Research paper

Benets, barriers, and bridges to effective supply chain management

Stanley E. Fawcett
Marriott School, Brigham Young University, Provo, Utah, USA

Gregory M. Magnan
Albers School of Business and Economics, Seattle University, Seattle, Washington, USA, and

Matthew W McCarter .
College of Business, University of Illinois, Champaign, Illinois, USA
Abstract Purpose The purpose of this article is to provide academics and practitioners a quantitative and qualitative analysis of the benets, barriers, and bridges to successful collaboration in strategic supply chains. Design/methodology/approach A triangulation method consisting of a literature review, a cross-functional mail survey, and 51 in-depth case analyses was implemented. Senior managers from purchasing, manufacturing, and logistics were targeted in the mail survey. The break down by channel category interviews is as follows: 14 retailers, 13 nished goods assemblers, 12 rst-tier suppliers, three lower-tier suppliers, and nine service providers. Findings Customer satisfaction and service is perceived as more enduring than cost savings. All managers recognize technology, information, and measurement systems as major barriers to successful supply chain collaboration. However, the people issues such as culture, trust, aversion to change, and willingness to collaborate are more intractable. People are the key bridge to successful collaborative innovation and should therefore not be overlooked as companies invest in supply chain enablers such as technology, information, and measurement systems. Research limitations/implications The average mail-survey response rate was relatively low: 23.5 percent. The case study analyses were not consistent in frequency across channel functions. Although the majority of companies interviewed and surveyed were international, all surveys and interviews were managers based in the US. Practical implications This study provides new insight into understanding the success and hindering factors of supply chain management. The extensive literature review, the cross-channel analysis, and case studies provide academics and managers a macro picture of the goals, challenges, and strategies for implementing supply chain management. Originality/value This paper uses triangulation methodology for examining key issues of supply chain management at multiple levels within the supply chain. Keywords Supply chain management, Strategic management, Relationship marketing Paper type Research paper

Introduction
The strategic supply chain continues to be adopted by organizations as the medium for creating and sustaining a competitive advantage (Ireland and Webb, 2007). Such a displacement is understandable considering the potential benets of successful supply chain management (SCM). These benets include inventory reduction, improved delivery service, and shorter product development cycles. Despite
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these enticing benets, organizations who partner in strategic supply chains continue to encounter barriers. These barriers exist at multiple levels of organization: the organizational, intra-organizational, inter-organizational levels. For example, strategic supply chains may encounter performance glitches or the inability to meet customer demand (Hendricks and Singhal, 2003) from such things as quality and production problems, employee apprehension to yield up control, and poor collaborative planning. These glitches can be quite costly in terms of higher inventory and lower sales growth (Hendricks and Singhal, 2005). These potentially costly burdens from failure to meet customer demand are a strong motivator for supply chain
The authors would like to thank CAPS Research for its generous funding of the authors stream of research into achieving world-class supply chain performance.

Supply Chain Management: An International Journal 13/1 (2008) 35 48 q Emerald Group Publishing Limited [ISSN 1359-8546] [DOI 10.1108/13598540810850300]

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Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

(SC) managers and management scholars to develop bridges or solutions and strategies to either avoid or remedy the barriers to strategic SC success. However, despite the growing interest of SCM and the benets, barriers, and bridges toward its success, research that addresses all three issues from a multi-channel perspective is in need. Knowing and understanding how, when, and why some supply chains succeed while others do not would not only be of interest to SC scholars, but to the managers that daily face the challenge to making strategic SCM a reality. The purpose of this paper is to report and review the potential benets, barriers, and bridges of strategic SCM. We argue that for strategic supply chains to be successful managers and scholars must not focus on one particular inhibitor or facilitator, but rather consider the barriers and bridges in combination or holistically. Doing so not only allows us to separate the trees from the forest but further allows rms to capitalize on the added benets of SCM. Our arguments begin with a review of the salient theory and literature of SCM in terms of benets, barriers, and bridges. A two-part study composed of mail surveys and 51 in-depth interviews is discussed and their ndings shared. We discuss our ndings and their implications, and conclude with some suggestions for future research.

Background: benets, barriers, and bridges

In this section, we review the literature of the benets, barriers, and bridges to SCM. This literature review began rst with the authors going back 25 years in the salient SC journals and trade press. As the search continued, we broadened our search to other journals and trade press that discussed benets, barriers, and bridges in supply chains. The articles were read and categorized by their primary topic(s) concerning SCM. We frame our arguments within a contingency framework, where, for strategic supply chains to succeed in creating value, their actions (as individual rms and as a supply chain) must align with the external environment. Contingencies and strategic supply chain management Strategic supply chains are supply chains where the members are strategically, operationally, and technologically integrated and are anticipated for long-term stable relationships with the ability to change to the demands of the environment (Hult et al., 2004, p. 241). In recent years, numerous theories and paradigms have been used by scholars to understand why some strategic supply chains succeed in creating value while others do not. Although perspectives of and prescription to SCM vary, a common idea among scholars is that competitive success for a strategic supply chain is contingent on managements ability to recognize changes in the competitive environment and then direct and coordinate action within and across organizations to utilize resources effectively and meet the demands of the environment (Stonebraker and A, 2004; Fawcett and Magnan, 2001). In short, strategic supply chains as organizational entities are more likely to succeed when they are able to adapt and align with the demands of the external environment (Thompson, 1967). A second theory that helps explain how strategic supply chains can mobilize to create value and that goes hand in hand with contingency theory is Lewins (1951) force eld 36

