Gillyard angelisa elisabeth

Copyright by Angelisa Elisabeth Gillyard 2003 ABSTRACT Supply Chain Management (SCM) offers the possibility of increased customer service while minimizing costs Before choosing what type of supply chain strategy to pursue, a firm must first evaluate the type of supply chain(s) in which it participates The type of functional strategies chosen should complement the type of supply chain(s) in which the firm is a member Certain manufacturing and logistics strategies are more appropriate given the characteristics of the supply chain This thesis explores the relationships among supply chain characteristics, logistics and manufacturing strategies, and firm performance In addition, this study proposes an alternative logistics strategy framework using the competitive priorities of cost, quality, delivery and flexibility Multivariate analysis of variance (MANOVA) was used to test the hypotheses Results indicate limited support for the notion that successful firms participating in agile supply chains choose to emphasize different logistics and manufacturing strategies than less successful firms in agile supply chains The same holds true for firms participating in lean supply chains Results from the logistics strategy factor analysis demonstrated that the proposed framework is not only a feasible one, but one that is effective at describing the logistics strategy ii Dedicated to my Mother and Father iii ACKNOWLEDGMENTS First and foremost, I would like to thank God for giving me the strength and courage to pursue this degree and to see it to completion I thank my adviser, Martha Cooper, for her continued support and mentorship throughout my matriculation in the doctoral program Her encouragement has been invaluable throughout this entire process I am grateful to my committee, Glenn Milligan and John Current, for their continued support and cooperation Their comments and suggestions have contributed much to the improvement of this document I also wish to thank my family Without their constant and unconditional love, support and encouragement, I would not be who and where I am today Thanks are also extended to the other doctoral students who were by my side throughout this journey Their intellectual discussions and words of encouragement made the doctoral program more enjoyable This research was supported in part by a grant from The Ohio State University’s Alumni Grants for Graduate Research and Scholarship and the GE Faculty for the Future Fellowship iv VITA September 13, 1974 ………………………………Born - Atlanta, GA 1996 ………………………………………………B.S Mathematics, Spelman College 1998 ………………………………………………M.S Management, Georgia Institute of Technology 2002 ………………………………………………M.A Business Administration, The Ohio State University 1998-2002 ……………………………………… Graduate Teaching and Research Associate, The Ohio State University PUBLICATIONS "Career Patterns of Women in Logistics: Emphasis on Mentoring," Martha C Cooper, Cuneyt Eroglu, Angelisa Gillyard, Priyatabh P Sharma, Council of Logistics Management Conference Proceedings (CD-ROM), 2002 Cited in several trade publications, including Inventory Management Report, New York, New York: IOMA, December 1, 2002 "Career Patterns of Women in Logistics," Martha C Cooper, Angelisa Gillyard, and Antuza Sandu, Council of Logistics Management Conference Proceedings, 2001 Cited in several trade publications, including Inventory Reduction Report, New York, New York: IOMA, December 2001, p 10, and Managing Logistics, Issue 12-01, p.12 v "Career Patterns of Women in Logistics," Martha C Cooper and Angelisa Gillyard, Council of Logistics Management Conference Proceedings, 2000, pp.75-97 Cited in several trade publicatio ns, including Inventory Reduction Report, New York, New York: IOMA, December 2000, pp.3, FIELDS OF STUDY Major Field: Business Administration Studies in Supply Chain Management Minor: Logistics Management vi TABLE OF CONTENTS Abstract ………………………………………………………………… Page ii Dedication ……………………………………………………………… iii Acknowledgments ……………………………………………………… iv Vita …………………………………………………………………… v List of Tables ………………………………………………………… ix List of Figures ………………………………………………………… xi Chapters: Introduction …………………………………… Literature Review …………………………… 10 Supply Chain Management …………………… Hypotheses – ……………………… Manufacturing Strategy ……………………… Hypotheses – ……………………… Logistics Strategy …………………….……… Hypotheses – 12 …………………… The Model …………………………………… Contributions ………………………………… 10 19 21 24 25 30 34 36 Methodology ………………………………… 38 Subjects ……………………………………… 38 Instrumentation ……………………….……… 39 Supply Chain Type…………………… 39 vii Manufacturing Strategy ……………… Logistics Strategy …….……………… Performance ………….……………… Procedures …………………………………… Data Analysis ………………………………… Results ………………………………………… 51 Description of the Sample …………………… Preliminary Analysis ………………………… Logistics Strategy …….……………… Manufacturing Strategy ……………… Supply Chain Characteristics ………… Review and Tests of the Hypotheses … Summary of the Results ……….