SUPPLY CHAIN

MANAGEMENT AS A
COMPETITIVE
ADVANTAGE IN THE
SPANISH GROCERY

Supply Chain
Management:
Sir Sheikh
Mohammad Ali

TEAM MEMBERS
Hira Anwer Ali 32555
Mobin
32581
Kanjiani
Maryam Zafar
Ilyas Khan

32599

Hassam Ul
Haue

32553

INTRODUCTION

By:
Mobin Kanjiani

INTRODUCTION
The study is based on the internal (within
organization) and external (amongst other
organizations) integration processes.
As well as how they help to give a firm a
superior performance and a competitive edge.
The study was conducted on the Spanish
grocery sector.

During the past 15 years, the Spanish grocery

sector has been growing, mainly due to the
development of new technologies (EPOS
-Electronic Point of Sales- and EDI -Electronic
Data Interchange).

EPOS

EDI

INTRODUCTION
The highly competitive environment of the groceryretailing sector has made companies look for a
competitive advantage, which can be helped by
adopting the Supply Chain Management (SCM)
approach.
SCM involves integration, co-ordination and
collaboration across organizations and throughout the
supply chain. It means that SCM requires internal and
external integration.

Effective internal integration is

essential for supply chain
management.

Evolution from distribution logistics to supply chain

INTRODUCTION
The effect of internal and external integration
can be measured by analyzing the absolute
and relative performance of the company.
Absolute performance: refers to the
performance considering the company itself,
not taking into account its competitors
performance, for example costs, stock-outs
and lead-time reductions are some measures
of absolute performance.

INTRODUCTION
A firm gains competitive advantage by performing
strategically important activities more cheaply or better
than its competitors. The contribution of SCM gaining a
competitive advantage is embedded in the concept of
relative performance, which can be measured by asking the
company to compare its performance with that of its
competitors.
Logistics management will only help in the absolute
performance of the company, where as SCM will help in
both absolute and relative performance of the firm.

LITERATURE REVIEW

By:
Maryam Zafar

Internal
Integration

Construct Model

Performance

External
Integration

LITERATURE REVIEW
This paper analyses:
1) the relationship between internal and external
integration processes,
2) their effect on firms performance
3) and their contribution to the achievement of a
competitive advantage.
Performance improvements are analyzed through:
1) costs,
2) stock out

LITERATURE REVIEW
And, the achievement of a better competitive
position is measured by comparing the firms
performance with its competitors performance.
To analyze this, an empirical study has been
conducted in the Spanish grocery sector.

LITERATURE REVIEW
A firm gains competitive advantage by performing
strategically important activities more cheaply or better
than its competitors (Porter, 1985).
Stank, Keller & Daugherty (2001) concluded that,
(1) internal and external collaboration are positively
correlated,
(2) internal collaboration leads to a better competitive
position in some logistics service performance variables
(speed, dependability, responsiveness, flexibility and
overall customer satisfaction),

VARIABLES

By:
Ilyas Khan

VARIABLES
Internal
Integrati
on
Absolute
Performa
nce

External
Integrati
on
Relative
Performan
ce

INTERNAL INTEGRATION
In this research Internal integration is the integration across
functional boundaries within a firm. The level of internal
integration is reflected by the extent to which logistics
activities interact with other functional areas, as well as by the
extent to which logistics is or is not a separate functional unit:
Informal teamwork
Joint establishment of
objectives
Established teamwork

Joint development of the

responsibilities understanding

Shared ideas, information and other

resources

Joint decisions about ways to

improve cost efficiencies

EXTERNAL INTEGRATION
In this research external integration means the integration of
logistics activities across firm boundaries. It is to think of the
manufacturing enterprise in terms of the entire supply chain,
which increasingly consists of many separate firms banded
together
in network
arrangements:
Informal
teamwork
Joint establishment of
objectives
Established teamwork
Joint development of the
responsibilities understanding
Shared ideas, information and other
resources

Joint decisions about ways to

improve cost efficiencies

Established work team for the implementation and development of

continuous replenishment programs (CRP) or other ECR practice

ABSOLUTE PERFORMANCE
Absolute performance refers to the performance considering
the company itself, not taking into account its competitors
performance. Costs, stock-outs and lead-time reductions are
some measures of absolute performance. The aim of
analyzing performance in absolute terms is to determine
which improvements can be achieved by implementing a
My company haslogistics
achieved
a
Myprogram:
company has achieved cost
integration
reduction in the cost-to-serve
reductions in the transport to
this customer
this customer
My company has achieved cost
My company has achieved stockreductions in the order process of
out reductions in the products this
this customer
customer buys
My company has achieved a lead time reduction for this customer.

RELATIVE PERFORMANCE
A firm gains competitive advantage by performing
strategically important activities more cheaply or better than
its competitors. The contribution of SCM to gaining a
competitive advantage is embedded in the concept of relative
performance, which can be measured by asking the company
My
responds
to this
company
responds to
tocompany
compare its
performance
with that My
of its
competitors:
customers needs and
special requirements of this
requirements
customer
My company serves on the delivery
My company provides the
date established
quantities ordered
My company notifies in advance
late deliveries or if quantities
ordered are not served

My company collaborates in new

product launches

HYPOTHESES
&
CONCLUSION

By Hira Anwer
Ali

HYPOTHESES
Internal Integration affects Performance:
External Integration affects Performance:
Internal and External Integration are positively
related:

CONCLUSIONS
There are 3 result that derived from analysis.
1. Firm accomplish high level of internal integration before
executing SCM.
2. (Stage 2)When companies achieve level of integration
this level of integration leads to a better absolute
performance.
A high level of collaboration among internal processes
contributes to achieving cost, stock outs and lead time
reductions.

CONCLUSIONS
However, this internal collaboration does not lead
to gaining a competitive advantage. This could
be due to the fact that there are already many
companies that have achieved this stage.
3. (Stage 3) The external integration level leads
to a better absolute and relative performance.
Companies extend the level of integration to their
supply chain members, they can perform superior
to their rivals in the following variables:

CONCLUSIONS
1) response to customers needs and
requirements,
2) response to special requirements,
3) accomplishment of quantities and delivery
dates,
4) and collaboration in new product launches.
SCM contributes to gaining a better competitive
position because there are few companies that
have achieved this stage. SCM will become a

RESULTS & LIMITATIONS

By:
Hassam Ul
Haque

RESULT
With respect to the studies mentioned in the
literature review, results from this study confirm
that internal and external integration are correlated.
It also verified that both levels of integration lead to
a better absolute performance.
Moreover, internal integration by itself is not
sufficient to gain a competitive advantage, There is
the need to extend this integration to suppliers and
customers.

RESULT
And:
Stank, Keller & Daugherty (2001) considered
very heterogeneous industries in the same
model, and this could be the reason why they
failed to demonstrate that external integration
leads to a better relative performance.

LIMITATIONS
This study has some limitations.
This study has not considered other significant
members of the grocery supply chain such as
grocery retailers, Third Party Logistics,
manufacturers suppliers, etc.
This study has focus only on the manufacturerretailer relationship.
Another limitation is that intra-firm co-ordination
has been measured only on one internal
relationship : the Production-Logistics interface.

LIMITATIONS
We have only measured the effect of inter-firm
co-ordination from the perspective of the
provider.
We consider that the involvement of SCM to
gaining a competitive advantage is affected by
the level of SCM implementation in the industry.
Future research should apply this study to other
sectors in order to consider different sector
structures and different levels of SCM
implementation.