ARTICLE IN PRESS

Int. J. Production Economics 89 (2004) 353–361

Supply chain management survey of Swedish

manufacturing firms
Jan Olhager*, Erik Selldin
.
Department of Production Economics, Linkoping .
Institute of Technology, SE-581 83 Linkoping, Sweden

Received 15 April 2002; accepted 16 January 2003

Abstract

Supply chain management practices and principles are evolving and changing rapidly, e.g. through modern
information and communication technologies. These changes affect the ways supply chains are designed, the way they
are managed, and how planning and control activities take place within these chains. But how far have companies come
in dealing with supply chain issues? This paper investigates supply chain management strategies and practices in a
sample of 128 Swedish manufacturing firms. We specifically study issues related to the supply chain design, integration,
planning and control, and communication tools for managing supply chains. The main findings indicate the following.
The extent to which suppliers and customers are involved in supply chain planning and control is expected to increase
steadily over the next 2 years. The primary priority for the selection of supply chain partners is quality performance.
However, delivery dependability, cost efficiency, volume flexibility, and delivery speed are also judged to be important
inputs to the supply chain partner selection process. Today, companies expect to broaden and deepen the use of new
information and communication technologies for improving supply chain operations. Our findings concerning future
supply chain management practices, principles and priorities are discussed.
r 2003 Elsevier Science B.V. All rights reserved.

Keywords: Supply chain management; Integration; Manufacturing; Survey; Sweden

1. Introduction any manufacturing firm. During the 1990s the

The challenges for manufacturing firms are
shifting from internal efficiency to supply chain
efficiency. World-class manufacturing today as-
sumes that the entire supply chain is world class. It
may be necessary but no longer sufficient to
continuously improve the internal operations if
the external linkages are not up to par. A supply
chain focus is vital for the long-term well being of
*Tel: +46-13-281000; fax: +46-13-288975.
E-mail address: jan.olhager@ipe.liu.se (J. Olhager).
software support systems transited from manufac-
turing resource planning (MRPII) to enterprise
resource planning (ERP) to illuminate the impor-
tance of planning and controlling all resources in a
manufacturing firm; not only material and capa-
city. The outward-shifting focus to the supply
chain calls for another type of software support
systems, i.e. supply chain-planning software. A
foundation for implementing such systems is the
strategic linkages between successive partners in a
supply chain; not only for tactical planning and
control, but also with respect to strategic intent; as

