Handbook of Global Supply Chain Management

John T. Mentzer, Matthew B. Myers, Theodore P. Stank

• Publisher: SAGE Publications, Inc
• Year: 2006
• Print ISBN: 9781412918053
• eBook ISBN: 9781506319568
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

This state-of-the-art Handbook provides a comprehensive understanding and assessment of the field of global supply chain management (GSCM). Editors John T. Mentzer, Matthew B. Myers, and Theodore P. Stank bring together a distinguished group of contributors to describe and critically examine the key perspectives guiding GSCM, taking stock of what we know (and do not know) about them.   

Key Features:

• Identifies emerging developments and delineates their significance to the practice of GSCM
• Examines many methods and perspectives on GSCM that have emerged from logistics, operations, marketing, management, economics, sociology, personnel, information systems, and international relations
• Employs top flight international contributors from both academia and practice who share their unique perspectives and insights within the broad parameters of this volume  

Intended Audience: The Handbook is a valuable resource for graduate students, researchers, and parishioners alike, bringing clarity and comprehensive insight to the phenomenon of global supply chains and to their management.

1

Why Global Supply Chain Management?

John T. Mentzer

Theodore P. Stank

Matthew B. Myers

The term supply chain management (SCM) has risen to prominence over the past 15 years, becoming such a “hot topic” that it is difficult to pick up a periodical on manufacturing, distribution, marketing, customer management, or transportation without seeing an article about SCM-related topics. Logistics, one central element of SCM, has long been an area of concern for both practitioners and academics. In fact, the professional association for logistics and SCM professionals—the Council of Logistics Management, which changed its name in 2005 to the Council of Supply Chain Management Professionals (CSCMP) to encompass the broader management area of SCM—holds an annual conference that often draws more than 4,000 participants. Furthermore, every company today either sources globally, sells globally, or competes with some company that does. Thus, global supply chain management (GSCM) represents a central area of focus for many businesses and business schools today.

Although the extraordinary growth of GSCM attests to its robustness and practical importance, the field is diffuse and complex. Many methods and perspectives on GSCM have emerged from logistics, operations, marketing, management, economics, sociology, personnel, information systems, and international relations. Their diversity and rapid growth make it hard to keep abreast of significant developments. Moreover, many of these approaches have evolved with relative independence, paying little attention to how they relate to existing methods or interrelate with each other. This makes it difficult to accumulate wisdom in the field and to develop a coherent knowledge base to guide research and practice.

Thus, this handbook is aimed at providing a comprehensive understanding and assessment of the field of GSCM. In each chapter, the authors describe and critically examine the key perspectives guiding GSCM, taking stock of what we know (and do not know) about them. They identify emerging developments and delineate their significance to the practice of GSCM. The chapters are not intended to be exhaustive summaries of all the relevant literature and research, but emphasize basic knowledge and understanding of the field. They pay particular attention to identifying connections among methods and perspectives and exploring how they contribute to integration of knowledge in GSCM.

The handbook maps the broad terrain of GSCM from multiple viewpoints seeking to explain what is already known, what new developments are occurring, and how different methods and approaches are interrelated. For each chapter, we tried to select the most knowledgeable and prominent practitioners and scholars in the global arena to represent the key perspectives in the field. These contributors share their unique perspectives and insights within the broad parameters of this handbook. The result, we believe, is a handbook that offers a comprehensive, yet in-depth, examination of GSCM. Thus, it is intended for all relevant audiences in GSCM. For researchers, the handbook provides a broad inventory of what is currently known about GSCM and identifies significant knowledge gaps and issues that need to be addressed. It provides a fertile ground for future research. Advanced students should use the handbook to gain a solid foundation in GSCM. It will help them understand and appreciate the multiple perspectives that guide the field and show them where GSCM is likely headed. For thoughtful practitioners, the handbook provides a valuable reference and source of ideas and methods for developing organizations. It also provides them with conceptual frameworks for understanding GSCM practice and for creating new methods and techniques.

