INTRODUCTION

Enterprise resource planning (ERP) and total quality management (TQM) are practices that continue to have an enormous effect on business. First, ERP can be considered both as an organizational planning and reengineering opportunity as well as being a software application for tracking and controlling transactions. Specifically, an ERP system (i.e., an enterprise system) is an information technology (IT) infrastructure that facilitates the flow of information between the processes of an organization (Al-Mashari and Al-Mudimigh 2003). Although the initial intention of ERP was a "within-organization" focus, many organizations have addressed supply chain challenges with their enterprise systems. The Internet has also brought about a revolution in supply chain thinking (Davenport and Brooks 2004). Second, TQM is a holistic philosophy of management that requires the organization to continuously seek improvement in every activity, in every function, in every process. Particularly, Klenz (1999) offered that enterprise quality improvement is quite different from quality improvement at the process level requiring information from many departments within the organization. He argued that the disparity and disconnection of systems including ERP, manufacturing resource planning (MRPII), and statistical process control (SPC) poses a major problem for the implementation of enterprise quality improvement.

Quality management programs and ERP implementations are strategic business initiatives that aspire to improve firm performance (Laframboise 2002). As reported in Williams, Van der Wiele, van Iwaarden and Visser (2004), TQM is a management approach that ensures mutual cooperation of everyone in an organization and associated business processes to produce products and services that meet, and hopefully exceed, the needs and expectations of customers. The authors argue that even though there are signs of a decline in interest for TQM from top management, there is potential for renewed attention based on e-business and the Internet, although this might be more conspicuous at the operational level than the strategic level, albeit supported by top management commitment.

Similarly, others have discussed how both ERP and TQM initiatives have a broad scope, usually affecting all the processes and several areas of the company (Ang, Davies and Finlay 2000; Bhatt 2000; Ravichandran and Rai 2000; Koch 2001; Manetti 2001). However, McAdam and Henderson (2004) argued that rapid developments in technology would appear to have bypassed the TQM discourse given the paucity of systematic research specifically on e-business and TQM. They suggested that technology as an external driver of TQM, e-business in relation to business process reengineering (BPR) and supply chain issues need more studies in the area of IT as applied to TQM principles. Furthermore, very little academic research has been carried out on ERP (or on the business impacts of ERP systems post-implementation), except for research on reasons for implementation and on the challenges of the implementation project itself (Akkermans, Bogerd, Yucesan and van Wassenhove 2003).

As practices that drive organizational development, these strategic resources are instances of the approach known as the resource-based view (RBV). Kalling (2003) reported that the RBV provides a broader perspective for the organization because it focuses the sustainability of competitive advantage. He posited that resources affect processes, which in turn affect product and services. Quality and strategic planning are complementary and good-quality management is a key source of competitive advantage (Mehra and Agrawal 2003). TQM triggers an inimitable competitive advantage due to its ability to encourage routines and guidelines generating a wealth of distinctive competencies, and in line with RBV, it becomes an important competitive advantage (Tena, Llusar and Puig 2001). Furthermore, these initiatives can be incorporated as part of a supply chain management system (SCMS) to permit the partners in a chain to mutually gain from the initiatives. Subramani (2004) suggested that such an SCMS will enable suppliers to both create value and retain a portion of the value created by the use of these systems in inter-firm relationships. The latter warned, however, that there is a lack of insight into the attributes of ERP resources as well as the processes that lead to ERP-based competitive advantage. This work considers the combined effect of these two resources as a potential to influence supplier relationships.

Over the past few decades, although ERP initiatives and quality management programs have evolved independently from one another, both are considered as resources that require senior leadership commitment, high levels of investment and organizational effort, but that may allow organizations to gain competitive advantage. A firm may implement these resources into its operations in a somewhat unique fashion or in a way that is not easily replicated. According to the RBV, firms have competitive advantage when they have resources that possess four key attributes, i.e., value, rareness, inimitability and non-substitutability (Barney 1991; Wade and Hulland 2004). However, there is some difference of opinion regarding the role of information technology in RBV. On the one hand, Powell and Dent-Micallef (1997) posited that information technology by itself cannot lead to competitive advantage, but may assist other resourses in doing so; on the other, Pereira (1999) argued that an ERP (e.g., SAP), if properly managed, could be a determinant of strategic competitive advantage in the RBV sense. Similarly, others offer that firms with superior IT capability exhibit superior performance (Bharadwaj 2000; Santhanam and Hartono 2003). According to Li and Du (2003:3):

  The changes introduced to the company by the ERP system usually affect
  many internal business units. In order to have a successful
  implementation, substantial support of top management and devoted
  involvement of every employee must occur. This is exactly the essence
  of TQM culture. Without such TQM culture and its methods, the chance
  for an ERP system to succeed is very slim.

Suppliers play an important role in the performance of the organization, particularly if the client firm outsources some production to a supplier. This study represents the initial step in a case study of the supply chain in the aerospace manufacturing industry using one major firm as a pilot project. However, this is an exploratory study that remains essentially a conceptual paper.

