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A Framework of Supply Chain Management Literature

Article  in  European Journal of Purchasing & Supply Management · March 2001

DOI: 10.1016/S0969-7012(00)00020-4

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 European Journal of Purchasing & Supply Management 7 (2001) 39}48

A framework of supply chain management literature

Keah Choon Tan*
University of Nevada Las Vegas, College of Business, Department of Management, 4505 Maryland Parkway, Box 456009, Las Vegas, NV 89154-6009, USA
Received 2 February 1999; received in revised form 6 April 2000; accepted 7 April 2000

Abstract

Over the past decade, the traditional purchasing and logistics functions have evolved into a broader strategic approach to materials
and distribution management known as supply chain management. This research reviews the literature base and development of
supply chain management from two separate paths that eventually merged into the modern era of a holistic and strategic approach to
operations, materials and logistics management. In addition, this article attempts to clearly describe supply chain management since
the literature is replete with buzzwords that address elements or stages of this new management philosophy. This article also discusses
various supply chain management strategies and the conditions conducive to supply chain management.  2000 Elsevier Science
Ltd. All rights reserved.

Keywords: Logistics; Physical distribution; Purchasing; Supply chain management

1. Introduction separate paths and integrates the two bodies of literature

in the uni"cation of supply chain management into
During the 1990s, many manufacturers and service a commonly accepted terminology that includes all the
providers sought to collaborate with their suppliers and value creating activities along the value chain. In addi-
upgrade their purchasing and supply management func- tion, this article attempts to describe supply chain man-
tions from a clerical role to an integral part of a new agement clearly, since the term has been used very
phenomenon known as supply chain management. Since liberally in the literature. This article also discusses vari-
this aspect of supply chain management primarily fo- ous supply chain strategies and the conditions conducive
cuses on the purchasing and supply management func- to supply chain management.
tions of industrial buyers, we have classi"ed it elsewhere
as the purchasing and supply perspective of supply chain
management (Tan et al., 1999, 1998b). Correspondingly,
many wholesalers and retailers have also integrated their 2. Supply chain management de5ned
physical distribution and logistics functions into the
transportation and logistics perspective of supply chain The literature is replete with buzzwords such as: integ-
management to enhance competitive advantage. Over rated purchasing strategy, integrated logistics, supplier
the last 10 years, these two traditional supporting func- integration, buyer}supplier partnerships, supply base
tions of corporate strategy evolved along separate paths management, strategic supplier alliances, supply chain
and eventually merged into a holistic and strategic ap- synchronization and supply chain management, to
proach to operations, materials and logistics manage- address elements or stages of this new management
ment, commonly referred to as supply chain management philosophy (Tan et al., 1998a; New, 1997; La Londe
(SCM). and Masters, 1994). While each terminology addresses
This article reviews the literature base and deve- elements of the phenomenon, typically focusing on im-
lopment of supply chain management along these two mediate suppliers of an organization, supply chain man-
agement is the most widely used (but abused) term to
describe this philosophy. Unfortunately, there is no ex-
plicit description of supply chain management or its
* Tel.: #1-702-895-3873; fax: #1-702-895-4370. activities in the literature (New, 1997). For example,
E-mail address: [email protected] (K.C. Tan). Harland (1996) describes supply chain management as

0969-7012/00/$ - see front matter  2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 9 6 9 - 7 0 1 2 ( 0 0 ) 0 0 0 2 0 - 4
40 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48

