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Cinderella in the C-Suite: Conducting Influential Research to Advance the Logistics and Supply Chain Disciplines

2011; Wiley; Volume: 32; Issue: 2 Linguagem: Inglês

10.1111/j.2158-1592.2011.01010.x

2158-1592

Stanley E. Fawcett, Matthew A. Waller, Donald J. Bowersox,

Outsourcing and Supply Chain Management

Not long ago, a member of the JBL Interest Group was engaged in a discussion with his dean regarding the role of logistics and supply chain management (SCM) within the business school. Perhaps you will not be surprised to hear that a difference of opinion had existed regarding three key points: (1) the journals on the school's "A-list," (2) the number, type, and importance of classes in the supply chain curriculum, and (3) resource-allocation (i.e., hiring) decisions. As the JBL Interest Group member argued for the strategic importance of SCM in today's academic and business communities, the dean responded, "When I was a PhD student, logistics was viewed as the business school's ugly stepdaughter." Regrettably, this dean's this early perception of logistics had been formative, remaining unchanged in the more than 30 years since he had completed his doctoral program. Although this conversation was neither the first nor the last of its kind, it is illustrative of our field's challenge: to raise the visibility and stature of the logistics and supply chain disciplines to that of strategic contributors. Consistent with open systems theory, changes in the competitive environment over the past 30 years have inseparably linked differential performance to a firm's logistics and supply chain capabilities (Lawrence and Lorsch 1967; Scott and Davis 2006). For example, technological advancements have reduced lead times and created the information-empowered customer; that is, the customer who wants it all—higher quality, lower cost, and better service—instantly (Blackwell 1997; Fine 1998; Hammer 2004). Similarly, in today's "flat" world, both hungry, agile competitors as well as curious, capable customers seek their place on the global stage (Friedman 2005). As these two forces have combined, survival in today's global arena has become increasingly difficult, requiring managers to design value-creation systems that efficiently and effectively utilize worldwide resources to meet the ever-rising demands of global customers. Such a competitive mandate often exceeds the capacities and capabilities of any individual firm (Dyer and Singh 1998; Fawcett et al. 2007a,b). Over 15 years ago, Harold Sirkin, Vice President of Boston Consulting Group, succinctly described today's challenge, "As the economy changes, as competition becomes more global, it's no longer company vs. company but supply chain versus supply chain" (Henkoff 1994, 66). Now the good news: This reality has opened the door to the C-suite for today's supply chain professionals. Paradoxically, despite concerns that the door to the C-suite refers to a closing door on logistics, the emergence of the Chief Supply Chain officer as an integral occupant of the C-suite has actually increased the importance of world-class logistics management and leading-edge logistics research. Our opportunity today is twofold: Conduct research to articulate more clearly how logistics contributes value both via day-to-day operations and in the bigger picture. Conduct research to develop and clarify more fully SCM's influence on business model design as well as on strategy development and execution. These two research streams will often be interdependent since logistics processes both enable and are impacted by the supply chain structure within which they exist. In the remainder of this editorial, we highlight core value-added contributions of logistics and SCM and delineate how key mega and micro trends have set the stage for us to conduct the research needed to increase the visibility and stature of logistics and SCM disciplines. Logistics is the leadership responsibility to design and manage systems to control movement and positioning of raw materials, work-in-process, and finished inventories at the lowest total cost and highest customer influence. Core logistics systems include order processing, inventory, transportation, warehousing, and material handling and accounted for over $8 trillion in global expenditures in 2010. Although we do not have the space to detail all of logistics' varied value-added contributions, a brief review of logistics' influence on three factors—(1) economic development, (2) value creation/customer satisfaction, and (3) differential firm performance—underscores the need to carefully manage and research logistics systems. First, logistics affects economic development by making exchange possible. Adam Smith (1976) recognized this as he set forth three propositions regarding the wealth of a nation: The wealth of a nation is the product of its labor. The greatest improvements in the product of labor result from the division of labor. The division of labor is limited by the extent of the market. Logistics' importance emerges from Smith's proposition concerning the extent of the market. That is, a product's availability and cost affects its market competitiveness. The more efficient the logistics system, the more extensive the market, and thus, the greater the ability to take advantage of the division of labor.11 The relationship