BACKGROUND

As reported in Kuei, Madu and Lin (2002), supply chain management (SCM) is a network of autonomous or semiautonomous business entities collectively responsive for procurement, manufacturing and distribution activities associated with one or more families of related products. ERP is seen as contributing to SCM in technical areas such as standardization, transparency and globalization (Akkermans et al. 2003). SCM is particularly necessary when a firm has outsourced part of its operations. In this regard, high levels of strategic outsourcing characterize the aerospace manufacturing industry in an effort to enhance a firm's competitiveness. Gilley (2000) offered that this strategic decision endeavors to (1) increase the manufacturing flexibility of the organization without adding capacity, (2) share the risk with suppliers and (3) take advantage of the possibility of choosing the best of breed for some product lines or services, i.e., outsourcing to firms recognized as superior regarding the overall value for their product. Furthermore, he argued that in order to take advantage of these benefits, the level of control over the supply chain is a determinant factor. Cox (2001) argued that competence in procurement and supply management must start from an understanding of the bases of supplier power and business strategy. Companies are likely to increase control over their suppliers by gaining power from information (Stuart 1998; Munson 1999; Cox, Sanderson and Watson 2000), and ERP applications, or similar integration solutions, are a leading tool for this purpose (Sawy, Malhotra, Gosain and Young 1999; Nah, Lau and Kuang 2001; Themistocleous, Irani and Love 2002).

ERP combines both business processes in the organization and IT into one integrated solution, something material requirement planning (MRP) and manufacturing resource planning (MRPII) lacked. Thus, ERP is considered as an extension of MRPII, but with enhanced and added functionality. Chung and Snyder (1999) stated that although the common task characteristic of MRP, MRPII and ERP technologies is to handle production planning and control for uncertain customer demand, MRP lacks technical capabilities in integration, flexibility and accessibility; while the MRPII standard system is not a business blueprint for an integrated management information system. However, they suggested that even though MRPII has, for decades, followed a simple backward scheduling logic while exploding the bill-of-materials, MRPII could be enhanced; but as long as all the functional divisions are not integrated in the organization, MRPII cannot be considered an enterprise system.

As noted by Davenport (1998), an ERP is a way of doing business, not merely a software package. Furthermore, ERP may be viewed as a top-level quality program (Laframboise 2002). Top-level quality programs are initiatives that encourage the organization to holistically seek process improvement, often drastically. Examples include Six Sigma programs (Rich 1997), business-process reengineering (BPR) (Mayer, Benjamin, Caraway and Painter 1995), TQM (McAdam and Henderson 2004) and any of the several national quality awards programs and ISO-9000: 2000 (Tonk 2000). In addition, Bhatt (2000) suggested that the use of integrated IT tools has proven to be valuable in providing opportunities for process standardization, which coincidentally may also be considered a goal of quality management. Kumar and Harms (2004) suggested that standardization in a manufacturing or service environment may be achieved by identifying commonalities within operations, processes and services.

Specifically, IT has a key role to play in the process of applying TQM in an organization and can affect all the dimensions (Saraph, Benson and Schroeder 1989; Flynn, Schroeder and Sakakibara 1994; Ahire, Golhar and Waller 1996). Furthermore, the focus of a quality-based paradigm has also shifted from the traditional company-centered setting to complete supply chain systems (Kuei et al. 2002). Hence, it is necessary to examine how well the ERP application interacts with the firm's quality program because of the shared effects that can occur. As Wade and Hulland (2004) indicated, information systems exert their influence on the firm through complementary relationships with other firm capabilities. Additionally, the authors suggested that in the field of IS, minimal attention has been focused on RBV; and specifically, "while the RBV recognizes the role of resource complementarity, it is not well developed in the theory" (p. 109). Thus, through an RBV, the joint, successful implementation of these ERP and TQM resources potentially provides a complementary resource that may lead to competitive advantage.

Previous research has explored the interactions between information systems (IS) and quality management (Sawy, Malhotra et al. 1999; Ang, Davies et al. 2000; Bhatt 2000; Ravichandran and Rai 2000; Koch 2001; Weston 2001). Schniederjans and Kim (2003) argued that change methods like BPR and catalysts for change methods like TQM must be aligned to support the implementation of ERP. The authors provided insights into the possible sequence scenarios for implementing ERP, TQM and BPR; there is, however, scant research regarding the impact on the quality programs specifically by ERP applications. Themistocleous, Irani and O'Keefe (2001) examined the extent of ERP implementation with organizational requirements without specific mention of quality programs or other comprehensive organizational initiatives. Salvador, Forza, Rungtusanatham and Choi (2001) explored the interactions between suppliers and clients for quality management and performance; however, the role of enterprise systems was not considered. Correspondingly, there is a growing body of literature on the impact of ERP applications on the supply chain (Sawy, Malhotra et al. 1999; Palaniswamy and Frank 2000; Manetti 2001).

Given that outsourcing in the aerospace manufacturing industry can go as high as 90 percent of the value of the product (Gilley 2000), the quality of suppliers is paramount. Moreover, this industry is heavily regulated--e.g., Federal Aviation Regulations (2002) and Fastner Quality Act (1998)--and aircraft, engine and appliance manufacturers are required to set procedures in place to control and assure the quality of the products and services received from their suppliers. For example, Boeing, in its client role, relies on hundreds of suppliers for the 5 million to 6 million components needed to build a large twin-aisle airplane (Brong 2002). Furthermore, Boeing, in its supplier role, has adopted a Web-based EDI for the approximately 600 airlines for parts ordering from Boeing.

Hendricks and Singhal (2001) argued that all major firms pursue quality programs in an effort to improve long-term financial performance. TQM will continue to play a key role in improving competitiveness through state-of-the-art methodologies (McAdam and Henderson 2004). In the aerospace industry, examples of major firms include Boeing, General Electric, Raytheon and Bombardier. The positions of these and other firms in a sample aerospace supply chain are presented below in Figure 2.

Accordingly, the objective of this study is to examine the coexistence of an ERP application and a separate quality program within a firm, to what extent they complement each other, to what extent they provide competitive advantage to the firm and subsequently to consider whether these resources impact supplier relationships.

