In pursuit of supply chain fit

AuthorYasmine Sabri
DOIhttps://doi.org/10.1108/IJLM-03-2018-0068
Pages821-844
Publication Date12 Aug 2019
In pursuit of supply chain fit
Yasmine Sabri
Aston Logistics and Systems Institute, School of Engineering and Applied Science,
Aston University, Birmingham, UK
Abstract
Purpose The purpose of this paper is to develop exploratory propositions and a conceptual framework on
the interaction between organisational structure (decision-making centralisation and internal coordination)
and the relationship between supply chain fit and firm performance.
Design/methodology/approach Through a case study, two corporate groups with distinctive
organisational structures were examined; both are undergoing a critical moment of changes to their top
management and are reshaping their corporate and supply chain strategies. Data on decision-making
centralisation, internal coordination mechanisms, supply, demand and innovation uncertainties, and supply
chain strategies were collected from key respondents.
Findings The analysis conducted suggests the need to consider the joint interaction between
organisational structure and supply chain fit in offsetting the implications of a potential misfit on firm
performance. Furthermore, the context sensitivity of a supply chain is often overlooked, hence simply
modifying supply chain strategy does not necessarily lead to a variation in firm performance.
Practical implications This research is of particular importance to most organisations in the testing
times of uncertainty in the global landscape. It guides supply chain practitioners to better understand which
elements of the organisational structure interact with the uncertainty of supply, demand and innovation.
Originality/value This paper is one of the first to investigate the interaction between elements of
organisational structure and supply chain fit and identify decision-making centralisation and coordination as
the internal uncertainty factors that are most relevant to supply chain fit research. A conceptual framework
has been built for future testing, in which the organisational structure moderates the relationship between
supply chain fit and firm performance.
Keywords Supply chain fit, Supply chain strategy, Organizational structure, Uncertainty,
Abductive reasoning
Paper type Research paper
1. Introduction
The notion of fit became a central theme in supply chain research when Fisher (1997) proposed
that superior performance can be achieved by matching innovative products (i.e. high demand
uncertainty) with responsive supply chain strategy, and functional products (i.e. low demand
uncertainty) with cost-efficient supply chain strategy. Chopra and Meindl (2007) described
this type of match as the zone of strategic fit(p. 46). Put simply, to achieve higher firm
performance, organisations need to decrease environmental uncertainty by aligning their
supply chain strategy with their competitive strategy, thus taking uncertainty factors into
account in the design of supply chains (Flynn et al., 2010; Defee and Stank, 2005). Therefore,
consistency between supply chain strategies and their design with regard to the environment
becomes a fundamental idea in achieving supply chain fit (Stock et al., 1998; Wagner et al., 2012).
The cumulativeevidence in the supplychain literature suggeststhat fit is positivelyrelated
to a firms operationalperformance (Stocket al., 2000; Hallavo, 2015) and financial performance
(Wagner et al., 2012; Hallavo, 2015; Gligor, 2017). Yet, the literature has provided mixed
findings on the dichotomy of responsiveness vs efficiency, where the notion of designing
purely responsive or cost-efficient supply chains was not supported in the findings of some
studies (cf.Selldin and Olhager, 2007;Hallavo, 2015). Furthermore, recent research has pointed
to a potential tradeoff between the resources needed to achieve fit vs the expected benefits The International Journal of
Logistics Management
Vol. 30 No. 3, 2019
pp. 821-844
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-03-2018-0068
Received 16 March 2018
Revised 10 October 2018
18 April 2019
6 June 2019
Accepted 8 June 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
The author would like to thank IJLM Editor Professor Britta Gammelgaard for her support during the
review process, as well as the anonymous reviewers who provided valuable suggestions and extremely
constructive comments.
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Supply
chain fit
(Gligor, 2017). The higher the level of environmental uncertainty, the more challenging it
becomes to achievesupply chain fit, hence morecostly (Gligor, 2016). The inconclusive results
in supply chain fit research can be due to the terminology-heavy literature (Hallavo, 2015,
p. 71). Moreover, supply chain strategies result from multidimensional and conflicting
uncertainties, which are often not fully investigated in the literature, and therefore, the
conceptualisation of supply chain fit can be daunting (Van de Ven et al., 2013, p. 403).
A second and equallyimportant issue is that the supply chain fitliterature usually adopts
an outward look, which has led to few studies considering the internal environments
of firms. Fit studies usually address three main elements: supply chain strategy and
design, environmental uncertainties, and firm performance ( Fisher, 1997; Lee, 2002). Yet, the
environmental uncertainties addressed in supply chain fit research predominantly relate to
productor market characteristics.For example, Qi etal. (2011) validated the moderating effects
of demand, supplyand technological uncertainty on the relationship between competitive and
supply chain strategy and firm performance. Hallavo (2015) investigated product demand,
supply and technological uncertainty and their impact on organisational and operational
performance.Wagner et al. (2012) investigated supply and demanduncertainty and extended
the work of Fisher (1997) by introducing the notion of positive and negative misfit to reflect
different degrees of the match. Gligor (2016, 2017) investigated uncertainties of market and
technological dynamism, technical complexity, product diversity and geographic dispersion.
The high research concentration on product uncertainty has left other internal
uncertainties, as well as their impact on supply chain fit and firm performance, relatively
unexplored. This could be because the notion of supply chain fit in Fishers (1997)
propositions, while providing ground-breaking insights, overlooks the role of firmsinternal
environment (Gligor, 2017; Prajogo et al., 2018). Not surprisingly, the role of organisational
structure is also often overlooked in the supply chain fit literature. Organisational structure
affects an organisations strategic actions (Eva et al., 2018), and therefore investigating
organisational structure is even more important in times of uncertainty and organisational
change. Another reason is because of its positive impact on firm performance (Buttermann
et al., 2008; Zheng et al., 2010; Gambi et al., 2015), particularly financial performance (Qi et al.,
2017). Furthermore, firms that are organised in a way that allows them to deal primarily
with stable markets may not perform as effectively in high-uncertainty environments, so do
their supply chains (Nahm et al., 2003).
The elements of organisational structure have been found to be positively related
with developing a supply chain innovation capability (Daugherty et al., 2011) and
resilience capability (Treiblmaier, 2018). Similarly, they impact on supply chain performance
(Kim, 2007). Furthermore, certain combinations of organisational structure and supply chain
strategy will lead to variations in firm performance (Defee and Stank, 2005). In light
of this discussion, whilst organisational structure has been investigated in a number of
studies in a supply chain and logistics context, however, a comprehensive analysis on the
interaction between organisational structure and supply chain strategies, uncertainties and
performance is still missing in the literature.
The present research attempts to bridge this gap in the supply chain fit literature by
exploring how the level of centralisation of decision making, the internal span of control,
lateral relationships, hierarchy and authority interact with supply chain fit and firm
performance. Organisational structure usually deals with how the tasks are allocated
among organizational units and how decision-making authority is specified(Stock et al.,
1998, p. 43), as well as internal coordination mechanisms (Parthasarthy and Sethi, 1992). To
that end, this research poses the question:
RQ1. How do the levels of decision-making centralisation and internal coordination of
the organisational structure impact on the relationship between supply chain fit
and firm performance?
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