Supply Chain Management—Part of Strategic Management

Klaus Venus
(Ifl-Consulting, A-4400 Steyr, Austria)

Abstract: The purpose of the paper is to investigate how Supply Chain Management (SCM) is integrated with strategic management of companies and how this degree of integration impacts the competitiveness of companies. SCM is a capability that connects operational levels, where innovation actually occurs, with strategic levels and synchronizes the strategic and operational factors when managing resources strategically. Therefore, SCM is concerned with managing all activities involved in integrating supply and demand management within and across companies composing the supply chain (CSCMP, 2009). The new competitive landscape is described as “hypercompetitive” (D’Aveni R. A., 1994) because it is characterized by “escalating competition and strategic manoeuvring” (D’Aveni R. A. & Ravenscraft D. J., 1994) due to rapid technological developments and increasing globalization (Hitt M. A., Keats B. W., & DeMarie S. M., 1998). For the purpose of this work, I will adopt the definition of dynamic capabilities as the “ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments” (Hitt M. A., Keats B. W., Harback H. F., & Nixon R. D., 1994). Strategic supply chain management means that supply chain management is not merely a function that supports business strategy but a key part of strategy and strategy implementation. The strategic integration of SCM on firm base will be evaluated by literature study. In parallel a questionnaire will be developed to empirically understand how SCM (SCM-strategy is developed, is part of business strategy, drives business strategy) is part of business strategy and how this is communicated and what is the business impact compared to peers. Findings-Many executives are still hesitant to surrender the control of their operations to a total SCM function that tries to optimize the entire demand network rather than an individual firm’s operations. Strategic management research has been concerned with the question of, “why certain firms attain and sustain competitive advantage during both stable and unstable market conditions” (Zahra S. A., Sapienza H. J., & Davidsson P., 2006) propose that firms’ dynamic capabilities, which they define as “the abilities to reconfigure a firm’s resources and routines (Teece D. J., Pisano G., & Shuen A., 1997; Shimizu K. & Hitt M. A., 2004) in the manner envisioned and deemed appropriate by its principal decision-maker(s)” (Zahra S. A., Sapienza H. J., & Davidsson P., 2006) lead to differences in firms’ abilities to identify and exploit future growth opportunities which could lead to attaining and sustaining competitive advantage. Trust between partners develops more effectively when incentives and purposes of the partners are aligned and a shared identity is created. Surely, incorporating perspectives from strategy research into SCM can guide SCM and elevate it to a more strategic level, while at the same time, strategy can benefit from SCM in implementing and enabling organizational strategies.

Keywords: supply chain management (SCM); strategic management; dynamic capabilities; competitiveness

JEL codes: F