Supply Chain Management

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Industrial Marketing Management

Abstract This article examines the impact of inertia on the management of the firm’s supply chain operations and the effects it can have on a produce-to-stock firm’s ability to respond to external market pressure and develop corrective strategies. The research methodology used is based on earlier Catastrophe Modeling that looked at inertia in organizational design, competitive pressure, and competitive response. The model demonstrates how latent variables, such as customer pressure and supply chain inertia can influence a finished goods supply chain management’s response under various conditions. The model was tested and validated using questionnaire data gathered from a sample of members of the Council of Logistics Management. The model was used to estimate individual finished goods firm inertia response estimates. We incorporate these estimates in a brief examination of three produce-to-stock firms from the sample to give readers an idea of the usefulness of the approach in examining supply chain inertia. D 2005 Elsevier Inc. All rights reserved. Keywords: Produce-to-stock management inertia; Supply chain inertia; Catastrophe modeling; Organizational inertia; Customer pressure; Supply chain response

1. Introduction The management of supply chains in today’s highly competitive environment requires that logistics managers respond quickly to competitive challenges, inventory shortages, customer complaints, inaccurate order processing, and unreliable transportation situations. New technologies and processes such as radio frequency identification (RFID) and collaborative planning, forecasting, and replenishment (CPFR) initiatives are being incorporated into supply chain management operations to provide managers with a competitive edge. In today’s intensely competitive environment, bunprepared corporations that have not whipped their supply chains into shape are beginning to feel the squeeze in the form of slashed profit margins, anemic market share and plummeting customer satisfactionQ (Roberts-Witt, 2002; p.1).

T Corresponding author. Tel.: +1 215 204 1682. E-mail address: msmith@temple.edu (M.F. Smith). 0019-8501/$ - see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2004.11.003

Managerial inertia, exhibited by logistics managers, may inhibit their understanding of the impact of operational changes on performance and preclude the timely development of strategies to correct them. bManagerial inertia is also an important issue inhibiting the optimization of the supply chain. Managers are often stuck to the old way of doing things, thus being incapable of adopting the new management philosophies required to succeed in the new business environmentQ (Patosalmi, 2003; p. 3). A lack of responsiveness to environmental change can reduce the efficiency of the firm’s supply chain operations, increase logistics costs and result in lost revenue for the firm. The authors of a study on successful supply chain management operations noted b. . . supply chain leaders also were shown to have flexible, adaptable business processes for customer relations, supplier management, new product design, and other supply chain operationsQ (Anderson & Mulani, 2003; p. 3). In the area of leadership, one supply chain executive indicated that inertia was the biggest problem with CEO leadership (Pellet, 2002; p. 3).

M.F. Smith et al. / Industrial Marketing Management 34 (2005) 614–628

615

The management inertia in an organization often affects supply chain performance in two ways. First it can lead to a slow down in the upstream processes in the supply chain (Todd, 2001). This involves the relationships of the manufacturers with their suppliers and includes inbound transportation coordination, inbound inspection, JIT planning, stocking demand level forecasting, and production scheduling and planning. Management inertia results in long lead times and bclumsy distribution...
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