This assignment is based on a case study that is in Ashford University’s library. Please read Soltani, Azadegan, Liao, and Phillips (2011) which may be found in the Ashford University library (EBSCO database). You are the senior executive in charge of supply chain management for the focal firm or buyer in the United States. M-case and H-case are two important suppliers for your firm. The CEO of the focal firm wants action. The CEO has asked you to respond to the following statements.
Submit your three to four-page paper (not including the title and reference pages) written according to APA style as shown in the approved style guide. The CEO has also asked you to include two scholarly sources in addition to the textbook to support your answers.
International Journal of Production Research Vol. 49, No. 1, 1 January 2011, 269–293
Quality performance in a global supply chain: finding out the weak link
Ebrahim Soltania*, Arash Azadeganb, Ying-Ying Liaoa and Paul Phillipsa
aKent Business School, University of Kent, Canterbury, Kent, UK; bDepartment of Management, New Mexico State University, USA
(Final version received 25 May 2010)
Much has been written on the intensive interconnection between supply chain management (SCM) and quality management (QM) with a particular focus on the systems-based view as the common thread between these two operation management topics. Absent in this debate has been any examination of the dynamics of SCM and QM practices and the resultant implications for the end customer in terms of product/service quality at a global level. In consequence, the nature and extent of their interconnection or interlinking and the resultant implications for the product/service quality has remained tangential. Using a qualitative study of two very large branded athletic and casual sports apparel and footwear manufacturers based in Asia with world-wide suppliers and distribution centres, this study aims to broaden the debate by arguing that partnering with suppliers of high QM capabilities in chains of relationships does not necessarily result in downstream benefits to both the manufacturer and end customers. We argue that both SCM and QM practices must advance from traditional firm- driven, fire fighting and product-focused mindsets to a more collaborative mode of inter-firm relations in that a much greater level of co-operation among both upstream and downstream chains is regarded as a key to competitive advantage.
Keywords: supply chain management; quality management; supply chain quality management; case study; Asia
As organisations link quality management (QM) or total quality management (TQM) to supply chain management (SCM) and extend their vision beyond their own firms into the supply chain to manage quality, most current research has referred to such integration and co-ordination of the two concepts as supply chain quality management (SCQM) to highlight the paramount importance of quality to a supply chain’s long-term success (e.g. Ross 1997, Evan and Dean 2000, Robinson and Malhorta 2005, Foster 2008, Foster and Ogden 2008). This is particularly the case for those firms which operate globally, not least because, first, their competitive advantage position in one country is significantly affected by their position in other countries or vice versa, and more specifically and second, to compete on quality in the global market firms must ensure that their suppliers are on the leading edge in quality and regarded as high performers (see Chen et al. 2004, Yeung 2008).
*Corresponding author. Email: [email protected]
ISSN 0020–7543 print/ISSN 1366–588X online
� 2011 Taylor & Francis DOI: 10.1080/00207543.2010.508955
A close examination of most research linking QM to SCM suggests several clear shortcomings of their findings. These shortcomings can be divided into three key issues:
(i) the adopted research methodology, (ii) the theoretical approach, and (iii) the scope and context of the research.
Regarding the first issue, it has been rare to qualitatively investigate the dynamics of SCQM interventions. The dominant quantitative or survey-based methods, however, appear to be poorly suited to collect data from multiple perspectives of upstream and downstream supply chain partners. Concerning the second issue while, in the absence of lacuna in theoretical discussion, several authors have made an attempt to utilise organisational theories to offer provocative wisdom to SCM arena, they do not directly explore and analyse SCQM (e.g. Crook and Combs 2007, Holcomb and Hitt 2007, Ireland and Webb 2007, McCarter and Northcraft 2007, Miles and Snow 2007, Morgan et al. 2007, Rogers et al. 2007; see Ketchen and Hult 2007 for a full review). Instead, the key tendency of the authors appear to be the increased focus that is being placed upon, first, a synthesis of organisational theories and SCM in to build a better understanding of why some supply chains excel while others remain highly dysfunctional, and second, how organisational theories can help differentiate between typical supply chains – i.e. those often forced to focus on delivering speed, cost, or a select set of their competitive priorities – and best value supply chains which seek to align all of their competitive priorities to meet the needs of customers within a target market. Relating to the third and final issue which is the focus of this paper, it seems likely that the primary focus of most of the existing research has so far been on the inter-relationships between the supply chain key partners within the boundaries of national context, thereby undermining the complexities involved in the global off-shoring practices. While traditionally business competition was viewed at the firm and national levels, it is not uncommon now to see global sources are integrated into firms’ core businesses; thereby firms have to gain advantage over competing supply chains. Clearly, such level of competition is in great need of much greater level of co-ordination among chains or networks of suppliers, distributors, producers, and customers (see Zhang et al. 2009). These issues point to SCQM which requires a system-based approach to performance improvement that leverages opportunities created by upstream and downstream linkages with suppliers and customers (Foster 2008, p. 461).
