The Study of Innovation Management Model: Trust, Mutual Assist, Thanksgiving

- An Example of a Healthy Chain Retail Stores

Student: Li-Siang Lin

Advisor: Jing-Er Chiu, Ph.D.

Contents

• Abstract• Introduction• References• Research method• Expected results

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Abstract(1/3)

• Consumers gradually accept organic crops, and this causes the booming of chain retail health food stores.

• The concept of "trust" in the supply chain of suppliers or partners is the object of study.

• The impact of core values - "trust", "mutual assistance" and "thanksgiving" on innovation management model and the supply chain performance.

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Abstract(2/3)

• Identify the key performance indicators of the supply chain through literature review and expert questionnaires and compare with the performance of CPFR.

• Finally, analyze the results of this study, and find their innovation management model for this health retail chain store.

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Abstract(3/3)

• Part of the expected results, make use of a healthy retail chain stores based on "trust" the dimensions of the four major competitive advantage: speed, quality, cost and flexibility and find out the key of dimensions, to strengthen and improve the supply chain processes.

• Make some conclusions to the healthy retail chain stores as a practical reference.

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Introduction

• Research Background and Motivation

• Research purposes

• Research framework and processes

• Limitations of the research

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Research Background and Motivation(1/4)

7Mechanistic Organic

Research Background and Motivation(2/4)

• Mechanistic organization: Fewer span of control, vertical communication, decision-making slowed, employees lack of the autonomy, flexibility weak, higher management costs.

• Organic organization: the group is a kind of flat that include cross-functional, cross-level and cross-department, reduce level, enhance employees autonomy, no excessive standardization work or regulations, the organization has a more flexible, comprehensive communication network. 8

Research Background and Motivation(3/4)

• The object of this study is a healthy supply chain stores, that branch in Taiwan has already reach as high as eighty-eight, the overall business organizations through “Trust" and " Mutually Assist " and “Thanksgiving" for the core values , and establish a system of trust between consumers and producers.

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Research Background and Motivation(4/4)

• CPFR:A collaborative process whereby supply chain trading partners can jointly plan key supply chain acidities from production and delivery of raw materials to production and delivery of final products to end customers. Collaboration encompasses business planning, sales forecasting, and all operations required to replenish raw materials and finished goods.

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Research purposes(1/2)

• Analysis of the concept of "trust " for a healthy retail chain in the supply chain between suppliers or partners.

• The impact of core values - "trust", "mutually assist" and "thanksgiving" on innovation management model and the supply chain performance.

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Research purposes(2/2)

• Compared the performance of CPFR between the object and suppliers.

• The literature review and expert questionnaire to identify the key performance indicators of the supply chain, with CPFR there the similarities and differences, and define innovation management model belonging to the shop.

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Research framework and processes

• Ch1: Introduction.

• Ch2: References.

• Ch3: Research method.

• Ch4: Expected result.

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Identify research problems

Results and future research

Definition of innovation management model

Search for relevant research literature

Analyze the trust of supplier and find the difference with CPFR

Limitations of the research

• Across a wide range of healthy organic retail chain.

• For familiar with the study of the organizational structure, the path of the supply chain and operational procedures.

• The research will be focus on the healthy retail chain Douliu stores, the Taiwan branch has been up to eighty-eight stores since 1998 as the research object.

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References

• Organic agriculture

• Collaborative Planning Forecasting and Replenishment

• The concept of trust

• Innovation management model

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Organic agriculture(1/2)• In 1924 Dr. Rudolf Steiner took the lead

advocate of organic crops cultivation method. Until the 1970s, the oil and energy crisis, organic agriculture was gradually by the national attention to force governments to re-examine the agricultural policies and norms.

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Organic agriculture(2/2)

• The definition of organic agriculture from Council of Agriculture for: Organic agriculture is to comply with the principle of circulating sustainable use of natural resources, does not allow the use of synthetic chemicals, the emphasis on the conservation of soil and water resources and the ecological balance of the management system, and to achieve the goal of agricultural production of natural safety of agricultural products.

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Collaborative Planning Forecasting and Replenishment

• CPFR: Introduction

• CPFR: Guiding principles

• CPFR: Mission and step

• CPFR: Model and process

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CPFR: Introduction

• Use of Internet technology, the public share downstream end of the supply chain inventory and sales information, under the guidance of this group, retailers and manufacturers within the supply chain collaborative planning, forecasting and replenishment, and also jointly bear the consequences and responsibility.

• VICS first pronounce CPFR in 1998.• CPFR Guide lines(2004):The process flow between the two

corporate partners to the formal specification. Enterprises of both sides must agree to collaborative planning and forecasting, and monitoring the entire process until the success of the operation between replenishment, and then verify the occurrence of the abnormal condition, and finally take feasible solution to solve. 19

CPFR: Guiding principlesGuiding principles The main purpose

Emphasized consumer-focused and successful pursuit of the value chain

CPFR scenario-based architecture, as the goal to improve customer value and identify each process core competencies.

To share forecast demand planning in accordance with the needs of consumers

Repeated exchange of information among partners, to improve demand planning capabilities, making the supply chain predictability to improve.

Enterprise risks should be shared in order to eliminate supply constraints

To cope with supply constraints, the retailer can switch orders production mode, in order to obtain a higher interest.

Source: Chang, P. L. et al.(2006), Production management .20

CPFR: Mission and step

• Strategy & Planning: Establish the ground rules for the collaborative relationship. Determine product mix and placement, and develop event plans for the period.

