3 Implications for Career Choice
3.1 Lifelong learning
There used to be a notion that a university graduate was a ‘finished good’ but that notion is now considered outdated and the replaced with the idea that education is a continuous lifelong process (Holden and Heart, 2004, 1996).This process can take on different forms and does not necessarily refer to classroom learning
The terms life long learning and self-regulated learning are synonymous but the latter is used to more precisely describe life long learning in formal education (Smith, 2001). Self-regulated learners are people who take an active part in their own learning by setting goals, self monitoring and modifying their learning styles (Brenan and Schloemer, 2007). It is also viewed as a key to career success (Harvey, 2001, 1999). The author has this approach to learning now that she is older but as a teenager did not. This, it could be argued, means that it was a good idea to withdraw from formal education and return with a more mature approach a few years later. The author plans to gain experience in purchasing as a career and return to education to study for a Masters Degree. The time scale for this would depend on her employment and financial restraints. From there she would like to continue formal education further but does not know what direction this will take her at this early stage. This is the form of life long learning that she would favour.
Contemporary organisations recognise that knowledge is a valuable commodity (McFadyen and Cannella, 2004).
There are other paths that available to the author that may be considered. Smith and Wilson (2004) acknowledge that there has been a rise in vocational learning since the early 1990’s. Apprenticeships have become a popular choice among students that do not want to pursue an academic career (Capelli, 1996)
This is where a more skilled person works along side a lesser skilled person. It has a specific focus such as the attainment of a new skill (Schraeder et al, 2007). Should the author want to learn a new skill this would an ideal way to do it. Although the Vark test indicated that she has a high preference for learning things by doing them, the author at the present time feels that she is more suited to the academic route but, in conjunction with the personality of an ‘activist’, would not rule out the possibility for the future.
Many university graduates go straight into a graduate training scheme, typically for 1 to 2 years before taking a full time position (Vitor et al, 1999). Training schemes are more focused on the job and allows the individual to continue to develop but in a direction that is beneficial for the company that they work for (Holmes, 1999). The author will apply for training schemes such as this to develop new skills whilst working.
On the job experience is another route for lifelong learning. Experience from any area of life, help to shape the way that people act in the future (Wise and Millward, 2005). Gibbs et al (1994) discuss the fact that there is a transitional period for graduates whilst they adjust to their position. In time after gaining on the job experience they become better at their work (Harvey, 2001). Some specialists have worked in their chosen profession for their whole working lives, giving them unparalleled knowledge on their subject area (Holmes, 2001)
3.2 Transferable Skills
Modern organisations are not looking for academic qualifications alone, they require a mixture of abilities and attributes (Holden and Harte, 2004). The ability to mix with other people of different backgrounds is essential when moving into a new workplace (Lau et al, 2005). To ensure that teams work effectively good communication is essential and so having the skills to interact with other team members will enhance the employability of a person (Leung et al 2003). The capacity to socially interact with others has never been a problem for the author, who has always had a wide circle of friends, incorporating a diverse network of friends, colleagues and associates. This has been shown in the result of both the Belbin and Myres-Briggs tests (Appendices 7 and 8)
Many modern organisations require managers to be capable report writers (Lau et al, 1999). Holden and Harte (2004) explain that good communication leads to more effective and accurate decision making. The basic English skills, that the author had learned at school, provided a strong foundation to build upon. These skills were not used very much whist she was working at Netto because her position was in accounts and therefore any reports that she was required to put together were numerical. The store manager jobs that followed did not really help to develop these skills any further either because, as a manger, she spend much of her time ensuring that the stores were being run properly (Appendix 2). It wasn’t until she returned to education that skills such as report writing helped her to improve the way that she could express her self in writing in a more logical and academic manor. This skill can be used in the author’s carrier when creating reports or when communication needs to be written.
Holmes (2001) considers that organisations consist of a diverse number of projects, large and small that are interlinked. Having the right skills to manage projects improves the profile of the author. According to her test results, her personality is consistent with that of a leader. When the author began her own business it was a project that needed careful planning. Valuable skills were learned about how to co-ordinating tasks and using resources to their best effect. To increase this ability the author opted to take a project management module at University. This has given her the skill to be able to co-ordinate complex projects and conduct time analysis which would be a valuable tool to take into her future career.
Lau et al (1999) observed that it is good business practice to recruit and develop capable leaders. The author has expressed natural leadership qualities from childhood and so has had many experiences of leading a team and managing people. She took her first business management training course at the age of 17 at New College when doing her A-levels. This skill built upon further when working as a store manager for The Scooter People and McArdles Hardware. The author then took a Foundation Degree in Business Management and starting her own valeting business. This combination of theoretical learning and practical experience is something that a future employer may find attractive.
The ability to deal with high pressure situations is another transferable skill. Bandura (1977) recognises that mangers are under pressure on a daily basis. Throughout the authors life she has been confronted with many high pressure situations. These have been in her personal, academic and professional lives. She is someone who thrives on pressure and gets a high level of satisfaction from being in a over coming obstacles in a high pressure environment. Evidence of this comes from the results of the results of the Myres Briggs test which outlines the fact that her personality type tends to remain calm in pressurised situations.
The author has acquired the skill of critical analysis through higher learning. She is able to gather and inspect all of the evidence in a subjective manor. Critical analysis is the examination of evidence and considering question its validity as well as analysing conflicting views to generated and educated opinion on the subject in hand (Turner 1996). In a working environment this might translate to being a thorough researcher.
During her University studies the author was required to work as part of a group. This experience has given her an insight into the way that a team of people need to interact to complete a task. Although the author had worked as part of a team in her working life, she had either been assigned a specific role or been in charge of her team. Having worked alongside people to form joint decisions may be of benefit if she is called upon to work as a part of a cross functional team during her career. Christopher (2005) maintains that cross functional teams are one of the key characteristics of best practice logistics.
When organisations are recruiting new managers, they need them to be able to convey large amounts of information quickly and clearly to a large amount of people. Presentations are a quick and powerful way of doing this (Holden and Harte, 2004) Power point presentations have been regularly given at both college and university by the author, who already had experience of presenting information to colleagues.
Todays business world requires IT skills from the majority of its employees. Technological advances mean that much of the communication between organisations is electronic (Waters, 2003) The author will bring the ability use all of the Microsoft office tools to a highly effective level to her next position as well as the Project Manager Software.
The final transferable skill to be discussed is self reflection. When an employee measures their own progress they have a higher probability of setting their own goals and achieving higher standards (Brenan and Schloemer, 2007). Before the author returned to education, at the age of twenty seven, self reflection had not been methodical process but more a collection of thoughts about how her life was progressing. At Newcastle College she regularly had to review her progress and reflect on the implications that this would have for the future.
This personal development project is the first time that the author has had to conduct an in depth self analysis and is a skill that the author can use to asses her achievements and plan her goals for her future career.
3.3 SWOT
To analyse the findings so far a SWOT analysis has been conducted. This is a toll to analyse the person as a product (Cameron, 2005). It highlights the key strengths, weaknesses, opportunities and threats to help the author have a clear perspective when making a career choice.
Table 2
3.4 Justification for Career Choice
The career that the author would like to pursue is a supply chain manager, preferably in the purchasing function. Her leadership skills and experience would transfer to any management position and the purchasing modules that she has taken at college and university have given her an insight into the role. This function, in recent years, has facilitated the transformation of purchasing from a clerical operation into a strategic function (Johnson et al, 2006). Purchasing is no longer responsible for a chain of non- value adding activities such as paperwork processing (Monczka et al, 2004).
This change has lead to the expansion of the purchasing function’s role to include benchmarking, supplier development, supplier coordination, supplier market research, supplier capability analysis, make or buy decisions, cost analysis and sourcing strategy formulation (Carr et al, 2000).This means that the function can be used to gain competitive advantage and that managers in this function are highly valued (Johnson et al, 2006). This is reflected in the remuneration packages for the job advertisements for graduates (see appendix job ads). Much emphasis is placed on strategic sourcing skills when developing purchasing managers (Carr and Pearson, 2002).
Anderson and Katz (1998) divide strategic sourcing skills into four categories. The table below shows how some of the skills of the author match up with these categories.
Table 3
Further more, Stuart (1993) comments that technical skills can be drafted in from functions such as accounts, IT and marketing but purchasing professionals will require good management skills. This would infer that the author would make a strong candidate for the position of a purchasing professional. It has been suggested that the continuous improvements of supply management skills is a prerequisite for purchasing professionals if they are to assist with supplier development and interpret changes in the supplier market(Lester, 1999). The authors desire for continuous learning will help her to meet these requirements.
Section B: Literature Review
How can supplier integration be used to gain a competitive advantage?
4 Justification for topic choice
The author has selected this topic because of her interest in a future career in supply chain management. Part A of the personal development project has highlighted that she has the skills and background to become a leader in this area and wider reading has highlighted that integration along the supply chain may improve a company’s chances of competing in their given market (Porter, 1985; Lysons and Farrington, 2006). She feels that it would be imperative to have a solid understanding of the theories and past research in this area if she is to pursue her career as a supply chain manger especially now that the role has become one of strategic importance (Johnson et al, 2005). This is supported by Eltantawy et al (2006) who state:
‘Leading firms recognise the strategic role of supply management and its importance to the ability of the firms to remain competitive.’
4.1 Aims and Objectives
The aims and objectives of this study are:-
- To establish a sound understanding of competitive advantage
- To explore the ways in which competitive advantage could be gained
- To compare current academic literature on the competitive advantages gained by supply chain integration.
- To provide a critical analysis on the concepts and key principles of integration and it’s use as a method of gaining competitive advantage
5 Introduction
Business methods in recent years have been rapidly changing. The consumer is more demanding of product range as well as low prices (Christopher, 2005). This has resulted in short product lifecycles and the need for constant innovation (New and Westbrook, 2004). The concept of supply chain management has emerged as a method of ensuring that a firm can remain competitive in today’s volatile business climate.
“A supply chain consists of a series of activities and organisations that move through on their journey from initial suppliers to final customers” (Waters, 2003:pp2).
For example the supply chain for a piece of paper would begin with the planting of the trees and goes through various operations, companies and transport ending with the recycling of the used paper.
Traditionally supply chains were fragmented with all parties concerned having their own goals, the buyers would try and achieve the lowest price and the suppliers would be trying to charge the maximum amount (Schorr, 1998). Recently companies have begun to work together within their supply chain to achieve the end goal of satisfying the end customer and therefore gaining a good reputation and encouraging repeat custom (Jobber, 2004). Waters (2003) identified that it is not the individual companies, but the whole supply chains, that compete against each other.
This lean towards integration will be examined in this study. It has been agreed by many authors that companies need to be able to adapt to change to survive (Lynch,2000: Mullins 2005: Johnson et al, 2005), facilitated in the changes in processes, procedures and technology (Waters, 2003). Porter (1985) expressed that organisations could only survive by competing and so this study will investigate the ways in which an organisation can gain a competitive advantage through integrating with suppliers.
Stuart (1993) has highlighted that the purchasing function has developed from a being a clerical function to one that can be used to gain competitive advantage and this study will explore whether integration is one of the strategies that can be used to achieve this.
This study will examine competitive advantage and the theories behind it. This will open up a discussion about customer value and the characteristics of it. It will go on to explain the way in which supplier integration can affect competitive advantage and why. The risks of integration will also be discussed and the requirements for successful integration will then be highlighted and conclusions will be drawn.
6 Competitive advantage
The foundations of this study are based upon the concept of competitive advantage. It is important that the nature of this concept is understood before a case can be built around how strategic purchasing can have an effect upon it.
Competitive advantage results from the implementation of a strategy which is capable of ensuring that a firm can maintain a favourable market position (Jobber, 2004). This translates into higher profits than competitors operating in the same industry (Quale,yr).
According to Porter (1985:pp3)
“Competitive advantage grows out of value a firm is able to create for it’s buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset at a higher price There are two types of competitive advantage: cost leadership and differentiation”.
Porter's Generic Strategies (source: Porter, 1985, p.12)
Treacy and Wiersema (1995) agree that a focus is required if competitive advantage is to be gained and believe that there were three truths that characterised modern competition. They believe that different customers bought different kinds of value. Organisations should choose their customers and therefore narrow their focus to concentrate on giving the best value to their selected customer group rather than trying to please a wide range of people (Brick et al, 2003).
When standards rise, so do customer expectations and continual improvement is the only way to stay ahead. To produce an unrivalled level of a particular value, a more advanced a more advanced operating model – “a machine”- dedicated to that type of value would be required (Kotler, 2000), Although customer value is a central concept to this framework Treacy and Wiersema (1993, 1995) make no attempt to define it.
According to Woodruff (1997) there are two perspectives about customer
value: the perceived value that the customer receives from the organisation and the value of the customer to the organisation. When Treacy and Wiersema (1993) describe how the level of value that the customer expects has been boosted by industry leaders, it indicates that they are describing customer value as something that the customer gains through giving their custom to the organisation. Zeithaml (1998) described customer value as the customer’s assessment of their perceived benefits gained by using a particular product or service measured against what they have given in return. This indicates that customer value is a trade off between what the customer received, for example, quality, good service or benefits – and what was sacrificed in return, such as money, time or opportunity costs. Woodruff (1997) expanded on this to include both the desired and received value, putting emphasis on the fact that value stems from customer expectations and preferences and so ultimately it is the evaluation that the customer makes that determines the value. Huber et al (2001) agrees that customer value is concerned with perceptions of individuals and therefore may be a very subjective area. This is reinforced by research that showed differences in what managers thought that the customers valued and what the customers said that they valued (Brick et al, 2003). These differences create the potential for organisations to make mistakes when trying to deliver value to their customers (Parasuraman et al., 1985; Woodruff, 1997).
Treacy and Wiersema (1995) introduced three concepts, based on the ‘three truths’ of modern competition, that business should understand:
- Value Proposition – The implicit promise of the organisation to deliver a certain combination of values. These could be service, quality, price, convenience, etc.
- Value Driven Operating Model – The combination of operating, management and business systems, that ensure that the value proposition is delivered.
- Value Disciplines – Three distinct ways for organisations to combine the value proposition and the value operating model to ensure that they are the best in their particular market at delivering customer value. These disciplines offer different types of customer value.
- Operational excellence – The proposition of these organisations was “middle- of-the-market” products at the best price and at the least inconvenience. e.g. The ‘no frills’ mass marketing approach used by Wal-Mart.
- Product Leadrship – Propose to offer the best products and continually innovate to be the first to bring new products to market. Eg Nike or Intel
- Customer Intimacy – Propose to deliver specifically what the customer wants and also focus on customer relations. They are able to offer the most suitable solution to each customer through their profound understanding of the customer and enable the customer to gain the best possible value through providing any support that may be required. e.g. a private bank
.
Similarities can be drawn to the three areas that Porter (1991) considered for competitive strategy - cost leadership, differentiation and focus.
Treacy and Wiersema (1995) point out that although the organisation will choose one of the disciplines to excel at, it must still retain the same standards as their competitors in the other two disciplines if competitive advantage is to be obtained.
Sobel (1995) suggested that the Treacy and Wiersema (1995) had merely found another label for the concept of elasticity of demand. If an organisation adopts a value discipline then it reduces the elasticity of the demand. This, in turn reduces price sensitivity to increase profitability. This is done because customer expectations are raised and their perception of the value of the product or service is higher. Thus providing a reason for customers to use a particular organisation rather than one of it’s competitors – this is a competitive advantage.
7 How can a competitive advantage be gained ?
Every aspect of the organisation can be used to gain competitive advantage such as prices, products, service levels to name a few. However to gain a sustainable competitive advantage it is essential to get an advantage in such a way that it can not be easily imitated rather than just giving a leading edge in the short term (Lynch, 2000).
A company can be broken down into primary and secondary activities with each section of the organisation adding value to give the best possible profit margin. (Porter, 1985) (Fig. 1) These are grouped together into areas which are technologically and strategically distinct (Mullins, 2005).
Fig 1: Porters Value Chain 1985
The primary activities are split into five areas.
Table 4: Porter (1985)
Although having a lean approach to all logistics functions and good marketing and after sales is essential to add value to the organisation the support areas of the value chain also offer areas that can be used to gain competitive advantage (Quale, 2006)
The management of human resources can add value by addressing such issues as employee development and morale, the area of technology development can add value through having superior technology and technical know how. The firm infrastructure refers to the planning and co-ordination of the company, that if done well can also add vale (Porter, 1985).
Although this definition has required the disaggregation of company activities, this does not mean that they are considered as independent activities but a series of interdependent ones (Johnson et al, 2005). The relationship between the activities and how the performance of one activity can impact on the performance of another can also be used to gain a competitive advantage (Porter, 1991). For example, if the purchasing department bought well prepared, high quality raw materials then this may simplify manufacturing, therefore reducing scrap and reducing the time needed to produce the finished product. For these linkages to be effective it is essential that the departments in the organisation work together with high levels of communication (Mullins, 2005). Few companies can allow their functions to work in isolation from each other and so the very building blocks of integration must begin with integration within the organisation (Emberson and Story, 2006). This means allowing information and resources to flow between functions, with the entire organisation having common goals rather that departmental ones.