The present study takes the point offered by Li and Warfield (in their Call for Papers for this special issue on Quality Assurance in Global Supply Chains) that little is known about the dynamics of quality co-ordination and assurance in global supply chain or as they succinctly put it: ‘How to assure quality performance in a global supply chain.’ Our concern in this study is also consistent with the views of Foster (2008, p. 466) who raised a similar question of ‘How do we assure product and service quality in the supply chain?’ and Ketchen and Hult’s (2007, p. 573) argument that rather than competing ‘firm versus firm’, today’s organisations are battling ‘supply chain versus supply chain’. Such research and the resultant implications not only contribute to the ‘enhancement of quality co- ordination in global supply chain’, but also offer a unique platform on which appropriate strategies and measures to eliminate the root problem of product recall germinate. This study addresses these issues by adopting a qualitative methodology and attempts to collect data from two international large branded athletic/casual footwear and sports apparel manufacturers with different degree of supplier’s and distributor’s ownerships, and
270 E. Soltani et al.
production facilities in China, Vietnam, Indonesia and Malaysia and a global market in both developed (e.g. Europe, USA) and developing (e.g. Middle East, Arab Gulf Countries, Asia) economies.
The organisation of this paper is as follows. It begins with a brief review of literature pertinent to QM, SCM, and specifically the interface between the two concepts – i.e. SCQM. Then, it presents an overview of the adopted qualitative research method. Next, the research findings are presented and discussed. A final section reassesses the theoretical and practical implications of the research.
2. A review of the literature
2.1 Quality assurance and supply chain management: an overview
While both concepts of SCM and QM (or TQM) are not new, and each has its own precepts and underlying assumptions, most current research recognises the problem of supplier relationship or, more specifically, supplier quality. According to previous studies (see Crosby 1979, p. 73), some 40–50% in 1970s to 60–70% of the cost of goods sold at the beginning of the new millennium onwards consisted of purchased goods – an increase of 20% in the 30-year period 1970 to 2000. The implications of such evidence are two-fold. First, supplier quality (included in the totality of the concept of TQM) can substantially affect the overall cost of a product or service. Second, as large companies do not operate in a vacuum and are involved in global industries, the knock-on effects of the degree of supplier quality can jeopardise not only the firm’s revenues but also their long-term survival in the marketplace.
While a positive perception of a company’s product/service quality can lead to its long-term survival, a negative perception can result in an erosion of trust of all stakeholders, thereby damaging seriously the viability of the firm, not least because of immediate product recall. In Li et al.’s (2008) analysis of current research evidence on the product recall storm (e.g. the recall of Berko Electric Toe-Space Heathers made in the US; the recall of backpack blowers made in Japan; the recalls of toys and pet food produced in China – to name but a few), the problem would appear to be attributed to the issue of quality co-ordination in global SCM. It is at this point in the analysis of supplier quality that the role of SCQM becomes crucial. While the evidence on the root cause of the aforementioned examples of the product recall in the global market was sketchy, it seems plausible to expect that operations management scholars generally pursue a rational path in that the quality co-ordination in global supply chain is continuously improved. Such words are echoed by Li et al.’s (2008) comment that: ‘. . . rather than spending time deciding [whom to blame] or who to apologise to whom and crafting a large volume of media stories, every company and supply chain should be taking a hard look at making improvements to its quality assurance programme’.