About Global Supply Chain Management

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The current trend toward the globalization of supply chains renders many managers confused as to what globalization really means. Often, the term is little more than a battlefield of semantics, of little value to the individual tasked with managing value creation and cost reduction processes in the movement of goods. Clearly, globalization infers the cross-border movement of goods and the emergence of global competitors and opportunities across competing supply chains within an industry. Managers, however, often question the differences between a global market and a single market, in that many of the same conditions exist in both. Although this may be true, the complexities of cross-border operations are exponentially greater than in a single country, and the ability to compete in the global environment often depends on understanding the subtleties that emerge only in cross-border trade—that is, in GSCM.

Why do so many people spend so much time thinking, writing, and doing GSCM? The answer is that it is a considerable source of competitive advantage in the global marketplace. The fierce competition in today’s markets is led by advances in industrial technology, increased globalization of demand and supply sources, tremendous improvements in information availability, plentiful venture capital, and creative business designs (Bovet and Sheffi 1998). In highly competitive markets, the simple pursuit of market share is no longer sufficient to ensure profitability, and thus, companies focus on redefining their competitive space or profit zone (Bovet and Sheffi 1998). For example, companies pursue cooperative relationships to capture lifetime customer share (as opposed to mass market share) through systematic development and management of cooperative and collaborative partnerships (Gruen 1997). Markets have been changed by factors such as power shifts from corporate buyers to end users, the requirement for mass customization, emergence of global consumer segments, time- and quality-based competition, improvements in communications and information technology, increasing knowledge intensity, and changing government policies.

Power in a broad spectrum of supply chains has shifted downstream toward the customer or end user (LaLonde 1997), and as a result, customer satisfaction becomes the ultimate goal of a company. As the customer increasingly is in charge in the marketplace, interfirm cooperation is critical to satisfy customers. Manufacturers and their intermediaries must be nimble and quick or face the prospect of losing market share, and thus, relationships and predictable performance become very important in a supply chain (LaLonde 1997).

Mass customization provides a tremendous increase in variety without sacrificing efficiency, effectiveness, or low costs (Pine 1993). In other words, customers want low cost with high levels of service and customization with availability (Bovet and Sheffi 1998). Pine (1993), therefore, argues that mass customization can be achieved only through the committed involvement of employees, suppliers, distributors, retailers, and end customers.

Firms are competing in a global economy, and thus, the unit of business analysis is the world, not just a country or region. The communications revolution and globalization of consumer culture will not tolerate hand-me-down designs or excessive delivery times (Bovet and Sheffi 1998). In this context, Kotler (1997) states, “As firms globalize, they realize that no matter how large they are, they lack the total resources and requisites for success. Viewing the complete supply chain for producing value, they recognize the necessity of partnering with other organizations” (p. 72).

Time- and quality-based competition focuses on eliminating waste in the form of time, effort, defective units, and inventory in manufacturing-distribution systems (Larson and Lusch 1990; Schonberger and El-Ansary 1984; Schultz 1985). In addition, there has been a significant trend to emphasize quality, not only in the production of products or services but also throughout all areas in a company (Coyle, Bardi, and Langley 1996).

LaLonde and Powers (1993) suggest that the most profound and influential changes that directly affect companies are information technology and communications. With the advent of modern computers and communications, monolithic companies, which had become highly bureaucratic, started eroding. Fast communication that links all members of a company decreased the need for multiple layers of people who were once the information channel and control mechanism. The decreased cost and ready availability of information resources allow easy linkages and eliminate time delays in the network (LaLonde and Powers 1993).

In the new competitive landscape, knowledge (information, intelligence, and expertise) is a critical organizational resource and is increasingly a valuable source of competitive advantage (Hitt, Ireland, and Hoskisson 1999). Similarly, LaLonde and Powers (1993) characterized the 1990s as the era of reassembly or reintegration after that of disintegration. Current reintegration is based not on position or prescribed roles in a hierarchy; it is based on knowledge and competence (LaLonde and Powers 1993). Bringing together the knowledge and skills to effectively serve the market requires coordination (Malone and Rockart 1991).

Finally, government policy may encourage cooperative strategies among firms. The U.S. 1996 Telecommunications Act and subsequent court battles have created significant uncertainty for the firms involved; consequently, a significant number of alliances have emerged (Hitt et al. 1999). The enactment of the U.S. National Cooperative Research Act of 1984, as amended in 1993, eased the U.S. government’s antitrust policy to encourage firms to cooperate with each other to foster increased competitiveness of American industries (Bowersox and Closs 1996; Barlow 1994).

