Constructive Engagement in Sales and Operations planning Master Thesis Operation Management & Logistics TU Eindhoven - Supervised by Dr. O. Türetken Dr. R. Kusters 10-06-2016 BSc. S.W.M. Moons
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ConstructiveEngagementinSalesandOperationsplanning
MasterThesisOperationManagement&Logistics
TUEindhoven-
SupervisedbyDr.O.TüretkenDr.R.Kusters
10-06-2016BSc.S.W.M.Moons
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“NavigatingasuccessfulS&OPjourneyis60%changemanagement,30%process,and10%technology”
Chase(2013)
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ManagementSummaryInthismasterthesisreportamodeloffactorsaffectingconstructiveengagementinaSales&OperationsPlanning(S&OP)process isproposed, includingtheirrespectiverelations.Thismodel incorporatesandbuilds on findings from related research, and is validated during an exploratory case study at anorganizationthathasrecentlyimplementedaSales&OperationsPlanning(S&OP)process.TheS&OPprocessisatoolforbalancingsupplyanddemandforthemediumtolongterm.Theprocessusuallyconsistsoffourmonthly-recurringmeetings(Milliken,2008;Olivia&Watson,2010).Manyarticleshavebeenwrittenaboutthistopic,withanoticeableincreaseininterestoverthelastfivetotenyears(Ambrose,2015).PartoftheincreasedinterestcanbeattributedtoincreasedoperationalcomplexityformanufacturingorganizationsdisplayedinFigure1.Bytakingintoaccountboththedemandsideandthesupplysideofoperations,theS&OPprocesscanmitigatetheeffectsofoperationalcomplexitythroughincreasedinformationsharingandorganizationalalignment.
ExternalSuppliers
KnowledgeWorkers
InternalSuppliersPrice
DeliveryTime
Options
Complexity
CustomerDemand
Parts
LaborVacations
FlexWorkers
WorkForceCapacity
SupplyChainCapacity
Figure1:OperationalComplexity
AlthoughorganizationsareintriguedbythepotentialbenefitsofaS&OPprocess,manyfirmsstruggletoaccomplishtheintendedperformanceimprovements.Accordingtopreviousresearchroughly30percentof S&OP initiatives fail to achieve the intended results (Milliken, 2008;Wagner, 2013). Difficulties inachievingcross-functional collaborationarebelieved tobe thebiggestobstacle inachieving improvedperformance(Ambrose,2015).SuccessfulS&OPrequiresagreatdealofteamworkandcross-functionalcollaboration(Braunscheidel&Suresh, 2009; Feng et al., 2014; Ambrose, 2015). Thismeans people with different perspectives andfunctional orientations need to reach alignment to achieve a common goal. This combination ofcollaborationandfunctionalconflictisgenerallyreferredtoasconstructiveengagement(Ambrose,2015;Olivia&Watson,2011).TheobjectiveofthisresearchistoproposeanewmodeloffactorsthataffectconstructiveengagementinaS&OPcontext.Accordingly,thefollowingresearchquestionisposed:
WhatarethefactorsaffectingconstructiveengagementinaS&OPprocess?
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Withrespecttothisresearchquestion,anintegratedmodelisdevelopedthatincorporatesandbuildsonmodelsproposedinpreviousresearch.Theresearchworkwasinitiatedwithawide-rangingliteraturereview to locate gaps in the current literature, and identify relevant factors enabling constructiveengagement. Next, a case study was conducted to evaluate the model in a case organization. Thisapproachwastakeninordertoprovidethecontext-dependentfindingsneededforqualitativeresearch.Theproposedmodelof factorsaffectingconstructiveengagement ispresented inFigure2.Themodelintegratesthefindingsofpreviouswork,andisvalidatedduringacasestudyatanorganizationoperatingin the high-mix, low-volume manufacturing industry. The external team factors centralization, topmanagement support and resources & time, and the internal team factors social cohesion andsuperordinate identity directly impact constructive engagement. Constructive engagement affects theprocess quality factorsprocedural quality and information quality, and has a positive effect on S&OPperformance.AreinforcingstructureisincludedtorepresenthowS&OPperformancecanmotivateS&OPteammembersthroughincentivealignment,whichinturnincreasesconstructiveengagement.
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ExternalTeamFactors
TopManagement
Support
Centralization
SuperordinateIdenity
SocialCohesion
Resources&Time
Rewards&Incentives
ConstructiveEngagement
ProceduralQuality
S&OPPerformance
InternalTeamFactors
InformationQuality
IncentiveAlignmentQuality
ProcessQuality
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Figure2:ProposedmodelofFactorsaffectingConstructiveEngagement
Thefindingsofthisresearchthesishaveimplicationforbothresearchersandpractitioners.TheproposedmodelprovidesanintegratedperspectiveonpreviousworkinaS&OPcontext,andidentifiesthepotentialforfutureworktofurthervalidateandaddtothemodel.PractitionerscanbenefitfromthepresentedfindingsfromanorganizationthatwasintheearlystagesofimplementingaS&OPprocess.Thefactorsinthe proposed model can serve as a guideline for managers during a S&OP process implementationinitiative.
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ContentsManagementSummary................................................................................................................................3
1. Introduction.........................................................................................................................................7
1.1Researchdescription..........................................................................................................................7
1.2ResearchScope..................................................................................................................................9
1.3DocumentStructure...........................................................................................................................9
2. BackgroundandRelatedResearch.....................................................................................................10
2.1SalesandOperationsplanning(S&OP)............................................................................................10
2.2Crossfunctionalcollaboration..........................................................................................................13
2.3ConstructiveEngagement................................................................................................................14
2.4Analysisofexistingconstructiveengagementmodels.....................................................................19
3. ResearchDesign.................................................................................................................................20
3.1LiteratureReview.............................................................................................................................20
3.2DevelopmentofProposedModel....................................................................................................21
3.3CaseStudy........................................................................................................................................24
3.4AnalysisoftheFindings....................................................................................................................27
4. ResearchModel..................................................................................................................................28
4.1ConstructiveEngagement............................................................................................................28
4.2SocialCohesion.............................................................................................................................29
4.3Superordinateidentity.................................................................................................................30
4.4TopManagementSupport...........................................................................................................30
4.5Centralization...............................................................................................................................31
4.6InformationQuality......................................................................................................................31
4.7ProceduralQuality........................................................................................................................32
4.8Rewards&Incentives...................................................................................................................32
4.9Resources&Time.........................................................................................................................33
4.10S&OPPerformance.....................................................................................................................33
5. ResultsandDiscussion.......................................................................................................................35
5.1Quantitativeanalysis........................................................................................................................35
5.2Qualitativeanalysis..........................................................................................................................38
5.2.1ConstructiveEngagement.........................................................................................................38
5.2.2SocialCohesion..........................................................................................................................40
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5.2.3Superordinateidentity..............................................................................................................41
5.2.4TopManagementSupport........................................................................................................41
5.2.5Centralization............................................................................................................................42
5.2.6InformationQuality...................................................................................................................43
5.2.7ProceduralQuality.....................................................................................................................44
5.2.8Rewards&Incentives................................................................................................................45
5.2.9Resources&Time......................................................................................................................46
5.2.10S&OPPerformance..................................................................................................................47
5.2.11Analysisofpracticaluse..........................................................................................................47
5.3ThreatstoValidity............................................................................................................................49
5.4Integration........................................................................................................................................51
5.5Futurework......................................................................................................................................55
6. Conclusion..........................................................................................................................................56
Appendix....................................................................................................................................................57
Appendix1–Referencelist....................................................................................................................57
Appendix2–Ambrose(2015)ResearchSummary................................................................................62
Appendix3–Questionnaire...................................................................................................................66
Appendix4-QuestionnaireResults.......................................................................................................72
Appendix5-SMARTPLSModelandresults..........................................................................................81
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1. IntroductionInthismasterthesisreportamodeloffactorsaffectingconstructiveengagementinaSales&OperationsPlanning(S&OP)process isproposed, includingtheirrespectiverelations.Thismodel incorporatesandbuilds on findings from related research, and is validated during an exploratory case study at anorganizationthathasrecently implementedaSales&OperationsPlanning(S&OP)process.DuringthecasestudyaS&OPprocessredesigninitiativewasevaluatedatanorganizationoperatinginthehigh-mix,low-volumemanufacturingenvironment.TheS&OPprocessisahighlysocialprocessthatisdependentonthecombinationofcross-functionalcollaborationandfunctionalconflict,referredtoasconstructiveengagement.ConstructiveengagementisbelievedtoplayacrucialroleinthesuccessofaS&OPprocess.Thevariablesaffectingconstructiveengagementareidentifiedusingacomprehensiveliteraturereview,andareproposedinanintegratedmodel.Thismodelwasanalyzedandvalidatedwiththefindingsattheresearch organization. The remainder of this chapter holds the detailed research description, projectscope,andprojectoutline.1.1ResearchdescriptionTheS&OPprocessisatoolforbalancingsupplyanddemandforthemediumtolongterm.Theprocessusuallyconsistsoffourmonthly-recurringmeetings(Milliken,2008;Olivia&Watson,2010).Manyarticleshavebeenwrittenaboutthistopic,withanoticeableincreaseininterestoverthelastfivetotenyears(Ambrose,2015).However,manyofthearticlesoriginatefrompractitioners’literature,whichseemstohaveatendencytodescribebestpracticecases,butfailtoidentifytheunderlyingfactorsofthesuccess.Specifically,thedevelopmentandearlyimplementationofaS&OPprocessislargelyundiscussed,whilethe potential benefits of S&OP and the different levels of maturity are discussed more extensively(Ambrose,2015;Thoméetal,2012).Inordertoachievetheintendedbenefitsanddevelopamorematureprocess, an organization has to start with a very basic S&OP process that is supported by the teammembers(Wallace&Stahl,2008).ThehighnumberoffailedS&OPinitiativesdescribedintheliteratureindicatesthedifficultyofestablishingevenabasicS&OPprocess,andprovidesthemotivationforfurtherresearchinthecrucialearlystagesofthedevelopmentandimplementationofaS&OPprocess(Singh,2010;Grimson&Pyke,2007).TheS&OPprocess isembracedbyagreatvarietyoforganizationsrangingfromfastmovingconsumergoodsproducerstocapitalgoodsmanufacturers(Milliken,2008;Olivia&Watson,2010).Thisresearchwillfocusoncapitalgoodsmanufacturers,sinceitisthoughtthatS&OPcanprovideanespeciallyvaluabletoolforthistypeofproducer.Recentdevelopmentshavegreatlyincreasedtheoperationalcomplexityformanufacturers(LaurentLimetal.,2014).Customersexpectacapitalgoodtomeettheiruniqueneedstoalargeextent.Thishasledtoanincreaseinthenumberofproductsamanufacturerhastooffer,andaresultingdecreaseinthenumberofsalesperproduct.Thishasledtocapitalgoodproducersoperatinginahigh-mix,low-volumemanufacturingenvironment.Forecastingisacrucial,ifnotthemostimportant,componentofS&OP(Wallace&Stahl,2006;Wagner,2013).ThemainintendedgoalofS&OPistostrikeabalancebetweensupplyanddemand,toachievemaximalrevenueagainstthelowestpossiblecost,resultinginmaximalprofit.However,forecastingsales
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numbershasproven tobeadifficult task in ahigh-mix, low-volumeenvironment. Lowoutputmeansforecasterrorsarerelativelylargeintermsofpercentages.Inmostorganizationsthesalesdepartmentisgiventhetasktocomeupwithaccurateandreliableforecasts.Thiscanleadtovariouslevelsofresistance.Since forecasts are almost inevitably wrong to some extent, sales manager might expect to receivecriticismwhenforecastsprovetobeinaccurate.ThiscandecreasetheirwillingnesstocooperateduringtheearlystagesofS&OPprocessimplementation(Milliken,2008;Grimson&Pyke,2007).Another characteristic of a high-mix, low-volumemanufacturing environment is the large number ofsuppliers.Atypicalfirmcanhavehundredsoruptothousandsofsuppliers,eachresponsibleforoneormorepartsthatmakeupthefinalproduct.Thesupplychaindepartmentisresponsibleformaintainingacloserelationshipwithsuppliers,andkeepingtrackofthecapabilitiesofthesupplier.Largeincreasesofthetypicalorderquantitymaynotalwaysbepossibleduetothesupplier’scapacity (Grimson&Pyke,2007). This again suggests the importanceof receiving accurate forecasts from the salesdepartment.Whendeviations fromthe typicalquantitiesare relayed to the supplier in time, the supplier can takeactionstomeetthenewdemandlevel.Atthesametimethesupplydepartmentshouldalsoclearlyandtimely communicate the limitations of the supply chain to the sales department. This is necessary toensurethatdemandcanbematchedbytheavailablesupplycapacities.CollaborationiskeytoachieveS&OPsuccess(Lapide,2004).However,typicallythesalesdepartmentiscustomer-facing,whilethesupplychaindepartmentissupplier-facing(Ambrose,2015).Thecontrastingfocuspointscancreatea tension field that impedesthewillingness tocollaborate.Lackingacommonunderstandingandlowlevelsofinformationsharingmakeitverydifficulttoachievetheoptimaloutputlevelsoftheorganization.Theinabilitytoachievecollaborationbetweendifferentfunctionalgroups isbelievedtobeoneofthemainreasonswhysomanyS&OPinitiativesfail(Milliken,2012;Wallace&Stahl,2008).Accordingtopreviousresearchroughly30percentofS&OPinitiativesfailtoachievetheintendedresults (Milliken, 2008;Wagner, 2014). The difficulties in achieving cross-functional collaboration arebelievedtobethebiggestobstacleinachievingimprovedperformance.InrecentresearchbyAmbrose(2015),aconceptualperformanceframeworkisdevelopedtoimprovethecurrentknowledgeabouttherelevantfactorsthatcontributetoincreasedperformanceinthecontextofS&OP.Eightvariablesaredescribedthatarethoughttoaffectthelevelofconstructiveengagement,basedonpreviousresearch.Thevariablesareacombinationoftheinternalteamfactorssocialcohesionandsuperordinate identity, and the external team factors top management support, centralization,informationquality,rewards&incentives,proceduralquality,andresourcesandtime.TheobjectiveofthisresearchistoproposeanewmodeloffactorsthataffectconstructiveengagementinaS&OPcontext.Accordingly,thefollowingresearchquestionisposed:
WhatarethefactorsaffectingconstructiveengagementinaS&OPprocess?Withrespecttothisresearchquestion,anintegratedmodelwasdevelopedthatincorporatesandbuildsontheworksinpreviousresearch.Theresearchworkwasinitiatedwithawide-rangingliteraturereview
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tolocategapsinthecurrentliterature,andidentifyrelevantfactorsenablingconstructiveengagement.Next,acasestudywasconductedtoevaluatethemodelinacaseorganization.Thisapproachwastakeninordertoprovidethecontext-dependentfindingsneededforqualitativeresearch.Forthecasestudy,anindustrycompanyoperatinginahigh-mix,low-volumemanufacturingenvironmentwastargeted.Duringthecasestudy,observations,documentation,questionnairesandinterviewswereusedtogatherinformation.1.2ResearchScopeTheresearchtargetsataS&OPprocessredesigninahigh-mix,low-volumemanufacturingenvironment.This environment is characterized by an extensive product portfolio, low individual product salesnumbers, and a large number of suppliers. These characteristics cause a high level of complexity.Furthermore, these departments have conflicting objectives; sales want to have flexibility to meetcustomer-specific requirements, while the manufacturing department prefers predictability andcertainty.TheresultingfunctionalconflictobstructsthecollaborationthatisrequiredtomakeS&OPwork.Figure 3 graphically represent the disconnection between the sales department and the supply chaindepartmentthattheS&OPprocessintendstoresolve.Thisresearchworkfocusesonthecross-functionalconstructiveengagementthatisneededtoachievesuccessfulbalancingofdemandandsupply.
SalesDepartment
SupplyChainDepartmentDisconnectionCustomers Suppliers
Figure3:DisconnectionbetweenDemandandSupply
1.3DocumentStructureInthischapterthetopicofthispaperispresented,alongwiththeresearchdescriptionandscope.Theremainderofthisthesisreportsisstructuredasfollows.Chapter2providesthefindingsoftheliteraturestudy. Previous work related to the S&OP process and constructive engagement is identified anddiscussed. Two relevant previousmodels are analyzed, and themotivation for a newmodel is given.Chapter3introducestheresearchdesign,includingthedevelopmentoftheproposedmodel,andthecasestudydescription.Inchapter4theresearchmodelispresentedwithaseparatesectionforeachproposedfactor inthemodel. Inchapter5theresultsofquantitativeandqualitativeanalysisarediscussed.Thefindingsoftheresearchareintegrated,potentialthreatstovalidityarediscussed,anddirectionsforfutureworkareidentified.Finally,chapter7presentstheconclusionofthisthesisresearch.
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2. BackgroundandRelatedResearchA literature reviewwas conductedoverabroad rangeofpriorwork toassess the current knowledgeregardingS&OP,andtargetrelevantgapsintheliterature.Thefindingsarepresentedinthesub-sectionsthatfollow.First,S&OPprocessrelatedliteratureispresented.Next,theimportanceofconductingcasestudies about the S&OP process is discussed. Among several gaps in the current literature, the oneregardingthedevelopmentofacomprehensiveunderstandingofhowS&OPshouldbeimplementedwaschosenasastartingpointforthisresearchwork.Constructiveengagementwasidentifiedasthekeyfactorto achieve performance improvements associated with S&OP. Next, variables affecting the level ofconstructive engagement are explained using existing model of constructive engagement in a S&OPcontext,developedbyAmbrose (2015), andOlivia&Watson (2011).At theendof this chapter thesemodelsarecompared,andthemotivationforanewmodelisprovided.2.1SalesandOperationsplanning(S&OP)Intoday’sdynamiceconomicenvironmentcompaniesarefacedwithanincreasinglycompetitivemarket.Globalization, market uncertainty and increasing supply chain complexity raise challenges forcoordinationofbusinessprocesses(LaurentLimetal.,2014).Theproductionofcapitalgoodsbecomesincreasinglymorecomplexandresource-intensive.Ascompaniesmakeuseofglobalsourcing,longerorvariable lead times become more common. Therefore, more and more companies are turning theirattentiontotheoptimizationofthesupplychain.Supplychainmanagementisbasedontheconceptofformingtraditionallynon-coordinatedbusinessunitsintoaunified integratedorganizationalunitalongthesupplychaintocoordinatethebusinessprocesseffectivelyformsupplierstothecustomers(Fengetal.,2013).Salesandoperationsisaconceptrelatedtosupplychainmanagementwhichhasgainedalotofrecognitionoverthepastdecade.ArecentstudyofglobalmanufacturersbyProkopets(2012)shows70%ofthestudyparticipantshadimplementedanS&OPprocess.S&OPprovidesan instrument forboth thehorizontalalignmentofdemandandsupplyplans,and theverticalalignmentofbusinessstrategyandoperationalplanning.(Fengetal.,2013;Wagneretal.,2014).Thegeneralobjectiveismatchingthedemandandsupplyinthemedium-longtimehorizon.S&OPservesas a communication and decision making process that addresses volume and product mix and thecompany’skeyresources(Xuetal.2009).S&OPisamonthly-basedtacticalplanningprocess,whichisledbyseniormanagementandisorientedtowardsthebalancingofdemandandallthesupplycapabilitiesofproduction,distribution,procurement,andfinancetoensuretheplansandperformanceofallbusinessfunctionsarealignedtosupportthebusinessplan(Ling,2002;AberdeenGroup,2004;Bower,2005).AligningbusinessstrategyandoperationalplanningisrequiredforsuccessfulS&OP.Toachievealignmentseveralcoordinationmechanismshavetobeputinplace.Coordinationistheprocessofcommunicationanddecisionmakingamongasetofactorstoachievecommongoals(Malone,1987).Inthecontextofsupplychainmanagement,coordinationisrealizedwhenthedecisionsarebeneficialtothesupplychainasawhole(Gupta&Weerawat,2006).Thedecisionsaboutproductionandprocurementquantitiesto
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meetdemandrequirecoordinationamonginternalbusinessunitsandexternalpartners(Schneeweiss,2003).AlthoughS&OPenjoysgrowingmanagerialinterest,severalissuesposeachallengetotheimplementationandoverallperformance.Oneof themainchallengesconcerns the interactionbetweentheSalesandManufacturingdepartments(Ambrose,2015).Thesedepartmentsoftenhavedifferentgoalsandachieveincentives in different ways (Lawrence & Lorsch, 1967; Mello, 2010). The main goals of salesrepresentatives are to grow revenue andbe flexiblewith the customer requirements. This leads to apreferenceforawideproductvarietyandsaleswithafullspectrumofavailableproducts(Singh,2010).In contrast,manufacturingmanagersareoftenevaluatedand incentedbasedon theefficiencyof theproductionprocess.Thisleadstoapreferenceforanarrowproductscopeandlowinventorylevels(Olivia&Watson,2010;Shapiro,1977).Fromasocialperspective,salesmanagershavegenerallyalwaysbeeninvolved in the sales and marketing departments, while production plant managers have ascendedthroughproductionasforemenandproductionsupervisors.Theresultingdifferenceinspecificknowledgeleadstoadifferentwayinthinkingandcommunicating,andadifferenceinculture(Konijnendijk,1993,Shapiro,1977).FurtherchallengesregardingS&OPinvolvetheimplementationandapplication.AlthoughtheliteraturemakestheS&OPprocessappeareasytounderstand,manyorganizationsfacedifficultieswhentryingtoachievetheexpectedbenefits(Bower,2005).TheliteratureonlyprovideslimitedunderstandingofhowtheperformancecanbeimprovedwiththeimplementationofS&OP(Thoméetal,2012).Theseproblemsindicate that the literaturedoesnot currentlyprovide clearguidelines for the companies to follow toachieve a successful S&OP process. Especially methods to facilitate coordination between differentfunctionaldepartmentsareneeded.Thisisduetotheunderstandingthatawell-maintainedrelationshipbetweendifferentfunctiongroupsenhancesthefirmperformance(Flynnetal.2010).Previous literature reviews on the S&OP process have provided a better understanding and someguidelinesforpracticaluse.Thoméetal.(2012)conductedasystematicliteraturereviewtoofferempiricalevidenceoftheeffectofS&OPonfirmperformance.Thisreviewshowedthereisatleastpartialevidencethatcross-functionalplanningprocessescanminimizethenegativeeffectofcontradictingperformancemeasures on firm performance. Singhal & Singhal (2007) showed the central role of operationsmanagement by linking it with supply chains and other function departments in the organization.Tuomikangas&Kaipia(2014)aimedtosynthesizeaframeworkofcoordinationmechanismsinS&OPwiththeirliteraturereview.ThisledtoidentifyingsixrelevantcoordinationmechanismsforS&OP.WhatallpreviousliteraturestudieshaveincommonistheremarkthatmoreempiricalresearchisneededonthetopicofS&OP.Anespeciallyobviouslackofcasestudiesisdescribed.TheinformationgainedfromcasestudiesmayprovideabetterframeworkfortheimplementationandcontinuoususeoftheS&OPprocess.Thismayhelppractitionersinovercomingthepreviouslymentionedchallenges.TheexistingcasestudieswillbebrieflydiscussedinordertofindaspecificpartoftheS&OPprocesswheremoreresearchmaybeneeded.
