13B SCM Assignment

8/8/2019 13B SCM Assignment

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Journal Paper Review

Submitted to:-

Prof. Samir Kumar Srivastava

Advanced Course in Logistics and

Supply Chain Management

Group -13 BPGP/25/133 Krishna KUMAR

IEP/11/019 Madeleine BLIN

IEP/11/020 Perrine BASSET


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Towards a theoretical toolbox forstrategic sourcing

Christopher L. Shook, Garry L. Adams and David J. Ketchen Jr

Department of Management, Auburn University, Auburn, Alabama, USA, and

Christopher W. Craighead

Supply Chain Management Program, Auburn University, Auburn, Alabama, USA


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Synopsis

The ability to fully exploit the potential of internal as well as

external sources is closely related to the sourcing

management capabilities of a company. Sourcing deals with

entities that come from various internal and external

sources. In that environment, there is great potential for

problems with integration, communication and co-

ordination, and conflicting directions. The article offers a

conceptual framework that regards sourcing as a strategic

function of a company.

The goal of this paper is to provide a broad foundation for

further research in the area of strategic sourcing. By viewingstrategic sourcing through multiple theoretical lenses

(writers have taken 10 organisational theories), each

offering unique insights.

The authors by viewing strategic sourcing through the lens

of ten organizational theories, this research provides

multiple insights into many interrelated strategic sourcing

questions, such as when to Make, Buy or Ally, how many

and which suppliers, and how to manage sourcing

relationships. The paper offers a rich and diverse foundation

to foster future theory-building activities in sourcing and

supply management research.

The authors brings out different organisational theories

which are often conflicting and tries to drive a discussion

which would be a source for further research. From a

practical perspective, the paper offers a conceptual frame

for managers as they make strategic sourcing decisions.

Thus we believe that review of the paper will equip us learn

sourcing decisions from different perspectives and broaden

our approach studied in classroom

Major Decisions in Strategic Sourcing

Objective

To study how strategic sourcing decisions are

made based on Organisational theories.

To understand the competing and/or

complementary theory bases and to possible

insights into many strategic sourcing questions

such as when to make, buy or ally

Strategic Sourcing

Make Buy Ally


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Introduction

In todays competitive business scenario, the market decides the price of the product and hence

the profit of any organization depends on controlling the cost of operations. In most of the

manufacturing organization, 60% to 70% of the cost is spending on the procurement function.Hence, there is a significant opportunity in improving the bottom line through Strategic Sourcing

i1

Strategic Sourcing is a comprehensive process designed to pursue all value levers by leveraging a

companys buying power with select suppliers, conducting best price evaluations, sourcing

globally and conducting company/supplier joint process improvements

The strategy is to shift the companys focus from the current transaction oriented independentbuying of goods and services to a product oriented strategic approach.

The Strategic Sourcing approach is designed to:

drive reduction in total cost of acquisition of goods and services

drive a thorough understanding of both the supply market and internal company

requirements

deliver significant earnings to bottom line

deliver improved value to all

Motivation

The basic motivation for the study of the research paper Towards a theoretical toolbox for

strategic Sourcingis to see how organisational theories can be applied to different firms making

their strategic sourcing decisions.

The paper is unique in itself as the paper outlines ten different organizational theories which are

very pertinent in todays business scenario.

The relevance is more important as the margins in various business in Telecom, Manufacturing

and other business have declined drastically declined as thus firms wants to leverage low cost

sourcing and their supplier- firm relationship is more into focus now.

1http://www.iimm.org/knowledge_bank/4_strategic-sourcing.htm


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Key Concepts Outlined in the Research Paper

