mitigating resisting

Mitigating resisting forces toachieve the collaboration-enabled

supply chainStanley E. Fawcett

Brigham Young University, Provo, Utah, USA

Gregory M. MagnanAlbers School of Business and Economics, Seattle University,

Seattle, Washington, USA, and

Amydee M. FawcettLateral Line Analytics, Woodland Hills, Utah, USA

Abstract

Purpose – The purpose of this paper is to address how companies mitigate existing forces to achievethe collaboration enabled supply chain (SC).

Design/methodology/approach – Seven key theories were used to provide insight into thetheoretical framework for the creation of the collaboration-enabled SC: contingency theory, theresource-based view of the firm, the relational view of the firm, force field theory, constituency-basedtheory, social dilemma theory, and resource-advantage theory. An exploratory cross-sectional surveywas conducted at two different points in time – a six-year period in between. The survey targetedthree different functional areas – logistics, manufacturing, and sourcing – to compare and contrastfunctional perceptions of barriers and bridges to collaboration.

Findings – Companies are beginning to pursue greater collaboration, however, managers are oftenstymied in their pursuit of collaborative business models. The data suggest that the challenge is notthe existence of a single barrier to collaboration, but one of accumulation. As the many resistorsreinforce each other, the change needed to increase collaboration is avoided. To overcome thesechallenges, the findings suggest that a comprehensive and carefully executed collaboration strategy isneeded to help a company profitably deliver high levels of customer satisfaction. Those companiesthat succeed achieve substantial, documentable benefits.

Practical implications – The findings reveal that developing a collaboration-enabled businessmodel is very difficult. Therefore, managers must carefully evaluate their companies’ motivation andreadiness to pursue a collaboration-enabled SC, consider whether they can generate momentum forsustained change, and ascertain whether they can persist when benefits are slow to emerge.

Originality/value – This study is both longitudinal and cross-functional and leads to a betterunderstanding of how to manage, change, and create a collaborative decision-making environment.

Keywords Supply chain management, Channel relationships

Paper type Research paper

IntroductionThe essence of supply chain management (SCM) is that to improve competitiveness,companies need to proactively manage resources beyond their organizational

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1463-5771.htm

The authors wish to thank CAPS Research for its generous financial support of this research.They also acknowledge the assistance and direction provided by the editor and anonymousreviewers to help improve the manuscript.

Mitigatingresisting forces

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Benchmarking: An InternationalJournal

Vol. 17 No. 2, 2010pp. 269-293

q Emerald Group Publishing Limited1463-5771

DOI 10.1108/14635771011036348

boundaries (Dyer and Singh, 1998). That is, well-managed companies possess valuable,but constrained resources and specific, but limited capabilities. Although theseresource advantages may confer a competitive advantage on a firm, most companiesdo not possess the inimitable resources needed to compete as stand-alone entities(Barney, 1991; Dierickx and Cool, 1989; Eisenhardt and Martin, 2000; Newbert, 2007;Rinehart et al., 2008). Competitive dynamics dictate that they work with other membersof the supply chain (SC) who possess vital resources and valued competencies.

To the extent that collaboration helps bring complementary competencies togetherto create customer value, the collaboration-enabled SC becomes an important source ofcompetitive advantage (Fawcett et al., 2008). Automakers Honda and Toyotaexemplify the collaboration-enabled business model. Honda is particularly dependenton its SC, sourcing about 85 percent of the value of its cars from suppliers (Nelson et al.,1998). Both carmakers have developed strong relational capabilities that drive higherthan average economic rents and differential firm performance (Dyer and Singh, 1998).Beyond this anecdotal evidence, research has confirmed that SC collaboration canmake substantive contributions to firm performance in the areas of enhancedproductivity and improved customer service and satisfaction (Dyer, 1996; Hendricksand Singhal, 2003; Hult et al., 2004; Lee, 2004; Rinehart et al., 2008).

However, experience reveals that companies struggle to translate collaborativerhetoric into collaborative reality (Fawcett and Magnan, 2002). Beth et al. (2003, p. 64)noted that “despite years of technological and process advancements, an agile,adaptive SC remains an elusive goal,” suggesting that the challenge lies deeper withinthe fabric of the organization (Parker and Anderson, 2002; Fawcett et al., 2009a).Behavioral issues appear to be problematic. For example, low trust acrossorganizational boundaries exacerbates the human tendency to avoid vulnerabilityand protect potentially idiosyncratic resources, including proprietary information(Fawcett et al., 2009a; McCarter and Northcraft, 2007). Likewise, functionalorganization can easily become dysfunctional silos, which engender turf conflict anddissipate value creation (Anderson, 1982; Barratt, 2004; Moberg et al., 2003; Wong andWong, 2008). These resistant forces are somewhat intransigent and inhibit acompany’s willingness and ability to collaborate.

To summarize, competitive dynamics are motivating companies to seek inter-firmcollaboration opportunities in an effort to build unique value-creation capabilities.Standing in the way are cultural and structural barriers that inhibit these endeavors.More often than not, the resisting forces have proven to be stronger than the drivingforces, resulting in minimal meaningful collaboration. This reality motivates thefollowing question, “Can companies mitigate existing resisting forces to achieve thecollaboration enabled supply chain?”

SC collaboration: a dynamic theoretical modelSC collaboration is a complex phenomenon. Grasping the nuances involved indeveloping a dynamic collaborative capability requires that managers explore theprocesses that promote or hinder collaboration from a variety of theoretical lenses. Keytheories that provide valuable insight are:

. contingency theory;

. the resource-based view (RBV) of the firm;

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. the relational view of the firm;

. force field theory;

. constituency-based theory (CBT);

. social dilemma theory; and

. resource-advantage theory.