As it was established at the beginning of this investigation – it is the whole of the Supply Chain that compete in the modern world and not just the individual organisations (Waters, 2003). By extending this integrated approach to include other supply chain members can bring it’s own rewards. Wasteful non-value adding activities can be eliminated to make the whole process of delivering a product or service to the end customer much leaner (Schorr, 1998).
Lean manufacturing was originally developed from the Japanese concepts of reducing 'Muda' or waste and striving for continuous improvement - 'Kaizen'. According to Horng (2007) some Japanese lean manufacturers work with their suppliers when business is low to enhance efficiency within the supply chain reduce costs and as well as, in some cases seek other business opportunities. This puts the emphasis on long term relationships with joint goals and mutual commitment.
As early as 1943 Toyota developed a supplier association 'Kyohokai' with the intention of promoting 'mutual friendship' and 'exchange of technical information' (Dyer and Nobeoka, 2000). Ninety Eight percent of their suppliers were members by 1994. The have regular meetings to discuss quality and have the opportunity to see, first hand, Toyotas best practice plants.
8 Benefits of Integration
Several authors have stated that the organisation can achieve a higher performance through supplier involvement (McGinnis and Vollopra, 1999; Monczka et al., 2000; Treacy and Tan, 2001).
8.1 Shared Problem Solving
Schorr (1998) suggests that suppliers that work along side their customers with a ‘teamwork approach’ to difficulties will learn from any problems, making them stronger and more capable to service their customers needs in the future. This advantage is particularly good for manufactures where product development and innovation are key issues. By working as a team, new products can be developed quicker an organisation can profit from the strengths of its suppliers (Clark and Fujimoto, 1991) all of which could be described as competitive advantages.
8.2 Reduction in Duplication of Effort
Working closely with a supplier may reduce duplication of effort. According to Schorr (1998:pp45)
“If the quality (and quantity) is correct every time, you should not have to inspect the items. If you don’t have to count or inspect the items, the good supplier can deliver the goods to the point of use….”
This cuts out the need for the customer to count and check the product as it is already being done by the supplier. This frees up resources in the supply chain and aids efficiency therefore providing a competitive advantage.
8.3 Reduction in Lead Times
Organisations which have a lower duplication of effort can move products more swiftly through the supply chain (Waters, 2003). Stalk and Hout (1990) outline the fact that both industrial and consumer markets are becoming more time sensitive. If suppliers are involved at the product development stage the then multifunctional teams can be used giving more flexibility and the need for fewer redesigns. This is achieved through effective communication and enables a more efficient product development process (Birou and Fawcett, 1994).
The advantage here is gained in two ways. Firstly the quick production of the product saves on variable operating costs and so the cost of getting the product to market which in turn allows more flexibility. For example, the price may be lowered without effecting profit - if price reduction would suitable for the market that the organisation is aiming for. The second benefit is that the customer will be happy will to receive the product in a shorter time.
8.4 Reduction in Costs
The above mentioned points will all result in the reduction of costs, however many more savings can be made through the integration of processes. This is facilitated through Just-in-time (JIT) systems such as Kanban or cross docking. When keeping the inventory levels down the cash flow is improved (Christopher, 2003). According to Rushton et al (2005), supply chain mapping to one way ensure that the inventory remains low throughout the supply chain. Such systems require integrated technology work effectively. Carter et al (1990) state that integration is an initiative to build competitive advantage through early supplier involvement in product engineering, product development and the sharing of technologies. It is a way to obtain manufacturing capabilities with no capital investment (Narasimham and Das, 1999).
When money is saved many firms reinvest in improving processes to drive for continuous improvement (Christopher, 2003). This allows them to stay ahead of competitors.
8.5 Improved Quality
Making use of external technologies and knowledge will result in the improvement of development projects (Chung and Kim, 2003). As technologies advance and become required across different sectors of the supply chain it becomes difficult and unnecessarily expensive to own technological capabilities on everything. By involving the suppliers, the organisation gains access to further technologies, without the cost of investing in it (Swink, 1999). Furthermore, the manufacturability of products improves when suppliers have been involved at an early stage as any problems can be discussed and resolved early in the process resulting less problems at the manufacturing stage (Wasti and Liker, 1997).
Providing higher quality goods gives an a source of organisation a competitive advantage.
9 Risks with integration
There are also risks that need to be address by organisations that opt for supplier involvement.
9.1 Supplier Dependency
When allowing an outside company to be responsible for any of the activities that the organisation would normally perform it may bring the benefits discussed previously but also the organisation may loose the ‘know how’ of performing such tasks (Naurla, 2001). For example, if an organisation leaves a large extent of it’s product development processes to it’s suppliers then they loose their capacity to innovate internally. This can cause the organisation to overly depend on external technology sources (Pisano, 1990). It also exposes the organisation to any problems that the supplier may have as they are relying on the performance of their suppliers for their own success (Swan et al.,2003). The whole project can be delayed if the suppliers under perform (Waters, 2003)
9.2 Technology Leakage
The risk of leakage can’t be fully controlled in these situations because of appropriation difficulties (Williamson, 1985). Handfield et al (2002) identify that trust is a major issue and one party may feel they have more to loose by sharing information. Some companies may be reluctant to share information about development with suppliers who also supply their competitors.
9.3 Incompatibility
There may be a very basic problem preventing integration, the problem that the two companies are not compatible (Naurla, 2001). This could be due to a massive difference in structure, it could be down to an irreconcilable difference in management styles, it could even be down to the lack of technology needed to achieve integration in one or both of the organisations (Rajagopal and Bernard, 1993).
9.4 Opposition to change
Any change in an organisation can meet resistance and needs to be dealt with carefully (Coulter and Robbins, 2007).