• Demand & Supply Management: Project consumer (point-of-sale) demand, as well as order and shipment requirements over the planning horizon.

• Execution: Place orders, prepare and deliver shipments, receive and stock products on retail shelves, record sales transactions and make payments.

• Analysis: Monitor planning and execution activities for exception conditions. Aggregate results, and calculate key performance metrics. Share insights and adjust plans for continuously improved results.

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CPFR: Model and process

Source: VICS website, http://www.vics.org/committees/cpfr/#f122

The concept of trust(1/7)

• Researchers have long maintained that trust is essential for understanding generalized behavior and economic exchanges(Benassi, 1999).

• Trust is taken for granted in business transactions and is more conspicuous in its absence than in its presence (Baier, 2004).

• On a national basis, trust has been shown to be an integral component of a tight syndrome of social, political and economic conditions(Delhey, 2002).

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The concept of trust(2/7)

• Trust is also applied as a framework for considering the dynamics of inter-group and intra-group interactions within and between social contacts at all levels, including family, friends, community, and nations (Hardin, 2002).

• The differences between these definitions illustrate that trust can be viewed on many levels (i.e., global, national, regional, organizational, community-based, interest-based, and interpersonal) with varying degrees in between. It remains a difficult concept to describe due to its dynamic, evolving and multi-faceted nature (Lewicki & Bunker, 1996). 24

The concept of trust(3/7)

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Author Literature

Fukuyama (1995) ; Knack and Keefer(1997)

There is a great deal of recent theoretical and empirical evidence that trust between people fosters cooperation and economic activity and is hence crucial for economic and social development.

R. M. Morgan and S. D. Hunt(1994)

Commitment and trust lead directly to cooperative behaviors that are conducive to relationship marketing success.

The concept of trust(4/7)

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Author LiteratureP. M. Doney and J. P. Cannon(1997) This definition of trust is relevant in an

industrial buying context. A buying firm facing some degree of risk in a purchase situation trust to a supplier or salesperson that the buyer believes is able to perform effectively and reliably (credible) and is interested in the customer's best interests(benevolent).

Gambetta and Diego(2000) When we say we trust someone or that someone is trustworthy, we implicitly mean that the probability that he will perform an action that is beneficial or at least not detrimental to us is high enough for us to consider engaging in some form of cooperation with him.

The concept of trust(5/7)Author Literature

Putnam(1993) Trust is a habit formed during a centuries-long history of "horizontalnetworks of association" between people, covering both commercial and civic activities.

Morgan and Hunt(1994) Trust as the perception of "confidence in the exchange partner's reliability and integrity." Both definitions highlight the importance of confidence and reliability in the conception of trust.

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The concept of trust(6/7)

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Author LiteratureArrow(1974) Trust is an important lubricant of a social

system. It is extremely efficient; it saves people a lot of trouble to have a fair degree of reliance on other people's word.

Inglehart and Baker(2000) Trust is a social construct that is based on generalized relationships.

Nakata and Sivakumar(2001)) The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control the other party.

The concept of trust(7/7)

Source: D. H．McKnight, L． L. Cummings and N． L. Chervany (1998) 29

Innovation management model(1/3)

• The impact of innovativeness on firm performance and economic growth has been of interest to economists for decades (e.g., Mansfield et al., 1971).

• Innovativenessis defined as the adoption of an idea or behaviour—whether pertaining to adevice, system, process, policy, programme, product or service—that is new to the adopting organisation (Zaltman et al.,1973).

• One person or group’s propensity to adopt a new idea or technology early, relative to others, innovativeness. (Rogers and Shoemaker, 1971)

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Innovation management model(2/3)

• Innovation refers to any incremental or radical change embodied in product and process and includes change in value activities such as service and administration (Sher and Yang, 2005).

• Innovativeness has been consistently linked to higher firm performance (Calantoneetal.,2002; Deshpande andFarley,2004)

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Innovation management model(3/3)

32Source: http://amaanali.wordpress.com/tag/organic-structure/

Research Methods

• Research Process

• The frame of questionnaire

• Expert questionnaire process

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Research Process(Conceptual framework)

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Supply chain performance

innovation management

Core value

The performance of CPFR

Cost Flexibility Quality Speed

Trust

Thanksgiving

Mutual Assist

Retail Supplier

Trust analyze

The frame of QuestionnaireCompetitive priorities Definition

Quality strategies Organizations can create customer value by either reducing costs or increasing benefits in the production

equation(i.e., value = benefits / costs).

Cost strategies Focus on continually improving manufacturing processes to increase product reliability and customer

satisfaction.

Flexibility strategies In general terms, flexibility refers to a firm's agility, adaptability, and responsiveness.

Speed strategies Consideration of nothing more than time. For example: time-to-market, lead time and

communication response time.

Source : M. A. Youndt, S. A. Snell, J. W. Dean, Jr., D. P. Lepak(1996) 35

Expert questionnaire process

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Literature collection

Draft questionnaire production

The opinions of experts and scholars

Questionnaire correction

Sent out questionnaires

Expected results

• "Trust" structure of the object and its suppliers, as an important basis of the core values .

• Find the impact level of the core values - "trust", "mutually assist" and "thanksgiving" on innovation management model and the supply chain performance, and gives the results as a reference to this store.

• Compared the performance of CPFR between the object and suppliers.

• Define innovation management model belonging to the shop, and gives the results as a reference to this store.

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