Figure 1 combines these theoretical perspectives to present a framework for guidingthe development of a collaboration-enabled SC.

The role of dynamic environmental forcesContingency theory argues that managers must identify sequential, cause-and-effectrelationships among environmental, decision-making, and performance variables(Birkinshaw et al., 2002; Lawrence and Lorsch, 1967; Luthans and Stewart, 1977;Nasrallah et al., 2003; Scott and Davis, 2006; Stonebraker and Afifi, 2004; Wathne andHeide, 2004; Wong and Wong, 2008; Moffett et al., 2008). That is, as the world aroundthem evolves, SC managers must develop a contingent response – a strategy forutilizing the firm’s resources to achieve a sustainable competitive advantage that leadsto above normal returns on investment (Guide et al., 2003; Johnson et al., 2002). Lookingthrough the contingency-theory lens raises two important questions:

(1) What forces in the external environment are changing the competitive rules andthereby mandating a contingent response? The corollary: how are the ruleschanging?

(2) What is the appropriate contingent response?

Figure 1.A theoretical framework

for the creation of thecollaboration-enabled SC

Customerresources andcapabilities

Performance benefits

Improved operationalperformance:

• Lower operating costs• Enhanced customer service

Improved competitiveperformance:

• Return on assets• Sales and market share growth

External driving forces

• Intensifying competition

• Customers demands

• Globalization

• Compressed technology cycles

• An information revolution

• Increasing financial pressures

Supplier resourcesand capabilities Constituency-based resistors:

• Inconsistent performance measures• Inadequate training for new mindsets and skills• Non-aligned strategic and operating policies

Social dilemma resistors:

• Inability or unwillingness to share information• Lack of trust among decision makers• An unwillingness to share risks and rewards

Resisting forces

Resistingforces

Resistingforces

Contingent response

Build a collaborationcapability to leverage

firm resources!

Collaboration

ConnectivityTraining

CustomerfocusSupp

lierd

evel

opm

ent

lead

ership Enablers

Strategyexecution

Dif

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stra

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For managers, the key is to recognize the environment is changing and then correctlyidentify the forces driving the changes and their influence on competitive strategy. Asthey evaluate their companies’ strategic positioning, managers are likely to find thatglobalization, heightened customer demands, and compressed technology cycles areincreasing competitive intensity, putting tremendous pressure on cost management(Friedman, 2005). Greater focus on financial performance is further inducing managersto strive to increase asset returns and reduce concept-to-market lead times(Simatupang and Ramaswami, 2004). Interestingly, an information technologyrevolution is accelerating these competition drivers (Hammer, 1990, 2004; Hult et al.,2004; Mabert and Venkataraman, 1998). The seemingly unavoidable reality thattoday’s marketplace is dynamic and evolving at a rapid pace leads to our P1:

P1. Managers are cognizant that the environment is dynamic and that a variety offorces are driving the need to cultivate a collaboration-enabled SC.

Collaboration as a contingent responseA firm’s contingent response is defined by its differentiation strategy, which answersthe business-model-design questions, “What strategic capabilities do we need?” and“How can we best develop them?” The RBV of the firm provides insight into a firm’scontingent-response options. RBV argues that a firm is “a collection of productiveresources” that can be used to create value and advantage (Wernerfelt, 1984). The morevaluable, rare, and inimitable the resources, the greater the advantage the firm mayattain (Barney, 1991, 2001). As important as the firm’s resources are, how it configuresthem may be more important (Teece et al., 1997; Eisenhardt and Martin, 2000). That is,combining and structuring resources to create a dynamic capability can lead to evengreater, more difficult-to-replicate advantage (Newbert, 2007; Zhu and Kraemer, 2002).RBV thus encourages managers to pursue a contingent response that uses firmresources to build a valued dynamic capability.

Importantly, companies now source a large percent (typically 50-80 percent of costof goods sold) of their value-added capability from materials and service suppliers(Monczka et al., 2008). Thus, the quest to establish a non-imitable dynamic capabilityextends beyond the firm’s boundaries. This reality is supported by the relational viewof the firm, which argues that the most powerful sources of advantage may beembedded in inter-firm resources and routines (Dyer and Singh, 1998). Collaborativeroutines that identify and integrate complementary competencies up and down the SChave been shown to improve firm performance by both reducing costs and improvingcustomer satisfaction (Fawcett et al., 2008; Fine, 1998). Yet, relatively few firms havelearned how to collaborate effectively, suggesting that a collaboration capability israre, valuable, and hard to replicate (Frohlich and Westbrook, 2001; Fawcett et al.,2009b). The need to improve resource leverage combined with the possibility ofcreating unique value through collaboration defines our P2:

P2. Companies recognize the value of collaboration as an important strategicresponse to a changing environment and are actively pursuing SCcollaboration initiatives.

The strategy execution chasmAlthough many firms have espoused the development of a collaboration capability as acentral component of their competitive strategies, few have been able to execute to plan.

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For example, Boeing adopted a collaboration-enabled business model to design andmanufacture the Boeing 787, dubbed the dreamliner. Suppliers were givenunprecedented responsibility for major components of the plane. Unfortunately,governance issues exacerbated SC breakdowns forcing multiple delays in the plane’slaunch. Boeing’s credibility and cash flow were severely damaged (Lunsford, 2008a, b;Sanders, 2009). Like the majority of firms that have pursued intense collaboration,Boeing discovered that integrating complementary competencies across the SC is a verydifficult task. The question is, “Why do firms struggle to implement a collaborativecontingent response?”