Traditionally the approach to dealing with suppliers would put the emphasis on competition and self interest, with the customer focusing on getting the lowest unit price, the relationships would tend to be short term with little trust (Handfield et al, 2002). When purchasing managers have been dealing with suppliers in this, sometimes hostile, way it would be difficult for both parties to begin to work together towards a mutually beneficial goal. These personal differences may prevent a good working relationship in the future (New, S. and Westbrook, R (2004). It may even be the case that someone who has the strengths required to haggle for the lowest price does not have qualities required to build relationships and work in harmony with suppliers, as would be required if integration is to be implemented. This may even result in the need for management change for the integration to go ahead (Handfield et al, 2002).
Tekeshi (2001) commented that the effective management of the suppliers would result in the benefits overcoming the negatives.
10 Required for integration
Kogut (2000) attributes the success of working as a network over working as separate firms to variety of knowledge available but states for this to be used effectively there must be 'coordinating principles'. Dyer and Nobeoka (2000) studied Toyotas knowledge management systems and found that Toyota were successful at this and attributed the success to the creation of and identity for the network as which supports the knowledge transfers as well as a sound infrastructure. The following are essential if integration is to work:
10.1 Higher Levels of Trust
Trust is defined by Woodruffe et al (1998:pp141) as
“the confidence held by one party in its expectations of the
behaviour and goodwill of another party regarding business actions.”
Shoorman et al (2007) argue that trust is not merely a trait but an aspect of a relation that may vary across relations. They believe that trust is considered a management practice which implicates that trust is a means that can be utilised by management to overcome risks and improve performance. Trust lowers bargaining costs (Woodruffe et al, 1998) and decreases the amount of auditing needed (Schoorman et al., 2007). It also lowers the fear of exploitation (Walter, 2003). According to Bensaou and Venkatraman (1995) trust is the most effective governance means in points in the supply chain where innovation is critical.
Integration will strengthen relationships and heighten levels of trust. Hightened trust will enrich the working relationship and improve performance (Bozogan et al (1998). Trust and reliability between the two parties will aid with efficiency, product development and problem solving (Waters, 2003).
10.2 IT Alignment
It is widely acknowledged that there are many benefits to having integrated IT systems such as email, Computer aided design (CAD)/ Computer aided manufacturing (CAM) and electronic data interchange (EDI). Email and EDI have become extremely important tolls for communication (REF!!!).
Schorr (1998) states that
“If your systems are linked, you are able to process information in both directions and ensure the supply chain has adequate capacity to capitalise on new opportunities.”
This could give the edge over competitors.
Ferguson and Macbeth (1994) identify that
“There are undoubtedly major wastes in many paper-based communications systems”
By creating an on line or email based ordering system administration costs could be cut and the flow of information between the companies improved (Gates, 1999). He suggests that to achieve this, the paper form can be tallied with the suppliers and then replaced with digital forms.
EDI systems are sometimes linked with electronic funds transfer (EFT) where the customers account can be automatically debited when the goods have been received. These systems cut down the administration costs of both companies. (Gates, 1999).
In a Study at Lehigh University study Handfield et al, (2002) examined the way in which accounts staff spent their time. It was found that 80% of the time was used processing just 20% of the total value of purchases. This is because out of the 80,000 yearly transactions 60,000 were for less than $250. Processing invoices is a time consuming task. A system was implemented where instead of an invoice the supplier sends a data tape which contains one months transactions. The tape feeds all the information required, such as account number, invoice number and supplier number, into the account payable system. This cut the invoice processing time by around 75% (Handfield et al, 2002).
On the other hand, integration of CAD/CAM systems is not as widespread. Ragatz et al (1997) explain that this is due to the lack of compatibility between systems and it is often the case that files need to be converted into a neutral format. Karimi et al (1996) attribute the problems to the nature of the traditional IT strategies being a bottom up approach. IT systems tended to be designed around the requirements of the function. This issue is exaggerated when trying to co-ordinate with outside organisation as the variety of applications will be even greater. This will result in the IT systems being incomprehensible, incompatible and redundant. Monczka et al (2005) note that large companies use a variety of IT systems that are not compatible due the fact they have grown from mergers and acquisitions. To integrate these systems would be costly (Ragatz, 1997).
Lok et al. (2005: pp1357) define IT as
“a facilitator of integration of business functions at all levels in an organisation by making corporate-wide information more readily accessible”
In their study, IT is a determinant of organisational integration. They identified information sharing as the most important factor of IT and that the rewards can be seen in the improvement of processes such as operating efficiency.
Handfield et al (1999) determines that it is crucial that, under the conditions of early supplier involvement, alignment between buyer and supplier in achieved adding that in the modern world communication takes place extensively in a computerised way. This implies that where there is high supplier involvement, the higher the contribution of IT will be.
IT alignment can increase the benefits of lower lead times, lower cost and reduced duplication of effort.
10.3 Commitment form Top Management
The management role has been extensively researched to show that mangers are people that lead, motivate and inspire (Mullins, yr: Johnson and Scoles, yr. – any others!!) According to Lok et al (2005) the commitment of top management is key to the success with integration. Sourcing, as it has been established throughout this study, is of strategic importance and so sourcing suppliers for integration requires support at a strategic level (Monczka et al, 2005). Littler et al (1995) claims that the executive ‘champion’ has the ability to make things work and overcome any difficulties. It is the top management that will allocate resources requires for the collaboration and so it is vital that they are committed to ensure success.
This commitment from top management will help to reduce the risk of opposition to change.
10.4 Supplier Evaluation
It is becoming widely accepted that to manage a supply chain effectively the must be some elements of inter-organisational process integration (Waters, 2003). However, this can require a considerable amount of commitment, resulting in many firms opting to pursue a focus commitment strategy (FCS) (Johnson et al, 2006). This involves developing close working relationships with a restricted number of suppliers. By only integrating with key suppliers it is possible to measure their performance periodically (Ragatz et al, 1997). Conflict can be avoided though early agreements on performance measurements (Wynstra et al, 2003). Littler et al (1995) expressed that it was vital for both parties to understand the goals and objectives and that they are realistic. By sharing the goal setting it allows both parties to contribute, promoting a sense of equality to avoid dissatisfaction. Should all of the objectives have been met it can have a positive influence on the inter-organisational trust.