Institutional theory

External forces pressure firms to

behave in certain ways and not

behave in others

Avoid fads. Firms should use a sourcing

approach only if the approach matches thefirms strategy, not just because the

approach is used by others

Resource dependence theory

Firms seek to become less

dependent on others for resources,

and to make other firms more

dependent on them

Make when the resource is important and

there are few sources Buy when the

resource is unimportant and there are many

Sources Ally when the resource is important

and there are several sources Enhance the

dependency of suppliers and alliance

partners

Network theory

Managing inter-organizational

relationships is central to success

Choose suppliers that are central to the

network

Systems theory

Organizations are best viewed as

part of an interwoven and

intertwined system

Multiple sources should be sought in

complex and uncertain environments

Resource/knowledge-based views

of the firm

Unique assets and capabilities are

the source of enduring competitive

advantages

Do not outsource capabilities that create

competitive advantage Buying and alliances

may be vehicles for obtaining Capabilities

Pick sources with complementary

capabilities

Transaction cost economicsFirms should make decisions that

minimize costs

Buy when transaction costs are less than

production costs

Agency theory

When one firm delegates

responsibility to another, the first

firm must monitor the second or risk

opportunistic behavior

The costs of monitoring agents are part of

the transaction costs Buy when transaction

costs are less than production costs

Strategic choice theory

The decisions managers make about

strategic issues are the primary

driver of firm performance

A firms strategy should drive decisions

about whether to make, buy, or ally

Socio-cognitive theory

The interpretations managers make

of events and trends are the primary

driver of their decisions

Decisions about whether to make, buy, or

ally are shaped by past practices Firms with

a strong identity will tend to make rather

than buyor ally

Critical theory

Commerce has been a means for the

powerful and privileged to exploit

others for their own gain

The make, buy or ally decision should be

guided by how best to improve society

Suppliers and employees should not be

exploited Choose providers that have been

historically exploited and alienated

Theoretical perspective Key premise Key insights for sourcing


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Scope of the Study

From a research perspective, the paper discusses a schema to foster future theory building in

sourcing research. By viewing this research area through the lens of ten organizational theories,

the journal paper provided a rich and diverse conceptual frame for future research. Thisconceptual frame goes well beyond simply being one theory for one future study. Indeed, each

of these organizational theories could be utilized as a foundation for a single study or even a

series of studies. However, in some cases, multiple theoretical perspectives may be used to

enhance possible insights into strategic sourcing questions such as when to make, buy or ally.

Review Strengths and Weakness

The paper outlines and envelops the organisational theories in supplementing the sourcing

decisions of the Supply chain management.

Strengths

Presents an excellent framework of providing an overview of how organisational theories can

be used for the designing and implementations of sourcing decisions.

Gives ten different perspectives on how a company should make its sourcing decisions.

Provides better incentives for a further research in this area.

From a practical perspective, we believe the paper offers a conceptual frame for managers as

they make strategic sourcing decisions.

By utilizing well-established organization theories, the authors have offered managers ten

good theories to aid in decision making relative to strategic sourcing.

Weakness

The paper doesnt present a comparative view of the several of the organisational theories

and doesnt present relative advantages of each organisation theory.

In addition to complementary views among the theoretical bases, many of the theoretical

bases may be contradictory. For example, the resource-based view indicates that firms should


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not outsource commodities that are inherent in capabilities contributing to competitive

advantage. Transaction cost economics (TCE) indicates that we should outsource

commodities that have lower transaction costs than production costs.

The paper also doesnt make clear the industries in which one organisational theory is better

than the other.

As there is a growing concern of the Financial Supply Chain the paper should also include the

effects of the various aspects on the financial numbers like ROC, ROE etc. This aspect must be

included in the paper or can be extended in further research.

Managerial Implications

From a practical perspective, the paper offers a conceptual frame for managers as they make strategic

sourcing decisions. By utilizing well established organization theories, we believe that the paper offered

managers ten good theories to aid in decision making relative to strategic sourcing. Although empirical

investigation should be used to support/extend the conjectures laid forth in this paper, we believe the

paper offers a foundation for possible actions by managers.

Also, these theories allow managers to recognize the current situations (i.e. how things are)

departs from what the conceptual frame prescribes (i.e. how things should be) and perhaps even

how to close the gap.

In some cases, the theoretical base, such as transaction cost economics, may describe current

strategies, whereas others, such as network theory, may prescribe alternate future strategies

Reflections to actual Industry An Indian Perspective

It appears that some companies in India are following the suggested insights of the theories. For

example, Pepsi/ITC E-Choupal appears to be adhering to the concepts put forth by critical

theory.2

Pepsi/ITC cultivates stable relationships with farmers by paying premiums, establishing long-term

contracts, providing affordable credit, and investing in social projects in communities.3

2http://www.itcportal.com/sustainability/lets-put-india-first/echoupal.aspx


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BILT a paper producing is also following the same trend. Zuari fertilizers a strong leader in

fertilizer in western India also have strong relationship with farmers through credit and seed

lending.4

Suggestions

Inclusion of financial perspective will add more value to the research as there is growing

integration of financial and physical supply chain as discussed in the class

The paper should have discussed the conflicting attributes of the various organisational

theories.

