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Logistics collaboration in supplychains: practice vs. theory

Erik SandbergDepartment of Management and Engineering, Institute of Technology,

Linkoping University, Linkoping, Sweden

Abstract

Purpose This paper aims to present results from a survey that investigates the situation in realworld supply chains concerning logistics collaboration.

Design/methodology/approach Based on supply chain management literature, a questionnairewas developed covering important topics from the literature. The questionnaire was sent to thelogistics manager at Swedish manufacturing companies and a net response rate of 37.8 percent(177/482) was achieved. Apart from purely descriptive statistics, factor analysis, cluster analysis,

analysis of variance (ANOVA), and cross tabulations with x2

tests were used for the analysis.Findings From the results, three major conclusions are drawn. First, there is a clear relationshipbetween the intensity of the collaboration and the positive effects experienced from the collaboration.Second, the results indicate that top management is an important driver for higher intensitycollaboration. Third, there are serious differences between supply chain management (SCM) theoryand practice, due to the absence of strategic elements in the collaboration and the different ways inwhich supplier and customer collaborations are managed.

Research limitations/implications Related to SCM theory, the lack of strategic elements in thecollaboration might prevent or decrease the expected positive effects of the collaboration. It is thereforeimportant to increase the strategic level component in the collaboration. Top managementinvolvement is likely to be important to achieve this and hence more research on the topic is suggested.

Originality/value The study presents a broad overview concerning logistics collaboration thatcovers many of the most important supply chain management issues. In addition, their relationship is

discussed.Keywords Supply chain management, Cooperative marketing

Paper type Research paper

IntroductionDuring the 1980s and 1990s a new trend towards integration and collaboration insteadof so-called arms-length agreements between suppliers and customers has beenrecognised by researchers as well as business practitioners. Actors participating in thesame supply chain identify tradeoffs with their adjacent customers and suppliers andrecognise the importance of integration in the chain in order to focus on what is offeredto the end customer in terms of cost and service. Internal excellence is not enough

anymore; there is also a need for external excellence in the whole supply chain. This isthe philosophy underpinning supply chain management (SCM), which has receivedenormous attention in research journals as well as in industry. (Christopher, 1998;Lambert and Cooper, 2000)

True SCM-based collaboration among supply chain players can have significantbenefits. According to researchers as well as consultants, massive reduction of costs andimproved service are possible (Sandberg, 2005). Within the field of logistics, bestpractice companies have applied collaborative approaches based on the SCM philosophy

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and have achieved extraordinary results. As an example, Wal-Marts collaborativeplanning, forecasting and replenishment (CPFR) collaboration with their suppliers is awell-known success story. SCM literature, which often takes its starting point suchcollaborations represented by Wal-Mart, is fairly unanimous: SCM initiatives in supply

chains are positive and are expected to be beneficial for all parties involved. Thesediscussions and conclusions are however often on a conceptual level and are seldombased upon more rigorous theory (Bechtel and Jayaram, 1997) or empirical material (Leeand Whang, 2000; Stank et al., 2001) and are therefore often superficial.

As a consequence of this, the literature becomes fuzzy about what actually occurswhen companies collaborate and what specific effects are achieved. Therefore, moreresearch, especially empirical, is needed in order to verify existing literature.Furthermore, it could be questioned how much SCM exists in todays supply chains.Can SCM be considered to be implemented in most supply chains, or should SCM beconsidered as the exception rather than the rule?

From a logistics perspective the question of what SCM and collaboration reallymeans for the individual company is an issue. How is collaboration performed andwhat actions are undertaken? What parts of the very broad spectrum of actionssuggested by literature have been adopted? For what reasons is collaboration appliedand what barriers to collaboration exist? What are the consequences of collaboration interms of effects?

To answer these questions an examination of the situation in existing supply chainsconcerning logistics collaboration was undertaken. In November 2004 a survey wasmailed to 482 logistics managers at Swedish manufacturing companies[1] with morethan 100 MSEK (,12M Euro) and 100 employees. Based on the SCM literature, thesurvey covered a number of important collaboration issues such as the content ofthe collaboration (i.e. what is actually done in logistics collaboration), driving forces,the barriers experienced and the effects. The term collaboration was defined in the

survey as a relationship characterised by openness and trust where risks, rewards andcosts are shared between the parties. Furthermore, a basic prerequisite is that allinvolved parties should be able to influence the design of the collaboration. Typicalcollaborative logistics activities are joint planning and information sharing. This paperaims to present some of the main results from the study.

In this study, the perspective of a focal company situated in a supply chain is taken.The emphasis is on how the focal company acts and behaves compared to what isrecommended in the SCM literature. Figure 1 shows the focal company and its main

Figure 1.The chosen perspective

and the three types ofcollaboration investigated

in this study

Dyadic collaboration withsupplier

Focal companySupplier Customer

Triadic collaboration where bothsuppliers and customers are involved

Dyadic collaboration withcustomer

Source: Sandberg (2005, p. 6)

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collaboration possibilities in the supply chain. The focal company can be involved inthree types of collaboration, each of which were investigated; a triadic collaborationwhere both the supplier as well as the customer to the focal company are involved, ordyadic collaboration with either a supplier or a customer.

