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A framework of supply chain orientation


Terry L. Esper
Department of Marketing and Logistics, University of Tennessee, Knoxville, Tennessee, USA

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C. Clifford Defee
Department of Aviation and Supply Chain Management, Auburn, Alabama, USA, and

John T. Mentzer
(Deceased)
Abstract
Purpose The concept of supply chain orientation (SCO) has been described in multiple ways in previous research. The purpose of this paper is to integrate previous descriptions and further develop the structural element of SCO including the areas of organizational design, human resources, information technology, and organizational measurement. Design/methodology/approach A literature review is used to identify previous descriptions of SCO and present a framework to more completely describe the concept. Findings SCO cannot be understood without incorporating both a rms strategic intention to compete via supply chain capabilities and the rms internal structural elements. Research limitations/implications This is a conceptual study undertaken to develop a comprehensive framework incorporating SCO concepts. Although the framework is developed from the existing literature, further research is necessary to test the extended view of the concept. Practical implications The paper provides a template for understanding a rms current SCO, and may be a useful roadmap for rms wishing to develop a greater SCO. Originality/value Little research has been published surrounding the concept of SCO. The paper integrates previous descriptions by incorporating both strategic and structural views, and by explaining the antecedent elements internal to the rm that are required to form a SCO. Keywords Supply chain management, Organizational design Paper type Research paper

As is common with the development of a new discipline of study, an unresolved debate has continued over the last 20 years to dene the nature of supply chain management (SCM) and supply chain-related concepts. Though there is no universal acceptance of one SCM denitional view, several perspectives have resonated with both academics and practitioners. In particular, SCM denitions offered by the Council of Supply Chain Management Professionals (CSCMP) (Gibson et al., 2005), the Supply Chain Council at The Ohio State University (Cooper et al., 1997), and the Supply Chain Research Group at the University of Tennessee (Mentzer, 2001; Mentzer et al., 2001a), and the Supply Chain Council (2006) supply chain operations reference model have all been embraced to some extent and are each widely cited as reasonable SCM conceptualizations. The overlap of these SCM perspectives provides for the emergence of the following commonalities:

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each view emphasizes coordination and collaboration with suppliers and customers; each highlights the value of demand and supply matching; and all embrace a ow perspective (the Ohio State and Tennessee denitions specically address these ows, while the CSCMP denition subsumes the ows under the denition of logistics management).

Despite these commonalities, ambiguity still exists in terms of clearly dening the boundaries of SCM relative to other, more functionally oriented business disciplines. In addition, other SCM-related concepts have not been clearly dened. The thrust of the debate has focused on dening SCM, overshadowing-related concepts that hold promise for informing the discipline. One concept that falls into this category is supply chain orientation (SCO). In developing their denition of SCM, the University of Tennessee research group (Mentzer, 2001) combined the qualitative insights gained from 20 practicing SCM executives with the existing denitional literature. One of their most insightful ndings was the distinction between the SCM perspectives focusing on process ow management across organizations, and those that viewed SCM as a management philosophy inside a rm. The authors distinguished between these two viewpoints by suggesting that the former, interorganizational perspective was a more accurate conceptualization of SCM, while the latter intra-rm phenomenon was a vital antecedent dened as SCO. According to the authors, SCM is:
[. . .] the systemic, strategic coordination of the traditional business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzer, 2001, p. 22).

SCO, on the other hand, is dened as the recognition by a company of the systemic, strategic implications of the activities and processes involved in managing the various ows in a supply chain (Mentzer, 2001, p. 14). Hence, while SCM focuses on the management of exchange ows within and across the members of the supply chain, SCO emphasizes the strategic awareness and embracing of SCM within an individual supply chain rm. SCO is a necessary antecedent to effective SCM, suggesting that an organization must rst look inward before it can effectively engage in strategic management of supply chain processes (Min and Mentzer, 2004). Since its introduction, the SCO concept has been the focus of a small, but growing, literature base. A review of this literature suggests several conceptual gaps. First and foremost, two different perspectives have emerged regarding the conceptualization of SCO, creating a fundamental gap in the denition of the phenomenon. Second, a theoretically based, strategic framework of SCO is lacking, making research investigations and managerial applications more difcult. Third, SCO has not been conceptually integrated with other related research streams that may facilitate further development of the SCO concept. Considering the strategic importance of SCO for effective SCM, the purpose of this manuscript is to address these research gaps by conducting a two-phased literature review. First, we summarize the SCO literature, with a focus on developing an integrative strategic SCO framework based on the extant literature. Next, a review of relevant