0925-5273/03/$ - see front matter r 2003 Elsevier Science B.V. All rights reserved.
doi:10.1016/S0925-5273(03)00029-X
 ARTICLE IN PRESS
354 J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361
suggested by case studies (see e.g. Arntzen et al.,
1995; Camm et al., 1997; Hahn et al., 2000),
empirical research (see e.g. Frohlich and West-
brook, 2001; Lowe and Markham, 2001) and
theory (see e.g. Cohen and Mallik, 1997; Fisher,
1997; Lummus et al., 1998; Simchi-Levi et al.,
2000; Stadtler and Kilger, 2000; Stock et al. 2000;
Chopra and Meindl, 2001).
In this paper we present a survey of supply chain
strategies and practices in Swedish manufacturing
firms. The motivation for this survey is also based
on a previous survey to manufacturing industries
in Sweden (Olhager and Selldin, 2002) focusing on
the implementation of ERP systems. This study
showed that companies are about to extend their
ERP functionality. These extensions are primarily
concerned with supply chain management, and the
top priorities for the near future are supply chain
planning (SCP) systems and integration with
customers and suppliers. Therefore, we decided
to continue with a survey focussing on supply
chain issues related to integration, design, plan-
ning and control, from a practice as well as a
systems perspective. The survey covers supply
chain integration issues from a company perspec-
tive.
Previous studies on supply chain strategies and
practices generally find that broader integration
leads to improved performance. Frohlich and
Westbrook (2001) find that extensive and balanced
integration leads to better performance in terms of
marketplace, productivity and non-productivity
indicators, compared to firms having no, narrow
or biased integration towards the supplier or the
customer side. However, the level of integrative
activities was generally rather low among the firms
in the sample, which contained data from 1998.
Lowe and Markham (2001) report on the outcome
of the 2001 A.T. Kearney global excellence in
operations award, which contains some supply
chain elements. The top five finalists had closer
integration with suppliers, and experienced better
payback for e-commerce IT investments with
customers and suppliers, compared to the other
companies in the award competition. However, the
sample is very small and includes firms from many
different industries. In this paper, we investigate a
broader range of supply chain management issues,
in order to be able to provide for a fuller
understanding of supply chain management stra-
tegies and practices.
The paper is organised as follows. First, we
discuss the research methodology and the char-
acteristics of the responding enterprises. Then we
present and analyse the survey results, divided into
sections on supply chain design, supply chain
integration, supply chain planning and control,
and supply chain communication. Finally, some
concluding remarks are provided.
2. Research methodology
The survey reported here was mailed to PLAN
members employed within manufacturing firms in
Sweden; PLAN is the Swedish Production and
Inventory Management Society. PLAN provided
the mailing lists. The questionnaire focuses on
supply chain issues such as design, integration,
planning and control systems, and communication
tools and techniques.
In May 2001 the authors mailed the question-
naire to PLAN members in 511 different firms.
This constituted the entire body of PLAN
members in Swedish manufacturing firms. Post-
age-paid return envelopes were provided. The
survey employed three question formats: Likert
scales, multiple response, and metric measurement
scales. By October 2001, 128 usable responses were
received for a response rate of 25.0%, which must
be considered to be quite good for this type of
survey.
3. Enterprise characteristics
The characteristics of respondent and the
enterprise are summarised in Table 1. The largest
group of respondents was materials/supply chain
managers (39.4% of the responses). The second
largest group was production/inventory control
managers (18.9%). Together, these two categories
account for approximately 60% of the respon-
dents. The other respondents hold other positions
but are members of the Swedish Production
and Inventory Management Society, wherefore
 ARTICLE IN PRESS

J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361 355

Table 1 most of, if not all, the respondents are profession-

Enterprise characteristics ally centrally involved in questions and problems
Percent related to supply chain operations. There could
however be a bias included in the sample of
Respondent’s position
respondents since there are few high executives
Executive 4.72
Materials/Supply 39.37 and people working with marketing and sales
chain manager towards the customers.
Production 18.90 A majority of the responding firms have annual
inventory revenue of $50 million or less, and fewer than 500
control
employees. However, the sample also includes
Systems analyst/ 11.02
support large corporations and large divisions within
Plant/operations 9.45 corporations. Most companies, 69.1%, are produ-
manager cing industrial goods and the remaining 30.9% are
Purchasing 3.94 producing goods for the consumer market.
manager/buyer
The order penetration point determines the
Other 12.60
point along the total production process where a
Firm’s annual revenue specific product being produced is linked to a
$15 M or less 25.0
$16 M to $50 M 26.8 customer. Two distinct choices are contrasted, i.e.
$51 M to $250 M 29.5 make-to-stock (MTS) vs. make-to-order (MTO).
$251 M to $750 M 13.3 MTO includes engineer-to-order situations (ETO)
More than $750 M 5.4 and assemble-to-order (ATO). Thus, the manu-
Number of employees facturing environments where the finishing opera-
Fewer than 150 26.0 tions are carried out based on actual customer
150 to 500 34.6 orders are collected in the MTO option. The
501 to 1000 15.0
percentages in Table 1 indicate the proportion of
1001 to 5000 17.3
More than 5000 7.1 items being produced in a MTS or MTO fashion.
Make-to-order dominate (65% MTO or more) in
Type of goods produced
Industrial goods 69.1
57.9% of the firms, whereas 31.7% of the firms are
Consumer goods 30.9 dominated by MTS (65% MTS or more). The
remaining 10.4% have a more or less equal split
Order penetration point
between MTO and MTS.
MTS (%) MTO (%) The distribution of process choice takes into
0–5 100–95 32.5 account that a manufacturing firm may have a mix
6–35 94–65 25.4 of processes. Each firm divided 100% among the
36–64 64–36 10.4 five fundamental process choices: project, job
65–94 35–6 17.4 shop, flow shop, line, and continuous process.
95–100 5–0 14.3
Discrete manufacturers dominate with almost
Process choice equal distribution among job shop, flow shop,
Project 7.71
and line. There are 7.7% project manufacturing
Job shop 25.88
Flow shop 26.57 and 10.3% continuous process, wherefore all five
Line 29.37 basic process choices are represented.
Continuous process 10.32 When it comes to supply chain dominance, most
Dominating actor in of the respondents indicate their own operations as
the supply chain the most important in their respective supply
2nd tier supplier 0.88 chains. First tier customers dominate in almost
1st tier supplier 17.54 one-third of the cases, whereas upstream partners
Focal company 41.23
1st tier customer 32.46 dominate in less than 20% of the cases in this
2nd tier customer 7.89 sample.
 ARTICLE IN PRESS

