- Integration and Supply Chain Management
- What Factors Lead to Integration?
- What Are Integration's Performance Implications?
- Solidifying Our Understanding of Integration
- Toward Consensus on Cross-Functional Integration
- Extending Previous Definitional Work on Integration
- Planting the Seeds for Integration
- Tools Available to Managers
Toward Consensus on Cross-Functional Integration
Strong conceptual definitions, particularly of established concepts, must be grounded in research. Thus, a comprehensive definition of integration would have to include elements of the multiple perspectives outlined earlier. As such, we propose the following definition of integration:
- Integration is an ongoing process in which functionally diverse areas of an organization collaborate, coordinate, and communicate to arrive at mutually acceptable outcomes for their organization.
According to this definition, integration is conceived as a multidimensional concept that combines elements of collaboration, coordination, and communication. Functional diversification is conceptualized as antecedent to integration; that is, diversification represents the assumed state in which the integration of goals, activities, and knowledge occurs. Likewise, “mutually acceptable outcomes for the organization” are seen as the result of integration, rather than as a dimension of the concept. Definitions of the concept’s three dimensions—cross-functional collaboration, cross-functional coordination, and cross-functional communication—are important for completely understanding the phenomenon of integration as it exists in modern business organizations.
Collaboration generally refers to the mutual establishment of the goals and processes that govern a joint effort. Collaboration represents a special case of the more general concept of cooperation. Cooperation can be said to occur in a multi-agent system when (1) agents have a goal in common that no agent could achieve in isolation, (2) agents act to achieve that goal, and (3) agents perform actions that enable or achieve not only their own goals, but also the goals of other agents. Thus, cooperation is centrally concerned with how agents prioritize their own actions with reference to individual and joint goals. It entails not taking advantage of other agents who behave cooperatively. Cooperative agents are therefore willing to make decisions that may suboptimize individual goals in furtherance of a joint goal on the understanding that other agents in the system will behave likewise.
Cooperation incorporates more general ideas found in the integration literature, such as “working together.” Note, however, that cooperation does not imply coordination (discussed later), insofar as agents can act toward a common goal without any explicit sequencing of decisions or actions. Yan and Dooley make this distinction in arguing that “integration encompasses coordination (alignment of actions) and cooperation (alignment of interests).”10
Integration, however, goes beyond simple cooperation to include cross-functional collaboration. Collaboration includes working toward common goals, but also entails an ongoing process of establishing those goals and maintaining joint agreement on how best to achieve them. Thus, participants integrate individual goals by negotiating a mutual understanding of group objectives and the role each participant plays in achieving those objectives. In the supply chain context, “collaboration facilitates an assessment of the state of the supply chain, of the needs of the organization, and the determination of an approach for creating and sustaining value based on that collaborative assessment.”11
Collaboration represents an often difficult process of resolving conflicting interests to establish a joint plan of action with few enforcement mechanisms beyond voluntary agreement. It therefore requires functions to develop meaningful relationships based on trust and mutual respect. It also entails an appreciation of the unique constraints faced by the participants, and may therefore include sharing resources, ideas, and/or information to overcome such constraints. Stank characterizes collaboration in the following way:
- Collaboration depends on people’s ability to trust each other and to appreciate one another’s expertise. It is a voluntary process where two or more departments work together, share resources, and seek to achieve collective goals. It is fundamentally a process that cannot be mandated, programmed, or formalized. Collaboration emphasizes cooperation and is very much ‘contingent upon the ability of individuals, scattered within and across organizations to build meaningful relationships.’12
At its best, collaboration allows functions to continuously align individual and common goals as they seek to meet the demands of dynamic environments. Based on this understanding, the following definition of cross-functional collaboration is proposed:
- Cross-functional collaboration is an ongoing process of jointly defining, adjusting, and working toward common goals while maintaining mutual agreement on how best to achieve them.
Coordination represents a distinct but related concept to collaboration. Whereas collaboration defines common goals, coordination refers to the process of bringing together the contributions of constituent members in a way that attempts to consciously optimize a given goal. More colloquially, coordination is determining “what happens when” in achieving some objective. Thus, the central aspect of coordination is the integration of interdependent activities. But, in the context of integration, coordination specifically refers to the process of ordering functional activities—in terms of both substance and timing—so that process inputs and outputs are matched with maximal efficiency. The concept encompasses terms such as “synchronization” and “seamless supply chain operations” insofar as they also relate to inventory control and waste reduction. Germain and Iyer, for example, emphasized coordination in defining integration as the “unified control” of successive supply chain processes aimed at streamlining operations, reducing bullwhip effects, and efficiently matching supply to demand.13
Coordination is based on a systems view of the supply chain that sees functional activities as part of ongoing process flows. It may entail, for example, the use of advanced planning systems that employ optimization and metaheuristic approaches to find systemwide solutions or liaison personnel whose specific job it is to coordinate the efforts of several departments. It is important to stress that the concept of coordination presumes a predefined goal. As Oliva and Watson point out: “Coordination...should be considered different from integration in that where coordination takes the target for granted, integration often involves determining this target simultaneously with the aligning of allocation decisions.”14 Based on this understanding, the following definition of cross-functional coordination is proposed:
- Cross-functional coordination is an ongoing process of ordering supply chain activities across functional areas based on a systemwide approach that attempts to consciously optimize a given goal.
In general, any definition of communication needs to specify (1) what constitutes a communicative act, (2) whether the intention of the sender is considered, and (3) whether the evaluation of the communicative act by the receiver is considered. In the context of integration, communicative acts can take the form of both structured information exchange processes and informal interactions across functions. More importantly, however, the content of these communicative acts represents some tacit and/or explicit knowledge that resides within the sender function. For instance, Mollenkopf refers to information dissemination across marketing and logistics in terms of information regarding products and target customer segments (from marketing to logistics) and warehousing and transportation issues (from logistics to marketing).15 Other authors have likewise specified the content of communicative acts in terms that indicate the transference of knowledge from one functional area to another. Thus, in the context of integration, a communicative act is not simply the exchange of data or even face-to-face discussions by cross-functional teams; rather, a communicative act is the transfer of knowledge housed in one functional area to other areas of the firm.
Within a supply chain context, moreover, arriving at a shared interpretation of transmitted knowledge is critical to planning and implementing a collective response to the business environment. Thus, the intention of the sender (what the communicative act was meant to communicate) and the evaluation of the receiver (how the communicative act was interpreted) also play an important role in defining cross-functional communication. Indeed, researchers have specifically considered the importance of sender intention and receiver interpretation to integration. More broadly, several research papers have highlighted the need for mutual understanding as a critical element in cross-functional communication. Based on this understanding, the following definition of cross-functional communication is proposed:
- Cross-functional communication is an ongoing process of transferring knowledge from one functional area to other areas of the firm so that a mutual understanding of the relevance of the knowledge is achieved.