logistics research that is foundational to the SCO concept[1] is presented in order to establish the conceptual nature of the proposed SCO framework and its elements. Based on these literature reviews, a discussion of the proposed SCO framework is offered, with particular emphasis on managerial implications and opportunities for future research investigation. Supply chain orientation The underlying premise of the SCO concept is the notion that effective implementation of SCM requires the rm to place strategic emphasis on the integration necessary to facilitate SCM exchange. In essence, SCO represents a shared value and belief system that aids in understanding how the organization should strategically manage its supply chain, and the behavioral norms needed inside the organization (Deshpande and Webster, 1989). This suggests that organizations possessing a SCO approach SCM differently than rms that are less inclined to view SCM strategically. Though the existing SCO literature suggests conceptual agreement concerning the impact of SCO, the essence of the concept has been represented in divergent ways. Specically, SCO has been viewed from both strategic and structural perspectives. The strategic SCO paradigm builds on the original conceptualization of the construct, where SCO was conceived as a philosophy focused on the implications of managing supply chain ows (Mentzer, 2001). Strategic SCO research conceptualizes SCO through an emphasis on the importance of strategic direction in managing supply chains. As such, the nature of this perspective involves making a strategic choice to compete on the basis of supply chain capabilities (Defee and Stank, 2005) and utilizing this strategic emphasis to drive the performance of strategic business units within the rm (Stank et al., 2005). The strategic SCO perspective involves encouraging rm personnel to act in a manner that manages ows from supplier to customer, taking a systems approach to viewing the supply chain holistically rather than as constituent parts, and seeking integration, synchronization and convergence of intra- and inter-rm operational and strategic capabilities (Min and Mentzer, 2004). The structural SCO perspective, on the other hand, emphasizes organizational artifacts that facilitate SCM. For example, Min et al. (2007) suggest that SCO involves building and maintaining internal behavioral elements that facilitate relational exchange. The authors focus on the behavioral dimensions of trust, commitment, organizational compatibility, cooperative norms, and top management support as elements of SCO. Mello and Stank (2005) focus on dening the aforementioned behaviors in the context of SCO as cultural elements that support the organizations structure. The authors suggest that supply chain oriented organizations should behave in a way that facilitates trust, commitment, compatible supply chain partners to cooperate with, and top management endorsement. McAfee et al. (2002) also suggest that SCO is a cultural phenomenon, manifested through the structural elements of organizational policies and procedures. Though not referred to as SCO per se, Trent (2004) also highlights intra-rm structural elements necessary for effective SCM. This perspective conceptualizes SCO as an intra-rm structural management approach that facilitates effective SCM through emphasis on the behaviors, systems, and cultures necessary for integrated supply chain exchange. Considering the two distinct conceptualizations of SCO, we extend this dialogue by suggesting that SCO is a function of both the strategic and structural perspectives.

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More specically, we propose that the essence of SCO lies in the t between a rms supply chain strategy and its structural support for SCM. We suggest that the successful creation of an SCO requires a high degree of t between the organizations strategy and structure. Fit is central to organizational success, and the best performing organizations establish strategies that closely t the requirements of their environment (Chandler, 1962; Rumelt, 1974). Further, a minimal level of t is needed to ensure a rms continued survival (Miles and Snow, 1978, 1984). The concept of t has been extended to the supply chain environment (Chow et al., 1995; Cooper et al., 1997; Stock et al., 1999), with a high degree of t seen when member organizations align strategies in pursuit of common supply chain goals (Defee and Stank, 2005). According to this viewpoint, a supply chain-oriented rm not only places strategic emphasis on systemic, integrated SCM, but also aligns this strategic thrust with an organizational structure that capitalizes on this strategy. The strategic perspective alone is not enough, as it requires structural support for effective implementation. Furthermore, the structural perspective is not enough, in and of itself, as the necessary strategic direction to undergird the development and management of the structure would be lacking. Hence, as shown in Figure 1, we propose the merging of the two literature-based perspectives into a strategic framework of SCO. In particular, we argue that SCO is an internal enterprise concept, where rms operate in a supply chain environment within the global market. Hence, in order to effectively operate in this environment, an appropriate strategy-structure t is necessary. A framework of SCO As described above, a supply chain-oriented strategy involves viewing the supply chain from a systemic, holistic perspective and choosing to exploit the exchanges inherent in
Global market Supply chain Internal enterprise SCO SCO strategy Fit