theory. Force eld theory implies that the driving forces (external threats combined with internal benets) must exceed the resisting forces (e.g. culture, structure, perceptions of how things should be done) so that any organizational entity in this case a company within a supply chain can change and survive in changing environments. The ability to scan the environment for the forces driving SCM, to identify the potential barriers (or resisting forces), and to implement bridges (so as to over come resistance) enables members of a supply chain to maintain competitive success in changing environments and markets and become a successful strategic supply chain. Typically, the contingency model is driven by dynamic technological innovation, management skills across department and organizational functions, and integration vertically and horizontally across industry (Stonebraker and A, 2004; Funk, 1995; Hammer and Champy, 1993; Lawrence and Lorsch, 1967). These drivers can be considered driving forces (Lewin, 1951). Although these drivers push for supply chain collaboration, barriers or resisting forces push back (Lewin, 1951). Such resisting forces include lack of member support, inadequate measurement and information systems, and organizational culture. Nevertheless, organizations are not powerless in terms of choices or their ability in attempting to overcome these barriers. Strategic supply chain partners can create and implement initiatives that bridge the gap between a supply chain and a strategic supply chain. Some of these bridges include people empowerment, information integration, and alliance design. Thus, strategic supply chains can create value contingent on their ability to overcome resisting forces through a various mechanisms. Figure 1 shows a contingency framework for understanding SCM implementation. The following subsections outline the main sections of the framework. Driving forces of supply chain management The driving forces of SCM stem from two sources: external pressures and potential benets from strategic SC alignment. External pressures include such forces as advances in technology and increased customer demand across national borders (Mehta, 2004); maintaining lower costs while meeting these diverse needs (Cook and Garver, 2002); and intensied competition utilizing relationships among vertically aligned rms (Togar and Ramaswami, 2004). These pressures have begun shifting the focus of individual rms vying for market presence and power to supply chains competing against supply chains (Bhattacharya et al., 1995). Benets of strategic supply chain management The second main driving force entails the potential benets from successful SC collaboration (Balsmeier and Voisin, 1996). Table I offers a sample of the SC benets literature. Of the discussed benets, increased inventory turnover, increased revenue, and cost reduction across the chain are the most sought after (Daugherty et al., 2005; Attaran, 2004; Ferdows et al., 2004; Leonard and Cronan, 2002; Fine, 2000). Collaboration not only enables partners to reduce one anothers costs but also allows inventory to cycle through to customers faster. The two-fold result is increased revenues and decreased costs that can be shared across the chain. Two other core benets include decreased order cycle times and greater product availability (Leonard and Cronan, 2002; Stank et al., 1999a; Sheridan, 1999; van der Vorst and

Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

Figure 1 A contingency framework for understanding supply chain implementation

Beulens, 1999). To win customer allegiance, rms must have what customers want when and where they want it. Close relationships with suppliers leave room for special orders in unique times of high demand, helping satisfy the customer expectations. Additional benets are market responsiveness, added economic value, capital utilization, decreased product time to market, and logistics cost reduction (Lee, 2004; Mentzer et al., 2000; Tyndall, 2000; Christopher and Ryals, 1999). Revenue growth fueled by increased responsiveness occurring at lower costs using fewer assets translates into stellar performance. Overall, SCM potentially creates value for all members in the chain. However, such benets vary in importance and degree among partnering chain members (Agrawal and Pak, 2001). This variance in importance is further complicated by the potential risks strategic supply chains place upon aligned rms. In this following sub-section, we discuss these risks and other barriers in more detail. Barriers to effective supply chain management From the literature in Table II, the potential barriers or resisting forces are intimidating. The resisting forces to strategic supply management come both from the nature of the organization itself and the people that compose the organization. These barriers can be classied under one of two headings: inter-rm rivalry and managerial complexity (Park and Ungson, 2001). Inter-rm rivalry is a misalignment of motives and behaviors among allying partners within the strategic supply chain (Park and Ungson, 2001). Some barriers under this category include internal and external turf protection, poor collaboration among chain partners, and lack of partner trust. In short, interrm rivalry is the tendency for allying partners to compete rather than willingly cooperating. Absent a willingness to cooperate, a supply chain will not be able to attain lower costs and higher returns on investment. Further, irregular collaborative meetings among chain partners hinder managers 37

opportunities to share with one another concerns, weaknesses, and best practices. Other barriers to SCM fall under managerial complexity or misalignments in allying rms processes, structures, and culture (Park and Ungson, 2001). Under the umbrella of managerial complexity barriers include information system and technological incompatibility, inadequate measurement systems, and conicting organizational structures and culture (e.g. Sheridan, 1999; Tyndall et al., 1998; Quinn, 1997a). Because many rms are comfortable using their systems for only their own tasks, it is not surprising to see inconsistent information and technology systems as a barrier. People are change averse and unwilling to share information for fear of exposing their weakness and secrets to others. If SCM is to be implemented across company borders, a revamp in attitude and thinking is necessary. Cooper et al. commented:
Successful supply chain management requires a change from managing both individual functions to integrating activities into key supply chain processes (Cooper et al., 1997, p. 5).