Force field theory suggests that as managers pursue a collaboration capability, theymust consider two types of forces that will affect implementation success – drivingforces and resisting forces (Lewin, 1951). As discussed above, driving forces such asdemanding customers may dictate a need to rely on the strengths of other SC members.Resisting forces such as a lack of top management support make it difficult to executethe collaborative differentiation strategy. The drive for collaborative change oftenstalls when it collides with well-entrenched resisting forces. In effect, resisting forcesfreeze an organization into non-collaborative behavior, imperiling companies thatcompete in a dynamic environment. Unable to change faster than the externalenvironment or collaborate more effectively than agile competitors, “frozen” companiesbecome irrelevant (Friedman, 2000; Grove, 1996; Lee, 2004). Lewin identified athree-phase process for effective change management and strategy implementation:

(1) The unfreezing process: an external shock or emotional event such as the loss ofmarket share unfreezes the organization, making change possible. Managementresolve ( Jim Collin’s Level 5 leadership) can at times lead to organizationalthawing.

(2) The movement phase: driving forces and resisting forces collide, leading toimplementation failure or success, depending on:. the relative strength of the forces; and. management’s ability to enact and leverage collaborative change enablers.

(3) The refreezing tendency: most companies settle into a new equilibrium stateafter a period of dramatic change.

A closer look at collaboration resistors and collaboration enablers is needed to betterunderstand the dynamics of moving from the development of a collaborative strategyto the effective execution of a collaboration capability.

Collaboration resistors. Forcing resisting collaboration vary in strength andinfluence, might exist anywhere within an organization or SC, and may include people,policies, or processes (Dent and Goldberg, 1999; Kotter, 1995). Inadequate technologyhas often been blamed for impeding collaborative initiatives (Barratt, 2004; Moberget al., 2003; Tyndall, 1998; Cassivi, 2006). However, despite massive investments ininformation and process technologies, collaborative capabilities have not dramaticallyimproved (Beth et al., 2003). This reality suggests that other forces are blockingcollaboration’s emergence. Fawcett et al. (2008) found that organizational structure andculture are among the most intractable barriers to more effective collaboration withinthe firm and across the SC.


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Focusing first on structure, CBT provides insight into why functional structures areso common and so resistant to change (Anderson, 1982). CBT suggests that companiesorganize along functional lines to take advantage of in-depth knowledge that arisesfrom specialization. Deep functional skills are needed to manage specific value-addedactivities. They are also the building blocks of core competencies (Prahalad and Hamel,1990; Stalk et al., 1992). CBT does, however, warn that specialization has a dark side –“specialists” tend to pursue their own goals. Rewarded on disparate metrics andoperating with distinct lines of authority, functionalists possess strong incentives toprotect their own domain. Silos are built and fortified. As tension and conflict emergeacross organizational boundaries, collaborative efforts are preempted. Unfortunately,many practices from hiring and training to measurement and office space allocationreinforce the dysfunctional organizational structure (Ellinger et al., 2006).

Turning to organizational culture, social dilemma theory heightens ourunderstanding of the conflicts that undermine collaboration. Social dilemma theoryposits that collaboration can enhance value, but uncertainty and risk regarding valuedissemination leads to competition for scare resources (Zeng and Chen, 2003).Managers must manage the tension that exists between these two contending forces.That is, members of a SC alliance have no incentive to invest in collaborativecapabilities if another member of the chain is likely to use asymmetrical power toexpropriate any collaborative gains (Dawes, 1980; Diekmann, 1985; Olson, 1965;Cassivi, 2006). In essence, the existence of power asymmetry and opportunisticbehavior deters the commitment of resources needed to initiate meaningfulcollaboration (Kollock, 1998; Komorita and Parks, 1996; Murnighan et al., 1993).McCarter and Northcraft (2007) conceptualized SC collaboration as a social dilemmawhere trust and fear determine how members of a chain will interact with one another.Concerns regarding the excessive pursuit of self-interest must be mitigated to promotethe behaviors – e.g. information exchange, trust, sharing of risks and rewards –needed to achieve collaboration capability (Celly et al., 1999; Luo, 2007). Thesechallenges suggest our P3:

P3. Traditional organizational structures and cultures inculcate a variety ofbehaviors that impede the creation of a collaboration capability.

Collaboration enablers. Force field theory suggests that once an organization isunfrozen, management enters a tenuous period where driving and resisting forces areweighed in the balance (Kale et al., 2000). Managers can tip the balance towardcollaboration by investing in appropriate enablers (Frohlich and Westbrook, 2001; Minet al., 2007). Research has identified a variety of collaboration enablers including thefollowing: aligned objectives, a shared customer-oriented vision, technologicalconnectivity, relationship trust, supplier development, and process redesign andintegration (Barratt, 2004; Drucker, 2001; Funk, 1995; Grzeskowiak et al., 2007;Lambert and Knemeyer, 2004; Lee, 2004; Stonebraker and Afifi, 2004). Unfortunately,establishing these diverse and often complex enablers can be difficult and resourceintensive (Moberg et al., 2003). Our P4 emerges from the need for managers to activelypromote collaboration:

P4. Companies have learned that collaboration is not the natural state or behaviorand therefore are actively engaged in building structural enablers to bridge ormitigate existing collaboration resistors.

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Desired performance benefitsThe fundamental goal behind strategic management theories is to explain differentialfirm performance. For example, contingency theory argues that an appropriatecontingent response effectively executed improves firm performance. Similarly, RBVclaims that cultivating a rare, valued, and inimitable capability leads to better marketperformance. The question thus arises, “What are the performance benefits of a strongcollaboration capability?”

Working collaboratively with a network of capable customers and suppliers providesaccess to skills, resources, and markets unavailable to industry rivals that do notcultivate collaborative business models (Brady, 2003; Humphrey and Schmitz, 1996;Premaratne, 2001). Moreover, collaborative relationships are able to solve problemsquickly while generating new and novel ideas and transferring technology efficiently( Jones, 1996; Han et al., 1993; Cook et al., 2005). Ultimately, a collaboration-enabled SCreduces lead times, minimizes inventories, increases asset utilization, lowers costs,raises quality, facilitates faster innovation, and enhances flexibility (Corsten and Felde,2005; Hadley, 2004; Wisner, 2003; Denkena et al., 2006). A collaboration-enabled SCcapable of increasing revenues and lowering costs is an ideal formula for sustainedcustomer satisfaction and profitability (Lee, 2004).

Importantly, each of the theories discussed above implies a time component withoutexplicitly discussing the mechanism through which time influences managerialdecision-making’s effect on firm performance. Resource-advantage (R-A) theoryaddresses this gap, extending the RBV by looking at it through the lens ofheterogeneous-demand theory (Hunt and Davis, 2008). In essence, R-A theoryevaluates how the process of competition contributes to organizational learning. Ascompanies adopt a collaborative contingent response, they should learn from theirexperiences – whether successful or not. The ability to learn should lead to strongerand more innovative collaborative capabilities, creating a performance gap with lessadaptable and agile competitors. From this perspective, R-A theory suggests that in theintensely competitive and dynamic environment of recent years, collaborativecapabilities should be increasing. The idea that competition drives learning leads toour P5. P5 therefore states:

P5. Appropriately pursued, a collaboration capability delivers meaningfuloperational and firm performance benefits. Moreover, companies arelearning to obtain higher levels of benefits from their collaboration initiatives.

Research methodsTo assess the evolution and influence of a collaboration capability, an exploratorycross-section survey was conducted at two different points in time. As the initial studybegan, the notion of SC collaboration had been raised in the literature, but notfully explored. Nor had an effort been made to empirically evaluate its evolution –thus, the decision to replicate the study. A six-year interval between Periods 1 and 2provided sufficient time to evaluate the emergence of a collaboration capability. Threesteps were undertaken to ground the research:

(1) A comprehensive literature search going back to the early 1980s was conducted.This review provided insight needed to design a meaningful survey instrument.


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(2) A series of half a dozen preliminary, informal managerial interviews wereconducted to ensure managerial relevance.

(3) An advisory board consisting of managers and academics was assembled toprovide feedback on the research content and process.

These efforts provided context to interpret the survey findings regarding how drivingforces, collaboration resistors, and collaboration enablers are influencing theemergence and impact of a contingent collaboration capability.

The cross-functional and inter-organizational nature of a collaboration capabilitytogether with the desire to perform the study longitudinally required careful andconsistent selection of the survey’s key informants. Therefore, senior-level managers(e.g. director, vice-president, chief executive officer, etcetera) with broad organizationalaccountability, cross-functional interactions, and access to overall firm-levelperformance data were targeted. Because three distinct groups of SC managers –logistics managers, production managers, and supply managers – define a company’scollaboration capabilities, mailing lists were compiled with the assistance of three SCprofessional associations: the Council for Supply Chain Management Professionals, theInstitute for Supply Management, and APICS: the Association for OperationsManagement. Managers were randomly selected from industries actively involved inSCM. The research team removed contact information for managers who did not meetthe selection criteria, yielding a list of seasoned managers with ample experience asmembers of cross-functional and SC teams.

In both time periods, the survey process followed Dillman’s total design method;that is, three mailings of a cover letter, an instruction sheet, and the survey wereperformed. To increase the response rate, pre-notification phone calls were made toinvite managers to participate. Managers were also offered a copy of the study findingsand the opportunity to be entered into a drawing for one of several iPod Nanos. Overall,980 usable surveys were returned for a response rate of 14.13 percent. Table I providesdetailed response rates broken down by time period and professional organization.Importantly, the relative sample sizes and proportions from each of the threeprofessional associations were consistent across the two time periods suggestingsample equivalence. Further, an independent t-test was performed on the controlvariable of firm size as measured by number of employees. No significant differencewas found, which again indicates sample comparability.

Non-response bias was evaluated in both time periods. A total of two methods wereused. First, a comparison of early versus late responses revealed no problematicresponse patterns (Armstrong and Overton, 1977). Second, to more clearly verify thatthe respondents and non-respondents were not uniquely different, the demographic

Period 1 Period 2Professionalassociation

Completedsurveys

Responserate (%)

Percent of totalP1 sample

Completedsurveys

Responserate (%)

Percent of totalP2 sample

APICS 171 12.1 36 159 17.9 31ISM 138 10.6 29 156 19.0 31CSCMP 166 11.6 35 190 19.3 38Overall 475 11.4 100 505 16.7 100

Table I.Survey response rates

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profiles of the two groups were compared. In Period 1, because responses wereanonymous, we called managers on the mailing list until we had spoken with300 non-respondents (100 from each managerial group) to gather basic demographicdata so that respondent and non-respondent profiles could be compared. No significantdifferences in demographic profile were found. In Period 2, respondents were trackedso that mailing and survey administration costs could be minimized. Non-respondentscould also therefore be identified. Demographic profiles for 100 randomly selectednon-respondents were develop using Dun and Bradstreet databases. These profileswere compared to those of the respondents. No significant differences were found.

Findings and discussionThe following discussion evaluates the theoretical propositions identified above fromtwo perspectives. First, the longitudinal changes in the aggregate or overall responsesfrom the two time periods are presented. Second, the most recent perceptions (Period 2)of the three distinct groups of managers are presented for comparison purposes.Similarities and differences in the way that these materials managers approach SCcollaboration are identified and discussed.