managing business activities and relationships (1) inter- value chain, a practical approach to supply chain man-
nally within an organization, (2) with immediate sup- agement is to consider only strategically important sup-
pliers, (3) with "rst and second-tier suppliers and pliers in the value chain (Tan et al., 1998a, b). Technically,
customers along the supply chain, and (4) with the entire the value chain is too complex to achieve a full integra-
supply chain. tion of all business entities within it in order to reap the
Scott and Westbrook (1991) and New and Payne bene"ts o!ered by supply chain management. This leads
(1995) describe supply chain management as the chain to a second narrower de"nition of supply chain manage-
linking each element of the manufacturing and supply ment: the integration of the various functional areas
process from raw materials through to the end user, within an organization to enhance the #ow of goods from
encompassing several organizational boundaries. Ac- immediate strategic suppliers through manufacturing
cording to this broad de"nition, supply chain manage- and distribution chain to the end user (Houlihan, 1987,
ment encompasses the entire value chain and addresses 1988). Research in this area generally focuses on improv-
materials and supply management from the extraction of ing the e$ciency and competitive advantage of manufac-
raw materials to its end of useful life. Baatz (1995) further turers by taking advantage of the immediate supplier's
expands supply chain management to include recycling capability and technology, particularly during the prod-
or re-use. Supply chain management focuses on how uct design stage through early supplier involvement.
"rms utilize their suppliers' processes, technology, and A third de"nition of supply chain management
capability to enhance competitive advantage (Farley, emerges from the transportation and logistics literature
1997), and the coordination of the manufacturing, logis- of the wholesaling and retailing industry, emphasizing
tics, and materials management functions within an or- the importance of physical distribution and integrated
ganization (Lee and Billington, 1992). When all strategic logistics. There is no doubt that logistics is an important
organizations in the value chain &integrate' and act as function of business and is evolving into strategic supply
a single uni"ed entity, performance is enhanced through- chain management (New and Payne, 1995). Physical
out the system of suppliers. transformation of the products is not a critical compon-
Fig. 1 shows the activities and "rms involve in such ent of this de"nition of supply chain management. This is
a value chain as portrayed by New and Payne (1995). It probably where the term supply chain management was
begins with the extraction of raw materials or minerals originally used (Lamming, 1996). Its primary focus is the
from the earth, through the manufacturers, wholesalers, e$cient physical distribution of "nal products from the
retailers, and the "nal users. Where appropriate, supply manufacturers to the end users in an attempt to replace
chain management also encompasses recycling or re-use inventories with information. This is also consistent with
of the products or materials. Supply chain management those marketing related literature in supply chain man-
appears to treat all organizations within the value chain agement (Christopher et al., 1998; Christopher, 1996).
as a uni"ed &virtual business' entity. It includes activities
such as planning, product design and development,
sourcing, manufacturing, fabrication, assembly, trans- 3. Evolution of supply chain management
portation, warehousing, distribution, and post delivery
customer support. In a truly &integrated' supply chain, the In the 1950s and 1960s, most manufacturers empha-
"nal consumers pull the inventory through the value sized mass production to minimize unit production cost
chain instead of the manufacturer pushing the items to as the primary operations strategy, with little product
the end users. or process #exibility. New product development was
While in principle this de"nition of supply chain man- slow and relied exclusively on in-house technology and
agement addresses the supply process throughout the capacity. &Bottleneck' operations were cushioned with

Fig. 1. Activities and "rms in a supply chain. Source: New and Payne (1995).
 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48 41

