Implementation of a System Approach for Enhanced Supply Chain Continuity and Resiliency: A Longitudinal Study

• DOI: http://doi.org/10.1111/jbl.12021
• Date: 01 September 2013
• Published date: 01 September 2013

Implementation of a System Approach for Enhanced Supply Chain

Continuity and Resiliency: A Longitudinal Study*

Christopher A. Boone

1

, Christopher W. Craighead

2

, Joe B. Hanna

3

, and Anand Nair

4

1

Georgia Southern University

2

The Pennsylvania State University

3

Auburn University

4

Michigan State University

Researchers and practitioners frequently point to inventory as a necessary component of an effective supply chain strategy. However, an

undisciplined or ineffective approach to inventory can have a detrimental impact on an organization and its entire supply chain. When

making inventory decisions, firms must ensure that the selected approach “fits”the overall supply chain strategy. While such an assertion seems

intuitive, there is a need for empirical validation. We seek to contribute to this important body of research by investigating the impact of

improved strategic alignment of inventory on resiliency and continuity. More specifically, we investigate the impact of improved strategic fitby

comparing two distinct approaches to inventory management within a service parts environment. We hypothesize that a well-aligned approach

to inventory management can enhance continuity and resiliency. We test these hypotheses via a longitudinal field study involving 10 United

States Air Force (USAF) locations and two years of data (approximately 650,000 inventory transactions). Results from nine test locations and

one control location suggest that a well-aligned approach to inventory management is indeed effective in improving continuity and resiliency,

thus enhancing service-based strategies—in this case, the USAF’s ability to be mission-capable. While the results of the study are derived from

the USAF, we believe the implications provide broader insight into the use of inventory as a means of realizing a strategic fit.

Keywords: supply chain strategy; fit; resilience; continuity; longitudinal field study; empirical research; inventory optimization; METRIC

INTRODUCTION

Many have long recognized the importance of supply chain strat-

egy to guide critical business decisions regarding manufacturing,

inventory, distribution, and information flow (e.g., Chopra and

Meindl 2004). However, supply chain efforts can fail to produce

anticipated benefits due to a continued failure to properly align

products with the appropriate supply chain strategy (Fisher 1997;

Li and O’Brien 2001). In addition to choosing the right supply

chain strategy, firms must ensure that the individual components of

their supply chain strategy consider existing practices (Rabinovich

and Evers 2003) and “fit”together in a way that creates value and

competitive advantage (Chase et al. 2006; Qi et al. 2011).

In general, firms are expected to achieve better performance

with strategic consistency, or fit (Wagner et al. 2012), just as mis-

alignment is expected to negatively impact performance (Joshi and

Porth 2003). However, there is a general lack of empirical valida-

tion of this concept within supply chain management research. To

date, supply chain management research has continued to focus

more on supply chain operations than on consistencies between

products and their underlying supply chain strategies, that is, the

supply chain fit (Wagner et al. 2012). In fact, supply chain man-

agement research focused on “fit”is just beginning to emerge (e.g.,

Qi et al. 2009, 2011; Wagner et al. 2012).

Venkatraman (1989) identifies six different perspectives of fit

—fit as moderation, mediation, matching, gestalts, deviation, and

covariation. Supply chain researchers have frequently applied the

matching perspective of “fit”as is evidenced by the works of

Fisher (1997) and Lee (2002), who both stress the importance of

matching strategy with product characteristics and environment.

Another area where this perspective of fit is especially important

is when determining appropriate approaches to inventory man-

agement.

Dittmann (2012) recently reported the results of a survey in

which firms where queried on their respective supply chain strat-

egies. The survey identified inventory management as one of the

topics most frequently addressed as part of a supply chain strat-

egy. This importance is echoed by researchers who frequently

point to inventory management as a necessary component of an

effective supply chain strategy and a time-proven method for

mitigating disruptions and enhancing resiliency (Juttner et al.

2003; Chopra and Sodhi 2004; Sheffiand Rice 2005; Tomlin

2006). However, simply recognizing inventory as a necessary

component of a supply chain strategy is insufficient without a

supporting approach. A strategic approach is needed.

All agree that supply chains are increasingly susceptible to

large scale external disruptions like hurricane Katrina or the

attacks of September 11. However, external forces are not the

only source of disruptions. Supply chains can also be negatively

impacted by disruptions resulting from internal processes and

controls such as inventory order quantities and safety stock poli-

cies (Christopher and Peck 2004) as well as misaligned func-

tions, supply variability, capacity constraints, and quality

problems (Sheffiand Rice 2005; Ponomarov and Holcomb

Corresponding author:

Christopher W. Craighead, Department of Supply Chain and Infor-

mation Systems, Smeal College of Business, The Pennsylvania State

University, University Park, PA 16802, USA; E-mail: cwc13@psu.

edu

*The views and opinions expressed in this article are those of the

authors alone and do not necessarily reflect those of the United

States Department of Defense, the United States Air Force, or any

other government agency.

Journal of Business Logistics, 2013, 34(3): 222–235

© Council of Supply Chain Management Professionals