As pointed out in the Figure, only so-called primary members of the supply chain(Lambert and Cooper, 2000) are considered. This leaves for example collaboration betweenthe focal company and a third party logistics provider outside the scope of this study.

MethodologyThis study can be classified as a descriptive survey. A descriptive survey aims todescribe what situations, events, attitudes, or opinions are occurring in a population(Pinsonneault and Kraemer, 1993, p. 80). Hypotheses exploring connections betweenvariables can be investigated. However, in contrast to an explanatory study, no causalhypotheses are set up and tested:

Analysis stimulated by descriptive questions is meant to ascertain facts, not to test theory.

The hypo is not causal but simply that common perceptions of the facts are or are not at oddswith reality (Pinsonneault and Kraemer, 1993, p. 80).

In the study no clear, determined hypotheses were tested. However, since the questionsin the questionnaire were all generated from the SCM literature, they can all beconsidered as theoretically underpinned and therefore it is the SCM literature that isindirectly tested.

The questionnaire contained in total 30 questions on 10 pages. After a few generalquestions about the company, the respondents were asked to pick the most importantrelationship they had with either a supplier and/or a customer that they considered ascollaboration. If they had any triadic collaboration, they were asked to choose thiscollaboration before dyadic ones. In the rest of the questionnaire they were asked

questions about their chosen specific collaboration. The term collaboration and thepurpose of the study, etc. were specified in the questionnaire as well as in a cover letter.

The questionnaire and a cover letter were mailed to the 482 logistics managers inNovember 2004. Of the answers received, 177 questionnaires were considered useableand were coded in SPSS, which means a net response rate of 37.8 percent (177/468).In her doctoral thesis, Forslund (2004) makes a literature review on response rates inother similar research projects. Those response rates ranged between 5 and 58 percent.In comparison, it can be concluded that the response rate received in this thesis issatisfactory. Furthermore, 37.8 percent is far more than the minimum suggested byForza (2002), which is 20 percent for mailed questionnaires.

Three actions were undertaken to investigate possible systematic differences(Malhotra and Grover, 1998; Forza, 2002) among respondents and non-respondents. First,

differences in the number of employees were investigated between respondents andnon-respondents. As a second action, 41 logistics managers that had not answered thesurvey were briefly interviewed about their reasons for not answering. Above all, lack oftime was the most common reason. No statistical differences concerning non-responsecould be found. Finally, as a third action to investigate systematic differences betweenrespondents and non-respondents,earlyrespondents (i.e. those respondents thatansweredthe questionnaire within two weeks) were compared with late respondents (thoserespondents that answered after two weeks).

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The data analysis of the questionnaire was made in SPSS 11.5. Apart from purelydescriptive statistics such as mean values, standard deviation, and frequencies alsofactor analysis, cluster analysis, Analysis of Variance (ANOVA), and cross tabulationswith x2 tests were used.

ResultsBecause of the chosen industry, most of the respondents characterised themselvesprimarily as a supplier or manufacturer (14.7 percent and 83.1 percent, respectively).Furthermore, a majority of the respondents belonged to a business group (94.4 percent).The mean number of employees of the companies was 490 and mean annual turnoverwas SEK 1344 million (,100 million Euro). The characteristics of the productsmanufactured by the respondents were characterised by two five-point Likert scales;one ranging from single products to volume products, and the second ranging fromcustomer specific products to standard products. The mean values were 3.84 and2.66, respectively.

The respondents were asked to define which of the following three types ofcollaboration they had in mind when they answered the questionnaire (Figure 2).

The distribution shows that the majority of all companies are not engaged in triadiccollaboration, which is considered to be the minimum scope for SCM by many authors(Mentzer et al., 2001). Of the respondents, 17 (9.6 percent) answered that they had norelation that they considered as collaboration.

ProcessAccording to the SCM literature, the transition towards a process view is withoutdoubt one of the most important characteristics of SCM. A description and definition ofthe collaboration in terms of a process will lead to a better understanding of whatactivities are involved in the collaboration and how they are related to each other. Thisbecomes especially important in interorganisational collaboration when the processstretches over company borders, since it is often difficult to understand and to get agood insight into other actors internal activities (Melan, 1993; Willoch, 1994).

The use of processes in the collaboration with adjacent suppliers and/or customersis however very low. Only 24 percent of the respondents have together with theirpartner/partners defined and described their collaboration in terms of a process. Thisfigure must be considered as surprisingly low given the massive amount of literature

Figure 2.Distribution of different

types of collaborationchosen by the respondents

Supplier collaboration

60 (33.9%)

Focal companySupplier Customer

Triadic collaboration

44 (24.9%)

Customer collaboration

56 (31.6%)



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advocating a process approach over the past two decades; SCM literature and logisticsbusiness concepts such as CPFR as well as other management concepts such asbusiness process reengineering are all based on a process-oriented view of the firm.

