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Strategic Fit of Supply Chain Management Information Systems: A Multiple Case Study Investigation

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Title: Strategic Fit of Supply Chain Management Information Systems: A Multiple Case Study Investigation


1
Strategic Fit of Supply Chain Management Informati
on Systems A Multiple Case Study Investigation
  • Tim McLaren, MBA, BScEng DeGroote School of
    Business Hamilton, Ontario, Canada
  • email mclarets_at_mcmaster.ca
  • web http//merc.mcmaster.ca/mclaren

2
Agenda
  • What are Supply Chain Management Information
    Systems (SCM IS)?
  • Research Motivation and Objectives
  • Methods
  • Emerging Model of Strategic Fit of Supply Chain
    Management Information Systems (SCM IS)
  • Significance of Preliminary Findings

3
Supply Chain Management Information Systems (SCM
IS)
  • What? Information sharing within or between
    partners in a supply chain for
  • material movements
  • financial transactions
  • supply and demand planning
  • Why? Poor info requires excess inventory, time

partners in a supply chain
end-customer
tier 1 supplier
suppliers supplier
retailer
manufacturer
accurate demand information
distorted demand information
4
The Problem How to Ensure a SCM IS Fits a Firms
Strategies
  • Variety of SCM ISs, each with different
    capabilities
  • e.g. Electronic Data Interchange is good for
    efficiency Electronic Marketplaces are good for
    flexibility, etc.
  • Lack of theory of which capabilities are best for
    a specific organization (how to obtain strategic
    fit)
  • Firms look at what has worked for others without
    understanding if it really fits their unique
    situation
  • EDI works for Wal-mart, why wont it work for
    me?
  • Why did Nikes trial of a best-in-class SCM IS
    fail?

5
Research Questions and Objectives
  • Questions
  • Is the degree of strategic fit of a SCM
    Information System important?
  • How can we determine if a SCM IS fits a firm?
  • Objectives
  • Explore the concept of strategic fit of a SCM IS
    and its role in supply chain performance
  • Develop and evaluate a model and method for
    measuring strategic fit of a SCM IS

6
Research Methods Alternatives
  • Sample Size (n)
  • Must be big enough to cover proposed theories
  • Limited by large amount of supporting evidence
    required for new theories and measures
  • Methods
  • Statistical Confirmation? NO possible
    alternative explanations require support from
    qualitative evidence resulting low n not
    statistically powerful
  • Ethnography? NO too detailed for required n
    interested in outcome rather than process
  • Multiple Case Study? YES can explore and
    refine theory and measures iteratively using
    comparisons

7
Iterative Theory-Building Research (after
Eisenhardt, 1989)
review previous studies
develop conceptual model
operationalize constructs
pilot test measures
  • explore and validate model
  • surveys, interviews, and documents to explore
    validity of model and measures

8
Exploratory Multiple Case Study Method (after
Yin, 1994 Stake, 1995)

1 Managers had responsibility for SCM IS or
were at most senior level available Consultants
had previous work experience consulting for the
company Other Experts had knowledge of company
through published documents.
2 Former employee in IS department with
consulting experience in SCM IS implementation.
9
This Study is at Intersection of Three Important
Disciplines
10
Strategic Fit of a SCM IS Conceptual Framework
  • 1) SCM IS capabilities are indicated by level of
    support for
  • Operational Efficiency
  • Operational Flexibility
  • Long-term Planning
  • Short-term Planning
  • Internal Analysis
  • External Analysis
  • Internal Process Coordination
  • External Process Coordination
  • (supported individually in Strategic Management
    and IS studies this study provides additional
    empirical support)

11
Strategic Fit of a SCM IS Conceptual Framework
(contd)
  • 2) Differences in supply chain competitive
    environments are indicated by
  • competitive strategy types
  • (strong support in Strategic Management studies
    and emerging support in IS alignment studies
    this study provides additional empirical support)
  • level of supply chain integration
  • (emerging support in supply chain and IOS
    literature this study provides limited empirical
    support)

12
Emerging Conceptual Model of Strategic Fit of a
SCM IS
Competitive Strategy Type
Level of Supply Chain Integration
Strategic Fit of Supply Chain Management Info.
System
Supply Chain Management Info. Systems Capabilities
13
Measuring Strategic Fit of a SCM IS
1) Measure
Competitive Strategy Type
Level of Supply Chain Integration
Implemented SCM IS Capabilities Profile
14
Measuring Strategic Fit of a SCM IS
  • Product-Market Domain
  • Success Posture
  • Market Surveillance
  • Market Growth
  • Technology Goals
  • Technology Breadth
  • Technology Buffers
  • Managerial Focus
  • Planning
  • Administrative Structure
  • Control