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CaseStudiesInasystematicreview,Thoméetal.(2012)foundasinglecasestudyamong55articlesthatarereviewed.ThepaperbyOlivia&Watson(2010)describesacasestudyoftheS&OPprocessataglobalconsumerelectronicscompany.Thiscompanywascharacterizedbythepresenceofworkgroups,andincentivesandrewardsthatwereseparatelysetforthedifferentfunctionalgroupsintheorganization.Thismisalignmentledtocross-functionalconflicts.Thecasestudywasconductedusingsemi-structuredinterviews,directobservationsofplanningand forecastmeetings, andby reviewingdocuments. The company’s goalofimplementing S&OP was to achieve functional alignment and improve firm performance. It washypothesizedthatS&OPhasanintermediaterolebetweenthestructuraldeterminantsofcross-functionalalignmentandfirmperformancethroughthemediatingeffectsofproceduralquality,informationqualityand alignment quality. It was found that achieving alignment in the execution of plans can bemoreimportantthaninformationalandproceduralquality.In their literature review, Tuomikangas & Kaipia (2014) reiterate the need for empirical research tocomplementtheexistingmodelingandsimulationstudiesinthefield.Theirstudyrevealsthreearticles(includingtheonebyOlivia&Watson(2010)discussedabove)thatreportonthecasestudiesthatwereconducted.ThestudybyIvert&Johnsson(2010)describestheuseofadvancedplanningandschedulingsystems(APS)intheS&OPprocess.Thestudyreportsthatthiscombinationledtobenefitsregardingthelearningeffects,thesupportofdecisions,andtheplanningefficiency.ThethirdpaperbyCollin&Lorenzin(2006)focusesonhowcollaborativeplanningcanincreasetheagilityofsupplychains.Theirarticleisofamoredescriptivenature,anddescribesthelessonslearnedfromcollaborativeplanning.Itisarguedthatcustomers’demandcouldbebetterusedbysupplierstoachievemoreagilityandaligningsupplychains.Furthermore, they conclude that collaborative applications in information technology can bringmoreformalizationtotheplanningprocess.Fromthepreviousliteraturestudies,itcanbeconcludedthatthereisaneedforfurtherempiricalresearchinvolvingthesalesandoperationsplanningprocess.EspeciallyconductingcasestudieshasthepotentialtoprovidepractitionersvaluableinformationandgainfurtherunderstandingofS&OP.ResearchGapsThereviewoftheexistingliteratureinvolvingS&OPuncoversseveralresearchgaps,asreportedinstudiesbyTuomikangas&Kaipia (2014)andThoméetal. (2012).Twokeyresearchgapsareselected for thisthesisresearch.Theseare:
1. ThedevelopmentofacomprehensiveunderstandingofhowS&OPshouldbeimplemented2. Limitedempiricalresearch(e.g.casestudies)involvingS&OP.
Inthefollowing,weelaborateontheseresearchgaps.ThedevelopmentofacomprehensiveunderstandingofhowS&OPshouldbeimplementedAlthoughthechallengesassociatedwiththeimplementationofS&OParedealtwithwidelyinpractitionerliterature,thisaspectisalmostcompletelyabsentfromacademicliterature.CurrentacademicresearchoffersfewguidelineshowtomakeoptimaluseofthecapabilitiesofS&OP(Tuomikangas&Kaipia,2014).The lack of research on this topic seems odd, given the high implementation costs and high level of
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expectedbenefits.ThestudybyGrimson&Pyke(2007)proposesaframeworktoassesstheS&OPprocessmaturityatanorganization.The five integrationstagescanhelpmanagers indetermining thecurrentS&OPmaturity,andchoosingstepstoimprovetothenextstage.Inthisresearchavarietyoforganizationsareinterviewed,rangingfromjob-shopproductiontohigh-volumecommodityproduction.ThisresearchhoweverdoesnotprovideguidelinefortheimplementationoftheS&OPprocess.FutureresearchshouldfocusonprovidingguidelinesformanagersintheprocessofimplementingaS&OPprocess.LimitedempiricalresearchinvolvingS&OPLimitedempiricalresearchintheformofcasestudiesabouttheS&OPprocessinthecurrentacademicliterature has beenmentioned on several occasions in this thesis.Most of the empirical evidence inpreviouspapershasbeengatheredusing interviewsandsurveys.Theuseofacasestudyoffersan in-depthlookintotheimplementationprocessatanorganization.Thiscanprovidevaluableinsightintothelessons and pitfalls of S&OP implementation that can provide guidance for organizations planning toimplementtheprocess.ResearchgapanalysisTheliteraturestudyprovidedtwokeygapsinthecurrentS&OPrelatedresearch.First,limitedempiricalstudiesthroughcasestudiesprovidedthemotivationforaresearchwithacasestudydesign.Second,since many companies seem to struggle at the development and early implementation stages, thisresearch focusses on the development of a comprehensive understanding of how S&OP should beimplemented.Thefocuswillbeonthefactorsthataffectconstructiveengagement.Thenextsub-sectionselaborateontheroleofconstructiveengagementinaS&OPcontext.2.2CrossfunctionalcollaborationThebalancingofdemandandsupplyactivitiesinvolvesandrequiresinputfromvariousfunctionalgroups.Sales,marketing,finance,R&D,manufacturingandpurchasingareinvolved,amongothers.ThereforetheS&OP process requires a cross-functional effort (Braunscheidel & Suresh, 2009). The collaborationbetweenthefunctionalgroupsoftenprovestobeachallengefororganizations.Themainreasonsforthisarethedifferencesinspecializations,prioritiesandincentives,astheyoftencauseconflictswithrespecttohowsupplyanddemandshouldbebalanced(Shapiro,1977).TheS&OPprocessrequiresahighlevelof collaboration in the SupplyChain (McCarthy&Golicic, 2002). In his researchpaperNakano (2009)categorizestheconceptofcollaborationintothreedimensions:
1. Sharingresources2. Collaborativeprocessoperation3. Collaborativeprocessimprovement
Sharing resources means the sharing of standardized information such as forecasts, and data aboutinventory, production and purchasing. Furthermore, customized information such as operationalconstrains, resources, and factors of demand fluctuation are used (Nakano, 2009). The collaborativeprocessoperationreferstotheinvolvementofforecastsintotheplanningattheManufacturingCenters.Deviationsbetweentheforecastsandtheplanningareexamined,andplansofactionareconstructedif
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necessary. Continuous process improvements are required to stay flexible in the fast-changing globalenvironment.Therefore,organizationsmustincorporatecollaborativeprocessimprovement.Thismeansfirmshavetoimproveexistingprocesses,eliminateunnecessaryprocesses,andredesignorganizationalrolesandresponsibilities.The research by Nakano (2009) has provided findings that prove the positive effects of collaborativeforecasting and planning on the logistics production and performance (as depicted in the model,presentedinFigure4).Thelogisticsproductionandperformancewasmeasuredusingquestionnairesat65Japanesemanufacturingfirms.Theperformanceindicatorsincludedlogisticcosts,orderfillrate,anddeliveryspeed.Collaborative forecastingandplanningcanbedonewithsuppliers,withcustomers,orinternal.InternalcollaborativeforecastingandplanningistheintegralpartoftheS&OPprocess(andthetopic of this thesis). Although Nakano (2009) proves the positive effect of S&OP of the logisticsperformance, the research does not report how internal collaborative forecasting and planning isachieved.
CollaborativeforecastingandplanningwithmainSuppliers
InternalCollaborativeforecastingand
planning
Collaborativeforecastingandplanningwith
mainCustomers
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ProductionandPerformance
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Figure4:EffectsofCollaborativeforecastingandplanningonLogisticsProductionandPerformance(Nakano,2009)
2.3ConstructiveEngagementSuccessfulS&OPrequiresagreatdealofteamworkandcross-functionalcollaboration(Braunscheidel&Suresh, 2009; Feng et al., 2014; Ambrose, 2015). Thismeans people with different perspectives andfunctionalorientationsneedtoworktogethertoreachacommongoal.Thiscombinationofcollaborationand functional conflict is generally referred to as constructive engagement (Ambrose, 2015; Olivia &Watson, 2011). Themodel proposed in this thesis integrates and builds on twomodels proposed inpreviouswork;theS&OPperformancemodelbyAmbrose(2015),andtheplanningprocessqualitymodelbyOlivia&Watson(2011)S&OPPerformancemodelbyAmbrose(2015)The S&OP performance framework by Ambrose (2015) identifies internal team factors, contextualinfluencers, and environmental factors, and their effects on S&OP performance. The model of thisframeworkispresentedinFigure5.Theframeworkisbasedongroupeffectivenesstheoryandisvalidatedusingalargescalesurvey-basedresearch.Constructiveengagementispresentedasacentralfactorinthismodel,indicatingthecrucialroleitrepresentstoachieveimprovedS&OPperformance(Ambrose,2015).
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Figure5:ModelofS&OPperformance(Ambrose,2015)
InternalTeamFactors:The internal team factors, social cohesion and superordinate identity, are necessary to achieve teamchemistryand constructiveengagement. These factorsdefinehowcomfortablepeoplearewithin theteam,andhowmuchtheyfeelpartoftheteam.Social cohesion can be defined as the strength of interpersonal connections between teammembers(Hogg,1992).Thepresenceofsocialcohesioncanstimulateexchangeofresourceswithinteams,andthuscontributetoimprovedcollaboration(Nakata&Im,2010).Superordinate identitymeasures thecognitivecomponentof therelationamember feels towardstheteam(Sethi,2000).Itdefinestheextenttowhichmembersarecommittedtosharedgoals,andhaveasignificantpart in thesuccessor failureof thecollectivetask (Nakata& Im,2010).Strongpresenceofsuperordinateidentitycanmitigatefunctionalbiasesanddevelopagroupidentity.Alackofsuperordinateidentitycandecreasegroupeffectivenessduetolowerlevelsofknowledgesharing.ContextualInfluencers:ThecontextualinfluencersaretheexternalteamfactorsthatdefinethecontextoftheS&OPteamwithintheorganization.Thesefactorsdescribethequalityoftheprocessandinformation,aswellasthesupportoftopmanagementandhowthistranslatestotheavailableresourcesfortheteam.Topmanagementsupportisidentifiedasacriticalcomponentforthesuccessofavarietyoforganizationalchanges (Li & Ling, 2006). Top management refers to senior level managers, who are involved withformulating the strategy and tactical moves of the organization. Topmanagement support becomesapparentintheappropriateallocationofresources,directinvolvementintheprocessandcommunicationfromseniormanagers.Informationqualitydefinesthedegreeofappropriatenessandusefulnessofinformationsharingfortheteammembers anddecisionmakers (Olivia&Watson, 2011). Informationquality canbeachievedbystimulating frequent, complete and reliable information sharing between teammembers (Wallace &Stahl, 2008).High levels of information quality can contribute to the performance of cross-functionalcollaboration,whilelowlevelscanhaveanegativeeffectontheoutcomes(Li&Lin,2006).
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ProceduralqualityisdefinedbyOlivia&Watson(2011)as“thedegreetowhichaprocesscontinuouslyensures that the rules of inference used to validate information, and to make decisions within andbetween functions, are appropriate and sound.” Procedural quality is a structuringmechanismwhichensuresorganizationalactivitiesaregovernedbyestablishedrulesandprocedures(Nakata&Im,2010).Rewardsand incentives refers to theextent towhich teammembersare recognizednot just for theiroperationaltask,butspecificallyfortheircontributionstoachievingteam-basedgoals(Ambrose,2015).Jointrewardsareawayoflinkingaworker’sincometooutcomesofcross-functionalteamwork.Aligningrewardsandincentiveswithteamgoalsisoftenfoundtobedifficulttoachieve.Thepersonalcontributiontowardsteamsuccessorfailurecanhardlybequantified,makingitdifficultforamembertoassessthefairnessoftherewardsystem.Still,committingteammemberstodevelopcommongoalsthroughalignedincentivesisseenasanimportantfactorforachievingcollaboration(Xieetal,2003).Thefactorcentralizationreferstotheextenttowhichthepowerofdecisionmakingresideswithuppermanagement. Centralized organizations are characterized by the concentration of decision makinglocatedatthetopleveloftheorganization(Dewar&Werbel,1979).TheconsequenceofhighlevelsofcentralizationislowdecisionmakingpowerwithintheS&OPteamitself,meaningdecisionsalwayshastobedirectedtoandapprovedbythetopmanagement.Thelastexternalteamfactorisresourcesandtime.Appropriateresourcesandadequatetimearecriticalvariables for achieving successful outcomes of team work (Holland et al., 2000). In S&OP context,resources refer to having access to training and background information about the S&OP process(Ambrose,2015).Appropriate informationquality is another resource that can contribute to reachingteamgoals,andpromotingacommonlanguageandunderstanding.OrganizationsshouldrecognizetheimportanceofS&OPrelatedtasksandallocateadequatetimeformemberstoworkonthem(Wagneretal.,2013;Menonetal.,1997).Environmentalfactors:ThevariablesmarketturbulenceandtechnologyturbulencearefactorsthatarelikelytoaffecttheS&OPperformance (Ambrose, 2015). This assumption is reflected in the model of S&OP performance byAmbrose(2015),wherethetwofactorsareproposedtoinfluencetheeffectofconstructiveengagementonS&OPperformance.The factormarket turbulence describes thedegreeof change in customer-preferences, and customergroupcomposition(Kohli&Jaworski,1990).Thisfactorisdirectedatthestabilityofthedemand-side.Technologyturbulencereferstothesupply-sidestability,andreflectstheamountofdisturbancesintheproductgeneratingprocesses(Kohli&Jaworski,1990).AsimplerdefinitionisprovidedbyMenonetal.(1997)whodescribethetechnologicalturbulenceastherateoftechnologicalchangewithinanindustry.ConstructiveEngagement:The factorconstructiveengagementplaysacentral role in theS&OPperformancemodelbyAmbrose(2015).Intheliteraturethetermconstructiveengagementreferstothecombinationofcollaborationandfunctionalconflict(Olivia&Watson,2011).
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Outcome:TheoutcomeofaS&OPprocessiscapturedbythefactorS&OPperformanceinthemodeldevelopedbyAmbrose (2015). The measurement of S&OP performance in the research by Ambrose (2015) wasachievedbyusingascaledevelopedbyWagneretal., (2013). In their research,Wagneretal., (2013)define the benefits of S&OP as “a vertically and horizontally aligned set ofmarketing, development,manufacturing,sourcing,andfinancialplansthatenabletheongoingbalancingofsupplyanddemand”.IntheresearchbyAmbrose(2015),theseS&OPbenefitsarelabelledasthefactorS&OPperformance.
PlanningprocessqualitymodelbyOlivia&Watson(2011)TheresearchbyOlivia&Watson(2011)reportsonasinglecasestudyatanorganizationwherecross-functional conflicts are overcome, by making use of a S&OP process. Functional conflicts betweendepartment mainly arise from misaligned incentives, which are common in many organization withdistinct sales and production functions. A process perspective is taken by Olivia &Watson (2011) toidentifytheprocessasamediatortosupportdifferentincentives,whilemaintainingtherequiredS&OPprocessoutcomes.Figure6showstheproposedmodelofplanningprocessqualitybyOlivia&Watson(2011)
PerceivedBenefitofParticipatingintheS&OPProcess
MisalignedIncentives
OpenandTransparentProcess
PerceptionofS&OPProcess
Quality
QualityofS&OPProcessOutcomes
Participant’sEngagement
QualityofS&OPProcess
InformationQualityProceduralQualityAlignmentQuality
Figure6:PlanningProcessQualitymodel(Olivia&Watson,2011)
MisalignedIncentivesTheincentivelandscapeinanorganizationdefinestheformalmechanismsthatareinplacetoinfluencethebehaviorofdepartments.Holmstrom&Milgrom(1994)makeadistinctionbetweenhigh-poweredincentives,andlow-poweredincentives.High-poweredincentivesarebasedonmeasuresofperformance(e.g.salescommissions),whilelow-poweredincentivesarerewardsthatarereceivedbytheemployeeindependentofperformance(e.g.fixedsalary)(Olivia&Watson,2011).ThegoaloftheresearchbyOlivia&Watson (2011)was to providemore insight into how a S&OP process is able to achieve improvedorganizationalperformance,despitethemaintenanceofmisalignedincentivesandorientationsbetweendepartments.
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OpenandTransparentProcessDuringtheircasestudy,Olivia&Watson(2011)observedaS&OPprocessthatwasopenandtransparent.Participantsweremotivatedtosharetheinformationoftheirrespectivedepartments,andtheprocessenabled each stakeholder to influence the outcomes of the process. By sharing and consolidating allrelevant information,stakeholders intheS&OPprocesswereexplicitlyconfrontedwiththeiropposingorientationsandincentives.Thisopenandtransparentprocessenabledparticipantstoreachalignment,and achieve improved performance. By motivating the participants, and enabling a platform forcollaborationandfunctionalconflict,constructiveengagementwasobservedbyOlivia&Watson(2011).Participant’sEngagementIn their model of planning process quality, Olivia & Watson (2011) identify the factor participant’sengagementasalinkbetweenperceivedbenefitsfortheparticipant,andthequalityoftheS&OPprocess.However, much more frequent in their paper is the term constructive engagement. Constructiveengagement is described as the active involvement of all stakeholders in collecting, validating, andadaptinginformation,andguardingoutcomesthatimpacttheirrespectivedepartments.Olivia&Watson(2011)observedthecrucialroleofconstructiveengagement inachieving improvedprocessquality,bypositivelyaffectingtheprocessattributesinformation,procedural,andalignmentquality.QualityofS&OPProcessOlivia&Watson (2011) identify threeelementsofS&OPprocessquality; information,procedural,andalignment quality. Information quality ensures decision making is enabled, by verifying theappropriatenessoftheformandcontentofinformation.Proceduralqualityreferstothedegreetowhichinformationvalidationanddecisionmakingarecontinuouslymonitoredforintegrity.Thethirdprocessattribute alignment quality refers to the degree to which organizational and functional goals aresupportedbyaprocess,andthattheactionsaresynchronized.Duringtheircasestudy,Olivia&Watson(2011) observed the positive impact of S&OP process quality on the quality of the S&OP processoutcomes.QualityofS&OPProcessOutcomesIntheirresearch,Olivia&Watson(2011)reportonthesocialandperformanceoutcomesofimplementinga S&OP process. Performance outcomes included operationalmeasures, such as improved inventorycontrol.Whilesocialoutcomesincludedtheincreasedfrequencyofconstructiveengagement,includingsharing information and aligning operational decision making with the organization goals (Olivia &Watson, 2011). The improved social outcomes indicated the transformation of the participantsperceptions.Participant’sPerceptionsOlivia&Watson(2011)observedchangingparticipant’sperceptionsduringtheircase-study.TheS&OPprocess enables stakeholders to share their perspectives, and influence decision making by activelyengagingintheS&OPprocess.ImprovedperceptionsoftheS&OPprocessleadtotheimprovedperceivedbenefits of participating in the S&OP process, leading to constructive engagement (Olivia &Watson,2011).
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2.4AnalysisofexistingconstructiveengagementmodelsIn the previous section two models are presented that indicate the central role of constructiveengagement in a S&OP context. Themodel of S&OP performance by Ambrose (2015) identifies bothinternal and external team factors affecting constructive engagement. A positive relation betweenconstructive engagement is proposed, that can be impacted by environmental factors. The planningprocessqualitymodelbyOlivia&Watson(2011)aimsattentionattheperceptionsofS&OPstakeholders.InthemodelareinforcingstructureisproposedfromtheS&OPprocessoutcomesbacktoconstructiveengagement,flowingthroughtheperceptionsofprocessqualityandbenefitsofparticipatingintheS&OPprocess. The S&OP process is identified as a mediator that allows for improved performance, whilemaintainingmisalignedincentivesbetweendepartments.
While both models agree on the crucial role of constructive engagement to achieve performanceimprovement,somecleardistinctionsbetweenthemodelscanbemade.Tostartwith,theresearchwasconducted indifferentways.Ambrose(2015)madeuseofaquestionnaireapproachtoreachmultipleorganizations,operatingindifferentfieldsandindustries.Olivia&Watson(2011)madeuseofasinglecasestudyapproach,thatallowedtomakeobservationsandconductmorein-depthinterviewswiththeparticipants.
Thedifferentapproachesledtodifferentwaysofanalyzingandpresentingthefindings.ThefindingsbyAmbrose (2015) are analyzed quantitatively with a statistical approach. This allowed to make moregeneral statement about the findings of the research. The research by Olivia &Watson (2011) wasconducted at a single organization, making is harder to make general statement about the findings.Therefore,theirmodelwasputtogetherbycombiningfourpropositions,basedonthefindingsatthecaseorganization.
ThefocusofthetwomodelsprovidesdifferentviewsonthefactorsaffectingconstructiveengagementinaS&OPcontext.ThemodelbyAmbrose(2015)identifieseightvariablesthatareproposedtohaveadirecteffectonconstructiveengagement.Thesefactorsincludebothinternalandexternalteamfactors.AdirectpositiveeffectofconstructiveengagementonS&OPperformanceissuggested.InthemodelbyOlivia&Watson (2011) several factors are identified identically to themodelbyAmbrose (2015);constructiveengagement, information quality, procedural quality, rewards & incentives, and S&OP processperformance.ThefactorsocialcohesionproposedbyAmbrose(2011)differsfromwhatOlivia&Watson(2011)identifyasanopenandtransparentprocess.Whilesocialcohesionreferstotheextenttowhichpeople are working together, an open and transparent process refers to the willingness to shareinformation.CentralizationisdefinedbyAmbrose(2015)astheamountofdecisionmakingresidingatthetoplevelsoftheorganization.ThisconstructistheoppositeofwhatOlivia&Watson(2011)describeastheamountofinfluencetheparticipantsintheS&OPprocesshaveondecisionmaking,whichisreflectedinthefactorperceivedbenefitofparticipatingintheS&OPprocess.Superordinateidentityissimilar,butextends simply seeing benefits in participation, by feeling like a fullmember of the S&OP team. TwoexternalteamfactorsareidentifiedinthemodelbyAmbrose(2015)andareabsentinthemodelbyOlivia&Watson(2011),namelytopmanagementsupportandresources&time.ThefactoralignmentqualityreferstotheextenttowhichorganizationalandfunctionalgoalsaresupportedbytheS&OPprocess,andthattheactionsaresynchronized.ThisfactorispresentinthemodelbyOlivia&Watson(2011),butisnot
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apartofthemodelbyAmbrose(2015).Finally,Olivia&Watson(2011)proposeacycleofcontinuousimprovement in theirmodel. A reinforcing structure is presented, going from S&OPprocess outcomequalitybacktoconstructiveengagement,flowingthroughparticipant’sperceptions.ArelationbetweenS&OPperformanceandconstructiveengagementisabsentinthemodelbyAmbrose(2015).
ThesimilaritiesanddifferencesbetweenthesetwomodelsofconstructiveengagementinaS&OPcontextprovidethemotivationforanewmodel.Thecombinationofthesemodelsintoanintegratedmodelcanaddtotheliteraturebybuildingonfindingsfrompreviouswork,andvalidatingthenewmodelwithacasestudyapproach.Theresearchdesignthatisusedforthisresearchisexplainedinthefollowingchapter.