…… 40 43 45 46 46 51 52 52 57 59 69 77 Summary and Conclusions …………………… 78 Conclusions Drawn from the Research ……… Implications for Logistics and Supply Chain Theory ………………………………… Implications for Logistics and Supply Chain Managers ……………………………… Limitations of the Research …………………… Suggestions for Future Research ……………… Concluding Note ……………………………… 78 References ……………………………………………………………… 85 Appendices …………………………………………………………… Appendix A Email Sent to Subjects ………………………… Appendix B Instructions for Internet Survey ……………… Appendix C Internet Version of Survey …………………… Appendix D Microsoft Word Version of Survey …………… 89 90 93 98 117 viii 79 80 81 82 83 LIST OF TABLES Table 2.1 Page Eight Supply Chain Processes Proposed by Lambert and Cooper (2000) ………………………………………………… 12 2.2 Definitions of Supply Chain Management …………………… 14 2.3 Characteristics of Lean and Agile Supply Chains …………… 17 2.4 Description of Logistics Strategies …………………………… 2.5 Proposed Logistics Strategy Framework ……………………… 30 3.1 Scales for Supply Chain Type ………………………………… 3.2 Logistics Strategy Scales for the Cost Priority ……………… 43 3.3 Logistics Strategy Scales for the Quality Priority …………… 44 3.4 Logistics Strategy Scales for the Delivery Priority …………… 44 3.5 Logistics Strategy Scales for the Flexibility Priority ………… 45 3.6 Sample MANOVA Table for Manufacturing Strategy ……… 48 3.7 Sample MANOVA Table for Logistics Strategy …………… 49 4.1 Industries Represented ……………………………………… 52 4.2 Logistics Strategy Factors and Factor Loadings ……………… 54 4.3 Logistics Factors and Cronbach Alphas ……………………… 56 4.4 Manufacturing Strategy Factors and Factor Loadings ……… ix 27 39 58 Submit Thank you for your participation 116 Appendix D Microsoft Word/PDF Version of Survey 117 STRATEGY AND SUPPLY CHAIN CHARACTERISTICS This survey is intended to capture selected information about your manufacturing and logistics strategies as well as how your company operates within your supply chain Understanding the relationships between these strategies and your supply chain can help determine better paths to profitability In addition, completing this survey will enable you to condu ct a succinct audit of your own strategies without the intense data requirements and high costs of a lengthy audit All responses to this questi onnaire will remain strictly confidential Results will be reported on an aggregate level only If you are not sure of an answer to a question, please provide your best estimate Please answer all questions, since incomplete questionnaires create serious problems in data analysis Please submit your responses via the website or you may also print the survey and return the completed questionnaire via mail or fax per the information given below We would be happy to send you a copy of the results of the study if desired Simply provide your contact information at the end of the survey or send an email to agillyard@rhsmith.umd.edu to submit your request Your participation in this important research is greatly appre ciated! THANK YOU! You may direct questions and concerns to: Angelisa E Gillyard, Assistant Professor Department o f Logistics, Business and Public Policy Robert H Smith School of Business University of Maryland College Park, MD 20740 Email: agillyard@rhsmith.umd.edu Tel.: (301) 405-4105 / Fax: (301) 405-0146 Glenn Milligan, Professor Department of Management Sciences Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: milligan.3@osu.edu Martha C Cooper, Professor Department of Marketing and Logistics Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: cooper.7@osu.edu John Current, Professor Department of Management Sciences Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: current.1@osu.edu 118 STRATEGY AND SUPPLY CHAIN CHARACTERISTICS General Instructions and Information Individual responses to this questionnaire will be kept strictly confidential If you are not sure of the answer to a question, please provide your best estimate There are no right or wrong answers For questions which require an answer expressed in currency or percentages, please answer in whole dollars or percentages (e.g $1000 or 25%) You may direct questions and concerns to: Angelisa E Gillyard, Assistant Professor Department of Logistics, Business and Public Policy Robert H Smith School of Business University of Maryland College Park, MD 20740 Email: agillyard@rhsmith.umd.edu Tel.: (301) 405-4105 / Fax: (301) 405-0146 Glenn Milligan, Professor Department of Management Sciences Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: milligan.3@osu.edu Martha C Cooper, Professor Department of Marketing and Logistics Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: cooper.7@osu.edu John Current, Professor Department of Management Sciences Max M Fisher College of Business The Ohio State University Columbus, OH 43210 Email: current.1@osu.edu 119 A Please describe the product line category (e.g pet food) that contributes most to the sales volume of your company/division B Please answer the following questions regarding the product category mentioned in the previous question Approximately how many markets are targeted by this product line? _ markets Is the product for the primary market an _ industrial good or a _ consumer good? Is the product for the primary market : _ customized _ mass customized _ mass produced? Are there multiple brands within this product line? _ Yes _ No Is the primary brand in this product line a _“name brand” or _“generic?” Not familiar at all Somewhat familiar Fully aware How familiar are you with your company’s production priorities for this