Decision Sciences

Volume 29 Number 3
Summer I998
Printed in the U.S.A.

Special Research Focus on Supply Chain

Linkages: Challenges for Design and
Management in the 21st Century*
Vincent A. Mabert and M.A. Venkataramanan
Kelley School of Business, Indiana University, Bloomington, IN 47405,
e-mail: mabert@indianu.edu and venkatar@indiana.edu

ABSTRACT
Supply chain management is a central and important area for academic research due to
its impact on firms competing in today’s global economy. Managing the flow of mate-
rials from supply sources to the ultimate customer represents a major challenge for
today’s managers. To assist managers, the concept of supply chain management has
been adopted by many business leaders as an important way to assist in designing, plan-
ning, and controlling the network of facilities and tasks that comprise the many stages of
the supply chain. In turn, the flow of academic research in the area has increased to pro-
vide a better set of guidelines for effective implementation and execution.
This article sets the stage for recently completed research concentrating on’suppl y
chain management issues. First, a definition of supply chain management is pdvided
and compared to recent usage in this area and logistics management. Also, a framework
is provided that structures this dynamic and complex management task. Second, a
review of past research is presented to illustrate the many paths supply chain manage-
ment has traveled, and important contributions to supply management understanding
and decision making. Third, recently completed research articles are introduced that
have been selected to be part of this special issue of Decision Sciences. And fourth,
future research directions for supply chain management that need to be pursued by inter-
ested investigators are discussed.
Subject Areas: Logistics, Research Directions, and Supply Chain Management.

*Although the authors take full responsibility for the articles included in this research focus issue for
Decision Sciences, it is important to recognize all of the individuals who provided valuable assistance. First,
we wish to thank Lee Krajewski, Decision Sciences editor, for his guidance in the planning of the research
focus. His advice and support helped sharpen the research focus of this special issue and contributed to its
high quality. Second, we want to recognize Marian McCreery, at the journal’s headquarters, who coordinated
the review process of all submitted manuscripts. Her accuracy and timeliness kept the project on track. And
third, we wish to express our sincere appreciation to all the individuals listed in the Appendix for the time
they took from their busy schedules to blind referee the manuscripts submitted to the supply chain linkages
research focus. Their speed and completeness of review is to be commended.

537
538 Challenges for Design and Management in the 21st Century

INTRODUCTION
The numerous challenges faced today by global business organizations are
expected to increase in intensity and complexity as we move into the 21st century.
Expanded global competition is the norm rather than the exception, with an
unprecedented number and variety of products available to satisfy consumer
desires. The dynamics of faster product development have both benefited the con-
sumer and set new expectation standards for firms to meet market requirements.
Meeting the customer’s desire for high quality and quick service has added pres-
sures not historically present. Also, advanced hardware and software technology
have increased manufacturing flexibility, transportation speed, and information
availability, along with increased management complexity.
In recognition of these challenges, practicing managers and academic
researchers have realized that a more integrated approach to conducting business is
necessary to avoid the traditionally myopic approach, which maximized individual
activity performance at the expense of total system performance. Viewing and
managing, in a coordinated manner, the total set of activities involved in the deliv-
ery of goods or services to the market place as a supply chain has emerged as a use-
ful management concept.
However, the term supply chain is not used consistently by all. Some have
restricted the view to just the “relational” activities between a buyer and seller
(Cavinato, 1992; Ellram, 1991). Such an approach focuses on the first-tier pur-
chasing operations of a firm, and relationships with suppliers that might be char-
acter’lred by such arrangements as buyerlseller alliances and partnerships
?
(Blocher, Lackey, & Mabert, 1993). A second use of supply chain takes a broader
view by including all “upstream” suppliers to a firm as part of the supply chain
(Dobler & Burt, 1996). With this definition, an original equipment manufacturer
like Ford Motor Company would view its supply chain as containing all first-,
second-, etc., level suppliers in the supply network. A third view takes a “value
chain” approach, in which all activities required to bring a product to the market-
place are considered part of the supply chain (Porter, 1985; Davis, 1993; Lee &
Billington, 1995). This view adds manufacturing and distribution functions as part
of the flow of goods and services in the chain.
The supply chain definition used in this research focus issue follows the
spirit of the value chain concept.
Supply chain is the network of facilities and activities that performs the
functions of product development, procurement of material from vendors, the
movement of materials between facilities, the manufacturing of products, the
distribution of finished goods to customers, and after-market support for
sustainment.
Such a holistic approach is consistent with the integrated way today’s global
business managers are planning and controlling the flow of goods and services to
the market place. Today, firms are not only sourcing and selling their products
internationally, they are also taking advantage of global product development sup-
port such as Boeing’s 777 Japanese design group or IBM’s use of Indian software
programers for computer systems.
Mabert and Venkataramanan 539

