1

“Strategic profiles and supply chain management practices: an empirical

investigation”

Adib BENSALEM, 2012. European Logistics Association (ELA) Doctoral workshop

Purpose –

In the current context of world financial and economical crisis, as well as increased customer

expectations and information intensive processes, supply chain management (SCM) has become

strategic for organizations in their quest for competitive advantage. Fabbe-costes and Colin

(1999) add that the multiplicity of an organization’s reactions to a more and more uncertain

environment implies coordination and integration in a clearly defined supply chain strategy. In

fact, many authors have studied the practices involved in supply chain management to verify

whether they can be strategic by creating a positive impact on performance. There are two

schools of taught when it comes to the link between practice and performance. Through

observation and investigation, some authors have selected the “best practices” (Giffi et. al, 1990;

Voss, 1995) which are linked to operational performance in companies and support the “one best

way” concept. This set of practices is recommended in all circumstances. In opposition, based on

contingency theory, other authors point out that the best practices are not equivalent in any given

situation. Under this paradigm, the recommended practices depend on the strategic context. As

an example, Fisher (1997) asks “what is the right supply chain for your product?” and suggests a

typology of supply chains –hence, a set of SC practices- adapted to the business strategy of the

product sold. However, this body of literature (typologies and taxonomies in SCM) tend to

include strategy and performance but do not describe in detail the SC practices involved. As

Ward and Duray (2000) point out, the link between strategy and performance is not fully

specified into the operational practices required to translate strategy into performance (figure 1).

Therefore, we couple in this paper the contingency theory and the configuration approach to

make the theoretical basis for a taxonomy of strategic profiles linked to specific supply chain

practices and a specific operational performance.

2

Figure 1: Manufacturing strategy model (Ward and Duray, 2000)

Literature review and Research model –

Sousa and Voss (2008) carefully collect the papers published in Operational Management using

contingency theory (CT) as a theoretical basis and name this body of literature “Operations

Management Practice Contingency Research”. We can read that much research uses CT to study

independently the link between a single SC practice and performance. Although, CT allows for a

detailed analysis of the link between practice and performance under different contexts, it is

somewhat limited. It is not well suited when a set of practices is targeted and a holistic view is

required. Because an organization is composed of many contingencies (Siggelkow, 2001; Sinha

et al., 2005), drawing conclusions about specific contingent relationships can be challenging

(Lynn et al., 2010). Indeed, many interactions between the practices take place and cause

multicollinearity that complicates the observed phenomena. Also, when some relationships are

not significant, it is sometimes difficult to interpret. The configuration perspective provides a

complementary scientific approach that takes into account the complexity of the phenomena

under study. When a classification is well developed and described, it is a theory that can be

subject to a rigorous empirical evaluation through the quantitative models that will be described

later on (Doty and Glick, 1994). There are two types of configurations: typologies, which are

ideal types derived inductively a priori to suggest configurations organizations should emulate in

order to optimize performance; and taxonomies, which are extracted deductively a posteriori

from an empirical investigation and correspond to real types of organizations with different

levels of performance.

3

We have conducted a structured literature review based on previous efforts of Bozarth and

Mcdermott (1998), and Martin-Pena and Diaz-Garrido (2008) updated with the most recent

publications. We cover the period from 1980 to 2011 over 20 journals and two international

conferences. The review resulted in 27 articles that focused on analyzing or developing a

configuration in operations strategy. After analysis of the resulting articles, different elements

drew our attention. First, different variables are used as grouping variables but a number of them

seem to be more successful in finding their way into the final few. These are the competitive

priorities of cost, quality, flexibility and speed of delivery. Hence, we formulate the following

hypothesis:

H1. The classification of manufacturing companies based on their competitive priorities results

in significantly distinct strategic groups.

Second, only Mckone-sweet and Lee (2009) tried to classify different strategic groups related to

supply chain management (SCM). Except, they use a higher level of operations -the SCM

capabilities- and find belonging to a strategic group is disconnected from the SC capabilities

developed by the company. Our research differs from Mckone-sweet and Lee (2009) in the

number and nature of SC operations used in the classification (SC practices versus SC

capabilities). SC capabilities are more specific to an organization. They are developed through a

pattern of investments over time and cannot be easily imitated or acquired by trade, nor can good

substitutes be found (Dierickx and Cool 1989). On the other hand, SCM practices are more

common, easier to imitate and defined as the set of activities undertaken by an organization to

promote effective management of its supply chain (Li et al., 2005). Many authors have

considered SC practices in the reviewed literature. Table 1 is an attempt to select the most

relevant ones.

