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Information technology has changed the way American companies conduct their business. Fast-speed communication using fiber optic networks, satellite technology, and the Internet has greatly shrunk the size of the world. On the one hand, fewer and fewer American compa­nies could compete locally and not worry about foreign competition. On the other hand, more and more companies realize the great oppor­tunity that a globalized supply chain can offer. For example, extending sales to the global marketplace can significantly enlarge the customer base, which allows a company to amortize the expensive fixed cost of research and development and thus lower product prices. In addition, global outsourcing allows a company to choose among the best suppli­ers in the world, in terms of quality, price, service, reliability, and even technology.

The issue of managing the supply chain has also become an attrac­tive topic for academic research. In fact, the most popular topic in op­erations management in 1997, based on the submissions to the Journal of Operations Management, was supply chain management [ref. 6]. Moreover, in the 1997 annual survey of logistics executives [ref. 5] conducted by the Logistics Research Group at the Ohio State Univer­sity, the respondents were asked to identify two major factors that would influence the growth of the corporate logistics function in the next de­cade. Twenty-six percent of the responses identified information tech­nology as a primary factor, 14 percent cited supply chain management, and 8 percent identified globalization. The survey results highlight the importance of integrating information technology, supply chain man­agement, and globalization. Although it is well-recognized by many American companies that supply chain management is critical to the success of a company competing in the global marketplace, there is a lack of research on how European companies are viewing this impor­tant development. The European Economic and Monetary Union (EMU), with its more than 300 million consumers, represents one of the largest markets. Well-educated population and advanced manufac­turing technology make EMU an important source of supply. From a strategic point of view, it would be a grave mistake not to consider this area as a part of the global supply chain. The purpose of this presenta­tion is to report a research that focuses on German companies' ap­proach to managing their global supply chains.

PRIOR RESEARCH

Despite the recent popularity of supply chain management, it remains an underresearched topic. Many companies have been dissatisfied with their current management of the supply chain. A survey conducted by Deloitte Consulting in 1999 [ref. 7] revealed an interesting finding. Although 91 percent of the survey respondents ranked supply chain management as either critical or very important, only 2 percent con­sidered their supply chain management world-class. In fact, 75 percent of these companies ranked their supply chain management as either average or below average. Among the reasons for this less than satis­factory progress in supply chain management is the lack of supply chain management strategy. Fifty percent of the companies surveyed do not have a formal strategy for managing the supply chain.

Similar findings have also been reported by the Global Supply Chain Research Team commissioned by KPMG. In the initial phase of its study, the team reported that "for many companies, organizing a suc­cessful supply chain still remains an elusive but necessary goal. The implementation of a truly successful and fully integrated supply chain system can be difficult." [ref. 2]. The survey also revealed the growing trend of outsourcing. Most companies pursuing outsourcing focused on cost reduction. The study also found that "unfocused goals, inad­equate resources/effort, and organization resistance" were among the obstacles of managing supply chain.

Although these survey studies provide us with important messages for future improvement in managing supply chain, the focus has been primarily on American companies. Since the integration of supply chain with information technology and globalization is a crucial issue, there is a need to conduct similar studies that focus on Europe. It is therefore the objective of this research to study supply chain management in Germany, one of the most important members of European Union.

To Be Continued


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