SCO structure

Figure 1. Framework of SCO

SCM for competitive advantage (Defee and Stank, 2005; Mentzer, 2001). This element of the framework shown in Figure 1 is well established based on the existing SCO literature. The structural element, however, requires additional development. The notion that effective SCM requires certain intra-rm structural support pre-dates the introduction of SCO. As described earlier, the development of the SCO concept was originally based on several SCM denitions that were actually intra-organizationally focused (Mentzer, 2001). Hence, the internal SCO perspective itself was not new. However, SCO offered a comprehensive perspective on the importance of internal structural elements to effective external supply chain exchange. The literature has highlighted the impact of internal issues on supply chain effectiveness; yet, in a very fragmented and disjointed fashion. SCO provides a single construct that can be used to integrate various streams of research that have touched on these structural areas. Using Trents (2004) work as a conceptual foundation, it is proposed that the structural element of SCO consists of the following four categories: organizational design, human resources (HRs), information technology (IT), and organizational measurement. In essence, our framework suggests that SCO involves placing strategic focus on SCM (SCO strategy) and supporting this strategic emphasis through ensuring that the rms organizational design, people, systems, and measures are managed in a way to facilitate SCM (SCO structure). We review several literature streams that have informed these areas, and further develop the framework by dening the nature of each of the elements of SCO structure. In particular, we highlight the conceptual themes that emerge from the literature relative to facilitating more effective SCM. Organizational design Organizational design includes the process of developing the structure and formal system of coordination and control required to achieve company and supply chain goals (Hamel and Pralahad, 1994; Trent, 2004). We consider three areas of research to be essential to the description of organizational design for SCO: integration, structure, and collaboration. Integration has been a topic of primary interest for logistics and supply chain authors (Bowersox et al., 1999; Lambert et al., 2005; Mentzer, 2004). Tighter integration is at the heart of supply chain theory, and without it effective process coordination is impossible (Mollenkopf et al., 2000). Improved integration may result in enhanced customer service (Stank et al., 1999b), logistics performance (Germain and Iyer, 2006; Stank et al., 2001a), and overall rm performance (Rodrigues et al., 2004). The concept of integration dates back to the rst descriptions of logistics in the 1960s (Germain and Iyer, 2006). Most descriptions of effective process integration begin inside each functional area of a rm before spreading across functions to include all logistics processes internal to the rm (Stevens, 1989). Only when internal integration has been fully embraced can integration activities effectively expand to include boundary spanning processes outside the rm (Mentzer, 2001). Internal integration has not been easily achieved. Fawcett and Magnan (2002) argue that managers often lack the ability to effectively integrate across business functions inside the rm. Other authors have concluded it is actually easier for buyers to create integrated linkages with their suppliers, and logistics managers with their customers, than for either group to drive integration inside the rm (Sabath and Whipple, 2004). The lack of success with internal integration efforts may be the result of disjointed policies and practices, misaligned measures and rewards, and missing information that

