building?
A multiple case study
Master’s Thesis Supply Chain Management
University of Groningen, Faculty of Economics and Business
June 21, 2013 Qinyu Ji Studentnumber: s2265605 e-mail: Q.Ji.1@student.rug.nl Supervisor/ university Dr. Kirstin Scholten Co-assessor/ university Dr. E. Ursavas
Supervisor for Proposal Dr. Kirstin Scholten
Table of content
INTRODUCTION ...3
LITERATURE REVIEW...3
Supply chain vulnerability ...3
Supply chain resilience ...6
Supply chain integration ... 11
Conceptual model ...15
METHODOLOGY ...16
Research design and setting ...16
Data collection ...18
Data analysis ...19
RESULTS...22
Contribution of internal supply chain integration to supply chain resilience ...22
Contribution of external supply chain integration to supply chain resilience ...25
DISCUSSION ...32
Interpretation of findings and propositions...32
ABSTRACT
Globalization of trade extends the complexity of supply chains which increase risks and disruptions. To reduce such supply chain vulnerabilities, building supply chain resilience has become essential in current business environment. Supply chains are networks of interconnected companies, therefore, building resilient supply chains needs not only collaboration among functional areas within one company, but also inter-organizational alignments in supply chains. However, there is little empirical evidence relative to the relationship between supply chain integration and building supply chain resilience. This study systematically investigated such relationship by employing multiple case study methodology to generate theories from qualitative data. Four different supply chains are explored to gain empirical evidence about how supply chain integration configurations can differently contribute to supply chain resilience. The study finally proposed several relationships between supply chain integration and supply chain resilience building. This study concluded by proposing several future research suggestions that may be investigated further.
INTRODUCTION
contributes to the collaboration and coordination of supply chain members (Ragatz, Handfield & Petersen, 2002). Furthermore, better collaboration of supply chain members can then reduce the response time to disruptions (Christopher & Peck, 2004). In building supply chain resilience, the reduction of response time to disruptions can positively decrease the severity of disruptions and enhance the ability to overcome disruptions (Blackhurst, Craighead, Elkins & Handfield, 2005). From this perspective, supply chain integration has some potential relevance to supply chain resilience and contributing to building resilient supply chains. However, there is no or few study investigating the relationship between supply chain integration and supply chain resilience building.
Supply chain resilience is still a new research field and has not been explored widely. Concepts around supply chain resilience such as supply chain risk management and supply chain vulnerability have been widely researched. Previous researches into supply chain resilience focus on exploring resilience capabilities (Blackhurst et al., 2011; Christopher & Peck, 2004; Pettit et al., 2010; Ponomarov & Holcomb, 2009), relationship between supply chain resilience and risk management (Juttner & Maklan, 2011), and general approaches to build resilient supply chains (Christopher & Peck, 2004; Sheffi & Rice, 2005). At the meantime, there are many literatures explore the diverse aspects of supply chain integration (Flynn, Huo & Zhao, 2010; Frohlich & Westbrook, 2001; Gimenez, van der Vaart & van Donk, 2012). We can find out some overlap capabilities which are involved in both supply chain integration and supply chain resilience fields. Nevertheless, no researches clearly interpret such relationship. Since there is no or few study investigating whether supply chain integration can influence supply chain resilience and if so, how they can be interrelated, this gap in current literatures provides the motivation for this research. In order to close this gap, the research question is proposed as:
(How) does supply chain integration contribute to building supply chain resilience?
literatures by highlighting the role of supply chain integration in building supply chain resilience. Secondly, this research sheds new lights on supply chain resilience building strategies by proposing the empirical propositions considering how supply chain integration from different directions and degrees contribute to supply chain resilience. New dimensions of supply chain resilience building strategies have been identified which provide holistic views of relationships between supply chain integration and supply chain resilience. In addition, there are two practical contributions. Firstly, this research provides new thinking to managers to build their resilient supply chains. Managers can figure out which capability of supply chain resilience is most essential to them or they want to achieve for certain supply chain direction. The research offers concrete guidance to supply chain managers to analyze how to improve or redesign their supply chain integration strategies to increase supply chain resilience. Finally, this research also finds out some paradoxes which can provide new thinking for managers to make trade-offs during supply chain resilience building.
The remainder of this study is structured as follows. The next section describes the theoretical backgrounds of supply chain integration and supply chain resilience, and presents the conceptual model. Section 3 discusses the research methodology. Section 4 interprets the main results of the study. Section 5 discusses the findings which then propose the empirical propositions. The final section summarizes the main findings and gives suggestions for future research.
LITERATURE REVIEW Supply chain vulnerability
To be able to eliminate supply chain vulnerability, understanding the sources of vulnerability is essential (Wagner & Bode, 2006). Supply chain risks are the main cause of supply chain vulnerability. Risks caused by the downstream customers, upstream suppliers and uncontrolled disasters can result in supply chain disruptions (Jüttner, 2005; Kraljic, 1983; Sheffi, 2005; Wagner & Bode, 2006). However, supply chain vulnerability analysis is not equal to supply chain risk management. Supply chain vulnerability analysis concentrates on the survival ability of supply chains (Asbjornslett & Rausand, 1999) while supply chain risk management more focuses on identifying potential risks and mitigating them by implementing controls (Pettit et al., 2010). Although risks and disruptions in supply chains cannot be completely eliminated (Blackhurst et al. 2005; Blackhurst et al, 2011; Zsidisin, Melnyk & Ragatz, 2005), supply chain vulnerability can be reduced through improving the resilience of the supply chain (Zsidisin et al. 2005). Jüttner & Maklan (2011) explore the relationship between supply chain resilience and vulnerability. They illustrate that a supply chain with high vulnerability can have either high or low resilience, but high supply chain resilience will reduce the supply chain vulnerability. Thus, in order to decrease the supply chain vulnerability, improving resilience of supply chains is the key solution (Sheffi & Rice, 2005).
