- Learning Objectives
- Evolution of the Supply Chain Concept
- Total Systems Approach and Boundary Spanning
- Conceptual Foundations of Demand Chain, Value Chain, and Supply Chain
- Strategic Alliances and Partnerships
- Organizational Learning from Strategic Alliances
- Interfaces among Purchasing, Production, Logistics, and Marketing
- Theory of Constraints (TOC) for Supply Chain Management
- Change Management for Supply Chain Management
- Chapter Summary
- Study Questions
- Zara's Rapid Rise as a Cool Supply Chain Icon
Organizational Learning from Strategic Alliances
Because today’s competition is increasingly knowledge based, knowledge can be a key productive resource of the firm. Recognizing the opportunity to leverage knowledge as a competitive differentiator, many firms that are strategically aligned with other firms across the supply chain may be interested in learning about customer needs, market forces, industry dynamics, business acumen, and technological know-how from their supply chain partners. Thus, one of the incentives for forming strategic alliances among supply chain partners can be organizational learning. For example, according to the 15th annual Third-Party Logistics Survey conducted by Langley in 2010, many third-party logistics providers (or 3PLs) gave their clients new and innovative ways (“knowledge”) to improve logistics productivity by creating long-term 3PL-client relationships with an open and collaborative spirit. In general, organizational learning is defined as unconscious or deliberate development of new knowledge that has the potential to improve organizational capability and performance in the short and long run (Fiol and Lyles, 1985; Slater and Narver, 1995; Bell et al., 2002). Organizational learning consists of knowledge acquisition, dissemination, and shared interpretation of knowledge across the organizations (Sinkula, 1994; Min, 2001). The knowledge that can be gained from other organizations has two types:
- Explicit knowledge—Knowledge that can be codified and easily transmitted to partnering organizations. Its examples are knowledge often captured in the forms of documented texts, tables, charts, figures, diagrams, scientific formula, mathematical expressions, and written performance metrics (Nonaka, 1991).
- Tacit knowledge—Knowledge that cannot be easily communicated to partnering organizations due to its implicit, noncodified content. Examples include technical expertise and job-specific insights possessed by vehicle dispatchers, airplane pilots, ocean vessel navigators, insurance underwriters, and logistics engineers.
Organizational learning can occur at two different levels of the decision-making hierarchy (see Fiol and Lyles, 1985; Sinkula, 1994):
- Operational learning—Allows partnering organizations to improve their day-to-day practices and policies through the mutual detection and correction of errors and inefficient operations
- Strategic learning—Allows partnering organizations to redefine their overall missions, strategies, goals, and philosophies through the development of innovative thoughts and ideas
Regardless of the type of organizational learning, the extent and effectiveness of organizational learning may be greatly influenced by the level of trust between partnering organizations. Without mutual trust, organizations in the supply chain may be unwilling to share their information and consequently reluctant to diffuse their innovations and technology to their supply chain partners. Therefore, it is important to build trust among supply chain partners before forming strategic alliances and then exploiting the opportunity to learn from each other. Indeed, a study conducted by Kwon and Suh (2004) indicated that the presence of trust greatly improves supply chain performances. On the other hand, a lack of trust among supply chain partners often results in inefficient and ineffective performance as the transaction costs increase. Also, in order to build trust among the partners, there should be an opportunity for the firm to interact with its partners through an open communication channel. Once trust is established, organization learning necessitates experimentation, which involves unlearning of failing routines, and encouraging knowledge sharing between the partners to develop new or innovative practices (Kwon and Suh, 2004; Krikke and Caniëls, 2010). The last stage of organizational learning, as shown in Figure 1.5, involves alignment that changes routines and eliminates bad habits, while embracing a better way of doing things.
Figure 1.5. Organizational learning process through strategic alliance