Developing an Agile Supply Chain Model for SMEs

417 Pages·2017·11.63 MB·English

Developing an Agile Supply Chain Model for SMEs

Thesis submitted in accordance with the requirements of the
University of Liverpool for the degree of Doctor in Philosophy by
Sean Hugh Naughton

School of Management
Faculty of Humanities and Social Sciences

July 2016

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ABSTRACT
Rising worldwide competition is making it increasingly difficult for SME organisations to compete in the
marketplace as traditional means of manufacture, and modes of delivery are being changed through
technological advancements. In line with these factors, organisations are ever more capable of producing
goods that are more bespoke and personalised than in the past and within the price ranges and affordability
levels of demanding markets. Whilst large organisations have the power to enforce supply chain compliance in
order to meet these changes, it is not always the case for SMEs.
The agile supply chain philosophy moves away from traditional methods under which large organisations
enforce supply chain compliance, and embraces the concept of supply chain agility that allows the supply
chain as a whole to move forward as one and share the benefits as a developed and cohesive unit. Such a
philosophy should be to the advantage of all organisations, but ought to be of particular interest to SMEs as its
use could assist in improving their competitiveness.
This thesis is primarily concerned with the development of agile supply chains within SME organisations. The
research sets out to develop the means through which SMEs can develop their agile supply chains so as to
make them more efficient and competitive both now and in the future. The research is set upon existing
theories and models, particularly following the works of Sharifi et al. (2006), Ismail and Sharifi (2006), Ismail et
al., (2006) and Ismail et al., (2011) so as to contribute further to their concepts theoretically and to also
present the practical means by which such frameworks can be utilised in industry. The research provides a
link between manager perceptions and underlying factors that affect their organisations and how they relate
to the markets served. This has been achieved through the development of a model through which SMEs can
analyse their present operating position, consider new product features, potential supply chain partners and
the means through which to develop their agile supply chains as a complete unit.
Using case study methodology, some extensive fieldwork has been undertaken to examine the ideas and
extend our understanding of the approaches to build and sustain agile networks for organisations introducing
products into markets. The study has assisted in reforming and developing the initial models into practical
tools. Further to this, the research offers a series of developmental roadmaps that can be followed by SMEs to
assist in the progress of developing agility into their supply chains.
The outcomes from the research provide a contribution to academic theory and practice and build upon
previous research, taking it forward with practical tools that organisations can utilise. The findings provide
evidence for the benefits that can be derived from the developed models such that their application could be
realistically considered within a practical setting.
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ACKNOWLEDGEMENTS

I would like to thank the following for their support throughout the period of this research:

Primarily, I would like to thank my Supervisors Dr. Hossein Sharifi and Dr. Hossam Ismail. Your input,
advice and feedback has been gratefully received and appreciated.

I would like to express my appreciation to the organisations and individuals that volunteered their time
and efforts in the data gathering aspects of this study.

To my wife and family for your on-going support - thank you for your patience during the time dedicated
to this thesis.

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TABLE OF CONTENTS
ACKNOWLEDGEMENTS ............................................................................................................... 3

1.0 INTRODUCTION ....................................................................................................................... 13
1 . 1 Change and Uncertainty in the Global Business Environment ................................................ 13
1 . 2 Strategies in Response to Uncertainties: The Agility Concept ................................................ 14
1 . 3 Agile Supply Chains: an Extension to the Agility Concept ....................................................... 15
1 . 4 SMEs and Sustained Competitiveness under Uncertainty ...................................................... 17
1 . 5 The Rationale and Key Agenda for the Research .................................................................... 18
1 . 6 Research Questions ................................................................................................................. 19
1 . 7 Research Method .................................................................................................................... 20
1 . 8 Thesis Structure ....................................................................................................................... 20

2.0 LITERATURE REVIEW ................................................................................................................ 22
2.1. The Business Environment – Setting the Scene for Agility ...................................................... 23
2.2. The Emergence of Agility ......................................................................................................... 25
2.3. The Emergence of Agile Supply Chains ................................................................................... 34
2.4. Supply Chain Attractiveness .................................................................................................... 36
2.5. Frameworks for Achieving Agile Supply Chains ....................................................................... 38
2.6. Frameworks for Establishing Product Requirements .............................................................. 47
2.7. Frameworks for Establishing Supply Chain Partners ............................................................... 48
2.8. Frameworks for Establishing Roadmaps ................................................................................. 51
2.9. SMEs ........................................................................................................................................ 55
2.10. Supply Chains and SMEs .......................................................................................................... 58
2.11. Research Gap ........................................................................................................................... 60