Supply chain resilience
through several aspects according to existing researches. Explicit points of resilience capabilities from previous researchers are listed in Table 1.
Supply chain visibility and velocity
Christopher & Peck (2004) firstly state four principles that further provide insights into the resilience capability namely “supply chain reengineering”, “agility”, “collaboration”, and “supply chain risk management culture”. These principles increase the responsiveness and efficiency of the supply chain. Christopher & Peck (2004) identify “visibility” and “velocity” as the ingredients of “agility” to achieve rapid response to unexpected changes. Furthermore, “visibility” and “velocity” are also emphasized by Jüttner & Maklan (2011); Pettit et al. (2010); Ponomarov & Holcomb (2009) as the main resilience capabilities. Supply chain visibility is viewed as the level of transparency that a supply chain can be viewed from downstream to upstream and velocity is defined as the speed reacts to the crisis (Jüttner & Maklan, 2011). High levels of visibility and velocity not only directly influence the resilience of supply chains, but also indirectly improve resilience by increasing the agility of supply chains. Supply chains with low visibility usually have more risks and greater vulnerability (Christopher & Peck , 2004). Visibility is related to effective disruption response and recovery that high level of visibility can contribute to reducing ineffective decisions and overreactions in disruptions (Jüttner & Maklan, 2011). Velocity is the determinate factor for the loss (Jüttner & Maklan, 2011). Since with longer reaction time to crisis, the negative effects caused by crisis can be larger and long-term influences will be severer (Sheffi, 2005). Christopher & Peck (2004); Jüttner & Maklan (2011) classify visibility and velocity as components of supply chain agility, however, in this study, we use supply chain visibility and velocity separately instead of agility to have a holistic view of supply chain resilience.
Supply chain collaboration and adaptability
TABLE 1
Resilience capability in existing research
Author Title Journal Resilience capability Method
Christopher & Peck (2004)
Building the resilient supply chain Journal of Logistics Management Supply chain reengineering, Agility (visibility, velocity), Supply chain collaboration, Supply chain risk management
culture
Empirical
Christopher & Lee (2004)
Mitigating supply chain risk through improved confidence Journal of Logistics Management Agility Conceptual Blackhurst, Craighead, Elkins, & Handfield (2005) An Empirically Derived Agenda of Critical Research Issues for Managing
Supply-Chain Disruptions. International Journal of Production Research Disruption discovery, Disruption recovery, Supply chain redesign
Empirical
Sheffi & Rice (2005)
A supply chain view of the Resilient
MIT Sloan management
review
Flexibility, Redundancy Empirical
Ponomarov & Holcomb (2009) Understanding the concept of supply chain resilience The International Journal of Logistics Management Adaptability, Flexibility, Agility, quickly change,
Visibility
Conceptual
Klibi, Martel & Guitouni
(2010)
The design of robust value-creating supply chain networks: A critical review European Journal of Operational Research Responsiveness Theoretical
Pettit, Fiksel & Croxton (2010) Ensuring supply chain resilience: development of a conceptual framework Journal of business logistics Flexibility, Efficiency, Visibility, Adaptability, Anticipation, Recovery, Dispersion, Collaboration, Financial strength, Security, Market
position Empirical Jüttner & Maklan (2011) Supply chain resilience in the global financial crisis: an empirical study Supply Chain Management: An International Journal Flexibility, Visibility, Velocity, Collaboration Empirical Carvalho, Barroso, Machado, Azevedo & Machado (2012) Supply chain redesign for resilience using simulation Computers and Industrial Engineering
Wieland & Wallenburg
(2012)
Dealing with supply chain risks: Linking risk management practices and strategies to performance International Journal of Physical Distribution & Logistics Management
Agility, Robustness Empirical
of supply chains (van der Vorst & Beulens, 2002). Besides the influence of collaboration that improve the reaction to crisis, Sheffi (2005) proves that collaboration is also important after organizations successfully survive from the disruptions in order to share experiences among supply chain members to increase resilience.
Supply chain adaptability has not been mentioned frequently. It represents the ability to modify operations to avoid standstill in response to challenges or opportunities (Pettit et al., 2010). It can be achieved through several ways namely lead time reduction, disruption experience learning (Pettit et al., 2010). Supply chain adaptability always followed by visibility increasing (Simatupang & Sridharan, 2008; Wei & Wang, 2010). With more information shared in supply chains, the ability to adapt to disruptions can also be improved. Supply chain flexibility, redundancy and robustness
give supply chain more opportunities to recover to disruptions (Sheffi, 2005). However the most critical distinction between flexibility and redundancy is that the latter one has auxiliary capacities to counteract with disruptions and is achieved through proactive investments in capacity to the point of needs (Rice & Caniato, 2003). Supply chain flexibility focuses more on the easy transformation of process, resource, capacity, etc. Supply chain flexibility and redundancy are more influenced by supply chain structure building (Sheffi, 2005).
In another perspective, flexibility can be facilitated by a robust supply chain structure. By establishing a robust supply chain strategy, the reaction to unexpected disruptions will be more flexible and resilient (Tang, 2006; Wieland & Wallenburg, 2012). Supply chain robustness can be defined as “the ability of a supply chain to resist change without adapting its initial stable configuration” (Wieland & Wallenburg, 2012: 890). Achieving robustness relies on proactive supply chain structure building rather than changing supply chain configurations in disruptions (Wieland & Wallenburg, 2012). With the capability of robustness, supply chains can recover from disruptions without negative effects which consequently improve the resilience (Tang, 2006; Wieland & Wallenburg, 2012).