356 J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361

4. Survey results buffer capacity, indicating a stronger emphasis on

The results of the survey are divided into four
sections: supply chain design, supply chain inte-
gration, supply chain planning and control, and
supply chain communication.
4.1. Supply chain design
Table 2 summarises the answers concerning the
supply chain design objectives. The primary
purpose of establishing the supply chain design is
really a mix of many factors: securing supply and
demand outlet, involving supply chain partners in
product development, as well as achieving both
cost minimisation and fast response to changes.
However, as for manufacturing focus, resource
utilisation dominates the deployment of excess
cost minimisation than on fast response. There is
no preferred inventory strategy: minimising in-
ventories and holding buffer inventories receive
approximately the same support. Lead-time re-
duction may be important but not at the expense
of cost increases. This fact also supports cost
minimisation rather than fast response. Supply
chain partners are primarily selected based on
quality performance. The second most important
issue is delivery dependability. Actually, many
issues are important when selecting supply chain
partners; cost efficiency, volume flexibility, and
delivery speed are also very important. Still, the
quality issue seems to be extremely important, with
mean 4.50, standard deviation 0.64, median 5, and
mode 5 on a Likert scale from 1 to 5, ranging from
‘‘not important’’ to ‘‘very important’’.

Table 2
Supply chain design objectives

Averagea Std. dev.a Mediana Modea

Primary purpose
Secure supply of raw materials and components 4.13 1.00 4 5
Provide fast response to changing needs 3.87 0.83 4 4
Integrating suppliers and customers in product development 3.83 1.13 4 5
Minimise costs 3.77 0.92 4 4
Secure distribution and market channels 3.75 1.02 4 4

Manufacturing focus
Maintain high average utilization rate 4.03 0.97 4 5
Deploy excess buffer capacity 2.92 1.07 3 3

Inventory strategy
Minimise inventory 3.49 1.10 4 4
Deploy buffer stocks of parts or finished goods 3.24 1.04 3 3

Lead-time focus
Shorten lead time as long as it doesn’t increase cost 3.99 0.90 4 4
Invest aggressively in ways to reduce lead time 2.66 1.00 3 2

