Dibrell, Clay

Nicovich, Stefan

Sakaguchi, Toru

English

AIS Electronic Library (AISeL)

Association for Information SystemsAIS Electronic Library (AISeL)AMCIS 2002 Proceedings Americas Conference on Information Systems(AMCIS)December 2002DEVELOPMENT OF AN INTEGRATEDSUPPLY CHAIN MODELToru SakaguchiNorthern Kentucky UniversityClay DibrellOregon State UniversityStefan NicovichUniversity of New HampshireFollow this and additional works at: http://aisel.aisnet.org/amcis2002This material is brought to you by the Americas Conference on Information Systems (AMCIS) at AIS Electronic Library (AISeL). It has been acceptedfor inclusion in AMCIS 2002 Proceedings by an authorized administrator of AIS Electronic Library (AISeL). For more information, please contactelibrary@aisnet.org.Recommended CitationSakaguchi, Toru; Dibrell, Clay; and Nicovich, Stefan, "DEVELOPMENT OF AN INTEGRATED SUPPLY CHAIN MODEL"(2002). AMCIS 2002 Proceedings. 321.http://aisel.aisnet.org/amcis2002/3212350 2002  Eighth Americas Conference on Information SystemsDEVELOPMENT OF AN INTEGRATED SUPPLY CHAIN MODELToru SakaguchiNorthern Kentucky Universitysakaguch@nku.eduC. Clay DibrellOregon State Universitydibrellc@bus.orst.eduStefan G. NicovichUniversity of New Hampshiredibrellc@bus.orst.eduAbstractWith increased global competitive pressures, companies operating in these competitive environments are notonly looking to their distribution division to save money, but also to generate competitive advantages.  Onetechnique is the integrated supply chain.  However, this process has not met with success for all companies,leading some managers to consider the appropriateness of an integrated supply chain.  This dearth of successcould be attributed to the lack of scholarship to guide managers in their efforts to formulate and then implementtheir integrated supply chain strategies.  In an effort to fill this gap, our paper draws on resource dependencytheory and the realities of ever-increasing information technology sophistication as enablers of successfulsupply chain integration resulting in the creation of our model to guide managers throughout this processKeywords:  Supply chain management, resource dependency theory, information technology sophisticationIntroductionAs companies attempt to deal with increasing global competitive pressures, they are looking to their logistics and distributionsystems as potential areas for future competitive success.  The rapid advancement of information technologies, such as theexplosive growth of enterprise resource planning (ERP) and continuing development of e-commerce applications and the Internet,is forcing many companies to reevaluate their roles and positions within their competitive environments. This new businessparadigm is forcing business processes to be reconsidered and redesigned (Hackney, Burn, and Dhillon, 2000).  As such, manycompanies are modifying their logistics functions by forging strategic alliances with suppliers and buyers to create integratedsupply chains.  An integrated supply chain involves greater coordination and collaboration among all members of companys supply chain.  Itis sharing information across organizational boundaries within a network of alliances, including suppliers, and end-users.  Someof the potential benefits of employing an integrated supply system include overall cost and time reduction in design throughproduct stages (Davenport and Short, 1990).  However, with the hyperbole of advantages streaming from both academic andpractitioner journals, there has been inconclusive evidence that an integrated supply chain is an essential strategic tool forcompanies to succeed (Bowman, 1997).  Our primary purpose of this paper is to conceptualize and to empirically test a modelto aid managers in formulating their strategies for implementation of an integrated supply chain, drawing from resourcedependency theory and the realities of todays advanced information technologies as enablers of a successfully integrated supplychain.  Literature ReviewResource dependency theory suggests that a company will attempt to generate alliances with other organizations in order tomaintain a consistent supply of critical resources (Pfeffer and Salancik, 1978).  In essence, the initiating company will create anSakaguchi et al./Integrated Supply Chain Model2002  Eighth Americas Conference on Information Systems 2351Extent ofResource DependencyFor CompanyIT SophisticationExtent of SupplyChain IntegrationExternal TaskEnvironmentH1H2H3CompanyPerformanceH4+++alliance with another company who possess a needed resource, and in doing so; will attempt to create a mutual interdependencebetween the two alliance members through buyer-seller exchanges and through access to other members of the initiatingcompanys strategic alliance network.  Strategic alliances allow the company to create a web that is dedicated to the survival ofboth the company and to the other companies in the network (Arthur, 1996).  "Organizations attempt to alter their dependencerelationships by minimizing their own dependence or by increasing the dependence of other organizations on themselves" (Ulrichand Barney, 1984: 472). The company, which adds the greatest value to the supply chain, will be able to have greater control andpower over other members and influence the future direction of the supply chain. Likewise, a mutual dependence is created amongall of the members of the supply chain as uncertainty is reduced.The most popular system used to integrate supply chains has been the electronic data interchange (EDI).  The capability ofinterorganizational systems, like EDI, to connect supply chains has been predicted and demonstrated extensively (e.g., Cash andKonsynski, 1985; O'Callaghan, Kaufmann, and Konsynski, 1992).  