3. ResearchDesignThischapterdescribestheresearchdesignusedduringthemasterthesisstudy.Theresearchprocessispresented is Figure 7. A literature study is conducted to gain understanding of the S&OP process ingeneral, aswell as the role of constructive engagement in a S&OP context. The development of theproposedmodelintegratedthefindingsofpreviousresearch,andthecasestudyconductedatanindustryorganization.DuringthecasestudyexploratoryinterviewswereheldwithmembersoftheS&OPteamatthecasestudyorganization.Thesemembersalsoparticipatedbyfillingoutquestionnairestoassesstheperceived levels of the factors affecting constructive engagement. During the final interviews theproposedmodelwasvalidatedwithmembersofthecasestudyorganization.Thefactorsandrelationsintheproposedmodelareanalyzedbothquantitativelyandqualitatively.
LiteratureReview
ConstructiveEnagementinaS&OPcontext
S&OPProcess
DevelopmentofProposedModel
Adoptingexistingmodelsof
ConstructiveEngagementinaS&OPcontext
CaseStudy AnalysisofFindings
QuantitativeAnalysis
QualitativeAnalysis
ExploratoryInterviews
Questionnaires
FinalInterviews
Figure7:ResearchDesign
3.1LiteratureReviewLiteraturehasbeengatheredfrombooksandresearcharticlesfromacademicjournals.Themainsourcesto find and retrieve previousworkwere the online Google Scholar search engine, the TU Eindhovenuniversitylibrary,andtheTUEindhovendatabaseofacademicjournalsandbooks,andresearchreports.DuringthefirstpartoftheliteraturereviewpreviousworkontheS&OPprocessingeneralwasanalyzed.ThisledtotheidentificationofaneedforthedevelopmentofacomprehensiveunderstandingofhowS&OP should be implemented. Due to the highly social nature of the S&OP process, constructiveengagement was identified as a crucial factor for the success of a S&OP process implementation.Therefore,duringthefinalpartoftheliteraturereview,thefocuswasonliteraturecoveringtheroleofconstructiveengagementinaS&OPcontext.ThisledtotheidentificationoftheworkbyAmbrose(2015),andOlivia&Watson(2011).Themodelproposedinthisthesisincorporatesandbuildsonfindingsfromthispreviouswork.
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3.2DevelopmentofProposedModelVanAkenetal.(2007)identifytwodistinctapproachestoqualitativedataanalysis;thegroundedtheoryapproach,andthetemplateapproach.Thegroundedtheorydevelopstheoryoutofrawqualitativedatainastructuredway.Itpresentsastructuredapproachfortheexplorationofnewandunfamiliarterritory(VanAkenetal.,2007).Thegroundedtheoryapproachisaimedatthedevelopingconceptstorepresentaparticularaspectofreality,andfindingtherelationshipsbetweentheseconcepts.Codingisthemaintool todeveloptheconcepts.Sinceconceptsaredevelopedduringtheresearch, thegroundedtheoryapproachdoesnotrelyonmuchtheoreticalpre-understanding(VanAkenetal.,2007).Incontracttothegroundedtheoryapproach,thetemplateapproachdoesrelyonexistingconceptsandtheories (VanAkenetal.,2007).Whereas thegroundedtheoryapproachusescodingtodevelopnewconcepts,thetemplateapproachusesexistingcodes.Theuseofexistingcodesenablestheresearchertodisplaythedatafrominterviewsandquestionnairesinastructuredway.Thesystematicsdisplayofdataenablesastructuredandvalidanalysis(VanAkenetal.,2007).This research study applied the template approach,where the PhD dissertation by Scott C. Ambrose(2015)functionedasthetemplate.Threeelementsfromhispaperwereusedforthisresearch:• TheS&OPperformancemodel (Figure5)• Thedevelopedquestionnaire (Appendix3–Questionnaire)• Thefindingssectionfromthepaper (Appendix2–Ambrose(2015)ResearchSummary)Thetemplateapproachusesexistingcodes.Forthisthesisresearchthecodeswerethevariablesaffectingconstructiveengagement,extractedfromtheS&OPperformanceframeworkbyAmbrose(2015).Thesevariableshavebeenexplainedinchapter2.3.Therelianceonexistingcodesimprovedthevalidityofthisresearch,sincethecodesarebasedonprovenconcepts.ThegroundedtheoryapproachwasusedintheAmbrosepaper(2015)todeveloptheS&OPperformancemodel.TheconceptsusedintheAmbrosepaper(2015)aremostlybasedonexistingliteraturethatincludestheapplicablequestionnaireitemswithquestionsandLikertscales.Sincemostoftheconceptsareoriginallydeveloped for new product development teams, Ambrose (2015) had tomake small changes to thewordingofsomequestionnaireitems.Asummaryofthemodificationsandthereliabilityoftheadaptedandnewlydeveloped scales is given inappendix4. Thequestionnairesenabledcomparisonbetweenrespondents’perceptionsregardingvariablesofconstructiveengagement.ThefinalelementoftheAmbrosepaperthatwasusedforthisresearchwasthefindingssection.Whereasthis research used observations, questionnaires and interviews to triangulate the findings, Ambrose(2015) strictly used the questionnaires. This approach made it possible to gather a large pool ofrespondents.A total of 101questionnaireswasused todraw the conclusions about the relationshipsbetweentheconceptsintheproposedS&OPperformancemode(Ambrose,2015).Thecasestudydesignistimeconsumingtoahighdegree,makingitimpossibletoaccesssuchalargenumberofrespondents.Furthermore, this single case research only represents the findings at one company, which leads to
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limitationsregardingthegeneralizabilityofthefindings.Bycomparingtherichandcontext-dependingfindingsofthesinglecasestudytothefindingsoftheAmbroseresearch(2015)newinsightswerefound.Infact,Ambrosehimselfproposedin-depthinterviewsandcasestudyobservationsofS&OPteamsforfuture research (Ambrose,2015).Validating the findingsof theAmbrose research (2015) is suggestedusingastudyinafieldsetting,whereperceptionscanbecapturedfromentireS&OPteams.SelectionofFactorsinProposedModelIn this subsection the selectionof factors for theproposedmodel is explained. Theproposedmodelincludesfactorsaffectingconstructiveengagement,andusestheS&OPperformancemodelbyAmbrose(2015)asatemplate.AllfactorsproposedbyAmbrose(2015)andOlivia&Watson(2011)areconsidered,and are either included, excluded or integrated in the model proposed in this thesis. The completeresearchmodel,includingsuggestedeffects,ispresentedinchapter4.IncludedfactorsInTable1thefactorsincludedintheproposedmodelarepresented.AllnineincludedfactorsarepresentintheS&OPperformancemodelbyAmbrose(2015),andfivefactorsareincludedintheplanningprocessqualitymodelbyOlivia&Watson(2011).
Table1:IncludedfactorsIncludedFactors Presentinmodel:
Ambrose(2015) Olivia&Watson(2011)SocialCohesion Yes NoSuperordinateIdentity Yes NoTopManagementSupport Yes NoInformationQuality Yes YesProceduralQuality Yes YesRewards&Incentives Yes YesResources&Time Yes NoConstructiveEngagement Yes YesS&OPPerformance Yes Yes
ExcludedfactorsThe factors that are excluded in the proposed model are presented in Table 2. The factorsmarketturbulence and technological turbulence are proposed in the S&OP performance model by Ambrose(2015). These factors are excluded, as they do not directly affect constructive engagement. In thequantitativeresearchbyAmbrose(2015)thesefactorshadthelowestaveragevarianceextracted.Highlevelsofmarket turbulencewere found toamplify the importanceof constructiveengagement,whiletechnologicalturbulencewasnotfoundtomoderatetheimpactofconstructiveengagementonS&OPperformance.Fromamanagerialperspectivethesefactorscouldbeconsideredfixedinashorttomediumhorizon,whilethefactorsincludedintheproposedmodelcanbeinfluencedthroughmanagerialefforts.AlignmentqualityisidentifiedbyOlivia&Watson(2011)asanindicatorofprocessquality,andreferstotheextenttowhichtheS&OPprocesssupportstheorganizationalandfunctionalgoals.Thisfactorsisnotincludedasitisnotpartoftheusedtemplate,basedonthefactorsidentifiedbyAmbrose(2015).
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Table2:ExcludedFactorsExcludedFactors Presentinmodel:
Ambrose(2015) Olivia&Watson(2011)MarketTurbulence Yes NoTechnologicalTurbulence Yes NoAlignmentQuality No Yes
IntegratedfactorsInTable3thefactorsthatarenotexplicitlyincluded,butintegratedintheproposedmodelarepresented.These factors are identified in the planning process qualitymodel by Olivia &Watson (2011), whichincorporatestheperceptionsofS&OPstakeholders.Openandtransparentprocessreferstothelevelofcomfortpeoplehaveinworkingtogetherandsharinginformation.Thisfactorisintegratedinthefactorsocialcohesion,whichisincludedintheproposedmodelandholdsanearidenticalmeaning.The factors perceptions of S&OP process quality and perceived benefit of participating in the S&OPprocessarenotidentifiedintheS&OPperformancemodelbyAmbrose(2015).Thesetwofactorsreflectthe reinforcing structure in the model by Olivia & Watson (2011) from S&OP performance back toconstructiveengagement. This reinforcing structure is absent in themodelbyAmbrose (2015), but ispresentinthemodelproposedinthisthesisbyintegratingthesetwofactorsinrewards&incentives.Thisisexplainedinmoredetailinchapter4.
Table3:IntegratedFactors
IntegratedFactors Presentinmodel:Ambrose(2015) Olivia&Watson(2011)
OpenandTransparentProcess No YesPerceptionofS&OPProcessQuality No YesPerceivedBenefitofParticipatingintheS&OPProcess
No Yes
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3.3CaseStudyForthisresearchasinglecasestudydesignwasused.Themotivationforthisresearchdesign,alongwiththe benefits anddrawbacks of this design is presented in the following. A single case study design isdefinedasanempiricalresearchthatinvestigatesaphenomenonindepthandwithinitsreal-lifecontext(Yin,1989).Thistypeofresearchdesignisabletoprovideahighlevelofdetailandunderstandingofthecontext.Thismakes this researchespecially interesting for theS&OPprocess,whichhasnotbeenthetopicofanextensivenumberofpreviousworkincorporatingacasestudydesign.CasestudyorganizationThe case study organization for this research is a capital goodsmanufacturing firm. Four reasons arepresentedthatmakethisorganizationaviablerepresentativecaseforasinglecasestudy(Yin,1989).First,theorganizationsexperienceschallengesinachievingcollaborationbetweenthesalesdepartmentandthemanufacturingcenter,whicharequitecommonacrossawiderangeofindustrieswithasalesforcedriven demand (Shapiro, 1997). In addition the organization operates in a high-mix, low volumemanufacturing environment. This characteristic is of great importance to the business strategy, sincemakingmachinestostockcandriveupinventorycostsduetolowdemandfrequencyandalargeproductportfolio.Third,theprojectofferstheopportunitytofollowtheimplementationofS&OPfromaveryearlystage.Thedesignisstilldeveloping,andthedecisionmakingprocesscanbewitnessedfirsthand.Finally,theprojectmanagementandchangemanagementthatisrequiredforaprojectofthisscale,whichwillbring considerate changes. The first reason indicates a representative case, while the other reasonsindicateuniquecircumstanceswhichhavenotbeenextensivelydescribed inprevious research.Thesereasonssuggesttheappropriatenessofusingasingle-casestudyresearchdesign.In the section above several statement are made to argue the appropriateness of the selectedorganization forconductingacasestudy.However,several factorsprovidearguments toquestiontheappropriatenessoftheselectedcaseorganization.First,theS&OPwasintheearlystagesofworkingwithaS&OPprocess.Thelearningcurvethatcanbeexpectedwithanynewwayofworkingcouldinfluencetheperceptionsofpeopleinvolvedintheprocess.Closelyrelated,bytakingthequestionnairesduringtheseearlystagesrespondentsmayanswerbasedonexpectations,ratherthantheiractualexperiences.Besidesthestrengthsandflawsregardingtheappropriatenessofthecaseorganization,practicalreasonsplayedanimportantroleintheselectionofthecaseorganization.Apotentialcaseorganizationhadtoworkwitha S&OPprocess,bewilling to cooperate, andallow the research to takeplacewithin theirorganization.Thesepractical reasonsplayedan important role in theselectionofacaseorganization.Giventhelimitedtimeavailableforthisresearch,thechoicewasmadeforasinglecasestudydesign.Capitalgoodsmanufacturersareincreasinglyexposedtomarketchangeswhichdrasticallyincreasethecomplexityofoperations.Changesinthemarketareaproductoftheglobalizationoforganizations,andtheresultingincreaseincompetition.Improvedgloballogisticsandcommunicationhaveincreasedthecustomers’ willingness to look for the best deal on a global scale. Furthermore, the larger pool ofcompetitorshasledtohigherlevelsofpricesensitivityanddemandforcustomer-specificrequirements.
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Customersarelookingforahigh-qualityproductcustomizedtotheirneeds,againstthelowestpossiblepriceandwiththeshortestpossibledeliverytime.Theneedforhighlycustomer-specificproductsleadstocapitalgoodsmanufacturersworkinginahigh-mix,low-volumemanufacturingenvironment.Thistypeof environment is defined bymanufacturers with a large product portfolio, with relatively low salesnumbers per product type. Figure 8 shows how these market characteristics give rise to high leveloperationalcomplexity,
ExternalSuppliers
KnowledgeWorkers
InternalSuppliersPrice
DeliveryTime
Options
Complexity
CustomerDemand
Parts
LaborVacations
FlexWorkers
WorkForceCapacity
SupplyChainCapacity
Figure8:Businesscomplexityatthecasestudyorganization
The high complexity associatedwith themarket of high-mix, low-volumemanufacturers gives rise toinformationasymmetry,whereanoptimalsolutionismightnotbefound,duetounwillingnessorinabilityto completely share information. Additionally, Information asymmetry is caused by the opposingfunctionalorientations,wherethesalesdepartmentiscustomer-facing;thesupplychaindepartmentissupplier-facing (Kraiselburd & Watson, 2007). A cross-functional effort is required to minimizemismatches,duetocomplexityinformationasymmetry,andcreateoperationalvalue(Lawrence&Lorsch,1967).However,differencesinspecializationarenotoriousforgeneratingconflictswithinorganizations(Shapiro,1977).
The case study organization decided to implement a S&OP process to facilitate the cross-functionalalignmentanddecisionmaking. Increased informationsharing initiatives include improved forecastingmethods,newmeetingsstructuresandaclearsetofproductionconstraints.Ahigh-levelrepresentationoftheS&OPprocessatthecaseorganizationispresentedinFigure9.Duringthedemandplanningphaseseparatesalesforecastsareunifiedinanunconstraineddemandplan.Thesupplyrequiredtomeetthisplanisinvestigatedduringthesupplyplanningphase.Inthisphasetheconstraintsofthesupplychainandtheproductionsitesaretakenintoconsideration.Inthedemandsupplybalancingphaseseveralscenariosarecreated.Ascenarioisanalyzedoncustomerimpact,andfinancialaspects.Oneormorescenariosarepresentedtotheexecutiveboard.IntheexecutiveS&OPmeetingtheproposedscenariosisreviewedandthe final plan is decided. After thismeeting the S&OPplan is executed. The complete S&OP cycle aspresentedinFigure9takesfourweeks.
Figure9:HighlevelS&OPprocess
DemandPlanning SupplyPlanning
DemandSupply
Balancing
ExecutiveS&OP
Meeting
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SinglecasestudydesignAsimilarsinglecasestudydesignaboutS&OPisusedbyOlivia&Watson(2010).Thisdesigncanbeusedtodiscoverwhichvariables,skillsorbehaviorcontributetothesuccessorfailureofaprocess,andhasthepotential to provide new insights. Data can gathered during a case study through interviews andquestionnaires.Inthisthesis,acasestudyisconductedduringtheimplementationofanewS&OPprocessatthecaseorganization.Thishasnotbeen investigated inaS&OPcontexttothebestoftheauthor’sknowledge.Thismakesasinglecasestudydesignavalidresearchmethod.Evidencefromcasestudiesmaycomefromvarioussources;documents,interviews,observations,andquestionnaires(Yin,1989).Inthis thesis four sources provided the basis of information, and the input for answering the researchquestions:
• Documentation• Observations• Interviews• Questionnaires
Duringthecasestudy,documentationfromthecasestudyorganizationprovidedbackgroundinformationaboutthecompany,andthedepartmentsandsectorsthatareaffectedbythenewS&OPprocessdesign.Documentation includedexistingprocess charts, jobdescriptions, and informationbooklets thatweredistributedbeforeandduringthedevelopmentandimplementationofthenewS&OPprocess.Observationsweremadeduringthecasestudy,whichlastedsevenmonthsatthecaseorganization.Theresearcherwasabletoattendmeetingsandpresentationsatthecaseorganization.Theseincludedbothoperationalmeetings,andmeetingsrelatedtotheS&OPprocessredesign.Duringthesinglecasestudyin-depthinterviewsprovidedthemostvaluablesourceofrichinformation.In order to achieve reliability and prevent the respondent bias, organizationmembers fromdifferentfunctionsanddepartmentweretargeted,incollaborationwiththeS&OPprojectteamatthecasestudyorganization. During the case study, 10 key informants were interviewed. The key informants weremembersoftheS&OPProjectteam,Sales,andOperationsdepartments.AllparticipantswerepartoftheS&OPprocessredesigninitiativeatthecaseorganization,which,inthetimeofperformingthecasestudyin2015wasintheprocessofdevelopingandimplementingtheS&OPprocess.ExploratoryInterviewsDuringthecasestudy,semi-structuredinterviewswereconductedwiththeS&OPteammembersattheresearch organization. The goal of the interviews was an increased understanding of the case studyorganization,andhelpingwiththeselectionofkeyinformantsforthefinalinterviews.Furthermore,theexploratoryinterviewswereusedtofindoutthemotivationfortheimplementationofaS&OPprocess,includingthebenefits,proposedchangesandchallengesassociatedwiththecurrentprocess.Theselectedkeyinformantswereaskedtoparticipateintheansweringofquestionnaires.QuestionnairesThequestionnairetemplatewastakenfromtheAmbrose(2015)researchtoincreasethevalidityoftheanswers. The answers from the questionnairewere combinedwith the findings from the exploratoryinterviews and observations during the case study. These findings are analyzed graphically andnumerically, and are presented in combinationwith representative quotes from key informants. Thisprovidedananalysisthatisrichininformationandallowsforabetterunderstandingofthecontext.TheanalysisoftheresultswaspresentedtomembersoftheS&OPprojectteamatthecasestudyorganization.
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FinalInterviewsAfterthedevelopmentoftheproposedmodel,semi-structuredinterviewswereconductedwiththeS&OPteammembersattheresearchorganizationtovalidatethemodel.Thegoaloftheseinterviewswastoassesstheusefulnessof themodel forpractitioners,andprovidedatest fortherecognitionofresultscriteriafromVanAkenetal.(2007).InthefinalinterviewswithmembersoftheS&OPprojectteamtherecommendations that follow fromtheproposedmodelwerepresentedanddiscussed.Thisprovidedinsightintothepracticaluseoftheproposedmodel.EthicalaspectsDuring the case study ethical aspects were taken into account. All references to the case studyorganizationandtherespondentsarereportedinananonymousmanner.Allparticipationintheresearchwas on a voluntary basis. Respondent were given the opportunity to review their answers from thequestionnaireandinterviews.Finally,permissionwasaskedforpublishingthefindings.3.4AnalysisoftheFindingsThe researchmethod includes the combination of quantitative and qualitative data, as proposed byRossman&Wilson (1984,1991). They advocate using thismethod for three broad reasons; to enableconfirmationorcorroborationofeachotherviatriangulation,toprovidenewinsightsbyexploringnewwaysofthinking,ortodevelopelaborateanalysiswhichprovidesricherdetail(Miles&Huberman,1994).QuantitativeAnalysisThegoaloftheusedresearchdesignwastocapturethekeyinformantperceptionsoftheS&OPprocessandthefactorsintheproposedmodel.Theperceptionsweremeasuredusingquestionnaireswithscalesthatareadoptedfromteameffectivenessresearch,andadaptedforandvalidatedinaS&OPcontextbypreviousresearch(Ambrose,2015).Themodelproposedinchapter4,withthehypothesizedrelationswastestedusingpartialleastsquaresstructuralequationmodeling(PLS-SEM).ThismethodhasbeenusedinpreviousS&OPrelatedresearch(Hadaya & Cassivi, 2007; Ambrose, 2015). PLS-SEM serves as an especially relevant method for thisresearch,asitcanserveasanacceptableanalysismethodforexploratoryresearchwithasmallsamplesize(Hair,Ringle&Sarstedt,2011).However,inthiscasestudythesamplesizemaybetoolimited,causinglimitationsthatwillbefurtherexplainedinthediscussionsection.Hairetal.(2011)adviseasamplesizeforPLS-SEMexceedingtentimesthemaximumnumberofpathsgoingintoonelatentvariable. Inthisresearch,sixpathsgointothevariableconstructiveengagement,whichwouldrequireaminimumsamplesizeof60respondents.Inthisresearchthesamplesizeissignificantlysmaller.Asaresultofthesmallsamplesize,questionsfromthequestionnairehadtoberemovedfromthedataset.ThesamplesizeforestimatingthePLSpathmodelhadtoexceedthemaximumnumberofindicatorsin a variable. Since the sample size was ten participants, a variable could not contain more than 9questions. To satisfy this constraint one question was removed from the constructive engagementvariable,andthreequestionswereremovedfortheS&OPperformancevariable.Inthediscussionssectionthiswillbefurtherexplained.ThesoftwareusedforthistheanalysispartofthisresearchisSMART-PLSversion3.2.3(Ringle,Wende&Becker,2016).
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QualitativeAnalysisTheinformantsofacasestudyresearchareidentifiedbyMiles&Huberman(1994)asthemostlogicalsourcesofcorroboration.The impliedaccumulatedknowledgeofpeople,processandproductsmakesinformantsattheresearchorganizationapracticalandviablejudgetoevaluatemajorfindingsofastudy(Denzin,1978).InthisthesisresearchthetechniquepresentedbyMiles&Huberman(1994)wasused.Withthistechniquethecasestudyparticipantswerepresentedwitchasummaryofthefindings,andwereaskedtoevaluatetheaccuracyoftheproposedmodelofconstructiveengagement.ThetwomembersoftheS&OPProjectteamwhotookpartintheS&OPprocessredesigninitiativewereselectedtovalidatethe proposed model, and indicate the usefulness of the model for a future S&OP process redesigninitiative. These two members were selected for their experience with using conceptual models forprocessredesigns.
4. ResearchModelFigure 10depicts the researchmodel that is developed. In the following, the conceptof constructiveengagementandthefactorsofthemodelaredescribed inmoredetail. In introducingthefactors, thefindingsfrompreviousresearcharepresentedtoprovidethemotivationfortheincludedfactorsandtherespectiveeffectsonconstructiveengagement.
