STRATEGIC ROLE OF SCM IN A BUSINESS ORGANISATION

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CHAPTER 2: SUPPLY CHAIN MANAGEMENT PERSPECTIVES

INTRODUCTION

Chapter 1 provided an orientation for the study and briefly provided an overview of SCM in both the private and public-sector environment, both globally and in South Africa. In addition, the concept of SCM was briefly discussed, and various definitions of SCM were explored. This was followed by an overview of SCM in SOEs, SCM practices and challenges in SOEs in South Africa, and an analysis of the policies and regulations affecting SCM in SOEs. The chapter also provided the scope of the study, outlined the problem statement, and the primary and secondary objectives and research methodology to be followed.
The overview presented in Chapter 1 made it evident that SCM plays a crucial role in an organisation’s competitive advantage. The discussion on the alignment of SCM practices with SCM policies and regulations revealed the importance of strategic alignment in an organisation and in SOEs. It is assumed that the alignment of SCM practices with policies and regulations will contribute to the performance of SCM in SOEs, and consequently, improve service delivery. The chapter concluded with an outline of all the subsequent sections of the thesis.
Chapter 2 presents a broader overview on the concept of SCM in a business environment and further explores the definitions in much more detail. The chapter deals with crucial business principles that drive supply chain and the competitive advantage. The chapter begins by providing a broad overview of SCM in the business context and the various definition and further delve into strategic objectives of SCM, the strategic role of SCM in an organisation; the historical development of SCM, and the management of supply chain performance excellence. The chapter discusses how SCM principles can contribute towards the competitive advantage of the organisation. The drivers of SCM performance are discussed as well as the techniques to link SCM with an organisation’s strategy. The chapter concludes with a summary of the elements discussed in this chapter.

OVERVIEW OF SUPPLY CHAIN MANAGEMENT

Business organisations in the 20th century, regardless of their geographic locations, are operating in a global space. Products made in one corner of the world can navigate a complex web of international trade regulations and domestic operations, to end up in another corner of the world quickly and seamlessly (Drake, 2012:1). International trade and relations between trading countries have made it possible for business organisations to create enormous global supply chain networks consisting of manufacturers, wholesalers, retailers, distributors and consumers all over the world. Business organisations therefore have a huge responsibility to manage and maintain the relationships with their supply chain partners. Businesses, since they are all operating in one global environment, no longer compete against each other but compete supply chain-to-supply chain (Lambert & Cooper, 2000: 65; Näslund & Williamson, 2010:11; Azmi, Hamid, Hussain & Ibtishamiah, 2017:73).
The more companies compete on a global basis and have supply chains that span the globe, the more their competitive position in the global market depends on the SCM of the company. Effective and efficient SCM can provide a sustainable competitive advantage that will secure a business organisation’s space in the global market (Whipple & Roh, 2010:338; Coyle, Bardi & Langley, 2009:16; Drake, 2012:1). An effective SCM has become a potentially valuable way of securing a competitive advantage through the improvement of organisational performance (Bratić, 2011:9). Bratić (2011:9) further identifies the following elements of competitive advantage: price and cost, quality, delivery dependability, product innovation, and time-to-market. The author further advises that of these five elements, price, quality and time-to-market are stronger indicators of competitive advantage and can improve the business’s competitive position in the market. However, this is provided that the strategic importance of SCM is considered, because for SCM to effectively contribute to the competitive advantage of an organisation, it requires a strategic alignment between the organisation and its SCM strategies.
Although Section 1.2.1 provided a brief overview of SCM definitions, the following section provides a discussion of a larger variety of SCM definitions and crucial elements.

Supply chain management defined

The concept of SCM has been steadily evolving for the past 30 years (Näslund & Williamson, 2010:11, Drake, 2012:2). For decades, SCM was discussed under the umbrella of traditional business functions, such as purchasing and supply, logistics and transportation, operations management, marketing, organisational theory, management information systems, and strategic management (Chen & Paulraj, 2004:181). According to Bertrand and Fransoo (2002:16), and Drake (2012:2), disciplines such as finance, economics, accounting, psychology, sociology, human resources, and organisational behaviour have had a significant influence on the development of SCM. Much knowledge about SCM still resides in each one of the disciplines, with each one providing distinctive perspectives on what SCM is comprised of (Burgess, Singh & Koroglu, 2006:20). Ideally, a more holistic SCM philosophy is one that takes into consideration the viewpoints from various disciplines (Jain, Dangayach, Agarwal & Banerjee, 2010:11). Consequently, numerous definitions of SCM are found in literature, amongst professional associations, and in the industry (Elrod, Murray & Bande, 2013:39).
SCM represents and reflects a holistic approach to the operation of the organisation, and it relates to the entire procurement cycle, not just at the end. The maturity of SCM is evident in the way it has been ‘defined’ through the years. The definitions depict a move from a transactional to a strategic approach to SCM (Monzka et al., 2012:13).
Table 2.1 provides definitions of SCM from various perspectives in literature.
From the definitions provided in Table 2.1, it can be concluded that SCM is an integrated strategic process involved in sourcing goods and services to meet customers’ needs. Common elements established from the definitions are, customer focus, value-adding processes, planning and management, integration and collaboration. SCM comprises all the parties involved, directly, or indirectly, in filling an order or a customer request. The supply chain therefore includes the manufacturers, suppliers, transporters, warehouses, retailers and customers.
In the ‘chain’ part of the supply chain metaphor, suppliers are referred to as upstream entities, and customers as downstream entities (McKeller, 2014:2, Prater & Whitehead, 2013:4). According to Christopher (2006:30) and Prater and Whiltehead (2013:4) SCM is the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at an effective cost.
As illustrated in Figure 2.1 the process begins with the supplier’s supplier and ends with the customer’s customer (Simchi-Levi et al., 2009:1).
The goal in SCM is to create value for the services and products provided to end-customers, which in turn, provide benefits to the firms in the supply chain network (Hugo et al., 2011:11). Regardless of the definition or supply chain perspective used, each should recognise that supply chains are composed of processes, rather than discrete, often poorly-aligned activities. A process comprises a set of interrelated activities or tasks designed to achieve a specific objective or outcome (Monczka et al., 2012:9). Consistent amongst these definitions is the drive to improve operating efficiencies, quality and customer service amongst organisations (Wisner et al., 2016:8).
It is also clear that the definitions emanate from the various fields in the business industry. It is therefore crucial to trace the history of SCM to determine the developmental growth up to this stage.

