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Contents
Introduction: .................................................................................................................................... 5
How Logistics Management Enhances the Competitiveness of Marks and Spencer? ................... 6
Leadership ..................................................................................................................................... 13
Similarities and Differences between a Supply Chain and a Value Chain ................................... 18
Lack of Predictability.................................................................................................................... 22
Flexibility ...................................................................................................................................... 42
E-Commerce: ................................................................................................................................ 50
E-Business..................................................................................................................................... 51
Summary ....................................................................................................................................... 51
How Marks & Spencer Can Benefit from the Recent Innovations in E-Commerce and E-
Business ........................................................................................................................................ 51
References ..................................................................................................................................... 62
5
Chapter 1: Introduction
Introduction:
and In Touch. In like manner, these qualities have been at the core of how the association direct
their business since start of their excursion at Penny Bazaar at Leeds Kirk entryway Market in
1884. M&S is one of the UK's driving retailers, with obligation to making each minute
extraordinary through organization's stock system which fuses three area production network, for
example, claim mark nourishment, pieces of clothing and home things stockiest, that are
M&S inventory network covers arranging, sourcing, inside and outside business, Customer
Logistics Services and the Supply Chain Strategy and Development. The business fuses other
Supply Chain parts, for instance, Quality and Compliance, Environment, Sustainable Health and
meet client requests through the arranging, control and execution of the powerful development
and capacity of related data, merchandise and ventures from root to goal. Logistics
administration enables organizations to decrease costs and upgrade client benefit. The logistics
administration process starts with crude material amassing to the last phase of conveying
merchandise to the goal. By holding fast to client needs and industry principles, logistics
arranging steadily builds costs, and issues may emerge from the execution of insufficient
logistics programming. A large portion of these issues happen because of uncalled for choices
identified with outsourcing, for example, choosing the wrong seller or doing conveyance
undertakings without adequate assets. (Lambert, D.M. & Stock, J.R., 1993)
number, area and size of warehousing, dissemination focuses, and offices. Strategic
organizations with providers, merchants, and clients, making correspondence channels for basic
data and operational upgrades, for example, cross docking, coordinate delivery, and outsider co-
Item life cycle administration, so new and existing items can be ideally coordinated into
exercises important to get sources of info and segments to a creation office (counting the cost of
acquiring contributions), through the generation procedure and out through an appropriation
framework to the end client. Enhancing the effectiveness of the materials administration work
commonly requires the selection of a Just-in-Time (JIT) stock framework, intended to streamline
on stock holding costs by having parts land at an assembling plant in the nick of time to enter the
creation procedure or to have merchandise touch base at a retail location just when stock is
Marks and Spencer is the UK's driving retailers having 21 million individuals going to its
store every week. In spite of the fact that, it offers beautiful, top notch, extraordinary esteem
attire and home items, exceptional quality nourishment, the production network administration is
as yet secret and that will be understood in this investigation. The tactics involved are as follows:
Benchmarking of all operations against contenders and usage of best practices all through
the venture.
Marks and Spencer is additionally the main supplier of women ware and undergarments
in the UK and is quickly expanding its piece of the overall industry in menswear, kids wear and
home ware. 49% of its business is in apparel and home ware and the rest 51% in sustenance.
Other than that, it is likewise condition well-disposed and to introduce us a green earth it has a 5-
year eco design named Plan A. (Probst, G. & Raisch, S., 2005)
by means of our site and our recently propelled 'Shop Your Way' office. Its objective is to
through expanding the pace of progress and driving operational magnificence in the business;
building multi-channel ability; developing its global portfolio; and, as the economy comes back
to a more grounded balance, reviving its image correspondences. Its encouraging was hindered -
however not modified - by the subsidence. A year ago, It kept on actualizing here and now
destinations to direct M&S through the financial downturn. Because of this conclusive activity
our long-haul methodology stays set up. It has constructed a solid stage for development and
have enhanced or kept up piece of the pie in all its center regions. (Palmer, M. and Quinn, B.,
2005)
9
Supply Chain: The supply chain encompasses all activities associated with the flow and
transformation of goods from the raw materials stage (extraction), through to end users, as well
as the associated information flows. Material and information flows both up and down the supply
chain. The supply chain includes new product development, systems management, operations
transportation, warehousing, and customer service. Supply chains are essentially a series of
linked suppliers and customers; every customer is in turn a supplier to the next downstream
organization until a finished product reaches the ultimate end user. Supply Chain Management is
the integration of all the activities in the supply chain to achieve a sustainable competitive
advantage. D. Levi (2002) emphasizes supply chain management plays an integral and crucial
According to Hayes (2002), supply chain management can be defined as the process of
coordinating and integrating materials, finances, and information between the supplier,
manufacturer, and wholesaler with the goal to reduce inventory, thereby increasing profits. A
good manager or management team handling this aspect of the business is invaluable in
Council of Logistics Management (CLM) (2000) defines SCM as “the systemic, strategic
coordination of the traditional business functions and tactics across these businesses functions
within a particular organization and across businesses within the supply chain for the purposes of
improving the long-term performance of the individual organizations and the supply chain as a
10
whole”. SCM has been defined to explicitly recognize the strategic nature of coordination
between trading partners and to explain the dual purpose of SCM: to improve the performance of
an individual organization, and to improve the performance of the whole supply chain. Feldmann
M and Müller S (2003) indicated that the goal of SCM is to integrate both information and
material flows seamlessly across the supply chain as an effective competitive weapon .
different things to many different people and numerous developing definitions. Although the
literature is fraught with many definitions this paper presents its own high-level definition that
sets the concept within the specific research problem statement context that is related to
markets. Two major streams can be distinguished within SCM. The first stream puts SCM into
the context of logistics. The second, wider definition used in this paper is given as follows:
Based on Chen, A. Paularj (2004), illustration in his article that supply chain
encompasses all activities associated with the flow and transformation of raw material’s stage
(extraction), through to the end user, as well as the associated information flows. Materials and
information flows both up and down the supply chain with the purpose of producing a useful
product for the end user (customer). The supply chain also includes new product development,
Supply chains are essentially a series of linked suppliers and customers; every customer
is in turn a supplier to the next downstream organization until a finished product reaches the
the process of integrating organizational units along SC activities through improved supply chain
relationships, and coordinating materials, information and financial flows in order to fulfill
customer demands with the aim of improving performance of the organization as a whole and
achieve a sustainable competitive advantage”. This definition distinguishes between the supply
chain as the physical side and the management of supply chain itself.
Schfonsleben (1998) assumed that supply chain can be broadly classified of comprising
of three networks – Supplier, firm and Distribution. The supplier network consists of all
organizations that provide inputs, either directly or indirectly, to the focal firm (i.e., the
purchaser). Focal firms network is involved in the conversion of input material to the output
material. The distributive network consists of all downstream organizations from the focal firm
that ensure that the right quantity of goods is delivered to the appropriate customer location in a
timely manner.
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This classification is best visualized by house of SCM (Fig. 2) and will be described in
The roof of the house of SCM depicts the ultimate aim of SCM, namely improving
strategic position compared to its competitors (this is in line with the ideas of Porter (1998, p. 55)
The roof of the house of SCM rests on two pillars, ‘integration of organizational units’
and ‘Coordination of flows’. Of the many facets of SCM, three building blocks in each ‘pillar’
are outlined due to the important and innovative role they play in SCM.
13
Choice of Partners
Starting with the integration of organizational units we have to design the SC first, i.e.
find those partners with the best fit to the existing SC and the needs of the customers to be
served.
Network of organizations
challenge in controlling such a network stems from the nature of relationships between SC
partners.
They are neither part of a single hierarchy nor loosely coupled by market relations.
