Role of TEAM (Trust, Ethics, Alighnment Motivation ) for Successful Implementation of Retail Chain...

8/6/2019 Role of TEAM (Trust, Ethics, Alighnment Motivation ) for Successful Implementation of Retail Chain Sector Supply C

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Role of TEAM in SCM implementation1

Role of TEAM (Trust, Ethics, Alignment, & Motivation) for Successful

Implementation of Supply Chain Management of Retail Store Chains in

Pakistan: A Literature Review

Amer Saeed

School of Business and Economics, University of Management and Technology, Lahore

E-mail: amer.saeed @umt.edu.pk

Mobile No. 0321-4317949

Abstract

Concept of supply chain management (SCM) is based upon the linking of

different stake holders of the whole supply chain. The more coordinated these entities

are, the more effective and efficient supply chain would it be. Literature shows that

the most important factor for higher coordination among different companies is trust.

Starting from inter department trust within the organization it expands to outer

boundaries of the organization. It becomes more critical for the success of a whole

supply chain when it comes to establishing trust between different organizations. It is

also empirically proved through literature that behavioral uncertainties and presence


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of socially ethical practices are the roots for presence/ absence of trust between two

companies. Now, if some organization wants to create a successful supply chain, it

has to align itself with the goals of its chain members. For that a certain level of trust

establishment is necessary, which requires strong ethical grounds. As, in some cases it

might require a huge change in the whole organization from administrative level to

cultural level, high level of motivation from the top management is required. In the

absence of such motivation there are very few chances for the implementation of

SCM in its true spirit. After a series of open ended interviews and detailed literature

review, this paper is an attempt to consolidate some soft areas with the combined

name of TEAM (Trust, Ethics, Alignment, and Motivation) which as a whole will

guide towards a successful implementation of SCM.

Keywords: SCM ethics, trust, alignment, top management motivation

Introduction

SCM endeavors to align the dependent activities, functions and resources

between the different levels of the points of origin and consumption (Svensson and

Bth 2008). Due to its truly strategic nature, successful implementation of SCM has

become a source of competitive advantage. Although companies are investing a lot of

money to integrate and achieve the success as described by the researchers, only two

percent of supply chain integration practitioners claimed any appreciable supply chainsuccess (Moberg, Speh et al. 2003).It is also evident that public and private sectors,especially small and medium enterprises (SMEs) have recognized supply chain as an

important area to focus on its effectiveness. For SMEs cost-effective supply chain is

a matter of survival as purchased goods and services account for up to 80 per cent of

sales revenue (Quayle 2003).

Retail store chains are increasing in Pakistan day by day, specifically after

international chains like Makro and Hyperstar started their businesses successfully.

Now not only some old retail chains like HKB, some new small and medium sized


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retail chains have emerged in different business segments. These segments ranges

from very specific product range like fashion clothing to very diverse and wide range

products. In any of the case the supply chain of any retail store is a very difficult to

manage as some of the retail chains offering more than 30 thousand articles and

getting them from more than 1300 suppliers. Now to manage all these products and

suppliers these organizations need to invest to improve their systems and establish a

seamless supply chain. Retail store chain must be not only effective, it must be

responsive as well, because for many products customers have a choice to move to

some other store. But due to ever increasing tough competition, volatile economic

conditions, lack of vision and sometimes because of their small size, these retail store

chain find it difficult to make a proper supply chain strategy.

As supply chain management is an emerging field and through research and

practical application of different ideas and concepts, more new concepts and buzz

words are evolving. Most companies pick any one of those buzz words and try to

implement that in the name of SCM implementation. But due to the absence of basic

ingredients like high level of motivation and trust these attempts fails miserably.

The intent of this paper is to identify a set of core building blocks for successful

supply chain implementation instead of individual buzz words. A supply chain

implementation will be called a successful one if it can reduce the cost, improve

customer service and creates a win-win situation for all the partners of the supply

chain. It will be helpful for those retailers specifically who cannot afford to do

experimentation. After detailed open ended interviews from supply chain middle and

top level executives of retail store chains in Pakistan like Metro Cash and Carry,

ChenOne Stores, HKB and Famous Brands stores and literature review, this paper is

introducing a concept of TEAM (Trust, Ethics, Alignment and Motivation) which will

help practitioners to focus on all concerned areas while designing strategies for supply

chain implementation.

Literature review

After finalizing from interviews some of the most important factors for supplychain implementation, this study has tried to find out the support from literature about

those factors. Following is the discussion about all those factors which are then

combined with the name of TEAM to form a model of some soft areas for successful

supply chain implementation.

Trust


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It means reliance on another person or entity, having faith in others and believing

them. It exists when one party has confidence in an exchange partners reliability and

integrity (Morgan and Hunt 1994). Trust exists when a firm believes its partner is

being honest and benevolent(Kumar, Scheer et al. 1995) One can define trust as a

faith of one trading partner on the other that he will deal ethically, and will not try to

take undue favor of the situation (Gefen 2000).

Well established high level of trust and very strong dedication among all the

stakeholders of supply chain is required to achieve effectiveness in the supply chain

performance. Only established trust would make it possible to share required

information on time which is a key to successful implementation of the SCM. There is

evidence available in literature that a majority of strategic alliances faced problems

and ultimately broken because of absence of trust between the supply chain members

(Sherman 1992). Information sharing is a very critical issue because sometimes

companies have to share proprietary and strategic level information with the partners

who might become competitor in the future. This shows the importance of trust in the

absence of which it is not possible to share any single piece of information, whether it

is within the organization or among different companies (Bowersox, Closs et al.

2000).

Supply chain partnership incorporates higher degree of interdependence and dueto this, risk and trust becomes very significant for long term relationships and

effectiveness of whole supply chain (La Londe 2002). Today information of materials

and flow of material replaces its physical existence; in such situations sharing of right

information at the right time with the right departments/persons has a strategic

importance. Kwon (2005) states that if information is available but cannot be shared

by the partners most able to react to a given situation, its value degrades

exponentially.

Managers at every level are striving hard to minimize their costs, improve service

levels and enhance productivity. But to enhance productivity and effectiveness not

only the strong commitment to work together in the long term but also the presence of

mutual trust is necessary. (Morgan and Hunt 1994) Literatures show that one of the

biggest impediments to success of supply chains is lack of trust among the supply

chain partners. Once trust is established among the supply chain partners it will leads

to open information sharing which would be helpful to minimize opportunistic

behaviors (Ellram and Cooper 1990). One of the major reasons for huge increase in


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transaction costs is absence of trust between the trading parties due to which both

parties spend a lot of time and resources to inspect and verify each and every

transaction. Due to this fact effectiveness and efficiency are compromised which are

the basic cornerstones of SCM goals. (Kwon and Suh 2004)

Alignment

Consumers ever growing demand for low price with high quality of service

making it very hard for retailers, manufacturers and distributors to perform their

operations with highly cost efficient way with minimum possible lead times.

Companies achieving this efficiency target have created competitive advantage for

themselves. And to achieve that advantage retailers and manufacturers are bound to

break the traditional silos and establish partnerships for seamless flow of goods andinformation from upstream supplier to downstream consumer.

Today time has proven that supply chains are competing with each other and

supply chain management has become a strategic issue for the companies and to get a

competitive advantage it is very necessary to successfully implement supply chain

strategy (Power 2005). The purpose of the creation of alignment among all the drivers

and stake holders of the supply chain is to get a competitive advantage which cannot

be duplicated by the competitors

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PgB= (Billington 1994; Anderson and Katz 1998; Birou, Fawcett et al. 1998; Sunil,

Meindl et al. 2009). A well integrated and aligned supply chain not only is a source of

satisfaction for its end consumers but also for its share holders. Because well aligned

supply chains become a source of value creation for its share holders by minimizing

costs and maximizing market share. (Lee 2000)