+ +
++
ExternalTeamFactors
TopManagement
Support
Centralization
SuperordinateIdenity
SocialCohesion
Resources&Time
Rewards&Incentives
ConstructiveEngagement
ProceduralQuality
S&OPPerformance
InternalTeamFactors
InformationQuality
IncentiveAlignmentQuality
ProcessQuality
+
+
+
+
++
-
Figure10:ProposedmodelofFactorsaffectingConstructiveEngagement
4.1ConstructiveEngagementIn the literature the term constructive engagement refers to the combination of collaboration andfunctional conflict (Olivia&Watson, 2011). Constructive engagement plays a central role in both theproposedmodelsofOlivia&Watson(2011)andAmbrose(2015).Thischoicemakessense,asoneofthecorepropositionsoftheS&OPprocessisachievingformalizedcollaborationbetweenthefunctionsthatmanagesupplyanddemand(Wallace&Stahl,2008).
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Constructiveengagement-CollaborationOnce sales and operations recognize and embrace their shared responsibilities, performance can beimproved through collaboration (Alexander, 2013;Wallace& Stahl, 2008). Collaboration is facilitatedthroughtherecurrenceofoneormoreS&OPmeetingsperplancycle,withthegoaltoachieveoverallalignmentand reach consensuson thedemandand supplyplanning (Stahl, 2010).Besides the formalformsofcollaboration,researchalsoindicatestheneedforinformalformsofcollaboration(McCormack&Lockamy,2005).Infact,highlevelsofinformalcollaborationaresuggestedaspreliminaryindicatorsofaS&OPprocessdonewell(Olivia&Watson,2011).Truecollaborationgoesbeyondthemeresharingofinformation, anddependson theworkers’ ability tobuild trust and relationship, and learn fromeachother’sexpertise(Ellingeretal.,2006).Constructiveengagement-FunctionalConflictGiventheirdifferentorganizationalorientationsandscopeofresponsibilities,conflictsareinherentwhensalesandoperationscollaborate(Shapiro,1977).Whileachievingcross-functionalcollaborationisacoregoaloftheS&OPprocess,thisdoesnotanimpliedabsenceofconflict(Ambrose,2015).Infact,theS&OPoffersaforumwherepresentingdifferentopinionsisencouraged.Thetermfunctionalconflictreferstothebeliefthatdifferentfunctionswillalwaysexperiencesomedegreeofdisagreement,butthatdisputescanalwaysberesolvedinafriendlyorevenconstructiveway(Morgan&Hunt,1994).Opendialogueandopenconflictresolutionsarementionedasindicatorsoffunctionalconflict(Mello,2010;Stahl&Wallace,2012).
4.2SocialCohesionThefirst internalteamfactor issocialcohesion,andconcernstheextenttowhichthemembersoftheS&OPteammaintaincollegialityandenjoyworkingtogether.Previousresearchhasidentifiedthepositiveeffects interpersonal social ties haveon exchangeswithin team (Cohen&Bailey, 1997;Nakata& Im,2010). Although social cohesion has not been studied extensively in an S&OP context, it has beenidentified as an important factor in facilitating communications between different functional groupswithinnewproductdevelopmentteam(Ambrose,2015;Moenaertetal.,1994).Dougherty(1992)statesthepositiveemotionsassociatedwithsocialcohesionarehelpfulinovercomingthenegativestereotypesthatpreservefunctionalsilos.Beingabletoseethevalueindifferentfunctionalperspectivesisbelievedto be a necessity for constructive engagement, given the cross-functional nature of S&OP teams(Ambrose,2015).However,highlevelsofsocialcohesioncanactuallyhinderthequalityoftheprocess.Sethietal.(2001)foundsocialcohesionbeyondmoderatelevelscanhampertheinnovativenessofnewproductdevelopmentteams.Moregeneralized,Souder(1998)suggestteampotencyislostthemomentpeoplebecometoocomfortablearoundeachotherandtheedgesarelost.Groupthinkoccurswhenthestrong desire for conformity is pairedwith insufficient investigation of alternatives (Janis, 1982). Thisphysiologicalphenomenoncausesthelossofcreativityandimpairscriticaldecisionmaking(Janis,1982;Sethietal.,2001).InthequantitativeresearchbyAmbrose(2015)aninverted-Uassociationbetweensocialcohesionandconstructiveengagementwasproposed.Thistypeofrelationindicatesincreasedlevelsofsocialcohesionleadtoahigherlevelofconstructiveengagement,butafteracertainpointthepositiverelationhaltsanddecreases.Thispropositionis in linewiththefindings intheliteraturethatsuggestmoderatelevelsofsocialcohesionaredesired,buthighlevelscanstiflecriticaldialogueandleadtodecreasedcreativityandevengroupthink(Janis,1982;Sethietal.,2001).Contrarytotheseexpectation,findingsofthequantitativeresearchbyAmbrose(2015)suggesthighlevelsofsocialcohesionaid,nothinder,thefunctionalconflictaspectofconstructiveengagement.Thissignificantrelationis inlinewithfindingsfromanewproductdevelopmentstudy,wheresocialcohesionissuggestedtopositivelyaffectperformanceinjoinplanning
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andproblemsolving(Nakata&Im,2010).Thisprovidesthemotivationforthefirstincludedfactorandeffectintheresearchmodel:Proposed factor and effect: Social cohesion, which has a direct positive effect on constructiveengagement.
4.3SuperordinateidentityThesecondinternalteamfactorissuperordinateidentity,andconcernsthecognitiverelationamemberfeelstowardstheteam(Sethi,2000).Itdefinestheextenttowhichmembersarecommittedtosharedgoals, andhave a significant part in the success or failure of the collective task (Nakata& Im, 2010).Superordinate identity has received little research in an S&OP context (Ambrose, 2015). However,previousresearchsuggestssuperordinateidentityplaysakeyroleininnovativeness(Sethietal.,2001),and cross-functional integration (Nakata & Im, 2010) in similar multi-functional teams. Despite theapparentadvantagesofsuperordinateidentity,existenceoffunctionalbiascanproveitdifficulttoformagroupidentityforS&OPteams(Alexander,2013;Wallace&Stahl,2008).Difficultiesespeciallytendtoexistwhendepartments fight over scarceorganizational resources (Mello& Stahl, 2011). Since S&OPteamsareexpectedtopersistindefinitely,achievingsuperordinateidentitydespitefunctionaldifferencesissuggestedtobeespeciallyrelevantinanS&OPcontext(Ambrose,2015).InthequantitativeresearchbyAmbrose(2015)apositiverelationbetweensuperordinateidentityandconstructive engagement is suggested. The findings confirmed a significant, positive effect on cross-functionalengagement.Thesefindingsareconsistentwithgroupeffectivesliterature(Nakata&Im,2010),andsuggestmembersthatvaluetheirmembershipandarecommittedtosharedgoalsaremorelikelytoconstructivelyengageinS&OPteams(Ambrose,2015).Thisleadstotheinclusionofthefollowingfactorandeffectintheresearchmodel:Proposed factor and effect:Superordinate identity,which has a direct positive effect on constructiveengagement.
4.4TopManagementSupportThe first external team factor is top management support. Top management refers to senior levelmanagers,whoareinvolvedwithformulatingthestrategyandtacticalmovesoftheorganization.Someresearchersviewthesupportofseniormanagementasthesinglemostcriticaldriverofsuccessforanysignificant organizational change (Balsmeier & Voisin, 1996; Li & Lin, 2006). Furthermore, topmanagementsupportisidentifiedasaprerequisiteforgroupeffectiveness(Cohen&Bailey,1997),andcross-functionalcollaboration(Wong,2012).InanS&OPcontext,sustainedtopmanagementsupportisreferred to as the singlemost important element required for a successful S&OP process by leadingconsultants(Boyer,2009;Grimson&Pyke,2007;Milliken,2008;Wallace&Stahl,2008).InthequantitativeresearchbyAmbrose(2015)apositiverelationbetweentopmanagementsupportandconstructiveengagementissuggested.Contrarytoexpectationsbasedontheidentificationinpreviousresearch of topmanagement support as a critical success factor, a non-significant negative effect onconstructiveengagementwasfoundbyAmbrose(2015).Theresultsfromthequantitativeresearchseemto indicatetopmanagementdoesnotdirectlyaffectconstructiveengagement,orS&OPperformance.However, Ambrose (2015) argues the timing of top management support should be taken intoconsideration. The respondents in the research by Ambrose (2015) had an average of 8 years ofexperience inworkingwith a S&OPprocess, andnoneof the respondentshad less than6monthsofexperience.Furthermore,Ambrose(2015)explainsthecrucialroleoftopmanagementsupportduring
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thesettingupoftheinitialS&OPprocess.Thisprovidesthemotivationfortheinclusionofthefollowingfactorsandeffectintheproposedmodel:Proposedfactorandeffect:Topmanagementsupport,whichhasadirectpositiveeffectonconstructiveengagement.
4.5CentralizationThesecondexternalteamfactoriscentralization,andreferstotheextenttowhichthepowerofdecisionmakingresideswithuppermanagement.Centralizedorganizationsarecharacterizedbytheconcentrationofdecisionmaking locatedatthetopleveloftheorganization(Dewar&Werbel,1979).High levelsofcentralizationhavebeenfoundtoobstructthefairexchangeofinformation,andconstructivefunctionalconflict((Menonetal.,1997).Furthermore,lowautonomynegativelyaffectsgroupmotivationandtheabilitytogeneratealigneddecisionmaking(Trent&Monczka,1994).Ontheopposite,empowermentandincreasedautonomyare found tobedecisive for successful teams (Hollandet al., 2000).ResearchbyGuenter&Grove(2012)determinedemployeesaremorewillingtoparticipateincollaborativeplanning,whentheyperceivetheirrolesasimportanttotheoutcomes.S&OPliteratureidentifiesdecentralizationofdecisionmakingasakeysuccessfactorfortheS&OPprocess(Lapide,2004).In the quantitative research by Ambrose (2015) a negative relation between centralization andconstructive engagement is proposed. The findings indeed showed a negative relation approachingsignificance,meaninghigh levelsofcentralizationare likely tohaveanegative impactonconstructiveengagement.Thesefindingsleadtothefollowingfactorandeffectincludedintheproposedmodel:Proposed factor and effect: Centralization, which has a direct negative effect on constructiveengagement.
4.6InformationQualityTheprocessqualityfactor informationqualitydefinesthedegreeofappropriatenessandusefulnessofinformationsharingfortheteammembersanddecisionmakers(Olivia&Watson,2011).Comparedtointernalteamfactors,informationsharingandqualityhasreceivedfarmoreattentioninS&OPliteratureandresearch(Bower&Fossella,2013;McCormack&Lockamy,2005;Olivia&Watson,2011).Thesharingofinformationtoandamongteammembersisconsideredaprerequisiteforeffectivegroupcollaboration(Hackman,1990).However,littlevalueiscreatedwhentheinformationisoflowquality(Olivia&Watson,2011).Inparticular,theaccuracyofsalesforecastsisfrequentlymentionedasoneofthekeyattributesofS&OPperformance(Mello&Stahl,2011;Stahl&Wallace,2012).Olivia&Watson(2011)witnessedthefosteringofconstructiveengagementthroughinformationsharingintheirqualitativecasestudy.In the quantitative research by Ambrose (2015) a positive relation between information quality andconstructiveengagementisassumed.Thefindingsdidnotsupportthisrelation.However,furthertestingrevealedadirectpositiverelationshipofinformationqualityandS&OPperformance,butitdoesnotflowthroughconstructiveengagement.ThisfindingisinagreementwiththeproposedeffectofinformationqualityontheS&OPprocessqualityassuggestedbyOliva&Watson(2011).Thereforethefollowingfactorandeffectareproposed:Proposed factor and effect: Information quality, which is directly positively affected by constructiveengagement,andhasadirectpositiveeffectonS&OPperformance.
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4.7ProceduralQualityTheprocessqualityfactorproceduralqualityreferstotheextenttowhichastructuredandformalizedapproachistakentocollaborativework.Astructuredapproachisidentifiedasanimportantpredictorofgroup effectiveness (Hackman, 1987). Furthermore, support was found for procedural quality as asupportingfactorforcross-functional integration(Nakata&Im,2010).ProceduralqualityhasreceivedconsiderableattentioninS&OPliterature(Ambrose,2015).ExamplesarethedescriptionsofthevariousstagesofmaturityoftheS&OPprocess(Grimson&Pyke,2007;Lapide;2005;Muzumdar&Fontanella,2006;Wagneretal.,2013). However, littlevalidationoftheroleand importanceofthisattributehasbeenprovided(Ambrose,2015).IntheirsingleorganizationcasestudyresearchOlivia&Watson(2011)proposetheattributeproceduralqualityasacriticaldeterminantofS&OPprocessoutcomequality.In the quantitative research by Ambrose (2015) a positive relation between procedural quality andconstructiveengagement isproposed.A significant relationwasnot found, contrary to the research’sexpectationsgiventhefrequentoccurrenceinS&OPliterature(Ambrose,2015;Oliva&Watson,2011).However, a direct association between procedural quality and S&OP performance was supported(Ambrose, 2015). These findings are in accordance with the findings of Olivia &Watson (2011) whoproposeconstructiveengagementcanactuallypositivelyimpacttheproceduralquality,nottheotherwayaround.Thesefindingsareanalogoustothefindingsofinformationalquality.Thisleadstothefollowingproposedfactorandeffectincludedintheresearchmodel:Proposed factor and effect: Procedural quality, which is directly positively affected by constructiveengagement,andhasadirectpositiveeffectonS&OPperformance.
4.8Rewards&IncentivesThefactorrewardsandincentivesreferstotheextenttowhichteammembersarerecognizednotjustfortheiroperational task,butspecifically fortheircontributionstoachievingteam-basedgoals (Ambrose,2015).Jointrewardsareawayoflinkingaworker’sincometooutcomesofcross-functionalteamwork.Aligningrewardsandincentivesisacorepropositionofgroupeffectivenesstheory(Hackmanetal.,2000).The underlying assumption is that joint rewards enlarge the perceived level of interdependence(Chimhanzi,2004).Ambrose(2015)notesmembersoftheS&OPteamonlydevotedafractionoftheirtimetotheactualprocess,andthustheprioritysettingmaybedifficultifnoteam-basedincentivesareinplace.WhilesomeleadingS&OPconsultantsidentifyteam-basedrewardsasasignofS&OPprocessmaturity(Wagneretal.,2013),othersindicatethedifficultiesofchangingrewardsystemstoalignwithS&OP(Grimson&Pyke,2007).Besides,Olivia&Watson(2011)foundintheirsinglefirmqualitativecasesstudy that constructive engagement could be achieved even when rewards and incentives were notalignedwithS&OPobjectives.Infact,thelackofalignmentcouldevenbeidentifiedasfuelforconstructiveengagement,withfunctionalconflictinparticular(Olivia&Watson,2011).InthequantitativeresearchbyAmbrose(2015)apositiverelationbetweenrewardsandincentivesandconstructive engagement is proposed. The findings from the research identified having team-baserewardsandincentivesasthesinglemostcrucialcontextualinfluencerofconstructiveengagementwithinS&OPteams(Ambrose,2015).Duetothis,thefollowingfactorandeffectareproposed:Proposedfactorandeffect:Rewardsand incentives,whichhasadirectpositiveeffectonconstructiveengagement.
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4.9Resources&TimeResourcesandtimeisthelastexternalteamfactor.Appropriateresourcesandadequatetimearecriticalfactorsforachievingsuccessfuloutcomesofteamwork(Hollandetal.,2000).InS&OPcontext,resourcesrefertohavingaccesstotrainingandbackgroundinformationabouttheS&OPprocess(Ambrose,2015).Inorganizationswheretimeisscarceduetooverwhelmingresponsibilitieswithinthedepartment,S&OPcanbeviewedasalowprioritydistraction(Stahl,2010).ThecompletionofshorttermtaskisdeemedmoreurgentandeasytograspthanthelonghorizonoftheS&OPprocess(Mansfield,2012).ThiscanleadtothestructuralnegligenceofS&OPmeetings,orfailuretoproperlyprepare(Boyer,2009).PractitionerliteratureexplicitlymentionsstructuralmeetingsasakeysuccessfactorforS&OP(Lapide,2004).AnotherunderappreciatedaspectisthetrainingofteamswithinanS&OPcontext(Ambrose,2015),despitethesuggestedimprovementsineffectivecollaboration(Donnellon,1993).Onelastaspectofresourcesistheavailability of suitable IT facilities. Although general agreement states that sophisticated IT is not anecessity for initial success (Grimson & Pyke, 2007; Wallace & Stahl, 2008), research indicated thattechnology can improve theefficiencyof information sharingand thus improve facilitate constructiveengagement(Olivia&Watson,2011;Wallace&Stahl,2008).InthequantitativeresearchbyAmbrose(2015)apositiverelationbetweenresourcesandtimeallocatedtotheS&OPprocess,andconstructiveengagementoftheS&OPteam.Thefindingsdidnotsupportthisrelationwith significance. Itwas assumed that factors such as developing superordinate identity andaligningrewardsandincentiveshadabiggerimpactonconstructiveengagementthantheavailabilityofresourcesandtime.However,Ambrose(2015)arguesthattheavailabilityofadequateresourcesandtimecanplayanimportantroleintheinitialstagesofS&OPimplementation.Thereforethechoiceismadetoincludethefactorresourcesandtimeinthemodel.Thisleadstothefollowingproposedfactorandeffect:Proposed factor and effect: Resources and time, which has a direct positive effect constructiveengagement.
4.10S&OPPerformanceConstructiveengagementispresumedtoleadtohigherlevelsofcommitmentsandincreasewillingnesstoimplementtheplansresultingfromtheS&OPprocess(Olivia&Watson,2011).Sustainedconstructiveengagement is identifiedbyAmbrose(2015)asacritical factorsforthesuccessoftheS&OPinitiative.Ambrose (2015) defines the following formal definition, which includes aspects of collaboration andfunctionalconflict:“ConstructiveengagementistheextenttowhichS&OPteammembersproactivelycollaborate,includingvoicinganddefendingtheirrespectiveinterpretations.HavingthislevelofengagementisviewedasthelinchpinthatconnectsteamandcontextualinfluencestothedesirableoutcomeofS&OPperformance.”Although empirical research on S&OP performance is scarce, descriptions and indicators of a well-functioningS&OPcanbefoundinpreviousresearch(Ambrose,2015).Reducedfinishedgoodsinventoryismentioned(Dougherty&Gray,2013),aswellasincreasedforecastaccuracy,minimizedsupplychaindisruption,improvedreturnonassets,andincreasedcustomersatisfaction(Wagneretal.,2013).IntheirresearchOlivia&Watson(2011)proposeapositiverelationbetweenconstructiveengagementandthequality of the S&OP process outcomes, flowing through the quality of the S&OP process, includinginformationqualityandproceduralquality.Therefore,thefollowingfactorandeffectisproposedfortheresearchmodel:Proposedfactorandeffect:S&OPperformance,whichisindirectlyandpositivelyaffectedbyconstructiveengagement,flowingthroughProceduralQualityandInformationQuality.
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Furthermore,areinforcingstructureis includedintheproposedmodeltomeasuretheeffectofS&OPperformanceonconstructiveengagement.Previousworkhasindicatedhowpositiveprocessoutcomescanleadtoincreasedconstructiveengagement(Keatingetal.,1999;Shibaetal.,1990).IntheplanningprocessqualitymodelbyOlivia&Watson(2011),thequalityoftheS&OPprocessoutcomesissuggestedtoaffecttheperceptionsoftheS&OPteammembers,whichinturnaresuggestedtohaveadirectpositiveeffect on constructive engagement. Ambrose (2015) defines the factor rewards and incentives as theextenttowhichmembersofaS&OPteamreceiverewardsandincentivesbasedonteam-basedS&OPgoals and objectives. This suggests the factor S&OP performance can affect the factor rewards andincentives, which in turn is believed to increase constructive engagement (Ambrose, 2015; Olivia &Watson,2011).Hackmanetal.(2000)identifyaligningrewardsandincentiveswithteam-relatedgoalsasacorepropositioningroupeffectiveness.Peopletendtopursuebehaviorthatisrewarded,andthesameholdsforgroups(Glaser&Klaus,1966).Thislineofthoughtisconfirmedbyscholarswhoacknowledgeagrowingtrendofrewardingworkersbasedonteam-basedgoals,inadditiontoindividualgoals.(Arndtetal.,2011;Bamberger&Levi,2009).However, previous work does not always provide evidence a relation between incentives and theintendedperformanceenhancementsispresent.ArecentstudybyDriedonksetal.(2013)suggeststeam-based rewards positively affects group effort, but a positive effect on overall effectiveness was notsupported.Inadifferentstudy,sharedrewardssystemswerefoundtoimproveinformationsharing,butnottheconnectednessbetweendepartments(Chimhanzi,2004).Furthermore,Grimson&Pyke(2007)acknowledgethedifficultythat isoftenencounteredwhentryingtochangerewardstructurestoalignwithteam-basedS&OPgoals.Still,therewardingofS&OPteammemberstoachieveteam-basedgoalsisadvocated(Singh,2010),andis identified as a sign of S&OP processmaturity (Wagner et al., 2013). Ambrose (2015) describes anexamplehowasalesdepartmentcouldbeincentedtonotonlycareaboutsalesandrevenue,butalsoabouttheassociatedcost,suchasinventoryandscrapcosts.Thisexampleillustrateshowincentivesaimto increasecollaboration. In theworkbyOlivia&Watson (2011) theeffectof incentivesof functionalconflictisdescribed.ItcanbeconcludedmoreresearchisneededtodeterminetheeffectofincentivesoftherelationbetweenS&OPperformanceandconstructiveengagement.TomeasureifS&OPperformanceaffectsconstructiveengagementbasedonthe incentive landscape,thefollowingfactorandeffectareproposedintheresearchmodel:Proposedfactorandeffect:S&OPperformance,whichhasanindirectpositiveeffectonconstructiveengagement,flowingthroughrewards&incentives.
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5. ResultsandDiscussionIn this chapter the results of the validation of theproposed factors for constructive engagement arepresented.Thisthesisresearchusedacombinationofquantitativeandqualitativedatafortheanalysispart,asproposedbyRossman&Wilson(1984,1991).Thismethodwasusedforthreereasons;toenableconfirmationorcorroborationofeachpropositionviatriangulation,toprovidenewinsightsbyexploringnewwaysofthinking,andtodevelopelaborateanalysiswhichprovidedricherdetail(Miles&Huberman,1994).Theanalysisoftheproposedmodelistwofold.First,quantitativeanalysisisdoneusingpartialleastsquaresstructuralequationmodeling.Thestatisticalanalysiswillprovideinsightintohowtheproposedvariablesaffectconstructiveengagement.Thequalitativeanalysismakesuseof representativequotesfromtheparticipants,andobservationduringthecasestudy.Theremainderthischaptercontainsthethreatstovalidity,theintegrationofthefindings,andidentifiesopportunitiesforfuturework.