CONCEPTUAL MODEL

Wade and Hulland (2004) offered a review of the strategic information technology (SIT) literature as it relates to performance or competitive advantage. They offered evidence that SIT does have direct and positive effects on competitive advantage. Conversely, there is some support for the notion that the impact of SIT is also based on a number of other constructs. Given the wide-reaching scope of ERP, it is certainly considered part of a firm's strategic information technology. Similar to Wade and Hulland (2004), this work presents three mutually exclusive propositions.

Proposition 1a: The application of ERP directly influences competitive position and performance.

Proposition 1b: The application of ERP influences competitive position and performance both directly and indirectly through interactions with other resources.

Proposition 1c: The application of ERP influences competitive position and performance only indirectly through interactions with other resources.

Not only is aerospace one of the most regulated industries in the world, it can be described as quality intensive and quality dependent (Brong 2002). This exploratory study examines how quality programs of aerospace manufacturing companies are impacted by the implementation of an ERP application. Further, the effect on quality in relationships with suppliers is examined. The integrative nature of ERP, particularly as operationalized by ERP applications, suggests that the alignment with the comprehensive quality programs used in aerospace is an important factor for achieving improved quality levels in the supply chain, which ultimately impacts the performance of the organization (Gilley 2000). To better understand how ERP can affect quality, this paper provides a subjective measure of the adequacy of the ERP application with regard to the quality program in the organization.

Quality Programs and ERP

The Americas Aerospace Quality Group (AAQG) members agree, "Where aerospace quality is concerned ... there is no competitive advantage" (AQSO 2001), the message being that there must be no compromise on quality and thus all firms involved are on an equal footing, each link in the chain assuring that they and their partners are responsible for each other. The Aerospace Quality Standards Organizations--AQSO (2001) publication outlines the quality systems for assuring quality in the industry. These systems are developed by the International Aerospace Quality Group (IAQG) for the different clusters of nations around the globe and designed for many different firms.

Process control and process improvement are core elements of both ERP and top-level quality programs as implied by Ravichandran and Rai (2000). Bhatt (2000) indicated that information systems (IS) integration contributes positively to business process-improvement initiatives. He suggested that information sharing and network integration are positively correlated with process improvement initiatives, and thus are relevant to quality program implementation. However, according to Koch (2001), some implementation experiences of ERP applications like SAP and Baan demonstrate that the harmonizing of ERP to business improvement initiatives was not complete, and Aladwani (2001) argued that the influence of corporate politics and resistance to change were among the main roadblocks to successful implementation. "Senior managers must grasp and understand what information and change management strategies should be employed under what circumstances, and then create an organization that is both fluid and responsive to change without creating an overly stressful, chaotic, and mistrustful environment" (Weston 2001). This weakens the relationship between IS integration and quality initiatives.

Furthermore, Aladwani (2001) as well as Davenport (1998) suggested that an incomplete fit between the ERP and the quality program may emanate from the choice not to implement some ERP modules. Reluctance to implement new systems represents resistance to change and/or risks associated with switching to ERP.

While a firm may use several existing applications, ERP systems may have parallel modules offering a series of advantages in analytics, financials, human resource management, operations, corporate services and support for systems management issues (SAP 2004). The difficulty of ERP implementation is exacerbated by the sheer quantity and variety of complex functions that must be meshed (Al-Mashari and Al-Mudimigh 2003). The above leads to the following proposition:

Proposition 2: The quality modules in ERP applications do not adequately address the procedural and system complexities of the existing quality programs used by aerospace manufacturers.

ERP Implementation and the Supply Chain

If the use of an ERP application can increase the degree of influence over suppliers (Cox, Sanderson et al. 2000; Cox 2001), then managers of aerospace supply chains can improve the number of quality initiatives. This is important because, depending on the complexity of the supply chain, it can be consequently inferred that as the level of influence over the suppliers increases, the likelihood of their implementation of quality initiatives is augmented.

  Early enterprise resource planning (ERP) systems, or more simply
  enterprise systems (ES), were not primarily focused on the supply
  chain. Their initial focus was to execute and integrate such
  internally-oriented applications that support finance, accounting,
  manufacturing, order entry, and human resources. Having got their
  internal operations somewhat integrated, many organizations have moved
  on to address the supply chain with their ES. The Internet has also
  brought about a revolution in supply chain thinking (Davenport and
  Brooks 2004).

[FIGURE 1 OMITTED]

One of the trade-offs of ERP implementation is that the more customized a company's systems become, the less the firm's systems are able to communicate with the systems of suppliers and customers (Davenport 1998). This can be a likely impediment to full-fledged integration of buyer and supplier systems.

[FIGURE 2 OMITTED]

[FIGURE 3 OMITTED]

At the senior policy level, the value of aligning IT strategies and enterprise strategies has proven to be fundamental in the success of companies converting to e-commerce (Sawy, Malhotra et al. 1999). However, such a conversion is affected by the complexity of the aerospace supply chain. Figures 1 and 2 display examples that demonstrate these complex relationships. Figure 1 depicts how the major firms relate to each other. Furthermore, the extent of the impact of regulation on the entire supply chain is evident.

From raw material and services suppliers--S3 in Figure 1 (as well as companies A, B, C ... F, in the model shown in Figure 2)--to the focal firms (engine and aircraft manufacturers, referred to as C1 or C2 in Figure 1, or clients in Figure 2), numerous complex exchanges occur. Upstream suppliers can provide services to down-stream clients, and it often happens that some of these firms have electronic data interchange (EDI) links to more than one client. Hence, there is a key imperative to improve control over information in this complex environment.