Effectiveness of supply chain is heavily dependent upon information sharing to

create alignment among all the stake holders. Companies succeeding in developing

such behaviors can provide rapid access to the required information, which enables

the company to respond to customer requirements much faster than the competitors

(Sezen 2008). Companies now a days need to be aligned starting from the design

stage of the new product and continuing this alignment till the point of consumption

by the end consumer. To get this level of integration at a minimum cost and with

higher level of accuracy, even though supply chain partners exist in two different

parts of the world, we need the help of information technology (IT). Use of IT is

radically altering the basis for competing supply chains. IT helps to connect the wholesupply chain in a single unit by contributing in the creation of products, services,

distribution channels, and links with customers, suppliers and other stakeholders(Van

Der Zee and De Jong 1999).

Use of Information technology has revolutionized the business environment and

makes it possible to replace the physical inventory with the virtual inventory

(Christopher 2000; Graham and Hardaker 2000). Information technology is the

biggest enabler for creating seamless alignment within the organization among

different functions and outside the organization with all the suppliers and customers.

A well aligned supply chain enables the company to compete on the basis of speed

and flexibility, while at the same time holding minimum inventory in the whole

supply chain (Power 2005).

Ethics

Companies do exist in the market to earn profit for their share holders, but it

should not be on the expense of its employees health, consumers concerns,

environmental destructions or damage to the societal values. Rather companies shouldbe investing for the betterment of people, environment and society as a whole.


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Corporate social responsibility is consists of two main characteristics. On one

hand it describes the relationship between business and the larger society, and on the

other hand it refers to companys voluntary activities in the area of environmental and

social issues

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MgYW5kIFNvY2ll

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cmxzPjwvdXJscz48 L3JlY29yZD48L0NpdGU+PC9FbmROb3RlPn== (McWilliams

and Siegel 2001; Hill, Stephens et al. 2003; Carroll and Buchholtz 2008). CSR for

individual firms and companies have many well established parameters and guidelines

available, but there is very less work available which discusses the CSR covering the

whole supply chain. Although some concerns are being raised about some theoretical

and managerial ethical aspects of SCM, but so for now hardly any research has been

conducted regarding ethical values and standards of corporate thinking and strategies

of SCM (Svensson 2009). CSR is no longer the responsibility of any individualorganization; now it includes the whole supply chain (Andersen and Skjoett-Larsen

2009).

A partnership model of corporate ethics by Wood (2002) establishes basic

parameters for SCM researchers and practitioners. The partnership model guides to

concentrate not only within the organization ethics but also development of ethical

working model with the external partners as well. By taking this model as a base

researchers have worked to establish a supply chain ethics model that not only include

direct relationships but also the indirect relationships as well that could be of

importance keeping in view the whole supply chain. This model consists of four

approaches that may be derived from the relationships of organizations, the industry,

the marketplace and the society. It talks about ethical issues for a companys own

supply chain with immediate supplier and customer and enhances it to the end

supplier and end consumer of its own supply chain. Then it also emphasizes to

develop ethical standards for competing other supply chains and the society as a

whole. (Svensson and Bth 2008)


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Motivation

It is the activation or energization of goal oriented behavior. Top management

motivation to implement SCM is the top most managerial support factor among the

four to achieve the highest levels of supply chain success (Fawcett, Ogden et al.2006). To get desired level of alignment among the supply chain partners the key

factor is to establish very strong top management commitment (Akkermans, Bogerd et

al. 1999). Most of the literature focuses on the importance of SCM, need of

collaboration and building trust among different supply chain partners for the

successful implementation of SCM; however very little has been written about the top

managements motivation and commitment levels (Fawcett, Ogden et al. 2006). With

the increase in technological advancements, customer interaction has also increased

and to fulfill their demands a more responsive supply chain is required. Now, it is also

the duty of top management to focus on the supply chain as a whole instead of distinct

functional performances (Hausman 2004).

