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Naesens, A Swift Response Framework for Measuring the Strategic Fitfor a Horizontal Collaboration

Naesens, A Swift Response Framework for Measuring the Strategic Fitfor a Horizontal Collaboration

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Int. J. Production Economics 121 (2009) 550–561
A swift response framework for measuring the strategic fit for ahorizontal collaborative initiative
Kobe Naesens
Ã
, Ludo Gelders, Liliane Pintelon
Centre for Industrial Management, Katholieke Universiteit Leuven, Belgium
Available online 27 April 2007
Abstract
Companies operate globally and face increasing competition. Collaboration between companies could be a critical factorto remain competitive. Extensive academic research addressed the collaboration inside a supply chain (verticalcollaboration). Despite persuasive research, a literature survey indicates some major theoretical shortcomings, as presentedin this paper.A major theoretical and practical shortcoming is the lack of a strategic decision support framework for theimplementation of horizontal collaboration (collaboration between different supply chains). An appropriate collaboration-feasibility test is needed here. Two companies strategically ready to work together should first test if no insurmountablepractices inhibit the collaboration. If such practices are present, initiating a collaborative strategy will be probably a wasteof time and effort. This paper starts with determining the key elements influencing feasibility based on a literature studyand in-depth interviews in different companies. The Supply Chain Operations Reference (SCOR) model is used. Thesequantitative elements are hierarchically classified and are combined in a feasibility-test model. At the same time, lower-level hierarchical qualitative elements such as company characteristics are aggregated using the analytic hierarchy processas a method of multi-criteria decision-making and are integrated in the model in order to evaluate the differentcollaboration-types. The model is validated by means of several case studies of which one is presented in this paper.
r
2007 Elsevier B.V. All rights reserved.
Keywords:
SCM; Collaborative supply network; Strategic fit; AHP; Case study
1. Introduction
Companies are continuously searching for com-petitive advantage. This is necessary due to shorterproduct life cycles, shrinking profit margins, in-creased delivery requirements and increased globalcompetition. To maintain a competitive advantage,working together or collaborating could be a criticalsuccess factor. Collaboration may take severalforms such as informal meetings or formal teamswith members of different companies.In general, two types of collaboration can bedistinguished, namely vertical and horizontal colla-boration. The former can be defined as collabora-tion between parties performing complementaryactivities or services while the latter indicates thecollaboration between parties performing the sametype of activities and/or services (Naesens et al.,2004b;Cruijssen et al., 2005). Traditionally, collaboration was limited to part-ners inside the supply chain, which was considered
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www.elsevier.com/locate/ijpe0925-5273/$-see front matter
r
2007 Elsevier B.V. All rights reserved.doi:10.1016/j.ijpe.2007.04.004
Ã
Corresponding author.
E-mail address:
 
as an isolated system (vertical collaboration).Collaboration with companies of another supplychain (horizontal collaboration) is not yet wide-spread. Most horizontal collaboration can be foundbetween companies of two non-competitive supplychains but collaboration can also exist between twodirectly competitive firms. A supply network isconsidered to be a non-serial structure and thus astructure consisting of vertical and horizontalcollaboration (Naesens et al., 2004a).
2. Research focus
Extensive academic research addressed thecollaboration inside the supply chain or verticalcollaboration. Almost all scholarly business jour-nals (e.g. Operations & Production Management,Management Science, International Journal of Production Economics) published optimizationmodels concerning this type of collaboration.Despite extensive academic research mentioningthe importance of horizontal collaboration, studies(Naesens et al., 2004a;Cruijssen et al., 2005) showed the reluctance of companies to implement a supplynetwork. A strategic decision support frameworkfor implementing horizontal collaboration is not yetavailable.In this research, we focus on developing adecision support framework for the implementationof a specific type of horizontal collaboration,namely resource pooling in inventory management.The framework is depicted inFig. 1. In the first step,the objective of the collaboration should beidentified. When focusing on pooling warehouses,the main reason to collaborate is mostly to diminishthe handling and overhead costs. In the second step,the decision maker should walk through thedifferent ‘levels’ of the framework. The frameworkdeveloped consists of three levels. The first levelexamines the strategic fit between companies. The‘‘as is/to be’’ situation and potential compatibilitiesas well as possible insurmountable practices areexamined. In this level the potential partners areidentified. Until here, no clear picture on the impactof the collaboration on costs and benefits isavailable. The second level therefore identifies thecosts and benefits for each partner. The decisionmaker can then decide whether pursuing thecollaborative initiative is wise and if so, who shouldbe the preferred partner(s). The third level considersimplementing and sustaining the collaboration.Psychological elements such as trust are alsoconsidered. This (third) level is described inNaesenset al. (2006). This level presents some milestonesnecessary to enhance trust between the partners(including contractual agreements and the like).This paper addresses the first level, the strategicfit. The objective of the potential collaboration hasbeen identified but a swift strategic fit test shouldbe performed in order to identify the potentialpartners. The concept of fit received considerableattention. Studies (Chandler, 1962;Lawrence and Lorsch, 1967;Thompson, 1967;Radder and Louw, 1998) defined this concept as the fit between theorganizational structure, strategy, and/or the widerenvironment (external fit) and the fit among groupsor units within the organization (internal fit).Furthermore,Smith and Reece (1999)refer toSkinner (1969)who described, already in 1969, theneed for companies to have the proper external fitwhen developing and implementing a manufactur-ing strategy.The focus of this research is on the match betweentwo companies, having their own operations andenvironment, with regard to horizontal collabora-tion (resource pooling in inventories). It takes timeand resources to establish, maintain and developbusiness relationships between firms (Andersonet al., 2001). Therefore, checking the compatibilityof the two companies in advance is very important.The deliverable of this part of the research is apractical tool for checking the strategic fit betweentwo companies willing to initiate resource poolingin inventory management. Decision makers of both companies should separately check, based oncharacteristics of both companies, if they do fitor not.
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Level 1 : strategic fitIdentifying preferred partner(s) and defining goalsPooling items, % of total stock, etc.Agreements on sharing costs / benefitsLevel 2 : strategic / tactical decisionsBuilding and maintaining trustLevel 3 : Implementing / maintaining
STEP 1: objective of collaborationSTEP 2: framework 
 As is / To be
(best practice)Required improvements ?Insurmountable practices ?
Fig. 1. Decision support framework for horizontal collaboration.
K. Naesens et al. / Int. J. Production Economics 121 (2009) 550–561
551
 