Several second-tier suppliers to the focal companies (clients) are concurrently suppliers of the lower tier of the supply chain, and furthermore, some of these firms supply services and products to the end user as well. This shows the particular complexities associated with the analysis of the supply chain in the aerospace manufacturing industry and the need for the focal companies to carefully manage control over the suppliers. Aircraft and engine manufacturers are powerful organizations because of (1) expertise, (2) reward and (3) coercive influence, and information is a major determinant in these attributes (Munson 1999). Cox, Sanderson and Watson (2001) offered that integration of information is instrumental in improving the effectiveness of the use of power.

Given this complex structure, the authors suggest that the buyer-supplier "influence" scenarios described by Cox (2001) can be found in these supply chains, implying that relationship management has peculiarities that must be taken into consideration through an integrated effort. Cox, Sanderson et al. (2001) presented buyer-supplier scenarios in a power matrix. Their premise is "all buyer-supplier relationships are predicated on the relative utility and relative scarcity of the resources that are exchanged between the two parties" (Cox 2001:13). Their power matrix presents buyer-supplier relationships of (1) domination, (2) dependence, (3) mutual dependence (interdependence) and (4) independence. From the perspective of the buyer firm, it could be in any of the scenarios. Specifically, Stank, Keller and Daugherty (2001) and Munson (1999) suggested that collaborative relationships are the preferred type of regime.

The role of ERP may be to mitigate this process by the integration of information. Consequently, it can be inferred that the role of ERP applications has an effect on the power position. This would narrow the scope of this study and support a framework to analyze how relationship types change with ERP implementation. This provides evidence to propose the following:

Proposition 3: ERP implementation by aerospace manufacturers increases the influence of focal firms over suppliers' quality improvement systems.

There are numerous products and firms in the aerospace chain, covering a broad range of product and service sophistication, thus necessitating varying levels of engineering collaboration, among other services. Figure 3 depicts four independent variables--size of the focal and the supplier firms, the relationship type (dependence, dominance, mutual dependence and collaboration), product type and the scope of the quality program. These four factors may drive the degree of firm influence over suppliers. Additionally, there are three mitigating variables, i.e., the interface between the firms' ERP systems, the quality system and the required monitoring system. The ultimate dependent variable is an improved quality level in the supply chain. To effectively make use of this power position, any control of information that emanates from the ERP application may allow the focal firm to monitor and interface with the supplier.

To transform this effective influence into quality improvements, this paper suggests that if the ERP is well aligned with the specific features of the supplier's quality program, the likelihood that suppliers implement or enhance their quality initiatives will rise. Further, although an evaluation of a supplier's performance has traditionally been carried out without using an ERP application, the use of an ERP system should facilitate the evaluation of the performance of each supplier against several key indicators, including number of defects, on-time delivery and implementation of corrective actions to audit reports.

Given the inherent complexities in the aerospace supply chain, problems associated with the implementation of an ERP, the large size of the network of suppliers and the intricacies of quality programs (AQSO 2001; Brong 2002), the following is proposed:

Proposition 4: The aerospace manufacturer's use of ERP in managing quality within the supply chain is suboptimal because of incompatibility with existing quality program requirements.

METHODOLOGY

Whereas traditional MIS systems were simply a subfunction of an organization, the newer MIS systems could potentially lead to the restructuring of the entire organization, with the firm in its entirety becoming an MIS (Yin 1994). The arrival of integrated systems has fundamentally changed how firms operate (Hughes 1999). Given Yin's (1994) position, and such fundamental change occurring in the aerospace industry, a qualitative approach is deployed to conduct this research. As Pare (2004) posited, "Only the case method could capture such dynamic and changing conditions." Qualitative research, and particularly the case study format, is appropriate to explore the causality of the development of the digital supply network. "Case research is, therefore, useful when a phenomenon is broad and complex, when a holistic investigation is needed, and when a phenomenon cannot be studied outside the context in which it occurs" (Dube and Pare 2003). This method has the potential to guide managerial direction by exploiting facts from the industry to ground existing theoretical concepts (Stuart, McCutcheon, Handfield, McLachlin and Samson 2002).

The current research examines the implementation of a companywide initiative to manage a supply network fully by digital means. According to Dube and Pare (2003), "a pilot case study can be used to refine data collection plans and gain insights into the basic issues being studied." In addition, a pilot study is appropriate when the research is highly exploratory, and the study may allow the researchers to determine the appropriate unit of analysis (Yin 1994). Consequently, this study leads to an extensive case study of the aerospace manufacturing industry in Canada.

The unit of analysis is a Canadian aerospace engine manufacturer with facilities, design partners, customers and suppliers scattered around North America and Europe. Respondents for this research included middle- to senior-level management officials from IT, engineering, quality, logistics and procurement. Data were collected via a combination of structured and semistructured interviews with five company officials of the participating firm, occurring onsite. The authors provided three questionnaires and requested respondents to consider the firm's suppliers in general, i.e., not any one supplier, nor any specific or preferred suppliers. The three questionnaires comprised (1) a semistructured interview questionnaire with 13 open-ended questions relating to supply chain management, ERP implementation and quality issues (see Appendix A); (2) a sourcing questionnaire (see Appendix B); and (3) a quality questionnaire (see Appendix C). The two sections of the sourcing questionnaire requested respondents (a) to evaluate the degree of support provided by the ERP application for items on a list of processes relating to procurement; (b) to rank four relationship types--dominance, collaboration, mutual dependence and dependence--in order of prevalence of occurrence. The third questionnaire regarding supplier quality issues requested respondents to indicate the degree to which these quality issues are affected by implementation of the ERP application.

Interviews lasted approximately 75-90 minutes. Copious notes were taken at each interview and documented for each respondent. The data were collated into groups, merging all participant responses for each question. This allowed for the analysis of divergent and congruent statements.