10.5 Intellectual Property Rights
Takeishi (2000) states that intellectual property rights provide official boundaries between ideas and enterprise. This can be particularly important for companies that are involved with the development of new products. These legal mechanisms are enforced by national governments and therefore can not be effected by either firm (Ostergard, 2000). This enforces secrecy and reduces the risk of imitation (Veugelers and Cassiman, 1999).
The risk of technology leakage is reduced when intellectual property rights are established.
10.6 Communication
One of the main requirements of an integrated supply chain is that there is a lot of communication between the organisations in it (Waters, 2003). Successful cooperative agreements are expected to have a higher level of information sharing (Mohr and Spekman, 1994). This allows for better decision making and increases trust.
11 Conclusions
Through examining the theories that outline competitive advantage (Porter, 1985; Treacy and Wiersema, 1995) it is clear that organisations must attempt to gain a competitive advantage to survive. Treacy and Weirsema (1995) explained that it was essential to understand the target customers and their needs and then to provide a means of fulfilling them in a way that competitors would find difficult to replicate. Supplier integration offers such benefits if it is done well. Shared problem solving was found to cut lead times and costs, as did the reduction in the duplication of effort. Increased cash flow and quick lead times give a company the ability develop new faster, higher quality processes to react to the changes in the volatile modern business climate. The short product lifecycles, discussed in the introduction, should become easier to tackle because of this, as will the demands of customers to keep prices low, product range wide and quality high.
12 References
Alkhasawneh, I. M., Mrayyan, M.T., Docherty, C., Alashram, S. and Yousef, H.Y. (2007) Problem-based learning: Assessing students learning preferences using Vark . Nurse Education Today. Available at: (Accessed: 25 February 2008 )
Allport, G.W (1961), Pattern and Growth in Personality. New York. Holt, Rinehart and Winston.
Anderson, M. and Katz, P. (1998) Strategic Sourcing. International Journal of Ligistics Mangement. Volume 9. Issue 1
Anderson, N. and Sleep, S. (2004) An evolution of gender differences on the Belbin Team Role Self Perception Inventory. Journal of Occupational and Organisational Psychology. Volume 77. pp429-437
Bandura, A. (1977) Social Learning Theory. New York. Prentice-Hall
Belbin, R.D. (1983) Team Roles at Work. Oxford. Butterworth-Heinemann
Bensaou, M and Venkatraman, N (1995) Configurations of inter-organisational relationships. Management science. Volume 41 Issue 9
Birou, L.M and Fawcett, S.E. (1994) Supplier involovement in intergrated prduct development. International Journal of Physical Distribution and Logistics Management. Volume 7 Issue3
Brick, G., Beric Brown, a. And Abratt, R. (2004) Customer perceptions of the
value delivered by retail banks in South Africa. The International Journal of Bank
Marketing.Volume 22. Issue 5
Capelli, P. (1996), "Youth apprenticeship in Britain: lessons for the United States", Industrial Relations, Vol. 35 No.1
Caple, J. and Martin, P. (1994) Reflections of two pragmatists: A Critique of Honey and Mumford’s Learning Styles. Industrial and Commercial Training. Volume 26. Issue 1 Available at: (Accessed: 4 March 2008)
Cameron, S. (2005) The Business Students Hand Book. 3rd ed. Harlow. Prentice Hall
Carr, A.S., Keong Leong, G. and Sheu, C. (2000). A study of purchasing practices in Taiwan. International Journal of Organisation and Production Management. Volume 36 Issue 2
Carr, A.S and Pearson, J.N (2002) The impact of purchasing and supplier involvement on strategic purchasing and it’s impact on firm’s performance. International Journal of Organisation and Production Mangement. Volume 3. Issue 4.
Carter, C.R. (2000), "Ethical issues in international buyer-supplier relationships: a dyadic examination", Journal of Operations Management, Vol. 8 No.2, Accessed at: (Accessed: 19 April 2008)
Chung, S., Kim, G.M. (2003) .Performance effects of partnership between
manufacturers and suppliers for new product development: The suppliers standpoint. Research policy 32, issue 4: 587-603
Christopher, M. (2005) Logistics and Supply Chain Management. Creating Value-Adding Networks. 3rd ed. Harlow: Financial Times, Prentice Hall.
Clark, K.B., Fujimoto, T. (1991) Product development performance: Strategy,
organization, and management in the world auto industry, Boston. Harvard business school press
Cramer (2006) Myres Briggs: Celebrate or Re-evaluate?. Journal of Occupational and Organisational Psychology. Available at: (Accessed: 21 February 2008)
Currie, L. (1991) Patterns of learning styles across selected medical specialities. Educational Psychology. Volume 11 Issue 3 (Accessed: 21 February 2008)
Cummings, T.C. (1984), "Trans-organisational development", Research in Organizational Behavior, Volume 6 pp.367-422
Desforges, C and Fox, R (2002) Teaching and Learning: the Essential Readings. Oxford. Blackwell Publishers Ltd
Eicher, J. (1987) Making the message clear. Santa Cruz. Grinder, DeLozier, and Associates.
Flemming, N. D. (2001) Teaching and Leraning Styles: Vark Strategies. Christchurch. N. D. Flemming
Furnham, A., Steele, H and Pendleton, D. (1993) A psychometric assessment of the Belbin team role self-percption invetory. Journal of Occupational and Organisational Psychology. Volume 66. pp245-257
Gibbs, G., Rust,C., Jenkins, A. and Jaques, D. (1994) Developing Tranferable Skills. Oxford. Oxford Centre for Staff developement.