1) Measure
Competitive Strategy Type
Level of Supply Chain Integration
  • Supply Chain Strategy
  • Processes
  • Performance Management
  • Decision-Making
  • Operational Efficiency
  • Operational Flexibility
  • Short-term Planning
  • Long-term Planning
  • Internal Analysis
  • External Analysis
  • Internal Process Coordination
  • External Process Coordination

Implemented SCM IS Capabilities Profile
15
Competitive Strategy Types (after Miles and Snow,
1978)
  • Defender - operational efficiency
  • - Wal-Mart, ExxonMobil?
  • Prospector - innovation
  • - Nike, Leitch Technology?
  • Analyzer - minimize risk through proven
    opportunities
  • - Hewlett-Packard, Toyota?
  • Reactor - quick response to immediate market
    demands
  • - ???

16
Level of Supply Chain Integration (after
Moncrieff and Stonich, 2001 Poirier and Bauer,
2001)
  • Functional Focus
  • Internal Integration
  • Linked Network
  • Integrated Network
  • Network Optimization

17
Measuring Strategic Fit of a SCM IS
1) Measure
Competitive Strategy Type
2) Determine
Theoretically Ideal SCM IS Capabilities Profile
Level of Supply Chain Integration
Implemented SCM IS Capabilities Profile
18
Measuring Strategic Fit of a SCM IS
1) Measure
Competitive Strategy Type
2) Determine
Theoretically Ideal SCM IS Capabilities Profile
Level of Supply Chain Integration
3) Calculate
Profile Similarity Strategic Fit of SCM IS
Implemented SCM IS Capabilities Profile
19
Quantitative Methods
  • Survey questionnaire of firms for current
  • Competitive strategy attributes (existing
    measure)
  • Level of supply chain integration (emergent
    measure)
  • SCM IS capabilities (combination of existing
    measures)
  • Perceived strategic fit of IS capabilities (new
    measure)
  • Quantitative analysis using deviation from
    theoretical profile (after Venkatraman, 1989 and
    others)
  • Analyze relationships between research variables
    using a mathematical calculation (Euclidean
    distance)

20
Strategic Fit as Distance Between Ideal and
Observed Profiles
  • Distance or profile deviation calculated by
    Euclidean Distance between ideal and observed
    capabilities
  • Benefits
  • holistic instead of reductionist analysis (Van de
    Ven and Drazin, 1985 Sabherwal and Chan, 2001)
  • suitable when multivariate analysis infeasible
    due to number of interactions (Venkatraman, 1989)
  • Limitations
  • better is same distance as worse
  • capabilities are equally weighted

, for each i capabilities
21
Qualitative Methods
  • Exploratory case studies of firms for further
    evidence of
  • Competitive strategy patterns
  • Current and planned SCM IS capabilities and
    rationale
  • Current and expected strategic fit and benefits
    of SCM IS
  • Are there other factors that influenced
    satisfaction?
  • Are there other factors that influence strategic
    fit?
  • Are the findings from the survey measures
    significant and plausible?

22
Preliminary Findings
  • Initial model and measures gave inconsistent
    results I revised models and tested alternative
    measures iteratively until results were validated
  • Model of Strategic Fit of SCM IS helped explain
    differences in satisfaction with a firms SCM IS
  • Model and measures helped firms in study better
    understand their strategies and capabilities

23
Theoretical Model and Case Study Reports Will
Answer
  • Does evidence from interviews and documents
    corroborate with survey results?
  • Does evidence support the constructs and
    relationships proposed in the model?
  • Are there important variables missing in the
    model?
  • Do readers reviewing the evidence arrive at the
    same theoretical model?
  • Does theoretical model further our understanding
    of the concept of strategic fit of a SCM IS?

24
Suggestions for Future Studies
  • Statistical testing with large sample of firms
    from various industries
  • Investigate giving different weights to each
    capability depending on type of firm/industry
  • Develop decision-support system to provide
    strategic fit analysis and recommendations

25
Methodologically Related Studies
  • Reich, B.H., and Benbasat, I. Measuring the
    Linkage between Business and Information
    Technology Objectives, MIS Quarterly (201),
    1996, pp. 55-81.
  • Reich, B.H., and Benbasat, I. Factors that
    Influence the Social Dimension of Alignment
    between Business and Information Technology
    Objectives, MIS Quarterly (241), 2000, pp.
    81-113.
  • Broadbent, M., and Weill, P. Improving Business
    and Information Strategy Alignment Learning from
    the Banking Industry, IBM Systems Journal
    (321), 1993, pp. 162-179.