These supply chain resilience capabilities have potential linkages with supply chain integration since they can always be achieved through different supply chain integration strategies.
Supply chain integration
integration is defined as “linkages with entities outside the enterprise” (Rosenzweig et al., 2003:440). These integration directions combined with integration degrees form supply chain integration configurations (Frohlich & Westbrook, 2001). Here degrees of supply chain integration represents levels of taking collaborative activities with supply chain members (Frohlich & Westbrook, 2001). Supply chain integration is viewed as the essential factor to improve supply chain performance (van der Vaart & van Donk, 2008). However, different directions and degrees of supply chain integration play different roles.
Internal supply chain integration
External supply chain integration
External supply chain integration is a vehicle to bring information and knowledge obtained from internal integration to external supply chain members to gain joint benefits (Das, Narasimhan & Talluri, 2006). External supply chain integration helps to coordinate inter-organizational relationships within supply chains (Stank et al., 2001). Upstream suppliers, downstream customers, as well as competitors are the composite directions of external supply chain integration (Yusuf, Gunasekaran, Adeleye & Sivayoganathan, 2004). They play different roles in improving supply chain performance.
Integrations with downstream customers increase the accuracy of demand information and the responsiveness to changeable customer requirements (Flynn et al., 2010). Wei & Wang (2010) state that the most important external information in supply chains is customer demand information. With demand information sharing from customers, the production planning time can be reduced and at the same time, planning quality can be improved (Flynn et al., 2010). Furthermore, coordinative planning and information sharing conducted with downstream customers enable improvement of supply chain performance (Lee, Padmanabhan & Whang, 1997) which eventually mitigated the bullwhip effect and reduced the risks in supply chains (Power, 2005). Customer integration can also increase responsiveness and reduce lead times of supply chains by conducting strategies for instance make-to-order (MTO), just-in-time (JIT) (Simatupang, Wright & Sridharan, 2002).
The second direction of external supply chain integration is upstream supplier integration. Integration with upstream suppliers allows the changing requirements being better satisfied (Flynn et al., 2010; Ragatz et al., 2002) and delivery reliability from suppliers can be improved. Upstream supplier integration is positively related to supplier communication performance (Cousins & Menguc, 2006) and product development performance (Ragatz, et al., 2002). The high level of supplier integration enables the achievement of successful customization (Stank et al., 2001). Also the supplier integration generates capabilities to adapt to uncertainties (Das et al., 2006).
can improve supply chain performance. High degree of competitor integration improves supply chain responsiveness which increases the speed to react to market turbulence (Yusuf et al., 2004). Tang (2006) propose that having alliance with competitors, flexibility and robustness of supply chains are enhanced since the alliance acts as “safety net” that members can receive helps from others. Competitor integration has manifested its role in supply chain management.
Degree of supply chain integration
Frohlich & Westbrook (2001) identify degrees of supply chian integration as different extents of integrations. However, degree is abstract and not easy to test. Simatupang et al., (2002) propose four collaboration modes of supply chain integration namely information sharing,
incentive alignment, logistics synchronization and collective learning which can be used to
illustrate integration degrees to make them more concrete and understandable.
sharing risks, benefits, costs with supply chain members (Simatupang & Sridharan, 2008). Strategies can be conducted to achieve such alignment with supply chain members, for instance building good relationships, using quantity flexible contracts (Lee, 2000; Simatupang et al., 2002). Incentive alignment can positively improve supply chain performance. Due to the relationship with supply chain members has changed from traditional arm-length cooperation into more long-term association (Narasimhan & Das, 2001), close collaborations can be enhanced when facing problems (Helper & Sako, 1995). The last one is logistics synchronization which means “recognizing and concerting improvement initiatives that significantly contribute to value creation in the acquisition, consumption and disposition in products and services” (Simatupang et al. 2002). There are several strategies to achieve such integration mode namely logistics postponement, MTO, JIT, outsourcing, joint inventory management, etc (Simatupang et al. 2002). Logistics synchronization has the capability to reduce lead times thus improves responsiveness of supply chains.
Supply chain integration configurations with these different directions and degrees have different contributions to supply chain performance. Those capabilities of supply chain integration have potential linkage with supply chain resilience.
Conceptual model
researchers, in order to have in-depth investigation of the relationship between supply chain resilience and supply chain integration, the resilience capacities explored in this study are limited to those which are more related to supply chain integration according to literatures. Resilience capabilities for researching are showed in the conceptual model (Figure 1).
Generally, the relationship between supply chain integration and supply chain resilience will be explained through different supply chain integration configurations and supply chain resilience capabilities (Figure 1).
FIGURE 1 Conceptual model
METHODOLOGY Research design and setting
Goldstein & Mead, 1987; Meredith, 1998; Voss, Tsikriktsis & Mark, 2002). In supply chain resilience field, although some basic theories have been researched, the relationship between supply chain integration and supply chain resilience has few theoretical background and new theories still need to be developed. Furthermore, multiple cases are selected to guarantee replication logic in order to yield more reliable and generable theory (Yin, 1994). Therefore, multiple case study is the most suitable methodology for this research topic.
