SUPPLY CHAIN MANAGEMENT AS A

COMPETITIVEADVANTAGE IN THE SPANISH GROCERY

SECTOR

Supply Chain Management:

Sir Sheikh Mohammad Ali

TEAM MEMBERSHira Anwer Ali 32555

Mobin Kanjiani 32581

Maryam Zafar

Ilyas Khan 32599

Hassam Ul Haue 32553

INTRODUCTION By:Mobin Kanjiani

•The study is based on the internal (within organization) and external (amongst other organizations) integration processes.

•As well as how they help to give a firm a superior performance and a competitive edge.

•The study was conducted on the Spanish grocery sector.

INTRODUCTION

During the past 15 years, the Spanish grocery sector has been growing, mainly due to the development of new technologies (EPOS -

Electronic Point of Sales- and EDI -Electronic Data Interchange).

EPOS EDI

•The highly competitive environment of the grocery-retailing sector has made companies look for a competitive advantage, which can be helped by adopting the Supply Chain Management (SCM) approach.

•SCM involves integration, co-ordination and collaboration across organizations and throughout the supply chain. It means that SCM requires internal and external integration.

INTRODUCTION

•Effective internal integration is essential for supply chain

management.

Evolution from distribution logistics to supply chain

INTRODUCTION

•The effect of internal and external integration can be measured by analyzing the absolute and relative performance of the company.

•Absolute performance: refers to the performance considering the company itself, not taking into account its competitors’ performance, for example costs, stock-outs and lead-time reductions are some measures of absolute performance.

INTRODUCTION

•A firm gains competitive advantage by performing strategically important activities more cheaply or better than its competitors. The contribution of SCM gaining a competitive advantage is embedded in the concept of relative performance, which can be measured by asking the company to compare its performance with that of its competitors.

•Logistics management will only help in the absolute performance of the company, where as SCM will help in both absolute and relative performance of the firm.

LITERATURE REVIEW

By:Maryam Zafar

Internal Integratio

n

External Integratio

n

Performance

Construct Model

•This paper analyses:

1) the relationship between internal and external integration processes,

2) their effect on firms’ performance

3) and their contribution to the achievement of a competitive advantage.

•Performance improvements are analyzed through:

1) costs,

2) stock out

3) and lead time reductions.

LITERATURE REVIEW

•And, the achievement of a better competitive position is measured by comparing the firm’s performance with its competitors’ performance.

•To analyze this, an empirical study has been conducted in the Spanish grocery sector.

LITERATURE REVIEW

LITERATURE REVIEW•A firm gains competitive advantage by performing strategically important activities more cheaply or better than its competitors (Porter, 1985).

•Stank, Keller & Daugherty (2001) concluded that,

(1) internal and external collaboration are positively correlated,

(2) internal collaboration leads to a better competitive position in some logistics service performance variables (speed, dependability, responsiveness, flexibility and overall customer satisfaction),

(3) external collaboration does not lead directly to better outcomes in logistics service.

VARIABLES By:Ilyas Khan

VARIABLES

Internal Integrati

on

Absolute Performa

nce

External Integrati

on

Relative Performan

ce

INTERNAL INTEGRATIONIn this research Internal integration is the integration across functional boundaries within a firm. The level of internal integration is reflected by the extent to which logistics activities interact with other functional areas, as well as by the extent to which logistics is or is not a separate functional unit:

Informal teamwork Joint establishment of objectives

Established teamwork Joint development of the responsibilities’ understanding

Shared ideas, information and other resources

Joint decisions about ways to improve cost efficiencies

EXTERNAL INTEGRATION In this research external integration means the integration of logistics activities across firm boundaries. It is to think of the manufacturing enterprise in terms of the entire supply chain, which increasingly consists of many separate firms banded together in network arrangements:

Informal teamwork Joint establishment of objectives

Established teamwork Joint development of the responsibilities’ understanding

Shared ideas, information and other resources

Joint decisions about ways to improve cost efficiencies

Established work team for the implementation and development of continuous replenishment programs (CRP) or other ECR practice

ABSOLUTE PERFORMANCEAbsolute performance refers to the performance considering the company itself, not taking into account its competitors’

performance. Costs, stock-outs and lead-time reductions are some measures of absolute performance. The aim of

analyzing performance in absolute terms is to determine which improvements can be achieved by implementing a

logistics integration program: My company has achieved a reduction in the cost-to-serve

this customer

My company has achieved cost reductions in the transport to

this customer

My company has achieved cost reductions in the order process of

this customer

My company has achieved stock-out reductions in the products this

customer buys

My company has achieved a lead time reduction for this customer.

RELATIVE PERFORMANCEA firm gains competitive advantage by performing strategically important activities more cheaply or better than its competitors. The contribution of SCM to gaining a competitive advantage is embedded in the concept of relative performance, which can be measured by asking the company to compare its performance with that of its competitors’: My company responds to this

customer’s needs and requirements

My company responds to special requirements of this

customer

My company serves on the delivery date established

My company provides the quantities ordered

My company notifies in advance late deliveries or if quantities

ordered are not served

My company collaborates in new product launches

HYPOTHESES &

CONCLUSIONS

By Hira Anwer Ali

HYPOTHESES

Internal Integration affects Performance:

External Integration affects Performance:

Internal and External Integration are positively related:

CONCLUSIONS

There are 3 result that derived from analysis.

1. Firm accomplish high level of internal integration before executing SCM.

2. (Stage 2)When companies achieve level of integration this level of integration leads to a better absolute performance.

A high level of collaboration among internal processes contributes to achieving cost, stock outs and lead time reductions.

CONCLUSIONS

However, this internal collaboration does not lead to gaining a competitive advantage. This could be due to the fact that there are already many companies that have achieved this stage.

3. (Stage 3) The external integration level leads to a better absolute and relative performance. Companies extend the level of integration to their supply chain members, they can perform superior to their rivals in the following variables:

CONCLUSIONS

1) response to customer’s needs and requirements,

2) response to special requirements,

3) accomplishment of quantities and delivery dates,

4) and collaboration in new product launches.

SCM contributes to gaining a better competitive position because there are few companies that have achieved this stage. SCM will become a must to survive in the highly competitive environment.

RESULTS & LIMITATIONS

By:Hassam Ul

Haque

RESULT

With respect to the studies mentioned in the literature review, results from this study confirm that internal and external integration are correlated.

It also verified that both levels of integration lead to a better absolute performance.

Moreover, internal integration by itself is not sufficient to gain a competitive advantage, There is the need to extend this integration to suppliers and customers.

RESULT

And:

Stank, Keller & Daugherty (2001) considered very heterogeneous industries in the same model, and this could be the reason why they failed to demonstrate that external integration leads to a better relative performance.

LIMITATIONS

This study has some limitations.

This study has not considered other significant members of the grocery supply chain such as grocery retailers, Third Party Logistics, manufacturers’ suppliers, etc.

This study has focus only on the manufacturer-retailer relationship.

Another limitation is that intra-firm co-ordination has been measured only on one internal relationship : the Production-Logistics interface.

LIMITATIONS We have only measured the effect of inter-firm co-ordination from the perspective of the provider.

We consider that the involvement of SCM to gaining a competitive advantage is affected by the level of SCM implementation in the industry.

Future research should apply this study to other sectors in order to consider different sector structures and different levels of SCM implementation.