Developing Measurement of Collaboration Between the Supplier and Client Firms: A Study on Networked Firms in the Natural Forest Products Industry

Developing Measurement of Collaboration Between the Supplier and Client Firms: A Study on Networked Firms in the Natural Forest Products Industry

Muhammad Mohiuddin, Egide Karuranga, Yuliang Cao
Copyright: © 2024 |Pages: 24
DOI: 10.4018/JGIM.342838
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Abstract

This study recommends a suitable model for evaluating supply chain collaboration in the natural forest products industry. We follow a two-step analysis: The first-order measurement model is leveraged to assess collaboration level, and the second-order confirmatory factor analysis develops the collaboration level by using four indicators representing customer and supplier firms as well as two specific indicators for each of them. Four items are common practices for both sides: joint sales forecasting, exchange of basic information, joint planning, and joint delivery improvement. Two practices are highly oriented toward customers: resource sharing of logistics assets and exchange of performance evaluation. Business-to-business practices engaged mostly with suppliers include the implementation of replenishment systems and joint new product development. Collaboration measurement between suppliers and client firms contributes to effectively manage the relationship between the supplier and client firms and can improve the competitiveness of participating firms in the network.
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1. Introduction

Studies on supply chain management and inter-firm collaboration are emerging as a preferred research field across Operation management, Corporate sustainability, and Strategic management, among others. In the case of the supply chain, there is an opportunity to develop new models integrating new technologies such as Information technology (IT) to support collaborative practices in the natural resource industry supply chain that usually is slow to adopt advanced technology (Choudhry & O’Kelly, 2018; Al-Azad et al., 2022) and different from other industrial sectors (Lezoche, Hernandez, Díaz, Panetto, & Kacprzyk, 2020). Similarly, there is an opportunity to improve supply chain management in natural resource sectors by streamlining production value chains and inter-firm collaborations among the participant firms. The supply chain management of the forest products industry differs from other manufacturing industries and has several specific characteristics necessary to fulfill the needs of its end consumers for better efficiency and higher productivity. For example. There are several different types of activities involved in the forest industry, such as harvest planning, harvest organization and control, operations, transport, and logistics as well as timber sales (Müller et al., 2019) along with different types of organizations such as forest enterprises, timber enterprises as well as independent contractors with competing, complementing and independent activities (Müller et al, 2019). Despite the increased interest in this research area, the measurement of supply chain collaboration (SCC) in the forest industry remains scattered in multiple disciplines (Injazz and Paulraj, 2004; Rota et al., 2016; Sanders and Premus, 2005), and few studies have been undertaken using data from the natural forest industry. Most of the supply chain measurement models have been developed for the manufacturing supply chains. Due to the differences between the manufacturing supply chain and natural forest industry supply chains, a measurement model of the supply chain collaboration level specifically for the natural forest industry is needed to address effectively the collaboration level and types of collaboration. Moreover, the natural forest industry plays an important role in the socio-economic development of many countries, including Canada. This study fills this gap by developing a supply chain collaboration index in the natural forest industry. In an era of global value chain and dispersion of activities, competition is no longer among firms or products but rather depends largely on the capability to coordinate dispersed activities along the supply chain. Thus, collaboration among the various stakeholders in the forest supply chain becomes indispensable for the overall competitiveness of the value chain (Aschemann-Witzel et al., 2017; Mohiuddin and Su, 2014; Ramanathan, and Gunasekaran, 2014; Soundararajan, and Brown, 2016) and sustainability of participating firms (Schaltegger and Burritt, 2014). Supply chain collaboration among the value chain stakeholders can reduce transaction costs and risks and give access to resources and competencies from the collaborating firms, thereby creating a sustainable competitive advantage. Collaboration allows participating firms to combine their resources, knowledge, and capabilities to speed up their new product and process development, increase market share, and focus on core competencies to improve their specialization further. Collaboration contributes to inter-organizational dynamics by strengthening knowledge absorption capacity, structuring solutions, and motivating activity around a commonly defined goal (Van Hoof, and Thiell, 2014). However, SCC in the forest value chain is relatively low compared with the manufacturing industry. The forest supply chain is very often considered discrete and disconnected entities performing businesses based on short-term transactions with distorted information from tier-one suppliers or clients (Feng & Audy, 2020). Such circumstances necessitate in-depth study of SCC in the forest industry and its constituents to capitalize on the benefits that SCC brings to participating firms. However, few firms have truly captured the benefits emanating from the SCC despite its great potential (Min et al., 2005), and more research is needed to explore this vital issue (Goffin et al., 2006). Although many studies have been undertaken on SCC (Allred et al., 2011; Cao et al., 2011; Fawcett et al., 2011; Lambert et al., 2004; Morali and Searcy, 2013; Nyaga et al., 2010) in the manufacturing or service industry, more in-depth study is needed to understand the characteristics and natures of SCC in the natural forest products industry. Despite the existence of several well-known studies, few have addressed the exact nature and attributes of SCC (Cao and Zhang, 2011) in the forest industry. This study seeks to fill this gap by providing a reliable and valid measurement model of collaboration intensity and its determinants for the natural resource industries like the forest product industry. In fact, research on SCC is scattered among multiple research paradigms. Research in marketing and management focuses on such factors as commitment (Handfield and Bechtel, 2002); studies in operation research concentrate on such factors as information sharing and inventory systems (Srinivasan and Swink, 2015; Garcia, Grabot, & Paché, 2023); and information systems research focuses on information technology (IT) capabilities (Chi, Huang, & George, 2020). Fragmentation of research in multiple research streams has inhibited a thorough understanding of phenomena (Barringer and Harrison, 2000) and has limited our ability to explain and evaluate the level of collaborative efforts (Saeed et al., 2005) in the natural forest products industry.

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