More recently, in a context of business process redesign (BPR)Clark and Stoddard (1996) describe technical innovations such as EDI are enabler of the process innovations such as BPR.Information technologies should be considered to be an enabler of an integrated supply chain. Additionally, supply chainelectronic commerce coupled with the commercial availability of the Internet and development of sophisticated software includingERP tools make the integrated supply chain attainable for more organizations (e.g., Jenson and Johnson, 1999; Zheng, Yen, andTarn, 2000).Research ModelAs stated previously, our purpose is to create and to test a model of supply chain integration empirically with a theoreticalfoundation grounded in resource dependency theory and augmented with the applied uses of information technologies.  We haveadapted Chwelos, Benbasat, and Dexter (2001) model and simplified it to more poignantly represent the studied components ofour study.  Our model is illustrated in the Figure 1.Figure 1.  Proposed Research ModelHypothesesThe level of resource dependency will aid in predicting the company's potential benefit gained through either joining or formingan integrated supply chain.   Several of the articles touched upon the belief that industry effects may play a role in the level ofexhibited resource dependency (e.g., Pfeffer and Salancik, 1978).  If a company resides in a benevolent task environment, thenexternal resources will be non-critical.  For example, a concrete manufacturer needs a constant supply of rocks, sand, and waterto make concrete.  However, a company that is in a highly volatile environment such as in the semiconductor industry sector mustrely on external suppliers to satisfy demands for resources (Lukas, Tan, and Hult, 2001).  Supply Chain Management in the Digital Economy2352 2002  Eighth Americas Conference on Information SystemsH1: A company in a highly volatile environment has a higher Resource Dependency than a company in a benevolenttask environment.Companies who are considering whether or not to initiate or to join an integrated supply chain should consider their level ofresource dependency and level of information technology.  Opportunistic behaviors could be more self-evident for alliances basedon non-critical resources. Only companies that are high on both resource dependency and information technology will be ableto fully integrate their systems and realize the full potential of an integrated supply chain while simultaneously reducingopportunistic behavior of its members.  H2: A company with a higher Resource Dependency is likely to integrate the supply chains than a company with a lowerResource Dependency.H3: A company with a higher Information Systems Sophistication is likely to integrate the supply chains than a companywith a lower Information Systems Sophistication.Companies who integrated their supply chains to manage the logistics and development cost and to succeed in strategic planningwill be likely to show some evidence of their success in financial performance.  The purpose of this study is not merely showingthe link between the level of integration and the performance, but also the match between resource dependency and informationsystems sophistication and the level of affects the company's performance.H4: A company with a higher integration in the supply chains management will perform better than a company with alower integration.  The companies whose level of integrated supply chain management matches their resourcedependency and information systems sophistication will perform better than a company with a mismatch betweenthem.MethodologyDeveloping the InstrumentThe first phase of the study will consist of interviews with industry experts of supply chain management and the adoption ofrelevant scales in the development of an instrument to measure the constructs listed in the model. A list of possible measures tobe used has been identified (the scales are summarized in Table 1).  Table 1.  ScalesConstruct Source # of itemsExternal Task Environment(EX)- Lukas, Tan, and Hult, 2001 12Resource Dependency (RD) - Chwelos, Benbasat, and Dexter, 2001 3IT Sophistication (IT) - Paré and Raymond, 1991- IT investment (proxy)81Extent of Supply ChainIntegration (SCI)- Developed for this study (adopted from Chwelos, Benbasat, and Dexter(2001) - Proxy using investment data. 31Company Performance (CP) - Dess and Robinson, 1984 4Once the instrument is completed, a pilot testing using 4 - 5 organizations including their suppliers will be conducted.  For thenext phase of this research study, data will be collected, and the instruments and model will be tested using structural equationmodeling techniques drawn from a larger sample utilizing a mail survey. Sakaguchi et al./Integrated Supply Chain Model2002  Eighth Americas Conference on Information Systems 2353ConclusionWe argue that full benefits of an integrated supply chain cannot be achieved by all firms as the literature has consistentlypostulated.  Levels of resource dependency and information based technology intensity play integral parts in the potential rewardsof an integrated supply chain.   Without the ability to share information throughout the alliance, the integrated supply chain wouldbe unthinkable.   This paper has attempted to exhibit why some firms will do better in an integrated supply chain than others.  Thehope of the authors was not to dampen the enthusiasm regarding integrated supply chains, but to point out potential fallacies thatare illuminated through theory but have largely been ignored by both practitioner and academic writers.  Thus, this paper providesa point of reference for managers who are contemplating entering into an integrated supply chain.ReferencesAvailable upon request to the first author.

DEVELOPMENT OF AN INTEGRATED SUPPLY CHAIN MODEL

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DEVELOPMENT OF AN INTEGRATED SUPPLY CHAIN MODEL

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