Academic journal article Journal of Supply Chain Management

How Can Supply Management Really Improve Performance? A Knowledge-Based Model of Alignment Capabilities

Academic journal article Journal of Supply Chain Management

How Can Supply Management Really Improve Performance? A Knowledge-Based Model of Alignment Capabilities

Article excerpt

INTRODUCTION

The literature on supply chain integration emphasizes the importance of enterprise alignment with suppliers (Cousins & Menguc, 2006; Wong, Boon-itt & Wong, 2011), but a major gap exists when it comes to the specific processes used to describe and communicate internal needs to those suppliers (Narasimhan & Das, 2001). Prior research suggests integration is hindered by functional disincentives but supported by improved internal alignment, procedural and information process quality (Oliva & Watson, 2011), and improved communication within the enterprise (Cousins & Menguc, 2006; Pagell, 2004). Cross-functional integration is believed to require specific incentives to be effective (Flynn, Huo & Zhao, 2010; Watson & Zheng, 2005). Much of the prior research has focused on internal relationships between manufacturing and marketing (Flynn et al., 2010; Malhotra & Sharma, 2002; O'Leary-Kelly & Flores, 2002). Narasimhan and Das (2001), however, identify the importance of purchasing integration on manufacturing performance but measure primarily outcome-based process measures. To some extent, the majority of internal integration research emphasizes cost savings achieved through strategic sourcing (Lawson, Cousins, Handfield & Petersen, 2009; Terpend, Tyler, Krause & Handfield, 2008).

A new face of procurement is emerging, which recognizes that a new set of value drivers must be developed in the face of massive environmental changes (Handfield, 2013). Prior work on dynamic capabilities emphasizes the need to "integrate, build, and reconfigure internal and external competencies to address rapidly changing environments" (Teece, Pisano & Shuen, 1997, p. 516). Dynamic capabilities are unique sets of routines and processes that build unique relationships and specialized knowledge within a firm (Eisenhardt & Martin, 2000; Peng, Verghase, Shah & Schroeder, 2013; Teece et al., 1997). Such capabilities emerge through direct engagement with internal customers to understand requirements, codifying these requirements into a coherent statement of need and effectively communicating them to the supply market (Narasimhan & Das, 2001; Pagell, 2004; Swink, Narasimhan & Wang, 2007). We term this new capability "supply management alignment" because it empowers procurement to link internal and external parties that are mutually dependent on one another. Supply managers play an important role in facilitating a match between internal stakeholder needs and the supplier's interpretation of those needs. These strategies impact upon many value adding areas of the business, including the following; product innovation and technology development (Handfield, Ragatz, Monczka & Peterson, 1999); knowledge sharing and new process capability development (Dyer & Nobeoka, 2000); multi-tier supplier integration (Choi, Wu, Ellram & Koka, 2002); mitigation of supplier risk (Ellis, Shockley & Henrey, 2011); supplier performance improvement and capability augmentation (Krause, Handfield & Tyler, 2007; Krause, Scanned & Calantone, 2000), supplier financial disruption avoidance (Wagner, Bode & Koznol, 2009); and sustainable supply chain improvements (Wieland & Handfield, 2013). Yet, the specific processes resulting in improved alignment of internal stakeholder requirements with an emerging and growing global supply base remain unclear (Chen, Paulraj & Lado, 2004; Handfield, 2013; Kotabe, Martin & Domoto, 2003; Monczka, Blascovich, Markham, Parker & Slaight, 2010).

Moreover, a gap in the extant research is the depiction of the specific processes employed by supply managers to learn about internal business needs, filter and codify this information into knowledge, and transfer (e.g., "align") this codified knowledge effectively to suppliers. We, therefore, seek an answer to the research question: What are the characteristics of an effective supply management alignment process that result in improved outcomes? …

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