Supply Chain Management Survey of Swedish Manufacturing Firms
Supply Chain Management Survey of Swedish Manufacturing Firms
Supply Chain Management Survey of Swedish Manufacturing Firms
Abstract
Supply chain management practices and principles are evolving and changing rapidly, e.g. through modern
information and communication technologies. These changes affect the ways supply chains are designed, the way they
are managed, and how planning and control activities take place within these chains. But how far have companies come
in dealing with supply chain issues? This paper investigates supply chain management strategies and practices in a
sample of 128 Swedish manufacturing firms. We specifically study issues related to the supply chain design, integration,
planning and control, and communication tools for managing supply chains. The main findings indicate the following.
The extent to which suppliers and customers are involved in supply chain planning and control is expected to increase
steadily over the next 2 years. The primary priority for the selection of supply chain partners is quality performance.
However, delivery dependability, cost efficiency, volume flexibility, and delivery speed are also judged to be important
inputs to the supply chain partner selection process. Today, companies expect to broaden and deepen the use of new
information and communication technologies for improving supply chain operations. Our findings concerning future
supply chain management practices, principles and priorities are discussed.
r 2003 Elsevier Science B.V. All rights reserved.
0925-5273/03/$ - see front matter r 2003 Elsevier Science B.V. All rights reserved.
doi:10.1016/S0925-5273(03)00029-X
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suggested by case studies (see e.g. Arntzen et al., in order to be able to provide for a fuller
1995; Camm et al., 1997; Hahn et al., 2000), understanding of supply chain management stra-
empirical research (see e.g. Frohlich and West- tegies and practices.
brook, 2001; Lowe and Markham, 2001) and The paper is organised as follows. First, we
theory (see e.g. Cohen and Mallik, 1997; Fisher, discuss the research methodology and the char-
1997; Lummus et al., 1998; Simchi-Levi et al., acteristics of the responding enterprises. Then we
2000; Stadtler and Kilger, 2000; Stock et al. 2000; present and analyse the survey results, divided into
Chopra and Meindl, 2001). sections on supply chain design, supply chain
In this paper we present a survey of supply chain integration, supply chain planning and control,
strategies and practices in Swedish manufacturing and supply chain communication. Finally, some
firms. The motivation for this survey is also based concluding remarks are provided.
on a previous survey to manufacturing industries
in Sweden (Olhager and Selldin, 2002) focusing on
the implementation of ERP systems. This study 2. Research methodology
showed that companies are about to extend their
ERP functionality. These extensions are primarily The survey reported here was mailed to PLAN
concerned with supply chain management, and the members employed within manufacturing firms in
top priorities for the near future are supply chain Sweden; PLAN is the Swedish Production and
planning (SCP) systems and integration with Inventory Management Society. PLAN provided
customers and suppliers. Therefore, we decided the mailing lists. The questionnaire focuses on
to continue with a survey focussing on supply supply chain issues such as design, integration,
chain issues related to integration, design, plan- planning and control systems, and communication
ning and control, from a practice as well as a tools and techniques.
systems perspective. The survey covers supply In May 2001 the authors mailed the question-
chain integration issues from a company perspec- naire to PLAN members in 511 different firms.
tive. This constituted the entire body of PLAN
Previous studies on supply chain strategies and members in Swedish manufacturing firms. Post-
practices generally find that broader integration age-paid return envelopes were provided. The
leads to improved performance. Frohlich and survey employed three question formats: Likert
Westbrook (2001) find that extensive and balanced scales, multiple response, and metric measurement
integration leads to better performance in terms of scales. By October 2001, 128 usable responses were
marketplace, productivity and non-productivity received for a response rate of 25.0%, which must
indicators, compared to firms having no, narrow be considered to be quite good for this type of
or biased integration towards the supplier or the survey.