Cooper and Ellram (1 993) suggested that the applicability of supply chain
management lies someplace between fully integrated firms and independent com-
panies operating in the chainkhannel. We believe that our conceptualization of the
supply chain has equal applicability in large multisite f m s and small single-loca-
tion organizations. Even though firms such as Royal Dutch Shell and AMOCO
own raw material sources, manufacturing facilities, distribution networks, and
much of the retail structure, the problems of planning and controlling the move-
ment of materials and products in an effective manner are the same as with a less
integrated firm. Although the fully integrated firm may have better visibility of
operations and activities in the chain, which might reduce the degree of uncer-
tainty, the elements of the management task are the same in both settings.

SUPPLY CHAIN MANAGEMENT VERSUS LOGISTICS

MANAGEMENT
As noted above, the meaning of supply chain management depends upon how the
user defines the domain of the area. In a similar manner, the same is true for the tra-
ditional field of logistics. The Council of Logistics Management’s (CLM) defini-
tion of logistics is:
Logistics is the process of planning, implementing, and controlling the
efficient, cost-effectiveflow and storage of raw material, in-process inventory,
finished goods and related information from point of origin to point of
consumption for the purpose of conforming to customer requirement. (p. 2,
Council of Logistics Management, 1998)
This definition suggests a stronger emphasis on managing the flow and storage of
material, whereas the earlier supply chain concept placed greater weight on net-
work design elements such as facility network and product development.
A review of some logistics texts (Ballou,1993; Bowersox, Closs, & Helferich,
1987; Lambert & Stock, 1993; Shapiro & Heskett, 1985) offers a similar impres-
sion as that put forth in the CLM definition. Issues of transportation, inventory
control and order processing, warehousing, distribution management, and pur-
chasing dominate each book’s content, which reflect a business logistics view of
flow management. However, it is interesting to note that logistics has its roots in
the military, which tends to place greater emphasis on product design, reliability,
and sustainability (Jones, 1987).
It is obvious that significant overlap exists between the ideas and concepts
that define supply chain management and logistics management. Although both
have similarities, practitioner applications and areas of research vary greatly due to
circumstance. Practicing managers and academic researchers need to be aware of
the tremendous body of knowledge, discussed below, that has applicability in both
management paradigms.

SUPPLY CHAIN MANAGEMENT (SCM)

Though our definition of SCM establishes the general boundaries of the supply
chain, one needs to understand the associated managerial functions and tasks
540 Challenges for Design and Management in the 21st Century