Understanding environmental driving forcesDo managers really perceive that the competitive environment is changing in waysthat require higher levels of collaboration? To answer this question, we askedmanagers to indicate the relative strength of six driving forces on a seven-point Likertscale (1 – not a factor; 7 – critical factor). The data in Table II show that two forces aredriving SC collaboration:

(1) a desire to improve productivity; and

(2) a desire to improve revenue through increased customer satisfaction.

This finding is consistent over time although the emphasis placed on these two forcesdecreased significantly over time. Of note, whereas the desire to improve customersatisfaction was the most important driver in Period 1, the desire to improveproductivity has moved into a statistical tie in the Period 2 study. Competitivepressures appear to have raised the relative emphasis on promoting collaboration tomitigate cost pressures. Such a response is not unexpected in an environment whereChina has become the “world’s factory floor” and India has become the “offshoringdestination of choice.” However, non-collaborative initiatives such as online auctionsand the threat of outsourcing to Asia have also been employed to drive costs down.

Comparing functional perspectives reveals that logisticians are significantly moreproductivity focused than their counterparts. As logistics is typically a cost center, it isnot surprising that logistics professionals are focused on productivity. Otherwise thefour managerial groups are generally in agreement regarding the forces driving SCcollaboration.

Overall, SC managers pursue greater collaboration in response to a select group ofenvironmental driving forces. They appear to be very profit-and-loss statementoriented; that is, their primary concern is to respond to intense competition by focusingon customer satisfaction while driving costs down (Table III).


277

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Table II.Forces driving greater SCcollaboration: Period 1versus Period 2comparison

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Assessing the pursuit of a contingent collaborative capabilityTo better understand the extent to which companies are pursuing collaboration as acontingent response, managers were asked to indicate the extent to which their firmsengage in each of four types of collaboration (1 – not engaged; 7 – totally engaged):

(1) Cross-functional process integration within the four walls of the company.

(2) Upstream integration with valued first-tier suppliers.

(3) Downstream integration with valued first-tier customers.

(4) Complete forward and backward integration from “supplier’s supplier to thecustomer’s customer.”

Surprisingly, managers reported slightly lower levels of engagement incross-functional, upstream, and downstream collaboration activities (Table IV).Adding value across boundaries is not easy and most managers have little or noincentive to take the risks inherent in building collaborative relationships. Talkingabout collaboration, holding team-building activities and investing in technology areinadequate facilitators of higher levels of collaboration. Managers did, however, reportsignificant progress (P1 ¼ 3.37 vs P2 ¼ 3.68; p ¼ 0.01) in the area of complete forwardand backward integration. Investments in technology and SC mapping are beginningto provide better SC visibility, improving decision makers’ ability to track inventoryand manage lead times. While progress in this area is encouraging, the mean of 3.68 isquite low.

Looking at the functional responses reveals little difference among the threemanagerial groups – the means and ranks are all similar (Table V). The highest levelof integration taking place within the firm, followed in order by forward integration,backward integration, and complete integration. The desire to integrate withcustomers to become a supplier of choice, create switching costs and grow revenues isa stronger motivator than cultivating the benefits of more collaborative supplierrelationships. This finding suggests that collaboration is more important in buildingcustomer relationships, whereas leverage and power characterize many companies’approach to managing supply relationships.

Combined Purchasing Logistics Production

Driving forceP2

meanP2

rankP2

meanP2

rankP2

meanP2

rankP2

meanP2rank

Desire to improve SC productivity 5.34 1 5.26 2 5.66 1 5.22 2Desire to improve customersatisfaction 5.33 2 5.36 1 5.40 2 5.30 1Intensifying competition 5.11 3 5.16 3 5.07 3 5.07 3Desire to build the best team ofSC partners 4.67 4 4.81 4 4.62 4 4.49 4Desire to focus on core competence 4.39 5 4.65 5 4.20 6 4.38 5Desire to reduce capitalinvestments 4.37 6 4.43 6 4.41 5 4.37 6

Note: To what extent have the following led your firm to seek greater SC collaboration? (1 – not afactor; 7 – critical factor)

Table III.Forces driving greater

SC collaboration:a functional comparison


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Table IV.Extent of engagement inSC collaboration: Period 1versus Period 2

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To summarize, companies are not pursuing collaboration as proactively or assuccessfully as proposed. This reality highlights the need to understand the forcesresisting collaboration.

Discerning collaboration resistorsThe previous findings suggest that collaboration is hard work. It requires a new way ofthinking that is reinforced by supportive practices and systems. To explore whethercompanies are overcoming the pervasive and powerful barriers to high-levelcollaboration, managers were asked to evaluate the extent to which 11 resisting forcesimpede SC collaboration (1 – not a barrier; 7 – serious barrier). The top seven forcesfrom Period 1 were included in the assessment. A total of four new items were added.

The data in Table VI reveal good news: the barriers to SC collaboration havediminished. This is a very positive finding and is evidence that efforts to mitigatecollaboration resistors are achieving some success. Looking at individual resistors,we see that despite the improvements, the four most pervasive barriers remained thesame across time periods, with inadequate information systems (mean ¼ 4.82;percentage of five to seven ¼ 62.03 percent) again leading the list, followed by a lackof clear guidelines for managing SC relationships (4.47; 53.08 percent), nonaligned goalsand measures (4.46; 52.43 percent) and an unwillingness to share risks and rewards(4.38; 52.11 percent).