between logistics and Adam Smith's propositions was pointed out to one of the coeditors by friend and mentor, Martin Farris. Logistics is not just a necessary function in any developed economy but it is a limiting factor in overall economic development. Modern logistics systems make global business and economic development possible. The result: following the post-World War II logistics revolution, living standards for billions of people worldwide have improved dramatically. Second, logistics' relevance and vitality are firmly embedded in the tandem notions of value creation and customer satisfaction. Thought leaders have long alluded to this truth. For example, Peter Drucker (2001, 15) emphasized that, "There is only one valid definition of business purpose: to create a customer. …What the customer buys and considers value is never just a product. It is always a utility, that is, what a product or service does for him." Similarly, Kenichi Ohmae (1988, 149) noted, "Strategy isn't beating the competition; it's serving customers' real needs." Ohmae then emphasized, "First comes the willingness to rethink, fundamentally, what products are and what they do" (p. 149). Both strategists concur that value emerges from the utility or satisfaction derived by the customer. From a traditional economics' perspective, organizations increase the utility of a product or service by changing its form, time, place, or possession. Logistics is not merely a primary driver of time and place utilities but also a core enabler of form and possession utilities. Effective and efficient logistics makes value creation and customer satisfaction possible (Fawcett et al. 2007a,b; Coyle et al. 2011). Finally, a core objective of both managers and business scholars is to explain how a firm may achieve differential performance (Porter 1991; Dyer and Hatch 2006). So, the question emerges, "Can a firm's logistics strategy and system be used to attain distinctive advantage?" Although we can and should assess this question through a variety of theoretical lenses (e.g., social network, complex systems, or resource dependency), we highlight here only one possible perspective. Specifically, managerial efforts over the past 20 years have focused on developing core competencies as a source of competitive advantage (Prahalad and Hamel 1990). This resource-based view argues that firms that develop valuable, inimitable, rare, and nonsubstitutable capabilities will outperform their competitors (Dierickx and Cool 1989; Barney 1991; Teece et al. 1997). Stalk et al. (1992) describe how Wal-Mart's success emerged from a critical logistics capability. Other companies including Frito Lay, Ikea, Toyota, UPS, and Zara all have used logistics to enable "winning" competitive strategies (Bowersox et al. 1995; Christopher and Towill 2001). Importantly, empirical research has documented that a logistics excellence leads to differential operational and financial performance (Fawcett and Clinton 1997; Fawcett et al. 1997). As an enabler of economic development, value creation/customer satisfaction, and differential firm performance, logistics merits our careful investigation. Although we have made much progress since Peter Drucker (1962) called logistics "The Economy's Dark Continent," we still do not fully understand the intricacies that make logistics skills and capabilities difficult to inculcate and thus a source of competitive advantage. We have the opportunity today to not only explain how logistics is a source of competitive advantage but also explicate the process of how firms compete via logistics and how competition affects logistics decisions and the adoption of logistics processes. Logistics, when combined with supply management, manufacturing, and customer relationship management create a more comprehensive body of integrative knowledge called SCM. In today's silo-bounded world, the integrative nature of SCM can be difficult to communicate. For example, during a class discussion a couple of years ago, one of the coeditors tried to emphasize how important it is that all supply chain professionals understand the fundamental elements of financial analysis. He shared the idea that "Finance is the language of business." A student quickly raised his hand to correct this notion, saying, "We've been taught that accounting is the language of business." No sooner had the coeditor addressed this comment, than another student asked, "If finance is the language of business, what is supply chain management?" The answer came quickly, "Supply chain management is the business of business! Supply chain professionals are responsible for designing and managing the two essential processes that create and deliver customer value: new product development and order fulfillment." As the discussion wrapped up, two conclusions were reached: (1) firms are open systems that participate as members of larger systems known as supply chains, and (2) enduring success emerges only as the supply chain team works well together—each member of the team performing its role superbly. This second point clarifies the value-added essence of SCM. Over the years, a variety of definitions of SCM have been proposed (e.g., Cooper et al. 1997; Lambert et al. 1998; Bowersox et al. 1999; Fawcett and Magnan 2001; Frohlich and Westbrook 2001; Mentzer et al. 2001). Common to most of these definitions is the ability to manage value