involved to gain a better appreciation of the scope of supply chain management

function. The very nature of a supply chain conjures up the image of flow between
different levels, like suppliers to original equipment manufacturers (OEMs) or dis-
tribution centers to consumers, which is fundamental to the concept. Using the
concept of flow from raw material to consumer, Figure 1 presents a general struc-
ture of the supply chain and a sample of elements (managerial functions and tasks)
that configure the chain.
Our supply chain model contains five aggregate or major stages, which rep-
resent important phases in the flow. Sourcing involves not only the supply of raw
materials and components through a network of vendors, it also includes product
development support through subassemblydesign and tooling production for proc-
ess changes. Inbound Logistics focuses on effective and efficient movement and
storage of required materials to meet production schedules. Using provided inputs,
Manufacturing should produce a high quality and price competitive product in a
timely manner. Outbound Logistics concentrates on movement of finished goods
through the distribution network to global markets for consumer use. The final
stage, After-market Service, recognizes the need to support the product either
through replacement parts and repair service, or customer service representatives
to answer product-use questions.
A closer look within any one stage will reveal finer levels of detail. For
example, a manufacturer coordinating supply decisions would probably view the
sourcing stage as having many levels, representing first-tier, second-tier, etc., sup-
pliers. Some vendors would ship components, others would lend engineering and
tooling support, a third group would provide supply items such as cutting oils, light
bulbs, cleaning fluids, etc. The explosion of finer detail present in each stage adds
to the complexity of managing the diverse activities.
Heightening the managerial challenge, decisions made in one stage influence
operational performance in other stages. The inclusion of these linkages in supply
chain decision making represent the cornerstone of effective management for
f m s in the 21st century. Today, we see successful firms such as Hewlett-Packard
Corporation’s printer division (Lee & Billington, 1995), Digital Equipment Corpo-
ration’s computer group (Amtzen, Brown, Harrison, & Trafton, 1995), and General
Electric Corporation’s lighting division (Mabert & Marer, 1996) utilizing this
approach to supply, manufacture, and distribute products globally. Linking
together the supply chain stages in a coordinated manner has been an important
element in their success.
Though the concept of supply chain may be viewed as simple, the process of
linking decisions across stages in a coordinated manner is by no means an easy
task; it is one of the great challenges faced by managers today and in the future. In
recognition of this challenge, we propose a hierarchical approach, similar in spirit
to that of Hax and Meal (1975), as the most appropriate approach to integrate
across stages and time. Figure 2 presents a five-phase hierarchical process for sup-
ply chain decision-making integration, the general time horizon for implementa-
tion, the frequency of occurrence, and the linking of the phases by a common
database. The five phases are grouped into planning and control levels, recogniz-
ing the functional distinction between planned operations versus actual flow con-
trol of materials.
Figure 1: Typical supply chain configuration elements.
P
3
Q
c %
Inbornn d Outbound After Market
Sourcing =S Logirticr Manuf8cturing =+ Logirticr Service %
*%
sF
Plant location(s) DC Iocation(s) Number
location of
allocrtion, ctc. lOC8ti011, size, Capacity levels DCfunctions s m i c e centers
function, etc. and size
Productdesign 9 Proccss Functionand
support Transportation technologies In-house vs Size
mode contract carrier
Toolingdesign Productaud Sparesinventory
and supply In-house vs process 9 JnventoryIsafety leveland
contract carrier development stock levels locations
Spotmarket
purchase or Jnvcntorylsafety Maintenance ASIARsystems Service fled
putuenhip stock levels pr0-s size and
Package equipment
Delivery ASIARsystems wIPtargct!3 enginerring
schedules Failureanalysis
Vehicle workforce levels ED1 customer
Supplier dispatching links Datamining
development Robotics
Bucoding Shipping Workforce levels
Potracking CADICAMICAE schedules

EDIliis

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

Adapted from Gopal & Cahill(l992).

542 Challenges for Design and Management in the 21st Century

Figure 2: Hierarchical model for supply chain integration.

Time Review
Kpriznn Freauencv
Supply Chain Design 1 2-5 years Annually

Aggregate supply Planning1 12-18 mths Quarterly/

Monthly
. ~~~-~
.