5.1QuantitativeanalysisThemodelproposedinchapter4,withthehypothesizedrelationswastestedusingpartialleastsquaresstructuralequationmodeling(PLS-SEM).InFigure11theaverageresponsesfromtheparticipantsinthequestionnaire are presented. These responses reflect the perceived level of the factors that affectconstructiveengagementintheS&OPprocess.InTable4thedescriptivestatisticsoftheresponsesarepresented,includingtheminimum,maximum,mean,andstandarddeviationforeachmeasuredfactor.
Figure11:MeasuredFactorsofConstructiveEngagement(Scaledefinitionintablebelow)
Factor 0 1SocialCohesion StronglyDisagree StronglyAgreeSuperordinateidentity StronglyDisagree StronglyAgreeTopManagementSupport StronglyDisagree StronglyAgreeCentralization StronglyDisagree StronglyAgreeInformationQuality StronglyDisagree StronglyAgreeRewards&Incentives Never AlwaysProceduralQuality StronglyDisagree StronglyAgreeResources&Time StronglyDisagree StronglyAgreeCollaboration Never AlwaysFunctionalConflict Never Always
00.20.40.60.81
SOCIA
L
COHESIO
N
SUPERORDIN
ATE
IDENTIT
Y
TOP
MANAGEM
ENT
SUPPORT
CENTRALIZ
ATIO
N
INFORM
ATIO
N
QUALIT
Y
REW
ARDS&
IN
CENTIV
ES
PROCEDURAL
QUALIT
Y
RESOURCES&
TIM
E
COLLABORATIO
N
FUNCTIO
NAL
CONFLIC
T
FACTORSOFCONSTRUCTIVEENGAGEMENT
Averageresponse
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Table4:Descriptivestatistics(QuestionnairesinAppendix3–Questionnaire
Bootstrapping is used to test the significance the individual relation between the each variable andconstructive engagement. Bootstrapping is a statistical technique where continuous resampling isperformedtoobtainestimatesofsummarystatistics.Five-hundredbootstrapsub-samplesweredrawnfortheproposedmodel,withamaximumoffive-hundrediterations.Theresultsfrombootstrappingarepresented inTable5. In this tableβ represents theestimated coefficientof the relationbetween therespectivevariableandconstructiveengagement.Thep-valuerepresentsthesignificanceoftheproposedrelation.Inthisthesisap-valuebelow0.05isrecognizedasstatisticallysignificant.Asdiscussedinchapter3.4thesamplesizeislimited,raisingsomeconcernsforthevalidityoftheseresults.Thiswillbediscussedinmoredetailinchapter5.3.
Table5:Bootstrappingresults–ConstructiveEngagement ConstructiveEngagement Nr. Variable β p-value Result1 SocialCohesion 0.684 0.001 Supported2 SuperordinateIdentity 0.769 0.253 NotSupported3 TopManagementSupport 0.832 0.329 NotSupported4 Centralization -0.713 0.011 Supported7 Rewards&Incentives 0.901 0.146 NotSupported8 Resources&Time -0.907 0.313 NotSupported
The first proposed variable is social cohesion. A positive relation with constructive engagement waspresumed.Intheresultsofthebootstrappinganalysisindeedapositivelinearassociationwasfound,andagainstexpectations,analysisidentifiedthisrelationassignificant(β=0.684;p<0.05).ThesefindingsareinlinewiththeresearchbyAmbrose(2015)whereasignificantandpositivelinearrelationisalsofound.The second variable is superordinate identity. A positive relation with constructive engagement wasproposed. Bootstrapping analysis results suggest a positive relation with constructive engagement,howeverthesefindingsarenotsignificant(β=0.769;p>0.05).IntheresearchbyAmbroseapositiveandsignificantrelationshipwasfoundwithconstructiveengagement.Thenextproposedpositiverelationbetweentopmanagementsupportandconstructiveengagementisneither found to be significant for this research. The results from the analysis do however suggest apositiverelation(β=0.832;p>0.05).ThisfindingismoreinlinewithexpectationsthanthefindingsfromAmbrose,whereanegativesignificantrelationwasfound.
Factor (scale) Min. Max. Average %(fig.11) Std.Dev.SocialCohesion(1-7) 4 7 6 0,83 0,68SuperordinateIdentity(1-7) 2 7 5,3 0,72 1,61TopManagementSupport(1-5) 2 5 3,55 0,64 0,60Centralization(1-7) 1 5 2,36 0,23 0,92InformationQuality(1-5) 2 4 3,5 0,63 0,65Rewards&Incentives(1-5) 1 4 2,49 0,37 0,94ProceduralQuality(1-7) 3 7 5,33 0,72 0,95Resources&Time(1-5) 2 5 3,17 0,54 0,85Collaboration(1-7) 4 7 6,05 0,84 0,66FunctionalConflict(1-7) 2 7 5,33 0,72 1,15S&OPPerformance(1-7) 2 7 5,52 0,75 0,96
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Thevariablecentralizationwasexpected tohaveanegativeeffectonconstructiveengagement in theS&OPprocess.Theresultsfrombootstrappingseemtoindicatethatthisnegativeassociationdoesindeedexist,sincethisnegativerelationisfoundtobesignificantinthistest(β=-0.713;p<0.05).ThesefindingsaresurprisingsincetherelationwasnotfoundtobesignificantbyAmbrose(2015).Althoughhisresearchdoesalsoagreeonanegativeassociation,thatisnearlysignificant.Thefactorresources&time isproposedtopositivelyaffectconstructiveengagement.Theresultsfrombootstrappinghoweversuggestanegativeassociation,withtherelationnotfoundtobesignificant(β=-0.907;p>0.05).ThefindingsbyAmbrose(2015)indicateaverysmalleffectonconstructiveengagement,negativeforcollaborationandpositiveforfunctionalconflict.Neitherisfoundtosignificant.
Table6:Bootstrappingresults-Rewards&IncentivesRewards&incentiveswasproposedtopositivelyaffectthelevelsofconstructiveengagement.ApositiverelationissuggestedbytheresultsfromanalysisinTable6,butthisrelationisnotsignificant(β=0.901;p>0.05).ThesefindingsaresupportedbythefindingsbyAmbrose(2015)wereapositiverelationisalsofound.ThepositiveeffectofS&OPperformanceonrewards&incentivesissuggestedtobepositive,butthisrelationisnotsignificant(β=0.629;p>0.05).
Table7:Bootstrappingresults-InformationQuality InformationQuality Nr. Variable β p-value Result5 ConstructiveEngagement 0.609 0.454 NotSupported
Intheproposedmodelconstructiveengagementhasadirectpositiveeffectonthevariablesinformationqualityandproceduralquality.TheresultsofbootstrappinginTable7indicateapositiverelationcouldexist,butthisrelationisnotfoundtobesignificant(β=0.609;p>0.05).IntheresearchbyAmbrose(2015)adirecteffectfrominformationqualitytoconstructiveengagementwasproposed.Thisrelationwasnotfoundtobesignificant.
Table8:Bootstrappingresults-ProceduralQuality ProceduralQuality Nr. Variable β p-value Result6 ConstructiveEngagement 0.884 0.267 NotSupported
The model proposed in this thesis includes a direct positive effect of constructive engagement onproceduralquality.ThefindingsinTable8agreewiththedirectionoftherelation,butitisnotfoundtobesignificant(β=0.884;p>0.05).
Rewards&Incentives Nr. Variable β p-value Result9 S&OPPerformance 0.629 0.102 Notsupported
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Table9:R-squarevaluesofdependentvariables
InPLS-SEMthepredictivecapabilityoftheproposedmodelisassessedwiththeuseofR2determination.Thisvaluecapturesthecombinedeffectsof the independent factorsonthedependent factors. In themodel the independent factorsarenotaffectedbythe levelsofothervariables in themodels,butdoimpact the levels in the dependent factors. The dependent factors in the proposed mode includeconstructiveengagement, informationquality,proceduralquality,and rewards&incentives. InTable9theR2valueof0.951represents95,1%ofthevarianceinconstructiveengagementcanbepredictedbytheindependentfactorsinthemodel.ThisdifferenceintheR2numberscanbeexplainedbythenumberofindependentfactorsaffectingthedependentfactor.Sinceinformationquality,proceduralquality,andrewards&incentivesareonlyimpactedbyasingleindependentvariable,theR2valuesareexpectedtobelower.
5.2QualitativeanalysisTheinformantsofacasestudyresearchareidentifiedbyMiles&Huberman(1994)asthemostlogicalsourcesofcorroboration.The impliedaccumulatedknowledgeofpeople,processandproductsmakesinformantsattheresearchorganizationapracticalandviablejudgetoevaluatemajorfindingsofastudy(Denzin,1978).InthisthesisresearchthetechniquepresentedbyMiles&Huberman(1994)wasused.Withthistechniquethecasestudyparticipantswerepresentedwithasummaryofthefindings,andwereasked to evaluate the accuracy of factors in the proposed model of constructive engagement.Furthermore,thetwomembersoftheS&OPProjectteamwhotookpartintheS&OPprocessredesigninitiativewereselectedtovalidatetheproposedmodel,andindicatetheusefulnessofthemodelforafutureS&OPprocessredesigninitiative.Thiswasdonetodeterminethepracticaluseoftheproposedmodel. First, factors are analyzed by evaluating representative quotes from respondents, andobservationsfromthecasestudy.Next,theroleandimportanceofchangemanagementforlargescaleprocessredesignsarediscussed.ThetwomembersoftheS&OPProjectteamdiscussedandcommentedoneachseparatefactortakenintoaccountintheproposedmodel.Finally,therecognitionoftheresultsfromthethesisresearch,andtheusefulnessoftheproposedmodelforrelatedprocessredesigninitiativesarediscussed.
5.2.1ConstructiveEngagementThe role of constructive engagement is analyzed at the research organization by looking at bothcollaboration, and functional conflict. First representative quotes and observations regardingcollaboration are discussed. Next, the functional conflict aspects of constructive engagement arepresented.Constructiveengagement–CollaborationDuringthecasestudy,semi-structuredinterviewswereconductedwiththeS&OPteammembersattheresearch organization. During the interviews with the participants of the case organization, differentviewpointsonthelevelofcollaborationweregathered.Whilesomerespondentsarguedthatthecurrentlevelofcollaborationwasalreadysufficient,othersexperiencedlowerlevelsofcollaboration.However,
DependentFactors R2vConstructiveEngagement 0.951InformationQuality 0.195ProceduralQuality 0.167Rewards&Incentives 0.356
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allrespondentswerepositiveaboutthesetupandtheresultsfromthenewmeetingstructures.Therolesandresponsibilitiesaremoreclearlydivided,andthefeasibilitiesandconstraintsofinvestigationprovidemoreinsightintootherdepartment’sactivities.Participant1(S&OPProjectTeam):“Itisveryclearwhenpeoplehavethewilltoactivelycollaborate.Inthissituationtheywillstartdoingworkthatisnotnecessarilytheirown.Youwillgetfunctionalgive-and-takesituations.Peopleknowworkingtogetherisnotalwayseasy,buttheyareengagedandwillingtoworktogether.ThisefforthastocomebothfromSalesandthesupplychaindepartments.Collaborationoccursfrequently,specificallytheweeklyandmonthlymeetingsareafixedpartoftheS&OPagenda. Everyone involved is actively participating in creating common understanding and improvetogether.”Participant4(Operations):“Previously Sales entered the Sales orders in the ERP systems without checking the availability andfeasibilityoftherequests.Inthenewprocesswedomoreinvestigationupfrontandweareabletoprovideamoreaccurateandreliableconfirmationdate.Thebandwidthsinwhichwecanconfirmordersismorevisibleandbetterunderstood.Wecanprovidetransparencytowardssalesandthecustomer.”Participant7(Operations):“Ithinkwealreadyhadagoodlevelofcollaboration,butnowtherolesandresponsibilitiesaredividedmoreclearly.”Constructiveengagement-FunctionalConflictDuring the interviews itbecameapparent that functionalconflictplayedan important roleduring thecross-functional alignmentmeetings. Different organizationalmotives and viewpointswere named aspotentialcausesfordisagreements.Specifically,thedifferentgoalsofthesupplychaindepartmentandthesalesdepartmentwereof interest.Whilethesupplychaindepartmentstrivesforastructuredandconstant production schedule, Sales prefers to offer a higher level of flexibility to easier meet thecustomer’srequests.Participant1(S&OPProjectTeam):“Salesandthesupplychaindepartmentshavedifferentgoals.Saleswantstopostponemakingdecisionsandkeepflexibilityaslongaspossible,whilethesupplychaindepartmentwanttomakedecisionsassoonaspossible.Thisisthebiggestfieldoftensionbetweenthedepartments.Thesupplychainispreparedfora certain bandwidth of volume.When Saleswants to have a higher or lower volume thiswill lead toconflicts. So themain points of conflict are the increasing or decreasing of volume, and the levels offlexibility.Youcouldstartusingsomeformofscenarioplanningwhereyoucaneasilydeterminethecostsandbenefitsforeachcase.Thiscanassistinyourdecisionmaking.In this past sales made assumptions about the capabilities and constraints. Now you have a masterschedulerthathasaclearerandmoreaccurateunderstandingoftheconstrainsofthesupplychainandmanufacturing.“Participant4(Operations):“Inthenewprocesstherestillwillbedifferentmotivesandinterestbetweenthedepartments.Withthenewprocesswefacilitatethedialoguethatisrequiredtofindthebestsolutionfortheorganizationasa
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whole.We look at possibilities regarding deliveries times, andweigh it against the acceptance of theresultingcosts.”Participant9(Sales):“Inthenewprocesswehavefunctionalconflict.Ithinkintheendweshouldhaveourfocusmoreonthecustomers thanon thesuppliers. Iunderstand the importanceofhavingaclose relationshipwithyoursuppliers,butattheendthiscanalsohaveanadverseeffect.ThenewprocessallowsSalestoreallyfocusonthecustomers.Intheendwewillhavetoreachalignment.S&OPisnotasimpletooltoachievethis.Thishasmoretodowiththecultureinacompany.Idon’tthinkaS&OPcanjustbringthisdirectly.S&OPdoesbringdifferentfunctionalgroupstogether.ButifyoudecidethatSalesonlylooksatthecustomers,andthesupplydepartmentsonlylookatthesupplychain,youwillalwaysarriveinadeadlock.Attheendyoureachanalignmentbutthisisalwaysacompromise.Ithinkasacompanyyoushouldmakeadecisionaboutwhatyourpriorityis.Inthismarket,thesalesdepartmenthasvisibilityofonly3monthsintothefuture.Ifyouacceptthisasacompanyandfigureoutwhatthismeansforyoursupplychainandwhichcostsareassociated,youcanmakebetterdecisions.Thiscanhaveaprice,butattheendatleasteveryonespeaksthesamelanguage.”
5.2.2SocialCohesionIn the interviews during the case study conduct, a friendly and positive atmosphere when workingtogether was mentioned by nearly all members. The general feeling was that although people havedifferentmotivesanddiscussionshappen, thesediscussionarebasedontaskorprocessconflicts,notpersonal conflicts. Multiple members mentioned that the social cohesion has improved since theimplementationofthenewS&OPprocess.Participant1(S&OPProjectTeam):”Iamverypositiveaboutthelevelofsocialcohesionwiththemembersoftheteam.Thenewprocessforcespeopletoworktogether.Oncethebridgeisbuild,peoplewanttocollaborate.Onasociallevelpeoplegetacquaintedwhentheyworktogether,andthismakescommunicationaloteasier.Thisprovidesagoodfoundationtohavediscussionsabouttopicsthatwillhaveanimpactonmultipledepartments.Thisisabenefitfortheprocess.Thefirstobstacleisusuallythehighest.Whenthis istakenwecanachievetherequiredlevelofcollaborationfortheprocess.“Participant3(Sales):“Thereisafriendlyandpositiveatmospherewhenweworktogether.Pickingupthephone,orjustgoingbysomeone’sdeskitnotanobstacleatall.Ididn’texperienceanyemotion-basedarguments.”Participant10(Sales):“Itiscleareveryonehastheirownmotivesintheprocess,butintheendweallgetalongwell.Ithinkthelevelofsocialcohesionisgood.”Theopinions presented in the interviewswere in linewith theobservations throughout the researchperiod. Task and process conflicts were observed on multiple occasions, but members were alwaysfriendlyandcomfortablearoundeachother.Mostnotably,everymeetingendedonagoodnotewithsocialsmalltalkandfriendlyfaces.Theobservationswere inagreementwiththefindingsbyAmbrose(2015) andNakata& Im (2010). Although social cohesionwas present inmoderate to highperceived
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levels, it did not negatively affect functional conflict and the ability to critically consider multiplealternativesolutions.Previousliteratureindicatesthepositiveeffectssocialcohesioncanhaveonexchangewithinteams,andasan importantfacilitatorforcommunications.However,high levelsofsocialcohesionarethoughttoleadtolossofcreativityandcreativethinking.Incontrast,theresearchbyAmbrose(2015)suggestshighlevelsofsocialcohesionaid,nothinderthefunctionalconflictaspectsofconstructiveengagement.Duringtheinterviewstheteammembersindicatedmoderatetohighlevelsofsocialcohesion,andhowitmakescollaborationandcommunicationeasier.
5.2.3SuperordinateidentityThe interviews with the S&OP team members suggested that although the respondents value theirpresence in the S&OP process redesign team, they still feel more connected to their respectivedepartments.Thisindicatedthecurrentperceivedlevelsofsuperordinateidentityarelowtomoderate.In general, everyone agrees they are committed to commonobjectives. Examples of these long-termcompany-wideobjectivesincludetheincreaseofmarketshare,andtheincreaseofrevenueandprofit.However,eachdepartmenthasadifferent responsibility thatwill alwaysget thepriorityon theshortterm.ThefrequencyoftheS&OPprocessisalsomentioned.Itmakessenseemployeesidentifymorewiththedepartmenttheyworkwithonadailybasis,thenateamthatcollaboratesonamonthlybasis.Participant1(S&OPProjectTeam):“Ithinksuperordinateidentityiscurrentlyatalowlevel.Ithinksalesandproductionnowfeeltheyareobligated to work together. I think the identity liesmore with their department than with the S&OPprocess.IthinkthisalsohastodowiththefrequencyoftheS&OPprocess.Thisisamonthlycycle,whileforinstancemasterschedulingisaweeklyprocess.”Participant9(Sales):“Ithinkthemembersoftheprojectteamfeellikemembersoftheteam.”Thepresentedopinions in the interviewswere in linewith theobservations throughout the researchperiod. Observations showed members value their membership. However, group identity was onlyobservedintheS&OPteam.Thesurroundingfunctionswerehappytobeabletoprovideinputintotheprocess,buttheirdepartmentagendawasalwaysleading.Thisisexactlywherethechallengesofcreatinggroupidentitylies,asindicatedbytheliterature.Previousliteratureindicatesthepositiveeffectssuperordinateidentitycanhaveoninnovativenessandcross-functionintegration.ThefindingsfromtheresearchbyAmbrose(2015)suggestapositiverelationbetweensuperordinateidentityandconstructiveengagement.Theopinionspresentedintheinterviewsandtheobservationsindicatesuperordinateidentitymaybehardtoachieve,sinceoperationalworkwillbeprioritizedovertheactivitiesoutsidethenormalwork.However,sincetheS&OPprocessisamonthlycycleitwillbecrucialtoestablishandmaintainsuperordinateidentityinordertokeepteammembersengaged.
5.2.4TopManagementSupportThe interviewswith theS&OP teammembers indicated that the respondentsweremostlyundecidedabouttheleveloftopmanagementsupport.ThiscanbeexplainedbytheS&OPprocessbeinginaveryearlystage.Mostrespondentspresumedthattopmanagementwillbemoreinvolvedoncetheprocessis
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up-and-running.Theprogrammanagerindicatedthatthetopmanagementsupportispresent,otherwisethenewS&OPprocesscouldhaveneverstarted.Participant1(S&OPProjectTeam):“Topmanagementsupportisabsolutelycrucialtothesuccessoftheproject.Fromtheirsupportcomestheabilitytoreservetimeandresources.”Participant2(S&OPProjectTeam):“Topmanagementsupportwaspresent,otherwisethepilotwouldn’thavehappened.Italsoshouldintheresourcesavailablefortravelingandtimereservedfortheproject.Wewerealsoallowedtoactivelylookforpeopletofillthenewrolesfortheprocess.CurrentlytopmanagementdoesnotviewtheS&OPprocessasahighpriority.Theprocessfirsthastobecomemoreconsistent, thenthesupportwill increase.TheS&OPprocessismonthlyandlooksfarahead.Manypeoplefeelthehereandnowismoreimportant,andorder fulfillment is the first priority. Alsowe have very big difference in thematurity of the differentlocations.”Thepresentedopinions in the interviewswere in linewith theobservations throughout the researchperiod.Althoughtheroleoftopmanagementwasnotobserveddirectly,resourcesweremadeavailablefortheprocess,withtheabilitytoreservetimefortheprocesswasthemostfrequentlyobserved.Theprogrammanager,aswellasothermembersweregivensignificanttimetoworkontheS&OPprocessand related tasks. This included the weekly meetings, and time reserved to present and informstakeholdersfromvariousdepartments.Topmanagementwasalsoavailabletomakefinaldecisionswhenissueswereescalated.TheprocessdesignalsospecifiestheroleoftopmanagementintheactualS&OPprocess.Theiractiveroleillustratesthattopmanagementsupportispresent.Previous literature identifies top management support as the most critical driver for success oforganizational changes (Balsmeier & Voisin, 1996; Li & Lin, 2006). Topmanagement support is alsomentionedasaprerequisiteforgroupeffectivenessandcross-functionalcollaboration(Cohen&Bailey,1997). The research by Ambrose (2015) suggest top management support does not directly affectconstructiveengagement,norS&OPperformance.However,theperceptionspresentedintheinterviewsand theobservations indicate topmanagement supportplaysa crucial role in theS&OPprocess. ThisbecomesmostlyapparentintheavailableresourcesandtimeallocatedtotheimplementationofthenewS&OPprocess.
5.2.5CentralizationInterviewresultssuggestthattheS&OPteammembersperceivedvaryinglevelsofcentralization.Multiplemembersmentionthatdecisionswerealreadymadeinprincipalonahighlevel,andthatonlythefine-tuning was left for the members. However, these viewpoints were more about the implementationprocess,thantheactualS&OPprocess.DuringtheactualS&OPprocessmembersareinfactempoweredtomakedecision.However,whencostsareinvolved,orissuescannotberesolved,topmanagementdoeshavethefinalsayinthesematters.Participant2(S&OPProjectTeam):“SomeformiscentralizationispartoftheS&OPstructure.Themonthlyprocesscontainsasectionwheredecisionsaremade,andwheretopmanagementisinvolved.TheS&OPteamsupportsthesedecisionsbymakingpropositionsandinvestigatingdifferentscenarios.Itispossibletoalignwithintheteamandreachabalancebetweensupplyanddemand.Ifdecisionscanbemadeonthis level itwillhappen.Butwhenalignmentcan’tbereachedorwhencostsareinvolveditwillbeescalatedtohigherlevels.”
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Participant9(Sales):“I think themembers in the S&OP process have a certain level of autonomy. Some things have to beescalatedtohighermanagement.Whenfor instancewewanttostart looking into leadtimes,thiswillhave an impact of the inventory levels. This off course has to be informed and accepted by highermanagement.Theconsequencesoflargedecisionsarefeltbythewholeorganization,sotopmanagementshouldbeinvolved.”Observations about the level of centralizationweremostlymade by reviewing the flowcharts of theproposedS&OPprocess.Topmanagementmakesthefinaldecision,andsolves issuesandescalations.However, observations confirmed that the S&OP team is empowered to make decisions. Multipledecisions are made by the team to make a final selection of scenarios that are presented to topmanagement.Smallerdecisionsinashorttimehorizoncanevenbemadewithoutescalation.ThepositiveeffectofempowermentbecomeapparentinmultipleinterviewswherethemembersoftheS&OPteamexpressedtheirpositiveimpressionwiththenewformofmeetings.Thesemeetingsallowedtheteamtoshareinformationandreachalignmentinaveryshorttime.ItcanalsobenotedwhileempowermentisverypositivefortheengagementoftheS&OPteammembers,topmanagementwillalwaysbeinformedandhavethefinalsayinissuesinvolvingthestrategyofexpensesoftheorganization.In previous literature high levels of centralization are suggested to negatively affect exchange ofinformation, and constructive functional conflict. The findings by Ambrose (2015) indeed showed anegativerelation,meaninghighlevelsofcentralizationarelikelytohaveanegativeimpactonconstructiveengagement.Theopinionspresentedintheinterviews,andtheobservationsdidnotindicatehighlevelsofcentralizationattheresearchorganization.Althoughlargedecisionsandescalationscanbesolvedbyhighermanagement,theS&OPteamhasautonomyandcanmakesmallerdecisions.Inadditiontheyfulfillanimportantroleinpreparingthescenariosanddecisionsthatarepresentedtohighermanagement.
5.2.6InformationQualityTheS&OPteammembersofthecaseorganizationwerestillundecidedaboutthe informationquality.Althoughallrespondentsexpectedtheinformationqualitytobeimprovedwiththenewprocess,itwasunsurehowandwhenthiswillmaterialize.Creatingmoretransparencyand‘speakingthesamelanguage’were named as indicators of improved information quality. Respondents were positive about theincreasedsharingofsalesforecastsbysales,andtheimprovedidentificationofsupplychainconstrains,thatarepromisedtoreceivespecialattentioninthenewS&OPprocess.However,amemberofthesalesdepartmentforesawchallengestoincreasethetimehorizonfrom6monthsto18monthsintothefuture.Participant2(S&OPProjectTeam):“Wehaveidentifiedinformationqualityasapotentialproblem.Currentlythequalityoftheforecastsisquitelow.Wehavetodevelopmethodstomeasurethequality,anddefinethelevelofqualitywewanttomaintain.ThequalityofinformationsharingwasapriorityintheimplementationoftheS&OPprocess.S&OPisthedrivingforcesofyourdecisionmaking,andthisisonlypossiblewhentheinformationqualityisguaranteed.Westillhavetomakestepstoreachtherequiredlevel.Thehorizonofthefutureiscurrentlynotfarenough.Thesupplychainneedstolook18monthsaheadtoplanforlargeinvestment.”
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Participant9(Sales):“Wearenowinthestartingphasewherewearelookingwhichforecastsarecurrentlygood.Fromthisanalysiswewilldevelopmorereliableforecasts,andtranslatethistothefuture.TheresponsibilityofthecorrectnessoftheforecastslieswithSales.Theforecastsaresharedwith[participant3]and[participant1].Wearestilldevelopingthetoolstoassistinmakingtheforecasts.Wearenowlooking6monthsintothefuture.Wecanalsolook18monthsintothefuture,butIhavemyquestionmarksaboutthereliabilityofthis.Wehaveadistinctionbetweencompletelineswherewehaveavisibilityof7-9months.Butonthestand-alonemachinewecan’treallylookanyfurtherthan3months.IthinkthiswillbeoneofthemostdifficultthingsintheS&OPprocess,howyouworkwiththislimitedvisibilityinthesalesofthefuture.”Participant10(Sales):“I expect the quality of information sharing will improve with the new process. Sales has a betterunderstandingoftheconstraintsofthefactory.Thiswillhelpinprovidingamorereliabledeliverytimetowardsthecustomers.Inthecurrentsituationwedidn’tseetheproblemsofthesupplychainuntilafterweplacedtheordersintheERPsystem.”Observations throughout the case study revealed the main perceived shortcomings in regards toinformationqualityconcernthequalityofsalesforecasting.Infact,muchofthevolumescommunicatedtosupplierswerebasedonhistoricalnumbers,morethanonsalesforecasts.Salesdidcreateindependentdemand,but theaccuracyandreliabilityweretaken intoquestion. Itproveddifficult tocreateaclearpicture,sinceno informationaboutreliabilitywasgathered.Thisagain indicatesstepscanbemade inimproving the quality of information. Information quality was identified as attribute that had to beimprovedinthenewS&OPprocess.Itwasevenlabelledasapotentialproblem,indicatingthatiswasinfacttakenintoaccounttheS&OPprocessredesign.Inpreviousliteratureinformationqualityhasreceivedrelativelymuchattention.Sharingofinformationisidentifiedasaprerequisiteforgroupcollaboration.Apreviouscase-studysuggestedtheimportantroleinformationroleplays inenablingconstructiveengagement. IntheresearchbyAmbrose(2015) itwassuggested information quality affects S&OP performance, but it does not flow through constructiveengagement.Infact,itwassuggestedconstructiveengagementleadstoinformation.Thisideaisinlinewiththeobservations.Thedevelopmentofastructuredwaytoshareinformationcanonlybeachievedthroughcross-functionalcollaboration.
5.2.7ProceduralQualityIn the interviewswith the S&OP teammembers it becameapparent that theparticipantswerequiteconfidentabout theproceduralquality,butmoreclaritywasrequired insomeareas.Onerespondentmentionedthenewprocesssharesalotofsimilaritiestotheoldprocess,makingiteasytounderstand.Another respondent reported that the new process design looks good on paper, but awareness andinvolvementstillhavetoberaisedacrossdifferentfunctionalgroups.Otherissuesthatwerebroughtuparethelackofclarityabouttheoverallscopeandgoalsoftheprocess.Relatedtothis,thetimelineandthe ‘doton thehorizon’werenotalwaysperceivedasclear to the respondents.Theprojectmanageragreedthatimprovementsarerequired.Abettercommonunderstandinghastobecreatedamongtheparticipants,includingspeakingthesamelanguage,andclarityabouttherolesandresponsibilities.Lastly,thememberofthesalesdepartmentreportedsomeuncertaintyregardingtheperceivedqualityoftheS&OPprocess.
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Participant1(S&OPProjectTeam):“Currentlytheprocessiscleartothememberswhowereinvolvedinthepilot.Butthereareimprovementneededintheknowledgedepartment.Thewholecommunicationaroundthenewprocesswilltaketimetocomplete.Thegeneral topics liketermsanddefinitionsmustbebetterunderstoodbyeveryone. I’venoticed that thecurrent levelofknowledge isnoton the required levelyet.Thishasan impacton thequality of themeetings, since people are not fully sure ofwhat is expected from them. Especially thecommunicationandspeakingthesamelanguageareveryimportantfortheprocess.Wehavedeterminedthescopeoftheprojectbeforehand.Still,therewassomemiscommunicationormisunderstandingaboutthis.ButintheendtheprocesswasverymuchthesameasweplanneditwiththeS&OPprojectteam.”Participant7(Operations): “Theprocessiscleartome,butthetimelinesoftheprojectarenotclearyet.Wedon’tknowwhentheimplementationhastobecomplete.”Participant9(Sales):“Istillhavemyquestionmarkswiththenewprocess.Intheoldsituationwewereveryflexibleandthecustomercouldmakethefinaldecisionataverylatetime.I’mnotsureifthenewprocesscansupportthis.”Duringthecasestudysomemildconflictswereobserved.Proceduralqualitywasthecausefornearlyalloftheconflicts.Sincetheimplementationwasintheearlystages,alackofclarityaboutthescopeandthetimelineswerepresent.Thedefinitionanddevelopmentofprocesswenthandinhandwithobservationsofconstructiveengagement.Cross-functionalcollaborationwasrequiredtomapoutaprocesscontainingallrelevantprocessstepsandstakeholders.Intheliteratureproceduralqualityisidentifiedasanimportantpredictorforgroupeffectiveness.IntheresearchbyAmbrose(2015)adirectrelationbetweenconstructiveengagementandS&OPperformancewasfound.Thisfindingis in linewiththecasestudyresearchbyOlivia&Watson(2011)whoproposeconstructiveengagementcanactuallypositivelyimpacttheproceduralquality,nottheotherwayaround.This variable is thought to behave is a similar way to information quality, were cross-functionalengagementisarequirementtoachieveanagreed-uponprocessinthefirstplace.
5.2.8Rewards&IncentivesTheinterviewswiththeS&OPteammembersrevealedthattheresearchorganizationdoesnottieanymoney-basedrewardsandincentivestotheperformanceslinkedtotheS&OPprocess.Manyrespondentsreportedbeingunsureorundecided,sincenoformalcommunicationaboutthistopicwasprovided.Theprogrammanagerdidconfirmtheimplementationofteam-basedrewardsandincentiveswasnotintheshorttermplans,butitwouldbeanicethingtohave.OfparticularinterestarequotesbyamemberoftheS&OPcoreteam,whoindicatednon-monetaryrewardsandincentivesincludetheaccesstocertaininformation,andbeinginvitedtocertainmeetings.Participant1(S&OPProjectTeam):“For the quality of the process I think it would be good to have some rewards based on sharedperformance.Forinstance,keepingtheinventorylevelswouldcouldbeanincentivefortheteam.“
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Participant2(S&OPProjectTeam):Inorderforthenewprocesstoworkandbeacceptedwehadtotakeawaytheoldincentivestructures.These are not strictly monetary rewards. For instance attending the old meetings and receivinginformationcanalsobeseenasrewards.Wearenotlookingtotierewardstoteamperformance.Participant4(Operations):“We haven’t had any confirmations that rewards will be based on the performance in the process.CurrentlyIhaven’treceivedconfirmationthatIwillbegettingthejobwhentheprocessisimplemented.IfIgetthejobIwillbesatisfied.”Gatheringinformationthroughobservationswasdifficultforthisattribute,sincetherewardsstructurewasnotclearfromthestart.However,itbecameapparentthatthecompany-sharedvariablessuchastheinventorycostsareakeyindicatorofthesuccessofthenewS&OPprocess.Thisfactwasbroughtupinmultiplemeetings.However,itwasunclearifanybonusesorothermonetaryincentivesweretiedtothisperformanceindicator.TheobservationswereinlinewiththefindingsbyOlivia&Watson(2011)whoindicate the lack of aligned incentives can fuel functional conflict, and thus potentially increaseconstructiveengagement.Inpreviousliteraturerewardsandincentivesareproposedaskeyprerequisitesforgroupeffectiveness(Hackmanetal.,2000).IntheresearchbyAmbrose(2015)thisvariableisidentifiedasthesinglemostinfluencer of constructive engagement. The insights from the interviews indicate the outcomes orperformanceoftheS&OPprocessprovidethemostimportantincentivetoengageintheS&OPprocess.ThisideaisinlinewiththefindingsofOlivia&Watson(2011),whoproposethepositiverelationbetweenperceived process quality and perceived benefit of participating in the S&OP process. This in turnpositivelyaffectsthelevelsofconstructiveengagement(Olivia&Watson,2011).TheperformanceoftheS&OPprocess isthoughtto increasethelevelofconstructiveengagement iftheoutcomesarealignedwithS&OPteammembers’ rewardsand incentives.Thealignmentqualitydetermines if theperceivedqualityoftheS&OPperformanceleadstoconstructiveengagement.
5.2.9Resources&TimeParticipant2(S&OPProjectTeam):“ITdoesfacilitatetheS&OPprocess.WearecurrentlyworkingwithalowmaturityIT,butaremakingstepstomakeithelptheprocess.Firstwehavetomakesurealltherolesandresponsibilitiesareknownandinplace.NextwecanstartlookingathowITcanassist.Toolingisneededfortheprocess,butwealsohavetomake sure there is uniformity in how for instance information is shared. Not every department orlocationshoulduseadifferentformat.“Participant3(Sales):“CurrentlytopmanagementdoesnotreservespecifiedamountsoftimetoworkonthedeploymentoftheS&OPprocess.Thereforeoperationalworkhastheprioritysincethishastobefinishedinashortertimehorizonthantheprojectthatcantakemonthstoyearstocomplete.”Participant7(Operations):“Idisagreewithhavingenoughtimefortheproject.Somepeoplewereunabletoreservetimetoworkontheproject,sinceoperationalworkhasthepriority.Thereforetheyhadtoworklateinordertodoboth.”Observationsindicatedthatindeedsometeammembersgotintotroublewiththeiravailabletime,andhadtoworklatetofinishalltheirtasks.Theseissuecouldmostlybeattributedtothelearningcurvethat
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isassociatedwiththeinitialimplementationphase.Observingtheprocessmodelsandflowchartsmakeithighly likely thatallmembershaveadequatetimetoprepareandworkontheir tasks for theS&OPprocess.IntheliteraturethelackoftimeandresourcesisidentifiedasapossiblecauseforthelowerpriorityS&OPrelated tasks receive in comparison to operation activities. The availability of adequate time andresources, including IT facilities, can affect the levels of constructive engagement. In the research byAmbrose(2015)asignificantrelationwasnotfound.HoweverfromtheobservationsitwasidentifiedthatalackofresourcescandecreasethewillingnesstoengageintheS&OPprocess.
5.2.10S&OPPerformanceSince the S&OP process was not fully implemented at the research organization at the time of thisresearch, it was not possible to report on the S&OP performance improvements. Therefore, theparticipantscouldonlyreporttheirexpectationsaboutwhichperformanceimprovementsthenewS&OPwouldbring.Fromboththeopinionsprovidedintheinterviews,andobservedduringthecasestudyitbecameapparenttheparticipantswereexpectingperformanceresultscloselyrelatedtotheperformancemeasuresoftheirrespectivedepartments.Forinstance,participantsfromthesupplychaindepartmentemphasized the decrease of inventory as an indicator of success, while participants from the salesdepartment indicatedmeasures of success included higher sales, and shorter order fulfillment times.Theseobservationsare in linewith the researchbyOlivia&Watson (2011),who identify the relationbetweentheperceivedbenefitsofparticipating intheS&OPprocess,andtheperceptionoftheS&OPprocessoutcomequality.5.2.11AnalysisofpracticaluseInthissectionthepracticaluseoftheproposedmodelisanalyzed.ThemodeldevelopedinthisthesiscouldbeusedbymanagersduringtheimplementationofaS&OPprocess.Chase(2013)statesnavigatinga successful S&OP journey is 60% change management, 30% process, and 10% technology. Thisobservationisrecognizedbythetwokeyinformantsattheresearchorganization.BothparticipantsoftheS&OPprojectteamagreechangemanagementwasacrucialpartoftheS&OPprocessredesignproject.One informant states the change management aspects is even more crucial to the outcome of theredesignthantheprocessquality.Participant1(S&OPProjectTeam)“Changemanagement is themost thrilling aspects of this process. Developing and writing down theprocesscanbeabrainteaser,butonce this isdone thenextbigchallenge ishowyouget the involvedpeopletosupportandparticipateinthenewprocess.Ithinkthisisthemostcomplexaspectoftheentireproject.Ithinkthisisthemostcriticalpartoftheentireimplementation.Fortheoutcomeofanewprocessyouhavetwovariables;thequalityofthenewprocess,andtheacceptanceofthepeopleinvolved.Themultiplicationofthesevariablesistheresults.Bothhavetobepositive,butIthinkthechangemanagementaspectsshouldweighevenheavierthantheprocessquality.”Participant2(S&OPProjectTeam)“IthinkchangemanagementisacriticalpartoftheS&OPimplementation.Didwepayenoughattentiontothisaspect?Ofcoursethereisneverenoughattentionpaidtoit.Butuntilnowwehaven’tencounteredanyrealshowstoppers.Thepilotprojectisexecuted,andtheperceptionswerepositiveofbothoutcomesandchangemanagementlevel.Changedoescosttime,butwehavecreatedalotofawareness.”
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Thenextpartofthisqualitativeanalysisisacomprehensivediscussionofthetwoparticipants’perceptionofthevariablestakenintoaccountintheproposedmodelforconstructiveengagement.SocialcohesionwasnottakenintoaccountexplicitlyduringtheS&OPprocessredesignproject.However,awarenessoftheimportanceofsocialcohesionwasobservedduringthecasestudy.Akick-offmeetingwasorganizedatthebeginningofthepilottointroducethebackgroundoftheS&OPprocess.Duringthismeeting attentionwas given to introduceand familiarize the S&OPproject teammemberswitheachother.Theoverallperceptionswerepositive,andsocialcohesionwasfoundtobeincreasedduringtheproject.The informantsperceivedthe levelofsuperordinatetoberelatively lowatthetimeofthe interviews.Mostemployeestendtoidentifythemselveswiththefunctionalgroupsweretheyworkinadailyroutine.ThemonthlyfrequencyoftheS&OPprocessisidentifiedasapotentialthreattothelevelofsuperordinateidentity.Topmanagement supportwas identified by the informants as a crucial factor for the success of theprocess redesign. Without top management support it would be impossible to attain the requiredresourcesandtimeforaprocessredesignofthisscale.The two informantsexpects some levelof centralizationwillalwaysbe required in theS&OPprocess.Although the S&OP team is empowered tomake create and propose different scenarios for decisionmaking,theenddecisionsinvolvinginvestmentswillalwaysbemadebytopmanagement.Otherdecisionscan bemadeon lower levels in the organization.Unless issues are escalated to highermanagement,centralizationwillnotdecreasethelevelofconstructiveengagement.InformationqualitywasidentifiedexplicitlybythetwoparticipantsasapotentialriskforthesuccessandoutcomeoftheS&OPprocessredesign.Decisionmakingisbasedontheprovidedinformation.Thismeansthe quality of information will have an important role in the S&OP process. Examples of sharedinformationarebillofmaterial (BOM)structures,andsales forecasts.Bothsourcesof informationaredefinedandimprovedthroughcrossfunctionalefforts,meaningconstructiveengagementwillhaveanimportantroleintheimprovementofinformationquality.ProceduralqualitywasgivenalargeamountofattentionduringtheS&OPprocessredesignproject.Thedefinitionanddevelopmentofthenewprocesseswasdescribedasacrossfunctionaltask,withpeoplefromdifferentdepartmentworkingtogetherinmultiplesessions.Fromthesestatementstheimportanceofconstructiveengagementtoachieveconstructiveengagementwasconcluded.RewardsandincentiveswerenottakenintoaccountintheS&OPprocessredesignbytheprojectteam.However, steps were taken to assure constructive engagement would not be hindered by existingperformanceassessments.Rewardsandincentivesarenotonlymeasuredinmoney,butcanalsoincludeaccesstocertaininformation,orbeinginvitedtomeetings.ResourcesandtimeareidentifiedbytheinformantsaspotentialrisksduringtheS&OPprocessredesignproject.Someemployeeshadtotakeonnewordifferentrolesandactivities inthenewprocess.ThisrequiredsomeS&OPteamparticipantstoworkovertimeduringperiodsoftheimplementation.However,thesestrainsoftimeandresourceswereonlyapplicabletotheimplementationperiod.Duringtheregularprocesstimeandresourcesandmanagedandshouldnotthreatenthelevelofconstructiveengagement.
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Inadditiontothevariablesconsideredintheproposedmodelforconstructiveengagement,thematurityoftheorderfulfillmentprocesswasrecommendedtobethefoundationoftheS&OPprocess.Althoughthissuggestionwasnot taken into furtheraccount for theproposedmodel, itwillbeexplained in thediscussionssection.Toconcludethequalitativeanalysis,theproposedmodelwaspresentedtothemembersoftheS&OPprojectteamattheresearchorganization.Theopinionspresentedinthesemi-structuredinterviewsprovideapositiveassessmentoftheusefulnessoftheproposedmodel.OneparticipantdescribestheimplementationofthenewS&OPprocessasajourney.Withoutdefiningtargetsforthedifferentvariablesitwasimpossibletoknowwhichstepsstillhadtobetakentoachievethestatedgoals.Participant1(S&OPProjectteam)“Ithinkitwouldhavehelpedifwepaidmoreattentiontothesevariablesfromthestart.Unconsciouslyyoutakecertainaspectsintoaccount,butit’sgoodtomakeismeasurableupfront.Youassesthecurrentstatus,anddefinewhereyouwouldliketoendup.Thiswouldhavegivenusaclearerbeginningandendingoftheproject.Atacertainmomentduringtheimplementation,discussionsaboutrolesandthescopeoftheprojectoccurred.Thismodelwouldhavehelpedinmakingthevariablesthatshouldbetakenintoaccountvisual.Thechangesinperceptionscouldbethesparkofdiscussion.Nowweknowweareonajourney,butwecan’treallytheyhowfarweare.”“Iwouldusethisproposedmodelforfuturecomparableprojects.Thefactorsthatspeaktomethemostaretheinternalteamfactors.Ithinkthisissomethingthatisconsistentlyneglected.Peoplehaveatendencytofocusonprocesses,andassumethepeopleinvolvedpossesstheadequatelevelofskills,andareabletointeractandcommunicateinapropermanner.Ifthismodelmakesitpossibleforusetomeasuretheseperceptions,thanwecanstartworkingwithit.Currentlythisissomethingwefinddifficulttodo.“Participant2(S&OPProjectteam)“Ithinkthismodelcouldhavebeenusedfortheimplementation,howeverI’mnotsureitcouldonlybethismodel.Itisgoodthatyouhaveamodelwhereallimportantvariablesarepresentedinaclearway.Especiallyforpeopleworkinginfunctionswheredifferentfunctionalgroupshavetobealigned,itwouldbeconvenienttoknowwhichvariableshavetobetakenintoaccount.Itprovidesthefoundationtostartdiscussionandsolveissues.”“Thequestionnairesusedduringthiscasestudycouldbesentoutperiodically,tomeasurehowwellwearecurrentlydoing.Iftherearebiggapbetweenthegoals,thisshouldbediscussed.Thenadecisionhastobemadeinthestatusquoisadequateorwewillhavetoworkonsomeaspects.”
5.3ThreatstoValidityInthischapterthethreatstothevalidityofthefindingsarediscussed.Duringthecasestudyinformationwas gathered using various sources; documents, interviews, observations and questionnaires. Thesesourcesformedthebasisonwhichtheconclusionsweredrawn.Inordertodrawmeaningfulconclusionsfromcasestudyfindings,severalresearch-orientedqualitycriteriahavetobemet(Yin,1994).Themostimportantcriteriaofresearchqualityarecontrollability,reliabilityandvalidity(VanAkenetal.,2007).Inthefollowingthesecriteriaarereviewed.