The use of process related measurements in the collaboration was investigated with

three different types; total logistics costs for the collaboration and different kinds oflead times and services between the actors. The mean values and standard deviationsof the answers, given on five-point Likert scales, can be seen in Table I[2].

In general, lead times and service measurements are used considerably more thanmeasurements related to the total logistics costs. This also agrees with the internal useof measurements at the respondents companies where service related measurementsare applied far more. Other studies report similar findings (Aronsson, 2003) and canprobably be explained by the difficulties of measuring logistics costs.

The results of this study also show a relationship between having a defined processfor the collaboration and the measurement of it; ANOVA analysis shows thatrespondents with a defined and documented process in their collaboration also

measure it more. This is valid for measurements of costs, lead times as well as service.Probably as a consequence of a low degree of process definition, the respondents havenot applied a predefined way of how to share costs and savings in the collaboration toany great extent (a mean value of 2.54 on a five-point Likert scale). This result is also inline with the results presented by Spekman et al. (1998), who found that risks andrewards were shared equally between the partners to a very low extent. These findingsindicate a great potential for improvements in this area for future collaborations.

The respondents were also asked to estimate to what extent[3] they had documentedtheir processes in the areas of procurement, production, and distribution internallyat their company. Also the documentation of their whole internal process stretchingthrough the entire company was asked for. The mean values (standard deviation inparenthesis) are shown in Figure 3.

Type of measurement Mean Standard deviation

Total logistics costs 1.97 1.19Lead times between the companies 3.16 1.38Service between the companies 3.28 1.35


Table I.The use of process relatedmeasurements in thecollaboration

Figure 3.The degree of internalprocess documentation atthe focal company

Distribution

3.72 (1.07)

Production

4.02 (0.95)

Procurement

3.86 (1.05)

Whole Company 3.48 (1.07)

Source: Sandberg (2005)

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As can be seen in the figure, the respondents have documented to a relatively highextent their internal processes in all parts of their companies. This can be interpretedas a consequence of the widely spread adoption of ISO 9000 certifications.

Planning of logistics activitiesA process approach to collaboration puts a natural focus on the coordination andintegration of the activities involved (Melan, 1993; Willoch, 1994). Aronsson (2000)suggests that the question of organisational responsibility for the different activitiesshould be considered later when the process already is optimized. From this it followsthat the division of the organizational planning responsibility between companiescould be changed from a traditional view towards other, better integrated, solutions.Defining and describing a process could make these possible options more visible forthe supply chain members.

Examples of how the planning responsibilities can change and be treated indifferent ways can be seen in collaborative-based business concepts such as efficient

consumer response (ECR), vendor managed inventory (VMI), and CPFR. Influenced bythe SCM philosophy, these three concepts aim to improve inventory management andother logistics issues in the supply chain. In the case of ECR, the participating actorsplan the collaboration design jointly. However, at the operating level no change inplanning responsibility for logistics activities may be seen. Instead when consideringVMI, this change of responsibility can be seen clearly since the main idea behind VMIis the recognition that the vendor is better positioned in the supply chain to plan andmanage the replenishment of the customers warehouse. Finally, when consideringCPFR, the participating actors do the planning of some activities jointly. Thus, thethree concepts represent three different opportunities for handling the planningresponsibility of activities involved in the collaboration (Sandberg, 2005).

In the questionnaire, the means by which supply chain activities were planned was

categorized in the way as shown in Figure 4[4].

Figure 4.How planning of logisticsactivities is performed in

the collaborativearrangement

Do not agree Completely agree

Mean

2.20

3.00

3.31

21 43 5

0% 20% 40% 60% 80% 100%

Joint operational planning

N=157

Delegated planning

N=150

Joint strategic planning

N=142



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Figure 4 indicates that the most common way to plan logistics activities within acollaborative arrangement is joint planning on an operational level. This can also beconsidered as the least advanced and less demanding type of planning. The degree of jointstrategic planning can be considered as low. Of the respondents, 66 percent answered one

or two to the question concerning the extent to which joint strategic planning of supplychain activities is performed.

Interestingly, the degree of joint operational planning is not positively related to thedegree of joint strategic planning and vice versa[5]. Thus, more strategic planning doesnot seem to facilitate or lead to more operational planning or vice versa.

Of the respondents, 46 percent have answered four or five to the planning typewhere one actor plans for all parties including himself. This relatively high percentageis probably due to the fact that many of the collaborations are inspired by the idea ofVMI. Even if not asked for specifically in the questionnaire, many of the respondentshave answered on follow up questions that their collaboration is a typicalVMI-collaboration, etc.

Information sharingInformation sharing among the supply chain members is an important prerequisite forcollaboration (Lee and Whang, 2000; Yu et al., 2001; Xu and Dong, 2004) and has agreat impact on the performance in the supply chain (Barratt, 2004).