inventory to maintain a balanced line #ow, resulting in suppliers' quality control by purchasing only from
huge investment in work in process (WIP) inventory. a handful of quali"ed or certi"ed suppliers (Inman and
Sharing technology and expertise with customers or sup- Hubler, 1992). More recently, many manufacturers and
pliers was considered too risky and unacceptable and retailers have embraced the concept of supply chain
little emphasis appears to have been placed on management to improve e$ciency across the value chain.
cooperative and strategic buyer}supplier partnership. Manufacturers now commonly exploit supplier strengths
The purchasing function was generally regarded as being and technology in support of new product development
a service to production, and managers paid limited atten- (Ragatz et al., 1997; Morgan and Monczka, 1995), and
tion to issues concerned with purchasing (Farmer, 1997). retailers seamlessly integrate their physical distribution
In the 1970s, Manufacturing Resource Planning was function with transportation partners to achieve direct
introduced and managers realized the impact of huge store delivery or cross docking without the need for
WIP on manufacturing cost, quality, new product devel- receiving inspection (St. Onge, 1996). A key facilitating
opment and delivery lead-time. Manufacturers resorted mechanism in the evolution of supply chain manage-
to new materials management concepts to improve per- ment is a customer-focus corporate vision, which drives
formance within the &four walls' of the company. change throughout a "rm's internal and external linkages
The intense global competition in the 1980s forced (Fig. 2).
world-class organizations to o!er low cost, high quality
and reliable products with greater design #exibility.
Manufacturers utilized just-in-time (JIT) and other man- 4. Two alternative perspectives on supply
agement initiatives to improve manufacturing e$ciency chain management
and cycle time. In the fast-paced JIT manufacturing envi-
ronment with little inventory to cushion production or Fig. 3 presents a summary framework of the evolution
scheduling problems, manufacturers began to realize the of supply chain management along two separate paths
potential bene"t and importance of strategic and that eventually merged into a common body of literature.
cooperative buyer-supplier relationship. The concept While it is not an exclusive nor distinctive classi"cation
of supply chain management emerged as manufacturers of literature, Fig. 3 illustrates the evolution of supply
experimented with strategic partnerships with their chain management from the purchasing and supply ac-
immediate suppliers. In addition to the procurement tivities, as well as the transportation and logistics func-
professionals, experts in transportation and logistics car- tions, with a focus on integration, visibility, cycle time
ried the concept of materials management a step further reduction, and streamlined channels (Tan et al., 1998b).
to incorporate the physical distribution and transporta- The purchasing and supply perspective literature relates
tion functions, resulting in the integrated logistics con- to the previously disparate functions of purchasing and
cept, also known as supply chain management. supply management functions of the industrial buyers,
The evolution of supply chain management continued whereas the transportation and logistics perspective of
into the 1990s as organizations further extended best supply chain management literature evolves from the
practice in managing corporate resources to include stra- transportation and physical distribution functions of the
tegic suppliers and the logistics function in the value wholesalers and retailers. However, there are other
chain. Supplier e$ciency was broadened to include more means of classifying supply chain management literature.
sophisticated reconciliation of cost and quality consider- For example, Harland et al. (1999) and Harland (1996)
ations. Instead of duplicating non-value-adding activ- classify research in this area according to the levels of
ities, such as receiving inspection, manufacturers trusted integration (i.e., internal chain, dyadic relationship,

Fig. 2. Strategic vision of supply chain management.

42 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48

Fig. 3. A framework of supply chain management literature.

external chain and network of suppliers and customers) including the integration of purchasing, demand man-
among supply chain members. agement, new product design and development, and
manufacturing planning and control.
4.1. Purchasing and supply perspective of the This perspective on supply chain management focuses
industrial buyers on the manufacturing industry and has little to do with
the wholesaling or retailing industry. Its short-term ob-
In general, most of the recent literature on supply jective is primarily to increase productivity and reduce
chain management addresses the purchasing and supply inventory and cycle time, while the long-term strategic
perspective (e.g., Farmer, 1997; Morgan and Monczka, goal is to increase customer satisfaction, market share
1996; Lamming and Hampson, 1996; Kraljic, 1983). This and pro"ts for all members of the virtual organization.
perspective of supply chain management is synonymous To realize these objectives, all strategic partners must
with supplier base integration that evolves from the tra- recognize that the purchasing function is the crucial link
ditional purchasing and supply management functions. It between the sources of supply and the organization
emphasizes that purchasing and materials management itself, with support coming from overlapping activities
represents a basic strategic business process, rather than to enhance manufacturability for both the customer
a narrow specialized supporting function to overall busi- and supplier. The involvement of purchasing in concur-
ness strategy (Reck et al., 1992). It is a management rent engineering is essential for selecting components
philosophy that extends traditional internal activities by that assure the requisite quality is designed into the
embracing an inter-enterprise scope, bringing trading product and to aid in collapsing design-to-production
partners together with the common goal of optimization cycle time.
and e$ciency (Harwick, 1997). Supply chain manage- Suppliers participate at the earliest stage of product
ment creates a virtual organization composed of several design to render cost-e!ective design choices, often lead-
independent entities with the common goal of e$ciently ing to innovation in process and material technology to
and e!ectively managing all its entities and operations, compete in the global market (Monczka et al., 1994). By
 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48 43

