Roles and Capabilities of the Retail Supply Chain Organization

Supply chain management (SCM) has become a critical strategic function in many industries during the past 20 years. SCM has developed into an integrative discipline incorporating strategic elements with process and collaboration (Gibson et al. 2005). Further, SCM has become a critical competitive weapon favored by C-level executives searching for competitive advantage (Manrodt et al. 2005). Supply chain research has increased significantly in recent years, and many techniques have been suggested for achieving supply chain goals including collaboration (Sinkovics and Roath 2004), process integration (Min and Mentzer 2004), information sharing (Sanders and Premus 2005), standardization (Bowersox et al. 1999), and aligning measures and rewards (Mentzer 2004). In addition, SCM research is now acknowledged as providing theoretical and practical insight into a variety of areas including collaboration in production (Nativi and Barrie 2006; Pfohl and Buse 2000), new product innovation (De Luca and Atuahene-Gima 2007; Zacharia and Mentzer 2007), quality (Harding 1998; Liker and Choi 2004), transportation (Lieb and Butner 2007; Van Hoek 1999) and just-in-time manufacturing (Giunipero et al. 2005; Sillince and Sykes 1993). The importance of SCM to business strategy, and ultimately business success, appears to be on solid footing. During this same period there has been an increasing awareness of a fundamental shift in marketplace power from production to retail (LaLonde and Masters 1994; Maloni and Benton 2000). Where product and production once dominated (e.g., Procter and Gamble, General Motors), organizations closer to the consumer (e.g., Wal-Mart, Target) have taken a leadership role in the supply chain. Entire streams of research have picked up on the shift from a product to customer orientation (Kirca et al. 2005; Kohli and Jaworski 1990; Slater and Narver 1995). Retailers face unique supply chain challenges, and require distinct capabilities not required of upstream suppliers and manufacturers. Great retailers survive and thrive through outstanding supply chain capabilities (Browna et al. 2005), but the penalty for disappointing customers because of a single glitch in the supply chain can be steep. One study shows retailer's share prices fell an average of 9 percent on the day a supply chain problem was disclosed, with an additional 9 percent drop recorded over the next 90 days (Morrison and Assendelft 2006). Yet from a supply chain perspective, the power shift to retail and the recognition of retail as a critically important supply chain area has been neglected, revealing a substantial gap in research. Our understanding of retail supply chain management (R-SCM) may be limited at a time when effective management of the retail supply chain is more important now and into the future than in the past (Davies 2009). The goal of this research is to address the knowledge gap identified by the relative lack of research in the area and provide insight into the supply chain capabilities developed by best-in-class retail organizations. (1) A slowing economy suggests this need is more critical today than ever before. We address two primary research questions. First, what supply chain challenges are driving strategic actions in the retail industry? Second, what are the capabilities retailers leverage to perform the role of SCM? Neither of these questions have been explored in great depth in previous research. Initially, the literature is reviewed to clarify the knowledge gap. Next, we describe the study approach built on a robust grounded theory methodology including interviews with 25 senior retail SCM executives and follow-on survey execution. Then we reveal our key findings in the areas of R-SCM role definition and best-in-class capabilities. Results of our interviews confirm the importance of SCM to long-term retail success. LITERATURE REVIEW AND STUDY RATIONALE It is surprising that the retail supply chain has been given so little attention in both the logistics and retail disciplines. …