Outline of the Dissertation - 企業導入企業資源規劃系統對供應鏈管理能力之影響

Chapter 1 Introduction

1.4 Outline of the Dissertation

Chapter 1 defined and described ERP and SCM. It described the problem area; and it presented the research questions, an overview of the research process and the importance of the research. Chapter 2 presents relevant literature on ERP benefits and firm competencies of SCM and other important concepts. Chapter 3 presents the model, defines the constructs, dis-cusses their operationalizations and states the hypotheses. Chapter 4 uses the data to establish the instrument’s measurement validity. Chapter 5 analyses the model measurement. Chapter 6 discusses the findings and implications. Chapter 7 makes conclusions and remarks. It also

presents the major contributions to the academic community and its implications practitioners and the limitations of the work and suggested future research directions.

Benefits of ERP imple-mentation

Competencies of SCM Improved firm

performance on

Figure 1.1 Conceptual Model – Influence of ERP systems im-plementation on firm competencies of SCM

Create and refine initial pool of items for each construct in

concep-tual mode

Create final version of survey Create prototype

ques-tionnaire

Perform practitioner

pretest and interviews Refine items and construct definitions

Remove items that fail to perform as hypothesized or that violate

as-sumptions

Form and discuss conclusions Perform various data

transforma-tions

Figure 1.2 Dissertation process overview

Figure 1.3 The domain definitions of linking ERP benefits and firm competencies of SCM.

ERP Benefits

Operational benefits

The operational benefits are those arising from automating cross functional processes.

IT infrastructure benefits

The IT infrastructure benefit consists of the typical IT department benefits arising from reduction in cost of maintaining legacy sys-tems.

Managerial benefits

The managerial category includes benefits that arise from the use of data to better plan and manage production, manpower, inventory and physical resources and from the monitor-ing and control of financial performance of products, customers, business lines and geo-graphic area.

Strategic benefits

The strategic benefit category focuses on the benefits that arise from the system ability to support business growth.

Organizational benefits

The organizational benefits category captures the benefits derived from facilitation business learning, empowerment of staff and higher employee morale and satisfaction.

SCM Competencies

Operational process

Within the operational process, firm competen-cies include customer integration, internal inte-gration, and supplier integration whether ma-terial or service suppliers. Customer integration builds lasting distinctiveness with customers of choice. Internal integration links internally performed work to support customer require-ments, and supplier integration links externally performed work into a seamless congruency with internal work processes.

Planning and control process

The planning process includes competencies of technology and planning integration and mea-surement integration. Technology and planning integration refers to information systems capa-ble of supporting the wide variety of operational configurations needed to serve diverse market segments. Measurement integration refers to the development of measurement systems that faci-litate segmental strategies and processes.

Behavioral process

In the behavioral process, relationship integra-tion refers to the ability to develop and maintain a shared mental framework with customers and suppliers regarding inter -enterprise dependency and principles of collaboration.

Improved firm performance on

CHAPTER 2 LITERATURE REVIEW

Research into the relationships among ERP, SCM and firm performance has increa-singly applied theories and concepts from the strategic literature. The resource based view (RBV) of the firm is a particularly appropriate theoretical framework for studying the perfor-mance implications of SCM and ERP (Zsidisin et al., 2003; Sinkovics and Roath, 2004; Kal-ling, 2003; Tarafdar and Gordon, 2007). It complements traditional industrial organizational theory by recognizing the competitive value of resources/capabilities/competencies, and how they combine with and influence strategies pursued by a firm. Within a supply chain, re-sources and strategies include those that reflect inter-firm activity. We therefore suggest that ERP benefits play an important role in enhancing SCM competencies. Once a firm has adopted its ERP system and infrastructure, it is in a position to leverage relationships within the supply chain (Kovacs and Paganelli, 2003; Davenport and Brooks, 2004; Akyuz and Re-han, 2008). It follows that how a firm adopts an ERP system should be considered simulta-neously with consideration of enhancing its SCM competencies. Drawing from the literature, we posit that the benefits of adopting an ERP system include that it is an enabler and antece-dent of creating SCM competencies of enterprise. The related literature and conceptual framework underlying the study are presented next.