From a functional perspective, a high degree of consistency exists among therespondents (Table VII). However, looking at the sum of the responses reveals thatmanufacturers (4.09) are relatively optimistic – they perceive the barriers at lower levelsthan their purchasing (4.30) and logistics (4.30) counterparts. In fact, purchasers andlogisticians rated all 11 barriers as more problematic than their manufacturingcounterparts, suggesting that distance from the point of collaboration (either up ordownstream) leads to a diminished view of the challenges. That is, the professionalsclosest to the action are indicating that a gap exists between the “talk” of SC collaborationand the “walk” of building collaborative relationships. A disconnect exists betweensqueezing costs out of SC relationships and building more collaborative relationships.

Looking at the results in aggregate suggests that today’s challenge is not theexistence of a single formidable and immovable barrier; rather, the difficulty is one ofaccumulation. As the many resistors – ranging from technology to organizational


Collaboration typeP2

meanP2

rankP2

meanP2

rankP2

meanP2

rankP2

meanP2

rank

Cross-functional integration withinthe firm 4.61 1 4.60 1 4.61 1 4.68 1Forward integration with valued first-tier customers 4.29 2 4.22 2 4.35 2 4.32 2Backward integration with importantfirst-tier suppliers 4.15 3 4.21 3 4.08 3 4.10 3Complete forward and backward SCintegration 3.68 4 3.80 4 3.55 4 3.66 4

Note: How extensively is your firm engaged in the effort? (1 – not engaged; 7 – totally engaged)

Table V.Extent of engagement in

SC integration:a functional comparison


281

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nce

Inad

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ems

4.82

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20.

37*

11

062

.03

69.4

02

7.37

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tion

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atin

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4.70

20.

24*

33

052

.43

62.1

02

9.67

Com

pan

ies

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lin

gto

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eri

sks

and

rew

ard

s4.

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832

0.45

*4

40

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163

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.79

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icts

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cess

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abor

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–9

––

45.7

4–

–L

ack

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ad-b

ased

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ctio

nal

sup

por

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rS

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llab

orat

ion

3.99

––

8–

–41

.73

––

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kof

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ong

mem

ber

sof

the

SC

3.83

––

10–

–34

.49

––

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ltu

ral

dif

fere

nce

sam

ong

mem

ber

sof

the

SC

3.45

––

11–

–26

.44

––

Notes:

* p,

0.01

;T

ow

hat

exte

nt

are

the

foll

owin

gb

arri

ers

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our

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llab

orat

ion

effo

rts?

(1–

not

ab

arri

er;

7–

seri

ous

bar

rier

)

Table VI.The strength ofcollaboration resistors:Period 1 versus Period 2

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282

structure and culture to human behavior – reinforce each other, the wave of resistancebecomes a tide that inundates many companies’ efforts to increase collaboration.Because these resisting forces permeate the culture, structure, and technology of theorganization, managers find it difficult to eradicate them.

Evaluating collaboration enablersTo assess a company’s ability to establish behaviors and practices that are capable ofbridging the tide of implementation resistance, respondents were asked to evaluatehow well 16 different practices improve their companies’ ability to collaborateeffectively with other SC members (1 – does not improve; 7 – greatly improves).The responses in Table VIII reveal that progress is being made. Of the 16 enablers,11 are used more effectively to promote collaboration in Period 2 than in Period 1. Themean score for the bridges in Period 2 was 4.38, which compares to a mean of only 4.07in Period 1. That yields an average gain of 0.31 points, which is highly significant( p ¼ 0.01). Moreover, the level of enthusiasm toward the enablers has risensubstantially – nine of the 16 are endorsed by more than 50 percent of the respondentsas effective enablers (percentage of five to seven). This compares to only two in Period1. Companies are figuring out how to move their SC collaboration initiatives forward.Among the most effective enablers are:

. Open information sharing. Establishing a culture that is promotes informationsharing makes possible more effective senior-level interaction and greatersharing of technical expertise.


Collaboration resistorsP2

meanP2

rankP2

meanP2

rankP2

meanP2

rankP2

meanP2

rank

Inadequate information systems 4.82 1 4.84 1 5.02 1 4.58 1Lack of clear guidelines for managingSC relationships 4.47 2 4.57 2 4.48 6 4.29 4Performance measures and operatinggoals are not aligned 4.46 3 4.47 3 4.57 2 4.35 2Companies unwilling to share risksand rewards 4.38 4 4.38 4 4.55 3 4.30 3Turf conflicts hinder processmanagement 4.30 5 4.36 5 4.53 5 4.07 8A lack of willingness to share neededinformation 4.24 6 4.30 8 4.55 3 4.19 6Process costs are difficult to measure 4.24 6 4.32 7 4.27 7 4.26 5Lack executive-level support for SCcollaboration 4.20 8 4.35 6 4.16 8 4.10 7Lack broad-based functional supportfor SC collaboration 3.99 9 4.16 9 4.02 9 3.80 9Lack of trust among members of theSC 3.83 10 3.98 10 3.86 10 3.64 10Cultural differences among membersof the SC 3.45 11 3.50 11 3.57 11 3.45 11

Note: To what extent are the following barriers to your firm’s SC collaboration efforts? (1 – not abarrier; 7 – serious barrier)

Table VII.The strength of

collaboration resistors: afunctional comparison


283

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nR

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[16]

P1

[24]

Dif

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nce

Fre

qu

ent,

open

info

rmat

ion

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ing

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ers

5.29

4.64

0.65

*1

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79.8

754

.20

25.6

7A

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ers

5.27

4.59

0.68

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4.97

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52

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145

.70

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.g.

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cip

ants

)4.

924.

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267

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rts

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0.83

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ers

4.84

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0.01

;To

wh

atex

ten

td

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ion

bet

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ny

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firm

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(1–

doe

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ve;

7–

gre

atly

imp

rov

es)

Table VIII.The strength ofcollaboration enablers:Period 1 versus Period 2

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284

. Creating alignment. Companies are working to establish common goals andjointly develop appropriate measures.