Today’s business environment puts stress on both relations with customers and the service provided to such customers (Hitt et al. 1999). Kotler (1997) argued, “Customers are scarce; without them, the company ceases to exist. Plans must be laid to acquire and keep customers” (p. 109). The level of competition to capture customers in both domestic and international markets demands that organizations be quick, agile, and flexible to compete effectively (LaLonde 1997; Fliedner and Vokurka 1997). This level of flexibility cannot be obtained without coordination of the companies in the global supply chain.

Arguably, SCM has risen to prominence from its beginnings in the logistics management literature (Cooper, Lambert, and Pagh 1997). The CSCMP (2005) defines logistics management as

that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements. (para. 3)

This definition tells us that logistics management involves all the movement and storage activities that are associated with product and service flows. It is focused on what we call the “focal organization,” that is, on managing that organization’s inbound and outbound flows of goods, services, and related information. We can imagine that “related information” encompassing inventory quantities and locations, order status, shipment status and location, transportation status and vehicle location, and so on. But what about information that flows up and down a supply chain that is not related to the flow of goods and services? Information on marketing plans, advertising effectiveness, pricing structure, product management status, ownership and title, and financial status do not seem to be within the realm of logistics. For that matter, what about actual financial flows?

There are clearly flows up and down the global supply chain that are not part of the CSCMP definition of logistics management. CSCMP acknowledges that SCM is something more than logistics management by stating that “Logistics Management is that part of Supply Chain Management that…” So, SCM must encompass logistics management and these other flows mentioned above.

It was this realization that led the Supply Chain Research Group at the University of Tennessee (Mentzer 2004) to define SCM as

the systemic, strategic coordination of the traditional business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole. (p. 22)

Unlike logistics management, which focuses on the inbound and outbound flow of products, services, and related information from a focal organization’s perspective, this definition leads us to the conclusion that SCM is a management process that deals with inbound and outbound flows, from the perspective of the focal organization, its suppliers, and its customers. This means a fundamental aspect of GSCM is the consideration of not just the cost and profit goals of one company (the focal organization) but of all the companies involved in managing the global supply chain.

About the Handbook

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Given these definitions of the scope of GSCM, this handbook is divided into five major parts: (1) “Understanding Global Supply Chains,” (2) “Managing the Functions,” (3) “Resource Management,” (4) “Managing the Relations,” and (5) “Making It Happen.” Each part is summarized in the following pages.

Understanding Global Supply Chains

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Understanding the environment in which the firm will operate is critical to strategy development and implementation. Nowhere is this truer than in the global environment. The chapters in this part address the following areas essential to understanding global supply chains: global supply chain management strategy, assessing the global environment, value and customer service management, demand management, knowledge management, and process orientation.

Chapter 2: Global Supply Chain Management Strategy

In this chapter, the strategic management literature is reviewed to provide an underpinning for GSCM strategy (GSCMS). In addition, literature from logistics, operations management, purchasing/procurement, and marketing are reviewed to specify external environmental characteristics and internal processes and capabilities that are critical to establishing a sustainable competitive advantage through GSCMS.

Chapter 3: Assessing the Global Environment

Since 9/11, the pressures on supply chain managers have intensified, given new security concerns and the ensuing transportation delays that come with increased customs scrutiny. This—coupled with previously existing political, cultural, and economic variance across markets—has contributed to the stress supply chains feel when trying to meet delivery and service expectations, both at home and abroad. Perhaps not coincidentally, security crises arrived simultaneousl...

Table of contents

• Cover Page
• Title page
• Copyright
• Contents
• Preface
• 1. Why Global Supply Chain Management?
• PART I: UNDERSTANDING GLOBAL SUPPLY CHAINS
• PART II: MANAGING THE FUNCTIONS
• PART III: RESOURCE MANAGEMENT
• PART IV: MANAGING THE RELATIONS
• PART V: MAKING IT HAPPEN
• Name Index
• Subject Index
• About the Editors
• About the Contributors