Abstract
In this paper, we explore how a large organization, operating in a mature, asset-intensive industry, used the social system of a key supply chain to generate significant improvement in operating performance (e.g., inventory turnover ratio improved from 0.8 to 3.2 in 5 years). A case study approach was used to study a steel rail supply chain involving an Australian railway company as the focal company. This supply chain consisted of two other companies: a steel manufacturer and a bulk transporter. Multiple forms of data were collected and analyzed, including models and process maps of the supply chain, published and internal documents, Enterprise Resource Planning system reports, and in-depth interviews of 31 key personnel involved in the supply chain. We found that the organizations had invested heavily in formal systems, such as governance processes and information technology systems. However, it was the informal mechanisms across and within the social system which made the greatest contribution to the resulting improvements. This suggests that organizations may be able to achieve significant operating performance outcomes at far lower cost and in shorter time frames by working through the existing social systems instead of focusing excessively on formal governance and IT systems.
Similar content being viewed by others
Notes
At the time of the study, the Transport Provider and the Railway Company were in a legal dispute over possession of a freight terminal which included the transshipment area for the steel rail. Both firms had also become competitors. In this sense, the two firms were engaged in co-opetition (Brandenburger and Nalebuff 1996), where competitors also cooperate with each other. The view was taken that even if subjects from the Transport Provider agreed to participate in this study, there was a risk that the strained context would affect their responses; therefore no subjects from the Transport Provider were interviewed. Fortunately, from this study’s perspective, the Railway Company’s direct relationship in this chain was with the Steel Manufacturer. The Transport Provider had contracted directly with the Steel Manufacturer and had no direct contractual obligations with the Railway Company regarding this commodity. However, all the transport performance information was available to the Steel Manufacturer and staff from the Railway Company were able to discuss their dealings with the Transport Provider’s staff. Secondary sources of information such as annual reports and legal documents were also examined in depth to gain a fuller appreciation of the Transport Provider. While the Transport Provider’s lack of participation was a potential weakness to the study, this situation itself helped raise interesting issues about the reality in which supply chain members have to work, and just how far collaboration and trust can be taken.
References
Agarwal A, Shankar R (2002) Analyzing alternatives for improvement in supply chain performance. Work Stud 51(1):32–37
Brandenburger A, Nalebuff B (1996) Co-opetition: a revolution mindset that combines competition and cooperation. Doubleday, New York
Burgess K, Singh PJ, Koroglu R (2006) Supply chain management: a structured literature review and implications for future research. Int J Oper Prod Manag 26(5):703–729
Burt RS (1992) Structural holes: the social structure of competition. Harvard University Press, Cambridge
Cachon G, Fisher M (2000) Supply chain inventory management and the value of shared information. Manag Sci 46(8):1032–1048
Chen F (1999) Decentralized supply chains subject to information delays. Manag Sci 45:1076–1090
Chen IJ, Paulraj A (2004a) Towards a theory of supply chain management: the constructs and measurements. J Oper Manag 22(2):119–150
Chen IJ, Paulraj A (2004b) Understanding supply chain management: critical research and a theoretical framework. Int J Prod Res 43(1):131–163
Coleman J (1988) Social capital in the creation of human capital. Am J Sociol 94:S95–S120
Cousins PD, Handfield RB, Lawson B, Petersen KJ (2006) Creating supply chain relational capital: the impact of formal and informal socialization processes. J Oper Manag 24(6):851–863
Cousins PD, Menguc B (2006) The implications of socialization and integration in supply chain management. J Oper Manag 24(5):604–620
De Búrca S, Fybes B, Marshall D (2005) Strategic technology adoption: extending ERP across the supply chain. J Enterp Inf Manag 18(4):427–440
Defee CC, Stank TP (2005) Applying the strategy-structure-performance paradigm to the supply chain environment. Int J Logist Manag 16(1):28–50
Ellram LR (1996) The use of case study methodology in logistics research. J Bus Logist 17(2):93–138
Fabbe-Costes N, Jahre M (2008) Supply chain integration and performance: a review of the evidence. Int J Logist Manag 19(2):130–154
Fine CH (1998) Clockspeed. Perseus Books, Reading
Ford D, Hakansson H (2006) IMP - some things achieved: much more to do. Eur J Mark 40(3/4):248–258
Forrester JW (1961) Industrial dynamics. MIT Press, Cambridge
Fransoo JC, Wouters MJF (2000) Measuring the bullwhip effect in the supply chain. Supply Chain Manag Int J 5(2):78–89
Gardner JT, Cooper MC (2003) Strategic supply chain mapping approaches. J Bus Logist 24(2):37–65
Geertz C (1973) Thick Description: Toward an interpretation theory of culture. In: Geertz C (ed) The interpretation of cultures. Basic Press, New York, pp 79–118
Gittell JH (2000) Organizing work to support relational co-ordination. Int J Hum Resour Manag 11(3):517–539