. Teaming. People drive or derail collaboration and teams are a critical mechanismfor enabling collaboration. Companies appear to be improving their teamingskills.

A closer look at the functional responses (Table IX) reveals that just as purchasers andlogisticians were most sensitive to collaboration resistors, they are also the optimistsregarding the influence of enablers. The average enabler scores for the three groupswere as follows: purchasers ¼ 4.89, logisticians ¼ 4.83, and manufacturers ¼ 4.66.Focusing on the differing perceptions, several contrasting views are highlighted below.These contrasts are drawn from the comparative means as well as the relativerankings of the 16 practices:


Collaboration enablersP2

meanP2

rankP2

meanP2

rankP2

meanP2

rankP2

meanP2

rank

Frequent, open information sharingamong SC members 5.29 1 5.35 1 5.31 2 5.24 1A willingness to share informationamong SC members 5.27 2 5.35 1 5.53 1 4.95 2Efforts to establish common goalsamong SC members 4.97 3 5.08 3 5.04 3 4.80 4SC simplification (e.g. fewer SCparticipants) 4.92 4 5.05 4 4.81 9 4.90 3Collaborative efforts to adoptappropriate performance measures 4.91 5 5.01 6 5.02 4 4.75 6Use of cross-functional and SC teams 4.85 6 4.98 7 5.00 6 4.06 16Sharing of technical expertise withcustomers and suppliers 4.84 7 4.93 9 4.82 8 4.80 4Senior level managerial interactionamong SC members 4.84 7 4.90 10 5.01 5 4.68 7Making decisions based on total costanalysis 4.83 9 5.02 5 4.96 7 4.49 11Use of clear guidelines to manage SCrelationships 4.78 10 4.94 8 4.71 10 4.63 9Shifting roles and responsibilities (e.g.vendor managed inventories) 4.68 11 4.89 11 4.43 15 4.66 8Increased employee trainingregarding SC practices 4.58 12 4.63 12 4.56 11 4.56 10Creation of web linkages/portals toexchange information 4.52 13 4.59 14 4.55 13 4.46 12A defined and accepted approach tosharing risks and rewards 4.50 14 4.63 12 4.56 11 4.34 14Use of ERP/SCM software 4.43 15 4.36 16 4.55 13 4.55 13Process development and integrationinitiatives/workshops 4.36 16 4.51 15 4.35 16 4.15 15

Note: To what extent do the following improve collaboration between your firm and other SCmembers? (1 – does not improve; 7 – greatly improves)

Table IX.The strength

of collaboration enablers:a functional comparison


285

. Logisticians are significantly more willing to share information than the othermanagers.

. Logistics professionals are the only group to rank SC simplification outside thetop five enablers. Purchasing professionals gave SC simplification the highestrating. Of note, although purchasers have made real progress with supply-baserationalization, logisticians still struggle with what often appear to be intractablecomplexity challenges.

. Purchasers and logistics managers evaluate the collaborative value of teamingmore highly than production managers. Perhaps, this perception arises fromtheir more frequent participation on teams.

. Purchasers believe that total cost analysis is vital to evaluating inter-firmcollaboration opportunities. Production managers rank total costing as one of theleast effective practices.

The response pattern suggests that day-to-day experience with a practice influenceshow managers perceive its enabling impact. Managers rank practices they deal withdaily higher than their counterparts who only hear about them in meetings, throughin-house newsletters and in “lunchroom” conversations. More teaming, better training,more effective rotation programs and enhanced communication of “success stories” areneeded to overcome this fragmentation of experience, which promotes silo thinking.

The overarching theme conveyed by the enabler data is that although much workremains to be done, real progress has been made. As the data in Table X demonstrate,in Period 1, the top five resistors had scores that were significantly higher than theircorresponding enablers ( p ¼ 0.01). By Period 2, although four of the top five resistors

Resistors EnablersRank Score Practice Rank Score Practice

20011 5.19 Inadequate information systems 1 4.64 Frequent and regular

communication2 4.87 Lack clear alliance guidelines 15 3.97 Use of clear guidelines to select allies

20 3.76 Use of clear guidelines to manageallies

3 4.84 Inconsistent operating goals 5 4.31 Use of common goals4 4.83 Lack shared risks and rewards 18 3.83 Approach to share risks and rewards5 4.61 Processes poorly costed 17 3.85 Use of total cost analysis

24 3.08 Use of activity-based costing20071 4.82 Inadequate information systems 1 5.29 Frequent and regular

communication2 4.47 Lack clear alliance guidelines 10 4.78 Use of clear guidelines to manage SC3 4.46 Non-aligned measures and goals 3 4.97 Establish common goals

5 4.91 Collaborative adoption of measures4 4.38 Unwilling to share risks and

rewards14 4.50 Approach to share risks and rewards

5 4.30 Turf conflicts 16 4.36 Process development andintegration

Table X.Comparison of scores fortop five resistors andenablers: Period 1 versusPeriod 2

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286

remained unchanged, their scores were significantly lower ( p ¼ 0.05) and the scoresfor the related enablers were all higher, three of them significantly. Managers arebeginning to grasp where and how to invest scarce resources to promote both changeand more effective collaboration.