3. Methodology
This study is based on a literature study and in-depth case studies in eight companies located inBelgium. The companies have different strategies,products and environments. Each of the first six(A–F) companies mentioned inTable 1already hada collaborative partnership on inventory poolingwith a company in the same sector. Most partner-ships were successful except case study C because of a lack of strategic fit. Furthermore, company G andH were added to the study to check if the tooldeveloped is also usable in the so-called ‘soft-sector’when the collaborative initiative is not focused oninventory pooling.All observations and interviews were performedby one of the authors together with a master’sstudent of the Faculty of Psychology of theKatholieke Universiteit Leuven, Belgium. Thepersons interviewed were supply chain managersor board members and were selected because theywere in charge of implementing or sustaining thecollaborative initiative.The study started with a list of 300 differentelements, based on literature study, conferencepapers and informal contacts with practitioners.A more in-depth literature study revealed thatthis list could be drastically reduced based oncriteria as relevance, overlap, measurability, andthe like. Eventually 58 performance elements wereretained. The case studies confirmed that theseelements covered all relevant issues for the hor-izontal collaboration concerning resource pooling ininventory management.During the interviews, both a questionnaire witha Likert-scale and open-questions have been used.The questionnaire has been structured around thethree phases mentioned byGray (1989): i.e. problemsetting, direction setting and implementation. Anextra phase was added incorporating general ques-tions related to the partnership that were notspecific for a phase mentioned byGray (1989). Itis not the purpose of this paper to provide statisticalevidence on the selection of the criteria but rather toprove the practical relevance of the tool. Validationof the tool has been performed by different casestudies of which one is described at the end of thispaper.Furthermore, for each of the performance attri-butes, metrics have been determined based on theSupply Chain Operations Reference (SCOR) model(Supply Chain Council, 2005). The performanceattributes have been hierarchically classified todetermine if collaboration is possible. Three differ-ent alternatives have been checked: no collabora-tion, informal collaboration or partnership. Toachieve this, the analytic hierarchy process (AHP)has been used because of the hierarchical nature of the problem and the independency of each of theidentified performance attributes.
3.1. Principles of AHP 
When applying AHP, a hierarchical decisionscheme is constructed by decomposing the decisionproblem into its decision elements. The importanceor preferability of the decision elements arecompared in a pair-wise manner with regard to
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Table 1Case study companiesCompany Sector Categorization Size Person interviewed CollaborationA Transportation Belgium-France Small Sales manager Resource (truck) poolingB Transportation International Medium Staff member Resource (truck) poolingC Telecom National Large Purchasing & contractingofficerR&D poolingD FMCG Multinational Large Customer businessdevelopment managerResource (warehouse)poolingE Chemical Multinational Large Procurement & logisticsmanagerProduction poolingF Beverages Multinational Large Senior ofcer training &developmentTraining & developmentpoolingG Knowledge institution International Large Head information divisionpersonnel departmentCollaboration personneldepartmentH Service provider forPrevention and securityNational Large Prevention advisor forpsychological aspectsCollaborationpsychological aspects
K. Naesens et al. / Int. J. Production Economics 121 (2009) 550–561
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