Supply and Operations: Parallel Paths and Integrated Strategies
| Published date | 01 December 2004 |
| Author | Steve Brown,Paul D. Cousins |
| Date | 01 December 2004 |
| DOI | http://doi.org/10.1111/j.1467-8551.2004.00421.x |
Supply and Operations: Parallel Paths and
Integrated Strategies
Steve Brown and Paul D. Cousins
*
School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU and
*
Lancaster University Management School, University of Lancaster, Lancaster, Bailrigg, LA1 4YW, UK.
This paper provides evidence of links between the nature of strategic formulation within
firms and subsequent plant performance. The research focuses on how some firms have
managed to link operations and supply into an integrated set of mutually supportive
strategies. In the current competitive arena firms can no longer rely wholly on internal
resource-based capabilities but must instead form strategic partnerships within what are
often complex networks. The paper explores how operations and supply functions have
pursued parallel paths but have often not been fully integrated within firms. It is argued
that such integration, which forms part of what has been termed strategic resonance,
can reap enormous benefits in terms of plant-level capabilities for firms.
Introduction
This paper completes a series of publications of
longitudinal case studies in the computing and
automobile industries. The essence of the re-
search is to explore links between strategic
formulation and subsequent performance in a
range of capabilities in manufacturing/opera-
tions. Thus far, research has concentrated on
quality, product innovation and process technol-
ogy. Clearly, capabilities in inventory manage-
ment within the plant, as well as the ability to
develop relationships with suppliers, are of vital
strategic importance for manufacturing/opera-
tions management (MacBeth and Ferguson,
1994). Thus in our research we examined, on a
strategic level, to what extent senior-level opera-
tions and supply personnel were involved in
strategic formulation and, as we shall see in the
methodology section, this formed the essence of
Stage 1 of our research. We then explored links
between the types of strategic formulation and
subsequent performance.
This paper is divided into four parts. First, we
shall discuss how both the manufacturing/opera-
tions and supply functions have emerged as
strategic factors within the firm. In the second
section we describe how firms have often
struggled to deal with these strategic require-
ments as a result of manufacturing/operations
and supply being relegated from strategic areas of
the firm. The third part narrates how the strategic
roles of manufacturing/operations and supply
have been described in the literature and we
introduce a hypothesized model driven from the
literature review. The final section then provides
primary data on plant-level distinctions and
capabilities of firms within the automobile and
computing industries. We also discuss the im-
plications for managers from our research and
identify areas for future study.
The emergence of manufacturing/
operations and supply as strategic
factors
The strategic importance of both manufacturing/
operations and supply within the firm has become
evident in recent times (Brown, 2000; Ellram and
Carr, 1994; Harland, Lamming and Cousins,
1999; Hill, 1995; Lamming, 1993). In many
industries, including automobiles, aerospace and
computing, major players have had to reconfi-
British Journal of Management, Vol. 15, 303–320 (2004)
r2004 British Academy of Management
gure entire supply networks in order to remain
competitive. The effect has been for some major
suppliers to change the actual nature of their core
business, from a manufacturer towards a systems
integrator (Duray, Milligan and Berry, 2000;
Treacy and Wiersema, 1993; Zairi, 1992). This is
particularly notable in, and indeed is one of the
reasons for our focusing on, the two industries
discussed in our primary research – automobiles
and computers. The integration of the supply
chain towards a ‘seamless’ supply activity is
becoming the priority of firms today (Frohlich
and Dixon, 2001; Handfield et al., 1999; Towill,
1997). This trend has been fuelled by the
tendency for firms to outsource and develop a
tiered supply approach (Hines, 1994; Lamming,
1993). The motivation for this change can be
traced to the early 1980s and throughout the
1990s with the adoption of ‘Japanese’ approaches
to manufacturing/operations. The ability to
integrate operations and supply in the manage-
ment of inventory has been one of the greatest
areas of contrast between much of Western and
Japanese manufacturing (Brown, 1996). In recent
years, many Western firms have tried to emulate
some of the Japanese practices that had under-
pinned Japan’s success in many industries. The
strategic emphasis from firms in the early 1980s
heralded a massive change that was to pro-
foundly effect not only the way that firms
planned and used their resources, but also the
very nature of the coordination and acquisition
of these resources (intellectual and physical)
themselves (Steudel and Desrulle, 1992). In the
late 1980s and 1990s, supply chain management
rose in prominence (Carr and Pearson, 2002;
Ellram, Edis and Owen, 1996). Firms in all
sectors began to adopt techniques such as supply-
base reduction (Cousins, 1999), collaboration
and relationship management and outsourcing
(Ellram and Billington, 2001; Wilcox, Feeney and
Fitzgerald, 1995). This leads us to posit that:
H1: Plants that have higher levels of strategic
integration between supply and operations will
view inventory management as a strategic
issue.
External economic environmental conditions
within Western markets in the early 1980s
brought about significant change in manufactur-
ing/operations processes. Traditional inefficient
methods of manufacturing/operations were not
sufficient to stave off the ongoing threat of global
competition, particularly from Japanese firms in
key sectors including automobiles and electro-
nics. Firms realized that in order to survive they
needed to change. In a short period, markets had
developed from local, to national, international
and had then become global in nature. Many
firms in the West, unable to compete, went out of
business and were replaced by transplants (parti-
cularly in the automotive and computing indus-
tries). For example, in the 1980s General Motors
closed 21 of its plants in the USA (Brown, 2000).
These transplants, which were predominantly
Japanese, brought with them an opportunity to
learn fundamentally different approaches to
operations and supply strategies. Initially, firms
saw the unilateral adoption of these ‘new’
approaches including Just-In-Time (JIT), Total
Quality Management (TQM) and supplier part-
nerships as the domain of manufacturing/opera-
tions strategy (Schonberger, 1982, 1986).
However, what many firms at this time did not
appreciate was that the Japanese approach was
integrated in nature involving both operations
and supply within a wider strategic framework
(Womack, Jones and Roos, 1990). This leads us
to posit our second hypothesis that:
H2: Plants that have higher levels of strategic
integration between supply and operations will
achieve higher levels of business improvement
defined as (H2a) lower levels of work-in-
progress; (H2b) lower levels of finished good
inventory.
The relegation of manufacturing/
operations and supply from strategic
levels of the firm
The key question is: if manufacturing/operations
and supply are of strategic importance why, then,
are they often couched in tactical terms? We
suggest that the answer lies in the changes of
manufacturing/operations processes over time
and how these became divorced from the firm’s
strategy-making process (Lazonick, 1991; Lazo-
nick and West, 1995). The transition from craft
through mass production to the current era,
which includes approaches of lean manufacturing
(Womack, Jones and Roos, 1990) mass customi-
zation (Flynn, Schroeder and Flynn, 1999;
304 S. Brown and P. D. Cousins
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