Extended to include the industry perspective i.e. which industry should focus on which type oforganisational theory.

Must include the implementation strategy for various theories.

3http://pepsicoindia.co.in/CSR/replenishingwater/paithan.aspx

4http://www.ifc.org/ifcext/rmas.nsf/AttachmentsByTitle/BILTmonitor/$FILE/BILTFarm.pdf


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Supply management ethicalresponsibility:

reputation and performance impactsReham A. Eltantawy

Marketing and Logistics Department, Coggin College of Business, University of North Florida, Jacksonville, Florida,USA, and

Gavin L. Fox and Larry GiuniperoMarketing Department, The College of Business, Florida State University, Tallahassee, Florida, USA


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SynopsisSupply chain management has received insufficient coverage

in the past. Although the companies can no longer avoid a

corporate social responsibility. Nowadays lot of companies

started to integrate and avocate a Supply Management Ethical

and Responsible.

However theres still a lack about the way to measure the

weaknesses and the strengths of the ethical policies in a com-

pany and a lack of empirical researches .

The articles approach is first to raise up an equation SM

modelling, a sample of 162 purchasing provides the data

survey in order to go through different type of ethical

business.

Then 6 hypothesis are pointed out :

-Higher levels of strategic supply management skill have asignificant positive impact on SMER.

-Higher levels of SMER have a significant positive impact

on the supply managements perceived reputation.

-Higher levels of SMs perceived reputation have a

significant positive impact on SMs performance.

-Higher levels of strategic SMs skills have a significant

positive impact on SMs perceived reputation.

-Higher levels of SMER have a significant positive

-Higher levels of strategic supply management skills have

a significant positive impact on SMs performance

impact on SMs performance.

As a result its highlight that by making better the reputation of

a company, by the use of SMER there is a very positive impact

Objective

The purpose of this paper was to empirically

test a conceptual model of the impacts of

strategic skills, SMER, and perceived SM

reputation..


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on the performance .The author point out that the firms should

not ignore the SMER because according to the study it may

provide optimal adavantages.

Introduction

The current and trendy initiatives for companies stand in the challenge to be aware about

the social and environmental impact of their supply chain base.

Actually there is a lot of green issues that companies have to tackle with, thats why

everybody is expecting from business companies to improve their involvement in ethical and

social responsibility. For several years now a raise of a new way to make business had been

observed.

In fact over the past decade companies have become more aware of the need to address

Corporate Social Responsibility issues surrounding supply chains and practical guidelines. In broad

terms, the main objective of having a CSR supply chain management policy is to provide the

opportunity for companies to influence the practice and performance of their suppliers - large

and small - to deliver environmental improvements in their product or service.

This article allows us to understand the perspective on how social responsibility is

currently perceived by the global business community, how it is defined and measured.

Motivation

In the increasingly conscience-focused marketplaces of the 21st century, the demand for more

ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is

applied on industry to improve business ethics through new public initiatives and laws.

The main motivation is to study the strategy, the metrics and what corporate sociability

actually means, how companies are tackling those issues, tha paper tackles it by modeling the

ethics in Supply Management.


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Key Concepts Outlined in the Research Paper

> Business ethic

> Social responsibility

> Strategic supply management performance

> The importance of a good reputation

> A strong management implication

Scope of the Study

Without a basic CSR generated ethical framework companies lack the ability, the management

focus, and the necessary ground rules for dealing with adverse behaviour in their supply chains

which can potentially create great damage to the economic viability, operations and reputation

of every company. Taking responsibility for the management of an ethical supply chain that

extends to a corporation's supplier community is an important shift in thinking that has great

importance to companies and to the global economy because it marks an important new mindset

for modern corporations. Thats why its important to study deeply the way the SME strategy is

applied. It is a theorisation of the Ethics in suplly chain management.


Strengths

Good presentation of what is the ethical behaviour in the supply chain with a well

developed theoretical background.

Explication of the duties of the supply chain manager.

Outlines the social responsibilities of the current companies.

Give lot of examples taken from studies.


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Distinguish the term of business ethic and social responsibilities

Explain the influence of the environment

A deep hypotheses research.

The link between SM and the others functions of a company is well explained and the role

of the SM skill too.

A support analysis with figures.

Empirical vision.

Weakness

A unique empirical model

The study relies on cross-sectional and self-report measures.

The use of single informants in the study.

References to nineties theory ,they could have been more relevant

Data collected from a unique supply chain model.