Approach to choosing partners

Select primarily for quality 4.50 0.64 5 5
Select primarily for delivery dependability 4.17 0.77 4 4
Select primarily for cost efficiency 3.91 0.89 4 4
Select primarily for volume flexibility 3.76 0.84 4 4
Select primarily for delivery speed 3.72 0.85 4 4
Select primarily for product mix flexibility 3.09 0.99 3 3
Select primarily for reputation 2.94 1.00 3 3
a
Scale 1 to 5, ‘‘not important’’ to ‘‘very important’’.
 ARTICLE IN PRESS
J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361
4.2. Supply chain integration
Table 3 shows that on average, the respondents
consider their company’s supply chain coordina-
tion ability to be somewhat mediocre. It scores just
slightly above 3; probably due to the fact that
supply chain coordination is new to many
companies and that there are still opportunities
for improvement.
The dominating actor in the supply chains of the
respondents (cf. Table 1) showed that downstream
actors were dominant in more cases than up-
stream. This is reflected in that downstream
operations are considered to be more critical on
the average than upstream, as indicated in
Table 3. However, it is important to note that
both sides are considered to be quite critical rather
than not critical, emphasising the importance of
integration.
Forecasting is the area where companies
make the most important effort to collaborate,
see Table 3. This supports the observation that the
demand side of the supply chain is the most
important area for collaboration between supply
chain partners. Collaborative planning of capa-
city, inventory and production are used to some
extent, but considerably less than collaborative
forecasting.
Table 3
Supply chain integration
Averagea
Firm’s ability to coordinate the supply chain
Supply chain coordination ability 3.22
Averageb
Most critical part of the supply chain to plan and control
Downstream, towards the customer 3.84
Upstream, towards raw materials 3.64
Supply chain collaboration
Collaborative forecasting 3.65
Collaborative capacity planning 3.12
Collaborative inventory planning 2.97
Collaborative production planning 2.94
a
Scale 1 to 5: ‘‘very poor’’ to ‘‘very good’’.
b
Scale 1 to 5: ‘‘not at all’’ to ‘‘a great extent’’.
357
4.3. Supply chain planning and control
Even though the current utilisation of supply
chain planning and control tools and techniques is
at a relatively moderate level, many of these tools
and techniques are in their infancy. According to
Fig. 1, vendor managed inventory (VMI) and
supply chain planning (SCP) are modern techni-
ques that have started to become adopted. There
is, however, a low degree of penetration for all the
investigated techniques. More interesting to note is
the high awareness of SCP and advanced planning
and scheduling (APS), known by more than 80%
of the respondents. Collaborative planning, fore-
casting and replenishment (CPFR) is the least
known technique with less than half of the
respondents aware of it. When comparing these
results with Table 3 it should be noted that CPFR
as a concept is not the same as collaborative
planning or forecasting in general.
There is a slight bias for integrating upstream
operations, i.e. 1st and 2nd tier suppliers, relative
downstream operations according to Fig. 2 and
Table 4. In the light of the results concerning
supply chain integration, this is interesting. The
dominating actor as well as the importance to
control the supply chain has a tendency to lean
towards the downstream and customer side. The
Std. dev.a Mediana Modea
0.85 3 3
Std. dev.b Medianb Modeb
1.04 4 5
1.01 4 4
1.06 4 4
1.12 3 3
1.04 3 3
1.12 3 3
 ARTICLE IN PRESS

358 J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361

Fig. 1. Utilization of supply chain planning and control tools and techniques (VMI=vendor managed inventory; SCP=supply chain
planning; APS=advanced planning and scheduling; E-kanban=electronic kanban; CPFR=collaborative planning, forecasting and
replenishment)

Fig. 2. Span of utilization of supply chain planning systems.

span of utilization for supply chain planning result indicates that companies rather go for ease
system has, on the contrary, a very slight bias of integration than importance of integration.
towards the supplier side (cf. Table 3). This Integrating upstream operations is generally easier
 ARTICLE IN PRESS

J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361 359

Table 4
Span of utilization for supply chain planning system

Currently In the near future (within 2 years)

Averagea Std. dev.a Mediana Modea Averagea Std. dev.a Mediana Modea

2nd tier suppliers 1.23 0.67 1 1 1.98 1.04 2 1

1st tier suppliers 2.47 1.35 2 1 3.45 1.23 4 4
Internal operations 3.06 1.39 3 4 3.83 1.32 4 5
1st tier customers 2.32 1.40 2 1 3.12 1.42 3 4
2nd tier customers 1.43 0.82 1 1 1.93 1.11 2 1
a
Scale 1 to 5: ‘‘not at all’’ to ‘‘a great extent’’.