2.2 Managing quality and supply chain: the interface
An examination of various models, frameworks and approaches pertinent to QM suggests that underpinning QM philosophy is the common theme of ‘customer focus’ through effective ‘customer-supplier chain’ (see Crosby 1979, Deming 1986, Sitkin et al. 1994, Hackman and Wageman 1995, Oakland 2003, Soltani et al. 2006, 2008). The QM strategy for achieving its normative outcomes of optimising quality for the end customer,
International Journal of Production Research 271
organisational learning, and co-operative firm–customer relationship is rooted in, and shaped by, several interlocked assumptions, inter alia, quality, people, organisation, and the role of senior management. Hence it could be suggested that customers, both internal and external, are the linking pins (Likert 1967) within the organisations and so they become the focus of organisations in terms of fulfilling and exceeding their needs and wants. The customer–supplier chain was the focus of Deming’s (1986) 14-points and, indeed, the raison d’etre of the whole quality philosophy (see Hill and Jones 2008).
In a similar manner, SCM has been in place and gained importance since the 1980s based upon the promise that there are dependencies between levels in channels from the point of origin (i.e. suppliers or manufacturers) to the point of consumption (i.e. consumers, customers or end users) (Oliver and Webber 1982, Lambert et al. 1998, Li 2007, Svensson 2007). For Mentzer et al. (2001), SCM is regarded as a management philosophy which consists of a set of managerial processes with the aim of improving the long-term performance of the individual companies and the supply chain as a whole. In a similar vein, Svensson (2002, p. 263) views SCM as a business philosophy that simultaneously should address the overall bi-directional dependencies of activities, actors, and resources on an operational, tactical, and strategic level, from the point of origin to the point of consumption in and between channels (see also Santos et al. 2008, Millet et al. 2009, Shen and Chou 2010). From a review of existing literature, it can be seen that SCM has been defined in different ways to encompass different kinds of dependencies in, between and across companies in channels from manufacturers/suppliers to customers/ consumers. Despite the differences, the common denominator is that the SCM focus of today’s enterprise has arisen in response to several critical business requirements (Ross 1997, pp. ix–xi), namely:
(i) sustaining the collective momentum of various management paradigms such as just-in-time, business process re-engineering, and TQM which have required companies to turn outward to their channels of supply and distribution in search of untapped opportunities for cost and cycle time reduction and process agility (see Tan et al. 2008, Xu et al. 2008);
(ii) the realisation that closely integrated channels of suppliers and customers can provide today’s enterprise with unique sources of competitive competencies; and
(iii) enterprise re-engineering and operations streamlining (see Beheshti et al. 2007, Hsu and Wallace 2007, Zhang and Bhattacharyya 2007, D’Mello and Ananthanarayana 2010), thereby a need on the part of the enterprise to look seriously at their supply chain partners with a quality-driven customer focus.
In to identify possible similarities and differences between QM (see Sitkin et al. 1994, Hackman and Wageman 1995, Evans and Dean 2000, Mehra et al. 2001, Soltani et al. 2005, 2008) and SCM (see Tan 2001, Hult 2004, Robinson and Malhorta 2005, Li 2007, Li et al. 2008) and elucidate their interface (see Cheng et al. 2005, Flynn and Flynn 2005, Ketchen and Hult 2007, Foster 2008, Li et al. 2008), Figure 1 presents the underlying assumptions of each concept and highlights the linking pin of the two fields.
A close examination of Figure 1 suggests that some general differences can be detected between the two concepts. While some scholars view QM to encompass both within and external operations that need to be taken into account to guarantee high quality services and products, SCM seems to be viewed as a more external operation which is largely aimed at upstream activities. Moreover, each of the two concepts has their own origins and
272 E. Soltani et al.
is built upon and evolved from various research disciplines. QM has its root in total
quality control and covers both ‘hard’ and ‘soft’ practices. For most advocates of QM (e.g.