Bridges to effective supply chain management Once the barriers to successful SCM are identied, bridges can be designed and implemented to attain desired benets. However, for such bridges to work, research suggests the need for management to redesign its approach to problem resolution SC collaboration entails signicantly different business models and thinking styles of management (Moberg et al., 2003, p. 37). Table III provides a sample of the salient bridges to SCM. The top three bridges found in the literature focus on collaboration among chain partners. These three bridges are transparent information systems, cross-functional collaboration, and collaborative planning across the supply chain (Kulp et al., 2004; Mentzer et al., 2000; Monczka et al., 1998). If SC managers are expected to make difcult decisions in dynamic environments, valuable information must be available at the right place, at the right time, and in

Table I Literature review benets to strategic supply chain management

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Total

Benets, barriers, and bridges to effective supply chain management

Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Benets

38

Increased inventory turnover Increased revenues SCM cost reductions Product availability Decreased order cycle time Responsiveness Economic value added Capital utilization Decreased time to market Reduced logistics costs

18 12 11 11 11 7 5 4 4 2

Supply Chain Management: An International Journal

Sources: 1 Agrawal and Pak (2001); 2 Alber and Walker (1998); 3 Allnoch (1997); 4 Attaran (2004); 5 Balsmeier and Voisin (1996); 6 Callioni et al. (2005); 7 Christopher and Ryals (1999); 8 Closs et al. (1998); 9 Cooke (1997); 10 Daugherty et al. (2005); 11 Ferdows et al. (2004); 12 Handeld and Pannesi (1995); 13 Hult et al. (2004); 14 Inger et al. (1995); 15 Jayaram et al. (2004); 16 Kaas and Ohl (2002); 17 La Londe and Masters (1994); 18 Lee (2004); 19 Leonard and Cronan (2002); 20 Mentzer et al. (2000); 21 Metz (1998); 22 Monczka (1996); 23 Rajib et al. (2002); 24 Sabath and Frentzel (1997); 25 Sheridan (1999); 26 Silverstein (2002); 27 Stank et al. (1999a); 28 Tan et al. (1998); 29 Timme and Williams-Timme (2000); 30 Tyndall (2000); 31 van der Vorst and Beulens (1999); 32 Vergin (1998); 33 Vokurka (1998); 34 Waller et al. (2000); 35 Waller et al. (1999)

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Table II Literature review barriers to strategic supply chain management

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Total

Benets

Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Benets, barriers, and bridges to effective supply chain management

Interrm rivalry Internal and external turf wars Poor SCM planning Lack of vision of SCM Lack of channel trust Executive commitment Poor SCM understanding

16 10 9 8 7 7

39

Managerial complexity IS/IT deciencies Organizational structure/culture Lack SC measurement Lack alliance guidelines

10 9 8 7
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Supply Chain Management: An International Journal

Sources: 1 Akkermans and van Doremalen (2004); 2 Andraski (1998); 3 Barratt (2004a); 4 Barratt (2004b); 5 Bender (2000); 6 Cox (1999); 7 Frohlich (2002); 8 Inger et al. (1995); 9 Johnson et al. (2001); 10 Kilpatrick and Factor (2000); 11 La Londe (2003); 12 La Londe and Masters (1994); 13 Lee (2004); 14 Lonsdale (1999); 15 Lummus et al. (1998); 16 Mentzer et al. (2000); 17 Milligan (1999); 18 Moberg et al. (2003); 19 Monczka and Morgan (1997); 20 Monczka and Morgan (1998b); 21 Monczka and Morgan (1998a); 22 Morgan (1997); 23 Neuman and Samuels (1996); 24 New (1997); 25 Pitera (2000); 26 Quinn (1997a); 27 Quinn (1999); 28 Roux et al. (1999); 29 Sheridan (1999); 30 Smagalla (2004); 31 Timme and Williams-Timme (2000); 32 Tyndall (2000); 33 Tyndall et al. (1998); 34 van Hoekm et al. (1998)

Table III Literature review bridges to strategic supply chain management

Bridges

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Total

Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Benets, barriers, and bridges to effective supply chain management

40

Information transparency CFT/CF collaboration Collaborative planning IT architecture/internet Formal performance tracking Adopt strategic SCM vision Attention to human factors Supplier certication/reduction Target segmented customers Shared investment/benets

16 16 15 11 11 11 11 9 8 4

Supply Chain Management: An International Journal

Sources: 1 Akkermans and van Doremalen (2004); 2 Akkermans et al. (1999); 3 Andraski (1998); 4 Attaran (2004); 5 Ballou et al. (2000); 6 Barratt (2004a); 7 Barratt (2004b); 8 Bender (2000); 9 Bowersox and Closs (1996); 10 Burnell (1999); 11 Choy and Lee (2003); 12 Cooke (2000); 13 Croom (2001); 14 Daugherty et al. (2005); 15 Dyer et al. (1998); 16 Fawcett and Magnan (2001); 17 Frohlich (2002); 18 Forker and Hershauer (2000); 19 Handeld and Nichols (2004); 20 Hult et al. (2004); 21 Lummus et al. (1998); 22 Mentzer et al. (2000); 23 Metz (1998); 24 Moberg et al. (2003); 25 Monczka (1996); 26 Monczka and Morgan (1997); 27 Monczka et al. (1998); 28 Pagh and Cooper (1998); 29 Pitera (2000); 30 Poirier (1999); 31 Quinn (1997a); 32 Quinn (1997b); 33 Rajib et al. (2002); 34 Shen et al. (2003); 35 Sheridan (1999); 36 Stank et al. (1999a); 37 Stank et al. (1999b); 38 Tan et al. (1998); 39 Tyndall et al. (1998); 40 Vokurka (1998); 41 Vokurka et al. (1998); 42 Waller et al. (2000)

