Supply chain integration strategies in fast evolving industries

• Published date: 13 February 2017
• DOI: https://doi.org/10.1108/IJLM-01-2015-0013
• Pages: 29-46
• Date: 13 February 2017
• Author: Ehsan Sabet,Nahid Yazdani,Sander De Leeuw
• Subject Matter: Management science & operations,Logistics

Supply chain integration strategies

in fast evolving industries

Ehsan Sabet

Wolfson School of Mechanical, Electrical and Manufacturing Engineering,

Loughborough University, Loughborough, UK

Nahid Yazdani

Department of Business and Economics, Loughborough University,

Loughborough, UK, and

Sander De Leeuw

Business School, Nottingham Trent University, Nottingham, UK and

Faculty of Economics and Business, Vrije Universiteit Amsterdam,

Amsterdam, The Netherlands

Abstract

Purpose –The purpose of this paper is to define the “fast evolving industry”(FEI) and its supply chain

management (SCM) challenges. The authors review and structure the literature regarding integration

strategies and implementation methods to develop a strategic decision-making framework for SCM in the FEI.

Design/methodology/approach –The authors conduct a review of SCM literature, including supply chain

strategy, supply chain integration (SCI), agile and responsive supply chain and SCM for innovative and fast-

changing industries. The authors develop a conceptual model and a decision-making framework and use four

mini cases to provide support for the model and framework.

Findings –The FEI, characterised by a high level of innovation and differentiation, short products/services

lifecycle and high variety, is yet tobe fully defined. Inherent uncertainty in FEI supply systems makes SCM in these

industries a complex but strategic task for their managers. The framework and the model offered in this study,

which employ a core competency concept and provide risk management strategies, offer a strategic tool for

managers and scholars in the fieldt o optimisetheir integration strategies and to operationalise integration decisions.

Originality/value –Little research has been published on transferable and cross-industrial SCM in FEIs.

This paper defines the FEI and its resource-related concerns and then offers a conceptual model and a

strategic decision-making framework for SCI in FEIs.

Keywords Supply chain management, Supply chainstrategy, Supply chain integration,Agile supply chain,

Fast evolving industries, Responsive supply chain

Paper type Conceptual paper

1. Introduction

Fast evolving industries (FEIs) are industries characterised by high levels of innovation

and differentiation (Humphrey and Schmitz, 2002), high-product/service variety and

low-product/service life or replenishment cycles (Bilgen and Günther, 2010) and increasingly

sophisticated customers (Stevenson and Spring, 2007). Applying this definition, one can

observe that FEIs account for a large proportion of high added-value industries in

developed countries, for example, electronics and telecommunications (Arnold, 1999),

semiconductors (Brown et al., 2000), fast moving consumer goods (Siemieniuch et al., 1999),

pharmaceutical goods (Narayana et al., 2014), video games (Broekhuizen et al., 2013),

advertising (Bakhshi and McVittie, 2009) and music (Caves, 2000). Moreover, since market

The International Journal of

Logistics Management

Vol. 28 No. 1, 2017

pp. 29-46

Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-01-2015-0013

Received 20 January 2015

Revised 20 October 2015

12 April 2016

Accepted 8 June 2016

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

© Sabet, Yazdani, De Leeuw. Published by Emerald Publishing Limited. This article is published under

the Creative Commons Attribution (CC BY 3.0) licence. Anyone may reproduce, distribute, translate

and create derivative works of this article (for both commercial and non-commercial purposes), subject

to full attribution to the original publication and authors. The full terms of this licence may be seen at

http://creativecommons.org/licences/by/3.0/legalcode

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SCI strategies

volatility is increasingly evident in global economies and life cycles in many industries are

shortening (Christopher, 2000), FEI boundaries are expanding, which makes them an

important category of industry to study.

However, there have been few studies defining the FEI or formulating transferable

management knowledge and practices across different sectors of FEIs. Of those cross-industrial

studies that do exist, a majority are market-focussed and relatively few are resource oriented.

Cross-industrial market-focussed studies of FEIs include comparisons on customer satisfaction

(Gilbert and Veloutsou, 2006), customer relationship (Wulf et al., 2001) and customer loyalty

(Martensen et al., 2000). Examples of cross-industrial resource-focussed studies of FEIs are papers

on competition mechanisms (Lieberman and Asaba, 2006), technological capabilities (Park et al.,

2008), leadership style (Lok and Crawford, 2004) and strategic partnerships (Dodourova, 2009).

Since demand configurations are highly uncertain and fragmented in FEIs (Christopher

et al., 2004), resource design and allocations in these industries are highly strategic and complex

(Nachiappan and Jawahar,2014). The higherthe pace of change in an industry the largeris the

impact of supply chain management (SCM) on the competitive advantage of the firms (Perrons

and Platts, 2005). SCM must therefore be at the centre of strategic business reengineering

efforts in FEIs (Arnold, 1999). Although there are numerous studies of SCM in FEIs within

sectors they rarely go beyond sector boundaries to obtain cross-sectional SCM understanding.

The rapidly changing markets of FEIs point to an ever-increasing need for flexible and

responsive supply chains (Gunasekaran et al., 2008; Christopher et al., 2004). Integration

with suppliers is essential to meeting this need (Richey et al., 2009). Although supply chain

integration (SCI) has received significant research focus in recent years (Wu and Barnes,

2011), with regard to FEIs it is an under-examined area of research.

This paper aims to develop a decision-making framework for SCI strategies and

implementation mechanisms in FEIs. The next section explains how FEIs need agile

and responsive supply systems and describes existing models and frameworks that could

be used in FEIs. Section 3 further explains the importance of SCI as the main means of

achieving agility and responsiveness for FEI supply chains. In an attempt to develop an

SCM conceptual model and decision-making framework for FEI, Section 4 reviews the

underlying drivers of SCI as well as the best implementation practices and mechanisms

given the varying levels of supply uncertainty and varying levels of products/services

importance to the core business of FEIs. The conceptual model and decision-making

framework will be further elaborated by four mini cases, after which we conclude.

2. FEIs and agile supply

One of the earliest and major attempts to propose a supply selection model was by Kraljic

(1983), who articulated that firms must adapt their purchase strategies to supply uncertainty.

Kraljic (1983) suggested that SC strategies should be established on “the strategic importance of

purchasing”and “the complexity of the supply network”(p. 110) in order to establish close

collaboration with the suppliers. Later, Fisher’s (1997) model asserted that demand structure

differs by industry and that products/services are either functional or innovative. This model

also categorised supply chains as “efficient”or “responsive”and identified which type fits best

within different market structures. Fisher’s model, therefore, is one of the earliest frameworks

that can be employed for strategic supply chain selection in FEIs, as in these industries product

life cycles tend to be short, demand is variable and product variety is often high. Employing this

model for FEIs, the “market-responsive SC strategy”must be adopted “in order to minimize

stock-outs, forced markdowns, and obsolete inventory”(Fisher, 1997, p. 108). However, this

model does not provide the necessary level of detail on how responsive FEI suppliers must be,

or how to operationalise this responsiveness.

Fisher (1997, p. 114) further advises that upon identifying an innovative product a

company can manage uncertainty by “finding sources of new data that can serve as leading

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