3.0 THEORETICAL FRAMEWORK ....................................................................................................... 62
3.1. Key Framework Models ........................................................................................................... 62
3.2. The Knowledge Gap ................................................................................................................ 64
3.3. Approach to Model Development ........................................................................................... 68
3.4. PFS (Present Functioning State) Model Development ............................................................ 72
3.5. Identification of Product Features .......................................................................................... 77
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3.6. Identification of Supply Chain Partners ................................................................................... 84
3.7. Accompanying Roadmap Tool ................................................................................................. 95
3.8. Framework Model Limitations ................................................................................................ 98
3.9. Summary ............................................................................................................................... 100

4.0 METHODOLOGY ................................................................................................................ 101
4.1. Research Objectives .............................................................................................................. 101
4.2. Research Methodology ......................................................................................................... 102
4.2.1. Philosophical Approach ......................................................................................................... 102
4.2.2. Research Philosophy.............................................................................................................. 103
4.3. Research Strategy, Process and Planning .............................................................................. 105
4.4. Data Collection and Sample Identification ............................................................................ 107
4.5. Questionnaire Design ............................................................................................................ 110
4.6. Data Analysis ......................................................................................................................... 112
4.7. Data Validation ...................................................................................................................... 113
4.8. Research Limitations and Challenges .................................................................................... 115
4.9. Ethics and Dissemination....................................................................................................... 118

5.0 FINDINGS ............................................................................................................................. 121
5.1. Case Study Organisation A..................................................................................................... 121
5.2. Case Study Organisation B ..................................................................................................... 127
5.3. Case Study Organisation C ..................................................................................................... 135
5.4. Case Study Organisation E ..................................................................................................... 142
5.5. Case Study Organisation F ..................................................................................................... 149
5.6. Case Study Organisation G .................................................................................................... 158
5.7. Case Study Organisation H .................................................................................................... 166
5.8. Case Study Organisation K ..................................................................................................... 171
5.9. Case Study Organisation L ..................................................................................................... 177
5.10. Case Study Organisation N .................................................................................................... 183
5.11. Case Study Organisation O .................................................................................................... 190
5.12. Data Analysis Overview ......................................................................................................... 196

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6.0 DISCUSSION .......................................................................................................................... 212
6.1 Approach to Agile Supply Chains and their Implementation ................................................ 213
6.2 Agile Supply Chains and the PFS Model ................................................................................ 221
6.3 Product Features ................................................................................................................... 248
6.4 Supplier Management ........................................................................................................... 252
6.5 Reflection and Summary ....................................................................................................... 262

7.0 ROADMAPS .......................................................................................................................... 264
7.1 Linking the PFS Model to the Roadmaps ............................................................................... 265
7.2 Roadmap Development ......................................................................................................... 266
7.3 The PFS Model Areas of Consideration and Roadmaps ........................................................ 270
7.3.1 Market Risk and Products Roadmap Chain ........................................................................... 275
7.3.2 Financial Situation Roadmap Chain ....................................................................................... 286
7.3.3 Vulnerabilities Roadmap Chain ............................................................................................. 302
7.3.4 Suppliers and the Supply Chain Roadmap Chain ................................................................... 325
7.4 Roadmap Summary ............................................................................................................... 340

8.0 CONCLUSION ........................................................................................................................ 342
8.1 Summary of Chapters ............................................................................................................ 342
8.2 Review of Original Objectives ................................................................................................ 343
8.3 Contribution to Knowledge and Overview of Research Findings .......................................... 345
8.4 Main Conclusions of the Research ........................................................................................ 346
8.5 Practical Implications for Industry ......................................................................................... 348
8.6 Limitations of the Research ................................................................................................... 348
8.7 Recommendations for Future Research ................................................................................ 350
8.8 Concluding Remarks .............................................................................................................. 351

9.0 BIBLIOGRAPHY ...................................................................................................................... 352

