Supply Chain Strategy: Empirical
Case Study in Europe and Asia
ilkka sillanpää
University of Vaasa, Finland
ilkka.j.sillanpaa@gmail.com
sebastian sillanpää
Aalto University, Finland
sebastian.sillanpaa@outlook.com
The purpose of this case study research is to present a literature
review of supply chain strategy approaches, develop supply chain
strategy framework and to validate a framework in empirical case
study. Literature review and case study research are the research
methods for this research. This study presents the supply chain
strategy framework which merges together business environment,
corporate strategy, supply chain demand and supply chain
strategy. Research argues that all the different concepts that are
currently used as supply chain strategy can be condensed into a
presented supply chain strategy framework. Developed supply
chain strategy framework is a practical tool for business managers.
Future research could be multiple case studies in the global
environment to develop further the supply chain strategy framework.
Key words: supply chain strategy, corporate strategy, supply chain
management
Introduction
Supply chain management (scm) has been studied a great deal in the
industrial economics field of research. Researchers of scm as well as
the public have been interested in the published studies related to
improving cost efficiency, optimizing the whole supply chain (sc),
production control, stock management, agility, lean scm and sc integration.
scm is a management concept of the 2000´s and it includes segments
from the management concepts of the previous decades.
Many definitions for scm have been presented but scm has been
and is still regarded as a synonym for logistics, supply and sc control.
Today the broader definition determined by the Global Supply
Chain Forum is generally accepted as the norm (Lambert, Cooper
and Pagh 1998; Cooper, Lambert and Pagh 1997): ‘Supply Chain
management 9 (2): 95–115 95
Ilkka Sillanpää and Sebastian Sillanpää
Management (scm) is the integration of key business processes from
end user through original suppliers that provides products, services,
and information that add value for customers and other stakeholders.’
Supply Chain Council defined that there are four basic processes
in the sc: plan, source, delivery and return. Plan refers to processes
that balance aggregate demand and delivery requirements.
Sources are processes that transform product to a finished state
to meet planned or actual demand. Delivery is a process in which
the finished goods are delivered to a customer. Return is defined as
processes associated with returning or receiving returned products
(Iskanius 2006).
Many scholars state that supply chain strategy must reflect the
corporate strategy (Schnetzler, Sennheiser and Schönsleben 2007;
Harrison and New 2002; Christopher, Peck and Towill 2006; Chopra
and Meindel 2007; Waters 2009). According to a survey conducted
by Harrison et al. (2002), two-thirds of all respondents thought that
their supply chain strategy was significant or highly significant in
terms of corporate strategy. According to Rose, Singh Mann and
Rose (2012) however, there still exists a major gap between corporate
strategies and supply chain strategies (Rose, Singh Mann and
Rose 2012).
According to the literature review, the research gap is a relationship
between corporate strategy and supply chain strategy. The goal
of this research is based on the research gap and could be presented
as to deepen knowledge in supply chain strategy approaches and to
develop a supply chain strategy framework. The research problem
is presented as a question: What are the supply chain strategy approaches?
Research Methodology
A literature review and a case study research were employed as
the research methodologies in the study to develop a supply chain
strategy framework. The literature on supply chain strategies was
collected primary from journals in the areas of strategic management,
supply chain management, operations research and operations
management. The target was to focus on the latest journals
from last decade and that is why dissertations, textbooks, unpublished
working papers, and conference papers were excluded. The
literature search included journals published by numerous publishers
and research was done using Scopus, which is one of the largest
abstract, and citation databases of research literature. Several hun-
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Supply Chain Strategy: Empirical Case Study in Europe and Asia
dreds of journal articles were found and that is why the research has
to focus on the most relevant, cited and newest journals.
Eisenhardt (1989) defines case study research as a research strategy
that aims at understanding the internal dynamic of an individual
case (Eisenhardt 1989). Case study research is aiming at understanding
comprehensive and relevant phenomena of real life. In that case,
the endeavour is to study the phenomena in their genuine context.
Interface between the phenomenon and context is not often clear,
which complicates the work of a researcher (Yin 2009).