1-3 mths Monthly/

Weekly

2a *rder Fulfillment
2-4 wks Daily

1
a
I
SchedulinglDispatching I 1-5 days Continuously

The Supply Chain Design phase establishes the overall configuration of the
chain by looking into the future two to five years, determining the number of facil-
ities, distribution center (DC) locations, transportation modes, product design,
vendor support, etc. The supply chain configuration would be reviewed annually
to determine changes necessary to meet emerging business needs. Aggregate Sup-
ply Planning establishes general resource levels for the different stages for the
annual business planning period. For example, manufacturing and service center
workforce levels would be set, transportation fleet deployment would be decided,
and purchasing agreements would be reviewed. Material Flow Planning estab-
lishes a variety of time-phased schedules such as material from vendors through
inbound logistics, inventory position levels at warehouses and distribution centers,
production requirements in plants, and distribution shipping schedules for a hori-
zon of one to three months. Order Fulfillment, which occurs daily, focuses upon
the allocation of material for production and shipping, based upon received and
released orders between the stages in the chain. And finally, the continuous activity
of SchedulingRIispatchingconcentratesupon the real-time sequencingof material
through work centers, the release of material from the vendor, and dispatching ser-
vice personnel to repair equipment. If these five stages are to perform truly in an
integrated manner, they must share a common database that is updated as changes
occur over time.

SUPPLY CHAIN RESEARCH

Interest in supply chain research is not a recent phenomenon. Probably the first
comprehensive investigation and demonstration of supply chain interdependence
was conducted by Jay Forrester (1961) and reported in Zndustrial Dynamics.Over
Mabert and Venkataramanan 543

the last 35 years, hundreds of researchers have addressed various tasks such as
shop floor control and vehicle routing within the different stages of the supply
chain, and some have included the linkage between stages such as vendorhuyer
partnerships. Because of its size, no attempt will be made here to provide a com-
prehensive review of the literature. However, before discussing the new investiga-
tions reported in this research focus, we note a number of general research areas
that have made significant contributions to a better understanding and manage-
ment of the elements and tasks within the supply chain. A few references are pro-
vided to allow the interested reader a starting point for further investigation.
We begin by looking at the general location and transportation problem
research. As noted by Geoffrion and Powers (1993, the facilities location problem
has been a fruitful research area, with the typical problem structure represented by
a network of facilities (nodes) connected by a set of flows (arcs). Flows of materi-
als from suppliers to the ultimate customer are modeled to determine which plants
should produce which products, what transportation options should be used, and
which distribution centers should be opened. This body of literature has been very
helpful in configuring the site selection decision, which is an important design
issue in the planning of the supply chain. Both mathematical programming and
simulation have proved to be useful tools for investigation.
A closely allied research area to the location and transportation problem is
the multi-echelon inventory decision: this deals with both consumable and repair-
able supply items and focuses upon the quantity, timing, and location of material in
the chain. Simulation and analytical modeling have been used to help establish
inventory levels and ordering policies between stages. For example, Cohen and
Lee (1988) presented a series of linked submodels and heuristic procedures to
determine inventory levels, production rates, and shipping schedules from suppli-
ers to manufacturing, and from finished goods inventory through distribution.
Recognizing that uncertainty exists in managing the flow of material, important
performance criteria such as cost and customer service are used to evaluate differ-
ent inventory management operating strategies within the supply chain.
A fundamental element of the supply chain concerns the product design and
development functions. What will be the number, volume, and nature of out-
sourced parts, requiring suppliers to provide product and/or process development
support? As firms look to core competencies and outsource various development
activities like packaging design, managing that process becomes critical. As Clark
(1989) has shown, a number of trade-offs must be considered when evaluating in-
house versus supplier-providedsupport.
Real-time control of material and information flow is a cornerstone of
improved supply chain performance. A number of researchers (Pinedo, 1992;
Bhaskaran & Pinedo, 1992 ) have investigated various sequencing and dispatching
procedures for manufacturing parts within plants, whereas other investigators
(Bertsimas & Simchi-Levi, 1996) have looked at routing vehicles to distribute
products to customers. Critical to this flow control is information movement via
ED1 within the firm and between stages in the supply chain (Srinivasan, Kekre, &
Mukhopadhyay, 1994).
A growing body of literature is concentrating upon firm relationships devel-
oped between suppliers and customers for shared benefit, and joint venture
544 Challenges for Design and Management in the 21st Century

arrangements when entering new markets. Alliances and partnerships have been
increasing in our global business environment, and understanding their structure
and management is critical to their success (Heide & John, 1990; Monczka, Trent,
& Callahan, 1993).
In the last two decades we have seen significant advances in data capture and
analysis systems that improve response times. Until recently, the unavailability of
timely data limited one’s ability to plan the deployment of resources like inventory
or staff. However, the application of bar coding labels to products, documents,
containers, etc., and the accuracy of laser reading technology have provided an
opportunity to create useful databases (Inmon & Hackathorn, 1994 ) that drive bet-
ter decisions. Many of these decisions are aided by modem decision support sys-
tems (DSS) and artificial intelligence (AI) software (Holsapple & Whinston,
1996).
Finally, a supply chain is composed of numerous operations, and technolog-
ical change influences the operation’s process development implemented in the
chain. Changes in materials, hardware, tooling, transportation, material handling,
packaging, etc., ultimately control the performance of the supply chain. During the
last decade numerous developments in manufacturing, such as cellular manufac-
turing and automated material handling, have greatly increased throughput rates
and responsiveness of plants (Black, 1991). Also, developments within telecom-
munications have complemented other technologies such as microprocessors,
EDI, global positioning systems, etc., providing organizations with access to oper-
ational real-time information never before available.

RESEARCH FOCUS ARTICLES

Having provided a brief review of past research and major factors influencing sup-
ply chain performance, we turn our attention to recently completed research stud-
ies included in this research focus that contribute to our improved understanding
of the supply chain management function. As suggested in Figure 1, the initial
stage of the supply chain focuses on sources of supply and the numerous decisions
that occur at this level. As firms attempt to create virtual corporations by integrat-
ing suppliers into the decision-making structure to reduce product development
cycle time, increase delivery time performance, and reduce costs, determining
those factors that define successful interfirm relationships are critical. Monczka,
Petersen, Handfield, and Ragatz (“Success Factors in Strategic Supplier Alliance:
The Buying Company Perspective”) present a field study of 200 firms concerning
the use of strategic supplier alliances and those factors influencing success. Their
study reveals some interesting facts. First, although many f m s expend significant
effort to manage strategic alliances, not all are equally successful, requiring careful
pre-screening. Second, the ability to handle day-to-day activities and issues
requires constant attention; firms that focus on commitment, communications,and
interdependence have better alliance success than those that concentrate on initial
contractual arrangements. And third, alliances are resource and time intensive,
often limiting their application because of finite staff levels at purchasing f m s .
As already noted above, the nature and scope of the supplier-buyerrelation-
ship is important to the success of a company. Identifying key factors, which align
Maben and Venkataramanan 545

