Academic journal article Business: Theory and Practice

The Performance Outcomes of Dimensions of Supply Chain Integration: A Conceptual Framework

Academic journal article Business: Theory and Practice

The Performance Outcomes of Dimensions of Supply Chain Integration: A Conceptual Framework

Article excerpt


In the past one decade there has been growing consensus concerning the strategic importance of integrating with suppliers, manufacturers and customers (Bowersox, Morash 1989; Barrat 2004; Rosenzweig et al. 2003). With the growing importance of a well integrated supply chain, it has become one of the main focuses of research in the area of supply chain management.

Supply chain integration has been defined by Clancy (1998) as: "... attempting to elevate the linkages within each component of the chain, (to facilitate) better decision making (and) to get all the pieces of the chain to interact in a more efficient way (and thus) ... create supply chain visibility (and) identify bottlenecks" (Clancy, cited in Putzger 1998: 55).

Recently Flyn et al. (2010) gave a more holistic definition of supply chain integration as "the degree to which a manufacturer strategically collaborates with its supply chain partners and collaboratively manages intra and inter organizational processes with the goal to achieve effective and efficient flows of products and services, information, money and decisions, to provide maximum value to the customer at low cost and high speed."

Though SCI has been considered as a vital contributor to business performance (Vickery et al. 2003; Frohlich, Westbrooch 2001; Li et al. 2006; Zhao et al. 2002), the research shows inconsistency in its finding about the relationship between SCI and performance. These issues are related to inconsistent definition and operationalization of SCI and performance constructs. The review of literature shows that SCI has been studied as a unidimensional construct (Vickery et al. 2003; Rosenzweig 2003), two dimensional constructs (Stank et al. 2001; Zailani, Rajagopal 2005; Pagell 2004; Stanley, Wisner 2001), and also as a multidimensional construct (Droge et al. 2004; Narasimhan, Kim 2002; Gimenez, Ventura 2005). Flynn et al. (2010) identified three dimensions of SCI which are--supplier integration, customer integration and internal integration. The integration of various functional departments within the firm is termed as internal integration while integration with upstream suppliers and downstream with customer together is termed as external integration.

Similar variation can be seen in the measurement of performance constructs also. Some of the authors have related SCI with the operational performance while others have linked it with financial performance. Some of the other studies have shown the relationship between SCI and financial performance through mediating and moderating variables. They argued that SCI does not directly impact firm performance, instead, it provides companies some competitive capabilities which in turn affect its financial performance (Vickery et al. 2003; Rosenzweig et al. 2003).

Hence, it is important to understand the performance outcomes of different dimensions of supply chain integration. Further, the impact of these performance outcomes on financial performance is also an interesting avenue for research. This study reviews the existing literature on the relationship between supply chain integration and performance. Further, a conceptual research model is presented along with research propositions.

1. Literature review

Stevens (1989) highlighted the importance of supply chain integration. He stated that providing a high service level to customers without incurring additional cost is possible only when a company has a well integrated supply chain. His seminal work initiated several research in this area. Although the benefits of having an integrated supply chain was well documented after the work of Stevens, it was first empirically tested by Frohlich and Westbrook (2001). They investigated the relationship between supplier integration, customer integration and performance. The result showed that the companies with a higher degree of supplier and customer integration had the largest rate of performance improvement for all performance measure except for return investment. …

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