This study shows that the type of information shared within collaborations and thefrequency of sharing differ considerably. Table II shows mean values (in days) of thesharing frequency of a certain type of information[6].

The type of information that is shared by most respondents at least once a month isforecasts, which is shared by 94 percent of the respondents. Forecasts are relativelyeasy to share and are also reported as the most commonly shared type of informationin other survey-based studies, see, e.g. Selldin (2002).Of the respondents, 58.8 percent share at least two types of information at least once aweek, which in this study has been considered as the lower limit to describe theinformation sharing as intensive. For information sharing to be successful is not only aquestion about sharing the right information with a sufficient frequency, but also how

Information typeNumber of

respondents

Percentage of respondentssharing the type once a month or

more oftenMean (in

days)Standarddeviation

Production planning 111 71 9.09 7.37Inventory levels 118 76 8.97 7.52Forecasts 149 94 12.23 7.49Sales information (point

of sales data) 68 43 13.37 8.09Error messages, etc. 126 81 8.67 7.16Product campaigns 58 37 16.76 6.09Price levels and pricing 35 22 18.17 4.91Future deliveries, etc. 124 79 11.84 7.75Confirmations, trackand trace, etc. 104 66 6.85 6.20


Table II.The mean values forfrequency of sharing ofdifferent types ofinformation

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the transferred information is used and implemented by the receiving company (Leeand Whang, 2000). An important factor to facilitate the implementation and usage ofthe information is to share processed data instead of non-processed, i.e. share data thatis more specifically developed for the receivers needs. Such data is often more valuable

and will have a greater impact on planning efficiency and performance in the supplychain (Xu and Dong, 2004).

The degree of adjustment for the specific receiver of the shared information wasinvestigated with a five-point Likert scale, ranging from the information is notadjusted/processed to the information is very adjusted/processed. The mean value(standard deviation in parenthesis) for the answers was 3.66 (1.12). This indicates ahigh degree of adjustment of the information that is shared, which in turn improves thepossibilities for the receiver to use the information properly.

The development within the IT and technology sector over the last decades has hada great impact on information sharing in supply chains and is seen as an enabler formore advanced collaboration. Despite the strong support in the literature, only

50.6 percent of the respondents consider EDI and/or internet-based EDI to be the mainmeans of communication in the collaboration. Cross tabulation and x2 test shows thatrespondents with EDI or internet-based EDI in their collaboration also belong to the58.8 percent of the respondents that share at least two types of information at leastonce a week. This result was expected due to the better possibilities to shareinformation in a more efficient manner with EDI and other internet-based alternatives.

The use of more advanced communication methods does not however seem toinfluence the extent to which the shared information is processed and adjusted for thereceiver. The results imply that the use of EDI and internet-based alternativesfacilitates the transferring of information, but not the content of the information, i.e. towhat extent the information is processed and adjusted for the receiver. This is alsosupported when considering what types of information are shared significantly more

frequently in collaborations with EDI or internet-based EDI. Above all, it is operationalinformation types such as error messages and inventory levels that are shared morefrequently by EDI users. The need for adjustments of these types of information isprobably lower than for instance, forecasts and other information types that are moredifficult for the receiver to interpret.

Supply chain orientationSCM and collaboration can encompass a broad range of activities for companies in asupply chain. However, apart from suggesting what the actors actually should do,most authors also stress (even if they seldom discuss it more extensively) theimportance of undertaking the actions with the right intentions, referring to trust,

win-win thinking, common goals, etc. Mentzer et al. (2001) refer to this managementphilosophy as supply chain orientation (SCO), and define it as the recognition by anorganisation of the systemic, strategic implications of the tactical activities involved inmanaging the various flows in a supply chain (Mentzer et al., 2001, p. 11).

Experienced problems with these soft variables such as trust, organizationalcompatibility, commitment, vision, key processes, etc. were in the questionnaireinvestigated with statements on a five-point Likert scale ranging from do not agree tocompletely agree. In general, the answers indicate a low degree of problems, which


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means a good SCO. The respondents also felt that they had good possibilities toinfluence the design of the collaboration relatively to the other participants.

Another important prerequisite for a SCO is top management support (Mentzer et al.,2001). This was investigated with two statements about the managements

involvement during the initial phase of the collaboration and the involvementduring the ongoing collaboration. The mean values[7] and distribution of respondentscan be seen in Figure 5.

Logistics activitiesThe survey also explored the different logistics activities in which collaboration tookplace. The understanding of the functional scope of SCM today is very broad andcovers all the traditional intra-business functions within the company (Mentzer et al.,2001). From a logistics perspective this means a broad range of areas, where numerouscollaboration possibilities exist.

The respondents were asked to specify on a five-point Likert scale[8] to what extent

their collaboration was performed in the logistics areas shown in the Table III. As canbe expected, strategic planning is the least common area to collaborate in.Several analyses were performed to investigate if there were any differences in actions

undertaken in the collaboration depending on in which logistics area the collaborationtook place. Without success, factor analysis as well as ANOVA analysis was used tofind possible correlations between the actions undertaken and certain logistics areas.