Managerial ImplicationsNowadays an ethical company isnt enough anymore, even the supply chain should be ethically

responsible. Thats why even the management should be influenced by the ethic and social care.

Supply chain and sell management is a competitive atmosphere where sellers desire to win multi

million dollars contracts. Thats why supply chain managers have to adapt their selling techniques

to ethical selling techniques. No one company could ignore the benefit from an ethical policy inbusiness. It is as performing even more.

Managers are completely aware of their social duty. They follow sustainable priorities now.


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Reflections to actual Industry An European Perspective

In Europe all the companies, in a social and ethical care, has developed a new way of

management. Actually lot of the enterprise especially the big company, created a new function

added to Human Resources or marketing, its the Sustainable Development district.

Most of the companies are looking for a reward for being ecofriendly and having a strong social

policy in the management.

Unilever for instance is strongly committed to the ethical fights. Moreover Unilever advocates his

social policy by having a strong diversity inside the group, by always using ecofriendly materials

for instance....

This kind of patterns rose up after everybody started to be aware about the environment issues,

and also when globalisation became important encouraging a strong diversity in the work market.

An ecofriendly enterprise is a strong consumer insight.

SuggestionsThe paper should have discuss the ethical supply chain management by making a parallel with,

what is already done and what should have be done.

Moreover, it should have outline that its different according to the country the company is

implemented.

Actually the social policy adaptation is sometime, something cultural.

Furthermore give examples with well known company whom has adopted the social mangement

would have been judicious.

Moreover a part about the legal side with the applicable laws, regulations and trade agreements

would have been interesting.

Lastly notified us about the professional competence with the special skills of a manager who

wants have a ethic pattern would have been a good thing.


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Corporate social responsibility in globalsupply chains

Mette Andersen

Danish Commerce and Companies Agency, Copenhagen, Denmark, and

Tage Skjoett-Larsen

Department of Operations Management, Copenhagen Business School, Copenhagen, Denmark

Corporate social responsibility in global supply chains


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Synopsis

Supply chain management is an area of increasing strategic

importance due to global competition, outsourcing of

noncore activities to developing countries, short product life

cycle, and time compression in all aspects of the supply

chain. (Skjtt-Larsen et al., 2007).

Moreover, various stakeholders are showing an increasing

interest in environmental and social issues related to

international business.

However, despite many multinational corporations efforts

to implement social and environmental issues in their

supply chains, it exists a gap between the desirability of

supply chain sustainability in theory and the

implementation of sustainability in supply chains in practice.

Many business relations are changing and CSR is no longer

the individual companys domain; increasingly, it

encompasses the entire supply chain. This paper aims to

present a conceptual framework for analysing CSR practices

in global supply chains.

The goal of this paper is to provide an understanding of how

CSR practices are implemented in a specific firm, in this

case, the Swedish home furnishing retail chain IKEA. Thus,

the CSR practices at IKEA are shown through three parts:

introducing a code of conduct, implementing a code of

conduct and educating and encouraging the actors involved.

Therefore, even if the conclusions drawn from IKEA cannot

be generalized directly to other companies its CSR practices

can serve as inspiration for other companies that are

considering adopting corporate codes of conduct.

Contingency factors influencing CSR in

supply chains

CSR insupplychains

knoledgeenhancing

mechanisms

Film specificassets

Corporatehistory

Knowledgecontroliing

mechanisms

Objectives

Understanding how CSR is relatedto global supply chains;

Highlighting the driving forcesbehind the development of CSR inglobal supply chains;

Underscoring how CSR practices areimplemented and managed in aspecific multinational corporation;

Emphasising what are the mostimportant contingency factors inrelation to CSR practices in global

supply chains


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Introduction

In todays competitive business scenario, multinational companies can use the supply chain as a

competitive advantage. Indeed, todays competition has moved from competition between firms

to competition between supply chains (Christopher, 2005). Stakeholders are paying more and

more attention to the supply chain management and to its willingness to take into account the

Corporate Social Responsibility. Many multinationals, such Nike or Gap, have paid the price of

their carefreeness in the supply chain management. Nowadays, companies have to be aware of

their suppliers practices.

Thus, to avoid issues due to the supply chain, an increasing number of companies have

implemented environmental annual reports, sustainability strategies, and voluntary codes of

conduct. It is even becoming obligatory in some countries for stock exchange companies to

produce sustainable development report.