2.1 Supply Chain Management

Supply chain management (SCM) is a 21^st century paradigm of IT infrastructure. It fo-cuses on globalization and information management tools that integrate procurement, opera-tions, and logistics from raw materials to customer satisfaction. Further, it increases

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turing flexibility, transportation speed, and information availability, as well as management complexity. In recognition of this potential, practicing managers and academic researchers have realized that SCM has been a major component of competitive strategy to enhance orga-nizational productivity and profitability (Kovacs and Paganelli, 2003; Themistocleous et al., 2004; Akyuz and Rehan, 2008).

Not everyone, however, means the same thing by the term “supply chain management.”

SCM has evolved from the field of logistics. Its development was initially along the lines of physical distribution and transportation (Lamming, 1996). The term “supply chain manage-ment” first appeared in 1982. Around 1990, academics first described SCM from a theoretical point of view to clarify the difference from more traditional approaches and names, to man-aging material flow and the associated information flow (Cooper et al., 1997). Cooper et al.

(1997) provide a valuable review of 13 early SCM definitions: a solid argument that SCM and logistics are not identical. The term supply chain management has grown in popularity over the past two decades, with much research being done on the topic.

The Council of Supply Chain Management Professionals (CSCMP) (2004) (formerly The council of Logistics Management (CLM)), a leading professional organization promoting SCM practice, education, and development, defines SCM as: “SCM encompasses the plan-ning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities, including coordination and collaboration with suppliers, intermediaries, third-party service providers, and customers”. In essence, supply chain man-agement integrates supply and demand manman-agement within and across companies. CSCMP emphasizes that SCM encompasses the management of supply and demand, sourcing of raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, and distribution and delivery to the customer.

Several authors have defined supply chain management. Christopher (1998) and Sim-chi-Levi et al. (2000) define supply chain management as “the integration of key business

processes among a network of interdependent suppliers, manufacturers, distribution centers, and retailers in order to improve the flow of goods, services, and information from original suppliers to final customers, with the objectives of reducing system-wide costs while main-taining required service levels” (as cited in Stapleton et al., 2006, p. 108). The Global Supply Chain Forum (GSCF) defines supply chain management as “the integration of key business processes from end user through original suppliers, that provides products, services, and in-formation that adds value for customers and other stakeholders” (as cited in Lambert et al., 1998, p.1).

SCM concerns the integrated and process-oriented approach to the design, management and control of the supply chain, with the aim of producing value for the end customer, by both improving customer service and lowering cost (Bowersox and Closs, 1996; Giannoccaro and Pontrandolfo, 2002).

According to Li et al. (2006) the dual purpose of SCM is to improve the performance of an individual organization as well as that of the entire supply chain. CLM definitions clearly establish that SCM is more broadly conceived than merely “logistics outside the firm” (Lam-bert, 2004; Lambert et al., 1998). Recent research supports this conception, portraying SCM as a strategic level concept (Stank et al., 2005). Mentzer et al. (2001) consider SCM as a sys-temic, strategic coordination of business functions within an organization and between organ-izations within the supply chain, for improving the long-term performance of individual companies and the supply chain as a whole. The emphasis of each of these definitions is on the objective of SCM to create a distinctive advantage by maximizing the total value of prod-ucts and services (Stank et al., 2005).

Furthermore, Lummus and Vokurka (1999) add that SCM links all the departments within an organization as well as all its trading partners. There is mutual collaboration and companies work together to make the whole supply chain competitive. Information technolo-gy is widely used to share information and generate demand forecasts. The underlying idea in

SCM is that the entire process must be viewed as a single system. The core competencies of individual organizations are determined and are cashed on, to create enhanced competitive advantage for the supply chain.

By the 1990s, firms recognized the necessity of collaboration with suppliers and cus-tomers in order to create superior customer value. This movement titled supply chain man-agement or value chain manman-agement shifted a company’s focus from within an enterprise to managing across firm boundaries.

Deloitte Consulting survey reported that only 2% of North American manufacturers ranked their supply chains as world class although 91% of them ranked SCM as important to their firms’s success (Thomas, 1999). Thus, while it is clear that SCM is important to organi-zations, effective management of the supply chain does not appear to have been realized.

Bowersox and Closs (1996) argued that to be full effective in today’s competitive envi-ronment, firms must expand their integrated behavior to incorporate customers and suppliers.

This extension of integrated behaviors, through external integration, is referred to by Bower-sox and Closs (1996) as supply chain management. In this contex, the philosophy of SCM turns into the implementation of supply chain management: a set of activities that carries out the philosophy.