Hence, control mechanisms for a hybrid between market and hierarchy are regarded as a risk of
Leadership
The third building block concerns leadership within the SC. Two extremes are pointed
out in the following, namely, focal and polycentric SCs (Wildemann, 1997). A focal SC is
characterized by the presence of a partner who is the ‘natural’ leader, e.g. due to his financial
hierarchy even if SC partners are legally separated (e.g. in the European automotive industry). In
the other extreme, a polycentric network, all partners are regarded equal (e.g. in consumer goods
manufacturing and retailing). Here, a steering committee might be appropriate for aligning
decisions of partners, e.g. stipulating transfer prices and compensations. The steering committee
might also have access to a SC wide data and make use of SC-wide planning models (e.g. master
planning),
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flows across the SC represent the second pillar of the house of SCM.
information exchange between partners within instants by means of the Internet and related
services. Thus, sales data, forecasts, orders and any kind of messages can be exchanged across
Process orientation
Process orientation, the second building block of the coordination pillar, not only aims at
tearing down barriers between business functions in order to accelerate the execution of
processes and associated activities but also between organizations. In contrast to the original
work of Hammer and Champy (1993) who propose a radical redesign of processes for gaining
competitive advantage, incremental improvements are also looked for in SCs. Nonetheless, one
should not stop with linking existing activities more effectively but also consider a redesign of
‘streamlining cross-company processes is the next great frontier for reducing costs, enhancing
Advanced planning
systems is not in the area of planning. Hence, APS have been developed to fill this gap. It
exhibits a common architecture based on the principles of hierarchical planning (Anthony, 1965;
Hax and Meal, 1975) and make extensive use of solution approaches known as mathematical
programming and meta-heuristics. The main focus is on supporting the material flow across a
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supply chain and related business functions: procurement, production, transport and distribution
as well as sales.
Value chain and supply chain, two classic business concepts, have traditionally been
considered very similar. Lambert, Douglas, Martha, and Janus in their paper (1988), ‘‘Supply
Chain Management: Implementation Issues and Research Opportunities’’ have discussed the
assumption that everyone who touches a product or service adds some value to it.
The value chain is a systematic approach that describes the activities which take place in
an organization and relates them to both the competitive advantage and an analysis of the
competitive strength of the business. Influential work by Michael Porter in his book, Competitive
Advantage (1980) suggested that the activities of a business could be grouped into two headings
Primary Activities are those that are directly concerned with creating and delivering a product
Support Activities, which are not directly involved in production, but may increase effectiveness
or efficiency (e.g. human resource management). However, it is rare for a business to undertake
all primary and support activities. Porter (1998), emphasize that Value Chain Analysis is one
way of identifying which activities are best undertaken by a business and which are best
Following diagram depicts the Value Chain framework of Micheal Porter which is a model that
helps to analyze specific activities through which firms can create value and competitive
advantage.
16
What activities a business undertakes is directly linked to achieving competitive advantage. For
example, a business that strives to outperform its competitors by differentiating itself through
higher quality will have to perform its value chain activities better than the opposition. By
contrast, a strategy based on seeking cost leadership will require a reduction in the costs
associated with the value chain activities, or a reduction in the total amount of resources used.
According to the Value Chain technique defined by Porter (1985), the activities conducted in any
in any process or combination of processes in any industry can be divided into two categories,
namely: primary activities and support activities; shown conceptually in below table :
Primary Description
Activity
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Inbound All those activities concerned with receiving and storing externally sourced
logistics materials
Operations The manufacture of products and services - the way in which resource inputs
Outbound All those activities associated with getting finished goods and services to
logistics buyers
Marketing and Essentially an information activity - informing buyers and consumers about
Service All those activities associated with maintaining product performance after the
Secondary Definition
Activity
Procurement This concerns how resources are acquired for a business (e.g. sourcing and
Management
Infrastructure Concerned with a wide range of support systems and functions such as finance,
Source: Michel Porter (1985), ‘Competitive Advantage – creating and sustaining superior
performance’
In common parlance, Ramsay (2005) demonstrated that a supply chain and a value chain are
complementary views of an extended enterprise with integrated business processes enabling the
flows of products and services in one direction, and of value as represented by demand and cash
flow in the other. Both chains overlay the same network of companies. Both are made up of
companies that interact to provide goods and services. When we talk about supply chains,
however, we usually talk about a downstream flow of goods and supplies from the source to the
customer. Value flows the other way. The customer is the source of value, and value flows from
the customer, in the form of demand, to the supplier. That flow of demand, sometimes referred to
as a “demand chain” (Walters and Rainbird, 2004), is manifested in the flows of orders and cash
that parallel the flow of value, and flow in the opposite direction to the flow of supply. Thus, the
primary difference between a supply chain and a value chain is a fundamental shift in focus from
the supply base to the customer. Supply chains focus upstream on integrating supplier and
producer processes, improving efficiency and reducing waste, while value chains focus
downstream, on creating value in the eyes of the customer. This distinction is often lost in the
The Supply Chain also focuses on the activities involved with acquiring raw materials and sub
assemblies, then getting them through business manufacturing process smoothly and
economically; while Value Chain Management looks at every step, from raw materials
(including those business suppliers’ suppliers use) to business customers and the eventual end
user, right down to disposing of the packaging. The goal is to deliver maximum value to the end
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user for the least possible total cost. And it involves business, its suppliers and the suppliers’
suppliers.
The Order Fulfillment Value Chain is depicted in the following figure as a pictorial of the
In their seminal article, Greengard and Samuel ( 2001) draw attention to the ways that effective
supply chain management (SCM) has the potential to fundamentally change the way companies
environment
Supply chain management (SCM) provides an immense opportunity for organizations to reduce
costs and improve performance, especially in businesses with multiple centers of decision-
K. Patterson, C. Grimm; and T Corsi (2003) argued that with the implementation of supply chain
management, the narrow focus of managers and the adversarial relationships between logistics
providers, suppliers, and customers are replaced by strategic alliances and long-term cooperative
20
relationships. Suppliers and customers are viewed as partners instead of adversaries with the
objective of ‘‘maximizing competitiveness and profitability for the company as well as for the
According to Farhoomand and Ng (2000), the prospect that SCM can make firms more customer
responsive and thus more profitable has led managers to spend vast sums to improve supply
chain processes. For example, UPS has spent $9 billion since 1986. Yet, managing supply chains
is complex.
Based on investigation by Mahoney and Chris (2001), there are many barriers to building a high
performance supply chain. In this paper, the four most common barriers to be examined are:
Lack of predictability, due to a lack of visibility and the inability to identify changes necessary to
A study by Lundegaard and Karen (2001) evaluated the lack of visibility and data silos as a
barrier to supply chain performance. The study revealed that even the simplest supply chain
generates a tremendous amount of data with its ERP system and supporting applications. This
data lets managers perform deep dives into some aspects of their operations and most ERP
systems do provide basic reporting capabilities. However, these reports are rarely flexible
enough to address specific questions or immediate needs. Nor do they encompass the entire
supply chain. Managers have a choice: work from an incomplete view, or spend hours compiling
A high-performance supply chain performance management system must enable visibility across
operations. The ability to follow a process from the moment raw materials ship from the
supplier to the moment finished product arrives at the customer is critical. Yet the sheer volume
of data that managers need to work with makes this difficult to achieve. On the sell side, data
about sales, accounts receivable, fulfillment, finished goods inventory, and logistics. On the buy
side, data about purchasing, accounts payable, raw materials and semi-finished goods inventory,
production and logistics. There is also data from customers, logistics providers, and suppliers.