product line? (circle one) How familiar are you with your company’s logistics priorities for this product line? (circle one) Indicate the importance of the following priorities to the end customer for the product line mentioned above by assigning a percentage value to each priority (100% = most important; Total = 100%) a b c d e f g h i j Customization Delivery reliability Delivery speed Design/innovation Price/cost Product features Quality Service Time to market Other (Please specify) _ Total 100% 120 C The following questions are intended to assess your MANUFACTURING competitive priorities Please indicate the degree of emphasis that your company/division currently places on the following activities to remain competitive in the product category listed in Part A (circle one for each) No Emphasis Very Little Emphasis Moderate Emphasis Strong Emphasis Extreme Emphasis Reduce unit costs Reduce material costs Reduce overhead costs Reduce inventory level Increase labor productivity Increase capacity utilization Reduce defective rates Improve product performance Improve vendor’s quality Implement quality control circles Obtain ISO certification Improve product reliability Improve product durability (long life) Increase ease (cost and time) to service product Improve conformance of final product to design specification Reduce manufacturing lead time Reduce procurement lead time Reduce new product development cycle 121 No Emphasis Very Little Emphasis Moderate Emphasis Strong Emphasis Extreme Emphasis Reduce setup/changeover time Maintain a large number of product features or options Improve ability to introduce new products into production quickly Improve ability to adjust capacity rapidly within a short time period Improve ability to make design changes in the product after production has started Increase delivery reliability Increase delivery speed Improve pre-sales service and technical support Improve after-sales service Have short delivery time Ensure delivery on due date Please identify the most influential entities in your supply chain for the product line identified in Part A (check all that apply) _ Second Tier Suppliers _ First Tier Suppliers _ Manufacturer (Us) _ Distributor/Wholesaler _ Retailer Who in your supply chain receives real-time or frequent updates of end customer point of sale data for this particular product line? (Check all that apply) _ _ _ _ _ Second Tier Suppliers First Tier Suppliers Manufacturer (Us) Distributor/Wholesaler Retailer We use point of sale data primarily to: (check one) Manage inventory Determine production scheduling 122 D Please indicate the response that most closely applies to the product category listed in Part A (circle one for each) Marketplace Demand Stable Volatile Product Variety (# of distinct products in the product line) Low High Product Life Cycle Long Short Profit Margin High Low Information Sharing Obligatory Optional Strongly Disagree Disagree No Opinion Agree Strongly Agree This product line is a commodity good Price is an order winner for our product Availability is an order winner for our product Our dominant costs are production, distribution and storage costs Our dominant costs are obsolescence and stock out costs Our main purchasing policy from suppliers is to purchase capacity Our main purchasing policy from suppliers is to buy goods We rely primarily on mathematical models as our main forecasting mechanism We rely primarily on managerial experience as our main forecasting mechanism 123 Strongly Disagree Disagree No Opinion Agree Strongly Agree Maintaining a level production schedule is critical to maintaining profitability for this product line Using end customer consumption data is critical to maintaining profitability for this product line When choosing suppliers, they must be able to rapidly adjust their capacity to meet our needs Approximately how long is the average product life cycle for this product line? What is your contribution margin for this product line? (check one) When choosing suppliers, rank in order from most important (1) to least important (5) the following characteristics: _ _ _ _ _ _ months years less than 5% greater than 5% and less than or equal to 10% greater than 10% and less than or equal to 20% greater than 20% and less than or equal to 40% greater than 40% and less than or equal to 60% greater than 60% Cost of materials or services Delivery speed Delivery reliability Flexibility of supplier to adjust rapidly to significant changes in our orders Quality of materials Our average stock-out rate is approximately _ % for this product line Our average forecast error at the time production is committed is approximately _ % for this product line The lead-time required for a made-to-order product is _ days for this product line _ N/A The product variety for this product line is approximately _ variants The average forced end-of-season or end-of-life markdown, as a percentage of full price is approximately % for this product line N/A 124 E The following questions are intended to assess your LOGISTICS competitive priorities Please indicate the degree of emphasis that your company/division currently places on the following activities to remain competitive in the product category listed in Part A (circle one for each) No Emphasis Very