Table 1: Supply chain practices

# Supply Chain

Practices

Definition References

1 Customer relation Concerns customer relations

management, customer retention,

and customer satisfaction

improvement activities.

Aggarwal (1997), Claycomb et al. (1999),

Magretta (1998), Noble (1997), Tan et al.

(1998), Wines (1996), Narasimhan and Kim

(2002) , Rungtusanatham et al. (2003),

Vickery (2003), Li et al. (2005), Bayraktar

(2009)

4

2 Supplier relation This is about building long lasting

relationships with suppliers in the

perspective of creating mutual

benefits.

Balsmeier and Voisin (1996), Gunasekaran

et al. (2001), Lamming (1996), Monczka et

al. (1998), Stuart (1997), Narasimhan and

Kim (2002) , Rungtusanatham et al. (2003),

Vickery (2003), Li et al. (2005), Bayraktar

(2009)

3 Information sharing It’s the level of sharing critical and

confidential information.

Balsmeier and Voisin (1996), Jones (1998),

Lalonde (1998), Mentzer et al. (2000),

Monczka et al. (1998), Novack et al. (1995),

Stein and Sweat (1998), Towill (1997), Yu

et al. (2001), Li et al. (2005), Bayraktar

(2009)

4 Information quality Refers to the accuracy, speed,

punctuality, and precision of the

information shared.

Alvarez (1994), Berry et al. (1994), Chizzo

(1998), Holmberg (2000), Jarrell (1998),

Lee et al. (1997), Mason-Jones and Towill

(1997), McAdam and McCormack (2001),

Metters (1997), Monczka et al. (1998) , Li et

al. (2005)

5 Lean practices Waste reduction in the process

according to cost, time and quality

considerations

Flynn (1999), Handfield and Nichols (1999),

Mason-Jones and Towill (1997), McIvor

(2001), Taylor (1999), Womack and Jones

(1996), Li et al. (2005), Bayraktar (2009)

6 Postponement Moving downstream the supply

chain one or multiple operations in

order to postpone the product

differentiation (procurement,

production, and delivery)

Lee and Billington (1995), Beamon (1998),

Van Hoek (1998), Van Hoek et al. (1999),

Naylor et al. (1999), Waller et al. (2000),

Alvarado and Kotzab (2001),Tan et

al.(2001), Li et al. (2005)

7 Green SCM The practice of monitoring and

improving environmental

performance in the supply chain

Narasimhan and Carter (1998), Godfrey

(1998), Rao and Holt (2005), Zhu et al.

(2008), Carbone and Moatti (2008), Suering

and Muller (2008)

8 Outsourcing Delegating one or multiple logistics

activities to external operators

Larson and Kulchitsky (1999), Power et al.

(2006), Dankbaar (2007), Jiang et al. (2007),

Dabhilkar and Bengtsson (2008), Hsiao et

al (2010), Bayraktar (2009)

Based on the contingency perspective discussed earlier, we expect that these SC practices will

differ according to the strategic context and as such:

H2. There are significant differences between the strategic groups in terms of the SC practices

implemented.

Same goes for the performance levels of each strategic group, which are also expected to be

significantly different:

H3. There are significant differences between the strategic groups in terms of operational

performance.

5

Finally, although different authors name them differently, we can regroup the strategic groups

identified in the literature into five: (1) a group focused on reducing cost to increase efficiency,

and respect of promised delivery time; (2) a group which prioritizes quality and flexibility, trying

to adapt to customers needs in terms of delivery speed and ordering volumes; (3) a group

characterized by innovation and quick adaptation to customers’ preferences; (4) a group with

multiple strategies, do all organizations that don’t believe trade-offs are necessary in order to

achieve high levels of performance; and (5) a residual group of companies with intermediate

strategies and poor performance. Hence, we formulate the following research hypothesis:

H4. Five different strategic groups emerge from this taxonomy: (1) cost reduction, (2) quality

and flexibility, (3) innovation, (4) do all, and (5) a residual group.