The study also investigated that system must integrate data from all of these sources and present
centric, product-centric, and process-centric); highlights issues clearly; and provides answers
when managers still have time to act on them, rather than after the fact.
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In addition, it has been assumed throughout this study that managers also know they need better
visibility into their customers’ needs. They rank customer service as their second-highest
However, a recent survey by Deloitte shows that a mere eight percent collaborate with customers
across key areas, from strategic planning and forecasting to inventory management and cost
reduction. The reason is poor visibility. The result is Strains on key processes. Deloitte observes:
“It is no surprise manufacturers report that visibility of customer forecast data and inventories at
key customer and supplier sites is largely mediocre. This strains production planning, work floor
KILGER C (2000), emphasized that few companies have developed and synchronized the supply
and demand sides of their businesses to reduce the barriers to flexibility and profitability. This
lack of visibility leads to the second barrier to high-performance supply chains: the lack of
predictability.
Lack of Predictability
Predictability is known as that a plan will unfold as it should, at a known cost. The more
confidently a manager can predict demand, quantity, costs, and targets, the better able they are to
KILGER C (000), argues that production can ramp up earlier, lead times can be reduced, buffer
inventory investment can be minimized and problems can be identified and resolved before a
Unpredictability causes variation between expected and actual results. Left uncorrected, the
problem is likely to reoccur with continued detrimental impact on the supply chain. Usually, this
is because the root cause of the variation can’t be found and the process isn’t fixed. When this
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happens, managers fall into a constant game of catch-up – moving resources and materials
around the globe at the last minute, rather than proactively driving performance.
Incomplete Information
The constant game of catch-up is often due to the third barrier: incomplete information. Lacking
the time to fully analyze and understand a problem, managers have no choice but make hasty
decisions based on pre-configured ERP reports that provide a historical or partial view of the
problem. These reports help managers solve their immediate problems but prevent them from
making improvements that can lower costs or improve efficiency on a larger scale. In the high-
performance supply chain, every piece of information is delivered in the greater context of the
entire process. Effects of decisions can be evaluated so that people understand the cost-to-serve
and make better decisions. Complete information enables better collaboration. If a flaw or delay
is identified, managers, suppliers, partners, and customers can be alerted and work out a
Local Optimization
Manufacturers are spreading supply chain operations across the world. Yet according to Deloitte,
most optimization is still done at a local level – by product, function (say, production), facility,
country, or region. Few companies make global optimization a top priority or allocate human
resources to achieving it. This localized approach to optimization is to be expected, given that
most managers see silos of information rather than a complete, integrated view.
Also, without a clear link to strategy, managers cannot see or predict the impact their actions will
have further down the line. Their actions can bring about delays, changes, cost increases, or
shortfalls further down the line that ultimately hurt customer satisfaction (Ronnqvistm, 2003).
24
McGinnis and Vallopra (1999), showed a study entitled, “Purchasing and supplier involvement
over its competitors. It comprises capabilities that allow an organization to differentiate itself
from its competitors and is an outcome of critical management decisions. The empirical literature
has been quite consistent in identifying price/cost, quality, delivery, and flexibility as important
competitive capabilities (Tracey et al., 1999). In addition, recent studies have included time-
based competition as an important competitive priority. Research by Stalk (1988), Vesey (1991),
Handfield and Pannesi (1995), Kessler and Chakrabarti (1996), Zhang (2001), identifies time as
On the basis of prior literature, Koufteros et al. (1997), describe a research framework for
competitive capabilities and define the following five dimensions: competitive pricing, premium
dimensions are also described by ( Roth and Miller, 1990). Based on the above, the dimensions
of the competitive advantage constructs used in this study are price/cost, quality, delivery
According to Yamin et al. (1999), organizational performance refers to how well an organization
achieves its market-oriented goals as well as its financial goals. The short-term objectives of
SCM are primarily to increase productivity and reduce inventory and cycle time, while long-term
objectives are to increase market share and profits for all members of the supply chain (Tan et
al., 1999). Financial metrics have served as a tool for comparing organizations and evaluating an
25
organization’s behavior over time (Holmberg, 2000). Any organizational initiative, including
A number of prior studies have measured organizational performance using both financial and
market criteria, including return on investment (ROI), market share, profit margin on sales, the
growth of ROI, the growth of sales, the growth of market share, and overall competitive position
(Stock et al, 2000). In line with the above literature, the same items will be adopted to measure
This study fills a void in current research literature by: using an empirical approach to analyze
and identify the relationships among SCM practices, competitive advantage and organizational
performance.
It is expected that the current research, by addressing SCM practices simultaneously from both
upstream and downstream sides of a supply chain, will help researchers better understand the
scope and the activities associated with SCM and allow researchers to test the antecedences and
organization’s competitive advantage and its performance, it is expected that this research will
offer useful guidance for measuring and implementing SCM practices in an organization and
The abstraction is performed through the use of general systems theory, in particular that view of
general systems theory developed and applied by Yourdon (1989) to the field of information
systems. Abstraction should allow real world complexity to be removed and so reveal the more
fundamental aspects of supply chains. A benefit of developing this more fundamental view of
26
supply chains should be greater insight into how supply chains operate and how their
management can be improved. For example, using Yourdon's (1989) third theory of structured
decomposition the basic building blocks or components of supply chains can be revealed. The
general systems theory concept of a system boundary can then be used to better understand how
these supply chain components interact. Given greater understanding of the supply chain concept
it is hoped that greater agreement emerges about what constitutes a supply chain, and that with
The chapter reviews the history of general systems theory noting the significant contributions
made by von Bertalanffy (1969) and Weinberg (1975). The work of Miller (1978) and his
application of general systems theory in the field of biology was a source of inspiration for
Yourdon (1989) in his application of general systems theory to the field of information systems.
The work of Yourdon (1989) is seen by the authors as truly innovative in the sense that he
applied general systems theory to intangible objects and concepts as compared to earlier
researchers such as von Bertalanffy (1969), Weinberg (1975) and Miller (1978) who applied
general systems theory to tangible objects. Supply chains are considered to have similarities to
information systems: for example, they are more intangible than tangible, they have defined and
repeatable operating procedures, and they exist in order to assist the commercial objective of a
business—the exchange goods or services. Given these similarities it was felt that the work of
Yourdon (1989) would have applicability. Accordingly, the major aim of this chapter is to apply
Yourdon's (1989) four general systems theories of information systems to supply chains. These
Theory 1: The more specialized or complex a system, the less adaptable it is to a changing
environment.
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Theory 2: The larger the system, the more resources are required to support it, with the increase
Theory 3: Systems often contain other systems or are themselves components of larger systems.
Theory 4: Systems grow over time, both in terms of size as well as structural complexity.
Not only do these theories have applicability for information systems, but it is posited by the
authors that they also have applicability to supply chains. It is considered that the analysis and
discussion presented in this chapter has benefits for both academics and practitioners. For
academics, greater insight should lead to a more informed and consistent discussion of the
supply chain concept. For practitioners greater insight should lead to better supply chain
management practice, at the operational level—in the sense of more effective and efficient
supply chains—as well as at the strategic level—in the sense of more flexible and adaptable
supply chains.