Logistics area Mean Standard deviation

Production planning 2.77 1.29Forecasting 3.88 1.07Inventory management and replenishment 3.44 1.27Transportation planning 3.43 1.24Strategic planning 2.25 1.19


Table III.Mean valuesinvestigating to whatextent the collaboration isperformed in a certainlogistics area

Figure 5.The degree of topmanagement support fromthe focal company in thecollaboration


21 43 5 Mean

3.08

3.31

0% 20% 40% 60% 80% 100%

Top management

involvement in initial phase

N=157

Top management

involvement in ongoing

collaboration

N=158


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The result implies that the logistics area in which collaboration is performed, and theactions undertaken are independent of each other, i.e. no specific actions are undertaken inspecific logistics areas.

Driving forcesFrom a theoretical point of view, collaboration among supply chain members results inmany positive effects. On a general level lowered total costs, improved service andshorter lead times are often mentioned. Also more intangible effects, such as the wishto strengthen the companys market position and increase its competitiveness, can beseen as driving forces. In the questionnaire the driving forces for the collaboration werecategorized and measured by two main factors: cost and service. Figure 6 shows themean values and distribution of the respondents for the results[9].

The results indicate that both cost and service are considered as important reasonsfor setting up collaboration. Of the respondents, 72.6 percent have answered four orfive to the question of how important cost related factors were. The same figure forservice related factors was 95.3 percent. The findings are in line with previous

survey-based research made by Spekman et al. (1998), who found that the mostimportant reasons to engage in SCM collaboration could be found both on issuesrelated to cost reduction as well as service. The most important reasons for this,according to their study, were increased end-customer satisfaction, improved profits,satisfy supplier/customer requests and reduction of overall operating costs.

BarriersAs mentioned in the introduction, research indicates that surprisingly little collaborationamong companies can be seen in supply chains. Despite the many obvious advantages,collaboration is still something unusual. Furthermore, existing collaborations are facedwith shifting results of their collaborative efforts (Smaros, 2003).

A reason for the absence of logistics collaboration and positive effects could be thatbarriers for collaboration have not been successfully tackled. Two main categories ofbarriers can be identified in SCM literature; those related to technology and thoserelated to human beings (Sandberg, 2005).

As described above, the respondents had a rather good SCO and experienced a lowdegree of problems related to trust, personal chemistry, etc. When it comes to technologyrelated problems, this variable had the second highest mean value after the variable

Figure 6.Mean values for variables

measuring the drivingforces for the collaboration

0% 20% 40% 60% 80% 100%


21 43 5

Mean

4.43

3.87Cost related factors

N=146

Service related factors

N=151



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investigating problems with different logistics competences between the participatingactors. The results are in accordance with previous research (Hoffman and Mehra, 2000),and show that technology related problems still occur and cannot be ignored.

EffectsNine statements on a five-point Likert scale ranging from disagree to completelyagree investigated to what extent the respondents had experienced specific effects ofthe collaboration. Figure 7 shows mean values and distribution of answers for the ninestatements.

As can be seen in the figure, more positive effects are in general experienced onservice related issues than cost related ones, even if differences are small. Apart frompositive effects directly connected to either cost reduction or service improvements,this study also shows the more intangible effects of collaboration, i.e. increasedcompetitiveness, clearer division of responsibility between partners, and moremeasurements and follow ups. With factor analysis it was concluded that thesevariables were correlated to the cost effects as well as the service effects.

Figure 7.Mean values of variablesinvestigating experiencedeffects of the collaboration

0% 20% 40% 60% 80% 100%

More measurements and

follow ups

N=153

Clearer division ofresponsibility between partners

N=149

Respondent has achieved lower

costs

N=1503.55

3.59

4.11

3.72

3.88

3.82

3.52

3.41

3.88


21 43 5 Mean

Respondent has been

more competitive

N=146

Improved lead times

between companies

N=156

Respondents service towards other

actors has been improved

N=154

Partners service towards

respondent has been improved

N=152

Respondents service towards

partner has been improved

N=155

Partner has achieved lower costs

N=138


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In cases with dyadic collaborations, this study also investigated the impact thecollaboration had on relations with other companies on the other side of therespondents company. Respondents with a supplier collaboration were askedquestions about its impact on relations with their customers and vice versa. These

effects are shown in Figure 8. From the figure it can be concluded that improvedservice towards other members of the supply chain is the most experienced effect. Thisis valid for both types of dyadic collaborations, i.e. independent of whether thecollaboration is upstream or downstream in the supply chain.

Three major contributionsBelow some of the most interesting results on a more aggregated level are summarizedinto three major contributions. First, there is a clear relationship between the intensity ofthe collaboration and the positive effects experienced from the collaboration. Second, theresults indicate that top management is an important driver for a higher intensity of thecollaboration. Third, there are major differences between SCM theory and practice.