Measuring the performance benefits of collaborationDocumenting benefits is a critical part of an evaluation of the attractiveness of acollaboration capability. After all, anecdotal stories about SC collaboration’s benefitsabound. So too do stories about failed collaboration initiatives. A careful assessment ofbenefit achievability is therefore needed. To help quantify the benefits of SCcollaboration, we asked managers to indicate to what extent SC collaboration hasimproved their firm’s performance in ten specific areas (1 – not improved; 7 – greatlyimproved). The results reported in Table XI reveal that customer service benefitsremain collaboration’s most important contribution to firm competitiveness.Establishing more collaborative relationships enables companies not only to improvespecific service capabilities but also to insinuate themselves into customers’ keyvalue-added processes. Although collaboration’s top-line, revenue-generating impact isimportant, respondents also indicated that collaboration helps reduce a variety of costs.As a result, overall SC costs are improved and firm profitability goes up.

Focusing briefly on functional perspectives reveals a relatively consistent view ofthe collaboration benefits (Table XII). This represents an interesting evolution inperception from Period 1 when the three managerial groups perceived the nature ofcollaborative benefits quite differently. That is, in Period 1, the most prevalent benefitsidentified by one functional area were viewed as relatively less important by the otherfunctions. One possible conclusion from this finding is that managers are doing abetter job of documenting and communicating the performance benefits that they areachieving. Despite the general convergence, supply managers place more emphasis oncollaboration’s ability to reduce the cost of purchased items and logisticians valueimproved on-time delivery benefits more than other managers.

Evaluated holistically, these findings suggest that a well-thought-out, carefullyexecuted collaboration strategy promises to help a company profitably deliver highlevels of customer satisfaction. This combination of service and efficiency is the allureof most strategic initiatives, not just the collaboration-enabled SC.

ConclusionThe data confirm that SC collaboration is a complex phenomenon. They also tell anintriguing story: as competition intensifies, some companies are responding by turningto collaborative initiatives. They are mitigating resisting forces and implementingcollaboration enablers. Their organizational structures and cultures are transformingto support their collaborative strategies. As a result, their collaborative capabilities areimproving and they are obtaining higher levels of customer service and productivity.

However, success has not been universal. Many companies are struggling toleverage collaboration for competitive advantage. The barriers to success are many.They begin with managers’ understanding of the nature of SC collaboration, whichinvolves the sharing of resources – information, people, and technology – among SCmembers to create synergies for competitive advantage. Indeed, a high-levelcollaboration capability goes beyond managing transactions for efficiency to


287

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31

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62

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.00

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3T

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8

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0.01

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ow

hat

exte

nt

has

SC

coll

abor

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nim

pro

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you

rfi

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ance

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otim

pro

ved

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)

Table XI.Documentingcollaboration benefits:Period 1 versus Period 2

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288

managing relationships for creativity and continuous improvement. Thus, for manyfirms, building a collaboration-enabled business model requires a transformation inthinking and practice. By failing to comprehend the character and magnitude of therequired change, these companies fail to:

. leverage external driving forces; and

. invest in collaboration enablers to mitigate prevalent collaboration resistors.

Their structures and cultures remain frozen – or are only partially thawed – and acollaboration capability remains out of reach.

The diversity of outcomes suggests that managers must carefully evaluate theircompanies’ motivation and readiness to pursue a collaboration-enabled SC. Theyshould assess managerial commitment to collaboration as well as managerialunderstanding of what is required to achieve it. Managers must then consider whetherthey can generate the momentum for sustained change. Simultaneously, they need toevaluate their companies’ abilities to implement specific collaboration enablers – theenablers that can most effectively mitigate the resistors that are present in their SC.Finally, they should ask whether or not they can persist even when the benefits areslow to emerge. Many companies simply do not have the vision or the patience to learnhow to collaborate successfully.

References

Anderson, P.F. (1982), “Marketing, strategic planning and the theory of the firm”, Journal ofMarketing, Vol. 46 No. 2, pp. 15-26.

Armstrong, J.S. and Overton, T.S. (1977), “Estimating non-response bias in mail surveys”,Journal of Marketing Research, Vol. 14 No. 3, pp. 396-402.

Barney, J. (1991), “Firm resources and sustained competitive advantage”, Journal ofManagement, Vol. 17 No. 1, pp. 99-120.


Collaboration benefitP2

meanP2

rankP2

meanP2

rankP2

meanP2

rankP2

meanP2

rank

Overall customer satisfaction 4.89 1 4.89 2 4.90 3 4.92 1On-time delivery/due-dateperformance 4.83 2 4.88 3 4.92 1 4.66 3Responsiveness to customers 4.82 3 4.80 5 4.91 2 4.86 2Firm profitability 4.69 4 4.85 4 4.64 5 4.53 5Overall product and SC costs 4.67 5 4.78 7 4.65 4 4.49 6Cost of purchased items 4.65 6 4.95 1 4.42 7 4.47 7Inventory performance 4.64 7 4.80 5 4.49 6 4.55 4Overall product quality 4.40 8 4.69 8 4.11 9 4.27 8Transportation costs 4.16 9 4.16 10 4.35 8 4.04 9New product developmentcapability 4.02 10 4.27 9 3.74 10 3.94 10

Note: To what extent has SC collaboration improved your firm’s performance? (1 – not improved;7 – greatly improved)

Table XII.Documenting

collaboration benefits: afunctional perspective


289

Barney, J.B. (2001), “Is the resource-based ‘view’ a useful perspective for strategic managementresearch? Yes”, Academy of Management Review, Vol. 26 No. 1, pp. 41-56.

Barratt, M. (2004), “Understanding the meaning of collaboration in the supply chain”, SupplyChain Management: An International Journal, Vol. 9 No. 1, pp. 30-43.

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Further reading

Fawcett, S.E. and Magnan, G.N. (2004), “Ten guiding principles of high-impact supply chainmanagement”, Business Horizons, Vol. 47 No. 5, pp. 67-74.

Corresponding authorStanley E. Fawcett can be contacted at: [email protected]


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