customer side. However, the level of integrative
activities was generally rather low among the firms
in the sample, which contained data from 1998. 3. Enterprise characteristics
Lowe and Markham (2001) report on the outcome
of the 2001 A.T. Kearney global excellence in The characteristics of respondent and the
operations award, which contains some supply enterprise are summarised in Table 1. The largest
chain elements. The top five finalists had closer group of respondents was materials/supply chain
integration with suppliers, and experienced better managers (39.4% of the responses). The second
payback for e-commerce IT investments with largest group was production/inventory control
customers and suppliers, compared to the other managers (18.9%). Together, these two categories
companies in the award competition. However, the account for approximately 60% of the respon-
sample is very small and includes firms from many dents. The other respondents hold other positions
different industries. In this paper, we investigate a but are members of the Swedish Production
broader range of supply chain management issues, and Inventory Management Society, wherefore
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Table 2
Supply chain design objectives
Primary purpose
Secure supply of raw materials and components 4.13 1.00 4 5
Provide fast response to changing needs 3.87 0.83 4 4
Integrating suppliers and customers in product development 3.83 1.13 4 5
Minimise costs 3.77 0.92 4 4
Secure distribution and market channels 3.75 1.02 4 4
Manufacturing focus
Maintain high average utilization rate 4.03 0.97 4 5
Deploy excess buffer capacity 2.92 1.07 3 3
Inventory strategy
Minimise inventory 3.49 1.10 4 4
Deploy buffer stocks of parts or finished goods 3.24 1.04 3 3
Lead-time focus
Shorten lead time as long as it doesn’t increase cost 3.99 0.90 4 4
Invest aggressively in ways to reduce lead time 2.66 1.00 3 2
4.2. Supply chain integration 4.3. Supply chain planning and control
Table 3 shows that on average, the respondents Even though the current utilisation of supply
consider their company’s supply chain coordina- chain planning and control tools and techniques is
tion ability to be somewhat mediocre. It scores just at a relatively moderate level, many of these tools
slightly above 3; probably due to the fact that and techniques are in their infancy. According to
supply chain coordination is new to many Fig. 1, vendor managed inventory (VMI) and
companies and that there are still opportunities supply chain planning (SCP) are modern techni-
for improvement. ques that have started to become adopted. There
The dominating actor in the supply chains of the is, however, a low degree of penetration for all the
respondents (cf. Table 1) showed that downstream investigated techniques. More interesting to note is
actors were dominant in more cases than up- the high awareness of SCP and advanced planning
stream. This is reflected in that downstream and scheduling (APS), known by more than 80%
operations are considered to be more critical on of the respondents. Collaborative planning, fore-
the average than upstream, as indicated in casting and replenishment (CPFR) is the least
Table 3. However, it is important to note that known technique with less than half of the
both sides are considered to be quite critical rather respondents aware of it. When comparing these
than not critical, emphasising the importance of results with Table 3 it should be noted that CPFR
integration. as a concept is not the same as collaborative
Forecasting is the area where companies planning or forecasting in general.
make the most important effort to collaborate, There is a slight bias for integrating upstream
see Table 3. This supports the observation that the operations, i.e. 1st and 2nd tier suppliers, relative
demand side of the supply chain is the most downstream operations according to Fig. 2 and
important area for collaboration between supply Table 4. In the light of the results concerning
chain partners. Collaborative planning of capa- supply chain integration, this is interesting. The
city, inventory and production are used to some dominating actor as well as the importance to
extent, but considerably less than collaborative control the supply chain has a tendency to lean
forecasting. towards the downstream and customer side. The
Table 3
Supply chain integration
Fig. 1. Utilization of supply chain planning and control tools and techniques (VMI=vendor managed inventory; SCP=supply chain
planning; APS=advanced planning and scheduling; E-kanban=electronic kanban; CPFR=collaborative planning, forecasting and
replenishment)
span of utilization for supply chain planning result indicates that companies rather go for ease
system has, on the contrary, a very slight bias of integration than importance of integration.