However, despite the willingness to implement sustainable strategy in their supply chain through

code of conduct, companies face many problems to implement them in practice.

IKEA is a very interesting study case, and best practices can be used by other companies in need

of inspiration to implement CSR in their supply chains. IKEA has created its own code of conduct:

IWAY, the IKEA Way on Purchasing Home Furnishing Products.

Motivation

The basic motivation for this study case is to give a concrete example of a firm which is successful

in implementing CSR in its supply chain. Indeed, many multinational companies desire to

implement best practices in their strategy and would like to be more implied in the social andenvironmental respect of the supply chain. However, there is often a gap between the ethical

standards expressed and the actual conditions at the suppliers. Giving the example of IKEA is a

good way to show that it is possible to make profit and to be a responsible firm.


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Key Concept Outlined in the Research Paper

The IKEAs Staircase model


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Introduction of code of conduct

Ikea established a code of conduct IWAY which defines what suppliers can expect from Ikea and

what IKEA requires from its suppliers with regard to working conditions, child labour, and

environment and forestry management. IWAY includes 19 different areas divided into more than

90 specific issues. IKEA created its own model, the staircase model which is a four step approach

to improve suppliers overall performance in 3 axes:

1) Outside environment

2) Social and working conditions

3) Wooden merchandise

Implementing the code of conduct

IKEA has established a clearly defined set of procedures for implementing IWAY at suppliers,

which are followed by all the trading areas. The company is in control of the entire process. To

make sure that the implementation will be possible, IKEA choose suppliers which will be positive

toward the environmental and social issues. Then, an audit is conducted and issues are noted in

an audit report, they have to be improved in the next 24 months. IKEA has a strategy of engaging

long term relationship with its suppliers, thus it helps them to respect the IWAY.

Educating and encouraging the actors involved

IKEA believes that educating its employees is the best way to implement IWAY. It offers many

courses related to production-related environmental and social issues, audit techniques, local

environmental regulations and local culture and language. Besides training, employees involved

in IWAY can share their experiences with auditors. They are aware and conscious about all the

process and can explain it to the suppliers. Even the suppliers can be trained by IKEA to be more

efficient.

IKEA has found a way to establish long term relationship with its suppliers which is the most

important point to introduce the CSR in the supply chain.


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Scope of the Study

The paper gives a practical example which goes beyond a purely theoretical study. It points up

the importance of embedding a global strategy which takes the whole process into account. It

also points out the limits of the IKEA case.


Strengths

Presents an excellent framework of how a company could implement CSR practices in its

supply chain through a very good example

Presents a good summary of how CSR is related to global supply chain

Underlines the importance of embedded the strategy to the entire process

Gives a great literature review of the sustainability in the supply chain and the Corporate

social responsibility

Weakness and suggestions.

This paper only includes the experiences and practices of one company which is a

multinational company but SMEs are the most numerous type of enterprise. Further case

studies are necessary in order to find out, which contingency factors influence the

organisation of CSR practices in supply chains in general.

The practices have been analysed from the perspective of a focal company but the

implementation of codes of conduct depends to a large extent on the willingness of suppliers

to adopt CSR requirements in their own organisation.

It would be also necessary to look at the entire process. Suppliers also have to make sure that

their suppliers are involved in the respect of the CSR, and so forth.


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Managerial Implications

The IKEA study case can offer some best practices and companies could inspire themselves

through this example. Indeed, supply chain management has moved from an operational

perspective, concerned mostly with purchase prices, quality issues, and sourcing reliability, to a

strategic perspective with a focus on long-term relationships with strategic suppliers. Thus

multinational are not only responsible for sound environmental and social practices within their

own premises, but also for the environmental and social performance at their suppliers, and

ultimately for the entire supply chain. Practising CSR in supply chains requires that CSR is

embedded with the entire organisation. It has to be disseminated to all functional areas,

subsidiaries abroad and offshore suppliers.

Reflections to actual Industry

It appears that more and more companies are willing to implement CSR practices in their global

supply chains. First of all, it allows them to increase their competitive advantage; and moreover

the stakeholders are more and more watchful about their practices. It can cost them a lot if a

scandal explodes. Nike and Gap, for example, have already paid their lack of attention to their

suppliers. Customers are paying more attention to what they buy and in which conditions the

goods are produced. Every multinationals are producing sustainable development reports. It

seems that they should take some advice from IKEA to implement their corporate code of

conducts.

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13B SCM Assignment