‘Supply chains’ and their management, typically referred to as ‘supply chain management’, are
terms that emerged during the late 1980s (Harland, 1996) and have been popular terms used
widely in textbooks, professional magazines, academic journals, courses of study and individual
subject offerings (Chopra and Meindl, 2004; Christopher, 2005; Lysons and Farrington, 2006;
Simchi-Levi et al., 2000). This practical and practitioner-based background has meant little
conceptual work has been undertaken. For example, in many research studies there is a
presumption that the terms ‘supply chain’ and ‘supply chain management’ are well defined and
clearly understood by all (Hull, 2002; Moon, 2004). However, from a conceptual perspective this
presumption should be tested. Handfield and Nichols (1999, p. 21) state that the supplier network
consists of ‘all Marks and Spencer that provide inputs, either directly or indirectly, to the focal
28
firm’. That is, the ‘supply chain’ may not be a chain, in which the links are considered to join
peer companies, but rather a ‘supply wheel’ in which a number of subservient companies supply
a dominant master (Avery, 1999). There are some obvious examples of supply wheels. A number
of authors refer to the relationships between General Motors and its suppliers as an example of a
supply wheel (Keen, 1991; Schwartz, 2000; La Londe, 2005). In addition, Keen (1991) made an
interesting observation: does a supply wheel identify a single ‘organization’ made up of the
master plus the participants, rather than a group of separate but collaborating organizations? This
issue is further discussed later in terms of the general systems concept of a boundary and the
Other supply chain topologies exist. Christopher (2005) and Kemppainen and Vepsäläinen,
(2003) argue for ‘supply networks’ in which there is still a dominant or focal firm, but the
linkages between suppliers and customers with the dominant firm are not necessarily direct.
(Beldona and Raisinghani, 2004) and Covisint (Kandampully, 2003; Johnson and Johnson,
2005). Covisint represents an evolution of supply chain topology: it has evolved from a supply
wheel—originally a supply chain e-marketplace for the motor vehicle manufacturers General
Motors, Ford and DaimlerChrysler—into a supply chain network that now services the
healthcare industry as well as other motor vehicle manufacturers in addition to the three
mentioned above (Covisint, 2006). Accordingly, the literature discussed above indicates that a
number of different supply chain topologies exist, which means that the presumption of one
Furthermore, not only does diversity exist in supply chain models, the literature review
conducted indicates that several definitions exist for ‘supply chain’ and ‘supply chain
29
management’, none of which could be considered dominant or generic. In most cases, these
definitions are derived from a particular sub-group or category of supply chains rather than
referencing or including all categories of supply chains. Alternatively the definition is asserted as
an already accepted and generic definition of what is a ‘supply chain’ (Chan et al., 2003; Duclos
et al., 2003; Kemppainen and Vepsäläinen, 2003; Lummus and Vokurka, 1999; Motwani et al.,
2000; Stonebraker and Afifi, 2004; Svensson, 2000; Vickery et al., 1999). Flowing from these
different definitions are argument, interpretations and conclusions that are divergent rather than
convergent, and more importantly self-justifying by recursively indicating that support of the
conclusion flows from the definitions asserted at the beginning of the discussion. The outcome of
this is that comparisons of research findings are difficult and that any assertions about the
A common, agreed upon view about supply chain management is also lacking. For example, in
discussing this activity, Gattorna and Walters (1996) observe that in a short period of time,
‘physical distribution management’ became ‘logistics management’, and then ‘supply chain
management’. For Gattorna and Walters (1996), this evolution reflected the increasing strategic
importance of this activity. On the other hand, Handfield and Nichols (1999) claim that a
‘logistics renaissance’ era has arrived, in which new and emerging information technologies are
used to meet the challenges of globalising markets with increasing domestic and international
competitiveness. Handfield and Nichols (1999) also claim that supply chain management
service. This implies that an important characteristic of supply chain management is the
30
technological infrastructure that facilitates the information flows (Childerhouse et al., 2003;
Dawson, 2002; Ho et al., 2003; Zeng and Pathak, 2003; Kim et al., 2005).
An argument could be put forward that variety and diversity reflect the fact that supply chains
and supply chain management are emergent fields of knowledge. Given this fact it is premature
to abstract to more fundamental concepts. The counter claim to this argument is that it has been
done with respect to the information systems field of knowledge which is also an emergent field
of knowledge. Yourdon (1989) adapted and applied the work of Miller (1978), who had earlier
applied general systems theory to the field of biology to derive characteristics that could be used
to distinguish between living and non-living systems. Yourdon's (1989) efforts did indeed show
that there were benefits in undertaking this work. For example the process of abstraction allowed
Yourdon (1989) to define abstract concepts such as the boundary of an information system; that
is, the things the information system would do and more importantly what it would not do.
complex information system down into simpler components or sub-systems. That is, the process
of abstracting information systems from their real world context led to new and deeper insights
into how information systems operated and new techniques to use to build better information
systems. In a similar vein it is proposed to take the work of Yourdon (1989) and apply it to
another intangible system, namely supply chains to see if there are benefits from doing this in
terms of a better understanding or insight into how supply chains work and how they can be
better managed.
General systems theory has a reasonably long history with major initial contributions by
Boulding (1956), (Forrester, 1958), (Forrester, 1961) and (Forrester, 1975), and von Bertalanffy
31
(1969). Von Bertalanffy (1969) is recognized generally as the principal thinker in this area
(Mulej et al., 2004). Other contributions to general systems theory have been made by (Klir,
1969) and (Klir, 1972), Weinberg (1975), Miller (1978), and Yourdon (1989). As indicated
above it is Yourdon's (1989) work that forms the focus for this paper. In addition, contributions
to the related areas of flexible system thinking, physical system theory, and the tools of systems
thinking, have been made by Senge (1990), Senge (1992), Fowler (1999), Lin (1999), Skyttner
(2001), Sushil (2002), and Liu (2003). Sushil (2002) considers that although there are differences
between physical (or tangible) systems, and ‘conceptual physical’ (or intangible) systems, these
two categories also have things in common. For example both categories can be disaggregated
into smaller yet discrete components. This statement can be directly related to the general
systems concept of decomposition: systems are constructed of sub-systems which are themselves
also the issue of the interactions between these discrete components. This interaction between
system components is related to the general systems concept of a system's boundary. A boundary
is necessary in order for systems to be able to interact with one another. Sushil (2002) also raises
the question of whether supply chains are primarily tangible systems, mere dealing with the
physical flow of goods; or are supply chains primarily intangible in nature, dealing with the flow
between two or more organizations (Cousins and Robey, 2005; Daniel et al., 2004; Murtaza et
al., 2004). Rather than attempting to classify supply chains as either tangible or intangible a
better approach may be to use the concept of decomposition and so consider supply chains as a
collection of sub-systems, most of which are intangible, e.g. systems that allow the transfer of
32
information from one organization to the other, while others are tangible, e.g. delivery systems
that allow the transfer of goods from one organization to the other.
To define the nature of supply chains, Skyttner (1996) outlines the work of a number of leading
general systems theorists and their views on what would constitute a system. Furthermore,
Skyttner (1996) makes interesting comments on what a system is: it is not normally something
that is ‘presented to the observer’ (Skyttner, 1996, p. 16), but rather something that is recognized
by that observer. Thus systems do not ‘exist in the real world independent of the human mind’
(Skyttner, 1996, p. 16). Skyttner (1996) also discusses various other definitions of a system as
being anything unitary enough to deserve a name (Weiss, 1971), anything that is not chaos
(Boulding, 1985), and a structure with organized components (Churchman, 1979). The common
themes emerging from these definitions is that a system is composed of finite elements or
components; the components combine to form an integrated whole; and the integrated whole
Accordingly, in order for supply chains to be considered systems the above-mentioned themes
should be present. Supply chains are composed of components: people, Marks and Spencer,
technological infrastructure, information flows, flows of physical goods, and flows of intangible
services. From the perspective of purpose, supply chains are created for the benefit of the
participants in terms of improving the flow of goods, services and information from one Marks
and Spencer to another. This argument indicates that supply chains are systems.