Each and every member of the supply chain, either within the organization or

form outside must show commitment to SCM. Appropriate resources should be

assigned from across the functional bodies to get maximum output. Now, as only the

top management has the authority to allocate, relocate, align and control resources,

the maximum motivation and commitment is required from them. But it is not onlythe duty of top management but all the workers and middle managers should become

an active part of it to make supply chain implementation a successful one (Blackwell

and Blackwell 1999).

Most projects fails due to the ambitious goals and timing targets. Company

executives remain in search of a silver bullet that can bring the results overnight and

improves the companys bottom line. The three major lessons learned from an ERP

system implementation includes; do not be too ambitious with the timing and

expectations for rapid results; ensure accurate alignment between requirements and

system functionality; and critical importance of data accuracy. (Moller 2000)

So, its all about setting real time targets, proper planning, taking a holistic view

of the organization, and placing right resources in the right amount and at the right

places and above all the patience. This all can happen only if the top management is

convinced, self motivated and committed for the implementation of SCM in its true

spirit.

TEAM Model


18/62

Top Management

Motivation

Successful Supply Chain

Implementation

Ethics Based

Working

Trust

Building

Alignmen

t


Much has been written on the need to integrate and align supply chains

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XRlPjwvRW5kTm90 ZT5= (Hoyt and Huq 2000; Larkins and Luce 2000; Lee 2000;

Frohlich and Westbrook 2001; Power 2005), developing and establishing trust level

among the supply chain partners

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mxzPjwvdXJscz48 L3JlY29yZD48L0NpdGU+PC9FbmROb3RlPn== (Morgan and

Hunt 1994; Sako and Helper 1998; Bowersox, Closs et al. 2000; La Londe 2002;

Kwon and Suh 2004; Lado, Dant et al. 2008), improving companys image as more

socially responsible and working on ethical grounds

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1Ymxpc2hlcj48dXJs

cz48L3VybHM+PC9yZWNvcmQ+PC9DaXRlPjwvRW5kTm90ZT5= (Rao and Holt

2005; Svensson and Bth 2008; Andersen and Skjoett-Larsen 2009) and the need of

top managements motivation and commitment to supply chain management

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FyeS10aXRsZT5T


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2RhdGVzPjx1cmxz



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2YgUGh5c2ljYWwg


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eGZ2dGMycDI1


9IkpvdXJuYWwg


dGhvcj5Ba2tl


dGhvcj5Wb3Ms


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VybmF0aW9uYWwg


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W5hZ2VtZW50PC9z


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W5hZ2VtZW50PC9mdWxsLXRpdGxlPjwvcGVyaW9kaWNhbD48cGFnZXM+NTY1LTU4MjwvcGFnZX

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(Akkermans, Bogerd et al. 1999; Marien 2000; Fawcett, Ogden et al. 2006). However

there is no study combining these soft issues or showing interrelationship of more

than two of above mentioned areas for any role in the development and

implementation of supply chain strategy.


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This model proposes that directly and indirectly top management motivation to

implement supply chain management is the key factor. Direct relation is obvious

through literature review


MDAwPC9ZZWFyPjxS


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RsZT48L3RpdGxlcz48


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W1lPjQ8L3ZvbHVt


2RhdGVzPjx1cmxz


Figure 1. TEAM Model of Soft issues


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WJlcj4xPC9udW1i


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Tk8L1llYXI+PFJl




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9IkpvdXJuYWwg


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TM1Nzc8L2lzYm4+



MDAwPC9ZZWFyPjxS


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FyeS10aXRsZT5T


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2RhdGVzPjx1cmxz

PjwvdXJscz48L3JlY29yZD48L0NpdGU+PENpdGU+PEF1dGhvcj5GYXdjZXR0PC

9BdXRob3I+PFll


jLW51bWJlcj4yM

Role of TEAM (Trust, Ethics, Alighnment Motivation ) for Successful Implementation of Retail Chain...

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Transcript of Role of TEAM (Trust, Ethics, Alighnment Motivation ) for Successful Implementation of Retail Chain...