26
References
  • Research Methodology
  • Eisenhardt, K. M. Building Theories from Case
    Study Research, Academy of Management Review
    (144), 1989.
  • Yin, R. K. Case Study Research, 2nd edition, SAGE
    Publications, Inc., Beverly Hills, CA, 1994.
  • Stake, R.E. The Art of Case Study Research
    Perspectives on Practice, SAGE Publications,
    Thousand Oaks, CA, 1995.
  • Preliminary Findings
  • McLaren, T. S., Head, M. M., and Yuan, Y. Supply
    Chain Collaboration Alternatives Understanding
    the Expected Costs and Benefits, Internet
    Research Electronic Networking, Applications and
    Policy (124), 2002, pp. 348-364.
  • McLaren, T. S., Head, M. M., and Yuan, Y.
    Measuring the Strategic Fit of Supply Chain
    Coordination Systems, Quarterly Journal of
    Electronic Commerce (forthcoming), 2003.

27
Research Summary
  • Problem
  • lack of theory to help decide which SCM IS
    capabilities are most important for a specific
    firm
  • Importance to Practice
  • reduces risk in IS planning by providing tools
    for analysis
  • measures quickly highlight areas of misalignment
  • Importance to Theory
  • investigates alignment of IS capabilities and
    business strategy
  • builds theory for understanding supply chain
    systems success with operationalizable constructs

28
Questions or Suggestions?
Competitive Strategy Type
Theoretically Ideal SCM IS Capabilities Profile
Level of Supply Chain Integration
Profile Similarity Strategic Fit of SCM IS
Implemented SCM IS Capabilities Profile
29
1) Measure
Competitive Strategy Type (Miles and Snow,
1978) -Defender -Prospector -Analyzer -Reactor
2) Determine
Notes 1) A firms competitive strategy type
determines the level of support for the SCM IS
capabilities -Operational Efficiency -Operational
Flexibility -Short-term Planning -Long-term
Planning -Internal Analysis -External
Analysis 2) A firms level of supply chain
integration determines the level of support for
the SCM IS capabilities -Internal Process
Coordination -External Process Coordination 3)
The strategic fit of a SCM IS is the similarity
(Euclidean distance) between the theoretically
ideal and implemented levels of support for each
SCM IS capability. The ideal level of support for
each capability is determined by a firms
competitive strategy type and level of supply
chain maturity.
Theoretically Ideal SCM IS Capabilities Profile
Level of Supply Chain Integration (Moncrieff and
Stonich,2001) -Functional Focus -Internal
Integration -Linked Network -Integrated
Network -Network Optimization
Implemented SCM IS Capabilities
Profile (Sabherwal and Chan, 2001 Zviran, 1990
Venkatraman and Ramanujam, 1987 Bensaou,
1997) Level of Support for -Operational
Efficiency -Operational Flexibility -Short-term
Planning -Long-term Planning -Internal
Analysis -External Analysis -Internal Process
Coordination -External Process Coordination
3) Calculate
Profile Similarity Strategic Fit of SCM IS
30
Supply Chain Information and Communication
Technologies
Uniqueness of Processes
Standardized
Customized
Tight
Collaborative Trading Exchange
Shared Collaborative System
Collaborative Portal
Web Services
Degree of Interorganizational Integration (proces
ses, systems, and data)
EERP/ EAI
eProcurement Hub / Portal
Third-party Electronic Marketplace
EDI
Web-based Order Entry
Email / Fax
Offline Trade Exchange
Offline Auction
Phone
Loose
Many-to-Many
One-to-One
One-to-Many
Type of Relationship
31
Success Factors for a SCM IS
32
Developing the Survey Instruments
  • Adapt survey instruments from previous studies
  • Administer instruments to seven senior informants
    on three manufacturers
  • Continuous revision of wording of instruments
    based on feedback.
  • Use panel of 3 supply chain experts (2 senior
    consultants and 1 e-Business Director) to analyze
    validity and plausibility of instruments
    results.
  • Replace invalid instruments repeat pilot tests
    until panel satisfied with validity of
    instruments.

33
Phase I Study Informants and Panel of Experts
34
Insights from Competitive Strategy Dimensions
Results
  • Possible Interpretations
  • Company A is overall positioned as a Defender
    (except for Retail unit) which has served it well
    but might be beginning to cause problems as
    market demand changes
  • Administrative adaptive cycle strongly defender
    but entrepreneurial dimensions are more
    Analyzer, especially in Retail segment possible
    evidence of misalignment

35
Pilot Testing of Measures
Informant had trouble deciding on paragraph to
choose her 2nd choice would have resulted in
complete agreement
36
Pilot Testing of Measures cont.
37
Pilot Testing of Measures cont.
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