Ackoff (1981) states an important element of a system is its dynamic nature, with interactions of
sub-systems across their boundaries: see also Klir (1991) and Backlund (2000). Ackoff's (1981)
analysis of system dynamics led to three important conclusions: (a) systems interact and are
33
influenced by their environment and by other systems; (b) the operation of each system
component has an effect on the way the system operates as a whole; and (c) the operation of each
system component is interdependent (also see Carbone (1999); Forrester (1961); and Lin and
Cheng (1998)). Are Ackoff's (1981) conclusions applicable to a conceptual view of supply
chains?
As part of an overall review of the supply chain literature, Caddy and Helou (1999) concluded
that there was no generally accepted model of a supply chain. However, their findings outlined
three common themes or constructs within existing supply chain models: (a) a focus on
organization structure and/or organization strategy; (b) people and people-related issues such as
interpersonal relationships and the roles of these relationships within supply chains (see also
Talaq and Ahmed (2004)); and (c) use of information and communication technology within
supply chains. Using these three basic themes, Caddy and Helou (1999) developed the Generic
Ackoff's (1981) conclusions about what is a system are reflected in this model. For instance with
respect to the third conclusion, the three supply chain components are important in their own
right, but each by itself does not provide a complete and comprehensive view of what a supply
chain is and how best to manage it. Each component provides a separate as well as a related
conjoint contribution which is Ackoff's (1981) second conclusion. Again these are arguments
The model shown above, through the interactions of the components indicated by the arrows in
the model, also supports the conclusion made by Ackoff (1981) and others that systems are
dynamic. Burkhardt and Brass (1990), like Germain and Droge (1998) claim that Marks and
that a change in technology is, or should be, followed by a change in structure. That is, a change
of the level or type of technology used in the supply chain will have an impact on the way both
Marks and Spencer and their employees interact with the supply chain. Caddy and Helou (1999)
considered that the type and level of interaction would be contingent upon factors such as Marks
and Spenceral culture, the environment in which the Marks and Spencer operates, the types of
personnel that interface with the supply chain, and the frequency and types of exchanges that
occur among the Marks and Spencer using the supply chain.
The above discussion indicates that supply chains can indeed be considered as systems.
Furthermore, this model also indicates the power of abstraction. For example, as an abstracted or
conceptual model, there can be different real world implementations of it in which the
importance of each of these components, with respect to the others, can differ. Therefore a single
abstracted model can lead to different real world expressions with at least three different
chains.
35
For understanding and organizing the results of the review of literature, in this study, the
Above figure presents a proposed study framework which has been developed to handle
SCM within a specific scope, so as to meet the proposed objectives of the thesis. The framework
is built around the concept that SCM practices will have an impact on organizational performance
both directly and also indirectly through competitive advantage. The main pillars of the study are:
Organizational performance
The five dimensions are strategic supplier partnership, customer relationship, level of
the development of the SCM practices construct is provided in the following paragraphs.
36
Competitive advantage and organizational performance are concepts that have been under
operations in the existing literature (Koufreros et al.; Zhang, 2001). Using literature support, the
performance are discussed, and hypotheses relating these variables are developed.
Scanning the recent SCM literatures, one may see that it is a scene of rapid change and
replete with buzzwords such as supplier integration, partnerships, supply base management,
supplier alliances, supply chain synchronization and supply chain management to address
elements or stages of this new management philosophy (Tan et al., 1998; La Londe and Masters,
1994). The term supply chain management (SCM) is most widely used to describe this
management philosophy. This new philosophy was viewed as a viable initiative to enhance
competitive advantage.
decision-making, either in the industry or service contexts, is undoubtedly not something new
(Bititici, Cavalieri, & Cieminski, 2005). Kaplan and Norton (1992) have proposed the balanced
scorecard (BSC), as a means to evaluate corporate performance from four different perspectives:
the financial, the internal business process, the customer, and the learning and growth. Their
BSC is designed to complement “financial measures of past performance with their measures of
the drivers of future performance”. The name of their concept reflects an intent to keep score of a
set of items that maintain a balance “between short term and long term objectives, between
financial and non-financial measures, between lagging and leading indicators, and between
internal and external performance perspectives”. The early image of the BSC serving the CEO
like a control panel serves an aircraft pilot seems to have expanded to include mechanisms to
37
alter the course of action as well. Now, the BSC seems to serve as a control panel, pedals and
steering wheel (Malmi, 2001). Table 1 outlines the four perspectives included in a BSC.
Table 1:
The four perspectives in a balanced scorecard of Marks and Spencer (Kaplan & Norton, 1992)
Mission: to achieve our vision by Mission: to succeed financially, by delivering value to our
Mission: to promote efficiency Mission: to achieve our vision, by sustaining innovation and
and effectiveness in our business change capabilities, through continuous improvement and
Many companies are adopting the BSC as the foundation for their strategic management
system. Some managers have used it as they align their businesses to new strategies, moving
away from cost reduction and towards growth opportunities based on more customized, value-
adding products and services (Martinsons, Davison, & Tse, 1999). A large number of methods of
organizational performance measurement systems have been reported in the literature ([Bititici
and Nudurupati, 2002], [Chan and Qi, 2003a], [Chan and Qi, 2003b], [Chan et al., 2006] and
[Sharma et al., 2005]). A comparison between the BSC approach and other approaches used to
Wang Laboratories, Inc. (Cross & Lynch, 1989) developed this system and it consists of
a four-level pyramid of objectives and measures: corporate vision/strategy, business unit market
and financial objectives, business unit operational objectives and priorities, departmental level
It (Dixion, Nanni, & Vollmann, 1990) involves a workshop to develop, revise, and
refocus the set of performance measures. It has the advantage of providing a mechanism for
identifying the improvement areas of the company and their associated performance measures.
However, it cannot be considered a comprehensive integrated measurement system and does not
concentrates on the organization’s strategies. The concepts and ideas were developed by hands-
on experience.
Kueng (2000) presented it especially for modern process-based businesses. It assesses the
performance of the processes for five aspects: financial view, employee view, customer view,
societal view, and innovation view. The BSC for supply chain management framework presented
here in this article is structurally similar to the BSC framework proposed by Kaplan and Norton.
feedback or information on activities with respect to meeting customer expectations and strategic
39
objectives. It reflects the need for improvement in areas with unsatisfactory performance. Thus
efficiency and quality can be improved. In this section, we make an attempt to summarize some
of the most appropriate performance metrics and measures of supply chain management
identified and discussed by Gunasekaran et al. (2001), and Gunasekaran, Patel, Ronald, and
McGaughey (2004).
The way the orders are generated and scheduled determines the performance of the
downstream activities and inventory levels. Hence, the first step in assessing performance is to
analyze the way the order-related activities are carried out. To do this, the most important issues
– such as the order entry method, order lead-time and the path of order traverse – need to be
considered.
The order entry method determines the way and the extent to which the customer
specifications/requirements are converted into useful information, and are passed down along the
supply chain. According to Mason-Jones and Towill (1997), such information connects all levels
of supply chain and affects the scheduling of all activities. Proper control of the order is possible,
provided that the order entry method is capable of providing timely, accurate and usable data at
various entry levels, and hence, can be used as a metric of performance measure.
Order lead-time
The total order cycle time, which is called “order lead time ”, refers to the time, which
elapses between the receipt of the customer’s order and the delivery of the goods. This includes
Total order cycle time = Order entry time (through forecast/direct order from the
A reduction in the order cycle time leads to a reduction in the supply chain response time
(Gunasekaran et al., 2001). This is an important measure as well as major source of competitive
advantage ([Bower and Hout, 1988] and [Christopher, 1992]). According to Towill (1997), it
directly influences the customer satisfaction level. Equally important is the reliability and
consistency of the lead-time. Because of bottlenecks, inefficient processes and fluctuations in the
volume of orders handled, there will be variations in activity completion times. The overall effect
of this may lead to a substantial reduction in delivery reliability and customer service level. To
deal with these, for example, the concept of “manufacturing cell” can be applied, in which well
integrated actions are performed in parallel by cross functional teams to effectively decrease the
order lead-time and reduce the redundancies (Schonberger, 1990). In fact, Schonberger notes
that, in one case study, Ahlstrom, a Finnish company, was able to reduce the lead-time from one
week to one day. Hence, therefore, measurement of total cycle time is very important in the
context of customer service, and to serve as a feedback to control the day-to-day operations.
