Twin-objective supply chain collaboration to cope with rare but high impact disruptions whilst improving performance

DOIhttps://doi.org/10.1108/IJLM-02-2016-0028
Date08 May 2017
Pages488-507
Published date08 May 2017
AuthorQuan Zhu,Harold Krikke,Marjolein C.J. Caniëls,Yacan Wang
Subject MatterManagement science & operations,Logistics
Twin-objective supply chain
collaboration to cope with rare
but high impact disruptions whilst
improving performance
Quan Zhu, Harold Krikke and Marjolein C.J. Caniëls
Faculty of Management, Science and Technology,
Open University of the Netherlands, Heerlen, The Netherlands, and
Yacan Wang
School of Economics and Management, Beijing Jiaotong University,
Beijing, China
Abstract
Purpose Rare but high impact (R-HI) disruptions, which are caused by legal changes, socio-technical
accidents, or natural disasters, are becoming more frequent and have strong short-term and long-term
impacts on performance. Meanwhile, the short-term perspective of managers leads to adoption of mitigation
strategies with lower investments and immediate performance improvement. The purpose of this paper is to
provide insights on supply chain collaboration (SCC) to establish so-called twin-objectivestrategy to help both
risk mitigation (through moderation effects) and performance improvement (through a direct positive impact).
Moreover, power position will be considered as the control variable.
Design/methodology/approach A cross-sectional approach was adopted with primary data collected
through a survey in China. Data were analyzed using structural equation modeling with partial least squares
estimations. A sub-group model analysis was applied to test the effect of the control variable.
Findings The findings verify that SCC has both a direct positiveimpact on performance and moderation
effects on the relatio nships between source s of R-HI disruptions and performance. The res ults of sub-
group model analysis illust rate that both powerf ul and weak focal firm s benefit from SCC, bu t in
different ways.
Originality/value The study shows that the allocation of gains from collaborative advantage should be
added to the theory-building of relational view. Meanwhile, the research extends the focal firms context to its
supply chains context so that classic contingency theory can be extended to adequately explain supply chain
management phenomena.
Keywords Supply chain collaboration, Partial least squares, Moderation effect, Sub-group model analysis,
Twin-objective
Paper type Research paper
1. Introduction
Complex and tightly coupled supply chains are usually slow to respond to changes in their
environment, and hence, they are more vulnerable to supply chain disruptions (Tang and
Tomlin, 2008). Unfortunately, rare but high impact (R-HI) disruptions, which are caused by
legal changes, socio-technical accidents, or natural disasters, are becoming more frequent
(Wagner and Bode, 2008) and have strong short-term and long-term impacts on
performance (Tang, 2006). Forecasting them is difficult, as having plenty of (forecast) data
will not provide confirmation, but a single instance can disconfirm(Taleb, 2007, p. 295).
Meanwhile, the short-term perspective of managers leads to adoption of mitigation
strategies that involve lower investments than forecast-based strategies and that provide
immediate performance improvement (Manuj and Mentzer, 2008). Thus, we postulate that
companies must complement existing supply chain strategies with specific target solutions
to better prepare for R-HI disruptions. Twin-objective strategies should help both risk
mitigation and performance improvement (i.e. adding value to the supply chains customer
The International Journal of
Logistics Management
Vol. 28 No. 2, 2017
pp. 488-507
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-02-2016-0028
Received 4 February 2016
Revised 12 May 2016
12 May 2016
Accepted 18 June 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
488
IJLM
28,2
and eventually focal firms financial performance). This can be achieved in various ways.
Strategies, such as redundancy (Sheffi, 2005), dual sourcing (Trkman and McCormack,
2009), and postponement (Yang and Yang, 2010), have been discussed to provide help,
but they share the same drawback namely, requiring a substantial investment that is only
meant for risk mitigation (Manuj and Mentzer, 2008).
We argue that supply chain collaboration (SCC) implying that the focal firm
strategically collaborates with its key supply chain partners and collaboratively manages
inter-organization processes (Flynn et al., 2010) is a feasible option to accomplish the twin
objectives mentioned. Zsidisin and Wagner (2010) found evidence for a moderation effect of
supply risk resiliency practices (including SCC items) on the relationship between supply
side risk sources (including sources of R-HI disruptions) and disruption occurrence.
However, the influence of these strategies (including SCC) on the relationship between
supply chain risk and supply chain performance has neither been thoroughly underpinned
with theory nor analyzed through empirical research(Wagner and Bode, 2008, p. 318).
By applying relational view and classic contingency theory, we will fill in this gap by testing
the moderation effects of SCC on the relationships between sources of R-HI disruptions and
supply chain performance. During stable periods, SCC can still help firms create customer
value (Flynn et al., 2010). Thus, we will also investigate the direct impact of SCC on customer
value and to what degree the financial performance of the focal firm benefits.
After evaluating the full model, we will explore whether there are differences between
powerful focal firms (that have the most negotiation power on the supply chain) and weak
focal firms (that have less negotiation power on the supply chain), as depending on the
power position of focal firms, the influence of SCC on individual focal firms might not be
effective (Zsidisin and Wagner, 2010).
The paper is structured in the following way. In Section 2, we present how SCC directly
influences performance and moderates the relationships between sources of R-HI
disruptions and performance through a literature review. Section 3 discusses research
methodology. This is followed by the statistical analysis of our data in Section 4. Finally, the
paper concludes with both discussion and implications in Section 5.
2. Literature review
SCC is groundedon the collaborativeadvantageof relationalview(Chen and Paulraj, 2004;
Dyer and Singh, 1998) in contrast to the competitive advantageof resource-based view
(Barney, 1991).Collaborative advantageis derived from relational rentsthat produce common
benefits forbilateral rent-seeking behaviors, while competitive advantagecomes from internal
rents that maximize a firms own benefits (Lavie, 2006). The perspective of collaborative
advantage enables supply chain partners to view SCC as a positive-sum game rather than a
zero-sum game where partners strive to gain more relational rents for their own competitive
advantages (Cao and Zhang, 2011). To evaluate the collaborative advantage created by SCC,
Cao and Zhang (2011) suggests five measures on supply chains operational performance:
process efficiency, flexibility,business synergy, quality, and innovation. However, despite the
improvement in operational performance, a supply chains neglect of its end customers may
be problematic (Chen and Paulraj, 2004). Satisfying customer needs is the central purpose of
any business (Doyle, 1994). Therefore, wefollow Esper et al. (2009) who argue that customer
value, the unique and individualized value that a supply chain creates for its customers,
should be the focus of collaborative advantage assessment, including satisfied products
(i.e. competitive price and reliable quality) and operations (i.e. on-time delivery and
customization) (Wong et al., 2005). This is because: first, the importance of customer value
helps supply chain partners focus on increasing effectiveness of delivering customer needs.
Second, in order to create more customer value, supply chain partners eliminate non-value-
added activities,thus making supply chain operationsmore efficient. Third, customervalue is
489
Twin-objective
SCC

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT