Management Innovations for Intelligent Supply Chains John Wang Montclair State University, USAManaging Ditedtor Lindsay Johnston Editorial Director: Joel Gamon Book Production Managet Jennifer Romanehak Publishing Systeme Analyst ‘Adrienne Freeland Assisant Acquisitions Euior: Kayla Wolfe Iypesetter: Henry Uisien Cover Design Nick Newecmer Published inthe United States of America by ‘Business Seienee Keference (an imprint of IGI Global) 701 E Chocolate Avene Hershey PA 17033 ‘el. 717-833-8815 Fax: 717-533-8561 Eomall cus @igi-global com Web site: hip wwwigi-global com Copyright © 2013 by IGI Global. All sights reserved. No purtof this publication may be reproduced, stored or distributed in sy form or by any means, elecron ‘oF mechanics, including phoweopying, without witien permissien fiom the publisher Product or company aames used in this set are for identification puyposes only. Inclusion ofthe names ofthe products or companies does not indicate a aim of ownership by IGI Glotal ofthe trademark or registered trademark Library of Congiess Cataloging-in-Publication Data “Management innovations for intelligent supply chains / John Wang, eter pm. Includes bibliographical references and index Summary: "This book provides compretensive coverage of automated supply chain management offering research, methedologies. and framenorks for researchers, grafuate students. and sianagement professional interested in the imeorpo- ‘ation of information systems to better support supply chain management™--Provided by publisher ISBN 978-1 -1666-2461- hardcover) -- ISBN 978-1-4666-2462-7 (chook) ~ ISBN 978-1-4666-2463-4 (print & perpetual sccess) 1. Business logisties~Information technology. 2. Business logistics-Mamagement, 3, Business intelligence. 4 Technological innovetions--Management, I. Wang, John, 1955- HD38,5.M3572013 16585001 -de23 2012028312 British Catslogeing in Publication Data ‘A Cataloguing in Publication record for this book isavailable ftom the Baitish Library The views expressed in this book are those ofthe authors, but not necessarily of the publishesTable of Contents Preface Supply Chain Governance and Relationships Chapter 1 Relational Attributes in Supply Chain Relationships veety Law, California State University, Bast Bay, USA Jacques Verville, University of British Columbia, Okanagan, Canada Nazim Taskin, University of British Columbia, Okanagan, Canada Chapter 2 2B Relationships in Modem Times: Implications of Relation-Specific Information Systems on Governance Forms Goril Hannés, University of Agder, Norway Otto Andersen, University of Agder, Norway Chapter 3 Supply Chain Partner's Perceptions of Trust and Risk: The Perspectives of UAE Printing and Packaging Industry ‘Mohammed Lacequidin, Express Flexi Pack, UAE B. S Sahay. Indian Institute of Management, India Vinita Sahay, Institue of Management Technology, India K. Abdul Waheed, Institue of Management Technology, UAE Chapter 4 An Empirical Test of the Information Processing Theory Honggeng Zhou, University of New Hampshire, USA svi ws 66Section 2 ‘Transportation Management Chapters Discrete-Event Simulation Models for Assessing Incidents in Railway Systems 83 Alvaro Garcia Sinchez, Universidad Politécnica de Madrid, Spain Miguel Ortega-Mier, Universidad Politécnica de Madrid, Spain Roberto Arranz, Universidad Politécnica de Madd, Spain Chapter 6 Minimizing Empty Truck Loads in Round Timber Transport with Tabu Search Strategies ” Patrick Hirsch, University of Natural Resources and Applied Life Sciences, Vienna, Ausiria Chapter 7 Solving Vehicle Routing Problems Using Constraint Programming and Lagrangean Relaxation in a Metaheuristies Framework 123 D. Guimarans, Universitat Autonoma de Barcelona, Spain R Herrero, Universitat Autonoma de Barcelona, Spain J.J. Ramos, Universitat Auténoma de Barcelona, Span 'S. Padron, Universitat Autonoma de Barcelona, Spain Chapter Optimizing Routes with Safety and Environmental Criteria in Transportation Management in Spain: A Case Study 144 Javier Fanlin, Public University of Navarre, Spain Fernando Lera-Lépez, Public University of Navarre, Angel A Juan, Open Unwersity of Catalonia, Spain Section 3 Inventory and Logistics Management Chapter 9 Effects of Vendor-Managed Inventory on the Bullwhip Effect 167 ‘Susanme Hohmann, FOM Unversity of Applied Sciences and HAV Global Solutions, Germany Stephan Zelewski, University of Duisburg. 'ssom, Germany Chapter 10 Genetic Algorithm and Particle Swarm Optimization for Solving Balanced Allocation Problem of Third Party Logistics Providers 184 R. Rajesh, Noorul Islam University, India S. Pugazhendhi, Annamalai University, India K. Ganesh, IBM India Private Limited, IndiaChapter 11 Analysis of Reverse Logistics Operations for a Computer Company 204 Albert Wee Kwan Tan, National University of Singapore, Singopore Arun Kumar, Royal Melhourne Institute of Technology, Austraika Balun Sundarakant, University of Wollongong, UAE Section 4 Manufacturing Systems Chapter 12 Solving a Bi-Criteria Hybrid Flowshop Scheduling Problem Occurring in Apparel Manufacturing 214 Jairo R. Montoya-Torres, Universidad de La Sabana, Colombia Fabian Vargas-Nieto, Finotex 8.A,, Colombia Chapter 13 Modeling of Hybrid Production Systems with Constant WIP and Unreliable Equipment 23: Mehmet Savsar, Kuwait University, Kuwait Section 5 Industry Studies Chapter 14 Supply Chain Management Practices of Indian Automobile Industry 258 B.S. Sahay, Indian Institute of Management, india Vikram Sharma, Galgotias College of Engineering and Technology, India G. D. Sardana, Birla Institute of Management Technology, India Chapter 15 Reconfiguring Supply Chains for a Global Automotive Industry 276 Leslie S. Hiraoka, Kean University, USA Chapter 16 Development of Holistic Framework Incorporating Collaboration, Supply-Demand Synchronization, Traceability and Vertical Integration in Agri-Food Supply Chain 294 Sanjay Sharma, National Institute of Industrial Engineering (NITIE),Mumban, India Sanjaysingh Vijaysingh Patil, G. H. Raisoni College of Engineering & Management, Pune, India Compilation of References 324 About the Contributors 363 Index 36Detailed Table of Contents Preface xvi Supply Chain Governance and Relationships Chapter 1 Relational Attributes in Supply Chain Relationships 1 ‘Sweety Law, California State University, East Bay, USA Jacques Vervile, University of British Columbia, Okanagan, Canada Nazim Taskin, University of British Columbia, Okanagan, Canada ‘The objective of this research paper is to examine the relational attribuies undespinning supply chain networks, which linked firms need to manage on an ongoing basis. In examining the connections, which aredifferent from transaction-based connections. this study measures the effects of face-to-face communication.trust, involvement, job tite, and sales volume on performance. The hypothesized rela tionships are mostly supported and provide nuanced insights into relational attributes that affect supply- chain relationshipsand performanee. These attributes are the basis for creating relationship intensity, magnitude, and history.described as collaborative facilitators that can enhance performance. All levels of management have a role to play’ in how the relational attributes are applied and managed, Senior leadership such as CEOs may needto play a larger role in trust development and involvement mainte- nance, while mid-level and line managersmay need to engege in more face-to-face communication in maintaining trust and collaboration intensity Chapter 2 B2B Relationships in Modern Times: Implications of Relation-Specific Information Systems on Governance Forms 28 Gortl Hannés, University of Agder, Norway Otto Andersen, University of Agder, Norway Information technology (IT) enables businesses to integrate information systems across entities without altering the firms’ legal boundaries. New forms of inter-firm dependence and governance mechanisms may arise, due to the explicit investments made in technology and systems for collaboration purposes. ‘There is an important distinction between general and customized investments in inter-organizaional information systems (10S), because the specificity level in IT exhibits certain characteristics that ac- centuate both therisk and value of inter-firm trade. Several research calls were made to validate gover- nance theories on 10S. Based on ¢ literature review, this paper provides a synthesis and integration of transaction cost economics (TCE) and IOS literature regarding governance forms. The paper discusses why the specificity level of 10S plays a central role in modern collaboration between firms, and how vertical electronic coordination (VEC) represents a mechanism for electronic governance forms and presents an agenda for future research,aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Lorenz, EH, (1988), Neither friends norstrangers: Informal networks of subcontracting in French industry. In Gambetta, D. (Ed.). Trust: Making andbreakingcooperaiive relations (pp. 194-210) New York: Blackwell Lummus, R. R., Krumwiede, D, & Vokurka, R. J. (2001). The relationship of logistics to supply chain monagement: developing a common industry definition. Industrial Man- agement & Dara Systems, 10118), 426-432. doi: 10,1108/02635570110406730 Lyons, T F., Krachenberg, A. R., & Henke, J. W. (1990), Mixed motive marriages) What's next for buyer-supplier relations? Sloan Management Review, 31(3), 29-36, MacMillan, K., Money. K., Money, A., & Dos- ning, S, (2005). Relationship marketing in the not-for-profit sector: an extension and applica- tion of the commitment-tust theory. Journal of Business Research, 58, 806-818, doi:10, 10165. ‘busres. 2003 08,008 Mascarenhas, O. A., Kesavan, R.. & Bernac- chi, M, (2004). Customer vaiue-chain involve- ment for co-creating customer delight, Jour- nal of Consumer Marketing, 21(7), 486-496 do 10.1108/073637604 10568707 Massey, G. R.. & Kyriazis, E, (2007). Interper- sonal trust between marketing and R&D during new product development projects. European Journal of Marketing, 419/10), 46-1172. doi: 10.1108/030905607 10773381 MeGinnis, M. A..&¢ Kohn. J. W. (1993), Logistics strategy, organizational environment, and time competitiveness, Journal of Business Logistics TA(1), 1-23, Mikkola, J, H.,& Skjoett-Larsen,T, (2003), Early supplier involyement:implications for new prod- uct development outsourcing and supplicr-buyer interdependence. Global Journal of Flexible Systems Management, 4(4), 31-42. 20 Relational Attributes in Supply Chain Relationships Mills, P.K., Chase, R.B.,& Margulies, N.(1983). Motivating the elientiemployeesystem asaservice production strategy. Academy of Management Review, 8, 301-310, Mohr, J., Fisher, R. J. & Nevin, J. R. (1996). Collaborative communication in interfirm rela- tionships: Moderating effects of integration and control. Journal of Marketing, 60(3), 103-115 doi: 10,2307/125 1844 Mohr, J.,& Nevin, J. R. (1990), Communication strategies in marketing channels: A theoretical perspective. Journal of Marketing, 54(4), 36-5 1 doi: 10.2307/1251758 Monezka, R. M., Trent, R. J, & Callahan, 7. J. (1994). Supply base strat supplier performance. International Journal Of Physical Distribution And Logisties,24(1),42-54. Mooman, C. Deshpande, R. & Zalman, G. (1993), Factors affecting trust in market research relationships. Journal of Marketing, 57(1). 81-101. doi: 10.2307/1252059 to maximize Morgan, R, M., & Hunt, S, D. (1994), The commitment-trust theory of relationship mar: keting. Journal of Marketing, 58(3), 20-38 doi: 10,2307/1252308 Narasimban, R., & Kim, S. W. (2002), Effect of supply chain integration on the relationship between diversification and performance: evi- dence from Japanese and Korean firms. Journal of Operations Management, 20(3), 303-323 doi: 10. 1016/80272-6563(02)00008-6 Oliver, C. (1990), Determinants of interorga- rizational relationships: integration and future directions. Academy of Management Review. 15(2), 241-265. Oliver, N. (1990b). Human factors in the implementation of just-in-time production International Journal of Operations & Produc- tion Management, 10(4), 32-40. doi’ 10.1108) EUM0000000001263aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.1826 Relationships in Modern Times CONCLUSION Transaction cost economies (TCE) has been ac~ credited as an important theoretical framework to prescribe how business-to-business relationship should be organized. The theoretical framework of TCE has not, however, fully recognized how increasing investmentsin information technology (IT) have led to profound changes in the content and form of moder B2B relationships. The emerging literature within inter-organizational information systems (IOS), has, on the otherhand, beencriticized forits wide focus and lack of theo- retical framework by taking several directions to address issues related to the inter-organizational phenomena of IOS. It is well established within institutional theory thatthe existence of asset speci ficity in business relationsis acenteal determinant of governance choice, Despite several rescarch callsto validate govemance theories on 10S, few examples within this literature haveintegrated and used the TCE framework to study the governance implications of specific IT investments. The TCE concept of vertical coordination nceds to be extended by the concept of vertical electronic coordination in order to study the ef fects of IOS on governance forms beiween the exchange partners. In particular, we propose that relation-specific IT investments, as a group. should be separated from other relation-specific investments, in order to study the implications for vertical clectronie coordination between suppli- ers and buyers. and to explore how new forms of inter-dependence and electronic governance forms emerge, Inthe IT era the traditional enets of TCE are beingchallenged by the economic transforms- tions of information technology. The theoretical framework of transaction costs economies, stand to benefit from the perspectives of these modem business transformations. ACKNOWLEDGMENT We would like to thank Editor in Chief and three anonymous referees for their valuable feedback REFERENCES Amit, R., & Zott, C. (2001). Value creation in e- business. Straiegie Management Journal, 22(6-7), 493-520, dot:10,1002/smij, 187 Andersen, O..