SCM has been receiving increased attention from all fronts, namely academicians, consultants, and business managers (Tan et al., 2002; Croom et al., 2000; Van Hoek, 1998) since the early 1990s. Organizations have recognized that SCM is the key to building sus-tainable competitive edge (Jones, 1998) in the 21^st century. SCM has been widely talked about in prior literature from various viewpoints (Croom et al., 2000) such as purchasing, logis-tics/distribution/transportation, operations and manufacturing management, organizational behavior, and management information systems. Industrial organization and transaction cost analysis (Ellram, 1990; Williamson, 1975), resourced based and resource-dependency theory (Rungtusanatham et al., 2003), competitive strategy (Porter, 1985), and social-political

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pective (Stern and Reve, 1980) are some of the aspects of SCM that have been discussed in past literature.

Generally, SCM has three levels. Some have restricted its meaning to apply to only the

“relational” activities between a buyer and seller (Ellram, 1991). A second use includes all

“upstream” suppliers of a firm. Yet a third takes a “value chain” approach, in which all activi-ties required to bring a product to the marketplace are considered part of the supply chain.

Manufacturing and distribution functions are thus included as part of the flow of goods and services in the chain (Davenport and Brooks, 2004; Kovacs and Paganelli, 2003; Dobler and Burt, 1996; Lee and Billington, 1993).

The term “supply chain” is used in the present research in the spirit of the value chain concept. A supply chain is a dynamic process and involves the constant flow of information, materials, and funds across multiple functional areas both within and between chain members (Jain et al., 2008). Such a holistic approach is consistent with the integrated way today’s glob-al business managers are planning and controlling the flow of goods and services to the mar-ketplace.

2.2 Competencies of SCM

The literature on SCM is quite vast and dispersed across many areas, such as purchas-ing and supply, logistics and transportation, marketpurchas-ing, organizational dynamics, information management, strategic management, and operations management. In recent years, supply chain design and its competencies and performance have received much attention from re-searchers and practitioners. To properly conduct research into constructing the SCM compe-tencies, we need to survey the literature on the subject of competency itself, and on SCM competencies and on SCM measures.

From the RBV viewpoint, all firms have capabilities; however, a firm will usually focus

on certain capabilities consistent with its strategy, and the firm’s most important capabilities are called competencies (Barney, 1991). Accordingly, competencies emphasize technological and production expertise at a specific point along the value chain (Stalk and Shulman, 1992;

Vickery et al., 1993; Cleveland et al., 1989). Bowersox et al. (1999) identified that a compe-tency reflects the synthesis of selected logistical capabilities into a logically coherent and manageable set of circumstances sufficient to gain and maintain supply chain collaborations.

Closs and Mollenkopf (2004) proposed a framework that identifies six firm competencies critical for SCM and is based on the work of Bowersox et al. in 1999. Each competency is composed of multiple underlying capabilities, which guide philosophies and processes to complete specific logistics and supply chain activities and to overcome obstacles that under-mine both internal and external integration of value-added supply chain operations. The com-petencies leading to high supply chain performance can be grouped into: customer integration, internal integration, material and service supplier integration, technology and planning inte-gration, measurement inteinte-gration, and relationship integration (see Figure 1). Furthermore, Closs and Mollenkopf (2004) developed a measurement model that considers both firm and supply chain performance using 13 logistics and supply chain variables representing five key performance areas, including: customer service, cost management, quality, productivity, and asset management. Gunasekaran et al. (2004) suggested a framework for measuring the per-formance of a supply chain that consisted of three levels: strategic, tactical, and operational.

Park et al. (2005) proposed a framework for the balanced supply chain scorecard (BSCS) that considers the literature on the BSC and SCM, SCM solutions, and product characteristics. The framework shows the objectives in four perspectives of the BSCS: financial perspective, cus-tomer perspective, business process perspective, and learning and growth perspective.

In the literature survey we identified the SCM competencies and, referring mainly to the framework of Bowersox et al. (1999) (see Figure 2.1), we analyzed the impact of ERP benefits on the SCM competency, and grouped the items into three constructs; and from that

literature we selected 20 items that are proposed as the content of SCM competencies (see Ta-ble 1). These constructs are: operational, planning and control, and behavioral process.