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ControllabilityControllabilityisthefirstcriteriaforresearchquality,andentailsaprecisedescriptionofhowtheresearchwasconducted.Thisincludesprovidinginformationofthemethodsusedfordatacollection,dataanalysis,participantselection,casestudycontextandthecontentsofinterviewsandquestionnaires.Thisdetaileddescriptionof the researchallowsother to replicate theprocess,andcheckpossibledisparities in theoutcomes. This criterionwas controlled for by proving the research design in this chapter about theresearchmethod.Furthermoretheresultsfortheactualresearcharepresentedaspreciselyaspossible(Swanborn, 1996). This includes the graphical presentation of results from the questionnaires, andpresentingrepresentativequotesandopinionsofthemembersofthecasestudyorganization.ReliabilityThereliabilitycriterionforqualityismetwhentheresultsofaresearchareindependentoftheparticularcharacteristicsofthestudy,meaningotherstudiescanachievethesameresults(Yin,1994;Swanborn,1996).Fourpotentialsourcesofbiasarerecognizedintheliterature;theresearcher,theinstruments,therespondents, and the situation (Van Aken et al., 2007). In this thesis research, researcher bias wasminimizedbymakinguseofstandardizedquestionnairestomeasurethevariablesofcollaboration.Theothermethodfor increasingthereliabilitywasthefollowingofexplicitprocedures fordatacollection,analysisandinterpretation(Swanborn,1996).Theproceduresforthecasestudyfollowedtheguidelinesby Yin (1994). Instrument biaswasminimized by using triangulation. The input from the exploratoryinterviews,documentation,observationsandtheresultsfromthequestionnairewereusedforthefinalinterviews.Inaddition,thefindingsofthisresearchbymakinguseoftriangulationoutsidetheresearch.ThefindingsfromtheresearchbyAmbrose(2015)wereusedtocompareandvalidatethefindingsofthisresearch.Thesedifferentresearchinstrumentsmayprovidecomplementaryorcontradictoryresults(VanAken et al., 2007). Contradictions occurwhen interviewees act or say something other than they do.Therefore using only a single instrument is likely to yield unreliable results. This thesis research usedtriangulationtominimizetheinstrumentbias.Respondentbiaswasminimizedbyselectingmembersofdifferent functional departments that were affected by the implementation of a S&OP process. Thesecondwaytoreducetheriskofrespondentbiasistousealargenumberofrespondents.Forthisresearchasampleoftenpeoplewasselected.Thebiasofthesituationwasminimizedbycarryingoutthestudyatdifferentmomentintime(VanAkenetal.,2007).Thisallowedtheresearchertomakeobservationsindifferentsituations,andbecomemoreawareofthecontextinthecasestudyorganization.ValidityThethirdmajorcriterionforthequalityofresearchresultsisvalidity.Aresearchresultisvalidwhenthewayitisgeneratedprovidesgoodreasontobelievetheadequatenessandtruthofthefindings(VanAkenetal.,2007).Therefore,arelationexistsbetweentheusedmethodsandthefindings.Thevaliditycriterioncanbebrokendownintothreetypes;constructvalidity,internalvalidityandexternalvalidity(Yin,1994;Swanborn,1996).Theconstructvalidityreferstotheextenttowhichaninstrumentmeasureswhatitisintendedtomeasure.Constructvaliditywasachievedbymakinguseofquestionnairesthathavebeentestedandvalidatedinpreviousresearch.Theinternalvaliditywasachievedbypresentingtheviewsandopinionsofmembersofdifferentfunctionalgroups.Thisdecreasedthechancethatimportantissuesandrelations were overlooked during the research. Internal validity is suggested by the findings of the
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interviewsandquestionnaires.Theanswersoftherespondentsdonotdiffertolargeextent,indicatingsomelevelofagreementbetweentherespondents.Theexternalvalidityreferstothegeneralizabilityofthefindings.Theuseofasinglecasestudyresearchdesign,andthesmallsamplesizeoftenparticipantsin the quantitative analysis poses a threat to the external validity. Usuallymultiple cases have to bestudiedtofindgeneralizableresults.Thereforethefindingsfromthiscasestudywerecomparedtothefindingsofthesurvey-basedresearchbyAmbrose(2015).RecognitionofresultsTheprevious three criteria for research criteria are frequentlymentionedandprominentlypresent intraditional methodological literature. Another criterionmentioned by Van Aken et al. (2007) for thequalityofresearchresultsistherecognitionoftheseresults.Thisreferstotheextenttowhichtheproblemownerororganizationmembersrecognizethefindingsoftheresearch.Resultsshouldsoundreasonable,plausibleoratleastpossibletothemembersoftheresearchsite(VanAkenetal.,2007).Inthisresearchthefindingsfromtheinterviews,observationsandquestionnaireswerediscussedwithmembersoftheS&OP implementation team. This provided insight if taking the proposed model of factors affectingconstructiveengagementintoaccountduringaS&OPprocessaddsvaluefromamanagerialpointofview.
5.4IntegrationInthissectionthefindingsofthequantitativeandqualitativeanalysisareintegrated.ThemodelproposedinthisthesisbuildsonthemodelsinpreviousworkbyAmbrose(2015)andOlivia&Watson(2011).Duringthequantitativeandqualitativeanalysisopinionsfromkeyinformantsattheresearchorganizationwerecollected.Inthischapterthesefindingsaresummarized.InternalTeamFactorsThefactorssocialcohesionandsuperordinateidentitymakeuptheinternalteamfactors.ThesevariableswereofparticularinteresttooneofthemembersoftheS&OPProjectTeamwhostatesthesevariablesareconsistentlyneglected,orattheveryleastnottakenintoaccountexplicitlyforlargeprocessredesignprojects.Quantitativeanalysisofthemodelprovidedasignificantandpositivelineareffectofsocialcohesiononconstructiveengagement.Thisfindingisinlinewiththeexpectations,astheresearchbyAmbrose(2015)suggest the same linear relation. Surprisinglyhoweverwas that theanalysis from this thesis researchprovidedasignificanteffect,whilethiswasnotfoundbyAmbrose(2015).Thisresultcanindicatesocialcohesion is a crucial factor to achieve constructive engagement in the early stages of S&OPimplementation.The results from the questionnaires show the respondents perceive high levels of social cohesion. Afriendlyandpositiveatmospherewasobservedduringthecasestudy.Althoughconflictsdidoccur,thesewerecausedbyfunctionalconflict,notpersonalconflict.Boththeinterviews,questionnaireanswersandtheobservationssuggesthigh levelsofsocialcohesiondonothinder,but infact increaseconstructiveengagement. This could reject the claim that high levels of social cohesion stifle critical dialogue assuggested by Janis (1982) and Sethi et al. (2001). In fact, according to a respondent social cohesionprovidedafoundationtohavediscussionsabouttopicsthatwillhaveanimpactonmultipledepartments.This suggest both aspects of constructive engagement, collaboration and functional conflict, can beincreasedbyhighlevelsofsocialcohesion.AchievingsocialcohesionshouldberegardedahighprioritycomponentofaS&OPprocessimplementation.
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Although theeffectofsuperordinate identityonconstructiveengagementwas found tobepositive,asignificanteffectwasnotfound.Mediumtohighlevelsofsuperordinateidentityweremeasuredforthefactor superordinate identity. This was surprising as the S&OP process was in the early stages ofimplementationatthetimeofthecasestudy.TheS&OPteamdidworktogetheronaweeklybasis,whichcouldhaveincreasedtheperceptionsoffeelingpartofthesameteam.However, the interviews and observations provide a different picture on the perceived level ofsuperordinateidentity.Althoughtherespondentsvaluetheirpresenceattheteam,indicationsarethattheyfeelmoreconnectedtotheirrespectivedepartments.Duringthe interviewsthefrequencyoftheS&OPprocesswasgivenasanexplanationforthemoderatelevelsofsuperordinateidentity.Thedurationandtheearlystagesof theS&OPprocessat theresearchorganizationdidnotprovideaconclusiveanswer.Thisisexpectedassuperordinateidentityisexpectedtodevelopandgrowovertime.IntheresearchbyAmbrose(2015)asignificantandpositiverelationwasfound,butonlyrespondentswith extendedexperienceparticipated in his research. The findings from this thesis research indicateconstructiveengagementcanbeachievedataS&OPteamweresuperordinateidentityisstilldeveloping.ExternalTeamFactorsThelevelofcentralization,andtheamountofavailableresourcesandtimearepartoftheexternalteamfactors.Highlevelsofcentralizationarepresumedtodecreasethelevelconstructiveengagement,whileespecially low availability of resources and times are expected to negatively affect constructiveengagement.Thefactorcentralizationwasindicatedaslowbytherespondentsinthequestionnaire.Intheresearchmodelanegativeeffectofcentralizationonconstructiveengagementwasproposed.Quantitativeanalysissupports this presumption, as a significant and negative relation from centralization to constructiveengagementwasfound.Besidesthefactorsocialcohesion,thisistheonlyotherfactorthatwasfoundtohaveasignificantimpactonconstructiveengagement.TheopinionsexpressedbytherespondentsduringtheinterviewsindicatedsomelevelsofcentralizationarepartoftheS&OPstructure.Topmanagementhasthefinalsaywhenlargerdecisionshavetobemade.However,theS&OPteamplaysanimportantroleinthepreparationsandselectionofscenariosonwhichthedecisionaremade.ThefindingsfromthisresearchreiteratethesuggestionsofpreviousworkbyGuenter&Grove(2015),who suggest lower levels of centralization can lead to increased constructive engagement. This is inagreementwith the quantitative research by Ambrose (2015)were a negative effect on constructiveengagementapproachingsignificancewasfound.Thefindingsinthisthesisresearchcanbeofgreatvalueforpractitioners.LowlevelsofcentralizationindicatetheS&OPteaminthecasestudyfeelsempowered(TavaresThoméetal.,2012).Thequantitativeanalysisinthisthesissuggestthiscontributestoincreasedlevels of constructive engagement. The findings in this thesis indicate providing adequate levels ofempowermentshouldbetakenintoaccountbymanagersduringS&OPprocessimplementation.Thefactorresourcesandtimewasindicatedasmediumbytherespondentsinthequestionnaires.Intheresearchmodelapositiverelationbetweenthelevelofavailableresourcesandtime,andconstructiveengagementwasproposed.Againstexpectationsastrongnegativerelationwasfoundinstead.Theopinionsexpressedintheinterviewssuggestedtherespondentsperceivedlowtomediatelevelsofavailable resources and time. This can be attributed to the additional work required during theimplementationwhichwasaddedontopofthestructuralworkthathadtobedone.TheaccessandabilityofITfacilitieswerealsomentionedaslimited.MembersoftheS&OPteammentionedactivitiesfortheirrespectivedepartmentwouldfrequentlyreceivepriorityoverS&OPrelatedactivities.Still,thestatisticalanalysisshowsconstructiveengagementcanbeachievedwithouthighlevelsofresourcesandtime.This
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isinagreementwiththeobservationswhereconstructiveengagementwasdetected,whilerestrictionsinavailable time and resources were present. The findings of this thesis research suggest constructiveengagement can be achieved despite moderate levels of resources and time being available for themembers of the new S&OP process. This suggestion is of importance to managers, since theimplementationofanewprocesswilloftenaddworkontopoftheregularactivities.Timeandresourcesshouldstillbemanaged,butlowtomoderatelevelsdonotnecessarilyobstructachievingconstructiveengagementduringaS&OPprocessimplementation. ProcessQualityThe variables information quality and procedural quality are grouped under process quality. Thisaggregation is in line with the S&OP process quality model by Olivia & Watson (2011), who foundconstructiveengagementimprovedparticipantperceptionsofinformational,andproceduralquality. Infuturework, additional factors could be added to furthermeasure and define the factors of processquality.Moderatelevelsofinformationqualitywereindicatedbytherespondentinthequestionnaires.Statisticalanalysisdidnotfindasignificanteffectofconstructiveengagementoninformationquality.InaS&OPcontext,salesforecastsinparticulararefrequentlymentionedaskeyindicatorsofinformationquality (Mello& Stahl, 2011; Stahl&Wallace, 2012). In the case study the respondentsweremostlyundecidedaboutthequalityofinformation.ThiscanbeexplainedbytheS&OPprocessattheresearchorganizationbeingintheearlystagesofimplementation.Methodsandprocessesforsharinginformationandsalesforecastswerebeingdevelopedatthetimeoftheresearch.However,expectationswerethatthe increased collaborationdue to the S&OPprocesswould lead to increased information sharing. Inparticularthecommunicationoftheconstraintsofthesupplychainandassemblylineswerenamedaspositivedevelopments.Thefindingsofthiscasestudyontherelationbetweenconstructiveengagementoninformationalqualityarenotconclusive.Thiscanbeattributedtotheprocessesandformatsoninformationexchangebeingina stage of development during the case study. However, the positive expectations of respondentsexpressedintheinterviewsareinlinewiththepositiveeffectofconstructiveengagementoninformationquality identifiedbyOlivia&Watson (2011).According toexpectation, informationexchange isunderdevelopmentduringearlystagesofS&OPimplementation.However,thecombinationofcollaborationandfunctionalconflictcouldplayanimportantroleinthedevelopmentofsharinginformationeffectively.Thestatisticalanalysisofthefactorproceduralqualityindicatestherespondentsperceivemoderatetohigh levelsofproceduralquality.Althougha significant relationwasnot found, the findings suggestapositiveeffectofconstructiveengagementonproceduralquality.Despite the S&OP process being in the early stages of implementation, the respondents expressesconfidence in thequality of theprocess.One respondentmentioned thenewprocess shares a lot ofsimilaritiestotheoldprocess.Thetimelineoftheimplementationandthenewroleswerenotfullycleartosomeoftherespondents.Duringthecasestudyconstructiveengagementwasobservedduringthedevelopmentofnewprocess.Bothdimensionsofconstructiveengagement,collaborationandfunctionalconflict,occurredduringworkingsessions.Duringthecasestudytheprocesswasstillpartiallyunderdevelopment.Still, therespondentsalreadyperceivedtheproceduralqualityasmoderatelyhigh.Thiscanbeattributedtothesimilaritiesbetweennew and the previous process, as indicated by one of the respondents. The positive perception ofproceduralqualitycouldalsobecausedbytheclearwayofpresentingthenewprocesstoallstakeholdersbefore and during the implementation phase. The new process was presented during informationmeetings,detailedflowchartsandpromotionalbookletscontainingsummarizeddetailsaboutthenew
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S&OP process. The findings of the case study suggest the importance of informing and engaging thestakeholdersduringtheearlystagesofS&OPimplementation.S&OPPerformanceFormostmanagerstheperformanceoftheS&OPperformancewillbethemostimportantfactoroftheproposedmodel.Unliketheotherfactorspresentedinthismodelthisisarguablythehardesttoachieve.Manyfactorsgointotheperformanceofthenewlydesignedprocess.Whereasthemanagercanaffecttheotherfactorstosomeextent,S&OPperformanceimprovementarelesslikelytobeachievedwiththeeffortsofonepersonorasmallgroupofpeople.InthismodelS&OPperformancemainlyservesastheoutcomeofprocessquality,asproposedbyOlivia&Watson(2011).InadditiontheS&OPperformanceisproposedtopositivelyaffectconstructiveengagement,flowingthroughalignmentquality.The results from quantitative analysis suggest a positive effect of S&OP performance on rewards &incentives.Thisrelationwasresultedinalowp-valuedespitethesmallsamplesize,providingmotivationforfurtherresearchonthisrelation.IncentivesAlignmentQualityIn the sameway information quality and procedural quality are grouped under the variable processquality, the measured factor rewards and incentives is grouped under incentive alignment quality.AlignmentqualitywasnotpartofAmbrose’sModelofS&OPperformance(2015),thereforeareinforcingstructure fromS&OPperformance toconstructiveengagementwasnot taken intoaccount.However,previousworkprovidedthemotivationtoconsiderthepositiveeffectonconstructiveengagement.TherelationspresentedinthemodelofconstructiveengagementinthisthesisareinlinewiththeproposedmodelofOlivia&Watson (2011). In theirpaper thequalityof theS&OPprocessoutcomespositivelyaffectstheperceivedbenefitsofparticipatingintheS&OPprocess,flowingthroughperceptionsoftheS&OPprocessquality(Olivia&Watson,2011).Inthisthesisincentivealignmentqualityisdefinedasthedegreetowhichtheincentiveslandscapeensuresthegoalsofadepartmentareinlinewiththegoalsoftheorganizationasawhole.Thiscanbeillustratedbytakingthesupplychaindepartmentfromthecasestudyresearchasanexample.Forthisdepartmentreducinginventorylevels,andtheassociatedcosts,isan importantmeasureofS&OPperformance.Thismeasurewasofgreatmeaning to thisdepartment,since these costs were located on the department’s profit and loss (P&L). The perceived benefit ofparticipating in the S&OPprocess,was to lower the inventory costs, and in turn receive rewards andincentiveswhichareattributedtothisperformanceindicator.In the questionnaires the respondents indicated a moderate-low level of the factor rewards andincentives.ThismeanscurrentlytheS&OPteammembersarenotfrequentlyrewardedforteam-sharedresults. Additionally, the respondents were unsure if incentives would be tied to the S&OP processoutcomesinthefuture.Still,quantitativeanalysissuggestapositiverelationexistbetweenrewardsandincentivesonconstructiveengagement.Althoughthisrelationisnotfoundtobesignificant,itisinlinewiththequantitativeresearchbyAmbrose(2015).Infact,intheresearchbyAmbrose(2015)thisfactorwas found tohave the singlebiggesteffecton constructiveengagement.Again, itmustbenoted therespondentintheresearchbyAmbrose(2015)alreadyworkedwithinaS&OPprocessforalongerperiodoftime.TheinterviewswiththemembersoftheS&OPteamprovidedmoreinsightintotheundecidedanswersinthequestionnaires.Answersindicatethecasestudyorganizationdoesnotcurrentlytieanymoney-basedrewardsandincentivesdirectlytoactivitiesintheS&OPprocess.Onerespondentsuggeststheimportanceof the role of non-monetary rewards, such as invitation to certain meetings and access to certaininformation.No rewards directly tied to S&OP activitieswere present at the research organization. However, therespectivedepartmentsoftheS&OPteammembersallhavekeyperformanceindicators.Observations
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during the case study showed how misaligned incentives can initiate functional conflict. Theseobservations are in line with the findings of Oliva & Watson (2011), who found out constructiveengagementcanexistdespitemisaligned incentives.The findingsof this researchandtheresearchbyAmbrose(2015)indicatetherewardsandincentivescanhaveadirecteffectonconstructiveengagement.Althoughthereinforcingstructurecouldusemoreresearchinfuturework,thecasestudyhaveprovidedmotivationtobelieveareinforcingstructurecouldexistinaS&OPcontext.TopManagementSupportThefindingsintheresearchbyAmbrose(2015)didnotsupporttheproposedpositiveinfluenceoftopmanagementsupportonconstructiveengagement.However,theroleoftopmanagementsupportshouldnotbediscarded.AsindicatedbythekeyinformantsfromtheS&OPprojectteamresourcesandtimecanneverbe securedwithout topmanagement support. Ina similarway, thedistributionof rewardsandincentivescannotbeapprovedwithouthighlevelsupport.Top management support was perceived as moderate by the respondents in the questionnaires. Apositive,butnotsignificanteffectonconstructivewasfoundduringquantitativeanalysis.Ambrose(2015)suggesttopmanagementcouldbeofparticular importanceduringtheearlystagesofaS&OPprocessimplementation, since during this stage resources and time have to be made available for thedevelopmentandintroductionofthenewprocess.Duringtheinterviewstherespondentsindicatedtheywereundecidedabouttheleveloftopmanagementsupport. However, they did acknowledge the time and resources that were made available for theimplementationofthenewS&OPprocess.Onerespondentindicateswithouttopmanagementsupportthenewprocesswouldn’thavehappened.Thesestatementsareinlinewiththeobservationduringthecasestudy.Althoughtopmanagementwasnotactivelyinvolvedinthedevelopmentandimplementation,adequatetimewasmadeavailablefortheS&OPteam.Althoughasignificantrelationbetweentopmanagementsupportandconstructiveengagementwasnotfoundinthisresearch,findingssuggesttopmanagementdoesplayanimportantroleinthesuccessoftheS&OPprocess.Furtherresearchisneededtoprovidetheconclusivenatureoftopmanagementsupport,andhowitaffectstheotherfactorsintheresearchmodel.Still,sinceanyS&OPprocessinitiativewillclaimtime and resources of the people involved,managers should acknowledge topmanagement supportshould always be secured before initiating any S&OP initiative. Since top management support isrecognizedasthesinglemostimportantdriverofsuccessforanysignificantchangewithinanorganization(Li&Lin,2006),failingtoearnsupportoftopmanagementcouldleadtofailureoftheS&OPinitiative(Milliken,2008).
5.5FutureworkInfutureworktheproposedmodelshouldbeanalyzedandvalidatedusingalargersampleofparticipants,preferablyworkingindifferentorganizationsandindustries.PerspectivesofallstakeholdersoftheS&OPprocessshouldbetakenintoaccount.Toensurethis,multiplepeopleoperatingindifferentdepartmentsofanorganizationshouldbeinterviewed.IntheresearchbyAmbrose(2015)asamplesizeofaround100respondents provided significant findings. In addition to increasing the sample size, theperiodof theresearchcouldbeextended.Thiswouldallowaresearchertotrackthedevelopmentoffactorsduringalongerperiodtime,andgetmoreinsightintohowthesefactorsimpactconstructiveengagement.Futureworkhasthepotentialtoextendtheproposedmodelbyaddingfactors.Especiallythereinforcingstructure, representing the effect of S&OP performance on constructive engagement is in need ofadditionalresearch.BothcaseswheretheS&OPperformanceishigherandlowerthanexpectedshouldbeanalyzed.ThiscouldprovideinsightintothelegitimacyofareinforcementstructureasproposedbyOlivia&Watson(2011),andincludedintheresearchmodelinthisthesis.