Giunipero, L., Handfield, R. B. and Eltantawy (2006) Supply management’s evolution:key skill sets for the supply manager. International Journal for Operations and Production Management. Volume 26. Issue 7
Gladwell, M (2005) Personality Profiles: What do these tests reveal? Leadership excellence. Volume 22. Issue 9. pp Available at: ( (Accessed:21 February 2008)
Gross 1990, R (1990) The Science of Mind and Behavior. Harlow. Prentice Hall
Handfield, R., Nichols, E. (1999), Introduction to Supply Chain Management, Englewood Cliffs. Prentice-Hall
Harvey, L. (2001), Defining and measuring employability, Quality in Higher Education, Volume 7. Issue 2
Hawk, T.F and Shar, A.J. (2007) Using learning styles to enhance students learning. Decision Sciences Journal of Innovative Education. Volume 5. Issue 1
Hind, D. (1994) Transferable Personal Skills. Sunderland. Business Education Publishers Ltd
Hirsh, S. (1991) Using the Myres Briggs Type Indicator in Organisations. 2nd ed. Palo Alto. Consulting psychologists press.
Holden, R and Harte, V (2004) New graduate engagement with professional development: A pilot study. Journal of European Industrial Training. Volume 28. Issue 2. Available at: (Accessed:15/02/08)
Holmes, L. (2001) Reconsidering graduate employability: the ’graduate identity’ approach, Quality in Higher Education. Volume 7. Issue 2
Huber, F., Herman, A., Morgan, R.E. (2001) Gaining competitive advantage through customer value oriented management .Journal of Consumer Marketing, Volume 18 pp.41-53.
Jobber, D. (2004) Principles and Practice of Marketing.4th ed.
McGraw-Hill International (UK) Ltd
Johnson, G. Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy. 5th ed. Harlw Pearson Education Limited.
Kennedy, D.B. and Kennedy, D.A (2004) Using the Myres Briggs Type Indicator in Career Counselling. Journal of Employment Counselling.Volume 41. March Issue. Available at: (Accessed: 23 February 2008)
Khapova, S. N., Arthur , M.B., Wildersom, C.P.M. and Svensson, J.S. (2007) Professional identity as the Key to Career Change. Career Development International. Volume 12. Issue 7. Available at:
(Accessed: 24 February 2008)
Kolchin, M.G. and Giunipero, L. (1993) Purchasing Education and Training: Requirements and Resources. Tempe. Centre for Advanced Purchasing Stores
Kotler, P. (2000), Marketing Management, Millennium ed., Englewood Cliffs. Prentice-Hall,
Lau, V.P and Shaffer, M.A. (1999) Career success: The effects of personality. Career Devepolment International. Volume 4. Issue 4. Available at:
(Accessed on 20 April 2008)
Lok, P., Hung, R. Y., Walsh, P and Crawford, J. (2005) An Integrative framework for measuring the extent to which organisational variables influence the success of improvement programmes. Journal of Management Studies. Volume 42. Issue 7
Lester, M (1999) One on one: an interview with Joseph Yacura. Journal of Supply Chain Management. Volume 35. Issue 1
Leung, S. H.N., Chan, J. W.K. and Lee W.B. (2003) . Team Performance Management. Volume 9 Issue 3
Available at: (Accessed 23 April 2008)
Littler,D. LeverickF and Bruce, M. (1995) Factors Affecting the process of collaborative product development. Journal of Innovation Management, Volume 12 Issue 9.
Lychn, K. (2000) Corporate Strategy. 2nd ed. Essex. Pearson Education Limited
Lysons, K and Farrington, B. (2006) Purchasing and Supply Chain Management. 7the ed. Harlow. Pearson Educstion Limited.
Macrosson W.D.K., Hemphill D.J. .
Journal of Managerial Psychology. Volume 16. Issue 5 Available at ://www.emeraldinsight.com/Insight/viewPDF.jsp?Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0500160503.pdf (Accessed on 24 March 2008)
Malone, S.A. (2003) Learning About Learning. London. CIPD
McFayed, M. A. and Cannella, A.A. (2004) Social, Capital and Knowledge
Creation: Diminishing Returns of the Number of Strength of Exchange Relationships. Accademy Management Journal. Volume 47. pp 735-746
McGinnis,M.A. and Vollopra, R.M. (1999) Purchasing and supplier involvement in process improvement. Journal of Supply Chain Mnagement. Volume 35. Issue 4
Monczka, R., Trent, R. and Handfield. R (2004) Purchasing and Supply Chain Management. 3rd ed. Cincinnati. Southwestern Publishing College.
Monczka, R.M., Trent, R.J., (2005) .Achieving excellence in global sourcing., MIT
Sloan management review 47, issue 1: 24-32
Mullins, L.J. (2005) Management and Other Organisational Behaviour. 7th ed. Harlow. Pearson Education Limited.
Narasimham and Das, 1999 An empirical Investigation of the Contribution of Strategic Sourcing to Manufacturing Flexibilities and Performance Decision Sciences. Volume 30. Issue 3. Available at: (Accessed: 20 April 2008)
New, S. and Westbrook, R (2004). Understanding Supply Chains.Oxford. Oxford University Press
Naula, R (2001) Choosing between integral and non-integral R&D. Studies. Technology Analysis and Strategic Management. Volme 13 Issue7
Ostergard, R. L (2000) The measurement of intellectual property rights protection. Journal of international Logistics. Volume 31. Issue 2
O'Reilly, D., Cunningham, L., Lester, S. (1999) Developing the Capable Practitioner: Professional Capability through Higher Education. London. Kogan Page
Parinton, D and Harris, H.(1999) Team role balance and team performance:and imperical study. Journal of Management Development. Volume 18. Issue 8.
Pearson, R., Perryman, S., Connor, H., Jagger, N., Aston, J. (1999), The IES Annual Graduate Review 1998-1999: The Key Facts, IES, Brighton, Institute for Employment Studies Report. Volume. 354
Pedler, M., Burgonge, J., and Boydell, T. (2001) A Managers Guide to Self Development. 3rd ed. Berchire. McGraw Hill Publishing Company.