Data collection
Followed by Yin (1994), before collecting data, a protocol needs to be finished. A well-designed protocol will increase the reliability and validity of research data (Yin, 1994). Questions ask in interviews are the core of the protocol. The protocol is showed in Appendix
A. After the first two interviews, questions were critically evaluated and revised.
In order to mitigate bias in the interview, the key approach is to select appropriate informants (Eisenhardt & Graebner, 2007). Informants are better to have holistic view of the supply chain phenomenon. Those informants we chose are all knowledgeable about the research area (supply chain management) since they have direct contacts with supply chain issues and have power to support the research. Triangulation is used as the principle in collecting data (Voss et al., 2002). It can decrease discrepancies and limitations in data through combining multiple sources and methods for the same research phenomenon (Blackhurst et al., 2011; Yin, 1994). Reliability of data can also be increased by triangulation method (Voss et al., 2002). Therefore, data was collected from multiple sources and data collection methods.
their validation, the data can be coded in order to gain better overview of the similarities and differences by classifying data into categories (Voss et al., 2002). Table 2 shows the main information of each interview. Given the sensitivity of the data provided, names of both the focal company and supplier companies were not mentioned.
The second source of data was from archives. The archival data was from internal sources which are mainly the yearly reports of those companies that they offered to us and some slides introducing the backgrounds and developments of their companies. Another source is websites of case companies that also provide basic background information and records of some important events happened ever. These archive data was first used to better understand those companies and their responsibilities. Most information in these archive data was about general descriptions of companies. Relevant information to the research was noted as raw data to be coded later. Data from archives can increase the validity of the research.
Data analysis
Data was analyzed using qualitative data analysis (Miles & Huberman, 1994) with the support of coding software “QDA Miner”. The analysis is first through within-case analysis, and cross-case analysis afterwards (Miles & Huberman, 1994).
Within-case analysis
TABLE 2
Basic interview information
Supply chain Position in supply chain
Informant Interview time lasted Data source O&F supply chain The focal company Category Procurement manager
90 minutes Face to face interview
First-tier supplier
Production planning manager
90 minutes Face to face interview; Website of the company CH supply chain The focal company Category Procurement manager
75 minutes Face to face interview
First-tier supplier Account manager
120 minutes Face to face interview; Slides showed in interview; Yearly report (2012) PP supply chain The focal company Category Procurement manager
90 minutes Face to face interview; Working sheet First-tier supplier Account manager 45 minutes Face to face
interview Logistics supply chain The focal company Category Procurement manager
75 minutes Face to face interview; Working sheet First-tier supplier Operation manager 60 minutes Face to face
supply chain resilience. “A priori coding” was applied in this step, which means those categories were built prior to the analysis and defined from the literatures (Weber, 1990). Thus those coding schemes comprised (See table B1 in Appendix B for detail definitions and
schemes.):
Firstly, two supply chain integration directions namely internal and external supply chain integration (Gimenez & Ventura, 2005). Furthermore, in external integration, supplier integration, customer integration and competitor integration were involved (Yusuf et al., 2005).
Secondly, four integration modes which applied to investigate supply chain integration degrees namely information sharing, incentive alignment, logistics synchronization and collective learning (Simatupang et al., 2002; Simatupang & Sridharan, 2008).
building. For instance, if codes showed “with disruption experience learning with suppliers, the supply chain disruption can be prevented next time and operation of supply chain can be improved to better status”, we took this as collective learning with suppliers can improve robustness of supply chains. After matching patterns within each case supply chain, the relationship between supply chain integration and supply chain resilience can manifest.
Cross-case analysis
After finishing analysis in each case, the cross-case analysis is required (Miles & Huberman, 1994). Cross-case analysis can have further investigation based on single case analysis to first enhance the generalizability and second gain deeper understandings and explanations of the research field (Miles & Huberman, 1994). The way to conduct cross-case analysis in the study was comparing the findings of each case to check whether findings in the single case appeared by chance or indeed existed in most or all cases. That means if those relationships between supply chain integration and supply chain resilience manifested in single supply chain exist in most or all case supply chains, the relationships can be confirmed since the applicability of the findings has been approved. After cross-case analysis, the general relationship between supply chain integration and supply chain resilience can established which will be further explained in the nest section (showed in Table 3).
RESULTS
Contribution of internal supply chain integration to supply chain resilience
Internal information sharing vs. supply chain resilience
TABLE 3
The relationships between SCI and SCRE Supply chain
integration
Impact on supply chain resilience capabilities
Redundancy Visibility Adaptability Collaboration Velocity Flexibility Robustness
understanding situations of disruptions, companies can modify their operation plans to avoid standstill which enhance the supply chain adaptability to disruptions. (Representative
quotations for each critical themes and relationships are showed in Appendix C, Table C1.)
That is to say, not only visibility of disruption situations can be improved through real-time disruption information sharing, the appropriate actions to maintain regular operations of companies can be taken since visibility of supply chains.
Secondly, in normal business conditions, information sharing across functional areas enables companies achieving better operations in order to adapt to and even prevent some disruptions. One manager from CH supply chain, for example, noted that early involvement of procurement department into product development together with sales and production departments to share requirement information and changes of needs is essential for departments to collaborate together and have better operations. With little information sharing among functional areas in the company, the whole company cannot cooperate as one integrated entity. Interviewees also noted that information blockage can cause miss coordination among different functional areas. Further, the information blockage can influence other supply chain members.
Internal collective learning vs. supply chain resilience
Internal disruption experience learning was identified by interviewees in all case supply chains as a critical factor to increase supply chain resilience. After disruptions, no matter those disruptions are handled successfully or not, summarizing internal mistakes and success manners of all involved departments and proposing improvement plans are helpful to prevent same disruption happen again. First, learning activities can increase supply chain adaptability since the company can manage their operation better. Second, internal learning improves collaboration among departments therefore if disruption happens again, departments can take appropriate actions to collaboratively handle the disruption.