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does not support a process view of the business (Bowersox et al., 1999, 2000). A rms ability to effectively integrate across internal functional areas enables more process-oriented organizational designs. Firms organized around processes are more likely to embrace integration and therefore reect a SCO. Structure is the design of organization through which the enterprise is administered (Chandler, 1962, p. 14). Structure provides the means for accomplishing the organizations stated strategic goals. Further, structure is the mechanism of integration both within organizations and across the extended supply chain (Defee and Stank, 2005). Chow et al. (1995) suggest structure emanates from within the rm and must extend across the boundaries of multiple organizations. The authors identify ve dimensions of structure taken from the management science literature. Formalization is the degree to which norms governing cross-functional activities inside the rm are made explicit. Intensity is the level of resource investment that an organization has in its supply chain operations. Frequency represents the amount of contact between functions. Standardization is the degree of similarity in the resources or procedures used. Reciprocity is the degree of symmetry in a relationship between functions or between rms in a supply chain. Stank and Traichal (1998) surveyed maquiladora managers and developed a model to empirically test the relationship between a rms logistics strategy, logistics organizational design dimensions, and logistics performance. Three structural variables were considered essential elements of internal logistics integration: centralization of decision-making authority, formalization of rules and procedures, and specialization of tasks across organizational units. The authors concluded organizational structure does affect the rms logistics performance when moderated by the degree of integration. Stock et al. (1999) expanded beyond a single-rm perspective and considered enterprise logistics integration that takes other supply chain organizations into consideration. Dimensions of structure proposed are the degree of vertical integration found within the focal logistics rm, exibility to react to changing circumstances, and cooperation found between rms. The vertical integration and exibility dimensions are internal to the rm. Rodrigues et al. (2004) used information systems and measurement systems to express structure. The model proposed by the authors suggests these structural elements drive internal and external integration. They found a more signicant result occurred by combining internal and external integration into a single mediating factor that led to improved performance. Stank et al. (2005) developed a strategic logistics framework combining structure with the resource-based view (Barney, 1991; Wernerfelt, 1984). The authors proposed rms with a SCO seek tighter integration in order to effectively implement SCM. Logistics capabilities were suggested as a surrogate for structure and ve logistics capabilities were identied: customer focus, time management, integration, information exchange, and evaluation. Considering capabilities as structure is consistent with the conclusions of Stank and Traichal (1998) concerning positioning and integration capabilities (Bowersox et al., 1995). Defee and Stank (2005) reviewed the organization and supply chain structure literature and proposed ve structural elements and ve external contingency factors necessary to develop a complete supply chain strategy-structure-performance theoretical model. Structural dimensions proposed include information integration, communications, standardization, decision-making authority, and rewards. Three of the

structural elements in the proposed model were subsequently empirically tested and validated (Defee et al., 2009). The structural elements developed by a rm are the result of organizational design activities. The structures developed by a supply chain-oriented rm promote cross-functional thinking, communication, and information sharing. Firms lacking a SCO may not develop similar structures. Collaboration has been called the driving force necessary for effective SCM (Horvath, 2001). As with integration and structure, collaboration should rst develop across functional areas inside the rm, with the goal of creating a more tightly integrated internal operation (Kahn and Mentzer, 1996; Stevens, 1990). Collaboration serves as a means to achieve the ultimate endgame of integration. Only after this functional interdependence has been built should the rm extend collaborative efforts to include other supply chain organizations (Min et al., 2005). Effective intra-rm collaboration is strongly associated with successful external collaboration (Gimenez and Ventura, 2003). Interestingly, Barratt (2004) argues that few rms have been able to capitalize on the potential of collaboration. Consistent with this line of thinking, Fawcett and Magnan (2004) contend few companies have actually engaged in the level of integration expected from collaboration. A failing of collaboration may be the result of poor communication, a lack of understanding of rm processes, or an overabundance of information (Barratt, 2004). Internal collaboration is aided by strategic alignment between functions, the existence of a shared vision, mutually held goals, and joint rewards (Kahn and Mentzer, 1996). Information sharing is also critical to collaborative efforts (Stank et al., 1999a). Internal collaboration was found to positively impact rm performance (Stank et al., 2001b). Collaboration between departments also led to perceived relationship effectiveness, which in turn was linked with improved distribution service performance (Ellinger et al., 2000). Effective internal collaboration is thus an essential criterion of organization design necessary for the creation of an SCO. Human resources SCM is a very human-centric phenomenon (Myers et al., 2004). Over 90 percent of logistics activities take place outside of direct supervision (Bowersox et al., 2000), which highlights the importance of effective people (i.e. HRs) to logistics and supply chain excellence. Although nancial, equipment, technological and market-based resources are necessary for effective SCM, the people that actually accomplish the work of the rm are critical for the effective functioning and exploitation of each of these resource categories (Richey et al., 2006). Simply stated, having resource competencies in the other areas is restricted by the quality of the rms talent in supply chain management positions (Richey et al., 2006, p. 163). Considering the importance of supply chain HRs, a stream of literature has highlighted several HR issues that contribute to more effective SCM. This literature suggests a certain structuring and management of HRs to drive SCM success, and falls within two primary categories: supply chain-related knowledge, skills, and abilities (KSAs) that are associated with success, and HR strategies that develop and support the use of these KSAs in supply chain organizations. The primary focus of the KSA research stream, dating back to the 1960s, has been to highlight the characteristics of effective logistics and supply chain personnel (Murphy and Poist, 2006). Early work suggested that mid-to-senior level