RESULTS

Quantitative results are based on the Likert scale questions, while the views of participants expressed in the interviews resulted in more qualitative measures. Use of both quantitative and qualitative measures enriched the quality of the outcomes.

Quantitative Results

Respondents received a list of processes, programs or activities that relate to suppliers, as shown in Table I. These supplier-related activities are a convenience sample of items and are based on the work of Gunasekaran, Patel and Tirtiroglu (2001). The items also served as discussion starters during the interviews. The initial version (Appendix B) contained 13 items. Respondents were requested to rate the degree of support that the ERP provides to each one using a 5-point Likert scale, with 5 being the top score. In the following list, the number in parentheses represents the average value for the degree of support. The table contains the consensus values provided by two respondents directly concerned with this area, while the other respondents preferred not to comment on this questionnaire.

The respondents indicate that the implementation of SAP supports supplier-related processes expressed as numbers 1, 2, 3, 5, 12, 13 and 14 more than the remaining supplier-related activities.

Next, to explore the nature of the relationships of the firm with its suppliers, respondents were asked to rank the prevalent types in the supply chain (ranking from 1 to 4, with 1 being the prevalent--most common type of relationship). As described earlier, these relationship types are based on the work of Cox (2001). The results from three respondents are consolidated in Table II. Two respondents lacked sufficient information to respond.

From the data, one could infer that collaboration and mutual dependence occur more often than the extreme positions, dominance or dependence. The most prevalent type of relationship with suppliers is collaboration, followed by mutual dependence. Dominance was ranked third among the four relationship types. One respondent indicated that this relationship is "mainly found in suppliers with low technological levels and in suppliers that depend largely from the firm for its survival." Few suppliers reported dominance over the firm as a preferred approach.

The quality questionnaire sought to provide insights into the degree that ERP supported quality situations within the supplier relationships. One respondent was provided a list of four items (# 1, 3, 4 and 5 in Table III) based on the list in Kannan (2002). As shown in Table III, the respondents indicated their perceptions of the relevant aspects of the relationships, based on a 5-point Likert scale, where 1 equals low support and 5 equals strong support.

Items #2-Control of documents released to suppliers and #6-Managerial training (selected suppliers are given both training in the focal firm's quality program and Web-portal training) were mentioned during the interview and added to the original list of four items. As seen in Table III, these responses suggest that the degree of support through the use of ERP for these aspects of the quality program is low. The fit between the ERP and certain aspects of the quality program related to suppliers could be deemed incomplete.

Qualitative Results

Highlights of the responses to the semistructured interviews with the five participants are provided below. The numbers correspond to the questions (see Appendix A).

1. The participants perceived the relationship with supplier firms as "strong," with good supplier-selection processes, high visibility (traceability of products and processes) and "excellent" support for suppliers in terms of training--both technical and managerial. Some of the weaknesses reported included inadequate supply of spare parts from the suppliers and low flexibility of delivery--such as a lack of ability to meet Just-in-Time requirements. However, respondents indicated that their supply chain was large, complex and often difficult to control but was improving due in part to the use of a Web portal for information exchange. Given that the portal is an intermediary between the firm and its suppliers, the ERP application has replaced over 40 legacy applications, providing better support to payment, purchase order placement and scheduling/planning functions.

2. Regarding the impact of ERP implementation on the effectiveness of the supply chain, the participants reported an improvement in the relationship, especially regarding administrative and financial aspects. However, respondents perceived initial switching costs to a new supplier as high. Better information flow was the benefit often mentioned by the respondents. As one said, "The overall picture is better now than before," but another said, "It is too early to judge, but in overall terms, it appears to be producing good results." Another respondent stated that the power position of the firm has changed because "the effect of the ERP application increased our process visibility which makes our firm better able to exercise the power and influence over the suppliers than before."

An unexpected issue raised was that control over several small suppliers is harder to exercise than with the other larger suppliers. The small supplier in the supply chain presented some characteristics that were reported to cause variability in the level of quality, such as (1) succession issues within the small firm, (2) excessive dependence on the client firm and (3) low visibility of their internal manufacturing processes.

3. The respondents maintain that quality programs are directly linked with the performance of the firm, e.g., "a very high impact on performance," and, from another, "a high overall level of internal improvement has been accomplished because of our quality program." Moreover, the participants posit that the quality program drives the profitability of the firm, i.e., "increased performance, decreased costs, is now a way of living, cutting a lot of waste." It has "reduced our workload while increasing the accuracy of information."

4. When asked how well the ERP application supported the quality program, the initial perception was positive; however, following further discussion regarding the fit between the two, there were indications that full support might be lacking. According to one respondent, "ERP is a tool for data analysis but it does not provide total support." The ERP application was seen as aiding process-improvement projects with better data than before--a direct link to the quality program because of the increased flow of information.

5. The new quality program (holistic and specific to the firm) and the ERP application were implemented concurrently, the former in 1998 and the latter in 1999. "However, the firm had previously been streamlined." As one respondent stated, although the ERP application paralleled parts of the quality program, "by itself the ERP was complicating many processes." Another respondent offered, "The quality program was there to make sure that the ERP was useful for the organization. The ERP application itself was not driving any improvements in the field, but provided the firm with performance measurements and data, serving as a communication tool."

6. Respondents indicated that the ERP application is perceived as a tool of quality running parallel to the firm's quality program and both are seen as supporting each other in improving performance. Said one, "The ERP is more than a quality program; it is a quality tool that uses and organizes data."