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Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

the right hands of people who approach the problem from different perspectives and with different styles. The remaining bridges include adopting a strategic SC vision, paying attention to human factors, and supply-base reduction and certication (Barratt, 2004a; Metz, 1998; Tan et al., 1998). This spectrum of proposed solutions suggests a single remedy cannot solve SCM (Table III). Managers must be able to think outside of the box using different combinations of approaches with different people to remedy SC problems. To summarize, external forces drive organizations to align and form strategic supply chains so as to align SC action with external environmental demands. By aligning behaviors with the environment, numerous benets motive rms to achieve SC collaboration. However, to attain these benets, strategic supply chains must navigate barriers to successful collaboration using various approaches and strategies that act as bridges.

Table IV Adjusted sample sizes, completed surveys, and response rates

Adjusted sample size Completed surveys 96 129 109 Response rate (percent) 7.2 9.4 8.1

Pre-test ISM CSCMP APICS Pre-notication ISM CSCMP APICS

1,329 1,369 1,351

370 398 328

84 76 94

22.7 19.1 28.7

Methodology
SCM is a boundary-spanning activity (Bowersox et al., 1999). Attaining information from different functional managers as well as channel positions helps paint a macro-picture of how SCM may be effectively achieved. To develop this picture and extract a more robust and generalizable set of ndings, a triangulation approach was used (Scandura and Williams, 2000, p. 1250; Jick, 1979; Lewis, 1998). This method included an extensive literature review (Tables I to III), a cross-functional mail survey, and in-depth cases studies. Cross-functional mail survey The purpose of the mail surveys was to capture how functional managers view the benets, barriers, and bridges to SCM. Three different groups of managers were identied: manufacturing, purchasers, and logistician managers. Based on literature as well as a series of pre-survey interviews, a four-page instrument was developed. The initial survey was reviewed by several practitioners and academics that served as the studys advisory board. Their feedback was used to modify the survey instrument. A large-scale pre-test was conducted. Three mailing lists of approximately 1,500 middle- and senior-level managers were complied from membership rosters from the Institute of Supply Management (ISM), the Council of Supply Chain Management Professionals (CSCMP), and APICS. The survey process followed Dillmans (1978) total design method, including three mailings of a cover letter, an instruction sheet, and the survey instrument. The adjusted sample size, number of respondents, and response rate are listed in Table IV. Approximately 100 non-respondents from each group were randomly selected, telephoned, and asked basic demographic data so that respondents and nonrespondent proles could be compared. No differences between the groups were found. From the 100 managers who chose not to participate, the three most common answers were: the manager was to busy; the manager was inundated by surveys and no longer participated in survey studies; and the managers organization had yet to adopt a SC philosophy. The pre-test results were reviewed and the survey was modied accordingly. New mailing lists of 500 were complied from the three professional associations. Each manager was then telephoned and asked to participate in the study, during 41

which the list was adjusted for incorrect numbers and employees no longer working at the organizations. The number of managers contacted, the number of surveys completed, and response rates are listed in Table IV. Case studies To explore the whys behind our survey ndings, a series of in-depth case studies were conducted (Yin, 1981). Following suggestions from Eisenhardt (1989), ve chain positions were pre-determined to allow cross-channel analysis. Such a case variety fosters the development of a more creative and generalizable theory (Lewis, 1998, p. 460). A total of 51 in-depth case studies were conducted. The break down by channel category is as follows: 14 retailers, 13 nished goods assemblers, 12 rst-tier suppliers, three lower-tier suppliers, and nine service providers. Data collection for these case studies came from two sources. The rst source of data consisted of annual reports and other company documents pertinent to SC operations for each rm. These data were our secondary source of information as some companies were public while others were not and therefore were more open about sharing their archived information with the researchers. The second and primary source of data source consisted of 51 interviews with SC managers at the companies. Case study participants were senior-level managers initially identied based on their participation at annual meetings of leading professional associations where they were presenting cuttingedge ndings in SCM. Such a non-randomized selection method allows us to transparently observe extreme chainmember practices and shed light as to why some rms succeed in supply management while others do not (Pettigrew, 1990, p. 275). In most instances, the interview was conducted with multiple managers from the host organization (the number of company representatives ranged from one to eight). The average interview lasted over four hours with the shortest interview lasting a little over an hour and the longest taking over ten hours. All interviews were conducted face-to-face and promised condentiality to facilitate candid responses. During each interview, a semi-structured interview guide was used. The guide was divided into general questions, questions on collaboration among the interviewees company customers and suppliers, and key practices with particular chain members. The guide consisted of both open ended or rating scale questions, enabling a clearer perspective of each interviewees responses (Spradley, 1979). To become

Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

intimately familiar with each case, structured case study writeups were created to allow further analysis. Such an approach is central to avoiding data asphyxiation where enormous volumes of data overwhelm the analysis process (Pettigrew, 1990). We also became familiar with each case as a standalone entity, allowing for unique patterns from each case to become visible and for, if possible, generalizable patterns from cross-case comparisons to be derived (Eisenhardt, 1989).

