Information Technology Reference
In-Depth Information
this data into various datawarehouse structures.
Often, data from diverse sources is inconsistent
and unusable for the integration purposes required
for supply-chain wide initiatives.
Cross-functional supply chain management
applications systems integration is defined by
Malhotra, Gosain, and El Sawy (2005) as the
level of real-time communication of a hub firm's
functional applications that are linked within an
SCM context and their exchanges with enterprise
resource planning (ERP) and other related inter-
enterprise initiatives like customer relationship
management (CRM) applications. At the lowest
level, an ERP system is essential in enabling the
seamless integration of information flows and
business process across functional areas of a fo-
cal firm --- this is normally referred to as “ERP
I” (Law & Ngai, 2007). ERP functionalities are
important control and management mechanisms
that are connected with the ERP systems of the
firm's trading partner --- referred to as “ERP II”.
ERP implementations are growing more extensive
and interconnected among firms in linked value
chains. Karimi, Somers, and Bhattacherjee (2007)
found that ERP projects with greater functional,
organizational, or geographic scope result in higher
positive shareholder returns.
To obtain optimum results, supply chain trading
partners have to inevitably approach a collabora-
tive posture in their relationships which would
rely heavily on cross-functional interenterprise
integration. To facilitate the realization of this
goal, the Supply Chain Council (SCC), a not-
for-profit corporation, has endorsed the Supply
Chain Operations Reference Model (SCOR)
as the cross-industry standard for supply chain
management (Holloway, 2006).
information (Lee, et al., 1997), physical materi-
als (Stevens, 1990), and financial information
(Mabert & Venkatraman, 1998) with its value
chain trading partners. This formative construct
has three subconstruct components: information
flow integration, physical flow integration, and
financial flow integration (Mangan, Lalwani, &
Butcher, 2008).
Information has the potential to reduce vari-
ability in the supply chain, enable suppliers to
make better forecasts (i.e., more accurately ac-
counting for effects of promotions and market
changes, for instance), enable the coordination of
manufacturing and distribution strategies, enable
lead time reduction, and enable retailers to service
their customers better by providing preferred items
and avoiding out of stock situations (Simchi-Levi,
Kaminsky, & Simchi-Levi, 2004).
This study uses the construct, information
flow integration, to mean the degree to which a
firm exchanges operational, tactical, and strategic
information with its supply chain trading partners
(Malhotra, Gosain, & El Sawy, 2005). The instru-
ment used in this study measures the sharing of
production and delivery schedules, performance
metrics, demand forecasts, actual sales data, and
inventory data, for information flow integration.
Malhotra, Gosain, and El Sawy (2005) define
physical flow integration as the level to which the
hub firm uses global optimization with its value
chain partners to manage the flow and stocking
of materials and finished goods. Raw materials,
subassemblies, and finished goods constitute
downstream physical flows, whereas returned
products for defects or repairs make up the up-
stream physical flows. In this study, physical flow
integration is measured in terms of multi-echelon
optimization of costs, just-in-time deliveries,
joint management of inventory with suppliers
and logistics partners, and distribution network
configuration for optimal staging of inventory
(Malhotra, Gosain, & El Sawy, 2005).
Financial flow integration is defined as the
level to which a hub firm and its trading partners
supply chain process integration
In this study, supply chain process integration
is defined following the construct used by Mal-
hotra, Gosain, and El Sawy (2005): the degree
to which a hub firm has integrated the flow of
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