sourcing decisions to manufacturing’s goals, and ultimately drive increased cus-

tomer satisfaction, provides a better understanding of those areas in which supply
chain managers need to focus their attention to maximize the chain’s potential.
Narasimhan and Jayaram (“Causal Linkages in Supply Chain Management: An
Exploratory Study of North American Manufacturing Firms”) propose a frame-
work for supply chain integration to measure the effectiveness of strategic deci-
sions along the supply chain. Sample data from 127 U.S. and Mexican firms were
used to test the framework using a structural equation modeling approach to mea-
sure the strength of the linkages between identified factors and performance out-
comes. Although this study identifies and measures important goals such as cost,
speed, quality, and flexibility at the strategic or macro level, a better understanding
of how to implement programs to attain these goals is critical. As the old saying
goes, “The devil is in the detail.”
Improving customer satisfaction in a global economy frequently requires
firms to reengineer a supply chain for cost reduction and performance improvement.
Important tasks in reengineering include analysis of alternatives and understanding
of the risks associated with them. Simulation provides an effective tool to evaluate
supply chain reengineering efforts in terms of performance and risk. Swaminathan,
Smith, and Sadeh (“Modeling Supply Chain Dynamics: A Multiagent Approach”)
provide a supply chain modeling framework for rapidly reconfiguring the supply
chain based upon studies of several different supply chains. The authors outline the
approach, which uses library-based supply chain modeling components, and dis-
cuss its application at IBM.
As suggested by Swaminathan et al., reengineering the supply chain because
of business dynamics is becoming a necessity, and not an easy task. Although soft-
ware simulation tools can ease the burden of analysis, it is still a major endeavor.
Sita Bhaskaran (“Simulation Modeling of a Manufacturing Supply Chain”) illus-
trates the magnitude of a supply chain reengineering project for a blanking and
stamping operation at General Motors, using simulation as the primary analytic
tool. The paper describes the level of detail required to understand material and
information flows and evaluates different system configurations to identify
improvement.
Though purchasing has been traditionally viewed as having a limited role in
the business life of a firm, that perception has changed in the last decade with sup-
plier alliances, certificationprograms, and supply base reduction initiatives. Carter
and Carter (“InterorganizationalDeterminants of Environmental Purchasing: Ini-
tial Evidence from the Consumer Products Industry”) develop a model representing
purchasing’s involvement with environmental concerns, and test organizational
factors that influence performance. Survey data from 437 companies were used to
test the developed model, which represents an initial attempt at structuring a com-
plex set of activities influencing environmentalefforts by a firm. Their results indi-
cate that purchasing has a significant impact on company environmental concerns
and, if the purchasing function is to make a major contribution, it needs to span the
supply chain from vendors and the company’s marketing staff, to customers and
government agencies, to help integrate activities.
Redesigning the distribution segment of an existing supply chain network pre-
sents interesting challenges for supply chain decision makers. The reconfiguration
546 Challenges for Design and Management in the 21st Century

typically involves interactions among multiple factors including customer satis-

faction, market share, distribution costs, profits, and efficient performance of the
redesigned network. Satterfield and Robinson (“Designing Distribution Systems
to Support Vendor Strategies in Supply Chain Management”) propose a multidis-
ciplinary framework that considers the interactions between market share, profit-
ability, and distribution service in designing a distribution network. This
framework involves a logit model for estimating market share based on service and
price in the first stage. These parameters are included in a mixed-integer optimiza-
tion model for finding the best distributionnetwork in the second stage. The frame-
work has been applied to a design problem faced by an industrial chemical
distributor, demonstrating its robust nature.
Ross, Venkataramanan, and Ernstberger (“Reconfiguring the Supply Net-
work Using Current Performance Data”) propose an alternative two-stage frame-
work for distribution network design. In contrast to Satterfield and Robinson, this
framework relies on identifying the best set of practices in current operations to be
included in redesign of the distribution network. The first stage involves identify-
ing efficient practices in the current network using both qualitative and quantita-
tive measures. In the second stage, the efficient measures are quantified and
included in an integer programming optimization model for reconfiguring the dis-
tribution network. This framework is also demonstrated by its application with
operating data from an agriculture petroleum distributor serving the midwest
region of the United States.
Whether configuring a new supply chain or reconfiguring an existing net-
work, decision makers need to make strategic decisions such as warehouse and
distribution center locations, and which commodities will be processed at each
site. The general supply chain configuration models are combinatorial in nature,
which make these problems hard to solve. Some researchers have developed effi-
cient methods for solving the single-productcapacitated and uncapacitated ware-
house location problem using branch and bound solution techniques, dual ascent
procedures, and Lagrangian relaxation techniques. The work by Jayaraman (“An
Efficient Heuristic Procedure for Practical-Sized Capacitated Warehouse Design
and Management”) focuses upon the multiple product-multiple location decision,
using Lagrangian-based heuristic techniques for locating capacitated warehouses.
Computational results on a variety of problems indicate that these heuristics per-
formed well in terms of solution quality and solution time.
The lack of safety stocks in a just in time (JIT) arrangement between a sup-
plier and customer causes the purchasing firm to be very dependent upon the sup-
plier’s ability to meet specified due dates. A growing body of evidence indicates
that suppliers often hold larger inventories to decouple the linkage in the between
stages and smooth the supply chain operations. JIT proponents recommend that
suppliers should be discouraged from holding excessive inventories and meet the
demand through a reduction in variation in flow times by implementingJIT within
the supplying firm. To implement JIT at the supplier, a number of process changes
will be needed. However, some corresponding adjustments will also need to occur
at the customer’s firm. Grout (“Influencing a Supplier Using Delivery Windows:
Its Effect on the Variance of Flow Time and On-Time Delivery”) investigates the
effect of delivery time windows on variance of flow time at the supplier and on-time
Mabert and Venkataramanan 541