Case study research is regarded as a good research method when
the research problem can be described with the help of questions
how and why. The method is very useful when a researcher cannot
control the target. Furthermore, it is useful when the focus is on
concurrent events in a real time manner especially when the border
between the event and context is not clear. There are three types
of case study research: explorative (seeking to find out more about
a phenomenon) research, descriptive research and explanatory research.
The purpose of explorative research is to obtain information
regarding a phenomenon, find new ideas and possible research
problems. In explorative research, already existing information is
collected and sorted. The aim of descriptive research is to provide as
accurate an image of an individual, group, situation or phenomenon
as possible. In the research, the focus is not in clarifying connections
between phenomena or factors interpreting behaviour, but only in
describing a situation. The aim of explanatory research is to explain
causal relations between phenomena and testing related hypotheses
(Yin 2009).
In this study case study, research method is used to develop and
validate supply chain strategy framework in the empirical case study.
Theory
corporate strategy
Nag, Hambrick and Chen (2007) define strategy as ‘the major intended
and emergent initiatives taken by general managers on behalf
of owners, involving utilization of resources, to enhance the performance
of firms in their external environments’ (Nag, Hambrick
and Chen 2007). Ramos-Rodríguez and Ruíz-Navarro (2004) identified
the works that have had the greatest impact on strategic management
research, which can be seen in table 1. They recognized
that there are three different scientific disciplines from which the
different fields of strategic management research have grown: econumber
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Ilkka Sillanpää and Sebastian Sillanpää
table 1 Theoretical Roots of Strategic Management
Academic views on Corporate Strategy
Economic-based Sociology-based Psychology-based
Evolutionary economics Contingency theory Power
Transaction cost theory Resource dependence Pattern
Industrial economics Organisational ecology
Resource-based view Ecosystem
Agency theory
notes Adapted from Ramos-Rodriguez and Ruíz-Navarro 2004.
nomics, sociology and psychology. Economics has been the founding
theory for such strategic management fields as evolutionary
economics, transaction cost theory, industrial economics, resourcebased
view of the firm and agency theory. Sociology with its different
theories is the foundation for such fields as contingency theory,
resource-dependence theory, organisational ecology and ecosystem.
The most popular psychological views of strategic management include
power and pattern views to strategy creation (Ramos-Rodrígue
and Ruíz-Navarro 2004).
Economics Based Strategic Management Fields
Evolutionary economics theories try to explain 1) the movement of
something over time or why something is what it is at the moment in
time in terms of how it got there, and 2) how some random elements
generate or renew some variation in the variables in question, and
what mechanisms systematically winnow extant variation (Valentino
and Christ 1990).
Transaction cost theory is as old as evolutionary economics. It
studies the relationship between a firm and its environment through
a contractual or exchange-based approach (Kujala et al. 2006). According
to Hoskisson et al. (2000), if the transaction costs of markets
are high, hierarchical governance modes will enhance efficiency, although
they can have their own bureaucratic costs (Hoskisson et al.
2000).
Ramos-Rodríguez and Ruíz-Navarro (2004) identify that the prime
contributions of industrial economics to strategic management literature
are the structure-conduct-performance paradigm and the
study of strategic groups (Ramos-Rodrígue and Ruíz-Navarro 2004;
Porter 1980) illustrates three potentially successful generic strategic
approaches to attaining competitive advantage and thereby outperforming
other firms in an industry: differentiation, cost-leadership
and focus (Porter 1980).
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Supply Chain Strategy: Empirical Case Study in Europe and Asia
According to the resource-based view, the resources of a firm can
be the source of a competitive advantage as long as resources are
valuable, rare, inimitable and non-substitutable. Resource-based
view is a complement to the traditional emphasis of industrial economics
on industry structure and strategic positioning within that
structure as a source of competitive advantage (Eisenhardt and Martin
2000; Newbert 2007; Hoskisson et al. 1999).
Agency theory was born in the 1960s and it deals with relationships
that arise when one self-interested individual (the principal)
delegates some decision-making authority to another