towards the supplier side (cf. Table 3). This Integrating upstream operations is generally easier
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Table 4
Span of utilization for supply chain planning system
Averagea Std. dev.a Mediana Modea Averagea Std. dev.a Mediana Modea
To a great
5.00
extent
Telephone
4.00 Fax
E-mail
Letter
3.00 EDI (incl. XML)
Extranets (Internet based)
Kanban
2.00
E-marketplaces
since the buyer often is the stronger part, whereas planning systems will increase in the near future.
it may be more difficult for a supplier to bring on In general, the median firm moves up one step on
the initiative for a new supply chain planning the five-step scale from ‘‘not at all’’ to ‘‘a great
approach. In 2 years time, the respondents do not extent’’ referring to how different actors along
expect the distribution of utilization for supply the supply chain are likely to be involved in
chain planning system to change, but the usage supply chain planning systems. The largest jump
among all actors is expected to increase. in the data results are for the immediate supply
A paired t-test of the answers concerning the chain partners, i.e. 1st tier suppliers and 1st
utilisation of supply chain planning systems today tier customers, indicating a mode move from 1 to
compared with the utilisation in 2 years from now 4 on the scale from 1 to 5, whereas 2nd tier
shows that all of the changes are statistically suppliers and customers stay at the lowest
significant on the 0.01-level. The median and mode utilization mode level. Thus, the main initiatives
numbers in Table 4 also strongly suggest that the are expected for the immediate suppliers and
evolution of the utilization of supply chain customers. However, there will still be several
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Table 5
Utilization of tools for communicating with customers and suppliers
Averagea Std. dev.a Mediana Modea Averagea Std. dev.a Mediana Modea
decline in importance whereas electronic commu- Camm, J.D., Chormann, T.E., Dill, F.A., Evans, J.R.,
nication techniques and especially those based on Sweeney, D.J., Wegryn, G.W., 1997. Blending OR/MS,
judgment, and GIS: Restructuring P&G’s supply chain.
the Internet will increase and become dominant.
Interfaces 27 (1), 128–142.
Companies are starting to appreciate the im- Chopra, S., Meindl, P., 2001. Supply Chain Management:
portance of the supply chains in which they operate. Strategy, Planning, and Operation. Prentice-Hall, Upper
However, most firms have quite some ways to go to Saddle River, NJ.
take full advantage of the promises of supply chain Cohen, M., Mallik, S., 1997. Global supply chains: Research
integration. The awareness of planning and control and applications. Production and Operations Management
6 (3), 193–210.
techniques and communication means is high, and Fisher, M., 1997. What is the right supply chain for your
work on increasing and improving supply chain product? Harvard Business Review 75 (2), 105–116.
integration and collaboration will be intensified in Frohlich, M.T., Westbrook, R., 2001. Arcs of integration: An
the near future. Of interest for future research is international study of supply chain strategies. Journal of
therefore to study the impact of supply chain Operations Management 19 (2), 185–200.
Hahn, C.K., Duplaga, E.A., Hartley, J.L., 2000. Supply chain
collaboration and integration on company perfor- synchronization: Lessons from Hyundai Motor Company.
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Lowe, P.G., Markham, W.J., 2001. Perspectives on operations
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Acknowledgements Lummus, R.R., Vokurka, R., Alber, K., 1998. Strategic supply
chain planning. Production and Inventory Management
This research is supported by grants from the Journal 39 (3), 49–58.
Olhager, J., Selldin, E., 2002. Enterprise resource planning
Swedish Foundation for Strategic Research. We
survey of Swedish manufacturing firms. European Journal
would like to acknowledge PLAN for providing of Operational Research 146 (2), 365–373.
the mailing lists. Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., 2000. Design-
ing and Managing the Supply Chain: Concepts, Strategies,
and Case Studies. Irwin/McGraw-Hill, Boston.
Stadtler, H., Kilger, C. (Eds.), 2000. Supply Chain Manage-
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