Design/methodology/approach –

To test the research hypotheses, we have developed a survey with measurement scales of the

study variables extracted from the literature review. An online survey was sent to 1 000

companies of different sizes and industries, randomly selected from a population of about 3 500

Moroccan manufacturing companies within the industrial city of Casablanca. The database was

provided by the Moroccan Ministry of Commerce and Industry.

5 Strategic groups

Competitive priorities

Cost

Quality

Flexibility

Speed of delivery

Characteristics

SCM practices

Outsourcing

Postponement

Information sharing

Information quality

Lean practices

Customer relation

Supplier relation

Green SCM

Operational performance

Context

Size

Industry

Figure 1: Research model

6

Findings –

119 valid responses (12% response rate) were collected and a cluster analysis was conducted in

SPSS, followed by a comparison of means using the schoffe coefficient for testing for

significance. Five different strategic clusters emerge with significant differences on most

competitive priorities and SC practices. They are focused on (1) cost reduction, (2) quality, (3)

Innovation, (4) do all, and (5) a residual group. All four hypotheses are validated.

Relevance/Contribution –

This study contradicts previous findings about the disconnection between operations strategy and

SCM practices. The model developed helps managers in a coherent implementation of strategy

into SCM practices and performance optimization. It also provides grounds for academicians to

investigate further the link strategy-practice-performance.

References

1. Aggarwal, S., 1997. Flexibility management: the ultimate strategy. Industrial

Management 39 (1), 26–31.

2. Alvarado, U.Y., Kotzab, H., 2001. Supply chain management: the integration of logistics

in marketing. Industrial Marketing Management, 30 (2), 183–198.

3. Alvarez, D., 1994. Solving the puzzle of industry’s rubic cube-effective supply chain

management. Logistics Focus 2 (4), 2–4.

4. Balsmeier, P.W., Voisin, W., 1996. Supply chain management: a time-based strategy.

Industrial Management 38 (5), 24–27.

5. Bayraktar, E., Demirbag, M., Lenny, K.S.C., Tatoglu, E., Zaim, H., 2009. A causal

analysis of the impact of information systems and supply chain management practices on

operational performance: Evidence from manufacturing SMEs in Turkey. International

Journal of Production Economics 122, 133–149.

6. Beamon, B.M., 1998. Supply chain design and analysis: models and methods.

International Journal of Production Economics, 55 (3), 281–294.

7. Berry, D., Towill, D.R., Wadsley, N., 1994. Supply chain management in the electronics

products industry. International Journal of Physical Distribution and Logistics

Management 24 (10), 20–32.

7

8. Bozarth, C., McDermott, C., 1998. Configurations in manufacturing strategy: a review

and directions for future research. Journal of Operations Management 16, 427–439.

9. Carbone, V. and Moatti, V., 2008. The Green Supply Chain: Preliminary Results of a

Global Survey, Supply Chain Forum, an International Journal, 9 (2), 66-76.

10. Chizzo, S.A., 1998. Supply chain strategies: solutions for the customer-driven enterprise.

In: Software Magazine. Supply Chain Management Directions Supplement, 4–9.

11. Claycomb, C., Droge, C., Germain, R., 1999. The effect of just-in-time with customers

on organizational design and performance. International Journal of Logistics

Management 10 (1), 37–58.

12. Dabhilkar, M., Bengtsson, L., 2008. Invest or divest? On the relative improvement

potential in outsourcing manufacturing. Production Planning & Control 19 (3), 212–228.

13. Dankbaar, B., 2007. Global sourcing and innovation: the consequences of losing both

organizational and geographical proximity. European Planning Studies 15 (2), 271–288.

14. Dierickx, I. and Cool K., 1989. Asset Stock Accumulation and Sustainability of

Competitive Advantage. Management Science, 35 (12), 1504-1511.

15. Doty, D.H. and Glick., W.H., 1994. Typologies as a Unique form of Theory Building:

Toward Improved Understanding and Modeling. Academy of Management Review, 19

(2), 230-251.

16. Fabbes-Costes, N. and Colin J., 1999. Formulating logistics strategy, in: D. Waters, ed.,

Global logistics and distribution planning: Strategies for management, 3rd edn. London:

Kogan Page.

17. Flynn, B.B., Huo, B., Zhao, X., 2010. The impact of supply chain integration on

performance: A contingency and configuration approach. Journal of Operations

Management 28 (1), 58–71.

18. Flynn, B.B., Schroeder, R.G., Flynn, E.J., 1999. World class manufacturing: an

investigation of Hayes and Wheelwright’s foundation. Journal of Operations

Management 17, 249–269.

19. Giffi, C., Roth, A.V. and Seal, G.M., 1990. Competing in world-class manufacturing:

America’s 21st century challenge, Business One Irwin, Homewood, IL.

20. Godfrey, R., 1998. Ethical purchasing: developing the supply chain beyond the

environment. Dans: Russel, T. (Ed.), Greener Purchasing: Opportunities and Innovations.

Greenleaf Publishing, Sheffield, England, 244–251.

8

21. Gunasekaran, A., Patel, C., and Tirtiroglu, E., 2001. Performance measures and metrics

in supply chain environment, International Journal of Operations & Production

Management 21 (1/2), 71-87.

22. H.I. Hsiao, R.G.M. Kemp, J.G.A.J. van der Vorst, and S.W.F. (Onno) Omta, A, 2010.

Classification of logistic outsourcing levels and their impact on service performance:

Evidence from the food processing industry, International Journal of Production

Economics, 124 (1), 75-86

23. Handfield, R.B. and Nichols Jr., E.L., 1999. Introduction to Supply Chain Management.

Prentice Hall, Upper Saddler River, New Jersey.

24. Holmberg, S., 2000. A systems perspective on supply chain measurements. International

Journal of Physical Distribution and Logistics Management 30 (10), 847–868.

25. Jarrell, J.L., 1998. Supply chain economics. World Trade 11 (11), 58–61.

26. Jiang, B., Belohlav, J.A., Young, S.T., 2007. Outsourcing impact on manufacturing

firms’s value: evidence from Japan. Journal of Operation Management 25, 885–900.

27. Jones, C., 1998. Moving beyond ERP: making the missing link. Logistics Focus 6 (7), 2–

7.

28. Lalonde, B.J., 1998. Building a supply chain relationship. Supply Chain Management

Review 2 (2), 7–8.

29. Lamming, R.C., 1996. Squaring lean supply with supply chain management. International

Journal of Operations and Production Management 16 (2), 183–196.

30. Larson, P.D., Kulchitsky, J.D., 1999. Logistics improvement programs the dynamics

between people and performance. International Journal of Physical Distribu- tion &

Logistics Management 29 (2), 88–102.

31. Lee, H.L., Padmanabhan, V., Whang, S., 1997. Information distortion in a supply chain:

the bullwhip effect. Management Science 43 (4), 546–558.

32. Li, S., Ragu-Nathan,B., Ragu-Nathan,T.S., Rao,S.S., 2005. Development and validation

of a measurement for studying supply chain management practices. Journal of Operations

Management 23, 618–641.

33. Magretta, J., 1998. The power of virtual integration: an interview with Dell computers’

Michael Dell. Harvard Business Review 76 (2), 72–84.

34. Martin-Pena, M.L. and Diax-Garrido, E., 2008. Typologies and Taxonomies of

Operations Strategy: A Literature Review. Management Research News, 31 (3), 200-218.

9

35. Mason-Jones, R. and Towill, D.R., 1997. Information enrichment: designing the supply

chain for competitive advantage. Supply Chain Management 2 (4), 137–148.

36. McAdam, R., McCormack, D., 2001. Integrating business processes for global alignment

and supply chain management. Business Process Management Journal 7 (2), 113–130.

37. McIvor, R., 2001. Lean supply: the design and cost reduction dimensions. European

Journal of Purchasing and Supply Chain Management 7 (4), 227–242.

38. McKone-Sweet, K. and Lee, Y., 2009. Development and analysis of a supply chain

strategy taxonomy. Journal of Supply Chain Management 45(3), 3-24.

39. Metters, R., 1997. Quantifying the bullwhip effect in supply chains. Journal of

Operations Management 15 (2), 89–100.

40. Monczka, R.M., Petersen, K.J., Handfield, R.B., Ragatz, G.L., 1998. Success factors in

strategic supplier alliances: the buying company perspective. Decision Science 29 (3),

5553–5577.

41. Narasimhan, R. and Carter, J.R., 1998. Environmental Supply Chain Management. The

Center for Advanced Purchasing Studies, Arizona State University, Tempe, AZ, USA.