delivery performance at the customer. He presents a methodology that shows

reduction in flow time does not always improve timeliness of delivery. The paper
suggests that use of delivery time windows, along with penalties for late delivery,
can improve supplier performance.

FUTURE RESEARCH DIRECTIONS

It is our observation from reviewing both the submitted articles to this research
focus and prior published research, that only the surface of the supply chain man-
agement domain has been addressed. With changing dynamics due to global com-
petition and new technological advances in numerous areas, future researchers
interested in supply chain problems will have numerous opportunities to explore
critical management issues. We suggest six broad areas that are in need of greater
investigation.
1. Greater development of linked detail planning and control models for vertically
integrated firms on the supply chain needs to be done, with inclusion of all stages
of the chain. A number of current researchers (Cohen & Lee, 1988; Geoffrion &
Powers, 1995; Lee & Billington, 1993) have done an excellent job of develop-
ing procedures, optimal and heuristic, that help us model the supply chain to
improve performance. This work has primarily concentrated on the manufac-
turing and distribution part of the chain, with firms such as IBM and Hewlett-
Packard, which are highly vertically integrated. Further work is needed to
exploit the shared organizational data. The work by Arntzen et al. (1995) illus-
trates a movement in this direction.
2. Although vertically integrated firms normally share detail operating data, such
is often not the case for non-vertically integrated firms. Therefore, a different
approach may be necessary for these firms. An alternative would be the devel-
opment of linked rough cut planning and control models for coordination of
non-vertically integrated firms on the supply chain. These models would both
utilize more available aggregated data and focus more on risk analysis.
3. In Figure 1, the supply chain was characterized by the flow of materials from
sources of supply to customers. However, there are other information-type
flows in marketing, finance, and human resource management that parallel and
assist the material flow. For example, financial transactions occur all along the
supply chain. These flows between stages should be captured and incorporated
into the chain configuration to better understand the interaction of all elements,
because they often trigger the physical flow.
4. It has been recognized in the quality area that product design is a fundamental
element in keeping quality-related costs low. The same is true for the supply
chain. For example, fewer components in a product means fewer suppliers and
service parts. Therefore, future researchers need to explicitly include the prod-
uct development function and its impact on the supply chain configuration.
5. As was noted with product design, how process development activities are
employed also can greatly impact supply chain performance. For example, if a
548 Challenges for Design and Management in the 21st Century

fm uses a postponement strategy to configure the product closer to the point

of use, the packaging and material handling processes are influenced. Because
of this, we believe the explicit inclusion of the process development function
that influences design issues in manufacturing, material handling, packaging,
information technology, and transportation need to be present when evaluating
the supply chain configuration.
6. It is obvious that the supply chain management paradigm has been appropri-
ately targeted and applied to manufacturing firms producing and marketing
products for both domestic and international markets. The question to be raised
is its applicability and value to the non-manufacturing sector, which represents
over 70% of the United States Gross National Product. We believe future
researchers should explore the application of the supply chain concept in non-
manufacturing settings, like financial services and health care, to determine its
robustness and overall value.
The above suggestions are not all-inclusive. They represent the collective
wisdom obtained through our review of the literature, work on this research focus,
focused panel sessions at conferences, and discussions with academic researchers
and practicing managers. [Submitted: January 9, 1997. Accepted: April 13,1998.1