To a great
5.00
extent

Telephone

4.00 Fax
E-mail

Letter
3.00 EDI (incl. XML)
Extranets (Internet based)
Kanban
2.00
E-marketplaces

Not at all 1.00

Currently Near future

Fig. 3. Utilization of tools for communicating with customers and suppliers.

since the buyer often is the stronger part, whereas
it may be more difficult for a supplier to bring on
the initiative for a new supply chain planning
approach. In 2 years time, the respondents do not
expect the distribution of utilization for supply
chain planning system to change, but the usage
among all actors is expected to increase.
A paired t-test of the answers concerning the
utilisation of supply chain planning systems today
compared with the utilisation in 2 years from now
shows that all of the changes are statistically
significant on the 0.01-level. The median and mode
numbers in Table 4 also strongly suggest that the
evolution of the utilization of supply chain
planning systems will increase in the near future.
In general, the median firm moves up one step on
the five-step scale from ‘‘not at all’’ to ‘‘a great
extent’’ referring to how different actors along
the supply chain are likely to be involved in
supply chain planning systems. The largest jump
in the data results are for the immediate supply
chain partners, i.e. 1st tier suppliers and 1st
tier customers, indicating a mode move from 1 to
4 on the scale from 1 to 5, whereas 2nd tier
suppliers and customers stay at the lowest
utilization mode level. Thus, the main initiatives
are expected for the immediate suppliers and
customers. However, there will still be several
 ARTICLE IN PRESS

360 J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361

Table 5
Utilization of tools for communicating with customers and suppliers

Currently In the near future (within 2 years)

Averagea Std. dev.a Mediana Modea Averagea Std. dev.a Mediana Modea

Telephone 3.76 0.87 4 4 3.37 1.03 4 4

Fax 3.66 0.88 4 4 2.88 1.07 3 2
E-mail 3.46 0.98 4 4 4.10 0.77 4 4
Letter 2.59 1.00 2 2 2.12 0.92 2 2
EDI (incl. XML) 2.40 1.32 2 1 3.37 1.35 4 4
Extranets (Internet based) 1.69 0.98 1 1 3.10 1.17 3 4
Kanban 1.68 1.01 1 1 2.10 1.15 2 1
E-marketplaces 1.33 0.56 1 1 2.46 1.11 2 3
a
Scale 1 to 5: ‘‘not at all’’ to ‘‘a great extent’’.