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logistics and supply chain managers needed a mix of functional, managerial, and interfacing skills (Herron, 1985). Poist (1984), similarly, proposed a BLM framework, suggesting that successful managers were procient in three skill categories: business skills, logistics skills, and management skills (BLM). Building on this framework, Murphy and Poist (1991) focused on specic knowledge areas that were the most and least important for senior-level logistics managers. The authors found, for example, that business writing and knowledge of information systems and HR management were business skills perceived as of great importance for effective senior-level logistics managers (Murphy and Poist, 1991). More recently, Murphy and Poist (2006) used the BLM framework to compare the skills necessary for senior- and entry-level logistics managers. The authors found that across the three skill categories, senior-level managers focused more on cross-functional skills that place emphasis on leadership, whereas the skills of entry-level managers were much more functionally focused and narrow in scope. Additional logistics/supply chain skills frameworks include those of LeMay et al. (1999), Gibson et al. (1998), and Gammelgaard and Larson (2001), which all highlight the collective knowledge and skills necessary for effective logistics and supply chain decision making. Building on earlier works that established categories of logistics and supply chain skills, more recent research has highlighted the performance implications of HR issues. Myers et al. (2004) also addressed key skills of logistics managers, though focusing on mid-to-entry level management. Their framework, building on Daugherty et al. (2000), highlights the performance implications of social, decision-making, problem-solving and time management skills, where each skill area was found to be positively associated with logistics performance. Richey et al. (2006) found that rms that employed supply chain managers with higher levels of general intelligence, need for achievement, and adaptability performed better. Along similar lines, McAfee et al. (2002) dene the connection between similar skills and external partner relationships. Periatt et al. (2007) went beyond skills and highlighted personality characteristics that were associated with customer-oriented logistics personnel. In particular, the authors focus on the Big Five personality traits (Barrick and Mount, 1991) and found that openness, agreeableness, conscientiousness, and extraversion emerged as impacting customer orientation across logistics employees. This research stream suggests that organizations interested in SCO should put emphasis on hiring employees with general business knowledge and skills, specic expertise in logistics, and interpersonal skills. In addition, adaptability and willingness to learn are important to continued supply chain success. In order to foster and maintain the supply chain KSAs necessary for effective performance, rms must also focus on supply chain oriented HR strategies and policies. Research in this area has suggested a number of strategic approaches to leveraging supply chain personnel. For example, Deeter-Schmelz (1997) highlights the importance of using self-directed work teams to facilitate enhanced logistics and supply chain decision making. Ellinger et al. (2005) focus on the role of supervisory coaching in logistics. Keller et al. (2006) emphasize the impact of internal marketing on employee satisfaction, performance and interdepartmental orientation. Autry and Daugherty (2003) highlight the importance of person/organization t in developing more satised and better performing logistics personnel. Esper et al. (2007) suggested the development

of learning capabilities and transformational leadership styles to facilitate the embracing of new logistics/supply chain ideas. This literature places emphasis on employee satisfaction and skill utilization. Hence, for increased SCO, organizations should embrace leadership styles, structural formations, and consider HR issues (i.e. person/organization t) that facilitate high levels of satisfaction, as satisfaction has been shown to impact performance (Autry and Daugherty, 2003). In addition, learning infrastructures and cross-functional teams allow for better utilization and development of supply chain KSAs. Information technology IT serves as a vital lynchpin linking functional areas throughout the organization. IT serves as a coordinating mechanism providing connection across departments inside the rm and across rms in the supply chain (Bowersox et al., 1999; Simchi-Levi et al., 2008). Logistics IT can be separated into internal and external components (Closs and Savitskie, 2003; Savitskie, 2007). Internal IT facilitates tighter internal integration (Brah and Lim, 2006) and internal collaboration in logistics and supply chain organizations (Sanders and Premus, 2005). It is the presence of effective IT-enabled internal coordination (Lewis and Talalayevsky, 1997) that allows the rm to expand collaborative efforts outside its own boundaries to include other organizations across the supply chain (Sanders and Premus, 2002). IT has been widely described as a critical tool for effective logistics and supply chain organizations for over 20 years (Allen and Masters, 1988; Closs et al., 1997; Forman and Lippert, 2005; LaLonde and Masters, 1990). Early descriptions of IT were often focused on the use of stand-alone systems to improve quality or productivity (Curry and Kenny, 1983; Dadzie and Johnston, 1991; Festervand and Meinert, 1992; House, 1978). The view of IT evolved in tandem with increased emphasis on integration and collaboration. The difculty of connecting multiple disparate systems (Narasimhan and Kim, 2001) led to a shift from functionally centered to process-oriented applications (Closs, 1994), and ultimately across rms (Edwards et al., 2001). ITs ability to make information available eased the implementation of integrated logistic processes (Gustin et al., 1995). IT is described as a critical prerequisite ability for rms attempting to use their logistics capabilities to create a competitive advantage (Bowersox and Daugherty, 1995; Closs et al., 1997). As SCM became a prominent concept, IT was identied as a critical enabler of SCM processes (Auramo et al., 2005; Mabert and Venkataramanan, 1998). The rms goals for IT in a SCM context include ensuring information availability at a single point of data access, creating visibility to upstream and downstream changes in demand or supply, and enabling effective decision-making based on this supply chain wide information (Simchi-Levi et al., 2008). IT is needed to improve operational quality and overall company performance by reducing processing lead time, improving efciency, and eliminating errors (Brah and Lim, 2006). The availability of supply chain information allows the supply chain rm to mitigate its risks (Christopher and Lee, 2004). The creation of a SCO relies signicantly on the existence of solid IT capabilities to enable linkages across departments resulting in tighter integration. In addition, SCO rms strive to enable integration and collaboration across rm boundaries in the supply chain, which is both supported and facilitated by IT. Supply chain-oriented rms should