Pisano, G.P (1990). The R&D bounderies of a firm. Journal of Operations Management. Volume 7 Issue10
Porter, M. E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. New York. The Free Press.
Porter, M. E. (1991). Towards the Dynamic Theory of Strategy. Strategic Management Journal. Volume 12. pp.95-117
Purcell, K., Morley, M., Rowley, G. (2002), Employers in the New Graduate Labour Market: Recruiting from a Wider Spectrum of Graduates, Employment Studies Research Unit, University of the West of England, Bristol.
Quale, M. (2006) Purchasing and Supply Chain Management: Strategies and Realities. London. Idea Group Publishing
Ragatz, G.L, Handfield, R. B. and Scannell, T.V (1997) Benefits associated with supplier integration. Journal of business research. Volume 4 Issue 3
Rushton, A., Oxley, J. & Croucher, P. (2005) The Handbook of Logistics and Distribution Management. 2nd edn. USA: Kogan Page.
Ryckman, R.M (1997), Theories of Personality. London. Brooks/Cole Publishing Company
Schorr, J. E. (1998) Purchasing in the 21st Century. New York. John Wiley & Sons, Inc.
Schraeder. M., Freeman, W. and Durham, C. (2007) A Lexicon for Lifelong Learning. Available at:http://www. (Accessed: )
Shaw, G and Marlow, N (1999) The role of student learning styles, gender, attitudes and perceptions on information and communication technology assisted learning. Computers and Education. Volume 33. pp 223-234
Schoorman, M.R., Mayer, G.G. and Davis, J.H (2007) An intergrative model of organisational trust. Academy of management review. Volue 32 Issue 9.
Smith, L. and Wilson, E. (2004) . Education and Training; Volume: 46 Issue: 2 Available at: (Accessed: 21 April 2008)
Stalk, G. Jr, Hout, T.M. (1990), Competing against Time: How Time-based Competition Is Reshaping Global Markets. New York. Free Press
Statt D, A (2000) Using Psychology in Management Training. London. Routledge
Sobel, R. (1995), "The discipline of market leaders", Electonic News, Vol. 41 pp.46-9.
Stuart, F.I. (1993) Supplier partnerships, influencing factors and strategic benefits. International Journal for Purchasing and Materials Management. Volume 29. Issue 4
Swan, K.S., Allred,B.B. and Jones ,D (2003) A product and prcess model of technology sourcing mdel. Journal pf innovation management. Volume 20. Issue 6
Swink, M (1999) Threats to new product manufacturability and the effect of development team integration. Journal of Operations Management. Volume 17. pp 773-786
Takeishi, A. (2001) Bridging inter and extra firm boundaries. Strategic Management Journal. Volume 4 Issue 7
Tracey, T., Tan, C.L. (2001) .Empirical analysis of supplier selection and
involvement, customer satisfaction and firm performance., Supply chain management 6, issue 4: 174-188
Treacy, M., Wiersema, F. (1995), The Discipline of Market Leaders, London Harper Collins,
Turner, D. (1996) Managing Personal Development. London. The Industrial Society
Veugelers, R. and Cassiman, B (1999) Make and buy innovation agenda. Rotterdam. Eramus Research Institue of Management.
Wasti, S., Liker, J. (1999) .Collaborating with suppliers in product development: A
U.S. and Japan comparative study., IEEE transactions on engineering management 46, issue 2. pp 245-257
Wise, A.J and Millward, L.J. (2005) The expectancies of voluntary career change in 30-somethings and implications for guidance. Career Development International. Volume 10. Issue 5. Available at
(Accessed: 3 April 2008)
Waters, D. (2003) Logistics: An Introduction to Supply Chain Management. Hampshire: Palgrave, Macmillan
Woodruff, R.B. (1997), "Customer value: the next source for competitive advantage", Journal of the Academy of Marketing Science, Vol. 25 pp.139-53
.
Woodruffe, C (2006) How managers and non managers differ in their MBTI Personality. People Management Journal. May Issue
Available at:
(Accessed: 3 April 2008)
Wynstra, F., Pierrick, E., and Ten, D. (2000) Managing supplier involvement in new product development. Europen journal of Purchasing and Supply Management. Volume 6 Issue 1
Zeithaml, V.A. (1988) Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence. Journal of Marketing, Volume. 5 pp.2-22.
13 Bibliography
Artiza, A. Swailes, S and Senior, B. Belbins team role model: Development, validity and applications for team building. Journal of management studies. Volume 44. Issue 1
Duff, A. and Duffy, T. (2002) Psychometric properties of Honey and Mumford’s learning style questionnaire. The journal of Management Development. Available at: (Accessed: 23 February 2008)
Gritzmacher (1990) ) in Johnson et al, 2006 – job just
Grossman, M. (2004), “The role of trust and collaboration in the internet-enabled supply chain” The Journal of American Academy of Business. September issue. pp. 391-6
Gunter, H., Grote, G. And Thees, O. (2006) Information in Supply Networks. Does it lead to better collaborative planning? Journal of Enterprise Information.
Emerald Group Publishing Limited. Available at: (Accessed: 13 April 2008)
Henry, S.M. and Stevens, K.T. (1999) Using Belbin’s leadership role to improve team effectiveness: An empirical investigation. The journal of systems software. Volume 44. pp 241-250
Klien, B., McCall, L., Austin, D and Piterman, A. (2007). A psychometric evaluation of the learning styles questionnaire: 40-items version. British Journal of Educational Technology. Volume 38 Issue 1
Parkinson and Taggar (2007) Earning and Outgoing. Financial Management. July/August Issue (Accessed: 13 April 2008)
Prichard, J.S and Stanton, N.A (1999). Testing Belbins team role theory of effective groups. The journal of Management Development. Volume 18. Issue 8