Historical development of supply chain management

This section provides the historical background and milestones in the development of SCM over the past century. The historical development of SCM provides an appreciation for the growth, development, and increased importance of the profession over the last 30 years. Each historical period has contributed something unique to the development of SCM, including the events that shaped today’s emphasis on integrated SCM (Handfield et al., 2011:26).
There are several different perspectives amongst SCM scholars when describing the route that SCM has taken from the past to the present moment. According to Giunipero, Handfield and Eltantawy (2006:823), the progressive changes in SCM were driven by the changing business environment; increased globalisation, technological advances, internet-based systems, and increased demands by upper management. As a result, the SCM function was compelled to realign themselves with the business strategies, and therefore add value to the supply chain. Burt, Dobler & Stirling (2011:9) maintain that the continuing development of SCM involves two major paradigm shifts: (1) from a focus on internal processes to value-adding benefits, and (2) from tactical to a strategic focus.

CHAPTER 1: INTRODUCTION TO THE STUDY 
INTRODUCTION
CONCEPTUALISATION OF THE STUDY
PROBLEM STATEMENT
RESEARCH OBJECTIVES
RESEARCH DESIGN AND METHODOLOGY
SAMPLING METHOD
RATIONALE FOR THE STUDY
SCOPE OF THE STUDY
CHAPTER OUTLINE
CHAPTER 2: SUPPLY CHAIN MANAGEMENT PERSPECTIVES
INTRODUCTION
OVERVIEW OF SUPPLY CHAIN MANAGEMENT
STRATEGIC ROLE OF SCM IN A BUSINESS ORGANISATION
STRATEGIC ALIGNMENT OF SCM
SUPPLY CHAIN INTEGRATION
ENABLERS OF SUPPLY CHAIN EXCELLENCE
SUPPLY CHAIN PROCESSES
CONCLUSION
CHAPTER 3: SUPPLY CHAIN MANAGEMENT IN SOUTH AFRICAN STATE-OWNED ENTERPRISES
INTRODUCTION
GLOBAL OVERVIEW OF STATE-OWNED ENTITIES .
PUBLIC SECTOR SUPPLY CHAIN MANAGEMENT IN SOUTH AFRICA
SUPPLY CHAIN STRATEGY IN STATE-OWNED ENTITIES
LEGISLATION GOVERNING SCM IN STATE-OWNED ENTITIES IN SOUTH AFRICA
IMPLEMENTING SCM PRACTICES IN STATE-OWNED ENTITIES
SUPPLY CHAIN PERFORMANCE IN STATE-OWNED ENTITIES
SCM CHALLENGES IN STATE-OWNED ENTITIES
CONCLUSION
CHAPTER 4: INSTRUMENTS FOR ALIGNING SUPPLY CHAIN MANAGEMENT PRACTICES 
INTRODUCTION
THEORETICAL PERSPECTIVES ON SUPPLY CHAIN
REVIEW OF STRATEGIC ALIGNMENT FRAMEWORKS
CONCEPTUAL MODEL AND HYPOTHESeS DEVELOPMENT
CONCLUSION
CHAPTER 5: RESEARCH METHODOLOGY
INTRODUCTION
RESEARCH PHILOSOPHY AND PARADIGMS
RESEARCH APPROACH
RESEARCH METHODOLOGICAL CHOICE
RESEARCH STRATEGY
TIME HORIZON
DATA COLLECTION METHODS
DATA ANALYSIS METHODS
CONCLUSION
CHAPTER 6: DATA ANALYSIS AND INTERPRETATION OF RESULTS
INTRODUCTION
DEMOGRAPHIC PROFILE OF THE RESPONDENTS
SUCCESS FACTORS FOR IMPLEMENTATION OF SUPPLY CHAIN STRATEGY IN STATE-OWNED ENTITIES
THE IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT PRACTICES IN STATE-OWNED ENTITIES
COMPLIANCE TO SCM POLICIES AND REGULATIONS
SUPPLY CHAIN PERFORMANCE
SUPPLY CHAIN CHALLENGES IN STATE-OWNED ENTITIES
RELATIONSHIP BETWEEN THE DEPENDANT AND independent VARIABLES
HIERARCHICAL MULTIPLE REGRESSION ANALYSIS
VALIDATION OF STRUCTURAL MODEL AND HYPOTHESIS
CONCLUSION
CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS
INTRODUCTION
REVISIT RESEARCH QUESTIONS AND OBJECTIVES
RESEARCH OBJECTIVES
DISCUSSION OF THE RESEARCH FINDINGS
SUMMARY AND RECOMMENDATIONS
RESEARCH CONTRIBUTION
LIMITATIONS OF THE STUDY AND SUGGESTIONS FOR FUTURE RESEARCH
CHAPTER SUMMARY
REFERENCES
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