Little Emphasis Moderate Emphasis Strong Emphasis Extreme emphasis Achieve maximum efficiency from distribution Gain control over activities that result in purchasing and distribution costs Improve competitiveness of price Minimize transportation cost Increase labor productivity Increase capacity utilization Reduce inventory Improve accuracy of filling orders We absorb the cost of freight and handling on returns due to shipping damages or products shipped in error We give adequate advance notice of price changes to our customers Quality/durability of packaging Adherence to our customers’ specific shipping instructions Achieve coordinated physical distribution to customers served by several business units Reduce length of promised lead times on emergency/ASAP orders for our customers 125 No Emphasis Very Little Emphasis Moderate Emphasis Strong Emphasis Extreme emphasis Ability to expedite emergency/ASAP orders for our customers High fill rate on ad/promotional orders for our customers High fill rate on normal reorders Reduce length of promised lead times on normal orders Reduce length of promised lead times on ad/promotional orders to our customers Short delivery/transportation time to our customers Delivery on due date to our customers Wide geographic range of delivery for our customers Logistics system responsiveness Quick and effective response to changing customer needs Quick and effective response to changing supplier needs Accommodating customers’ special requests Developing or maintaining specific logistics strategies to deal with distinct customers High fill rate on emergency/ASAP orders Our ability to handle defective product returns Our ability to rapidly adjust capacity _ None _ Some _ All Are any of your logistics activities outsourced? 126 F The following questions explore the PERFORMANCE of your firm Indicate your business’s position on the following dimensions over the past three years compared to your key competitors with respect to the product line identified in Part A (circle one for each) Significantly Lower Approximately Equal Significantly Higher Return on investment (ROI) Growth in ROI Return on sales (ROS) Growth in ROS Return on Assets Profits as a percent of sales Sales growth Market share growth Market share Net income before taxes Product performance Product features Product conformance to specifications Product durability Product serviceability Product attractiveness as perceived by the customer Overall product quality as perceived by the customer 127 G This section is designed to collect demographic information about your company Please answer the following questions with your best estimate if exact data are not available In what industry does your company participate? (Check all that apply) _ Appliance _ Electronics _ Automotive _ Food Related _ Building Materials _ Metals/Metal Working _ Chemicals/Plastics _ Office Equipment _ Computer Hardware _ Paper & Packaging _ Other (Please specify): _ What is the nature of your company’s primary business? _ Manufacturing _ Merchandising _ Other (Please specify): What is the total number of employees in your company/division? _ Less than 100 Employees _ 101-500 Employees _ 501-2,500 Employees _ 2,501-10,000 Employees _ 10,001-30,000 Employees _ 30,001-50,000 Employees _ Over 50,001 Employees How old is your company? _ Less than years old _ 5-15 years old _ 16-35 years old _ 36-70 years old _ over 70 years old 128 _ Petroleum _ Pharmaceuticals _ Textiles/Clothing _ Wholesale/Retail _ Leanness (cost efficiency) _ Mostly leanness _ Equally leanness and agility _ Agility (flexibility and responsiveness) _ Mostly agility _ Don’t Know Our supply chain for this product line primarily emphasizes: (choose one) What is your company’s annual gross sales dollars? (check one) _ less than $1 Million (M) _ greater than $1M and less than or equal to $5M _ greater than $5M and less than or equal to $10M _ greater than $10M and less than or equal $50M _ greater than $50M and less than or equal to $100M _ greater than $100M and less than or equal to $500M _ greater than $500M and less than or equal to $1 Billion _ greater than $1 Billion and less than or equal to $5 Billion _ greater than $5 Billion and less than or equal to $10 Billion _ Over $10 Billion What is your company’s overall position in the primary market targeted by the product line listed in Part A? _ Market Leader _ Dominant Player (Top 5) _ Other How many major competitors are there in the primary market targeted by the product line listed in Part A? _ _ _ _ _ _ One Two to five Six to ten Eleven to twenty More than twenty No opinion 129 How long have you been with this company? _ Less than one year _ 1-3 years _ 4-6 years _ 7-15 years _ 16-25 years _ over 25 years Please give your title and a brief description of your position responsibilities (e.g manager of all North American manufacturing) How long have you held your current position? _ Less than one year _ 1-3 years _ 4-6 years _ 7-15 years _ 16-25 years _ over 25 years Would you like a copy of the study results? _ Yes _ No If so, please provide your contact information below or send an email to agillyard@rhsmith.umd.edu Name Address _ Address _ Address _ Address _ City _ State Zip Email Address THANK YOU FOR YOUR PARTICIPATION!!! 130