Enterprise logistics and supply chain structure: the role of fit

• Author: Noel P Greis,Gregory N Stock,John D Kasarda
• DOI: http://doi.org/10.1016/S0272-6963(00)00035-8
• Date: 01 August 2000
• Published date: 01 August 2000

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Journal of Operations Management 18 2000 531–547

www.elsevier.comrlocaterdsw

Enterprise logistics and supply chain structure: the role of fit

Gregory N. Stock a, ), Noel P. Greis b,1, John D. Kasardac,1

aDepartment of Operations Management and Information Systems, College of Business, Northern Illinois UniÕersity, Dekalb,

IL 60115, USA

bCenter for Logistics and Global Strategy, Kenan Institute of PriÕate Enterprise, Kenan-Flagler Business School,

UniÕersity of North Carolina at Chapel Hill, Kenan Center, Campus Box 3440, Chapel Hill, NC 27599-3440, USA

cKenan Institute of PriÕate Enterprise, Kenan-Flagler Business School, UniÕersity of North Carolina at Chapel Hill, Kenan Center,

Campus Box 3440, Chapel Hill, NC 27599-3440, USA

Received 25 July 1999; accepted 27 January 2000

Abstract

The emergence of the extended manufacturing enterprise, a globally dispersed collection of strategically aligned

organizations, has brought new attention to how organizations coordinate the flow of information and materials across their

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supply chains. This paper explores and develops the concept of enterprise logistics Greis, N.P., Kasarda, J.D., 1997.

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Enterprise logistics in the information age. California Management Review 39 3 , 55–78 as a tool for integrating the

logistics activities both within and between the strategically aligned organizations of the extended enterprise. Specifically,

this paper examines the fit between an organization’s enterprise logistics integration capabilities and its supply chain

structure. Using a configurations approach, we test whether globally dispersed network organizations that adopt enterprise

logistics practices are able to achieve higher levels of organizational performance. Results indicate that enterprise logistics is

a necessary tool for the coordination of supply chain operations that are geographically dispersed around the world.

However, for a pure network structure, a high level of enterprise logistics integration alone does not guarantee improved

organizational performance. The paper ends with a discussion of managerial implications and directions for future research.

q2000 Elsevier Science B.V. All rights reserved.

Keywords: Enterprise logistics; Supply chain structure; Organizational performance

1. Introduction

Recent trends in global production have both

increased supply chain complexity and reinforced the

notion that logistics strategies and practices are es-

)Corresponding author. Tel.: q1-516-463-5723; fax: q1-516-

463-4834.

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E-mail addresses: mgbgns@hofstra.edu G.N. Stock ,

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noel greis@unc.edu N.P. Greis , john kasarda@unc.edu J.D.

––

.

Kasarda .

1Tel.: q1-919-962-8201; fax: q1-919-962-8202.

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sential elements of business strategy LaLonde and

Masters, 1994; Chow et al., 1995; Stock et al., 1998;

.

Stank and Traichal, 1998 . Logistical complexity has

increased as organizations have moved from central-

ized, vertically integrated, single-site manufacturing

facilities to geographically dispersed networks of

resources that collectively create value for the cus-

tomer. This extended enterprise may be consonant

with a single multinational organization or, as is

increasingly the case, a set of strategically aligned

companies which partner to capture specific market

opportunities. These extended global enterprises are

0272-6963r00r$17.00 q2000 Elsevier Science B.V. All rights reserved.

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PII: S02 72- 69 63 0 0 0 00 35 -8

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G.N. Stock et al.rJournal of Operations Management 18 2000 531–547532

designed to provide the speed and flexibility neces-

sary to respond rapidly to windows of market oppor-

tunity. Traditional logistics practices and technolo-

gies that integrate productive activities within the

factory are necessary but not sufficient for competi-

tive success. New logistics practices and technolo-

gies must now also link production and logistics

processes in different organizations across geograph-

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ically dispersed locations Greis and Kasarda, 1997;

.

Quinn, 1997; Brunell, 1999 . Examples of firms that

have employed new logistics practices to improve

competitive performance include Hewlett-Packard,

IBM, Chrysler, Lear, AlliedSignal, and Wal-Mart

ŽBradley et al., 1998; Zarley and Torode, 1997;

.

Trunick, 1997, 1998; Gourley, 1998 .

In this paper, we explore the relationship between

enterprise logistics practices and improved perfor-

mance of the new extended global enterprise. We

begin by introducing a conceptual framework that

explicitly recognizes the emerging role of logistics

and its importance to new supply chain structures

that have evolved in response to current competitive

pressures. Specifically, we examine the alignment of

logistics practices and supply chain architectures us-

ing the notion of ‘‘fit.’’ ‘‘Fit’’ is defined as an

appropriate consistency between logistics practices

and supply chain structures. Using a configurations

approach, we then examine the implications of the

framework to develop and test a set of hypotheses

linking logistics–supply chain fit to organizational

performance. Sections describing the methodology

and empirical results follow. The paper closes with

conclusions and implications for future research.

2. Conceptual framework

The idea that firms might develop logistics capa-

bilities that support basic business or manufacturing

objectives is not new. Throughout the 1990s, a num-

ber of papers have attempted to uncover typologies

of logistics strategy that relate individual firm prac-

tices to strategy specifications. In particular, a longi-

tudinal study beginning in 1989 and replicated in

1990 and 1994 is one of the first to explicitly link

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logistics practices and strategic elements McGinnis

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and Kohn, 1990, 1993; Kohn and McGinnis, 1997 .

A similar study investigated linkages between orga-

nizational structure and logistics strategy, identifying

three distinct logistics strategies — process, market,

and information — differing in the breadth, scope

and depth of logistics activities within the firm

ŽBowersox et al., 1989; Bowersox and Daugherty,

.

1987 . A subsequent study by Clinton and Closs

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1997 offered limited validation of the Bowersox

and Daugherty classification scheme. All of these

studies have focused largely on logistics practices

and strategies within the firm. While these empirical

studies do include supplier–customer linkages in

their scale development, none explicitly address the

logistical practices that have arisen in the last few

years in response to the tremendous speed of global-

ization — specifically the need to move goods greater

distances quickly and efficiently. This paper fills this

gap by addressing the logistical coordination of geo-

graphically dispersed activities across the extended

enterprise, and by considering the logistics practices

that are required to support the extended enterprise.

Our proposed framework is shown in Fig. 1. This

framework links a firm’s supply chain structure and

logistics integration approach to organizational per-

formance. There are three principal constructs in this

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framework: supply chain structure which is cha-

racterized by geographic dispersion and channel go-

.

vernance , logistics integration, and organizational

performance. The degree of fit between logistics

integration and supply chain structure can be ex-

pected to affect the firm’s performance. In other

words, we expect that certain combinations of supply

chain structure and logistics integration will result in

higher firm performance than other combinations of

these constructs.

In specifying the framework’s constructs, we have

employed a configurational approach. The configura-

tional approach has been used widely in business

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strategy and management research Dess et al., 1993;

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Ward et al., 1996 . Configurations are defined as

‘‘commonly occurring clusters of attributes . . . that

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are internally cohesive’’ Miller and Friesen, 1984,

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p. 12 . They can be embodied as classifications of

organizations, such as taxonomies or typologies,

which share common characteristics along a number

of dimensions. A strength of the configurational

perspective is that it takes a more holistic approach

and recognizes that many organizational constructs

are not easily characterized by simple continuous or