creation across organizational boundaries. This perspective is consistent with both the resource-based and relational views of the firm. For example, strategy scholars commonly use the terms "integrate,""coordinate," and "reconfigure" to describe the boundary-spanning nature of the capability-development process (Teece et al. 1997; Eisenhardt and Martin 2000; Newbert 2007; Barreto 2010). Dyer and Singh (1998, 661) extend this notion, reminding us that, "a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines." When essential knowledge, technologies, and innovation reside outside firm boundaries, a company's network (both customers and suppliers) becomes the source of competitive differentiation (Gulati 1998; Lavie 2006; Holcomb and Hitt 2007). Competition truly has become a team sport. SCM's contribution is to help organizations bring together complementary competencies that reside across the global network to create inimitable value. Although we have gained greater appreciation for SCM's competitive potential, we still lack an understanding of the nuanced dynamics inherent in managing value-creation processes across organizational boundaries. We must continue to probe inside SCM's "black box" to gain greater insight into how people, technology, and structure influence system design and competitive success. Today's logistics and supply chain research must help managers and scholars alike understand more completely how value is created to help firms achieve differential performance as well as to improve the quality of life for people around the world. Our goal is to publish outstanding research in the Journal of Business Logistics that takes a deep dive into the deep skills of logistics. We are also pursuing exceptional research that explains how collaborative supply chain processes and systems work. As we have discussed the state of logistics and supply chain research with colleagues around the world, we have noticed that many demographic, psychographic, and technological trends are driving the need for improved logistics and supply chain practice. These mega and micro trends, some of which we highlight in Table 1, merit the high-quality research that is able to influence both thought and practice. Indeed, as the corporate and academic worlds recognize the centrality of logistics and SCM to sustained competitive performance, our opportunity and responsibility to conduct meaningful research increases. We should emphasize one caveat regarding Table 1—the mega and micro trends included is not meant to be exhaustive. Rather, we hope they illustrate the breadth of topics and diversity of research methods that we would like to publish in JBL as we seek to advance the logistics and supply chain disciplines. Closely examining the mega and micro trends influencing managerial decision making, we must conclude that the external environment is not simply affecting managerial practice but also that logistics and supply chain decisions are shaping the world in which we live. In his book, The World is Flat, Thomas Friedman (2005) illustrates this essential idea. Over half of Friedman's 10 flatteners derive from logistics and supply chain capabilities. Perhaps never before have the core "disciplines" we seek to elucidate via our research played such a vital and recognized role in molding our world and the human circumstance. A second point also stands out as we ponder the trends above—logistics and supply networks are complex, integrative, and adaptive systems. A variety of research is needed to understand the details, the interrelationships, and the evolution embodied in the core logistics systems of order processing, inventory, transportation, warehousing, and material handling. The same is true as we look at the more holistic domains of supply, manufacturing, logistics, and customer relationship management that comprise SCM. JBL encourages topically and theoretically as well as methodologically diverse research that brings insight and improvement to today's decision-making environment. Logistics and SCM each represent not only legitimate but also essential arenas for research and development. Each has applicable theory and each requires the collective efforts and knowledge of practitioners and academics to continuously anticipate, discover, and implement solutions to existing problems. Our research opportunity is work in a continuing—and hopefully expanding—partnership with the business community to discern new knowledge and guide research results into widespread practice. Restated, to add real value and make a real contribution, we must conduct research that goes beyond merely talking about organizational performance. Our research must help decision makers improve performance. As we discover specific knowledge and ultimately synthesize that knowledge into a higher level of integrated understanding, we can expect two important outcomes: We will advance the frontiers of the logistics and supply chain disciplines, helping improve corporate performance and societal well-being. We will find that the business school's ugly stepdaughter has grown up—and that she is not just wearing Cinderella's glass slipper but she also has a key to the C-suite. We thank the following individuals for their helpful comments on earlier drafts of this manuscript: Chad Autry, Susan Golicic, Sara Liao-Troth, John Ozment, Eric Peltz, Steve Rutner, and Judy Whipple.