Annals of the University of Oradea: Economic Science (Jul 2014)
AN EXPLORATORY APPROACH TO INTEGRATION OF BUSINESS PRACTICES IN SUPPLY CHAIN MANAGEMENT
Abstract
Literature on supply chain management focuses increasingly on the topic of supply chain integration. Morash and Bowersox (1989) show that integration links relationships, activities, functions, processes and locations. Integration links a firm with its customers, suppliers and other channel members. The empirical research brings supporting evidence on the theory that organizations achieve the desired competitive advantage only by focusing on one strategy – either collaborative closeness or operational excellence. Wang, Tai and Wei (2006) have developed a virtual integration theory in supply chains. According to them supply chain integration makes the chain agile, allowing a flexible and timely response to disturbances in the environment. Integration, show the above mentioned authors, involves (a) collaborative operation execution, (b) collaborative process planning & control and (c) supplier responsiveness. Collaborative operation execution and planning & control are operationalized through modern IT solutions linking partners throughout the supply chain. Supplier responsiveness reflects the extent to which a supplier meets customer requirements. Evidence shows that the greater the environmental volatility, the greater will be the extent of virtual integration in a supply chain. In the process of creating new value for consumers, the overall output in the supply chain is maximized through collaboration among supply chain members and integration of the key business processes. After reviewing the literature on supply chain integration, present paper proposes an exploratory analysis of the measurement model corresponding to logistics integration. A Romanian dataset of 21 firms from various industries, covering all levels of a supply chain, from production to commerce is used to conduct a principal factor analysis to test for (a) content validity, (b) substantive validity, (c) uni-dimensionality and (d) reliability of scales used to measure integration in supply chains. Also the principal component analysis is used to forecast both dependent and independent variables subsequently used in an OLS estimation of the relationship between supply chain integration and performances in Romanian supply chains. Results support the conclusion that Romanian supply chains focus on a strategy of operational excellence.