involving suppliers early in the design stage, manufac- pendent "rms in the value chain. In this respect, supply
turers may be able to develop alternative conceptual chain management is synonymous with integrated logis-
solutions, select the best components and technologies, tics systems, and the literature base is extensive (Johnson
and solicit help in design assessment (Ragatz et al., 1997; et al., 1999; Lambert et al., 1998; Bowersox and Closs,
Burt and Soukup, 1985). An emphasis on internal com- 1996; Coyle et al., 1996).
petencies requires greater reliance on external suppliers Broadly de"ned, an integrated logistics system en-
to support directly non-core requirements, particularly in compasses the integration of processes, systems and or-
design and engineering support (Prahalad and Hamel, ganizations that control the movement of goods from the
1990). suppliers to a satis"ed customer without waste (Ellram,
Elsewhere (Tan et al., 1998b), we have empirically 1991). Where logistics once meant saturating warehouses
examined the impact of the purchasing and supply per- with inventory, an integrated logistics system includes
spective of supply chain management on contemporary inventory management, vendor relationships, transpor-
business practices, and concluded that the factors cited tation, distribution, warehousing and delivery services.
in the literature as being elements of e!ective supply The role of e!ective physical distribution is a critical
chain management (for example, customer relations and component of the logistics process. Merchandise must be
purchasing practices) positively a!ect corporate perfor- replenished quickly and arrived where and when it is
mance. In general, supply chain management seeks needed in smaller lot sizes, especially in a JIT system
improved performance through elimination of waste and (Hand"eld, 1994). The goal is to replace inventory with
better use of internal and external supplier capabilities perfect information. E!ective coordination of logistics
and technology to create a seamlessly coordinated supply activities, by means of excellent information technology
chain. Thus, elevating inter-company competition to in- processes, is essential to organizational performance
ter-supply chain competition (Anderson and Katz, 1998; (Lewis and Talalayevsky, 1997). The advancement of
Birou et al., 1998; Lummus et al., 1998; Morgan and electronic interchange, bar coding and radio frequency
Monczka, 1996; Christopher, 1996). scanning technologies has greatly aided the evolution of
the integrated logistics concept. Evidence of work in this
4.2. Transportation and logistics perspective area includes Whiteoak (1994), who traces the evolution
of the merchants of the retail grocery distribution practice in the 1970s
into the current supply chain management concept.
The transportation and logistics functions of the The current research extends the supply chain man-
wholesaling and retailing industry focus on a di!erent agement concept beyond the con"nes of one company to
aspect of supply chain management, that is, one of loca- include other organizations in the value chain, including
tion and logistics issues more often than transformation. the carrier, which plays a crucial role in an e$cient
Its origin can be traced to an e!ort for better manage- supply chain (Carter and Ferrin, 1995). However the
ment of the transportation and logistics functions (Chris- literature suggests that internal organization cultures
topher et al., 1998; Christopher, 1992, 1996; Fisher, 1997; prevent a truly integrated logistics concept (Gattorna
Lamb, 1995; Turner, 1993; Bowersox et al., 1992; et al., 1991) although there is empirical evidence that
MacDonald, 1991). While Lamming (1996) primarily transaction-speci"c investment has a strong positive
addresses the purchasing and supply perspective of sup- e!ect on the commitments of such a relationship
ply chain management, he concludes that supply chain (Anderson and Weitz, 1992).
management is a theory grounded in the "eld of logistics. Organizations in the retail industry resort to supply
Interestingly, Eloranta and Hameri (1991) note that re- chain management to counter the increasing uncertainty
search in logistics tend to be separated into inbound and and complexity of the marketplace and competitive situ-
outbound logistics, with a primary focus on inbound ation to reduce inventory in the entire value chain
logistics. (Houlihan, 1987, 1988). It is a strategic tool and di!ers
According to this perspective, supply chain manage- from classical transportation and logistics management
ment incorporates logistics focus into the strategic deci- in that the value chain is a single uni"ed entity. Jones and
sions of the business (Hale, 1999; Houlihan, 1988). The Riley (1987) also echo this single entity concept, where
once narrow focus of logistics becomes a comprehensive inventories are used only as a last resort to bu!er uncer-
topic that spans the entire value chain from suppliers to tainty in business pattern. Davis (1993) and Scott and
customers (Shapiro et al., 1993; Langley and Holcomb, Westbrook (1991) suggest that a supply chain can reduce
1992). It enables channel members to compete as a uni- its overall inventory simply by e$ciently redistributing
"ed logistics entity instead of simply pushing inventory stock within the supply chain. In the integrated logistics
back along the value chain. In such a setup, La Londe concept, short and reliable order cycle and the ability to
and Masters (1994) suggest that most of the bene"ts of "ll entire orders are critical customer service elements
forward and backward vertical integration can be ob- (Ellram et al., 1989). However, it is important to recog-
tained by coordinating the logistics operations of inde- nize that the geographical spreads of channel members
44 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48