Crosby 1979, Feigenbaum 1983, Ishikawa 1985, Deming 1986, Garvin 1988, Juran 1989,
Waldman 1994), the concept can be characterised by customer orientation, culture of
excellence, removal of performance barriers, teamwork, training, employee participation,
management commitment, and customer–supplier chain. Like QM, SCM has also emerged
from a wide range of disciplines; namely, physical distribution, transportation and
network systems of materials, logistics and transportation, services, supply base
integration and information (Croom et al. 2000, Tan 2001, Ross 2002, Robinson
and Malhotra 2005, p. 318, Hou et al. 2007, Li 2007). In contrast, there are more and clear similarities between QM and SCM, an indication
of the possibility of their integration. Both concepts are under the domain of operations
management functions; both, in the majority of instances, are complementary and closely
interconnected; both emphasise the importance of system-based view to operations (Foster
2008); both can be regarded as a major means of attaining competitive advantage; the
effectiveness of both concepts requires a high degree of co-ordination among all
organisational levels and people and activities (see Li and Wang 2007) and more
importantly, as both concepts emphasise or indeed start and end with the customer
(Gattorna and Walters 1996, p. 12), it can be safely and strongly argued that fulfilling and
meeting customer needs can be regarded as the interface between them. As a result of trivial differences – largely of meaning and emphasis as opposed to
substance – and vital commonality between the two concepts, some scholars have proposed
the idea and therefore the value of integration of SCM and QM and merged them to form a
new concept which they called ‘supply chain quality management’ (SCQM). Building upon
the definition of SCQM by Ross (1997), Robinson andMalhorta (2005, p. 319) take a more
process centric view to SCQM and define it as ‘the formal co-ordination and integration of
business processes involving all partner organisations in the supply channel to measure,
analyse, and continually improve products, services, and processes in to create value
and achieve satisfaction of intermediate and final customers in the marketplace’. A similar
definition is adopted by Foster (2008, p. 461) in that SCQM is viewed ‘as a system-based
approach to performance improvement that leverages opportunities created by upstream
and downstream linkages with suppliers and customers’.
exceeding customer’s needs and
• Strategic planning and leadership • Continuous improvement/learning • Empowerment and teamwork • Human resource focus • Management structure • Quality tools • Supplier support • Customer–supplier chain
• Transportation and logistics • Marketing • Strategic management • Continuous improvement/learning • Organisational behaviour • Best practices • Supply base integration • Relationship & partnerships
Quality managementSupply chain management
Figure 1. The interface between SCM and QM.
International Journal of Production Research 273
While the aforementioned definitions highlight the paramount importance and critical role of QM, assurance and control as a pre-requisite for improving the overall supply chain performance in the form of an effective buyer–supplier relationship, a close examination of empirical evidence pertinent to supplier–manufacturer–customer relations suggests that there are also potential for significant cost, losses not least because suppliers are more likely to engage in guileful self-interest seeking (Williamson 1975, Heide 1994, Brown et al. 2000, Morgan et al. 2007, p. 515). While the fear of opportunism by key players in supply chain partnership is not uncommon, it undoubtedly weakens the potential for enhanced manufacturer performance and dissatisfaction of the end user. At a deeper level, the vulnerability of the manufacturer or the maximisation of the supplier’s own economic goals is higher when the parties are involved in a multi-layered supply chain (Morgan et al. 2007, Li et al. 2008). In relation to such likelihood of opportunistic behaviour by suppliers, McCarter and Northcraft (2007) make a further interesting observation. They view supply chains as social dilemmas in that each actor must decide whether to pursue his/her own interest or the collectives’ interest.
3. Research method
Although under-utilised in QM and SCM research, qualitative research methods have recently been recommended by operations management scholars to complement frequent use of survey-based methodologies (Singhal et al. 2008). While empirical research, often in the form of survey-based methodologies, has emerged as the dominant paradigm in the field of operations, management, not least because of its applied nature (to quote Flynn, cited in Singhal et al. 2008, p. 346) ‘as we move into the future, many important issues relate to the global operations and SCM environment. It is important that we adapt our methods to a global context. Measures that were developed for use in a Western context may not be relevant in very different national cultures, both in terms of wording and in terms of the underlying constructs that they represent’. We therefore argue that the use of qualitative methods to explore issues of SCQM in the context of non-Western environment can uncover the dynamics of managing manufacturer–supplier relationships in terms of unethical and opportunistic behaviour, and the associated contextual factors underlying such misbehaviours. The adoption of qualitative and case-based approaches in this research is therefore a response to Singhal et al.’s (2008) recent call for multiple methods to explore SCQM practices in the context of non-Western economies.