Intensity drives positive effectsThe findings from the survey show that:

. there is a strong relationship between the process orientation, the degree of jointoperational planning, and intensity of information sharing; and

. that the intensity of these aspects are positively related to the experienced effectsof the collaboration.

Several analyses showed that the respondents degree of process orientation, intensityof information sharing and degree of joint planning are closely related to each other.On a general level it can be stated that more of one thing also means more of the other

two, indicating a positive spiral of intensity (Sandberg, 2005).The results are in accordance with SCM literature, i.e. having a clear processapproach can facilitate and be the starting point for the participating actors to increase

Figure 8.Experienced effects on

relations with actors onthe other side of the

respondents company

0% 20% 40% 60% 80% 100%


21 43 5 Mean

3.13

3.09Increased collaboration

N=109

Increased and faster

information sharingN=109

Improved service by the

respondent towards other actors

N=112

3.63



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information sharing and the degree of joint planning since the advantages will be moreobvious. However, this study only investigates statistical relations and what comesfirst of the three aspects in the collaboration is therefore not investigated. Mostprobably, it would not be possible to make a strictly causal order of the aspects. For

example, as stated above a collaboration could start with a clear process approach andcause more intensive information sharing due to an increased understanding of theneed for sharing more information. The opposite order is however also possible; anintensive information sharing could force the actors involved to specify theircollaboration in terms of a process in order to be able to use the shared information in amore efficient way. Furthermore, a need for an intensive information sharing could

justify implementation of EDI between the partners, which in turn could demand aprocess definition to enable its proper use.

In the following section the effects experienced and the variables measuring processorientation, information sharing, and joint planning are discussed.

Process orientation and effects. Analysis indicated a relationship between the degreeof process approach adopted and the experienced effects of the collaboration. To startwith, respondents with a defined process for their collaboration experience asignificantly clearer division of responsibilities between themselves and theirpartner/partners. As discussed above, the description of a process will increase theawareness of the activities involved and contribute to a better understanding of thecollaboration. Thus, a clearer division of responsibility between the participating actorscan be a consequence of a clear process approach. It can also, together with propermeasurements, be an important driver for improvements in the collaboration. A cleardescription of responsibility facilitates and encourages actions for improvements.

Respondents with a defined process are also likely to measure the effects of thecollaboration more, both in terms of costs and lead times as well as service. The use ofmeasurements is in turn positively related to the effects experienced in the collaboration;

respondents who measure more also experience better effects of what they measure. Information sharing. The many promising effects of information sharing in supply

chains are another fundamental feature of the SCM literature. On a general level thiscan be confirmed in this study; respondents reporting more positive effects also shareinformation more frequently. However, due to differences in intensity of informationsharing among the types of collaboration[10] and a too low-response rate, the resultscannot be considered as independent from the type of collaboration that is performed.

Joint planning. The explanation as to why a higher rate of joint planning improvesthe effects of collaboration can also be explained by reduction of uncertainty. Jointplanning can be considered as a kind of information sharing since it demandscommunication between the actors. For example, in the SCM-based concept of CPFR,this communication with a constant negotiation connects and integrates the actors

with each other, which in turn leads to problem solving and improved effects (Barrattand Oliveira, 2001).

This study can confirm the relationship between a high level of joint operationalplanning and more positive effects from the collaboration. It is above all service relatedeffects, lead time improvements, and other more intangible effects that are improvedby joint operational planning. The expected positive relation between a high degree of

joint strategic planning of supply chain activities and better effects cannot beconfirmed by this study. The lack of a relationship could be due to the fact that the

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study also shows a weak relationship between a higher level of strategic planning andincreased intensity in the collaboration (concerning actions undertaken in thecollaboration). Thus, a reason for the lack of relationship could be that it is the intensitythat causes the positive effects, and a high degree of joint strategic planning does not

contribute to this.The process approach and intensity in information sharing and joint operational

planning is however not easily achieved and is not only related to positive effects of thecollaboration. In some cases it also leads to more problems experienced in thecollaboration. For example, respondents with a defined process experience moreproblems with the variable different goals of the participating actors. This shouldhowever not be interpreted as if documentation of processes makes the collaborationmore difficult. Instead, this result should be interpreted as respondents who work withprocesses in their collaborations become more aware of the problems and thus have abetter possibility to deal with them and minimize them. Actors collaborating withoutprocesses may not even be aware of some of the problems.

Furthermore, respondents with more intensive information sharing (i.e. sharing atleast two types of information with their partner at least once a week) also experiencesignificantly more technology related problems. The reason for this could be that theserespondents also use EDI and internet-based EDI more often (this relation wasdiscussed in chapter 5.2.3 above). However, when considering the mean values[11]between respondents with more complicated technology (respondents using EDIand/or internet-based alternatives) and respondents using traditional means ofcommunication (telephone, e-mail, etc.) no such significant difference can be found.Thus, technology related problems are experienced to the same extent by thoserespondents who only use traditional communication means.