2.3 Enterprise Resource Planning

Different researchers have suggested different ways of defining ERP: that is, from a business, technical or functional perspective. One way of looking at ERP is as a combination of business processes and information technology. Davenport and Brooks (2004) proposed that implementing ERP systems brings many benefits to the organization, including reduction of cycle time, improving information flow, rapid generation of financial information, promo-tion of E-business, and assistance in development of new organizapromo-tional strategies. From a technical perspective, ERP was designed to overcome the operational problems that compa-nies experienced with earlier information systems. Bendoly and Schoenherr (2005) maintains

Figure 2.1 21^st Century Supply chain framework Source: Bowersox et al. (1999)

that ERP systems should not be looked at simply as tools that have a fixed and measurable output, but rather as comprising a technological infrastructure designed to support the capa-bility of all other tools and processes used by a firm. Functionally, an ERP system primarily supports the management and administration of the deployment of resources within a single organization. One significant feature of an ERP system is that core corporate activities, such as manufacturing, human resources, finance, and supply chain management, are automated, and are improved considerably by incorporating best practices, so as to facilitate greater ma-nagerial control, speedy decision making and huge reduction of business operational cost. The definition of ERP used in the present research is as stated by Wallace and Kremzar (2001):

“An enterprise-wide set of management tools that balances demand and supply, con-taining the ability to link customers and suppliers into a complete supply chain, employing proven business processes for decision making, and providing high degrees of cross-functional integration among sales, marketing, manufacturing, operations, logistics, purchasing, finance, new product development, and human resources, thereby enabling people to run their business with high levels of customer service and productivity, and simultaneous-ly lower costs and inventories; and providing the foundation for effective e-commerce.”

2.4 ERP Benefits

Many firms install ERP systems to improve the flow of information across sub-units (Kalling, 2003). Data standards eliminate the burden of reconciling or translating information that is inconsistently defined across two or more sub-units. Data standards also do away with the potential for translation or reconciliation errors as well as ambiguity about a field’s true meaning (Wade and Hulland, 2004). The integration provided by ERP also reduces the ad-ministrative costs of sharing information, since many manual activities involved with keying and translating information from one system to another are eliminated. Finally, since the

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gle database makes data universally available as it is updated, ERP improves the timeliness of information. Enhancing this flow enables the centralization of administrative activities, such as payroll and accounting. Furthermore, it allows better operational coordination, such as im-proving material flows among plants or information flows from sales offices to plants. ERP can also enhance centralized decision-making at the divisional or corporate level as informa-tion from various sub-units is centralized and standardized in a timely fashion (Davenport and Brooks, 2004). Because it allows better coordination, ERP is sometimes credited with foster-ing an inter-functional process approach to business, rather than a functionally oriented one.

Many firms also install ERP systems to replace existing IT infrastructure as well as to reduce maintenance costs and the costs of future IT improvements. With ERP systems the vendor develops and maintains the software and thus spreads the costs of doing so among numerous customers.

For years organizations have striven to realize the benefits of ERP, ES and IT invest-ments. Integrated ERP systems affect all aspects of a business (Kalling, 2003; Hong and Kim, 2002). Dhillon (2005) claimed that real benefits reside not within the IT domain but, rather, in the changes in the organizational activities that the IT system has enabled.

Several researchers have classified the types of ERP benefits, and have indicated that some approaches may be appropriate techniques for evaluating the performance or benefits of ERP systems. Irani and Love (2001) proposed a framework for meeting the challenges asso-ciated with categorizing benefits that is based on the work of Harris (1996). In a case study of an MRPII investment, it was observed that as one moves from strategically oriented IS projects through tactical to operationally oriented projects, the benefits accrued go from those that are generally intangible and non-quantitative in nature to more tangible and quantitative ones for strategic, tactical and operational benefits. The benefits of ERP systems include streamlined business processes, improved planning, improved decision making, and reduction of inventories.

Mabert et al. (2000) surveyed about 500 business executives, and revealed the follow-ing performance outcomes of ERP: quickened response time, increased interaction across the enterprise, improved order management, improved customer interaction, improved on-time delivery, improved supplier interaction, lowered inventory levels, improved cash management, and reduced direct operating costs. Stratman and Roth (2002), using 36 measures, defined eight theoretical ERP competency constructs. They posited a portfolio of managerial, technic-al and organizationtechnic-al skills and expertise as necessary antecedents to improving business

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