Contribution of external supply chain integration to supply chain resilience
Upstream supplier integration
Information sharing vs. supply chain resilience
The first dimension is still real-time disruption information sharing. Interviewees from all case supply chains noted this as the important point to effectively handle disruptions. In disruptions, buyers keep contact with suppliers to obtain information about what is going on and also what is the impact of disruptions to supply chains. With more information shared from supplier site, buyers can have better visions of disruptions and also suppliers would like to make sure everybody in the supply chain aware of disruption situations. Thus what supply chain members usually do is to keep updating information as much as they get. The visibility of disruption information in turn contributes to having better adaptation and collaborative reactions of supply chain members. One manger from case supply chain stated that through downstream supply chain members sharing disruption information and needs with their suppliers, suppliers could have better collaboration with them to manage supplying or operations. Supply chain members can also understand how they can adjust their production plans to the current situation in order to maintain the regular operation due to increasing visibility.
Disruption information sharing help supply chain members understanding what is the situation of disruptions and what impacts will be. Buyers can react to disruptions quickly to reduce negative effects of disruptions and even to maintain the material supply or product production with more information shared from supplier site. In this perspective, supply chain velocity of quick responses to disruptions can also be increased. Information sharing during disruptions also contains information about what suppliers can do to maintain the supply. This kind of information sharing also enables buyers to take corresponding actions quickly to respond to disruptions.
better understanding and visions of suppliers’ processes in disruptions. More importantly, based on those information suppliers provided, buyers are able to propose relevant plans or refine their plans to reduce vulnerability in supply chains beforehand. When disruption occurs, supply chain members can make decisions to take right actions quickly and collaborate with others followed those contingency plans.
Collective learning vs. supply chain resilience
All interviewees from case supply chains discussed the need of disruption experience learning between supply chain members. With more experiences shared with suppliers in supply chains, chain members can learn from each other and gain more understandings. Supply chain members can learn from other’s mistakes in order to improve their collaborations later. Buyers have to discuss with suppliers together about what and how to improve after disruptions, and dive into what to do to improve supply processes if disruption happens again. Buyers learn together with suppliers can improve the processes and prevent same disruption happens again. Consequently supply chains can become much more adaptive and stronger than before.
Incentive alignment vs. supply chain resilience
Interviewees from three of the four case supply chains discussed the role of having good relationships with suppliers in building resilient supply chains. Having good relationship with suppliers firstly increases their dedications to fulfill contracted items and secondly gains willingness of suppliers to do everything for buyers in disruptions to keep their operation running. One manager from O&F supply chain, for example, noted that suppliers feel as honors to fulfill the contracted items with buyers who have good relationships. Furthermore, suppliers can influence their upstream suppliers to better fulfill the contracts thus buyers can gain benefits from this well collaboration. When face disruptions, buyers and suppliers can have close and efficient collaborations under good relationships. One manager stated:
want to supply… and that is sometimes you can never cover in a contingency plan or contract. And having a balanced relationship, which is open and where you trust each other. That are of course the best value you can have and the best reason that people want to help to solve these issues.”
The relationships with suppliers are important in supply chains, because suppliers will try their best to cooperate with buyers and help them avoid standstill. One manager from PP supply chain, for example, noted that since the good relationship with suppliers, in disruptions, suppliers actively sought solutions for customers without their asking in order to reduce the reaction time of customers thus reduce the effects of disruptions. It is really helpful to reduce financial damage of customers. Even if customer still have standstill, the time of standstill can be controlled to minimum.
If the disruption happens only in the buyer site, the good relationship with supplier makes them actively cooperate with buyer to effectively handle disruptions. Thus, building good relationships with suppliers makes them more willing to take actions to collaborate with buyers and help to maintain supply chain operations to overcome disruptions. In another perspective, as stated by one manager, in the good relationship, the buyer pushed the supplier to increase inventory for them since the buyer really depended on the supplier. The supplier increased investment in inventory when they found that is really important to reduce vulnerability in supply chains.
However, good relationships with suppliers also cause problems inside the company which can introduce vulnerability to the supply chain. One manager from O&F supply chain, for example, stressed that due to the good relationship with suppliers, they could almost always get extra capacities from suppliers when they have problems in their production planning. Then there was no incentive for production department to improve their planning which in turn increase the potential risks in the supply chain.
times of supplier and ultimately maintain the supply. If they found that products are not able to use currently, then buyer can instantly seek for other solutions. This allow buyer to react to disruption at the shortest time and propose other plans to maintain the operation.
Logistics synchronization
There is one strategy of logistics synchronization to integrate with suppliers, namely outsourcing. Supply chain members tend to outsource some capabilities for instance logistics, warehousing to outside third party suppliers in order to concentrate themselves on core competencies. After analyzing case supply chains we found that when disruption happens at the buyer plant, the operations can be maintained since 3PL providers can still deliver stored products to other plants of buyer to maintain the regular operations. The stored products held by 3PL providers will not be influenced by such disruption. Since the operations are maintained, the adaptability of supply chains then is improved through outsourcing strategy.
Competitor integration
Incentive alignment vs. supply chain resilience
Building relationships with competitors to effectively handle supply chain disruptions is noted by three of the four supply chains. Normally in the market there are several companies produce same products. When there is disruption in the supply chain and for instance in the supplier site, if the supplier has relationship with its competitors, the supplier can turn to competitors for help to maintain the physical flow in supply chain. Noted by one manager, although this reaction may harm the image of the supplier company, the flow of products can be maintained. If companies don’t have such relationship with their competitors, they cannot raise the problem to them and consequently lose one opportunity to quickly adapt to disruption.
