Organizations now recognize that business functions that manage the supply chain (purchasing, logistics, and operations) are critical contributors to competitive advantage and profitability. Until recently, organizations’ attempts to gain competitive advantage focused primarily on marketing, product differentiation, and the exploration of new distribution channels (e.g., Internet, e-commerce, e-business, and e-market places). Recent studies, however, suggest that senior executives have added supply chain management (SCM) to this list, considering it as critical or very important to their company and industry. There is also increasing evidence that companies that excel in managing their supply chains repeatedly outperform their rivals (Accenture, 2002).
Why have executives’ perceptions of the relative importance of SCM changed so radically? Handfield and Nichols (2002) identified three major developments in global markets and technologies that have contributed to this shift:
- Ever-increasing customer demands in the areas of product and service cost, quality, delivery, technology, and cycle time brought about by global competition;
- The emergence—and greater acceptance—of higher-order cooperative inter-organizational relationships; and
- The information revolution.
In other words, it has become clear that most companies must collaborate with suppliers and customers in order to respond to market needs, with such collaboration enabled by new information technologies.
Is collaboration always beneficial? We address this question from the perspective of what we refer to as pain points — that is, specific and well-defined aspects of SCM that are hindering smooth flow and ability to innovate in a firm’s supply chain as perceived by senior supply chain executives. An understanding of current supply chain pain points is essential to coming to grips with the role of collaboration and the trust it often implies in the chain. Collaboration is most likely to arise in response to certain pain points, and its development may well generate additional such points.
Therefore, in this study we share our insights into the key areas for future research identified by practitioners who experience the daily pains associated with managing supply chain relationships. Our pain point map is useful for defining the role of trust and collaboration in the SCM toolbox, allowing us to move away from the simultaneous errors of taking trust and collaboration completely on faith in all supply chain contexts and holding back from investment in relational capital out of fear and outdated thinking in contexts where it would provide clear benefit.