and cost structures determine the structure of logistical example, Freeman and Cavinato (1990) propose a four-
support (Fernie, 1995; Taylor and Probert, 1993). stage supply chain management model and describe the
purchasing characteristics necessary in each stage. This
4.3. The unixed/integrated supply chain conceptual work is useful in matching purchasing with
management strategy the strategic process of the "rm, but it does not provide
a framework for strategically linking purchasing to the
When supply chain management was integrated from other functional areas. Subsequently, Watts et al. (1992)
the two perspectives into a common body of knowledge develop a conceptual framework for linking purchasing
that encompasses all the value-adding activities on the to corporate competitive strategy and to functional level
value chain, researchers realized the importance of incor- strategies. This framework is a crucial step in stimulating
porating supply chain management in overall business more active purchasing involvement in developing and
planning process (Harland et al., 1999). However, Carter implementing corporate competitive strategy that will
and Narasimhan (1994) note that it is not widely prac- improve an organization's performance.
tised. Business process reengineering literature (Burgess,
1998; Fliedner and Vokurka, 1997) supports the notion
of closely integrating the operations across functional 5. Conditions conducive to supply chain management
areas between manufacturers, suppliers and customer. In
an empirical survey, Ellram and Pearson (1994) also Supply chain management may allow organizations to
discover that despite the increased emphasis of integrat- realize the advantages of backward vertical integration
ing purchasing into overall corporate strategy, the pri- while overcoming its disadvantages. However, certain
mary function of purchasing remained a clerical role of conditions must be present for a successful supply chain
negotiating price/items. While many strategic models management adoption. Farley (1997) concludes that the
have been proposed (for example, Reck and Long, 1988) single most important prerequisite is a change in the
to link the crucial role of supply chain management in corporate cultures of all members in the value chain to
overall strategic corporate planning, they failed to sug- make it conducive to supply chain management. A tradi-
gest any action model that is useful to practitioners. tional culture that emphasizes seeking good, short-term,
More recently, Frohlich et al. (1997) have utilized rigor- company-focused performance appears to be in con#ict
ous statistical analyses of survey data and suggested that with the objectives of supply chain management. Supply
there are three di!erent types of supply chain strategies, chain management focuses on positioning the virtual
and the process of ful"lling customer's orders is of para- organization in such a way that all contributors in the
mount importance to all three types. The three supply value chain bene"t. E!ective supply chain management
chain strategies are &innovator', &marketeer' and &care- rests on the twin pillars of trust and communication
taker' strategies. While &innovators' emphasize rapid new (Grieco, 1989), and procurement and logistics profes-
product introduction and design changes, &marketeers' sionals must be equipped with the necessary expertise in
o!er broad product lines and &caretakers' focus on o!er- the critical functions of their own enterprise and fully
ing the lowest price. understand how it a!ects the entire value chain.
The goal of the integrated supply chain strategy is to A buyers' market is an ideal situation in which to
create manufacturing processes and logistics functions develop long-term strategies with key suppliers because
seamlessly across the supply chain as an e!ective buyers have leverage in negotiating cost, quality, certi-
competitive weapon that cannot be easily duplicated by "cation of processes, acquisition and sharing of new
competitors (Anderson and Katz, 1998; Birou et al., 1998; technology and production competence, especially for
Lummus et al., 1998; Lee and Billington, 1995). A well- recurrent transactions that require specialized processes
integrated supply chain involves coordinating the #ows (Ellram, 1994). In response to the intense global competi-
of materials and information between suppliers, manu- tion, mergers and acquisition that create redundant logis-
facturers and customers (White et al., 1999; Narasimhan tics capability, and new information technology, "rms
and Carter, 1998; Trent and Monczka, 1998), and imple- may adopt supply chain management to move beyond
menting product postponement and mass customization mere cost reduction into the domain of real manufactur-
in the supply chain (Lee and Tang, 1998; Pagh and ing e$ciency (La Londe and Masters, 1994; Porter,
Cooper, 1998; Van Hoek et al., 1998). Higher level of 1994).
integration with suppliers and customers in the supply In recent years, the rapid development of client/server
chain is expected to result in more e!ective competitive supply chain management software that includes a com-
advantage (Johnson, 1999; Hines et al., 1998; Lummus pletely integrated supply chain management and elec-
et al., 1998; Narasimhan and Jayaram, 1998). tronic commerce component also aids in the evolution of
Most recent research that addresses supply chain man- supply chain management (King, 1996; Semich, 1994).
agement strategy emphasizes the critical role of purchas- Sharing information with supply chain partners through
ing in formulating corporate level strategies. For Electronic Data Interchange (EDI) is also a critical
 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48 45