Customer integration
Information sharing vs. supply chain resilience
The first dimension of information sharing for customer integration revealed during data analysis is forecast information sharing. As noted by interviewees from all case supply chains, here customers refer to business units. Customers usually have their own forecast information. It was stressed by one manager from CH supply chain that getting forecast information from customer site is important for suppliers. Sharing forecast information with supply chain members can make customer demands more visible and thus chain members can proactively plan their productions or supply more suitable to customer needs which smooth the operation process between suppliers and customers, and reduce the likelihood of supply chain disruptions.
Interviewees from all case supply chains stated that, to share information, supply chain members need to communication with heir customers through various communication tools and information technologies for instance emails, teleconference, EDI, SAP, etc. One manager from Logistics supply chain, for example, stressed that using advanced information technologies with customers increased the visibility of normal business information. In those IT systems everything can be found by both supplier and customer. Some interviewees also noted that although they did not have advanced information technologies with suppliers currently, they were planning to build advanced IT systems with suppliers to increase the visibility of supply chains.
All interviewees from four case supply chains highlighted the need for sharing disruption information with customers to handle disruptions. In disruptions, keep disruption information transparently is essential to supply chain members. As noted by interviewees what is important in disruptions is that supply chain members describe real-time situations of disruptions to their customers, offer information about alternatives, and keep customers updated what is happening. Customers then can have better views of disruption situations and take corresponding actions. In another perspective, which was highlighted by one manager from case supply chains, sharing disruption information with customers also gained supports from customer site which achieving supply chain collaboration. Customers may have dual sourcing, if they well-understand the disruption information, they can source products from their other suppliers to maintain their operations in order not to cause a standstill. Therefore, adaptability of supply chains is also increased through transparent information sharing with downstream customers.
Good disruption information sharing with customers can also increase supply chain collaboration in another perspective. Understanding requirements and needs of customers in disruptions, suppliers can cooperate with them to fulfill their needs, such as change delivery plans or delay production for them. They can work together to handle disruptions efficiently.
Collective learning vs. supply chain resilience
Interviewees from three of the four case supply chains stressed the importance of disruption experience learning with customers to increase supply chain resilience. After disruptions, supply chain members tend to summarize disruption experiences with their customers and improve the process or collaborations together. As stated by one manager from CH supply chain, one result of experience learning with their customers was that they adjusted their supply chain to customer needs in order to prevent same disruption happen again and this was helpful to improve supply chain operations.
maintain their operations in disruptions. The supply chain resilience then can be increased through such understanding.
Logistics synchronization vs. supply chain resilience
Interviewees stated conducting one operational flexibility strategy in logistics synchronization, MTO, as one way to integrate customers. Suppliers produce those products based on orders from customers. As mentioned by two managers from two supply chains, products made to orders have short lead time served to supply chain members. Also those products are transported to customer site frequently, for instance several times one week. When disruption happens, supply chains can respond quickly since the short production lead time and it is more easily to make changes in disruptions. Since the lead time of reacting to disruptions can be reduced, supply chain velocity is improved.
However, those logistics synchronization strategies also incur vulnerability to supply chains. One manager from O&F supply chain, for example, stressed that with MTO or JIT strategies, buyers have no or few inventories in place. Any disruption is able to cause potential standstill for buyers since they rely heavily on suppliers. If supplier is influenced by disruptions, then those buyers will also be affected. Due to the lack of inventories, product availability is reduced and redundancy capability cannot be achieved in disruptions. Furthermore, without the inventory slacks to quickly react to and recover from disruptions, supply chain members have to seek for other solutions to handle disruptions. Therefore, supply chain robustness is reduced by conducting such logistics synchronization strategies. So, customer integration by using logistics synchronization strategies can also reduce supply chain resilience. One interviewee explained:
“If we are delayed with our production…if they (buyers) don’t have any spare stocks then our delay causes delay at them. We actually have customers of which our truck was caught in a traffic jam at the highway that (they) needed to stop their production because they had 2 hours of stock at their reorder point.”
supply chain integration and supply chain flexibility building. Nevertheless, through analysis we found that building flexibility in supply chains is indeed helpful to improve supply chain resilience since flexibility increase the robustness of supply chains.
DISCUSSION Interpretation of findings and propositions
Relationship between supply chain integration and supply chain resilience
Supply chain integration consists of different integration modes which can be classified from four areas: information sharing, incentive alignment, logistics synchronization and collective learning (Simatupang et al., 2002). From findings of the study it can be noted that an integrated supply chain has more information visibility, operational collaboration and knowledge sharing, which make supply chains more responsive to uncertainties. Previous research has found that responsive to changes is one important capability in building supply chain resilience (Ponomarov & Holcomb, 2009). Furthermore, integrated supply chains have the ability to maintain regular operations in disruptions which contribute to better recovery from disruptions. In line with literature, with integrated relationships with partners, mutual collaboration and support of supply chain members are increased (Rosenzweig et al., 2002). Such relationship also exists in disruptions. These capabilities created by supply chain integration together contribute to increasing supply chain resilience. Hence, the relationship between supply chain integration and supply chain resilience is obvious.
Proposition1. Supply chain integration can contribute to building supply chain resilience through increasing important resilience capabilities.
Contribution of internal supply chain integration to supply chain resilience
disruption situations into all functional areas. Since disruption information is transferred cross disciplines, visibility of disruption situations can be improved within the company. This finding also supports the literature that visibility is an outcome of information sharing (Jüttner & Maklan, 2011). Through improvement of visibility, supply chain resilience can be increased by having more capability to quickly identify disruptions and take actions. Furthermore, internal information sharing increases collaboration occurring between functional areas. With useful information shared, interdependent departments can collaborate to enhance production planning and control which supports the literature that the number of disruptions happening can be reduced (Blackhurst et al., 2005). Besides this, the responding time to disruptions is decreased due to enhanced visibility. In line with the literature, collaboration can contribute to reduce uncertainties and improve organizational operations which consequently increase adaptability of supply chains.