Granovetter MM (1985) Economic action and social structure: the problem of embeddedness. Am J Sociol 91(1):481–510
Halldorsson A, Skjøtt-Larsen T (2006) Dynamics of relationship governance in TPL arrangements - a dyadic perspective. Int J Phys Distrib Logist Manag 36(7):490–506
Hervani AA, Helms MM, Sarkis J (2005) Performance measurement for green supply chain management. Benchmark Int J 12(4):330–350
Holmstrom J (1998) Implementing vendor-managed inventory the efficient way: a case study of partnership in the supply chain. Prod Inventory Manag J 39(3):1–5
Houghton L, Kerr D (2006) A study into the creation of feral information systems as a response to an enterprise resource planning systems implementation within the supply chain of a large government-owned corporation. Int J Internet Enterprise Manag 4(2):135–147
Itami H, Roehl TW (1991) Mobilizing invisible assets. Harvard University Press, Cambridge
Jick TD (1990) Customer-supplier partnerships: human resources as bridge builders. Hum Resour Manag 29:435–454
Kang S-C, Morris SS, Snell SA (2007) Relational archetypes, organizational learning, and value creation: extending the human resource architecture. Acad Manag Rev 32(1):236–256
Klein B (1980) Transaction cost determinants of “unfair” contractual arrangements. Am Econ Rev 70(2):356–362
Knowledge Based Systems Inc. (2009) IDEF integrated definition methods. www.idef.com. Accessed December 2009
Koulikoff-Souviron M, Harrison A (2007) The pervasive human resource picture in interdependent supply relationships. Int J Oper Prod Manag 27(1):8–27
Krause DR, Handfield RB, Tyler BB (2007) The relationships between supplier development, commitment, social capital accumulation and performance improvement. J Oper Manag 25(2):528–545
Lau HCW, Lee WB (2000) On a responsive supply chain information system. Int J Phys Distrib Logist Manag 30(7/8):598–610
Lee HL, Padmanabhan V, Whang S (1997) The Bullwhip effect in supply chains. Sloan Manage Rev 38(3):93–102
Lewis MW (1998) Iterative triangulation: a theory development process using existing case studies. J Oper Manag 16:455–469
McCarter MW, Northcraft GB (2007) Happy together?: insights and implications of viewing managed supply chains as a social dilemma. J Oper Manag 25(2):498–511
McCormack K, Ladeira MB, de Loiver MPV (2008) The supply chain performance and maturity in Brazil. Supply Chain Manag Int J 13(4):272–282
Miles MB, Huberman AM (1994) Qualitative data analysis: an expanded sourcebook. SAGE Publications, Thousand Oaks, CA
Milhaupt CJ (1996) A relational theory of Japanese corporate governance: contract, culture, and the rule of law. Harv Int Law J 37(1):3
Naslund D (2002) Logistics needs qualitative research - especially action research. Int J Phys Distrib Logist Manag 32(5):321–338
Porterfield TE, Bailey JP, Evers PT (2010) B2B eCommerce: an empirical investigation of information exchange and firm performance. Int J Phys Distrib Logist Manag 40(6):435–455
Power D (2005) Supply chain management integration and implementation: a literature review. Supply Chain Manag Int J 10(4):252–263
Putnam R (2000) The collapse and revival of the American community. Simon and Schuster, New York
QSR International (2004) NU*DIST V4 Qualitative analysis software package, 4th edn. QSR International, Melbourne
Russell DM, Hoag AM (2004) People and information technology in supply chains: social and organizational influences on adoption. Int J Phys Distrib Logist Manag 34(2):102–122
Sari K (2008) Inventory inaccuracy and performance of collaborative supply chain practices. Ind Manag Data Syst 108(4):405–509
Scarbrough H (2000) The HR implications of supply chain relationships. Hum Resour Manag J 10:5–17
Serva MA, Fuller MA, Mayer RC (2005) The reciprocal nature of trust: a longitudinal study of interacting teams. J Organ Behav Manag 26(6):625–648
Snub AN, Stonebraker PW (2009) The human impact on supply chains: evaluating the importance of “soft” areas on investigation and performance. Supply Chain Manag Int J 14(1):31–40
Stewart G (1997) Supply-chain operations reference model (SCOR): the first cross-industry framework for integrated supply-chain management. Logist Inf Manag 10(2):62–67
Supply Chain Council (2002) Supply chain operations reference (SCOR) model, 2002. http://www.supply.chain.org/. Accessed November, 2002
Tan KC, Kannan VR, Handfield RB, Ghosh S (1999) Supply chain management: an empirical study of its impact on performance. Int J Oper Prod Manag 19(10):1034–1052
Villena VH, Revilla E, Choi TY (2011) The dark side of buyer-supplier relationships: a social capital perspective. J Oper Manag 29(6):561–576
Voss C, Tsikriktsis N, Frohlich M (2002) Case research in operations management. Int J Oper Prod Manag 22(2):195–291
Wallenburg CM, Raue JS (2011) Conflict and its governance in horizontal cooperations of logistics service providers. Int J Phys Distrib Logist Manag 41(4):385–400
Wasserman S, Faust K (1994) Social network analysis: methods and analysis. Cambridge University Press, Cambridge
Williamson OE (1979) Assessing vertical market restrictions: antitrust ramifications of the transaction-cost approach. Univ Penn Law Rev 127:953–993
Yin R (2003) Case study research: design and method, 3rd edn. Sage, Thousand Oaks
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Burgess, K., Singh, P.J. Using the social system of a supply chain to improve a focal organization’s operating performance. Oper Manag Res 5, 57–68 (2012). https://doi.org/10.1007/s12063-012-0065-y
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s12063-012-0065-y