The path that order traverse is another important measure whereby the time spent in
different routes and non-value adding activities can be identified, and suitable steps can be taken
to eliminate those (Gunasekaran et al., 2001). For example, by tracing through the order path, the
delays in the paperwork, time consumed while the product sits in the warehouse, time spent in
checking and rechecking can be identified and eliminated using methods such as JIT,
41
reengineering, and information technology (e.g. e-commerce, electronic data interchange (EDI)
and Internet).
industries and researchers, resulting in a steady stream of literature promoting it (e.g. [Ellram,
1991], [Fisher, 1997], [Graham et al., 1994], [Gunasekaran et al., 2001], [Landeros et al., 1995],
[Maloni and Benton, 1997], [McBeth and Ferguson, 1994], [New, 1996], [Thomas and Griffin,
1996], [Toni et al., 1994] and [Towill, 1997]). Most of these studies stress the partnership for
better supply chain operations. Accordingly, an efficient and effective performance evaluation of
buyer and/or suppliers is not just enough; the extent of partnership that exists between them
needs to be evaluated and improved, as well. The parameters that measure the level of
Table 2:
The entity and stage at which supplier is involved Toni et al. (1994)
42
This measurement is aimed to integrate the customer specification in design, set the
dimensions of quality and the feedback for the control process. They contain product/service
Flexibility
Being flexible refers to making available the products/services to meet the individual
demand of customers. This has become possible as a result of the development of such
technologies as flexible manufacturing systems (FMS), group technology (GT), and computer-
integrated manufacturing (CIM). In addition, other methods such as single minute exchange of
die (SMED), as well as information technology (IT) and communication systems (CS), which
provide online information, further facilitate quick response of the control system. The flexibility
that these systems impart has a high impact on winning customers. For example, Toyota is using
FMS and logistic principles to provide a high level of responsiveness to customer needs (Bower
& Hout, 1988). Stewart (1995) presents a list of practices that world-class companies employ to
improve flexibility. His analysis reveals a strong correlation of supply chain response time and
flexibility.
companies can achieve what was previously impossible: rapid response to meet individual
customer requirements.
43
The customer query time refers to the time it takes for a firm to respond to a customer
enquiry with the required information. On several occasions, a customer enquires or needs to be
informed about the status of an order, and the potential problems on stock availability or
delivery. Providing such information genuinely helps the customers to schedule their activities,
and helps the firm to retain them as customers. Thus, providing online information is an
important element of customer service, and it can be evaluated for improving the same. To
measure customer service, questions “what are the response times”, and “what procedures exist
The function of a supply chain does not end by providing goods to the customer. The post
transaction activities play an important role both as part of customer service, and for valuable
feedback for further improvements in the supply chain. For example, timely availability of spares
helps companies to provide better customer service, and to trace the problems arising from
warranty claims; then making improvements on them. Apart from these, there are other post-
– Measuring customer perception of service: this is done primarily through direct interviews
with customers. What are their needs? What is the service level they receive versus what are
their expectations? These are the questions firms should ask the customers to improve on
process also needs to be measured, managed, improved, and suitable metrics for it should be
established. This category consists of range of product and services, capacity utilization, and
wide range of products is likely to introduce new products at a slower rate than companies with a
narrow product range. Based on a statistical analysis of “UK Best Factory Awards Database”,
these authors show that plants that manufacture a wide range of products are likely to perform
poorly on added-value per employee, speed and delivery reliability. Furthermore, a company
with an extensive product portfolio less frequently breeds new products of innovation. This
indicates the impact of “product range” on supply chain performance, and so, it needs to be
According to Fisher (1997), the selection of right supply chain strategy depends upon the
nature of product variety and innovation. This also implies that the range of products and
services acts as an important strategic metric, and hence, it should be considered in performance
evaluation.
Capacity utilization
According to Wild (1995): “All the operations planning takes place within the framework
From the above statement, the role of “capacity” in determining the level of all supply
chain activities is clear. This highlights the importance of measuring and controlling the capacity
45
utilization. According to Slack, Chambers, Harland, Harrison, and Johnston (1995), capacity
utilization directly affects the speed of response to customers’ demand. Hence, by measuring
Scheduling refers to the time or date at which activities are to be undertaken. Such fixing
determines the manner in which the resources flow through an operating system. The
effectiveness of this has a significant impact on the performance of supply chain (Gunasekaran et
al., 2001). For example, scheduling based on JIT has tremendous influence on inventory levels.
Similarly, computer generated schedules based on systems like MRP, and more recently ERP,
provide a detailed and accurate bill of materials. These impact the effectiveness of purchasing,
throughput time and batch size. However, the applications of such systems should not be limited
to scheduling of shop floor activities and comparing their performance with others. In the case of
supply chains, since scheduling depends heavily on customer demand and supplier performance,
the scheduling tools/methods should also be viewed from that context. Based on these, it can be
concluded that measuring and improving effectiveness of scheduling techniques will improve the
These measures are designed to evaluate the performance of delivery and distribution
cost in supply chain. The typical measures for delivery performance evaluation are lead-time
date and order fill lead-time), distribution mode, the delivery channel, vehicle scheduling, and
warehouse location, the percentage of goods in transit, quality of information exchanged during
46
delivery, number of faultless notes invoiced, flexibility of delivery systems to meet particular
customer needs ([Gelders et al., 1994], [Novich, 1990] and [Stewart, 1995]).
In any typical delivery distribution mode, the delivery channel, vehicle scheduling, and
warehouse location play an important role in delivery performance (Gunasekaran et al., 2001).
location policies. A survey conducted by Gelders et al. (1994) in Belgium shows that tremendous
opportunities exist to improve the supply chain performance based on lead-time reduction in the
delivery process. What is needed, according to Gelders et al. (1994), is an understanding of the
whether a perfect delivery has taken place or not, and it acts as a measure of customer service
level. Stewart (1995) identifies the following as the measure of delivery performance:
Delivery-to-request date;
His study reveals a trend in the reduction of lead-time as an operational strategy for
A higher percentage signifies low inventory turns, leading to unnecessary increase in tied up
capital. Various factors that can be attributed to this are vehicle speed, driver reliability,
frequency of delivery, and the location of depots. An increased effectiveness in these areas may
Like other activities, delivery heavily relies on the quality of information exchanged. For
example, once the activities are scheduled, continuous monitoring is possible based both on
information derived and information supplied across the channels of distribution. Thus, the
quality and the way the information is presented determine the delivery performance to a large
extent, which, therefore, can be used to measure and improve performance (Gunasekaran et al.,
2004).
- Number of faultless notes invoiced: An invoice shows the delivery date, time and the
condition under which goods are received. By comparing these with the previous
agreement, it can be determined whether a perfect delivery has taken place or not. Also,
can be made.
- Flexibility of delivery systems to meet particular customer needs: Nowadays, the delivery
systems are becoming more flexible towards customer needs. By being flexible, a
delivery system can positively influence the decision of customers to place orders, and
hence, this can be regarded as a metric for winning and retaining customers. According to
Novich (1990), customers can be grouped into different segments based on their needs.