Internal learning of disruption experience can improve operations to prevent same disruption happens again. This is in line with the literature that companies who have post-disruption learning are better equipped to handle future disruptions (Blackhurst et al., 2011). Learning from disruptions provides companies opportunities to refine their process beforehand to have better operations to reduce the likelihood of disruptions and even if in disruptions, collaboration between functional areas can be improved since the experience learning of previous disruptions which can contribute to maintaining regular operations. Thus, the adaptability of supply chains can be increased and make supply chains more resilient to disruptions.
With relationships discussed above, the propositions can be proposed:
Proposition2. Internal supply chain integration can contribute to supply chain resilience. P2a. Internal transparent information sharing across functional areas can increase visibility of information, collaboration of functional areas and adaptability of supply chains. Those resilience capabilities consequently increase supply chain resilience.
Contribution of external supply chain integration to supply chain resilience
External supply chain integration contains supplier integration, customer integration and competitor integration (Yusuf et al., 2004). Previous researchers have largely explored how these directions of external supply chain integration different influence supply chain performance. In the study, these directions of supply chain integration have been linked with supply chain resilience capabilities in terms of different dimensions of integration practices.
Information sharing
Although information sharing with upstream suppliers or downstream customer has different contributions to enhancing supply chain performance (Flynn et al., 2010; Ragatz et al., 2002), the abilities of information sharing with different directions in improving supply chain resilience capabilities are almost the same. The study is in line with the notation of the research that information sharing with supply chain partners can improve transparency and responsiveness of supply chains and there are various kinds of information shared which contains real-time information, demand information, forecasts, order status, etc (Stevenson & Spring, 2007). No matter what kind of information is shared in supply chains, chain members can gain visibility to monitor products and processes. In line with the literature, those kinds of information shared with suppliers or customers can firstly improve supply chain visibility in disruptions. Information sharing is the channel that enables supply chain members know situations of disruptions, what customer needs in disruptions are and what actions supply chain partners can take to react to disruptions. Without transparent information sharing within supply chains, supply chain members cannot capture the status and impact of disruptions, and no timely actions can be taken to respond to disruptions.
disruptions. So, the supply chain adaptability can be improved through information sharing among supply chain members. In normal situations, building contingency plans between supply chain members shares information about back-up capacities, emergency handling abilities beforehand. Based on those information shared, supply chain members know how to cooperate effectively when face disruptions. Quick actions can be taken according to the preparations and collaboration between supply chain members is also enhanced.
Information sharing provides ability to quickly adapt to disruptions and make better decisions. The ability to quickly discover disruptions and take effectively actions is one form of supply chain velocity (Christopher & Peck, 2004). Transparent information sharing provides basis for quick disruption discovery and decision making to effectively handle disruptions. Thus, information sharing can also increase supply chain velocity which improves supply chain resilience.
It is also important to point out that in line with literatures, the findings state that advanced information technologies facilitate the information sharing to gain supply chain visibility and more effective collaboration (Simatupang et al., 2002; Stevenson & Spring, 2007). With advanced IT used, supply chain members can have clear views of all business information thus uncertainties in supply chains can be reduced.
Proposition3. Information sharing with external supply chain members (upstream suppliers and downstream customers) can increase supply chain resilience. Supply chain visibility, supply chain collaboration, supply chain velocity and supply chain adaptability as resilience capabilities can be increased.
Logistics synchronization
adaptability of supply chains when face disruptions. Likewise, in customer integration side, there are strategies that supply chain members can be synchronized such as conducting MTO, JIT delivery. These logistics synchronization strategies have contributions to reduce lead times of products. In line with the literature, short lead time is important to enhance velocity of supply chains (Jüttner & Maklan, 2011). In disruptions, the short lead time of products reduces the lead time of reacting to disruptions. Suppliers conducting those synchronization strategies are more able to respond rapidly to supply chains changes thus maintain the regular supply chain operations. The finding is also in line with the literature (Christopher & Peck, 2004). To sum up, conducting logistics synchronization with supply chain members (supplier/ customer) can raise adaptability of supply chains and increase supply chain velocity in disruptions.
However, the analysis also noted that logistics synchronization can increase vulnerability to supply chains. By using highly integrated strategies such as JIT delivery, MTO, redundancy capability cannot be achieved due to lack of slack inventories in place. In disruptions, those supply chains are more vulnerable since they don’t have availability of products to instantly respond to disruptions to maintain the regular operations. Also, supply chain robustness is reduced. Researchers have noted that slack inventories are the strategy to increase supply chain resilience (Sheffi & Rice, 2005; Tang, 2006). Our study supports those literatures that highly dependent on suppliers reduce the supply chain redundancy and robustness which in turn reduce the resilience of supply chains. Logistics synchronization can cause over dependent of buyers on suppliers which throws buyers into situations that the small problem in the supplier site will result in standstill of buyers.
Proposition4. Logistics synchronization with external supply chain members can increase supply chain velocity and adaptability. However, it also reduces the supply chains redundancy and robustness to quickly respond to and recover from disruptions without receiving negative effects.
Collective learning
Disruption experience learning activity with both upstream suppliers and downstream customers is of equal importance. Supply chain members can have manners that successfully managed those happened disruptions combining with some mistakes or unsatisfied points. Through collective learning, supply chain members are able to learn from those successful behaviors of others and improve unsatisfied collaborative manners. Supply chain collaboration can be conducted better next time due to the learning of problems. Sharing disruption experiences of supply chain members with each other can improve supply chains into more desirable status and better operations to reduce the vulnerability of supply chains which enhance supply chain adaptability. Previous literature has stated that learning experience from disruption is one strategy to increase supply chain adaptability (Pettit et al., 2010). Collective learning can create new knowledge to supply chain management before and in disruptions which supports the early research.