Top management is an important driver

Several analyses indicate that the involvement of top management in the ongoingcollaboration seems to be positively related to the intensity of what is done in thecollaboration. Top management is more involved in collaborations that have morefrequent information sharing and joint operational planning of the supply chainactivities. A reason for this could be that involvement by top management gives thelogistics department the authority to carry out the collaboration and bring it to a moreintensive level. The involvement of top management means an increased focus on thecollaboration and is regarded as a necessary prerequisite to enable SCM-basedcollaboration to function (Ireland and Bruce, 2000).

For the same reason a higher degree of involvement from top management shouldalso increase the degree of joint strategic planning between the actors. No such relationcan however be found in this study; a higher degree of top management involvement in

the ongoing collaboration is not positively related to the degree of joint strategicplanning of supply chain activities. A reason for this result could be that, it is theintensity of the collaboration on an operational level that causes the positive effects ofthe collaboration, rather than, if the collaboration includes joint planning on a strategiclevel. The results can be interpreted as top management engaging in operational issuessince these are connected to the intensity of the collaboration. It is the intensity that inturn causes the positive effects of the collaboration, rather than joint planning on astrategic level.


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This study also shows that top management involvement in collaboration with asupplier is important for increasing collaborative efforts on the other side of thecompany, i.e. the customer side. This relationship is also valid for the opposite situation,i.e. the more top management attention in customer collaboration, the more collaborative

efforts can be found on the focal companys supplier side. It could be argued that a highdegree of commitment in the collaboration makes the top management aware of thepossibilities for the other side of the company. Thus, thanks to the top managementinvolvement in the dyadic collaboration on one side of the company, relations on theother side of the company could be positively influenced.

Andraski (1998) claims that external as well as internal collaboration will onlybecome reality if driven by effective leadership (Andraski, 1998, p. 11). Topmanagement must understand what the collaboration means (Ireland and Bruce, 2000),and have an active role and be involved in the collaboration. Note that the worddriven used by Andraski above indicates that support is not enough. In this study,the word involvement has been used in order to distinguish from top managementsupport.

SCM in theory and practice differsBased on the survey results, it can be concluded that the respondents collaborations toa high extent are concerned with operational issues and that the degree of strategicactivity is very low. This result confirms previous research (Spekman et al., 1998) thatSCM as it is discussed in conceptual articles is a rare occurrence. Collaboration basedonly on operational issues cannot be regarded as completely integrated SCM; it is onlywhen strategic issues are involved that a shift towards real SCM-based collaborationcan be possible.

The low level of strategic issues in the collaboration could also be the reason whythe respondents SCO seems to be rather good among the respondents and independent

from the effects experienced. The operational content in existing collaborations doesnot challenge the respondents SCO since such collaboration can be managed withoutdemanding a change of mindset among the participating actors.

Except for the absence of strategic issues in the collaboration, the results alsoindicates serious differences in attitude and behavior depending on whether thecollaboration partner is a supplier or customer, despite the fact that no differencesconcerning background variables such as, e.g. company size and characteristics of theproducts can be found. The most important differences are shown in Table IV.

Supplier collaborations Customer collaborations

More influence on the shape of the

collaboration

More top management involvement

Less problems with the sharing of costs andrewards between the parties

More intensive information sharing and useof EDI and internet-based alternatives

Involves more strategic planning More technology related problemsMore improvements in service towardscollaboration partnerMoe increased competitiveness

Source: Sandberg (2005)

Table IV.Differences betweenrespondents withsupplier and customercollaborations

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In comparison to supplier collaborations, customer collaborations seem to be moreimportant for the focal company and are in general more advanced. They are gettingmore attention from top management and contain more intensive information sharing.Related to this, (probably as a consequence thereof) EDI and internet-based

communication means are used to a higher extent. This is also mirrored in the barriersexperienced in the collaboration; respondents collaborating with their customers alsoreport significantly more technology related problems.

Despite the lower top management involvement, respondents with a suppliercollaboration consider their collaboration to involve more strategic planning than theircolleagues with customer collaborations (even if the rate is still low). Note that, this isthe respondents own opinion and that the strategic planning is made within their owncompany; no differences can be found when considering the degree of joint strategicplanning in the collaborations. This could be due to the fact that these respondents alsofeel that they have significantly more influence on the design of their collaborations.The more the company can influence and manage the collaboration, the more strategicit becomes for the company.

When considering the effects of the collaboration the difference between upstreamand downstream relations becomes even clearer. Respondents with customercollaborations experience to a significantly higher extent that their service towardstheir partner has been improved and that they have been more competitive as aconsequence of their collaboration. These results are in line with Mattsson (2002), whodiscusses differences in attitudes between suppliers and customers. The differencescan be explained by the fact that respondents with customer collaborations often findthemselves in a weaker negotiation position than their colleagues with suppliercollaborations. They feel that they need to struggle to keep their customers andtherefore the service towards their customers becomes important. The collaborationcan also increase their competitiveness due to the closer ties with the customer, whichin turn strengthens the opportunities to keep the customer (Mattsson, 2002).