component of supply chain management (Ellram et al., Grieco (1989) who proposes a "ve-phase supplier certi"-
1989). EDI is not just an electronic ordering system; it cation process. Eventually, supplier certi"cation extends
can integrate stocking, logistics, materials acquisition, to include the logistics function, Gibson et al. (1995)
shipping and other functions to create a more proactive describe the utilization of supplier certi"cation to certify
and e!ective style of business management and customer carriers and its bene"ts. Inman and Hubler (1992) carry
responsiveness (Mische, 1992). The direct transfer of in- the concept of supplier certi"cation further by suggesting
formation between retailers and vendors aids in improv- that manufacturers should consider certi"cation of sup-
ing logistics e$ciency and supporting increased customer plier's product as well as its processes to avoid the
service levels. Besides the ability to increase accuracy and situation where the supplier's product falls well within
timeliness of information transferred, EDI may improve customer speci"cations but fails to perform as required.
cycle reliability and help to decrease cycle time. The literature base reveals three basic approaches to
Superior logistics management aids in successful sup- certify suppliers. Most US "rms develop their own certi-
ply chain management adoption. When coupled with an "cation systems. A growing number are adopting
information system such as EDI, the transportation sys- standardized systems, primarily based on ISO 9000 or
tem becomes the warehouse. Orders can be consolidated Baldrige Award criteria in an e!ort to streamline the
in the computer and carriers can be coordinated for JIT certi"cation process. However, a small group of organ-
delivery. Successful application of JIT principles in sup- izations encourage suppliers to pursue self-certi"cation
ply chain management requires agreements that (Maass et al., 1990). Proprietary systems allow the organ-
strengthen buyer}supplier cooperation so that supply ization to customize the certi"cation criteria and process,
strategy is directly links to the "rm's overall strategy but require extensive development time and investment.
(Polako!, 1992; Romero, 1991). As discussed above, JIT Utilizing ISO 9000 removes the redundant elements of
purchasing emphasizes reduction in inventory levels proprietary programs and reduces the need for prelimi-
throughout the value chain (Adair-Heeley, 1988), instead nary quali"cation and site visits. Unfortunately, it is
of simply pushing back inventories on suppliers. costly for suppliers to go through the ISO 9000 process
The traditional buyer}supplier relationship that em- with no guarantee of continuous product improvement,
phasizes multiple sourcing, competitive bidding and use only the assurance that a documented quality system
of short-term contracts has been characterized as adver- process is in place. As a result, some organizations devel-
sarial (Hahn et al., 1986). It tends to focus on the short- op in-house certi"cation programmes that combine cer-
term view of the purchase price and quality of a product tain ISO 9000 criteria with their own.
instead of the long-term capabilities of the suppliers. A related issue in supply chain management literature
However, there is a shift to developing long-term supplier is supplier development, which can be de"ned as any
capabilities in response to escalating competition, shorter e!ort of a buying "rm with its supplier to increase the
product life cycles, and rapidly changing customer de- capabilities of the supplier (Krause and Ellram, 1997). It
mands (Watts and Hahn, 1993, Shepherd, 1994). Al- involves a long-term cooperative e!ort between a buying
though much has been written on buyer-supplier "rm and its suppliers to upgrade the suppliers' technical,
relationships (Heide and John, 1990; Ellram, 1991), there, quality, delivery and cost capabilities and to foster on-
is a lack of empirical models for establishing a successful going improvements. Hahn et al. (1990) propose a con-
buyer-supplier partnership. ceptual model to describe the organizational decision
process associated with a supplier development pro-
gramme to serve as a guideline for designing such a pro-
6. Supplier certi5cation gram that can link purchasing strategy with a "rm's
overall corporate competitive strategy. Subsequently,
Another issue that has often been discussed in the Watts and Hahn (1993) have concluded that formal sup-
supply chain management literature is supplier certi"ca- plier evaluation is crucial to the supplier development
tion, primarily focused on purchased raw materials, com- process.
ponents and "nal goods, and in a few cases, on service
suppliers (Schneider et al., 1995, Jancsurak, 1992). Oper-
ating a supplier certi"cation programme appears is inevi- 7. Conclusion
table for a JIT manufacturer that operates with no excess
inventory and needs to deliver to the point of use (Maass, The development and evolution of supply chain man-
1988; Burgess, 1987). The ultimate goal of supplier certi"- agement owes much to the purchasing and supply man-
cation is quality at the source and to reduce inventory, agement, and transportation and logistics literature. As
non-conformance, communication errors, duplicate test- such, the term &supply chain management' is used in
ing, receiving inspection, deliver to point of use, cycle many ways, but three distinct descriptions dominate
time, and the ability to shift focus from process input to prior literature. Firstly, supply chain management may
output. An early work in supplier certi"cation is by be used as a handy synonym to describe the purchasing
46 K.C. Tan / European Journal of Purchasing & Supply Management 7 (2001) 39}48

