Linking business stakeholders' satisfaction and supply chain performance: a technical review.

• Author: Seyedhosseini, Seyed Mohamad
• Position: Report

1. INTRODUCTION

   Having sustainable relationship with business stakeholders in supply chain is the most important critical success factor to achieve competitive advantage in the market. Therefore in order to survive in the competitive market, nowadays firms are obliged to strive for fulfilment of stakeholders' expectations. However, customers' desires cannot be met unless every single process in the supply chain is enriched by adding value. A "value-added activity", as depicted in porter's (Porter 1985) value chain framework, is characterized as the value created by an activity with respect to its execution cost. Porter defined value as "the amount buyers are willing to pay for what a firm provides"; furthermore he stated that "value chain" is the combination of nine generic value added activities that are operating in a firm, i.e. activities which collaborate with each other to provide value for customers (Feller et al. 2006). Although both of the value chain and supply chain involve the same network of companies interacting to provide goods and services, it should be noted that value chains differ from supply chains in various aspects. Supply chain, emerging in the 1980s, is an internationally used term that encompasses every effort engaged in production and delivering of final products and services, from the suppliers' suppliers to the customers' customers (Khalifa 2004). While value chains focus mainly on value flows from customers to suppliers, supply chains concentrate on downstream flow of supplies and goods to the customers. It is evident that orders, cash and value in value chains flow in the opposite direction of supplies flow in supply chains (Walters & Rainbird 2004). The ultimate goals of supply chains are integration of suppliers and producers processes, as well as efficiency improvement and waste reduction, whereas value chains are aimed at creating value for customers (Feller et al. 2006). The creation of value is concerned with diverse groups of stakeholders: shareholders, customers, employee, society and environment (Alvardo & Rabelo 2008). To improve supply chain value, considering value from the stakeholders' point of view, should be measured. Therefore a set of indices is needed for a comprehensive evaluation of supply chain value. There are many studies proposing models and approaches to evaluate supply chain performance. Some of them focus only on customer perspective value creation or shareholders' perspective so the indices proposed for evaluation of supply chain performance are not comprehensive; nonetheless there isn't any comprehensive model to evaluate total supply chain value. The literature on supply chain management lacks a study proposing a framework as a comprehensive set of indices for value evaluation. The consideration of all stakeholders for value evaluation can be regarded as the other determinant of the uniqueness of this study.

2. RESEARCH METHODOLOGY

   In order to provide a comprehensive bibliography of the academic literature on supply chain value, Scopus--established by Elsevier--was searched. Scopus is a vast online database, encompassing majority of online journal databases such as Science Direct, Springer and etc. The literature search was based on the descriptor, supply chain, performance, value and evaluation/ evaluating/ measurement/ measuring/ assessment/ assessing which originally produced approximately 561 articles. The full text of each article was reviewed to eliminate those that were not actually related value measurement. The selection criteria were only those articles that had been published in journals linked to Scopus database were selected, as these were the most appropriate outlets for supply chain measurement research and the focus of this review, those articles which were clearly concerned with supply chain value were selected. Conference papers, dissertations, textbooks and unpublished working papers were excluded.

3. FRAMEWORK: HIGH LITING THE RELATION BETWEEN STAKEHOLDERS' SATISFACTION AND SUPPLY CHAIN PERFORMANCE

   Every firm engages a wide variety of partners called stakeholders. In fact stakeholders are all those people who affect performance of the firm. Accordingly every stakeholder deserves considerable attention and satisfaction during provision of services or production. As Murphy et al. (2005) stated "the ultimate objective of a business is to create value for all of its stakeholders beyond Kotler and Armstrong's long-term value for just customers. Nowadays the concept of "value" has gone beyond the preliminary view of exclusive value generation just for shareholders. Therefore organizations must be evaluated by generation of not only economic value but also ecological and social value. In other words organizations should consider value creation for all stakeholders who are involved with the company and not only for shareholders.

   According to Jensen (2001) the term stakeholder implies every individual or group who are able to greatly influence the welfare of the firm. With respect to the above definition, five groups of stakeholders can be recognized along the supply chain: Customers, Communities, Shareholders, Employees and Suppliers. In order to treat all of these groups equally, their needs and expectations should be firstly identified and then met by the firm. Customers should be satisfied personally by provision of high value in their products and services in a continuous manner. The individuality of each employee should be respected and an environment whereby employees' creativity and productivity can be fostered, appreciated and rewarded, should be provided. Suppliers should be considered as partners who play a prominent role in the achievement of firm's goals such as highest quality standard and greatest consistent level of service. Firms can create the value of community by striving to be caring and supportive corporate citizens among the global communities. Due to the fact that customer value is the salient value in business strategy model and in the success of companies in gaining competitive edge (simova 2009), the priority of supply chain value indices is totally in contrast to the priority of supply chain performance indices (figure 1).

4. TECHNICAL REVIEW

   Each of the selected articles was reviewed. After reviewing all of the articles, thirty five articles were identified as the ones which were somehow related to the concept of supply chain value. Most of these articles have emphasized the significance of performance evaluation. As stated by Milliken (2001) performance measurement process is the means for identifying and correcting short falls within the supply chain. Kaipia et al. (2007) have examined two case studies in grocery supply chains to increase added-value and improve total supply chain performance. They applied concept of 'time benefit analysis' to measure the impact of the change in grocery SC. Jiang et al. (2003) have articulated that supply chain performance measurement is useful for continuous improvement of firms specially for business process reengineering. They have proposed the multi-level decomposition process modelling with performance attributes (PMPA). Taking advantage of hierarchical structure method, they have defined the non-value added activities by using an "as-is" organization in their proposed model. Lambert & Pohlen (2001) have provided a seven-step process to establish supply chain indices across functional areas along the supply chain included "(1) End-to-End mapping of the supply chain with key points identified; (2) Analyze each link and evaluate the potential value; (3) Develop financial metrics to assess the relationship on profitability and shareholder value of the two firms; (4)Synchronize processes and activities to achieve performance objectives; (5) Use non-financial performance measures to enable individuals to meet supply chain process objectives and financial goals; (6) Evaluate shareholder value and market capitalization across firms with supply...