Results and discussion

Mean score for each mail survey question was compiled and ranked from highest to lowest in importance regarding the benets, barriers, and bridges of supply management. Rankings were then ordered by function within the chain. Response rankings were then listed by the percent of respondents that ranked survey items a ve or above. The mean scores, rankings, and percentages of scores ve or greater are listed in Table V. The data gathered from the interviews allowed for us to understand in greater detail the ranked items from the surveys. Table VI summaries the benets, barriers, and bridges synthesized from the mail surveys and interviews in this study. Benets of effective supply chain management Before investing money, time, and other resources into difcult implementations, most managers want to know if the results are worth the effort. Identifying and quantifying the expected benets is a critical part of any cost/benet analysis. The functional ratings of SC benets vary widely. Each functional area identied a different top-rated benet (Table V). Nearly 72 percent of purchasers scored cost of purchased items a ve or higher (mean 4:98). Logisticians identied on-time delivery/due-data performance as the greatest benet of SCM (67 percent, mean 4:83), and manufacturing respondents scored reduced order fulllment lead times as the most pervasive benet (51 percent, mean 4:69). Overall, the most prevalent benets identied by one functional group were viewed by the other functional areas as relatively less important. Thus, managers valued the purposes of SCM differently contingent on their position within the chain. This divergence in values suggests a two-edged sword facing SC managers. While moderate divergence of values can lead to superior group decisions and outcomes (in this case SC team decisions and outcomes) via positive conict over the nature of the task (e.g. purpose of SCM), too much (or high) value divergence can be detrimental to group decision making performance via negative conict (Jehn et al., 1999). The interviews further offer the suggestion of quantifying the benets of strategic SCM. A common saying at one of the interviewed companys is if you dont have the numbers, its just your opinion. However, the interviewees also revealed a caveat that the ability to track and quantify benets from SC initiatives is extremely difcult. The interviews were replete with soft anecdotal evidence that SCM reduces costs and better satises the end customer. In contrast the hard numbers were rare. Many of the companies interviewed are working diligently to develop better metrics to help them evaluate and justify SC initiatives. In looking back at survey rankings as a whole, it is noteworthy that satisfying customer needs is the primary benet. Interestingly, the most cited benet of SC 42

collaboration by the interviewed companies was cost reduction. All but one of the companies interviewed emphasized cost savings as an expected and realized benet of enhanced SC cooperation. It must be noted, however, that customer satisfaction was the second most mentioned benet resulting from SC collaboration. This mixed ranking brings up the question of where is the focus being aimed for the primary benets of SCM? While some caveats are visible, the overall view is quite attractive. Even so, managers should carefully analyze their companys specic position to verify that the benets discussed can be achieved. No single benet was obtained by more than 62 percent of the respondent organizations, implying that many companies have yet to be able to devise and implement a winning SC strategy. Barriers to effective supply chain management Conceptually, strategic supply chains seem to succeed or fail on the degree of resource sharing among partners (e.g. information, knowledge, skills) and the partners ability to use these resources effectively in changing environments. In this section, we highlight some of the main causes for why SC partners are unable to successfully share resources and effectively use those resources (even when they were shared). The main causes for supply chains being unable to share resources and utilize those resources may be divided into two broad categories congruent with Park and Ungsons (2001) dichotomy that we discussed earlier: inter-rm rivalry and managerial complexity. The three groups of functional managers were very consistent in their evaluations of the barriers to effective SCM. There were only two instances where the rankings varied by three places. Manufacturing managers ranked non-aligned performance measures as the fth most serious barrier to integration while both purchasers and logisticians ranked it lower at number eight. Manufacturing managers tend to be frustrated by conicting measures such as end-of-quarter sales goals that can create havoc on the production oor. Similarly, logisticians ranked a lack of willingness to share information as the fth most critical impediment compared to a ranking of eight for manufacturing managers. Given their boundary-spanning position, logistics managers are sensitized to the need to share information. Missing or incorrect information often creates a demand for expensive expediting. The single greatest barrier from the mail surveys is inadequate information systems. This barrier was the only variable to receive an average score of ve or greater. Since collaboration is intrinsically information driven, inadequate or incompatible information systems are a critical barrier to collaboration. Inadequate or incompatible information systems present a twofold dilemma. First, managing complicated SC networks requires collection and analysis of large amounts of data. Although, technology advances have yielded great use of data warehouses that collect and store information, analyzing the data correctly as to allow people to make decisions remains a difcult and complex task. Second, data only becomes valuable information when it is in the hands of the right people at the right time. If all the participants of a chain cannot access needed information, opportunities for value savings cannot be evaluated and full benets of integration will be difcult to attain. In short, these types of barriers fall under the concept of managerial complexity.

Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

Table V Combined and channel rankings of benets, barriers, and bridges

Mean Combined Rank % 5-7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 62.0 61.0 59.4 54.5 59.7 53.7 59.2 53.0 51.0 52.0 44.3 37.9 34.2 31.3 24.2 Mean 4.75 4.63 4.67 4.49 4.98 4.75 4.52 4.56 4.71 4.46 4.43 3.94 3.89 3.98 3.70 Purchasing Rank % 5-7 3 6 5 9 1 2 8 7 4 10 11 13 14 12 15 62.7 57.3 59.9 53.2 71.7 63.7 61.8 55.1 61.3 57.3 54.1 62.0 38.8 35.2 30.3 Mean 4.65 4.83 4.72 4.56 4.49 4.47 4.43 4.52 4.37 4.42 3.97 4.29 4.00 3.75 3.37 Logistics Rank % 5-7 3 1 2 4 6 7 8 5 10 9 13 11 12 14 15 62.9 67.0 64.7 59.1 59.0 55.1 59.6 53.0 50.8 56.5 38.7 54.0 36.9 31.2 21.8 Manufacturing Mean Rank % 5-7 4.67 4.49 4.49 4.69 4.34 4.34 4.53 4.37 4.11 4.09 4.11 3.43 3.66 3.56 3.26 2 5 4 1 8 7 3 6 10 11 9 14 12 13 15 62.9 67.0 64.7 59.1 59.0 55.1 59.6 53.0 50.8 56.5 38.7 54.0 36.9 31.2 21.8

Panel 1: Benetsa Respond to customer requests On-time delivery Customer satisfaction Order fulllment lead times Cost of purchased items Firm protability Handle unexpected challenges Inventory costs Overall product costs Productivity Overall product quality Transportation costs Market penetration Product innovation lead times Cost of new product development Panel 2: Barriersb Inadequate information systems Lack clear alliance guidelines Inconsistent operating goals Lack shared risks and rewards Processes poorly costed Non-aligned measures Lack willingness to share information Organizational boundaries Measuring SC contribution Measuring customer demands Lack employee empowerment Lack resources for SCM Panel 3: Bridges Frequent communication A willingness to share information Use of cross-functional teams Shared expertise w/suppliers Common goals Supply base reduction Senior management interaction Cross-functional processes Shared expertise w/customers Customer selectivity Increase SC training Use of SC measures Use of consistent measures EDI linkages Clear selection guidelines Vendor managed inventories Use of total cost analysis Sharing risks and rewards Shared mission statement Clear alliance management guidelines Common operating procedures Use ERP/SCM software Use supply chain teams Use of activity based costing

4.69 4.65 4.62 4.59 4.58 4.51 4.49 4.48 4.38 4.31 4.16 3.88 3.85 3.75 3.43

5.19 4.87 4.84 4.83 4.61 4.56 4.56 4.49 4.32 4.26 3.8 3.73

1 2 3 4 5 6 7 8 9 10 11 12

71.2 62.4 64.0 65.6 56.4 55.5 56.1 52.4 49.2 49.9 34.8 38.5

5.07 4.74 4.75 4.73 4.63 4.39 4.56 4.42 4.31 4.12 4.08 3.76

1 3 2 4 5 8 6 7 9 10 11 12

69.4 59.3 58.2 61.1 58.4 50.6 54.0 52.4 50.3 43.4 43.8 38.8

5.48 4.97 4.94 4.97 4.71 4.66 4.74 4.67 4.44 4.30 3.76 4.05

1 2 4 3 6 8 5 7 9 10 12 11

78.4 68.5 66.8 64.0 61.5 56.7 64.5 56.1 50.8 50.3 33.7 45.3

5.00 4.87 4.83 4.76 4.49 4.61 4.36 4.37 4.21 4.35 3.60 3.36

1 2 3 4 6 5 8 7 10 9 11 12

65.3 63.6 65.8 66.3 49.2 58.4 49.5 48.3 47.0 54.8 28.4 31.2

4.64 4.59 4.37 4.32 4.31 4.21 4.21 4.21 4.14 4.11 4.09 4.08 4.05 4.02 3.97 3.86 3.85 3.83 3.80 3.76 3.74 3.36 3.31 3.08

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

54.2 55.0 47.2 46.0 45.7 42.8 46.0 43.4 41.6 43.5 39.4 42.3 39.8 43.2 38.2 36.2 47.5 35.6 36.3 32.0 27.5 25.3 224.8 20.2

4.50 4.58 4.34 4.46 4.42 4.50 4.10 4.03 4.14 3.89 3.87 4.03 4.06 3.53 4.05 4.13 4.14 3.99 3.99 3.81 3.70 3.03 3.31 3.17

3 1 6 4 5 2 10 14 7 17 18 13 11 21 12 9 8 15 16 19 20 24 22 23

55.5 57.0 48.4 55.8 53.2 58.4 49.3 43.0 44.6 38.6 39.8 42.9 43.5 35.1 45.5 45.2 49.4 44.0 45.4 35.9 28.8 21.4 27.0 22.2

4.82 4.77 4.64 4.20 4.35 4.25 4.57 4.54 4.16 4.39 4.36 4.28 4.21 4.62 4.19 3.72 4.04 3.90 3.97 4.03 3.94 3.73 3.59 3.47