Thus, they can be grouped critically based on their economic profitability and flexibility.
Determining the total logistics cost can assess the financial performance of a supply
chain. It is necessary to decide on a broad level of strategies and techniques that would
contribute to the smooth flow of information and materials in the supply chain environment.
48
They are used to assess the financial performance of supply chain, such as assets cost, return on
Supply chain assets include accounts receivable, plant, property and equipment and
inventories (Stewart, 1995). With increasing inflation and decreased liquidity, pressure is on
firms to make the assets sweat, i.e. improve the productivity of their capital. In this regard, it is
essential to determine how the costs associated with each asset, combined with its turnover,
affects the “total cash flow time”. According to Stewart (1995), this can be measured as the
average number of days required transforming the cash invested in assets into the cash collected
from a customer.
Once the total cash flow time is determined, it can readily be combined with profit with
the objective of providing an insight into the rate of return on investment (ROI). This determines
the performance that the top management can achieve on the total capital invested in business.
As a corollary to this, the logistics management policies have a significant impact on ROI.
For example, superior customer service leads to improved sales and an increased profit,
and subsequently, a higher ROI. Likewise, other areas of organization can be explored. By
measuring ROI and the impact of the logistics policies on it, significant insights can be gained
In a supply chain, inventories range from raw materials, subassemblies and assemblies to
finished products, as well as inventories held up in transit. What was traditionally perceived as a
buffer in production to cope with uncertainties actually emerged to be one of the reasons for the
increase in lead-time (Slack et al., 1995). As customer service requirements constantly increase,
49
important. Hence, it is essential that costs associated with inventory should be evaluated, and
In a supply chain, the total costs associated with the inventory ([Christopher, 1992],
[Dobler and Burt, 1996], [Lee and Billington, 1992], [Levy, 1997], [Slack et al., 1995] and
o Service costs, consisting of costs associated with stock management and insurance,
o Cost associated with shortage of inventory accounting for lost sales/lost production.
In dealing with these costs, consideration should also be given to part/material size. A
low cost part may have large size, and consequently, a large space requirement. Also, in deciding
which cost should be tackled first, Pareto analysis can be used to prioritize the options. In
addition, proper trade-offs should be considered in dealing with inventory at various levels in a
supply chain. An excellent discussion on this, based on pitfalls and opportunities, is provided by
Lee and Billington (1992). In particular, they point out that the cost of reworking stored
components due to engineering changes and the risk of obsolescence could inflate the inventory
holding costs by 40%. Clearly, not considering such factors may lead to inappropriate choices.
In dealing with inventory in transit, a trade-off is needed because changing the mode of
transportation can significantly affect inventory investment and service performance. A faster
50
and more expensive shipping mode may save enough in inventory investment to justify increase
in shipping cost, but if inventory costs rates are appropriately chosen. According to Levy (1997),
care must also be taken for longer lead-time due to longer distance as it increases the “volatility”
of inventories, resulting in either too high or too low inventory levels. This, in turn, can lead to
higher administrative costs being incurred, and can be the cause of costs due to lost sales.
Another factor that needs to be measured and dealt with regarding inventory is the
accuracy of forecasting techniques. According to Fisher (1997), supply chain in many industries
suffers from inventory, owing to their inability to predict demand. A new demand forecasting
system that takes sales data from distributor’s computer and combines with on-hand inventory
could serve as a technique to deal with this problem. Harrington (1996) shows that using such
techniques, Microsoft has been able to keep production schedules open until one week, and make
well as accuracy of forecasting techniques, can provide an insight into the cost performance and
E-Commerce:
arrangement that includes the exchange of possession or rights to utilize merchandise and
ventures," characterizes the U.S. Evaluation Bureau. Exchanges aren't required to have a cost and
incorporate the two deals and things like free downloads. Web based business incorporates
exchanges made on the web, Intranet, Extranet, World Wide Web, by email and even by fax.
51
E-Business
E-business is more extensive than internet business; including the exchange based web
based business organizations and the individuals who run generally however take into account
online exercises too. An e-business can run any bit of its inner procedures internet, including
stock administration, hazard administration, fund, HR. For a business to be web based business
and e-business, it must both offer items on the web and handle other organization exercises or
Summary
E-commerce and e-business includes "the production of new esteem chains between an
organization and its clients and providers, and inside the organization itself," reports Computer
World. The Internet and electronic systems are excessively critical, making it impossible to
disregard in the present economy, so every business ought to have some type of web based
business technique. As your business develops, work to actualize an e-business procedure as they
can be muddled to institute. After you pick up involvement and information in the field of online
How Marks & Spencer Can Benefit from the Recent Innovations in E-Commerce and E-
Business
In 2010 M&S set out to position itself as a global multichannel retailer. This required a
Move stages.
Before the current year's dispatch the M&S's site was facilitated on an Amazon stage.
M&S naturally needed to take control of its own online bequest. It did this by not just building
its own web based business webpage starting with no outside help yet in addition by putting
distributing and at its heart. Customers are 24% more prone to purchase from a site in the event
that they've seen publication first. Keeping in mind the end goal to re-stage the site, Marks and
Spencer did the greater part of the client testing and fragmenting you'd expect with its beta site,
nonetheless it additionally took a gander at the outside scene as well (Brewer, A.M, 2008).
There was minimal advanced ability inside the business. Keeping in mind the end goal to
accomplish change, it needed to begin at the best in the meeting room. It did this by procuring an
online business master and putting them on the board and ensuring there was an advanced
concentration in the non-official group. The group additionally took the main 100 individuals in
the business and put them during a time and a half drenching course in computerized. The
improvement of the new site likewise took knowledge from cutting edge staff keeping in mind
the end goal to influence it to work for them and it does clients. (Arvaniti, C., 2010)
M&S used to satisfy its requests from an assortment of stops around the nation. In this
manner it wasn't recently the front-end that required changing, M&S additionally needed to put
resources into a productive dissemination organize. In online business, coordination is one of the
single greatest expenses and giving an effective concentrated administration will give the most
ideal client benefit and decrease unit cost. In April 2013, M&S opened a stop in Castle
Donington and now 100% of its online business is satisfied from that point.(Zyman, S., 2000)
The following are the three best practices implemented by Marks & Spencer, among
Marks and Spencer says its maintainability vision is "SUPPLY CHAIN DEPENDENT".
It implies that being a reasonable accomplice is integral to the retailer's methodology, while
transformative moral and ecological models are viewed as fundamental to the fate of the
business. M&S needs to go past the desires of representatives, clients and partners by teaming up
with providers to make reasonable working environments and accomplish step changes in natural
execution. Activities cover a scope of difficulties in the worldwide store network, which M&S
figures to represents around 80% of its impression. The organization is, for instance, sourcing
maintainable bundling from Sweden and working with angle providers and preservationists on
M&S is spreading best practice in manufacturing plants keep running by its providers in
Morocco by supporting an instructive program for clothing laborers. The UK retailer's providers
set up the preparation themselves utilizing educators gave by the Moroccan government. In the
same way, as other different organizations thinking about the complexities of production
network checking, Marks and Spencer realizes that distributing moral implicit rules is really the
simple piece. Motivating providers to follow it requires huge duty in investment and exertion and
what is much more troublesome is empowering industrial facility proprietors and chiefs to go
that additional mile and present more extensive social projects in their work environments. The
tutoring is given by the Moroccan government's preparation board;however, the production lines
have reworked their work routines to enable representatives to take the three-hour classes on the
Most of the providers say that an educated workforce is less demanding to oversee.
