Manufacturing and Service Supply Chain Performance: A Comparative Analysis

 

To compete in today's global markets, organizations strive to deliver their products and services in both an efficient and effective manner. A critical component in this effort is the design and coordination of the supply and distribution networks--supply chain management (SCM). SCM

was originally limited to traditional areas like purchasing, distribution and logistics. Over time, SCM has evolved as a field of inquiry and has expanded to include a myriad of areas, including supplier relationships, supply network structure and supplier collaboration. The majority of the SCM research has focused on the manufacturing sector even though the private services-producing sector leads the U.S. economic expansion and outpaces the goods-producing sector. In 2004, the private services-producing sector accounted for almost 70 percent of the current-dollar GDP (Strassner and Howells 2005). As the prominence of the service sector increases, attention is being directed to help understand the issues and complexities within "service" supply chains.

It is important to highlight the differences between service supply chains and the more traditional manufacturing supply chains. In service supply chains, human labor forms a significant component of the value delivery process and while, physical handling of a product leads to standardized and centralized procedures and controls in manufacturing supply chains, in services this is not entirely possible as many of the decisions are taken locally and the variation and uncertainties in outputs are higher because of the human involvement. In addition, the focus of efficiencies in service supply chains is on management of capacity, flexibility of resources, information flows, service performance and cash flow management. These issues are quite different from manufacturing supply chains and hence extensive examination of service supply chains is required to further understand these issues (Ellram, Tate and Billington 2004). However, there are also many areas where there are similarities. For instance, demand management, customer relationship management and supplier relationship management are critical factors in manufacturing supply chains that remain equally important in service supply chains.

Although these similarities and differences are well known, little research has been conducted to explore the implications for practicing supply chain managers. To address this gap, this paper analyzes specific supply chain-related strategies and the corresponding organizational performance in both manufacturing and service sectors. The results include an analysis of the relative prevalence of specific strategies and tactics within each sector and the differing impact on firm performance. The results provide supply chain managers in manufacturing and service sectors benchmarking data for deciding if various strategic SCM initiatives may enhance organizational performance. The following sections examine relevant literature, describe and test the research framework and summarize key findings.