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Strategic Fit ofSupply Chain ManagementInformation Systems:A Multiple Case Study Investigation: 

Strategic Fit of Supply Chain Management Information Systems: A Multiple Case Study Investigation Tim McLaren, MBA, BScEng DeGroote School of Business Hamilton, Ontario, Canada email: mclarets@mcmaster.ca web: http://merc.mcmaster.ca/mclaren

Agenda: 

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

Supply Chain Management Information Systems (SCM IS): 

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 end-customer retailer manufacturer tier 1 supplier supplier’s supplier partners in a supply chain accurate demand information distorted demand information

The Problem: How to Ensure a SCM IS Fits a Firm’s Strategies: 

The Problem: How to Ensure a SCM IS Fits a Firm’s 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 won’t it work for me?' 'Why did Nike’s trial of a best-in-class SCM IS fail?'

Research Questions and Objectives: 

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

Research Methods Alternatives: 

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

Iterative Theory-Building Research (after Eisenhardt, 1989): 

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

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

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.

This Study is at Intersection of Three Important Disciplines: 

This Study is at Intersection of Three Important Disciplines

Strategic Fit of a SCM IS Conceptual Framework: 

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)

Strategic Fit of a SCM IS Conceptual Framework (cont’d): 

Strategic Fit of a SCM IS Conceptual Framework (cont’d) 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)

Emerging Conceptual Model ofStrategic Fit of a SCM IS: 

Emerging Conceptual Model of Strategic Fit of a SCM IS Competitive Strategy Type Level of Supply Chain Integration Supply Chain Management Info. Systems Capabilities Strategic Fit of Supply Chain Management Info. System

Measuring Strategic Fit of a SCM IS: 

Measuring Strategic Fit of a SCM IS Level of Supply Chain Integration Competitive Strategy Type Implemented SCM IS Capabilities Profile 1) Measure:

Measuring Strategic Fit of a SCM IS: 

Measuring Strategic Fit of a SCM IS Level of Supply Chain Integration Competitive Strategy Type Implemented SCM IS Capabilities Profile 1) Measure: Product-Market Domain Success Posture Market Surveillance Market Growth Technology Goals Technology Breadth Technology Buffers Managerial Focus Planning Administrative Structure Control 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

Competitive Strategy Types(after Miles and Snow, 1978): 

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 - ???

Level of Supply Chain Integration(after Moncrieff and Stonich, 2001; Poirier and Bauer, 2001): 

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

Measuring Strategic Fit of a SCM IS: 

Measuring Strategic Fit of a SCM IS Level of Supply Chain Integration Competitive Strategy Type Implemented SCM IS Capabilities Profile Theoretically Ideal SCM IS Capabilities Profile 1) Measure: 2) Determine:

Measuring Strategic Fit of a SCM IS: 

Measuring Strategic Fit of a SCM IS Level of Supply Chain Integration Profile Similarity = Strategic Fit of SCM IS Competitive Strategy Type Implemented SCM IS Capabilities Profile Theoretically Ideal SCM IS Capabilities Profile 1) Measure: 3) Calculate: 2) Determine:

Quantitative Methods: 

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)

Strategic Fit as Distance Between Ideal and Observed Profiles: 

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

Qualitative Methods: 

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?

Preliminary Findings: 

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 firm’s SCM IS Model and measures helped firms in study better understand their strategies and capabilities

Theoretical Model and Case Study Reports Will Answer:: 

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?

Suggestions for Future Studies: 

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

Methodologically Related Studies: 

Methodologically Related Studies Reich, B.H., and Benbasat, I. 'Measuring the Linkage between Business and Information Technology Objectives,' MIS Quarterly (20:1), 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 (24:1), 2000, pp. 81-113. Broadbent, M., and Weill, P. 'Improving Business and Information Strategy Alignment: Learning from the Banking Industry,' IBM Systems Journal (32:1), 1993, pp. 162-179.

References: 

References Research Methodology: Eisenhardt, K. M. 'Building Theories from Case Study Research,' Academy of Management Review (14:4), 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 (12:4), 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.

Research Summary: 

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

Questions or Suggestions?: 

Questions or Suggestions? Level of Supply Chain Integration Profile Similarity = Strategic Fit of SCM IS Competitive Strategy Type Implemented SCM IS Capabilities Profile Theoretically Ideal SCM IS Capabilities Profile

Slide29: 

Level of Supply Chain Integration (Moncrieff and Stonich,2001) -Functional Focus -Internal Integration -Linked Network -Integrated Network -Network Optimization Competitive Strategy Type (Miles and Snow, 1978) -Defender -Prospector -Analyzer -Reactor 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 * Notes: 1) A firm’s 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 firm’s 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 firm’s competitive strategy type and level of supply chain maturity. Profile Similarity = Strategic Fit of SCM IS 1) Measure: 3) Calculate: 2) Determine: Theoretically Ideal SCM IS Capabilities Profile*

Supply Chain Information and Communication Technologies: 

Supply Chain Information and Communication Technologies Many-to-Many Uniqueness of Processes One-to-One One-to-Many Degree of Interorganizational Integration (processes, systems, and data) Loose Tight Standardized Customized Type of Relationship Email / Fax Phone Offline Auction Offline Trade Exchange Third-party Electronic Marketplace eProcurement Hub / Portal Shared Collaborative System EDI Web-based Order Entry Collaborative Portal Collaborative Trading Exchange Web Services EERP/ EAI

Success Factors for a SCM IS: 

Success Factors for a SCM IS

Developing the Survey Instruments: 

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 andamp; results. Replace invalid instruments andamp; repeat pilot tests until panel satisfied with validity of instruments.

Phase I Study Informants and Panel of Experts : 

Phase I Study Informants and Panel of Experts

Insights from Competitive Strategy Dimensions Results: 

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

Pilot Testing of Measures: 

Pilot Testing of Measures *Informant had trouble deciding on paragraph to choose; her 2nd choice would have resulted in complete agreement

Pilot Testing of Measures cont.: 

Pilot Testing of Measures cont.

Pilot Testing of Measures cont.: 

Pilot Testing of Measures cont.