Preparing writing can supplant tedious gatherings with bosses, while laborers who have finished
54
the course more effectively comprehend wellbeing directions and wellbeing cautioning takes
note. From Marks and Spencer's perspective, the key quality of the program is that the
organization has not forced it from the middle. The providers set up the preparation themselves
and tailor it to their necessities. Imprints and Spencer's significant part has been as an
ensuring biodiversity and the ecological privileges of nearby groups. It additionally has
approaches for the practical sourcing of cotton, wood, palm oil, soy, angle, calfskin, hamburger,
cocoa and espresso. This is upheld by quarterly up close and personal provider gatherings, a
yearly meeting and a committed site offering apparatuses, direction, motivators and the open
door for providers to share examples of overcoming adversity. Such stories incorporate
individual accomplishments like zero waste to landfill, half diminishment in water utilize, 290
tons of waste reserve funds, 30% less vitality utilize, 10% decreases in staff turnover, less
mishaps and compensation increments of up to half. (Jarrar, Y.F. & Zairi, M., 2001)
55
All the three companies interviewed have four perspectives in their scorecards, mainly
those suggested by Kaplan and Norton. However, two of the companies expressed willingness to
add employee perspective to their scorecards in near future. The number of measures in the BSC
Implementing the BSC has meant adopting new measures that were not used earlier in all
case companies. Most interviewees stated that BSC has forced them to select the most important
measures from the existing ones and helped them to focus their attention.
One of the key ideas suggested by the Kaplan and Norton (1996) in constructing
scorecards is to link the measures to the strategy and to each other following the assumed cause-
and-effect relationships. Case companies stated that they have derived their measures from
strategy, based on cause-and-effect reasoning. However, when asked to give an example of such
cause-and-effect chain, the claimed link between strategy and measures appeared weak in all the
cases.
In all the case companies we studied, BSCs are applied at business unit level, in contrast
to the top management level on the one hand and to department or individual level on the other.
Business unit refers to profit center. However two of the three case companies have agreed to
develop the BSCs at departmental and functional activity levels in near future.
BSCs are used for organizational performance measurement. Case companies set targets
for BSC measures. Managers and supervisory staff are held responsible for achieving the targets.
Non-financial measures and targets are used along with financial measures to provide more
56
relevance. BSCs are also viewed as information system in the organization as companies often
use the same as a tool to see what to improve? However, on investigating, how the managers and
supervisory staff are rewarded, case companies had some sort of bonus programs. But BSCs had
nothing to do with the bonus programs. Companies are not able to link their bonus programs
with the BSCs at this early stage of applications, but in further studies this would be one of the
key issues.
Practicalities of applications
In all the three cases data for BSCs are collected manually and systems are maintained on
spreadsheet programs. However one company expressed its willingness to acquire some special
purpose software in near future. BSCs results in companies we observed are usually reported as
chapter reports distributed to key functional managers and supervisors. The most common
electronic processing of information and improvement in reporting techniques are seen as future
targets of improvement.
The study from these cases suggests that several common errors must be avoided when
relationships; and
Failure to communicate the contents of, and rationale for the balanced supply chain
management scorecard.
57
and rather modest, or else peripheral to improvements in the system performance. As a result, we
believe that including stretch goals that require significant improvements in key areas will
Each of the observed companies was only able to identify a few cause-and-effect
relationships and performance drivers during their development of a balanced supply chain
management scorecard. In one case, faultless deliveries, customer query response time, and
supplier rejection rate were agreed to be performance drivers for internal business perspective.
However, the management team neglected to specify how the performance in these three areas
would be improved.
We would suggest that such improvements are possible through different mechanisms,
including the better buyer–customer partnerships and coordination, the adoption of new
development tools, and delivery reliability. As a result, we propose that explicit cause-and-effect
implemented. It is critical not only to relate performance drivers to the performance measures in
each key area, but also to consider how each of the performance drivers will significantly
supply chain management scorecards were developed. For example in two of the three cases
observed, the draft version of the BSC was circulated only to two or three members of the top
management, and one or two key middle level managers and supervisory staff. All functional
mangers were not told about the scorecard’s content or rational. Not surprisingly, they had little
enthusiasm for a commitment to this concept. Individual performance objective and appraisal
58
criteria for individual function were not linked directly to the BSC. As a result, we wish to stress
importance of broadly communicating both the purpose and intent of balanced scorecard and
firmly integrating it into the company’s performance management system. Scorecard templates
and results that are communicated to employees can motivate their efforts and reward them for
meeting targets. But a missing link is observed between the company’s bonus program and the
BSC. Our discussions and limited testing within the company also suggest that graphical rather
were also found weak during the process of development of the BSC. Supply chain trading
partners such as customers and suppliers were not actively involved in the building process of
The cases we studied reinforced a belief that while the specifics of balanced supply chain
management scorecard will differ from organization to organization; it is beneficial to build upon
a standard framework, such as the one presented here, rather than starting from the scratch. In
one case where a clean-sheet approach was employed, the learning and growth perspective
contained some measures that were clearly related to internal business operations, the customer
perspective was poorly developed, and the internal business operations perspective neglected the
Additional case studies are likely to reveal other barriers, obstacles and errors that can
Chapter 5: Conclusion
effective planning and control as well as decision-making. The measurement results reveal the
effects of strategies and potential opportunities in supply chain management (Chan, Qi, Chan,
Lau, & Ip, 2003). Although implementations of performance measures in companies are now
wide spread (Turner, Bititici, & Nudurupati, 2005), there is not a great deal of literature that
addresses the various issues faced by organizations during supply chain management
implementation in a balanced way. We have proposed application of the balanced supply chain
management scorecard to organizations with the objective to evaluate their day-to-day business
performance. This chapter has considered the use of a BSC framework to measure and evaluate
supply chain management. A concept initially proposed as a decision-making tool for senior
managers was examined in the day-to-day operations management domain by proposing and
detailing four supply chain management evaluation perspectives. We have also considered
specific metrics for each of the perspectives. While applying the BSC in supply chain
management, it is interesting to observe that some of the metrics in one category contradict other
metrics in another category. Even within a category one supply chain management metric
compromises others. For example, efforts to minimize metric ‘variations against budget’ often
result in problems related to other measures such as on-time delivery, inventory, lead-time, cash
flow and forecasting from other categories. By reducing flexibility of change in finance metric
‘variations against budget’, sudden high market demands could be compromised. Measure such
perspective. Similarly, ‘range of products and services’ compromise metrics such as flexibility to
meet particular customer needs, order lead time, responsiveness to urgent deliveries and
60
increasing more range in products and services offered by supply chains, their performance could
perspective category compromises with internal business metrics such as capacity utilization,
total inventory cost and planned process cycle time. Reasons are obvious as serving to an urgent
order could disturb routine production planning and planned delivery schedule. Hence, it also
contradicts metrics such as delivery reliability and delivery performance in the same customer
category. Within internal business perspective category, metric ‘capacity utilization’ contradicts
other measures such as range of products and services and responsiveness to urgent deliveries.
Maximum utilization of plant and machinery could affect delivery performance, delivery lead-
time and delivery reliability adversely. Supplier’s cost saving initiatives metric from innovation
and learning category also compromises with other metrics such as delivery performance and
delivery lead time of other categories. Managers using BSC should look into these contradicting
The four perspectives and related metrics represent a template rather than definitive
order to determine whether the proposed perspectives and measures are a necessary and
sufficient set. Nevertheless, the framework does represent a strategic supply chain management
evaluation tool that can be used to monitor and guide specific projects and general performance
improvement efforts. The value of the balanced supply chain management scorecard rises if it is
used to evaluate supply chain management performance on daily routine basis to coordinate wide
range of business operations simultaneously. The management of companies are likely to benefit
61
at all decision levels from a systematic framework based on goals and measures that are agreed
upon in advance.
62
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