& Buvik, A. (2001). Inter-firm co- ‘ordination: International versus domestic buyer- seller relationships. Omega, 292), 207-219 doi: 10, 1016/S0305-0483(00)00043-8 Anderson, E. (1985). The salesperson as outside agent or employee: A transaction cost analy sis Marketing Science, 43). 234-254, doi: 10.1287! mkse.4.3.234 Anderson, E., & Gatignon, H. (1986), Models of foreign entry: A transaction cost analysis and propositions. Jounal of international Business Studies, 17(3), 1-26, doi:10,1057/palgeave. Jibs 490432, doi: 10,2307/2555446 Anderson, E., & Weitz, B. (1992). The use of pledges to build and sustain commitment in dis- tribution channels, JMR, Jonmal of Marketing Research, 29(1), 18-34. doi:10.2307/3172490 Argyres, N.S. (1995), Technology strategy governance structure and interdivisional co- ‘ordination. Journal of Economic Behavior & Organization, 28(3),337-358, doi: 10,1016/0167- 2681(95)00039-9 39aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.online trust that deterministically drive both parties towards straicgic partnership and cooperation (Agarwal & Shanker, 2003). Two factors that sig- nificantly contribute t the success ofe- business are the trust people place in the online businesses and how secure they perceive transacting business ‘on the internet (Srinivasan, 2004). Lack of expe- rience and understanding of the other partner's technology may create barriers to trust among supply chain members. As suggested by Lippert (2001), technology trustisan individual's willing ness o be vulnerable to the technology based on perceptions, predictability, reliability and utility and influenced by an individual's predisposition to trust the technology. Though online retailing is evolving at an unprecedented rate, participants at all levels still exhibit a fundamental lack of trust. ITAS outsourcing include costreduction, service quality improvement, access to state-of the-art technology, and an increased ability to focus on the ‘corebusiness’,itis widely felttherefore, that the importance oftrustin the e-pusinessexchange desorvesspecial attention (Warrington et.al.,2000) as the customer's perception of the technologi- cal competency of the electronic communication system is very important in their information pro- cessing behavior and perecived trust. Therefore we draw our fifth hypothesis as follows, HS: Supply chain member's technology perspec- tive significantly impacts the trust pereep- tions. Inmarketswhere technology changes atarapid pacethere are, usually, multiplediserepant product standards (Heide & Weiss, 1995) and risks caused by the rapid pace of technology changes. Cousinset al (2004) suggest thatthere are two main types of supply chain risk to which companies can become exposed: technological risk. over-reliance on a single or limited source of a product, process, or technology and strategic risk over-reliance on a single or limited number of suppliers. The internet users encounter more risks than they do in face- 52 ‘Supply Chain Partner's Perceptions of Trust and Risk to-face transactions (Riegelsberger et al., 2003), Not all users understand ot pereeive these risks. ‘or wish to contemplate them. Some consumers may perceive working with computers as tisky. let alone using them to make purchases. Online transactions involve a lack of control on the part of customers with anonymous trading partners and, consequently. the potential for opportunism. Iumay be thatsome risks are heightened or unique totheonline purchasing environment. Ifcustemers think that they may be taken advantage of they may not engage in online transactions at all, if consumers perceive high risk and have no trust in an organization, they will be unlikely to enter into any kind of relationship (Harridge-March, 2006). Therefore we draw our sixth hypothesis as follows, H6: Supply chain member's technology perspec tive significantly impacts the risk percep- tions Security Perspective of Trust and Risk Inorder to avoid touble intheir relationship with exchange partners and to safeguard themselves against partners’ intentional or unintentional be- trayal of trust, supply chain members may want to control their partner's actions to ensure that they will perform as expected (Kabadayi & Ryu, 2007). Researchers have explored the control mechanisms that exist between organizations (Weitz & Jap, 1995) as unilateral that are based con the controlling party’s effort to influence its partner's action (Spekman, 1988). Use of external measurement, such a5 output measurement or the monitoring of a partner's behavior (Celly & Frazier, 1996) and bilateral control mechanism relying on relational norms (Lusch & Brown, 1996), which stimulate efforts for the mutual benefit of both partners (Weitz & Jap, 1995). In- stitutional trustinitiates anécontrolstrust between partners through legal frame works, commercial