SCM system effects on performance for interaction between suppliers and buyers
| Date | 01 September 2005 |
| DOI | https://doi.org/10.1108/02635570510616085 |
| Published date | 01 September 2005 |
| Pages | 857-875 |
| Author | Li‐Ling Hsu |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
SCM system effects on
performance for interaction
between suppliers and buyers
Li-Ling Hsu
National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan
Abstract
Purpose – The purpose of this paper is to examine the impacts of supply chain management (SCM)
benefits on the interactive performance between supply chain members.
Design/methodology/approach – The contingency theory and socio-technical theory were applied
in the construction of the research model. Four constructs were adopted for the development of the
research model: contingency factors, interaction process, interactive performance, and SCM system
benefits.
Findings – To respond to the challenges in global markets, an increasing number of enterprises
strive for better profits by working closely with suppliers. As the interaction increases, the buyer-seller
relationship changes accordingly.
Research limitations/implications – Empirical studies require further analysis and suggestions
were also made for further explication.
Practical implications – The interaction between the manufacturing and marketing departments is
a determinant for the firm’s competitive advantages.
Originality/value – Interviews with six case firms in the information/electronic industry show that
external and internal factors affect the interaction between supply chain members and result
performance improvement.
Keywords Supply chain management, Channel relationships, Contingency planning
Paper type Case study
1. Introduction
Pressed by keen competition in international market in the wake of globalization,
enterprises started to recognize the importance of supply chain management (SCM).
Functional activities, such as procurement, production, transportation, marketing and
services, already crossed functional or companies boundaries. As the interaction increases,
the buyer-seller relationship changes accordingly (Rahman, 2004). It is becoming more and
more important for enterprises to strengthen the coordination and functional activities
between supply chain members (Ballou et al., 2000; Foggin and Mentzer, 2003). In the
recent past, SCM technique has been proved crucial to improve the cooperation between
suppliers and buyers, and an imperative factor for boosting a firm’s competitiveness.
The benefits for implementing SCM have been widely recognized. Firstly, it helps
reduce the production, delivery and distribution costs, and inventory, secures
manufacturing flexibility, and drives for higher productivity. SCM synchronizes
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The author is grateful for the helpful comments and suggestions made by anonymous referees.
Also, Dr Binshan Lin (Editor-in-Chief of Industrial Management & Data Systems) whose
valuable assistance is greatly appreciated. In addition, the study had acquired financial support
from National Science Council in Taiwan – many thanks to the organization.
SCM system
effects
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Industrial Management & Data
Systems
Vol. 105 No. 7, 2005
pp. 857-875
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570510616085
manufacturing processes in a supply chain, suppliers are able to participate in the product
R&D (Lamming, 1993; Mason-Jones and Towill, 1997; Dyer et al., 1998; Christopher and
Juttner, 2000) and reduce the lead-times and cost in R&D. With the use of SCM,
enterprises can streamline manufacturing processes across functional or organizational
boundaries, and possess up-to-date production schedule of suppliers and avoid the
bullwhip effect and finally promote the product and service quality (Yu et al., 2001).
Nevertheless, streamlining heterogeneous supply chains is not an easy undertaking,
since each company has individual work structure, organizational structure, work
flow, information flow, or culture. This is even more so when supply chain suppliers
are located globally and are managed in different ways. Nevertheless, the
environmental uncertainty may offset enterprises profits, and cast doubts on the
effectiveness of SCM in improving a firm’s operational performance. Meanwhile,
whether implementing SCM system has a direct influence on the interactive
performance between enterprises is not addressed by the existing research in SCM
implementations. Therefore, our research is focus on the effects of SCM system to the
interactions and integration between supply chain members. We hope our research
finding may help researchers and practitioners to gain insights of how and why SCM
system in improving firms’ performances.
Our research goals include the study of the relationships of major constructs defined
in our research model:
.Study the internal and external situational variables and their relationships to
the gap in interaction process.
.Examine the relationship between gap in interaction process and
integrated-interaction performance.
.Study the effect of SCM implementation to the relationship between gap in the
interaction process and the integrated-interaction performance.
2. Literature review
In this paper, the research model was developed based on contingency theory and
socio-technical theory. To better understand the interactive performance between
supply chain members, we utilized a case study approach. In-depth interviews with six
firms in the IT/electronic industry were conducted. Test results were compared and
analyze to enhance the reliability and validity of our research model.
2.1 Contingency theory
Contingency theory addresses the impacts of environmental factors in an organization
and its structures. The theory was the outcome of research conducted by Lorsch and
Lawrence oven the years (Lorsch, 1965; Lawrence and Lorsch, 1967, 1986). They
suggest that the degree of organizational integration is a function of environmental
uncertainty and complexity, and flexible organizational mechanisms are required to
adapt to the ever-changing environment. Four organizational contingency factors are
identified: internal factors (supply network structure and channel climate) and external
factors (environmental uncertainty and technology dynamics) in the analysis of the
impacts of environmental variables on the interactive performance of supply chain
members.
Contingency theory argues that a high degree of organizational or function
differentiation will impede the cooperations between functions and organizations. The
IMDS
105,7
858
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