10.0 APPENDICES ....................................................................................................................... 380
Appendix A........................................................................................................................................ 380
Appendix B - Spreadsheet Formulae Used in Conjoint and Repertory Grid Analysis ....................... 406

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TABLE OF FIGURES
Figure 2. 1 - Overview of Areas Considered in Literature Review (Author) ................................................ 22
Figure 2. 2 - The EFQM Excellence Model (EFQM, 2013) ............................................................................ 40
Figure 2. 3 - A framework for agile supply chains (Ismail and Sharifi, 2006, pp. 435) ................................ 41
Figure 2. 4 - Agility in supply chains through design of supply chain and design for the supply chain (Ismail
and Sharifi, 2006, pp. 440) ...................................................................................................... 43
Figure 2. 5 - Strategic Agility Framework Stages (Ismail et al., 2011, pp. 5475) ......................................... 44
Figure 2. 6 – Ansoff Matrix (Ansoff, 1965 in Richardson and Evans, 2007, pp. i) ........................................ 45
Figure 2. 7 - Extended Ansoff Matrix (Sharifi et al., 2013, pp. 398) ........................................................... 45
Figure 2. 8 - Agile supply chain development framework (Sharifi et al., 2006, pp. 1094) .......................... 46
Figure 2. 9 - The Agility Road Map Process (Ismail et al., 2006, pp.15)....................................................... 53

Figure 3. 1 - Conceptual Model Overview (Author) .................................................................................... 69
Figure 3. 2 – Representation of Data Entry into PFS Model (Author) ......................................................... 69
Figure 3. 3 - Data Gathering & Model Implementation Process (Author)................................................... 71
Figure 3. 4 - Example PFS Model Score Output (Author) ............................................................................ 75
Figure 3. 5 - Example PFS Model Score Results (Author) ............................................................................ 77
Figure 3. 6 - Example Spreadsheet Conjoint Analysis Model (Author) ....................................................... 83
Figure 3. 7 - Example Outputs from Conjoint Analysis Model (Author) ...................................................... 83
Figure 3. 8 - Work Flow for Repertory Grid Analysis in this thesis (Author) ............................................... 86
Figure 3. 9 - Repertory Grid Analysis Process Flow (Author) ...................................................................... 88
Figure 3. 10 - Example of Repertory Grid Analysis Spreadsheet Model Internal Organisation Rankings
(Author) ................................................................................................................................ 89
Figure 3. 11 - Example of Lookup Values for Repertory Grid Analysis Spreadsheet Model Internal
Organisation Rankings (Author) ............................................................................................ 90
Figure 3. 12 - Example of Repertory Grid Analysis Spreadsheet Model Supplier Rankings (Author) .......... 91
Figure 3. 13 - Example Repertory Grid Analysis Values from Lookup Table (Author) ................................. 92
Figure 3. 14 - Example Repertory Grid Analysis Calculation Rankings in Spreadsheet Model (Author) ..... 94
Figure 3. 15 – Basic IDEF0 Model (adapted from Laguna and Marklund, 2013, pp. 138) ........................... 96
Figure 3. 16 – IDEF0 Key Activities (adapted from Akasah et al., 2010, pp. 5) ............................................ 97

Figure 4. 1 - Overview of the Research Process Adopted for this Thesis (Author) ................................... 105
Figure 4. 2 – The Five Stage Research Process Model (Stewart et al., 2002, pp. 420) .............................. 107

Figure 5. 1 - Organisation A PFS Model Score (Author) ............................................................................ 126
Figure 5. 2 - Organisation B PFS Model Score (Author) ............................................................................. 134
Figure 5. 3 - Organisation C PFS Model Score (Author) ............................................................................. 140
Figure 5. 4 - Organisation E PFS Model Score (Author) ............................................................................. 148
Figure 5. 5 - Organisation F PFS Model Score (Author) ............................................................................. 156
Figure 5. 6 - Organisation G PFS Model Score (Author) ............................................................................ 163
Figure 5. 7 - Organisation H PFS Model Scores (Author) ........................................................................... 169
Figure 5. 8 – Organisation K PFS Model Scores (Author) .......................................................................... 175
Figure 5. 9 - Organisation L PFS Model Score (Author .............................................................................. 181
Figure 5. 10 - Organisation N PFS Model Score (Author) ......................................................................... 187
Figure 5. 11 - Organisation O PFS Model Score (Author) .......................................................................... 194
Figure 5. 12 – Barriers that will Affect Growth Over the Next 5 Years (Author) ....................................... 199
Figure 5. 13 – Percentage Overview of Barriers that will Affect Growth Over the Next 5 Years (Author) 200
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Figure 5. 14 - Aggregated Results Indicating Technical Vulnerability for Data Set (Author) ..................... 204
Figure 5. 15 - Aggregated Results Highlighting Exposure Vulnerability (Author) ...................................... 206
Figure 5. 16 – Aggregated Results Indicating Organisational Belief of Factors Affecting Product Success
(Author) .............................................................................................................................. 208
Figure 5. 17 – Aggregated Results Illustrating the Significance of Economic Considerations to Participating
SMEs (Author) ..................................................................................................................... 210