companies that are unlikely to involve suppliers or 5. Summary and conclusions

customers two tiers away; with respect to that the
mode remains at 1 and the standard deviation
increases even though the averages and medians
increase.
4.4. Supply chain communication
The ways that companies communicate with
customers and suppliers will undergo major
changes in the near future. Today, telephone, fax
and e-mail are the prevalent ways to communicate
in the supply chains. The classic communication
means such as letter, phone, and fax is reported to
experience a reduction in utilisation (dotted lines
in Fig. 3). Electronic communication such as e-
mail, EDI, Internet-based extranets, and e-markets
will increase in importance along with kanban
(solid lines in Fig. 3). Within the next 2 years e-
mail will surpass the telephone as the major
communication tool between successive partners
in the supply chain. These reversing trends are
seen clearly in Fig. 3. The largest expected in-
crease in utilisation is reported for extranets and
e-markets.
In more detail, Table 5 confirms that the major
changes in utilisation will occur for fax (decreases)
and EDI, extranets, and e-marketplaces (increase).
A paired t-test shows that all differences, both
increases and decreases, over the next 2 years are
statistically significant on the 0.01-level.
In this paper we study supply chain strategies in
Swedish manufacturing firms. We used a ques-
tionnaire survey to capture the information from
128 different companies. With a response rate of
25.0% of the 511 contacted companies, this survey
is able to provide a fairly accurate overview of the
status of supply chain management from a design
perspective as well as from a planning and control
perspective. Most companies consider their own
operation to be the most important part of their
respective supply chains. As for other supply chain
partners, the downstream direction is more often
considered dominant than upstream.
From the study we conclude the following.
First, the main overall objectives for the design of
supply chains are resource utilization and cost
minimization. Second, many aspects are important
when companies choose supply chain partners, but
quality is the single most important criteria. Third,
forecasting is the prime area for collaborative
efforts. Fourth, companies are prepared to
expand the span of their supply chain operations
that can be planned and controlled in an
integrated fashion. Fifth, companies show rela-
tively high awareness of modern supply chain
planning and control tools. However, the utilisa-
tion of such tools is still at a relatively low level.
Sixth, the classic means for communication
between supply chain members are expected to
 ARTICLE IN PRESS
J. Olhager, E. Selldin / Int. J. Production Economics 89 (2004) 353–361
decline in importance whereas electronic commu-
nication techniques and especially those based on
the Internet will increase and become dominant.
Companies are starting to appreciate the im-
portance of the supply chains in which they operate.
However, most firms have quite some ways to go to
take full advantage of the promises of supply chain
integration. The awareness of planning and control
techniques and communication means is high, and
work on increasing and improving supply chain
integration and collaboration will be intensified in
the near future. Of interest for future research is
therefore to study the impact of supply chain
collaboration and integration on company perfor-
mance, to verify that such investments pay off.
Acknowledgements
This research is supported by grants from the
Swedish Foundation for Strategic Research. We
would like to acknowledge PLAN for providing
the mailing lists.
References
Arntzen, B.C., Brown, G., Harrison, T.P., Trafton, L.L., 1995.
Global supply chain management at Digital Equipment
Corporation. Interfaces 25 (1), 69–93.
361
Camm, J.D., Chormann, T.E., Dill, F.A., Evans, J.R.,
Sweeney, D.J., Wegryn, G.W., 1997. Blending OR/MS,
judgment, and GIS: Restructuring P&G’s supply chain.
Interfaces 27 (1), 128–142.
Chopra, S., Meindl, P., 2001. Supply Chain Management:
Strategy, Planning, and Operation. Prentice-Hall, Upper
Saddle River, NJ.
Cohen, M., Mallik, S., 1997. Global supply chains: Research
and applications. Production and Operations Management
6 (3), 193–210.
Fisher, M., 1997. What is the right supply chain for your
product? Harvard Business Review 75 (2), 105–116.
Frohlich, M.T., Westbrook, R., 2001. Arcs of integration: An
international study of supply chain strategies. Journal of
Operations Management 19 (2), 185–200.
Hahn, C.K., Duplaga, E.A., Hartley, J.L., 2000. Supply chain
synchronization: Lessons from Hyundai Motor Company.
Interfaces 30 (4), 32–45.
Lowe, P.G., Markham, W.J., 2001. Perspectives on operations
excellence. Supply Chain Management Review 5 (6),
52–60.
Lummus, R.R., Vokurka, R., Alber, K., 1998. Strategic supply
chain planning. Production and Inventory Management
Journal 39 (3), 49–58.
Olhager, J., Selldin, E., 2002. Enterprise resource planning
survey of Swedish manufacturing firms. European Journal
of Operational Research 146 (2), 365–373.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., 2000. Design-
ing and Managing the Supply Chain: Concepts, Strategies,
and Case Studies. Irwin/McGraw-Hill, Boston.
Stadtler, H., Kilger, C. (Eds.), 2000. Supply Chain Manage-
ment and Advanced Planning: Concepts, Models, Software
and Case Studies, Springer, Berlin.
Stock, G.N., Greis, N.P., Kasarda, J.D., 2000. Enterprise
logistics and supply chain structure: The role of fit. Journal
of Operations Management 18 (5), 531–547.