Regarding the ability to customize the ERP application, respondents stated, "We adapt to SAP." It was mentioned that the rigidity of the ERP structure provided "discipline to the organization" in administrative and financial aspects, but the trade-off is a lack of customization alternatives to become a more comprehensive system. It is important to note that the firm's former enterprise system was described as "highly flexible and adaptable, but a nightmare to maintain," because of the scattered nature of the former collection of applications.

7. The respondents were unable to indicate any impact that the firm's implementation of ERP was having on the quality programs of suppliers. Said one, "I can see an impact, but I can't specify how."

8. Regarding any possible interference that quality or regulatory certifications might have regarding ERP implementation, a respondent offered, "No interference at all. The ERP can fit to our existing processes, although the fit is incomplete at this time."

9. Regarding a trade-off between customization of the ERP and the firm's processes and abilities to integrate suppliers, one respondent stated that since low customization is possible with ERP, a trade-off with supplier relationships was perceived.

10. In situations where the supplier has its own ERP application, there is no influence detected on the interface between the firms. However, as one respondent indicated, "A supplier having an ERP may be preferred by the firm because of a better connectivity with administrative processes."

11. When asked to determine whether the ERP has changed the links with the suppliers, it was revealed that the e-commerce application within the ERP replaced all previous EDI links, with minimum costs for the supplier. Although this change was imposed on the suppliers, the focal firm provides training and supplier investment requirements in hardware are low. This helps to reduce the switching costs for the suppliers, reducing their resistance to change. The implications of this conversion are increased control over the supply chain and lowered workforce requirements to assist with communications with suppliers (most routine transactions are handled by the Web-portal interface with the ERP application).

12. The firm has a reduced number of suppliers. There is some degree of vertical integration--customer-supplier relationships among firms from the same holding company--in the supply chain. The degree of vertical integration might be related to the ability of the firm to audit the suppliers. Stringent supplier control regulations and liability issues were reported from the respondents to oblige the firm to track the quality of certain products upstream to various levels the supply chain. Without vertical integration in these process lines, additional stress is imposed on the audit function. However, "there is no distinction at all; all suppliers are handled in exactly the same way. Quality audits apply to all our suppliers."

13. Regarding supplier response to the firm's quality system after the implementation of ERP, there has been "no change because suppliers have been responsive to our quality requirements."

ANALYSIS

Given the above responses, it appears that the ERP application alone as a resource does not provide a competitive advantage or increased performance, other than improved power relationships with suppliers. However, as a complement to the quality program resource, there is perceived competitive advantage and increased performance. This supports Proposition 1c that ERP influences indirectly competitive position and performance through interactions with other resources.

As seen in Table I, even though the ERP application provides support to several activities related to suppliers, which is key to the effectiveness of the supply chain, many of the aspects related to quality indicated in the list are not well supported by the ERP (items 6, 7, 9, 10 and 11). Overall, this may provide an indication of a lack of ability of the ERP application to fully support quality processes within the supply chain. Further, firm officials indicated that software applications used to support these tasks do not have an interface with the ERP. As mentioned earlier, regarding the ability to customize the ERP application, one respondent stated that they adapt to SAP, thus emphasizing that the flexibility of the ERP system to adapt to the requirements of the quality program--as described in Table III--is low. This suggests that Proposition 2 (i.e., there exists an incomplete fit between the ERP and the quality program) may be supported. This indicates that regardless of the implementation efforts, some processes are still underserved by the ERP application.

The prevalent type of relationship with the suppliers is collaboration, as shown in Table II. Since a collaborative relationship implies an increased level of information sharing, the assumptions leading to Proposition 3 are partly supported. It was revealed that there might be two types of collaboration--negotiated or non-negotiated. Negotiated collaboration occurred when the firm imposed certain conditions on the supplier before entering into a collaboration agreement. Consequently, it might be necessary to introduce a fifth kind of relationship to reflect more precisely the power dynamics that occur in aerospace supply chains. Company officials described a "negotiated-collaborative relationship as an agreement in which early intense negotiations were necessary before entering into a cooperative type of agreement."

Further discussion of the nature of the power regimes existing in the firm's supply chain revealed that the firm was able to more effectively use its power position after the implementation of the ERP application. The main reasons offered were the increase in the visibility of (1) internal processes, (2) timely delivery and (3) adjustments to delivery deadlines. It was reported that when visibility increases, the firm is able to influence and control the supplier more effectively, which indicates that ERP did change the relationships between the firm and the suppliers. Further, several aspects related to quality that were "hidden" from the focal firm are now visible, which may contribute to notions that the power position can be enhanced following a successful implementation of the enterprise system. Respondents agreed that ERP implementation improved the power position of the firm, or allowed for an increase in the ability to exercise this power. Furthermore, respondents reported marginal improvements in quality as a consequence of this increased power, which they attributed to an increased visibility of the supplier's processes. The sources of these improvements could not be determined, and would be an aspect for further research.

Although the focal firm had implemented the quality module offered by the ERP supplier in parallel to the existing holistic quality program, key quality aspects relating to the suppliers are either poorly supported or handled with another software application. For example, legacy applications were still used to track the status of corrective action requests from suppliers. This indicates that in this case, this ERP application does not provide complete support to the quality program, which would support Proposition 4. Moreover, the fact that aspects relevant to quality requirements--such as nonconformance tracking--are not covered by the ERP suggests that integration of information has not been achieved. As discussed above, as the quality program becomes more complex and holistic, the ability of ERP applications to follow its requirements diminishes.

