functions. Although designing complex artifacts has been a popular research theme since H. Simon’s seminal work, issues of organizational coordination for developing complex products has increased in managerial importance and deserves further research. With empirical cases of automobile and electronic products, the authors propose a framework which addresses product development processes, product architectures, and organizational capabilities.

The fifth paper, “Benchmarking open and cluster innovation: case of Korea” by Park et al. examines a development model from the Korean IT industry based on the concept of open and cluster innovation. This model reveals the synergistic effects between the textile and electronic industries. Through analysis of the innovation structure of the Gumi Cluster, the authors found that the Korean electronics industry has successfully caught up with first movers like the Japanese and US electronics industries. In this catch-up process, industrial clusters of the Korean electronic industry took on an open cluster and sought open and cluster innovation through collaborating with foreign firms and other industries like the textile industry to achieve the rapid catch-up.

The sixth paper, “Project managers for risk management: case for Japan” by Shimizu et al. discusses complex risk management practices of Japanese firms in the turbulent environment. The authors focus on risk management in a variety of product accidents of Japanese firms. This paper compares the differences in risk management capabilities between:

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  the firms that have risk managers who are responsible for managing the overall organizational level risks of firms as well as project level risks related to product planning and process designs; and

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  the firms that do not have such managers.

Through empirical study, the authors suggest that the majority of firms define the scope of risk management in terms of specific functional responsibilities and find that firms that have risk managers define the scope of risk management more broadly beyond the organizational boundary to include the entire supply chain.

The seventh paper “Benchmarking business unit governance in turbulent times: the case of Japanese firms” by Aoki and Miyajima examines how corporate headquarters control of business units, the governing of which has emerged as a vital issue as business portfolios have grown increasingly complex due to diversification, globalization, and corporate group expansion via spinoffs and M&As. The authors measure the issue of business unit governance by the degree of decentralization and the intensity of monitoring. The authors compare the governance of internal business units with that of subsidiaries, and analyze the impact of corporate governance characteristics on business unit governance. The study reveals that:

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  the degree of decentralization toward subsidiaries is higher for strategic and personnel decision making; and

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  firms with reformed boards of directors and under a greater degree of pressure from capital markets monitor their business units more strictly.

Empirical studies on inter-organizational issues (6)

The next six articles deal with a broad set of inter-organizational issues related to integrative supply chain practices, IT implementation, procurement capability, joint operational activities, supplier management practices and sustainability practices.

The eighth paper “Building procurement capability for firm performance: a service-dominant logic view” by Dobrzykowski et al. explores four integrative supply chain practices – customer IT integration, supplier IT integration, customer collaboration, and supplier collaboration – using a service-dominant logic (SDL) lens to inform their relationships with procurement capability and ultimately firm performance. The authors show positive relationships among customer collaboration, supplier collaboration, customer IT integration, and procurement capability. The authors also provide a rare empirical investigation, and rich insights, into SDL for value co-creation in supply chain management by examining an international sample of manufacturers. In particular, the study contributes to the extant understanding of supply chain collaboration and integration by unpacking key practices in the context of a firm’s procurement capability.

The ninth paper “Trust-driven joint operational activities to achieve mass customization: a culture perspective” by Liao et al. seeks to identify relationships among buyer-supplier trust, joint operational activities, and the degree of mass customization as well as the interaction between culture and trust in the context of supply chain management. Based on 208 responses from suppliers in the USA and China, the authors empirically show that:

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  trusts positively drives manufacturer-supplier activities in operations;

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  joint operational activities contribute to mass customization capabilities in a significant way; and

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  the level of trust and the degree of joint activities are different for the four types of suppliers used in the study: US brands produced in North America, Japanese brands produced in China, US brands produced in China, and Chinese brands produced in China.

The level of trust is significantly lower for US brands in China than the other groups. Also, the degree of process improvement as a joint operational activity for US brands in the USA and for US brands in China is significantly lower than the other groups.

The tenth paper “Examining alignment between supplier management practices and information systems strategy” by Qrunfleh et al. examines the alignment between supplier management practices and information systems (IS) strategies (i.e. particular IS applications portfolios), and the effects of alignment on supply chain integration and supply chain flexibility. The authors develop a model and hypotheses suggesting that “lean” supplier practices, when aligned with the “IS for efficiency” IS strategy, have a positive association with supply chain integration. Similarly, “agile” supplier practices when aligned with the “IS for flexibility” IS strategy, have a positive association with supply chain flexibility. Using survey data from directors and senior managers in purchasing and supply chain functions from 205 manufacturing firms in the USA, the authors show that lean (agile) supplier management practices are positively associated with supply chain integration (flexibility) and that alignment of lean supplier practices and IS for efficiency enhances supply chain integration, through the positive moderating effect of IS for efficiency on the relationship between lean supplier practices and supply chain integration.