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APPENDIX
Supply Chain Linkage Referee List
Name Institution
Yasemin Aksoy Tulane University
Harish Bahl California State University
Jaydeep Balakrishnan University of Calgary
William Berry Ohio State University
Joseph Biggs California Polytechnic Institute
Joseph Blackburn Vanderbilt University
Paul Bobrowski Syracuse University
Frank Buffa Texas A&M University
Thomas Callarman Arizona State University
Gerald Campbell University of Connecticut
Phillip Carter Arizona State University
Stephen Chapman North Carolina State University
Daniel Conway Virginia Tech University
Edward Davis University of Virginia
K. Roscoe Davis University of Georgia
Vijay Desai HNC Software Inc.
Shad Dowlatshahi University of Texas-El Paso
John Dumond Rand Corporation
Ellen Dumond California State University-Fullerton
Lisa Ellram Arizona State University
Kathy Ernstberger Indiana University-South East
Barbara Flynn Wake Forest University
Laura Forker Arizona State University
James Freeland University of Virginia
Mabert and Venkataramanan 55 1

Supply Chain Linkage Referee List (continued)

Li-Lian Gao Hofstra University
Larry Giunipero Florida State University
Robert Handfield Michigan State University
Arthur V. Hill University of Minnesota
Nancy Hyer Vanderbilt University
Basheer Khumawala University of Houston
Larry La Forge Clemson University
Stephen Lawrence University of Colorado
Arvinder Loomba University of Southern California
Michael Maggard Northeastern University
Amold Maltz New Mexico State University
Paul Mangiameli University of Rhode Island
Melvin Mattson Radford University
Constance McLaren Indiana State University
Curtis McLaughlin University of North Carolina-Chapel Hill
Satish Mehra Memphis State University
David Olson Texas A&M University
Richard Penlesky Bowling Green State University
Jonathan Pinder Wake Forest University
Peter Pinto Bowling Green State University
Michael Pohlen University of Delaware
Alan Raedels Portland State University
Gary Ragatz Michigan State University
Larry Ritzman Boston College
E. Powell Robinson Texas A&M University
Roberta Russell Virginia Polytechnic Institute
Gary Scudder Vanderbilt University
Mark Sharfman University of Oklahoma
Dwight E. Smith-Daniels Arizona State University
V. Sridharan Clemson University
Daniel Steele University of South Carolina
Warwan Wafa University of Southern Indiana
Fred Weston Colorado State University
Greg White University of Southern Illinois
Wayne Winston Indiana University
Sajjad Zahir University of Lethbridge
552 Challenges for Design and Management in the 21st Century

Vincent A. Mabert is a professor of operations management at the Kelley School

of Business, Indiana University. Prior to joining the Indiana University faculty, he
held positions with Purdue University, Bowling Green State University, Ohio State
University, and Arthur Andersen & Company. His publications include articles in
Management Science, Decision Sciences, IIE Transactions,Journal of Operations
Management, International Journal of Production Research, and two
management casebooks. He conducts research and consults in the areas of
forecasting, manpower planning, and workforce scheduling for manufacturing and
service-oriented organizations. He is a Fellow of the Decision Sciences Institute.

M. A. Venkataramanan is an associate professor of operations and decision

technologies at the Kelley School of Business, Indiana University. His research
interests include network modeling, optimization techniques, combinatorial
problems, artifical intelligence, high speed computing, and supply chain models.
His research has been published in a variety of journals including Operations
Research, Annals of Operations Research, Naval Research Logistics, Computers
and OR, EJOR, and Mathematical Modeling.