and supply activities of manufacturers. Secondly, it may Bowersox, D.J., Closs, D.J., 1996. Logistical Management: the Integ-
be used to describe the transportation and logistics func- rated Supply Chain Process. McGraw-Hill, New York.
tions of the merchants and retailers. Finally, it may be Bowersox, D.J., Daugherty, P.J., Droge, C.L., Germain, R.N., Rogers,
D.S., 1992. Logistics Excellence: It's Not Just Business as Usual.
used to describe all the value-adding activities from the Digital Press, Burlington, MA, USA.
raw materials extractor to the end users, and including Burgess, J.A., 1987. Developing a supplier certi"cation program.
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Genuinely integrated supply chain management re- from business process reengineering. International Journal of Logis-
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quires a massive commitment by all members of the value Burt, D.N., Soukup, W.R., 1985. Purchasing's role in new product
chain. For example, the buyer may have to overhaul its development. Harvard Business Review 63 (5), 90}97.
purchasing process and integrate a supplier's engineering Carter, J.R., Ferrin, B.G., 1995. The impact of transportation costs on
teams and product designers directly into its own deci- supply chain management. Journal of Business Logistics 16 (1),
sion-making process. Since the cost of changing a partner 189}212.
Carter, J.R., Narasimhan, R., 1994. The role of purchasing and mater-
can be huge, the purchasing "rm can become a captive of ials management in total quality management and customer satis-
its suppliers. Poor supplier performance is not the only faction. International Journal of Purchasing and Materials
risk; the purchaser needs to worry about the possibility of Management 30 (3), 3}13.
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Christopher, M., Magrill, L., Wills, G., 1998. Educational development
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