The eleventh paper “The impact of ERP implementation on organizational capabilities and firm performance” by HassabElnaby et al. examines whether the implementation of ERP impacts both business strategy and organizational capabilities which in turn enhances firm performance. Specifically, the paper investigates the mediating effect of business strategy and organizational capabilities on the relationship between ERP implementation and firm performance. The authors show that ERP implementation has a positive impact when a firm employs a prospector business strategy, and that a prospector business strategy enhances the firm’s ability to achieve organizational capabilities, enabling the firm to achieve higher levels of financial performance. The study suggests that the prospector firm seeks better information to support decision making, develops new and innovative products that drive revenue growth, and builds efficient and effective operations that enhance return on assets.

The twelfth paper “Benchmarking sustainability practices: evidence from manufacturing firms” by Hong et al. presents a research model that defines sustainability practices in the context of competitive business environment, strategic drivers, operational and supply chain practices and performance outcomes. The authors identify research gaps in the areas of integration of sustainability practices across functional levels within firms and across networks. Using samples of total 379 companies, the authors provide three important findings. First, firms striving for responsiveness to markets and customers also improve environmental performance. Second, this study confirms lean practices as an important mediator to achieve excellent environmental performance. Finally, the focal company takes the lead in achieving environmental performance and suppliers are in the supportive circle of influence.

The thirteenth paper “Revisiting corporate reputation and firm performance link” by Lee and Roh investigates this link comprehensively using four different reputation attributes and firm characteristics in the context of high- vs low-tech companies. The authors operationalize corporate reputation as the four measures of Fortune’s “America’s Most Admired Companies” of 2008 and matched the companies with financial performance and firm characteristics measures from COMPUSTAT Research Insight for the period between 2001 and 2005. Using 230 firms over the same period, the authors show that corporate reputation is significantly and positively related with most indices of corporate performance measures, while debt leverage affects profitability negatively. It is surprising to find that innovativeness does not impact financial performance in either high- nor low-tech firms. A positive association between social responsibility and firm performance appears to be partially supported because it shows a significant impact on market-based performance, but not on accounting-based performance. Corporate reputation appears to emerge as a critical dimension of benchmarking of a firm performance.

Support of reviewers

The following reviewers and other anonymous reviewers participated in the rigorous review processes for the selection of papers for this special issue. Their dedication to this special issue has made it possible:

Fred Ahrens (University of Cincinnati, USA).

Tomofumi Amano (University of Tokyo, Japan).

Susita Asree (Winston Salem State University, USA).

Kuanchin Chen (Western Michigan University, USA).

Toyin Clottey (Iowa State University).

Angel Diaz (Instituto de Empresa, Spain).

Joshua Kang (Zhejiang University, China).

Seungchul Kim (Hanyang University, Korea).

Heebung Kwon (Park University, USA).

Erika Marsillac (Old Dominion University, USA).

Sachin Modi (University of Toledo, USA).

Carlo Mora-Monge (New Mexico State University, USA).

Kihyun Park (Robert Morrison University, USA).

Vafa Saboorideilami (University of Toledo, USA).

Takashi Shimizu (University of Tokyo, Japan).

Abraham Nahm (University of Wisconsin, USA).

Dawn Pearcy (Eastern Michigan University, USA).

Changwon Lee (Hanyang University, Korea).

Greg Rawski (University of Evansville, USA).

James Roh (Rowan University, USA).

Qiang (John) Tu (Rochester Institute of Technology, USA).

Vincent Whitelock (University of Toledo, USA).

The names of some reviewers who preferred to be anonymous are not included here.

We appreciate all the participants of the 4th International Symposium and Workshop in Global Supply Chains that were hosted by Instituto de Empresa, Spain for making the conference an overwhelming success. Special thanks to Dr Luis Solis and Dr Angelo Diaz for working on multiple tasks. In addition, the 20 members of the international scientific committee are thanked for their assistance in promoting the conference and for reviewing the submissions. Finally, no conference can succeed without the participation of the researchers and participants. All of the willing support of the conference organizers and the colleagues from around the world in the beautiful city of Madrid is appreciated.

Three guest editors – Paul Hong (University of Toledo), David Dobrzykowski (University of Toledo, USA), Youngwon Park (University of Tokyo, Japan) – worked well together on this double issue. Finally, we cannot forget how much we appreciate the enthusiastic support and editorial guidance of Angappa “Guna” Gunasekaran (Editor-in-Chief of Benchmarking: An International Journal).

Paul Hong, David Dobrzykowski and , Young Won ParkGuest Editors