Elephant and Samurai: Differences between Indian and Japanese Supply Chain Management

Global supply chain management has emerged as central aspect of corporate strategic planning in many Japanese firms during this decade. As Japanese firms focus on enhancing core competence and developing global outsourcing/strategic alliances, they lend strong credence to Vokurka's observation that a new belief is that companies will no longer compete against companies, but rather supply will compete against supply chains (Vokurka et al., 2002: 14). Accordingly, numerous studies observe an increasing focus in organizations on their ability to control what happens in the value chain outside own boundaries (supply chain management), as it becomes critical source of strategic competence and competitiveness in business (Branch, 2008; Slone et al., 2010; Trent, 2007). Simchi-Levi et al. define supply chain management (henceforth SCM) as a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements (2007: 1). Effective supply chain management has several competitive advantages; besides aiding in the improvement of overall customer value, effective SCM can reduce development and procurement costs, spur innovation, increase flexibility and accelerate product development (Burt et al., 2003; Monczka et al., 2011; Simchi-Levi et al., 2007). In today's environment, among large firms such as Walmart or Dell, competition is focused on how effective supply are rather than at the overall firm level (Hult et al., 2007). Recent research has focused on supply chain assessment, an important domain of supply chain management (Fawcett et al., 2006; Lambert, 2008; Trent, 2007). Supply chain assessment involves the selection and management of suppliers and is described as one of the most challenging aspects of supply chain management (Burtet al., 2009; Simchi-Levi et al., 2007). Supplier selection and management strategies are perceived to be important strategic decisions in the uncertain, competitive environment. Therefore, proper selection and management of the right suppliers would allow the company to leverage its competencies and capabilities to further refine its supply chain flexibility (Jantan et al., 2006). Anecdotal examples to support the notion that effective supply chain management is source of sustainable competitive advantages for global firms abound in the popular business periodicals. For example, Henke and Zhang (2010) and Lincoln et al., (1998) argue that the success of Japanese firms such as Toyota and Honda in global competition came from unique supply chain assessment and management practices. Kumar and Keshan (2009) and Phillania (2008) also argue that effective supply chain management contributed to the global competitiveness of Tara Steel and Bharat Forge in India. Further, an examination of supply chain management practices among Chinese firms by Jiang and Prater (2002), Lihong and Goffin (2001), Chang and Ding (1995), and Mummalaneni et al., (1996) reveals the unique approach of Chinese managers to supply chain management practices and performance outcomes. In addition, an examination of supply chain management practices among U.S., Japanese, and Korean firms by Dyer and Chu (2011) and Dyer et al., (1998) reveals differences among the three nations. Whereas U.S. firms have historically adopted an arm's-length approach with suppliers, Korean firms have established strong partnerships with suppliers: By contrast, Japanese firms have utilized both the arm's-length and the partnership approaches in supply chain assessment and management practices. The results of Dyer and associates (Dyer et al., 1998; Dyer and Chu, 2011) studies show strong partnerships with suppliers can create and sustain collaborative advantages. …