BI Knowledge: Supply Chain Management
Most of us are familiar with the Hans Christian Anderson’s fairytale of the little boy who says out aloud what nobody else dares: “But he doesn’t have anything on!”
BI Norwegian School of Management Associate Professor Marianne Jahre, taking her cue from the fairytale story, goes on to ask whether the managerial concept Supply Chain Management really delivers improved customer service and reduced costs, as claimed by the system’s champions.
A popular managerial concept
Supply Chain Management was used as a concept for the first time in the early 1980s, and has since become one of the most popular managerial concepts throughout businesses and organisations.
The reason for the popularity of the Supply Chain Management concept is of course the potential for saving costs and improve customer service in order to make more money.
“Much of the literature categorically states, while making reference to research and practical experience, that SCM and integration delivers improved results,” explains Marianne Jahre, Associate Professor of BI Norwegian School of Management.
In her view, researchers should delve deeply into the brave new managerial concepts, to see whether they can be ‘disrobed’.
“It is vital to go behind the wall of rhetoric to check out in depth what these concepts really mean.”
Together with her colleague Nathalie Fabbe-Costes (of Université de la Mediterranne-Aix_Marseille II in France), Marianne Jahre wanted to carry out research to find out whether the managerial concept of Supply Chain Management was a modern-day variety of “The Emperor’s New Clothes”.
“One of the problems with logistics/SCM as an academic discipline is that we have ‘tagged along’ behind the consultants for far too long, eager as they are to find new terms and concepts that can be sold to needy businesses. But – all that glitters is not gold,” states Marianne Jahre, researcher at BI.
In their study, the two researchers Marianne Jahre og Nathalie Fabbe-Costes, looked into nine of the highest-ranking magazines in the fields of logistics, SCM and OM (operations management), in order to analyze previously published works dealing with the connection between supply chain integration and financial performance.
Their findings were published as a paper in the International Journal of Logistics Management. The paper was awarded the Outstanding Paper Award Winner at the Emerald Literati Network Awards for Excellence 2009.
Jahre and Fabbe-Costes identified a total of 152 articles dealing with integration and logistics /SCM in the period from 2000 – 2006 in the relevant magazines.
Out of these, there were 38 scientific articles which reported findings related to the connection between integration and performance. A review of the articles show the following: 19 of the 38 studies conclude that the higher the integration, the better the performance, while 12 report more diffuse findings.
This could by and large be seen as relatively sound empirical evidence that integrated supply chains really do deliver improved performance.
The Emperor’s New Clothes?
In their critical review, Jahre and Fabbe-Costes find numerous weak spots in the studies that are used to promote the managerial concept of Supply Chain Management.
“Although 50% of the studies conclude that there is a connection, their methods and goals show such weaknesses that we have to question the results,” underlines Jahre.
In other words, the researches found that the so-called evidence behind the near-universal truth that integration improves performance cannot be taken for granted.
Fabbe-Costes, N. and Jahre, M. (2008): Performance and Supply Chain Integration – a review of the empirical evidence, International Journal of Logistics Management, Vol.19 Issue 2, 130-154. Outstanding Paper Award Winner at the Emerald Literati Network Awards for Excellence 2009.
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