The constructs of SCM competencies

To improve firm performance, a firm needs to enhance its competences in SCM. The 21^st Century Logistics framework identifies three categories of firm competences as critical for logistics and supply chain management (Figure 2.1). Each competence is composed of multiple underlying capabilities, which guide philosophies and processes to complete specific logistics and supply chain activities. Based on this framework and suggestions from experts who have recently gone or are currently going through ERP systems implementations or being responsible for SCM in Taiwanese IT industry, we identify the firm competences that may be impacted by ERP benefits and may lead to high supply chain performance and group them into three constructs. These are operational process integration, planning and control process integration, and behavioral process integration.

3.1.1.1 Operational process integration competencies of SCM

As Bowersox et al. (1999) and Closs and Mollenkopf (2004) defined in the 21^st Century Logistics framework, operations involve the processes that facilitate order fulfillment and replenishment across the supply chain. In the operational context, integration is essential in-ternally as well as with customers and suppliers. Customer integration builds on the philoso-phies and activities that develop customer intimacy and is the competency that builds lasting competitive advantage. Internal integration focuses on the joint activities and processes within a firm that coordinates functions related to procurement, manufacturer, and customer distribu-tion. Supplier integration also focuses on activities that create close ties with material and

ser-26 

vice providing supply chain partners. Competency in this area links externally performed ac-tivities into a seamless flow with internal work processes. Firms that desire to excel must blend their operating processes into those of supply partners in order to meet increasingly broad and demanding customer expectation. Nowadays, the IT industry is shifting from push methods driven by anticipated sales to pull methods that focus on delivering value to custom-ers through rapid response to demand. To do this profitably, firms must strip redundancy and duplication of materials and effort from supply chain operations. The task is all the more challenging because it is not limited to internal activities. It requires linking internal work processes with those of material and service providers. Thus, an important integration deci-sion is how many material and service suppliers to include in synchronized operations. That is, integrating operations with material and service suppliers to form a seamless flow of internal and external work overcomes the financial barriers of vertical ownership while retaining many of the benefits. A successful SCM of operational process integration, cross-functional unification, standardization, simplification, compliance, structural adaptation, operational fu-sion, and supplier management capabilities must be developed.

3.1.1.2 Planning and control process integration competencies of SCM

The planning and control process includes competences of technology and planning in-tegration refers to information systems capable of supporting the wide variety of operational configuration needed and to the development of measurement systems that facilitate segmen-tal strategies and processes to serve diverse market segments (Bowersox et al., 1999). Across the supply chain, information technology and measurement systems must facilitate planning and control of integrated operations. As Bowersox et al. (1999) explain in the 21^st Century Logistics framework, success of technology and planning integration rests upon six capabili-ties: information management, internal communications, connectivity, collaborative forecast-ing and plannforecast-ing, and activity-based and total cost management. Information management

27 

focuses on supply chain resource allocation through seamless transactions across the total or-der-to-delivery cycle. Internal communication uses technological systems to exchange infor-mation across functional boundaries in a timely, responsive, and usable format. Connectivity extends internal communications capability to supply chain partners. Collaborative forecast-ing and plannforecast-ing involves customers and suppliers developforecast-ing a shared vision supported by a mutual commitment to jointly generated action plans. Activity-based and total cost manage-ment uses activity-based costing, budgeting, and measurement to obtain a comprehensive picture of the cost/revenue contribution of a specific customer or product. Operational excel-lence must be supplemented and supported by integrated planning and measurement compe-tences. This process involves joining technologies to monitor, control, and facilitated overall supply chain performance.

3.1.1.3 Behavioral process competencies of SCM

The behavioral process rests on the quality of the basic business relationship between partners. In a competitive environment, single enterprises acting alone cannot fully achieve all management goals. The problem is that different firms typically operate under different man-agement philosophies and pursue divergent goals. Relationship integration refers to the ability to develop and maintain a shared mental framework with customers and suppliers regarding inter-enterprise dependency and principles of collaboration (Bowersox et al., 1999). Quality relationships can improve trust among a firm’s members, and further promote their attitude to and intentions of knowledge sharing in an organization (Yang and Chen, 2007). The relation-ship integration category is a competence that enables firms to build lasting distinctiveness with customers of choice and to share a mentality with customers and suppliers regarding in-terdependency and principles of collaboration. Role specificity is the capability to clarify lea-dership processes and establish shared, as contrasted with individual, enterprise responsibility.

Information sharing involves the willingness to exchange key technical, financial, operational

28 

and strategic information with others in the supply chain. Any firm seeking supply chain per-formance must demonstrate strong commitment to the customization required for effective customer and relationship integration. Bowersox et al. (1999) suggested, in the Supply Chain 2000 framework and assessment process, that the best way to start the search for integration gaps is by reviewing how a firm coordinates with customers and relationships. Thus, it is clear that consistent success ultimately depends on a firm’s competence to create value for custom-ers by providing products and services at prices that cover total cost and provide a profit to meet customers’ needs.