Implementation of a System Approach for Enhanced Supply Chain Continuity and Resiliency: A Longitudinal Study

Abstract

Researchers and practitioners frequently point to inventory as a necessary component of an effective supply chain strategy. However, an undisciplined or ineffective approach to inventory can have a detrimental impact on an organization and its entire supply chain. When making inventory decisions, firms must ensure that the selected approach “fits” the overall supply chain strategy. While such an assertion seems intuitive, there is a need for empirical validation. We seek to contribute to this important body of research by investigating the impact of improved strategic alignment of inventory on resiliency and continuity. More specifically, we investigate the impact of improved strategic fit by comparing two distinct approaches to inventory management within a service parts environment. We hypothesize that a well‐aligned approach to inventory management can enhance continuity and resiliency. We test these hypotheses via a longitudinal field study involving 10 United States Air Force (USAF) locations and two years of data (approximately 650,000 inventory transactions). Results from nine test locations and one control location suggest that a well‐aligned approach to inventory management is indeed effective in improving continuity and resiliency, thus enhancing service‐based strategies—in this case, the USAF's ability to be mission‐capable. While the results of the study are derived from the USAF, we believe the implications provide broader insight into the use of inventory as a means of realizing a strategic fit.

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“…This is also consistent with recent research in the Supply Chain and Logistics fields which involved short panels (e.g., Boone et al. ; Wan ) and also with the banking literature with longer panels (e.g., Hirtle ; Dietrich and Wanzenried ; Klein ) . We found that all hypotheses remained supported, consistent with results from our primary models.…”

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“…Contingency theory appears especially well suited for investigating the complexities of service parts management, but has thus far been rarely used in this literature stream. Contingency theory suggests organizational performance is maximized when processes and structures "fit" the environment (Lawrence et al 1967), suggesting service parts managers can be most effective by opting for strategies or tools that best complement their specific circumstances (Bacchetti and Saccani 2012;Boone et al 2013). Using a contingency theory approach, scholars could provide especially useful insights for managers by exploring the effectiveness of different big data strategies or techniques in varying contexts or environments.…”

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