Scholars exploring various aspects of organisation have also argued that qualitative methodology can result in generating, rather than collecting, data and can uncover significant insights into the attitudes of various parties as well as the full range of contextual issues underlying and influencing the research phenomenon (see Burgess 1984, Mason 1996, Easterby-Smith et al. 2003, Ogbonna and Harris 2005, p. 5). To probe beneath the surface of and provide a rich context for understanding the dynamics of supplier–manufacturer–customer partnerships and elucidating any weak link within the novel context of the research and encourage subjects to express their views at length, 148 in-depth interviews were conducted at two cases with a good cross-section of individuals or parties involved in supply chain partnerships. Based on the notion of a ‘systems-driven approach’ of both QM and SCM and the importance of global SCQM, all parties involved in upstream and downstream flow of raw materials, products and services – i.e. the triangle of supplier–manufacturer–customer – who were operating in different countries were
274 E. Soltani et al.
interviewed (see Bryman 1989). Intra-firm or manufacturing people provided a perspective on quality and supply chain policies; suppliers presented their views about the depth and breadth of manufacturer-supplier partnership; customers who formed the interface between QM and SCM presented a perspective from outside the supplier–manufacturer suite in terms of the real outcomes of their partnership. This in turn provided the opportunity for the researchers to identify any gap between the customers’ perceived product or service quality and the organisation’s rhetoric of SCQM, thereby elucidating the weak link in supply chain partnership.
Our approach to selection of research participants from intra-firm, upstream and downstream supply chain processes is consistent with the central concern of the qualitative research methods that ‘multiple perspectives’ must be systematically sought during the research inquiry (Strauss and Gorbin 1994, p. 280). In fact, the three types of key informants in our research form a triangle which represents a three-way partnership or triangular relationship involving upstream supply chain, firm/manufacturer, and down- stream supply chain parties. To effectively compete in the global marketplace, it is therefore imperative for the three parties to form, as Dittmer (1981, p. 485) rightly put it, a ‘strategic triangle’. This triangular partnership implies that the success or satisfaction of each party in the global supply chain is significantly shaped by or contingent on, first, the nature of the partnership between the other two parties, and more importantly and second, the degree of end customer satisfaction. In the presence of ineffective operations or malfunction or opportunistic behaviour of only one party or more, the partnership would result in (to quote McCarter and Northcraft 2007) a ‘social dilemma’, in that each party would pursue his/her own interest and therefore the whole supply chain would remain ineffective. Tables 1 and 2 present some descriptive statistics on the peculiarities of cases and interviewees.
As our aim was to explore and analyse the dynamics of SCQM and whether partners involved in the supply chain partnership pursued their own self-interest and looked for business opportunities to their individual advantage (see McCarthy and Northcraft 2007, Morgan et al. 2007), thereby elucidating weak links in supply chain, we chose two large branded athletic and casual footwear and apparel sportswear manufacturers. They had production facilities in several Asian countries, namely, China, Vietnam, Malaysia, Taiwan and Indonesia. In addition to local and regional wholesalers, retailers and their privately-owned shops, the major clients for the two companies were Adidas, Puma, Reebok, Nike and Timberland with franchise stores in Asia, Middle East, Europe, Mexico and USA. Each of the two companies was an original equipment manufacturer (OEM) and an original design manufacturer (ODM). Both were in operation for over 20 years. The two cases were leading branded athletic and casual footwear and sportswear manufacturers in terms of growth in sales, dividends and rise in profit; they had well- established SCM in that strong partnerships with global brand customers were deemed essential; they had the largest number of employees; they had the largest market share in the branded wholesale athletic and casual footwear and apparel manufacturers; and finally they benefited from a very diversified global market across both developed and developing economies. Further analysis of the documentary evidence of the cases indicated that each case had different combinations of focal and ordinary suppliers with several owned and private distribution centres.
In respect of operations management techniques and modern management practices, the two cases had several other broad characteristics in common. In to improve continuously and compete at national, regional, and global levels, each case adopted a
International Journal of Production Research 275
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