8/8/2019 13B SCM Assignment
1/21
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
8/8/2019 13B SCM Assignment
2/21
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
8/8/2019 13B SCM Assignment
3/21
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
8/8/2019 13B SCM Assignment
4/21
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
8/8/2019 13B SCM Assignment
5/21
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
8/8/2019 13B SCM Assignment
6/21
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
8/8/2019 13B SCM Assignment
7/21
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
8/8/2019 13B SCM Assignment
8/21
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
8/8/2019 13B SCM Assignment
9/21
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
8/8/2019 13B SCM Assignment
10/21
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..
8/8/2019 13B SCM Assignment
11/21
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.
8/8/2019 13B SCM Assignment
12/21
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.
Review Strengths and Weakness
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.
8/8/2019 13B SCM Assignment
13/21
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.
8/8/2019 13B SCM Assignment
14/21
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.
8/8/2019 13B SCM Assignment
15/21
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
8/8/2019 13B SCM Assignment
16/21
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
8/8/2019 13B SCM Assignment
17/21
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.
8/8/2019 13B SCM Assignment
18/21
Key Concept Outlined in the Research Paper
The IKEAs Staircase model
8/8/2019 13B SCM Assignment
19/21
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.
8/8/2019 13B SCM Assignment
20/21
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.
Review Strengths and Weakness
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.
8/8/2019 13B SCM Assignment
21/21
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.
i