1 2 3 13 9 11 5 6 15 7 8 10 12 4 14 22 16 20 18 17 19 21 23 24

64.4 66.8 60.6 45.3 51.9 47.3 61.5 56.6 49.5 55.0 48.9 54.8 50.1 58.7 47.9 38.0 48.9 43.7 43.1 45.5 38.1 35.3 34.1 29.0

4.57 4.41 4.12 4.35 4.17 3.93 3.94 4.03 4.12 4.01 4.01 3.93 3.87 3.83 3.69 3.78 3.42 3.63 3.47 3.43 3.56 3.26 3.03 2.60

1 2 5 3 4 11 10 7 6 9 8 12 13 14 16 15 21 17 19 20 18 22 23 24

56.1 54.8 45.0 50.0 44.5 37.7 38.9 41.7 41.7 47.1 40.1 40.1 37.1 44.5 33.4 35.9 27.0 29.6 31.0 23.6 23.1 26.0 20.6 14.9

Notes: a To what extent has SC integration improved your rms performance? (1 not Improved, 7 greatly improved); b To what extent do the items act as barriers to supply chain integration? (1 not a barrier, 7 serious barrier); To what extent have each of the items below facilitated increased inter-rm coordination? (1 not a facilitator, 7 effective facilitator)

43

Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

Table VI Top ten benets, barriers, and bridges to strategic supply chain management
Benets Barriers Bridges

Customer focus Increased customer responsiveness More consistent on-time delivery Customer satisfaction Shorter order fulllment lead times Company focus Reduced purchasing costs Better asset utilization Ability to handle unexpected events Reduced inventory costs Firm productivity Reduced overall product cost

Interrm rivalry Inadequate information sharing Inconsistent operating goals Lack of willingness shared risks and rewards Lack of willingness to share information Managerial complexity Lack of alliance guidelines Processes poorly appraised in terms of costs Non-aligned measures Organizational boundaries Measuring supply chain contribution Measuring customer demand

Operations, process, and supply management Accurate comprehensive measures Supplier alignment and rationization Effective use of pilot projects Process documentation and ownership People management Managerial and employee support Open information sharing Trust-based alliances Cross-trained experienced managers Supply chain education and training Using chain advisory councils

The interviews eshed out management concerns regarding SCM such that the barriers appeared to be stemming from quite a different source. According to the interviewees, human nature is the primary barrier to successful SC collaboration. Most people are change averse and prefer to stick to the status quo. Managers noted repeatedly that people throughout their organizations were suspicious of the types of change instigated by SCM and avoid such changes whenever possible. Management also noted that most individuals do not have a clear perception of what SCM means in relation to their tasks. Several managers stated that top management either lacks a clear vision of SC integration or fails to articulate a vision that other employees can relate to. Indeed, based on interviewee commentary, SCM vision remains fuzzy at most organizations. This lack of vision can lead to poor understanding of what SCM is in practice. The natural result of unclear potential and uncertainty is resistance to change, and even efforts to forestall any meaningful adoption of SC practices. Other substantive barriers to SCM were highlighted throughout the interviews. Human behavior was found at the root of nearly all of them (i.e. organizational culture and structure, functional conicts, lack of managerial commitment, conicting and non-transparent processes, policies, and procedures, performance measurement, information sharing, lack of trust, resource constraints, and complexity of SC networks). These interview ndings are rather revealing, since the survey data posited that inconsistent information technology, alliance guidelines, and operating goals were the prime barriers to SCM. The interview data remind us that it is people that gather, process, share, and interpret the information, write and uphold the alliance guidelines, and determine and adhere to the goals of their operations. These ndings reect a recent comment made during a SCM forum:
Despite years of process breakthroughs and elegant technological solutions, an agile, adaptive supply chain remains an elusive goal. Maybe its the people who are getting in the way (Harvard Business Review, 2003, p. 64; italics added)?

themselves. However, the ability for rms to utilize shared resources is a direct function of the amount and quality of resource shared. For example, interorganizational information systems are only as protable as a function of the quality and quantity of information they store and share if not enough information shared or the information that is shared is of little value, strategic supply chains may fall short of creating value (cf. Kumar and van Diesel, 1996). The surveys reveal that strategic supply chains suffer from inadequate information sharing, and the interviews go deeper suggesting one of the main reasons for inadequate information is not that companies lack ability but lack desire and willingness. Interrm rivalry creates vulnerability and impedes information sharing. Bridges to effective supply chain management The barriers to effective SC implementation are considerable. Reviewing the SCM literature together with the implementation literature for other cross-functional and resource-intensive strategic initiatives, numerous tools or bridges were identied regarding their impact on SCM implementation (Table V). Note that none of the 25 practices chosen in Table V appears to have a remarkably positive impact on SC collaboration (means range from 3.08 to 4.64). Possible reasons for such low means could be none of the practices are truly effective in bridging barriers to effective SCM or organizations are not sufciently advanced in adopting the practices to make SCM a reality. The interviews suggest that the second explanation underlies the survey results. Moreover, interviewees noted that SC collaboration is a complex undertaking. No single practice or group of practices can close the cultural, emotional, physical, and strategic gaps preventing collaboration. From the survey data, logistics managers viewed 17 of the 24 practices as more effective bridges than the purchasing and manufacturing managers (Table V). Likewise, purchasers rated 17 of the 24 practices more highly than their counterparts. Manufacturing managers consistently evaluated the various practices as less effective enablers than the other two groups. The greatest agreement found is that frequent and open communication is vital to effective SCM. The three groups of managers also tended to agree in their evaluations of the least effective enablers. A pattern emerges where managers to rank practices that they deal with on a 44