Proposition5. Collective learning with external supply chain members (suppliers and customers) can increase supply chain resilience. Supply chain collaboration and supply chain adaptability as resilience capabilities can be increased.
Incentive alignment
operations in disruptions. Opportunistic behavior is more likely to be reduced through good relationship between supply chain members thus enhance collaborations to face disruptions. From the buyer site, the good relationship with suppliers makes the collaboration more proactive and effective. Suppliers are willing to proactively seek for solutions to maintain the supply chain operations instead of waiting for requirements.
Relationship building with competitors in supply chains also enhances collaboration and adaptability of supply chains. Deeds & Hill (1999); Hamel et al., (1989) state the negative effect of competitor integration, however, out study revealed that having good relationship with competitors can be helpful to maintain operations in disruptions. Competitors who produce the same products can provide support to the disrupted company to maintain the regular operation in the supply chain, for instance supply to buyers on the name of the disrupted company to maintain the regular operation in the supply chain, or provide production facilities to the disrupted company to prevent standstill in the supply chain. Such finding of competitor integration supports the point in the literature that building alliance with other suppliers acts as “safety net” for each member and help can be received in disruptions (Tang, 2006). To sum up, the incentive alignment with suppliers and competitors can increase collaboration and adaptability of supply chains.
However, good relationship with suppliers can in turn increase vulnerability in supply chains. This is contrast to the research notes that external integration can enhance internal integration (Gimenez & Ventura, 2005). Suppliers are willing and able to satisfy extra needs of buyers based on the relationship. Under such circumstance, problems within the buyer company such as bad production planning caused the extra needs cannot be settled since departments knowing that those extra needs can always be fulfilled by suppliers. If problems exist inside one company in the supply chain cannot be settled, they will increase risks and vulnerability to the whole supply chain. Therefore, potential supply chain vulnerability can also be increased due to good incentive alignment with suppliers.
Contributions
Theoretical implications
This study has two main theoretical contributions. In previous researches, a number of researchers have emphasized the importance of building supply chain resilience (Sheffi, 2005; Sheffi & Rice, 2005; Zsidisin et al., 2005). Sheffi (2005) has proposed some principles and methods to increase competitive advantages to overcome vulnerabilities. In the supply chain integration field, there are lots of literatures exploring the advantages of supply chain integration and how to integrate supply chain members in order to gain those advantages. In those literatures, we can find out some overlap capabilities which are involved in both supply chain integration and supply chain resilience fields. Nevertheless, no or few research clearly interprets the relationship between these two fields. This research addresses the gap by clearly identifying the essential role of supply chain integration in supply chain resilience building. Supply chain integration as an important supply chain management strategy can contribute to improving supply chain resilience.
Secondly, since specific strategies to increase supply chain resilience from supply chain integration perspective is still unknown, this research sheds new lights on supply chain resilience building strategies by proposing the empirical propositions considering how supply chain integration from different directions and degrees contribute to supply chain resilience. New dimensions of supply chain resilience building strategies, namely different linkages of supply chain integration configurations with resilience capabilities, have been identified. These linkages can serve the body of knowledge well in supporting supply chain managers to coordinate their supply chain relationships to further improve the supply chain resilience building. These propositions also provide foundations for further researches into the relationship between supply chain integration and supply chain resilience.
Managerial implications
Westbrook, 2001). Managers must understand how these integration configurations can differently contribute to supply chain resilience beforehand. Considering the cost and capability, supply chain managers cannot use the same integration mode to manage all supply chains members and all supply chains. This research links different integration configurations with different supply chain resilience capabilities. Therefore, managers can figure out which capability of supply chain resilience is most essential to them or they want to achieve for certain supply chain direction. According to that resilience capability, managers can redesign their supply chain integration direction and degree based on the linkages proposed in the research. The research provides guidance for managers to build their resilient supply chains from the supply chain integration perspective.
Secondly, this research also finds out some paradoxes which can provide new thinking for managers to make trade-offs during supply chain resilience building. The analysis points out the conflict contribution of JIT or MTO strategy for instance which both increase supply chain resilience and enhance supply chain vulnerability. Managers need to carefully consider the effects of those integration strategies to supply chains and make trade-offs to best balance the benefits and losses. Managers can draw inspirations from this research about those paradoxes in building their resilient supply chains.
CONCLUSION
chain integration can greatly enhance supply chain resilience in such turbulent business environment.
This study has some limitations that need to be noted. First, one aim of the study is to explore the relationship between different supply chain integration directions and supply chain resilience building. The unit of analysis set was supply chains. In reality, due to the time and resource limitation, the study can only conducted with one focal company and first-tier suppliers. Interviewees in the focal company are all from purchasing departments and there is no research conducted in downstream customer companies of the focal company in supply chains. Supply chains explored are not completed ones which only contain two supply chain members. We cannot get evidence of how other supply chain members within those case supply chains are integrated, for instance the focal company with its customers. The investigation in completed supply chains can provide more information for the relationship of supply chain integration and supply chain resilience. Future researches can conduct investigates in completed supply chains which contains the focal company, first-tier suppliers, downstream customers, etc. to gain holistic knowledge for the relationship between different directions of supply chain integration and supply chain resilience.
Second, those disruptions mentioned by interviewees were relatively small and only caused short-term influences to supply chains. When those disruptions get away, everything in supply chain turns to normal. For some disruptions which have long-term influences, it can be explored that how supply chain members are integrated to recover from disruptions. Further researchers can focus more on supply chain cooperation in those long-term disruptions to generate new insights.
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