Figure 6. 1 – Breakdown of Production Format of all SMEs from Questionnaire Interview Data (Author)
......................................................................................................................................................... 215
Figure 6. 2 – PFS Model Overview of All Results for each Section/Question Area (Author) ..................... 230
Figure 6. 3 – PFS Model Market Risk Results (Author) .............................................................................. 233
Figure 6. 4 - PFS Model Suppliers and Supply Chain Results (Author) ...................................................... 234
Figure 6. 5 - PFS Model Suppliers and Supply Chain Results Showing Minimum and Maximum Possible
Data Outcomes (Author) ................................................................................................................. 235
Figure 6. 6 - PFS Model Financial Situation Results (Author) .................................................................... 236
Figure 6. 7 - PFS Model Relationship with Suppliers Results (Author) ...................................................... 237
Figure 6. 8 - Relationship with Suppliers PFS Model Results Overview (Author) ...................................... 238
Figure 6. 9 - PFS Model Suppliers and the Future Results (Author) .......................................................... 239
Figure 6. 10 – Suppliers and the Future PFS Model Results Overview (Author) ....................................... 240
Figure 6. 11 – PFS Model Product Results (Author) .................................................................................. 241
Figure 6. 12 – PFS Model Results – Relationship with Suppliers Relative to Products (Author) ............... 242
Figure 6. 13 – PFS Model Business Environment Results (Author) ........................................................... 243
Figure 6. 14 – PFS Model Results Comparing the Business Environment to the Financial Situation Outputs
(Author) ........................................................................................................................................... 244
Figure 6. 15 – PFS Model Results Comparing Environment to Market, Suppliers and the Supply Chain and
Product (Author) .............................................................................................................................. 245
Figure 6. 16 – PFS Model Vulnerability Results (Author) .......................................................................... 246
Figure 6. 17 – PFS Model Vulnerabilities Relative to the Business Environment Results(Author)............ 247
Figure 6. 18 – Repertory Grid Analysis ‘Low’ Responses (Author) ............................................................ 256
Figure 6. 19 – Repertory Grid Analysis ‘Medium’ Responses (Author) ..................................................... 257
Figure 6. 20 – Repertory Grid Analysis ‘High’ Responses (Author) ........................................................... 258
Figure 6. 21 – Aggregated Totals of Internal and External Factor Inputs in Repertory Grid Analysis
(Author) ........................................................................................................................................... 259