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more readily embrace technology that facilitates improvements in internal integration and cross-departmental collaboration. The desire to create a tightly integrated, collaborative environment inside the rm may be manifested through the IT systems deployed to facilitate those goals. Organizational measurement An important issue in measuring supply chain performance is the lack of holistic measures spanning all members (Holmberg, 2000; Lambert and Pohlen, 2001). Though there have been hundreds of metrics focused on logistics performance, most have remained rm centered and do not consider broader supply chain implications (Brewer and Speh, 2000). Measures such as logistics costs as a percentage of sales (Stock and Lambert, 2001) and order ll rate (Ellram et al., 1989) are primarily functional with emphasis on a single rm. It has been suggested, however, that supply chain performance measures consider the perspectives of other supply chain entities (Forslund and Jonsson, 2007; Lambert and Pohlen, 2001). Measures such as logistics service quality (Mentzer et al., 1999), the perfect customer order (Novack and Thomas, 2004) and the balanced scorecard approach suggested by Brewer and Speh (2000) place emphasis on viewing performance from a customers perspective. This is especially important considering the perceptual gaps that often exist between a rms view of their performance and the perceptions of other supply chain entities (Forslund, 2006), the historical lack of emphasis on service elements of performance (Novack et al., 1996), and the increased emphasis on the holistic supply chain (Mentzer et al., 2001a). In addition to measures that offer a broader supply chain focus, Brewer and Speh (2000) also suggest that supply chain measures facilitate learning and innovation. Considering the increased adoption of learning environments mentioned above, and the strategic emphasis on leveraging supply chain operations for competitive advantage, learning, and innovation are key areas to measure in supply chain-oriented rms. Hence, measures such as new product development cycle time and process improvement rates are of particular importance (Brewer and Speh, 2000). From a broader strategic perspective, research has also addressed the appropriate use of supply chain performance measures. Grifs et al. (2004, 2007) have suggested that measures be adopted considering three strategic perspectives: measurement focus, measurement frequency, and competitive basis. The measurement focus element places emphasis on integrated and aligned operations. The essence of this perspective involves balancing between nancial and non-nancial performance measures to ensure that strategic supply chain goals are nancially viable and operationally supported. Lambert and Pohlen (2001) emphasize the importance of connecting supply chain initiatives to economic value added and prot and loss statements. However, they also advocate the use of non-nancial measures to align behavior of supply chain operational personnel with strategic goals. Such an approach is also suggested by the SCOR model, in which multiple levels of performance measures focus on strategic/operational integration (www.supply-chain.org). It is important to note that, from a supply chain context, non-nancial measures may include a focus on integration with suppliers and/or customers to support collaborative supply chain strategies and initiatives. Also, non-nancial measures such as the perfect customer order place emphasis on internal integration by adopting a global measure of operational performance (Novack and Thomas, 2004).