As a form of strategic alliance (Monczka et al., 1998), strategic supply chains succeed and fail by their ability to utilize their collective resources. After all, the purpose of any alliance (in this case a strategic supply chain) is to mobilize resources to attain goals that no individual can attain

Benets, barriers, and bridges to effective supply chain management Stanley E. Fawcett, Gregory M. Magnan and Matthew W McCarter .

Supply Chain Management: An International Journal Volume 13 Number 1 2008 35 48

frequent basis higher than their counterparts who only hear about them from meetings, in-house newsletters, and lunchroom conversations. The more experience a manager has with a particular practice the more weight the manager places on that practice in terms of perceived importance. While this is neither not surprising nor new, it does suggest that a degree of fragmentation exists among the different functional managers. The divergence in how to deal with these integration barriers suggests that this may be a barrier in and of itself to SCM. Such insight suggests a need for more effective training regarding the applicability and impact of different facilitating practices, more extensive communication of program results, and more frequent use of cross-functional teams. The managers interviewed support this suggestion. Almost half of the managers identied training as one of the requirements for successful long-term SC implementation. SC education generates organizational member buy-in for SC proposals and provides context from which senior management establishes priorities and allocates resources. Managers who possess expertise in a chosen eld while able to communicate effectively with diverse functional colleagues are considered ideal managers. Several SC companies established SC steering committees composed of senior-level managers to increase crossfunctional interaction and establish buy-in from specic initiatives within their own company. While specic roles and responsibilities of steering committees can vary substantially, committee members typically meet to consider and evaluate proposals. At these meetings, the benets and burdens of SC initiatives discussed openly so that viable proposals can be more fully understood, rened, and subsequently promoted. Also, most managers interviewed were convinced that SC programs would not sell themselves without targeted pilot programs that can be used to document the value of SCM. These success stories are needed to generate momentum and to justify further investment in SC efforts. The combination of success stories and experience makes well-crafted pilot programs a vital bridge to SC accomplishment. The use of advisory councils is not conned to in-house use. Active SC companies institute supplier councils for specic commodities or technologies and use them as sounding boards for new ideas. Customer advisory boards are also utilized this way. Representatives from key customers are invited to take part as active members of boards that meets together at least annually to provide feedback into how the company can better meet their needs as customers. None of the companies interviewed have instituted advisory councils from all three entities the company, its suppliers, and its customers. The main message communicated via both the survey and interview data is that people management through increased communication, inter-team collaboration, and cooperation will not only bridge the current gaps encountered in SCM but allow middle- and senior-managers to improve their current success and reap greater rewards of SC collaboration. While SCM is enabled by modern information technology, SCM success is founded on people. Indeed, our ndings are summed best by one interviewed director of SCM, People are the bridge or the barrier to SC collaboration. 45

Conclusion and implications

The potential benets for integrating supply chains are compelling. However, barriers to success can be daunting. Understanding these barriers can lead to designing bridges to allow companies obtain SC benets (see Table VI for a review of the benets, barriers, and bridges). Managers must keep in mind the following three points regarding the benets, barriers, and bridges: 1 Although cost reduction is a prime motivator to strategic SC collaboration, customer satisfaction and service is perceived as more enduring by managers, and should therefore be brought to the fore as the leading goal for SC managers. Such a goal is difcult considering pressures from shareholders for individual rms to produce shortterm gains that can lead to long-term losses in value from strategic SCM. 2 All managers recognize technology, information, and measurement systems as major barriers to successful SC collaboration. However, the people issues such as culture, trust, aversion to change, and willingness to collaborate are more intractable. One potential reason for this may be that misalignments in technology, information systems, and measurement have demonstrably correct solutions;, e.g. either system A aligns with system B or it does not, and either all partners use the same metric or they do not and you solve either problem by using the same system or metric. However, when dealing with human barriers such as lack of trust, unwillingness to relinquish control, and opportunism solutions become more of a judgment call rather than an unsolved problem. Managers should not overlook this point when designing remedies to SC problems such as organizational culture and structure, and management styles. 3 People are the key to successful collaborative innovation. Companies continue to invest in technology, information, and measurement systems. However, managers must not overlook the training, educating, and bringing together of right people to use those systems and to interact with one another. Forming the right teams for the right tasks will then result in well-dened pilot projects and success stories that will help create buy-in from other organizations members and thus increase their commitment to SC collaboration. Regardless of function or channel position, managers believe that SCM can help their companies thrive in todays intensely competitive marketplace. However, running parallel to optimism regarding SCM must be the realistic view of the challenges found embedded in the very human and mechanical links of the supply chain. Only then can proper bridges be designed to leverage collaboration and attain strategic SC success.

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Corresponding author
Matthew W. McCarter can be contacted at: mmccart6@ uiuc.edu

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