CONCLUSIONS

Congruent with findings in the literature, this study found that integration of information is crucial in efforts to improve the effectiveness of the supply chain when collaborative relationships prevail. The notion of information integration is fundamental to ERP applications in that these applications rely on a single database connecting all information. A supplier-buyer relationship may encourage the use of a single data repository for transactions between the firms. For example, the buyer firm may authorize a supplier firm access to a restricted part of the buyer firm's database that pertains to their relationship. This increased openness and transparency in processes involving suppliers enhances the effectiveness of the use of power because the focal firm is creating the atmosphere of interdependency and a trusting relationship. Consequently, this paper concludes that the degree of focal (client) firm influence over suppliers can be enhanced using ERP.

From a resource-based view, enterprise resource planning and total quality management are complementary resources that lead to competitive advantage and improved organizational performance (P1c). The data suggest that ERP did not adequately support several quality aspects involving supply chain issues (P2). These aspects include the supplier's training program, auditor qualification and verification of incoming products. Some of those aspects, rated as critical by the respondents, were supported poorly, requiring additional software products, not linked with the ERP application.

Although evidence from a pilot study is not conclusive, it suggests that after the implementation of the ERP application, the visibility of some processes was increased and this somewhat aided supplier performance evaluation and control (P3). Further, company officials perceived that their ability to manage the supply chain improved after implementation. The extent and degree to which the improvement was accomplished could not be determined fully, warranting further investigation.

It is still uncertain whether the incomplete fit between the ERP and the quality program limits the ability of the firm to improve the performance of the supply chain (P4). Nevertheless, preliminary evidence suggests that the lack of flexibility of the ERP application increases the difficulty of integrating quality processes that are not included in the list of transactions of the quality module.

Progressing to the next level with a complete case study may yield different results. For example, it would appear necessary to collect data from or about suppliers, specifically regarding the technological levels of the suppliers, e.g., strategic components for airplane manufacturing. Further data relevant to supplier size could add significant clarification to the supply chain relationship. Finally, this paper adds to the literature regarding complementary effects of ERP implementation, specifically as to ERP and TQM, ERP and power regimes.

However, given this is a pilot study, there is an inherent weakness. The results cannot be accepted as conclusive due to the sample size. The results can only be see as items for verification in a case study with a much larger sample size. Furthermore, given only the focal firm as a participant, there is a biased view of the relationships in the supply chain. A case study involving several upstream and downstream partners to the focal firm would provide a more balanced view.

IMPLICATIONS

This research provides both practitioners and academics with opportunities to better appreciate how ERP and quality management are linked in a supply chain environment.

For Practitioners

In keeping with an RBV view expressed earlier, this paper concurs with the position of McAdam and Henderson (2004), who posited that future TQM development will be influenced by increasingly competitive and global markets, where competition will continue to increase. Furthermore, the authors argue that changes in e-business technology will increasingly affect business processes and supply chains, shaping the future of TQM through a need for increased effectiveness and efficiency. The aerospace industry will continue to provide models of quality, lean manufacturing methodologies and technology-advanced products. According to Brong (2002:36), "The state of quality in 2010 will see sonic cruisers, increased requirements for air travel, orbital transport systems, transplanet cargo shipments, automated quality assurance systems and increased requirements for quality as process and quality as result." This paper would encourage practitioners to be sensitive to the interplay of these resources and to appreciate that thorough implementation practices will lead to competitive advantage and better performance for the organization.

Firms implementing ERP applications with existing quality programs can consider the results of this research to appraise whether their current practices fulfill the requirements of the organization. In addition, for new implementations that encompass modifications or improvements to the client's quality program, this study underscores the need for better understanding of how the elements related to the supply chain can be integrated into the process.

The results from this study may be used by highly regulated industries similar to aerospace manufacturing, such as the pharmaceutical industry. The authors believe that governmental regulation for product quality imposed on these firms can have similar effects on the interactions between ERP implementation, quality programs and the supply chain, because of the added complexities of quality assurance by the firm and its suppliers that regulation poses on the quality program. It is suggested from the study that regulatory guidelines (including best practice certifications) can be a constraint to switch suppliers, which would affect the relationship types between the firm and its suppliers.

For firms implementing ERP applications after a comprehensive quality program has previously been established, this study emphasizes the relevance of the interactions between the enterprise application, quality procedures and the supply chain. Furthermore, for manufacturing firms seeking to update--or replace--their ERP applications after a comprehensive quality program is in place, this study provides a cautionary note on the importance of considering the impact of integration of information on the quality of the suppliers. This is not to suggest that ERP and quality initiatives must be implemented separately in an aerospace manufacturing firm. If implemented separately, further integration initiatives must consider the complexities that aerospace quality assurance programs require, including the need to exert oversight over a large number of suppliers and processes. If the firm wishes to implement a quality management module provided by the ERP application, then the implementation must be configured to respect the quality assurance needs of the aircraft industry.

For Researchers

This pilot study contributes to the RBV literature by considering ERP as a strategic information system. It adds evidence to the position that IT is a contingent resource. What needs to be investigated is whether this SIT can eventually alone lead to competitive advantage or whether it must continue to be considered as a contingent resource interacting with another resource such as TQM influences allowing competitive position and performance.

This paper contributes to research regarding ERP implementation by stressing the importance of emphasizing a quality management focus while implementing such enterprise systems. This is especially relevant in large manufacturing industries with extensive networks of suppliers.

Finally, future work in this area requires the expansion of this project as a case study to include suppliers of the firms that participated in the study and, as well, participation of aircraft and engine manufacturers located in Europe and the United States and their suppliers. It may be interesting to investigate further the potential for "negotiated-collaborative relationships" as an agreement in which early intense negotiations are necessary before entering into a cooperative type of agreement. Do such negotiations provide potential for competitive advantage for either or both parties?