Figure 7. 1 - Overview of Workings of Roadmap Tool (Author) ................................................................ 265
Figure 7. 2 – Appropriate Roadmap Chain Selection through PFS Model Results (Author) ..................... 265
Figure 7. 3 – Example of Previous Version of Single-Page Roadmap (Author) ......................................... 267
Figure 7. 4 – Basic example of IDEF0 Model (adapted from Laguna and Marklund, 2013, pp. 138) ........ 268
Figure 7. 5 – Decomposition Overview of the IDEF0 Diagrams (Author) .................................................. 269
Figure 7. 6 - Organisation G PFS Model Score (Author) ............................................................................ 271
Figure 7. 7 - Path to Organisation G’s Agility (Author) .............................................................................. 274
Figure 7. 8 - Determine Market and Product Viability Roadmap (Author) ............................................... 277
Figure 7. 9 - Determination of Market Structure and Presence Roadmap (Author) ................................. 279
Figure 7. 10 - Determination of Market Place of Operation (Author)....................................................... 281
Figure 7. 11 - Determine Price of Component / Product (Author) ............................................................ 283
Figure 7. 12 - Determination of Promotion Format (Author) ................................................................... 285
Figure 7. 13 – Financial Status Roadmap (Author) .................................................................................... 288
Figure 7. 14 – Financial Situation Roadmap – Effective Use of Economic Factors (Author) ..................... 290
Figure 7. 15 – Financial Situation Roadmap – Organisation Financial Status (Author) ............................. 292
Figure 7. 16 – Financial Situation Roadmap – Financial Operating Costs (Author) ................................... 294
Figure 7. 17 – Financial Situation Road Map – Profitability from Sales Relative to Costs (Author) .......... 296
Figure 7. 18 – Financial Situation Road Map – Managing the Effects of Inflation (Author) ...................... 298
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Figure 7. 19 – Financial Situation Road Map – Effect of Interest Rates (Author) ...................................... 300
Figure 7. 20 - Avoiding Vulnerabilities Roadmap (Author) ........................................................................ 303
Figure 7. 21 - Identify Potential Areas of Vulnerability Roadmap (Author) .............................................. 305
Figure 7. 22 - Highlighting Societal Vulnerabilities Roadmap (Author) ..................................................... 308
Figure 7. 23 - Highlighting Infrastructural and Transportational Vulnerabilities (Author) ........................ 310
Figure 7. 24 - Highlighting HR Vulnerabilities (Author) ............................................................................. 312
Figure 7. 25 - Highlighting Legal Vulnerabilities Roadmap (Author) ......................................................... 314
Figure 7. 26 - Highlighting Energy Vulnerabilities (Author) ....................................................................... 316
Figure 7. 27 – Highlighting Technological Vulnerabilities Roadmap (Author) ........................................... 318
Figure 7. 28 - Highlighting Technological Vulnerabilities Roadmap (Author) ........................................... 320
Figure 7. 29 - Highlighting Environmental Vulnerabilities Roadmap (Author) .......................................... 322
Figure 7. 30 - Potential Environmental Vulnerabilities Roadmap (Author) ............................................... 324
Figure 7. 31 - Supply Chain Roadmap Overview (Author) ......................................................................... 327
Figure 7. 32 - Supply Chain Roadmap (Author) ......................................................................................... 329
Figure 7. 33 - Design Components Roadmap (Author) ............................................................................. 331
Figure 7. 34 - Find Suitable Supplier Roadmap (Author) ........................................................................... 333
Figure 7. 35 - Align Supplier Needs with Organisation Roadmap (Author) ............................................... 335
Figure 7. 36 - Develop Supply Chain Structure Roadmap (Author) ........................................................... 337
Figure 7. 37 - Integrate Systems and Implement Supply Chain (Author) .................................................. 339
Figure 7. 38 - Cycle of Roadmap Development (Author) .......................................................................... 341

Figure 8. 1 – Model of Recommendations for Future Research (Author) ................................................. 350

Figure 10. 1 - Conjoint Analysis – Desirability of Features and Importance of Feature Dimensions
Formulae (Author) ........................................................................................................................... 407
Figure 10. 2 - Conjoint Analysis and Count Range Formulae (Author) ..................................................... 408
Figure 10. 3 - Repertory Grid Analysis – Rating and Ranking Formulae Part 1 (Author) ........................... 409
Figure 10. 4 - Repertory Grid Analysis – Rating and Ranking Formulae Part 2 (Author) ........................... 410
Figure 10. 5 - Repertory Grid Analysis Spreadsheet Lookup Tables (1) Formulae (Author) ...................... 411
Figure 10. 6 - Repertory Grid Analysis Spreadsheet Lookup Tables (2) Formulae (Author) ...................... 412
Figure 10. 7 - Repertory Grid Analysis Spreadsheet Lookup Tables (3) Formulae (Author) ...................... 413
Figure 10. 8 - Repertory Grid Analysis Spreadsheet Lookup Tables (4) Formulae (Author) ...................... 414
Figure 10. 9 - Repertory Grid Analysis Spreadsheet Lookup Tables (5) Formulae (Author) ...................... 415
Figure 10. 10 - Repertory Grid Analysis Spreadsheet Lookup Tables (6) Formulae (Author) .................... 416
Figure 10. 11 - Repertory Grid Analysis – Formulae showing links to Conjoint Analysis, Relative
Importance of Feature Dimensions from Conjoint Analysis and Overall Attractiveness to
Organisation (Author) ...................................................................................................................... 417