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Measurement frequency involves distinguishing between measures that are considered infrequently for diagnostic purposes, and those that are used to monitor operations daily (Grifs et al., 2004). Both perspectives provide holistic consideration of supply chain performance, as both short- and long-term issues are measured. Hence, diagnostic measures, such as supply chain costs per unit and supply chain costs as a percentage of sales, are necessary, as are more monitoring-oriented measures, such as order cycle time and on-time delivery percentages (Grifs et al., 2007). In dening the competitive basis element of their measurement framework, Grifs et al. (2004) build on Fishers (1997) work by suggesting that performance measures should be aligned to the strategic nature of the supply chain. Hence, some measures are more efciency focused, whereas others are more aligned with responsiveness. In essence, the nature of the supply chain (which, according to Fisher, is based on end product characteristics) should be considered when adopting performance measures. Grifs et al. (2007), for example, found that measures such as inventory turnover ratio and logistics costs per unit are perceived as measures of efciency, whereas order cycle time and days order late are considered measures that assess responsiveness. Considering the measurement literature, supply chain-oriented organizations should place emphasis on performance measures that go beyond the single-rm perspective and facilitate learning and innovation. In addition, measures should be aligned with the strategic emphasis of the supply chain, facilitate operational support and integration, and focus on both diagnosing and monitoring supply chain performance. Discussion At the most fundamental level, a supply chain is a series of inter-rm relationships (Cooper et al., 1997). Effective SCM, therefore, entails managing relational exchange with other supply chain entities. A vast majority of the existing supply chain literature has focused on facilitating this interorganizational exchange. Issues such as collaboration (Stank et al., 2001b), coordination (Fugate et al., 2006), and relationship structure (Golicic et al., 2003; Lambert et al., 1996) have represented a key focus of this research. In essence, this literature has focused on phenomena that exist outside a focal organization that facilitate supply chain exchange. Equally important are SCM facilitators that exist within the rm. Though a signicant literature base has addressed a number of these issues, it exists in a fragmented state, and a comprehensive framework that captures the underlying commonality of these literature streams has been lacking. The SCO concept, as introduced by Mentzer et al. (2001a, b) provided a conceptual umbrella, focusing on the idea that a philosophical approach to managing the supply chain involves issues within a particular organization. Subsequent research on the SCO concept, however, has further developed the concept without necessarily providing a framework to represent a thorough conceptualization of SCO. The literature review presented in this paper has attempted to address this gap by synthesizing research that has highlighted SCO-related issues. The result, as shown in Figure 2, is a literature-based framework that captures the managerial issues associated with being supply chain oriented. We propose that SCO is concerned with achieving a level of alignment, or t, between a supply chain-oriented strategy and structure.

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Systemic/holistic view of the supply chain Compete through supply chain capabilities Supply chain emphasis across business units

Organizational design. Focus on internal integration and collaboration Human resources. Hire Employees with key SCM skills. Focus on employee satisfaction. Implement leadership styles and structures that facilitate learning and cross-functional teams Information technology. Develop IT capabilities that facilitate internal integration and information exchange across the supply chain Organizational measurement. Adopt both diagnostic and monitoring measures that facilitate supply chain perspectives, alignment, learning and innovation

Figure 2. Supply chain-oriented strategy and structure

While the development of this framework has primarily focused on literature synthesis and integration, a number of theoretical and research implications associated with this paper are of note. From a theoretical perspective, two primary themes emerge from the conceptual framework that add to the breadth and depth of the SCO conceptualization. First, we extend the breadth of the SCO concept by including the notion of strategy-structure t. Such an approach broadens the perspective of SCO and rationalizes the SCO literature that has focused on either a strategic view or a structural view. The proposed conceptualization more effectively captures the essence of the issues associated with positioning an organization for supply chain success. Strategy and/or structure alone are not comprehensive, as both are required for effective sustainable performance (Defee and Stank, 2005). Second, we emphasize the key elements necessary for developing and maintaining a supply chain-oriented structure: organizational design, HRs, IT, and organizational measurement. This extends the depth of the SCO concept by highlighting its multi-dimensional nature and outlining key managerial areas to be considered when focusing on the structural approach to SCO. The proposed conceptualization of SCO presented in this paper differs from Min and Mentzers (2004) construct, and the theoretical extensions implied by our framework provide a basis for further research investigation. Since the focus of this step in the SCO program of research was the development of a comprehensive framework built upon an integrative literature review, a next step for future research should entail qualitative