The traditional breakdown of suppliers into large, medium and small was used to study the power dynamics within the value chain. In discussions with company officials, it was suggested that suppliers were classified in accordance with the nature of their relationship with the firm, as in "preferred" or "general," rather than size. A possible avenue of research is the study of the effect that e-commerce (using the ERP as a platform) has on suppliers depending on the nature of their relationship with the firm regardless of size. Finally, a possible avenue of research is to involve ERP suppliers in such a study to examine their views and future initiatives toward quality programs.

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Appendix A

INTERVIEW QUESTIONNAIRE

Respondent: ______

Title: ______

Evaluator: ______

Date: ______

 1. How would you describe your supply chain (from the point of view of
    your firm as the focal company)?
 2. To what extent do you perceive that your firm's implementation of
    SAP has enhanced the effectiveness of your supply chain?
 3. How do you relate the quality program implemented at your firm to
    the overall performance of the organization?
 4. How do you perceive the link between SAP and the Quality Program?
 5. How well do you think that SAP covers your firm's existing Quality
    Program's aspects?
 6. Do you see SAP as a quality program--per se--running parallel to
    your firm's existing Quality Program?
 7. How do you perceive the impact of SAP implementation at your firm in
    the quality programs used by your suppliers?
 8. How can the quality or regulatory certifications that your firm has
    achieved--or plans to achieve in the future--interfere with SAP
    implementation?
 9. Do you perceive that there is a trade-off between customization of
    SAP to your firm's processes and the ability to integrate the
    suppliers?
10. When the supplier has an ERP (SAP or similar), how is the interface
    process performed? Does the supplier influence the relationship in
    any way?
11. Did the implementation of the ERP system change (or modify) the EDI
    link with the suppliers? Where these changes imposed on the
    supplier, negotiated, or suggested by the supplier?
12. Are large suppliers subject to your firm's certification/approval in
    the same way as medium or small suppliers are?
13. How do you describe the supplier's response to your firm's quality
    system requirements after the implementation of SAP? Do you see any
    change?

Appendix B

SOURCING QUESTIONNAIRE (INITIAL VERSION)

Section (a) -- Regarding sourcing processes or activities related to suppliers, please rate the following as to the degree of support that SAP benefits the activities.

Please provide additional items to this list should you deem it appropriate.

(Rate from 1 to 5, where a value of 5 represents a strongest influence)

Activity/Process                             Rating

 1. Scheduling
 2. P.O. placement
 3. Planning
 4. Information exchange, engagement
 5. Payment
 6. Performance evaluation
 7. Consignment (inventory)
 8. Supplier evaluation
 9. Change management
10. Cost reduction and value engineering
11. Request for quotes
12. Supplier synchronization (coordination)
13. Quality status feedback

Section (b) Please evaluate the types of relationship that your firm generally has with your suppliers.

(Rank the following in order from 1 to 4)

Relationship       Rank

Dominance
Collaboration
Mutual Dependence
Dependence

Appendix C

ERP/QUALITY QUESTIONNAIRE (INITIAL VERSION)

Circle in the box to the right the value that best describes how well your ERP application (e.g., SAP) provides support to the quality features listed (please add some of your own, if appropriate).

An excellent evaluation (5) can be given if the following criteria are met:

* Use of additional (or parallel) applications is not required

* All the information required for the task can be easily accessed in SAP

* The transactions associated with the task can be completed in a timely manner

* A reasonable number of transactions are required to complete any operation

* The results of the operation (data) are complete and easily accessible

                                     None (1)       Excellent (5)

1. Supplier selection, audit and     1       2   3   4        5
   certification
2. Supplier performance evaluation   1       2   3   4        5
   (competitiveness)
3. Technical training and personnel  1       2   3   4        5
   qualification
4. Receiving inspection              1       2   3   4        5
5.                                   1       2   3   4        5
6.                                   1       2   3   4        5
7.                                   1       2   3   4        5
8.                                   1       2   3   4        5
9.                                   1       2   3   4        5

AUTHORS

Kevin Laframboise is an assistant professor in the John Molson School of Business at Concordia University in Montreal, Quebec, Canada.

Felipe Reyes is a consultant for APS Aviation, Inc. in Montreal, Quebec, Canada.

This paper is a substantive revision of a preliminary report presented at the Business Information Systems conference in Poznan, Poland, 2004.

Funding for this study was provided by the faculty research funding initiatives of the John Molson School of Business of Concordia University, Montreal.

Table I ACTIVITIES IN SUPPLIER RELATIONS AND RELATIVE SUPPORT FROM ERP
APPLICATION

Activity                                  ERP Support

 1. Scheduling                                 4
 2. Purchase order placement                   4
 3. Planning                                   4
 4. Information exchange engagement            3
 5. Payment                                    4
 6. Supply chain TQM program                   1
 7. Performance evaluation                     1
 8. Inventory consignment                      3
 9. Supplier evaluation                        1
10. Change management                          1
11. Cost reduction and value engineering       1
12. Request for quotes                         4
13. Supplier synchronization                   5
14. Quality status feedback                    5

Table II SUPPLIER/FOCAL FIRM RELATIONSHIPS

Relationship          Ranking     Total

Dominance          1     3     3    7
Collaboration      2     2     1    5
Mutual dependence  3     1     2    6
Dependence         4     4     4   12

Table III ERP SUPPORT FOR QUALITY

Activity                                                    Support

1. Selection, audit and certification of suppliers             2
2. Control of documents released to suppliers                  2
3. Evaluation of supplier performance                          3
4. Technical training and supplier personnel qualification     1
5. Receiving inspection to delivered products                  0
6. Managerial training                                         1

ERP, enterprise resource planning.