According to the conceptual SCM literature the differences shown in Table IVshould not exist. SCM philosophy advocates a focus on end customer demand andthat the whole supply chain should be managed as one single entity. Differencesin behavior, depending on if the partner is a supplier or a customer, tend to be outof the scope for most SCM literature. This pattern can have serious consequencesand risk the opportunity for creating a true SCO among the actors in the supplychain.

DiscussionThe description of logistics collaboration given in this paper shows that it is a moreintensive collaboration on an operational level that contributes to the achievement of

better results, and that top management involvement is an important driver for:. increasing the intensity of the existing collaboration; and

. increase collaborative efforts with other members of the supply chain.

The study also shows that the companies are still concerned with operational issuesand that their collaborations are seldom brought to a strategic level. In addition to this,the results indicate that there are serious differences in attitude and behavior betweensupplier and customer collaborations. The results are shown in Figure 9.


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In their study, Spekman et al. (1998) concluded the following:

In summary, we have implied that business has yet to crack the code; supply chain partnersstill do not share a common vision or react to the same set of metrics. If this is true,opportunities have been lost and many challenges remain. For a number of firms, talk ischeap and supply chain management is still only part of todays jargon. A number of firmsare sacrificing cost effectiveness, revenue enhancement, and customer satisfaction becausethey are unable to work effectively across the firms that comprise their supply chains

(Spekman et al., 1998, p. 648).

Related to the results presented in this study, the conclusion made by Spekman et al.(1998) eight years ago is still valid. Indeed, SCM as described in theory still seems to bemore of an utopia than reality, and many opportunities for cost as well as serviceimprovements have been lost.

Compared to theory, the most striking difference is the absence of a strategicdimension to the collaborations, something that is seen as a prerequisite for success bymost SCM theorists (Cooper and Ellram, 1993; Lambert and Cooper, 2000; Mentzer et al.,2001). Even if collaboration on an operational level is good, the logic behind the SCMtheory says that including a strategic level will have an even greater positive impact onthe supply chain performance. Thus, it could be questioned whether all the promised

supply chain improvements will be realized unless the collaboration is taken to astrategic level. This does not however mean that the operational level of thecollaboration should be ignored or underestimated. Successful collaboration meansworking on both levels (Moss Kanter, 1994), and the results from this study clearlyconfirms that the operational collaboration that is performed is positive in terms ofeffects achieved.

The results imply that one of the main questions of concern for future researchbecomes how strategic elements can be brought into the collaboration. Even though

Figure 9.The main results from thestudy

Collaboration Collaboration

The more intensive collaboration, the better effects are experienced

There are differences

between customer and

supplier collaborations

Top management is an important driver

Supplier Focal Company Customer

Source: Based on Sandberg (2005)

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some work on how strategic partnership in the supply chain should be created andmanaged exist (Christopher and Juttner, 2000), more research in this area has to be done.

Referring to the results of this study, top management involvement is an importantdriver for successful implementation of SCM. This issue has been discussed and

stressed by many authors within the SCM field (Andraski, 1998; Ireland and Bruce,2000) and in strategic alliance literature (Moss Kanter, 1994). However, despite itsimportance, the role of top management has not been investigated in-depth. Statementslike: top management support is a prerequisite for successful SCM-basedcollaboration are often made, but this is not enough anymore. A more detaileddiscussion about the role of top management would help to better understand what ittakes to achieve strategic collaboration. This could be one of the most important piecesin the big SCM puzzle that is not yet in place.

Notes

1. The defined population in this study is manufacturing companies (companies with SNI

codes starting with the letter D).2. One-sample t-test shows that the values for total logistics costs and service between the

companies are significant separated from 3.

3. Measured on a five-point Likert scale ranging from not at all to to a high degree.

4. The questions were put as a statement as to what extent the collaboration had changed theplanning of supply chain activities. The answers were given on a five-point Likert scaleranging from do not agree to completely agree.

5. Investigated with ANOVA analysis.

6. Note that the mean values in days are only based on those respondents that share the certaintype of information at least once a month (e.g. 111 respondents, or 71 percent, shareinformation about production planning at least once a month and the average number of

days between sharing for these respondents is 9.09 days).7. The answers were given on a five-point Likert scale ranging from do not agree to

completely agree which means a high involvement for high values.

8. Ranging from The collaboration is not performed in this area. to The collaboration is to agreat extent performed in this area.

9. The questions were put as a statement and the answers were given on a five-point Likertscale ranging from do not agree to completely agree.

10. Respondents with customer and triadic collaborations share significantly more frequentlyinformation with their partner/partners.

11. Investigated with ANOVA analysis.

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About the authorErik Sandberg is a PhD candidate in Logistics Management at Linkoping University. His

research includes logistics collaboration and the role of top management in a companys supplychain management practices. Erik Sandberg can be contacted at: [email protected]

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