42. Narasimhan, R. and Kim, S.W., 2002. Effect of supply chain integration on the

relationship between diversification and performance: evidence from Japanese and

Korean firms. Journal of Operations Management 20 (3), 303-23.

43. Naylor, J.B., Naim, M.M., Berry, D., 1999. Legality: integrating the lean and agile

manufacturing paradigms in the total supply chain. International Journal of Production

Economics 62 (1,2), 107–118.

44. Novack, R.A., Langley Jr., C.J., Rinehart, L.M., 1995. Creating Logistics Value: Themes

for the Future. Council of Logistics Management, Oak Brook, IL.

45. Power, D., Sharafali, M., Bhakoo, V., 2006. Adding value through outsourcing

contribution of 3PL services to customer performance. Management Research News 30

(3), 228–235.

46. Rao, P. and Holt, D., 2005. Do green supply chains lead to competitiveness and economic

performance? International Journal of Operations and Production Management 25 (9),

898–916.

47. Rungtusanatham, M., F. Salvador, C. Forza and T.Y. Choi. 2003. Supply-chain Linkages

and Operational Performance, a Resource-based-view Perspective. International Journal

of Operations and Production Management 23 (9), 1084-1100.

10

48. Seuring, S., and Müller, M, 2008. From a literature review to a conceptual framework for

sustainable supply chain management. Journal of Cleaner Production 16 (15), 1699-1710.

49. Siggelkow, N., 2001. Change in the presence of fit: the rise, the fall and the renaissance

of Liz Claiborne. Academy of Management Journal 44 (4), 838–857.

50. Sinha, Kingshuk, K., Van de Ven, Andrew, H., 2005. Designing work within and

between organizations. Organization Science 16 (4), 389–408.

51. Sousa, R., et Voss A. C., 2008. Contingency research in operations management

practices. Journal of Operations Management 26, 697–713.

52. Stuart, F.I., 1997. Supply-chain strategy: organizational influence through supplier

alliances. British Academy of Management 8 (3), 223–236.

53. Tan, K.C., 2001. A framework of supply chain management literature. European Journal

of Purchasing and Supply Management 7 (1), 39–48.

54. Towill, D.R., 1997. The seamless chain- the predator’s strategic advantage. International

Journal of Technology Management 13 (1), 37–56.

55. Van Hoek, R.I., 1998. Measuring the unmeasurable-measuring and improving

performance in the supply chain. Supply Chain Management 3 (4), 187–192.

56. Van Hoek, R.I., Voss, R.I., Commandeur, H.R., 1999. Restructuring European supply

chain by implementing postponement strategies. Long Range Planning 32 (5), 505–518.

57. Vickery, S.K., J. Jayaram, C. Droge and R. Calantone., 2003. The Effects of an

Integrative Supply Chain Strategy on Customer Service and Financial Performance: An

Analysis of Direct versus Indirect Relationships. Journal of Operations Management, 21

(5), 523-539.

58. Vickery, S.K., J. Jayaram, C. Droge and R. Calantone., 2003. The Effects of an

Integrative Supply Chain Strategy on Customer Service and Financial Performance: An

Analysis of Direct versus Indirect Relationships, Journal of Operations Management, 21

(5), 523-539.

59. Voss, C.A., 1995. Alternative paradigms for manufacturing strategy, International

Journal of Operations and Production Management, 15(4), 5-16.

60. Waller, M.A., Dabholkar, P.A. and Gentry, J.J., 2000. Postponement, product

customization, and market-oriented supply chain management. Journal of Business

Logistics, 21 (2), 133–159.

11

61. Ward, P.T. and Duray, R., 2000. Manufacturing strategy in context: environment,

competitive strategy and manufacturing strategy, Journal of Operations Management, 18,

123-138.

62. Wines, L., 1996. High order strategy for manufacturing. The Journal of Business Strategy

17 (4), 32–33.

63. Womack, J. and Jones, D., 1996. Lean Thinking. Simon and Schuster, New York.

64. Yu, Z.X., Yan, H., Cheng, T.C.E., 2001. Benefits of information sharing with supply

chain partnerships. Industrial Management and Data Systems 101 (3), 114–119.

65. Zhu, Q., Sarkis, J., Lai, K., 2008. Confirmation of a measurement model for green supply

chain management practices implementation. International Journal of Production

Economics 111 (2), 261–273.