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TABLE OF TABLES
Table 2. 1 – Agility Definition Overview (Adapted from Agarwal et al., 2007, pp. 2; Bernardes and Hannah,
2009, pp. 35; Rimiene, 2011, pp. 894, with further definitions added) .................................. 28
Table 2. 2 - Groupings of Agility Definitions based upon Table 2. 1 (Author) ............................................. 32
Table 2. 3 - Three Levels of Attractivenss Perception (Mortensen et al., 2008, pp. 802) ........................... 37
Table 2. 4 - Comparison of MBNQA, EFQM and Balanced Scorecard Frameworks (Dror, 2008, pp. 587) .. 39
Table 2. 5 - Definitions of Partnerships (Rezaei et al., 2015, pp.1529) ....................................................... 48

Table 3. 1 - Overview of PFS Model Questionnaire Areas (Author) ............................................................ 73
Table 3. 2 - Illustrating weightings used in the questionnaire/spreadsheet result calculations (Author) .. 74
Table 3. 3 – Overview of the Resultant Model Outputs (Author) ............................................................... 75
Table 3. 4 - Statistical Tools for use in Product Feature Determination (Author) ....................................... 78
Table 3. 5 - Tools used in Product Feature Determination (Author) ........................................................... 79
Table 3. 6 - Example Conjoint Analysis Model (Author) .............................................................................. 81
Table 3. 7 - Operations research, management science, production & operations management papers
based on Repertory Grid Analysis (Adapted from Goffin et al., 2012, pp. 808), ..................... 85
Table 3. 8 - Conversion weightings used in Repertory Grid Analysis (Author)............................................ 90
Table 3. 9 - Conversion weightings used in Repertory Grid Analysis (Author)............................................ 92

Table 4. 1 – Data Relating to Organisations Approached for Data Gathering (Author) ............................ 109
Table 4. 2 – Alterations to Questions following pilot at Organisation A (Author) .................................... 112

Table 5. 1 – Summary of Organisation A Findings (Author) ...................................................................... 125
Table 5. 2 – Organisation A PFS Model Data Scores (Author) ................................................................... 126
Table 5. 3 – Summary of Organisation B Findings (Author) ...................................................................... 133
Table 5. 4 - Organisation B PFS Model Data Scores (Author) .................................................................... 134
Table 5. 5 – Summary of Organisation C Findings (Author) ..................................................................... 139
Table 5. 6 - Organisation C PFS Model Data Scores (Author) .................................................................... 140
Table 5. 7 – Summary of Organisation E Findings (Author) ...................................................................... 147
Table 5. 8 - Organisation E PFS Model Data Scores (Author) .................................................................... 148
Table 5. 9 – Summary of Organisation F Findings (Author) ...................................................................... 155
Table 5. 10 - Organisation F PFS Model Data Scores (Author) .................................................................. 156
Table 5. 11 - Conjoint Analysis Results for Organisation F (Author) ......................................................... 157
Table 5. 12 - Repertory Grid Analysis Results for Organisation F(Author) ................................................ 158
Table 5. 13 – Summary of Organisation G Findings (Author) .................................................................... 162
Table 5. 14 - Organisation G PFS Model Data Scores (Author) ................................................................. 163
Table 5. 15 - Conjoint Analysis for Organisation G (Author) ..................................................................... 164
Table 5. 16 - Repertory Grid Analysis for Organisation G (Author) ........................................................... 165
Table 5. 17 – Summary of Organisation H Findings (Author) .................................................................... 168
Table 5. 18 - Organisation H PFS Model Data Scores (Author) ................................................................. 169
Table 5. 19 - Conjoint Analysis Results for Organisation H (Author) ......................................................... 170
Table 5. 20 - Repertory Grid Analysis Results for Organisation H (Author) .............................................. 171
Table 5. 21 – Summary of Organisation K Findings (Author) .................................................................... 174
Table 5. 22 – Organisation K PFS Model Scores (Author) ......................................................................... 175
Table 5. 23 - Conjoint Analysis Results for Organisation K (Author) ......................................................... 176
Table 5. 24 – Repertory Grid Analysis Results for Organisation K (Author) .............................................. 176
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