research to better delineate the concepts and their interrelationships to more fully develop the specics and any potential causal relationships that may exist between elements of the framework. A qualitative approach may involve case studies of existing supply chain-oriented rms and theory building research such as grounded theory that facilitates the emergence of additional concepts and constructs that inuence the framework presented here. Ethnographic research also could reveal norms of behavior, social processes, and attitudes of sub-cultures that exist within and across organizations, all of which inuence the nature and implementation of a SCO. Quantitative research will ultimately be useful in conrming the scope of the central concepts. Though research by Min and Mentzer (2004) and Min et al. (2007) have provided quantitative insights, testing of the proposed extended SCO conceptualization would add to our understanding of the concept. Later studies can build on this framework and be better positioned to quantitatively test the relationships proposed in the conceptual model, in terms of strength and potential direction. Particular focus should be placed on testing the multi-dimensional nature of SCO proposed, and the performance implications associated with the combination of the framework elements. Attention should also be directed at understanding the differences in SCOs that may arise across a variety of industry sectors, rm types, strategic approaches and geographic locations. Survey methods and simulation may be most appropriate to investigate such issues. While the primary focus of this paper is to contribute to theoretical developments regarding SCO, managerial implications are also of note. In particular, managers can use this paper to expand their understanding of the role of internal strategy and structure to facilitate effective SCM. While SCM is, by denition, an interorganizational concept, the fact that internal issues are antecedent to effective SCM is a key insight for supply chain managers. In addition, managers can also gather insights from this paper on the aspects of organizational strategy and structure that research suggests are associated with supply chain success. While not suggesting a prescriptive recipe for success, managers can use the framework presented to determine strategy and/or structural management areas that could be addressed to become more supply chain oriented, and as a result, drive enhanced supply chain performance effectiveness. Ultimately, it is hoped that this paper will broaden the program of research into SCO and its implications for global rms, their supply chains, and their customers. Such further investigation will enhance the managerial relevance of the concept by exploring the performance implications associated with having supply chain-oriented strategy and structural t. Considering the growing importance of SCM, and its use as a means of competitive positioning, understanding of the issues and nuances involved in achieving supply chain success are paramount. This paper moves us one step in that direction.
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Stock, G.N., Greis, N.P. and Kasarda, J.D. (1999), Logistics, strategy and structure, International Journal of Physical Distribution & Logistics Management, Vol. 29 Nos 3/4, pp. 37-52. Stock, J.R. and Lambert, D.M. (2001), Strategic Logistics Management, McGraw-Hill/Irwin, New York, NY. Supply Chain Council (2006), Supply-chain Operations Reference Model: SCOR Version 8.0 Overview, Supply Chain Council, Washington, DC. Trent, R.J. (2004), What everyone needs to know about SCM, Supply Chain Management Review, Vol. 8 No. 2, pp. 52-9. Wernerfelt, B. (1984), A resource-based view of the rm, Strategic Management Journal, Vol. 5 No. 2, pp. 171-80. About the authors Terry L. Esper (PhD, University of Arkansas) is an Assistant Professor of Logistics in the Department of Marketing and Logistics at the University of Tennessee. Terry L. Espers research interests include supply chain collaboration, supply chain learning and relationship management. His research has appeared in the Journal of Business Logistics, the International Journal of Physical Distribution & Logistics Management, Transportation Journal and several conference proceedings. Terry L. Esper is the corresponding author and can be contacted at: tesper@utk.edu C. Clifford Defee (PhD, University of Tennessee) is an Assistant Professor of Supply Chain Management at Auburn University. Previously, he was chief operating ofcer of international outsourcing rm PFSweb, Inc., based in Plano, Texas. He earned BBA and MBA degrees from Texas A&M University. His research interests include supply chain leadership, supply chain structure and performance, and the creation of dynamic capabilities in an interorganizational context. His work has appeared in the Journal of Business Logistics, the International Journal of Logistics Management and Supply Chain Forum. John T. Mentzer (PhD, Michigan State University) was the Harry J. and Vivienne R. Bruce Excellence Chair of Business in the Department of Marketing and Logistics at the University of Tennessee. He published eight books and more than 200 articles and papers in the Harvard Business Review, International Journal of Physical Distribution & Logistics Management, Journal of Business Logistics, Journal of Marketing, Journal of Business Research, Transportation Journal, Journal of the Academy of Marketing Science, Columbia Journal of World Business, Research in Marketing, Business Horizons, and other journals. He was past President of the Academy of Marketing Science and the CSCMP. He was the 2004 recipient of the Council of Logistics Management Distinguished Service Award.

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