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ThepreviousmodelsbyAmbrose(2015)andOlivia&Watson(2011)discussedinthisthesisareconductedintheUnitedStatesofAmerica.Itcouldbeinterestingtoconductcasestudiesindifferentcountriesandcontinents.Culturalfactorscouldbetakenintoaccount.Forinstance,Asiancountriescouldshowhigherlevelsofcentralization,andAmericancasestudiescouldshowmoreimportancewithregardstothefactorrewardsandincentives.Themodelscouldbecompared,takingculturaldifferenceintoaccount.FinallytheroleoftopmanagementsupportinthecontextoftheS&OPprocessshouldbeinvestigatedinmoredetail,specificallyintoduringwhichphaseofthisfactorisofmostimportance.6. Conclusion
Thepurposeof thismaster thesis report is to identify the factors affecting constructive engagement,particularlyintheearlystagesofaS&OPprocessimplementation.AnalysisofpreviousworkindicatestheneedforthedevelopmentofacomprehensiveunderstandingofhowS&OPshouldbeimplemented.ThisneedisevidentbythehighpercentageofS&OPprocessimplementationinitiativesthatdonotachievetheintendedresults(Milliken,2008;Wagner,2013).The improved performance associated with implementing a S&OP process is highly dependent onachievingamixofcollaborationandfunctionalconflict,thatisrequiredinacross-functionalteam-basedsettingsuchastheS&OPprocess.Giventhissetting,constructiveengagementis identifiedasacrucialfactorinthesuccessofaS&OPprocess.Anintegratedmodeloffactorsconsideredtoaffectconstructiveengagementisanalyzedquantitativelyandqualitativelywiththehelpofacasestudy.ThefindingsofthiscasestudysuggestthefactorssocialcohesionandcentralizationarecrucialfactorsforachievingconstructiveengagementduringtheearlystagesofaS&OPprocessimplementation.Disputealimitedsample,significanteffectsonconstructiveengagementwereidentified.Whilehighlevelsofsocialcohesionpositivelyaffectconstructiveengagement,centralization reducesconstructiveengagement intheS&OPprocess.Theothersevenfactorsintheproposedmodelwerenotfoundtosignificantlyaffectconstructive engagement. Still, findings from the case study indicate securing the support of topmanagement is identifiedasvital forachievinganyoperationalchanges.Observationsduringthecasestudysuggest informingandengaging thestakeholderscan increase theperceived levelofproceduralquality.The findings of the case study suggest constructive engagement can be achieved despite theabsenceofhighlevelsofresourcesandtime,andrewardsandincentivestiedtooutcomesoftheS&OPprocess.Finally,thefindingssuggestconstructiveengagementcanbepresentdespitemoderatelevelsofsuperordinateidentityandinformationquality.Theempiricaland theoreticalgroundingsof theproposedmodel suggest thepotential formeaningfulimplications for both researchers and practitioners. The internal validity of the research suggest thefindings could be applicable to similar cases. For researchers the model provides the integration ofpreviouswork.Themodelcanserveasthefoundationforadditionalresearchwherefactorsareaddedorsubtractedfromthemodel,basedonfindingsofquantitativeorqualitativeresearch.PractitionerscanbenefitfromthepresentedfindingsfromanorganizationthatwasintheearlystagesofimplementingaS&OPprocess.TheproposedmodelcanserveasaframeworktoidentifythefactorswhichshouldbeincorporatedduringtheimplementationofaS&OPprocess.Duringthecasestudy,respondentsindicatedthefactorsintheproposedmodelcanserveasaguidelineformanagersduringaS&OPprocessimplementationinitiative.Thesmallsamplesizeavailableduringthecasestudyprohibitedconclusivefindings,particularlyintermsofexternalvalidity.Therefore,additionalresearchisrecommendedtofurtherrevealtheroleandrelationsoftheidentifiedfactorsinaS&OPcontext.
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Appendix
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Appendix2–Ambrose(2015)ResearchSummaryHyptheses
• H1:ThereisaninvertedU-shapedassociationbetweensocialcohesionamongS&OPteammembersandconstructiveengagementoftheS&OPteam.
• H2:ThereisapositiveassociationbetweensuperordinateidentityoftheS&OPteamandconstructiveengagementoftheS&OPteam.
• H3:ThepositiveassociationbetweensuperordinateidentityoftheS&OPteamandconstructiveengagementoftheS&OPteamwillbestrengthenedassocialcohesionamongteammembersincreasesfromlowtomoderatelevels.
• H4:ThepositiveassociationbetweensuperordinateidentityoftheS&OPteamandconstructiveengagementoftheS&OPteamwillbeweakenedassocialcohesionamongteammembersincreasesfrommoderatetohighlevels.
• H5:ThereisapositiveassociationbetweenS&OPrelatedinformationqualityandconstructiveengagementoftheS&OPteam.
• H6:ThereisapositiveassociationbetweenproceduralqualityoftheS&OPprocessandconstructiveengagementoftheS&OPteam.
• H7:ThereisapositiveassociationbetweentopmanagementsupportforS&OPandconstructiveengagementoftheS&OPteam.
• H8:ThereisanegativeassociationbetweencentralizationandconstructiveengagementoftheS&OPteam.
• H9:ThereisapositiveassociationbetweenS&OPteam-basedrewards/incentivesandconstructiveengagementoftheS&OPteam.
• H10:Theassociationbetweenrewards/incentivesandconstructiveengagementoftheS&OPteamwillbeweakenedasS&OPrelatedinformationqualityincreases.
• H11:Theassociationbetweenrewards/incentivesandconstructiveengagementoftheS&OPteamwillbeweakenedasproceduralqualityoftheS&OPprocessincreases.
• H12:Thereisapositiveassociationbetweenresources/timeallocatedtoS&OPteammembersandconstructiveengagementoftheS&OPteam.
• H13:ThereisapositiveassociationbetweenconstructiveengagementoftheS&OPteamandS&OPperformance.
• H14:Thegreaterthemarketturbulence,thestrongertheassociationbetweenconstructiveengagementoftheS&OPteamandS&OPperformance.
• H15:Thegreaterthetechnologicalturbulence,thestrongertheassociationbetweenconstructiveengagementoftheS&OPteamandS&OPperformance.
Sample:100respondents,consistingof57respondersrepresentingsalesand44respondersrepresentingoperations.Questionnaireitems:
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SocialCohesion:ThisstudyadoptedthesocialcohesionscalefromNakataandIm(2010)containingfouritems.Theitemswereratedonaseven-pointLikert-typescale,with1=“StronglyDisagree”and7=“StronglyAgree”andtheCronbach’salphaforthismeasurewas.89.SuperordinateIdentity:ThisstudyusedthesuperordinateidentityscalefromNakataandIm(2010)containingsixquestions.Theitemswereratedonaseven-pointLikert-typescale,with1=“StronglyDisagree”and7=“StronglyAgree.”TheCronbach’salphascorewas.91.InformationQuality:ThisstudyadoptedtheinformationqualityscalefromLiandLin(2006)containingfiveitems.TheitemswereratedonaLikert-typescale,with1=“StronglyDisagree”and5=“StronglyAgree”andtheCronbach’salphascoreforthismeasurewas.88.ProceduralQuality:TheplanningprocessformalizationscalefromNakataandIm(2010)wasadaptedforthisstudy.Theitemswereratedonaseven-pointLikert-typescale,with1=“StronglyDisagree”and7=“StronglyAgree”withaCronbach’salphascoreof.86.TopManagementSupport:ThisstudyusedthetopmanagementsupportscalefromLiandLin(2006)containingfouritems.Theitemswereratedonaseven-pointLikert-typescale,with1=“Never”and7=“Always.”Thescaleanchorsweremodifiedfromtheiroriginalformas“StronglyDisagree”and“StronglyAgree”andthescalepointsweremodifiedfrom5to7inordertomitigatecommonmethodvariance.TheCronbach’salphawas.89.Centralization:ThisstudyusedthecentralizationscalefromMenonetal.(1997)containingfiveitems..TheitemswereratedonaLikert-typescale,with1=“StronglyDisagree”and7=“StronglyAgree”withaCronbach’salphascoreof.89.Theoriginalscalepointsweremodifiedfrom5to7inordertomitigatecommonmethodvariance.RewardsandIncentives:Therewardsandincentivesscalecontainseightitemsadaptedandbasedlooselyonthejoint-rewardscalesusedinXieetal.(2003)andSongetal.(2007).Theitemswereratedonafive-pointLikert-typescale,with1=“Never”and5=“Always.”TheCronbach’salphameasureforthisscaleindicatedareliabilityscoreof.87.Resources/Time:ThescaledevelopedbyAmbrose(2015)containssevenitemsnewlycreatedforthisstudy.Theitemswereratedonafive-pointLikert-typescale,with1=“StronglyDisagree”and5=“StronglyAgree”withaCronbach’salphascoreof85.ConstructiveEngagement:Theconstructiveengagementscaleiscomposedoftwodimensions:collaborationandfunctionalconflict.Forthecollaborationdimension,thisstudyuseditemsfromKahnandMentzer(1998)andcollaborationdescriptorsfromMinetal.(2005).Itconsistsoffouritemsratedonaseven-pointLikert-typescale,with1=“Never”and7=“VeryFrequently”,achievingaCronbach’salphascoreof.88.Functionalconflictwasmeasuredusingthesix-itemscalefromMasseyandDawes(2007)ratedonaseven-pointLikert-typescale,with1=“Never”and7=“VeryFrequently.”TheCronbach’salphascoreforthefunctionalconflictdimensionwas.81.AppendixTable1:HypothesistestingresultsAmbrose(2015)
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Appendixfigure1:HypothesistestingresultsmodelAmbrose(2015)
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Appendix3–Questionnaire
QuestionnaireS&OPMasterThesisStijnMoons
Dear S&OP Team member, for my Master Thesis I am conducting a research study about the S&OP process. With this questionnaire I would like to gain insight into your experiences and opinions about the implementation of the S&OP process at your organization. This includes the changed roles of the Master Scheduler and the Demand Planners. Results from this questionnaire will not be shared with other team members. Your answers will be used as input for a follow-up interview with me. With your answers in this questionnaire and the final interview, I hope to prove the value of implementing the S&OP process at your organization. Since the process has not yet been fully developed and implemented, please answer the question based on your expectations once the process has been implemented. The questionnaire consists of 10 constructs, and will take 10-15 minutes to complete. Thank you! Stijn Moons
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Social Cohesion: Thinking about the S&OP team, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
1 Members of the S&OP team are very comfortable with each other.
2 Members of the S&OP team are very friendly with each other.
3 Our S&OP team has a very pleasant working atmosphere.
4 Members of the S&OP team are committed to maintaining close interpersonal relationships.
Super ordinate identity:
Thinking about the S&OP team, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
1 Members of the S&OP team are committed to common project objectives.
2 Members of the S&OP team feel strong ties to the team. 3 Members of the S&OP team behave like a unified team. 4 Members of the S&OP team value their membership in
the team.
5 Members of the S&OP team feel that they have a personal stake in the success of the team.
6 Members of the S&OP team behave like departmental representatives who are driven by their respective departmental agendas. (a)
Top Management Support:
Thinking about the S&OP process at your company, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Und
ecid
ed
Agr
ee
Stro
ngly
A
gree
1 Top management considers the S&OP process to be
important.
2 Top management supports the S&OP team with the resources that we need.
3 Top Management regards S&OP planning as a high priority item.
4 Top Management participates in S&OP planning and its optimization.
68
Centralization: Thinking about the S&OP process at your company , to what extent do you agree or disagree with the following statements: St
rong
ly
Dis
agre
e
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
There can be little action taken by the S&OP team until upper management approves.
Decisions made purely by the S&OP team would be quickly discouraged by upper management.
Even small matters have to be referred to upper management for a final answer.
We have to ask upper management before we do almost anything.
Any decision that we make as an S&OP team has to have approval from upper management.
Information Quality:
Thinking about the S&OP process at your company, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Und
ecid
ed
Agr
ee
Stro
ngly
A
gree
1 Information exchange within our S&OP team is timely.
2 Information exchange within our S&OP team is accurate.
3 Information exchange within our S&OP team is complete.
4 Information exchange within our S&OP team is adequate.
5 Information exchange within our S&OP team is reliable.
Rewards and Incentives:
Thinking about the S&OP process at your company, to what extent do the following things occur?
Nev
er
Rar
ely
Und
ecid
ed
Freq
uent
ly
Alw
ays
1 Our senior management promotes team loyalty over functional loyalty.
2 Team members are evaluated based on team performance instead of individual performance.
3 Departments share equally in the rewards from achieving S&OP goals
4 There are team based rewards for achieving customer service targets.
5 There are team based rewards for achieving inventory management targets
6 Formal evaluation criteria are used for S&OP teamwork.
7 The team receives recognition when S&OP goals are exceeded.
69
8 The team receives financial incentives for exceeding S&OP goals.
Procedural Quality:
Thinking about the S&OP process at your company, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
1 In our S&OP process, plans have a specific format that is used by everyone.
2 We have clearly defined procedures for completing each step in the process.
3 We know which information sources are to be used in developing S&OP plans.
4 We have a precise timetable for completing the S&OP process.
Resources and Time:
Thinking about the S&OP process at your company, to what extent do you agree or disagree with the following statements:
Stro
ngly
D
isag
ree
Dis
agre
e
Und
ecid
ed
Agr
ee
Stro
ngly
A
gree
1 Members of the S&OP team have adequate time to work on S&OP-related tasks.
2 Members of the S&OP team receive education on S&OP best practices.
3 Members of the S&OP team rarely miss scheduled S&OP meetings due to conflicting agendas.
4 The information technology supporting our S&OP process is adequate.
5 Sufficient time is allocated for the S&OP process to be completed.
6 Our company provides adequate resources to support the S&OP process.
7 Members of the S&OP team receive training on effective teamwork practices.
Constructive Engagement:
During the past six months, to what degree did the S&OP team pursue the following activities and experience the following conditions:
Nev
er
Ver
y R
arel
y R
arel
y
Und
ecid
ed
Occ
asio
nall
y
Freq
uent
ly
Ver
y Fr
eque
ntly
Collaboration 1 Engage in joint planning. 2 Have a mutual understanding. 3 Informally work together. 4 Achieve goals collectively.
70
Functional conflict 1 Have consultative interaction and useful
give-and-take.
2 Differing opinions or views focus on issues rather than individuals
3 Even people who disagree respect each other’s viewpoints.
4 Disagreements between teammates impair discussion of issues. (a)
5 There are constructive challenges of ideas, beliefs, and assumptions.
6 Team members are comfortable raising dissenting viewpoints.
(a)= reverse coded Market Turbulence:
Stro
ngly
D
isag
ree
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
1 In our kind of business, customers’ product preferences change quite a bit over time.
2 Our customers tend to look for new products all the time.
3 We are witnessing demand for our products and services from customers who never bought them before.
4 New customers tend to have product-related needs that are different from those of our existing customers.
5 We cater to much the same customers that we used to in the past. (a)
6 Sometimes our customers are very price sensitive, but on other occasions, price is relatively unimportant.
(a)= reverse coded Technological Turbulence:
Stro
ngly
D
isag
ree
Dis
agre
e
Und
ecid
ed
Agr
ee
Stro
ngly
A
gree
1 The technology in our industry is changing rapidly. 2 Technological changes provide big opportunities in
our industry.
3 A large number of new product ideas have been made possible through technological breakthroughs in our industry.
4 Technological developments in our industry are rather minor. (a)
5 It is very difficult to forecast where the technology in
71
our industry will be in the next 2-3 years. (a)= reverse coded
S&OP Performance: Thinking about the S&OP process at your company, to what extent do you agree that the process (in the future) will accomplish the following: St
rong
ly
Dis
agre
e
Dis
agre
e
Slig
htly
di
sagr
ee
Und
ecid
ed
Slig
htly
A
gree
Agr
ee
Stro
ngly
A
gree
1 Increased forecast accuracy. 2 Increased supply chain visibility and hence reduced
the risk of supply chain disruption
3 Reduced inventory levels and thus cost of capital while maintaining or improving customer service levels.
4 Improved customer satisfaction levels. 5 Improved product availability for marketing and
promotional campaigns.
6 Reduced the number of expedited shipments and rush orders.
7 Reduced the amount of obsolete products. 8 Increased the return on assets (ROA). 9 Increased capacity utilization. 10 Better balanced production and sourcing costs
against transportation and safety stock costs.
11 Driven revenue growth through clearer focus on high margin products.
12 Increased sales and generated top line revenues.
72
Appendix4-QuestionnaireResultsSocialcohesionThisthesisresearchhasadoptedthesocialcohesionscalewithfourquestions,asdevelopedbyNakata&Im(2010),andadaptedforS&OPbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceivedlevelsofsocialcohesiononaseven-pointLikertscale,withthelowestscorebeing“stronglydisagree”,and the highest score being “strongly agree”. In the graphs the lowest score translates to 0, and thehighestscoreto1.ThegraphspresentedinFigure12showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.Figure12:Socialcohesionresponses
SuperordinateidentityThis thesis researchhas adopted the superordinate identity scalewith sixquestions, asdevelopedbyNakata&Im(2010),andadaptedforS&OPbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceived levels of superordinate identity on a seven-point Likert scale, with the lowest score being“stronglydisagree”,andthehighestscorebeing“stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure13showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
0
0.2
0.4
0.6
0.8
1
1 2 3 4
FigureXXX:SocialCohesion
Pr
S&OP
Rest
Average
73
Figure13:Superordinateidentityresponses
Visual inspection showsmoderate to high perceived levels of superordinate identity, with a notableexceptionforquestion6.ThisquestionmeasurestowhatextentS&OPmembersareabletoabandontheirroleasdepartmentalrepresentatives.TheresponsesseemtoindicatethatS&OPteammembersaredrivenbytheirdepartmentalagenda.Thefunctionalbiasthatcouldstemfromthisbehaviorcanmaketheformingofgroupidentitychallenging(Alexander,2013;Wallace&Stahl,2008).InterestinglytheS&OPteamscoresthehighestperceivedlevelsofsuperordinateidentity.ThismakesenseastheserespondentaremostactivelyinvolvedintheS&OPprocess,asthusconsiderthemselvespartoftheteam.TopmanagementsupportThisthesisresearchhasadoptedthetopmanagementsupportscalewithfourquestions,asdevelopedbyLiandLin(2006),andadaptedforS&OPbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceived levelsof topmanagement supportona five-point Likert scale,with the lowest scorebeing“stronglydisagree”,andthehighestscorebeing“stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure14showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
0
0.2
0.4
0.6
0.8
1
1 2 3 4 5 6
FigureXXX:SuperordinateIdentity
Pr
S&OP
Rest
Average
74
Figure14:Topmanagementsupportresponses
CentralizationThisthesisresearchhasadoptedthecentralizationscalewithfivequestions,asdevelopedbyMenonetal.(1997)andadaptedforS&OPbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceivedlevelsoftopmanagementsupportonaseven-pointLikertscale,withthelowestscorebeing“stronglydisagree”,andthehighestscorebeing“stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure15showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.Figure15:Centralizationresults
0
0.2
0.4
0.6
0.8
1
1 2 3 4
TopManagementSupport
Pr
S&OP
Rest
Average
0
0.2
0.4
0.6
0.8
1
1 2 3 4 5
Centralization
Pr
S&OP
Rest
Average
75
Visualinspectionshowslowperceivedlevelsofcentralization,withanotabledifferenceforgroup3.Thisgroup has a number of participants being undecided about the level of centralization, and somerespondents that perceive centralization as present. Specifically the role of top management as theconcludingargumentinescalatedissuesmighthavefueledthisperception.
InformationQualityThisthesisresearchhasadoptedtheinformationscalewithfivequestions,asdevelopedbyMenonetal.(1997)andadaptedforS&OPbyAmbrose (2015).Theparticipantswereaskedtoratetheirperceivedlevelsofinformationqualityonafive-pointLikertscale,withthelowestscorebeing“stronglydisagree”,and the highest score being “strongly agree”. In the graphs the lowest score translates to 0, and thehighestscoreto1.ThegraphspresentedinFigure16showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
Figure16:Informationqualityresponses
Visual inspectionof thegraphs revealsanoverallundecidedperception.Most responseswereslightlypositive,slightlynegativeorundecided.Thismakessenseastheprocedurestoshareinformationwerestillbeingdevelopedatthetime.Rewards&incentivesThis thesis research has adopted the centralization scale with eight questions adapted for S&OP byAmbrose(2015),basedonpreviousresearch(Xieetal.,2003;Songetal.,2007).Theparticipantswereaskedtoratetheirperceivedfrequencyofteam-basedrewardsand incentivesonaseven-pointLikertscale,withthelowestscorebeing“Never”,andthehighestscorebeing“Always”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure17showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
0
0.2
0.4
0.6
0.8
1
1 2 3 4 5
InformationQuality
Pr
S&OP
Rest
Average
76
Figure17:Rewards&incentivesresponses
Visualinspectionofthegraphsshowsmostmembersfeelteam-basedrewardsandincentivesaregivenoutinfrequentlyorarestillundecided.Noteworthyarethepeaksforquestions1,3and7.Question3canbeexplainedbyalmostallmembersbeingundecided,whichtranslatestoascoreof0.5.Inquestion1and7loyaltyandrecognitionarementionedrespectively.Itmakessensethatthatthesetwoquestionsarescorehigher,sincetheydon’tcontainareferencetorewards.Therespondentstendedtoassociatethiswithmoney,whileloyaltyandrecognitionaresocialrewards.Duringthecasestudy,semi-structuredinterviewswereconductedwiththeS&OPteammembersattheresearchorganization.Intheseinterviewsitbecameapparenttheresearchorganizationdoesinfactnottie anymoney-based rewards and incentives to the performances linked to the S&OP process.Manyrespondentsreportedbeingunsureorundecided,sincenoformalcommunicationaboutthistopicwasprovided.Theprogrammanagerdidconfirmtheimplementationofteam-basedrewardsandincentiveswasnotintheshorttermplans,butitwouldbeanicethingtohave.OfparticularinterestarequotesbyamemberoftheS&OPcoreteam,whoindicatednon-monetaryrewardsandincentivesincludetheaccesstocertaininformation,andbeinginvitedtocertainmeetings.Inpreviousliteraturerewardsandincentivesareproposedaskeyprerequisitesforgroupeffectiveness.IntheresearchbyAmbrose(2015)thisvariableisidentifiedasthesinglemostinfluencerofconstructiveengagement.TheinsightsfromtheinterviewsindicatetheoutcomesorperformanceoftheS&OPprocessprovidethemostimportantincentivetoengageintheS&OPprocess.ThisideaisinlinewiththefindingsofOlivia&Watson (2011),whopropose thepositive relationbetweenperceivedprocess quality andperceived benefit of participating in the S&OP process. This in turn positively affects the levels ofconstructiveengagement(Olivia&Watson,2011).TheperformanceoftheS&OPprocessisthoughtto
0
0.2
0.4
0.6
0.8
1
1 2 3 4 5 6 7 8
Rewards&Incentives
Pr
S&OP
Rest
Average
77
increasethe levelofconstructiveengagement istheoutcomesarealignedwithS&OPteammembers’rewardsandincentives.ProceduralqualityThisthesisresearchhasadoptedtheproceduralqualityscalewithfourquestions,asdevelopedbyNakataand Im (2010), and adapted for S&OP by Ambrose (2015). The participantswere asked to rate theirperceivedlevelsofproceduralqualityonaseven-pointLikertscale,withthelowestscorebeing“stronglydisagree”,andthehighestscorebeing“stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure18showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
Figure18:Proceduralqualityresponses
Visualinspectionofthegraphsshowsamoderatelypositivelevelofperceivedproceduralquality.Itmakessensetherespondentwerestillundecidedormoderatelypositiveabouttheproceduralquality,giventheprocess was still under development at the time of the questionnaire. In some cases, considerablediscussionsoccurredabouttheclarityandscopeoftheprocess.Duringthecasestudy,semi-structuredinterviewswereconductedwiththeS&OPteammembersattheresearchorganization.Intheseinterviewsitbecameapparenttheparticipantswerequiteconfidentabouttheproceduralquality.Onerespondentmentionedthenewprocesssharesalotofsimilaritiestothenewprocess,makingiteasytounderstand.Anotherrespondentsreportedthatthenewprocessdesignlooksgoodonpaper,butawarenessandinvolvementstillhavetoberaisesacrossdifferentfunctionalgroups.Otherissuesthatwerebroughtuparealackofclarityabouttheoverallscopeandgoalsoftheprocess.Related,thetimelineandthe‘dotonthehorizon’werenotalwaysperceivedascleartotherespondents.Theprojectmanageragreedthatimprovementsarerequired.Abettercommonunderstandinghastobecreatedamongtheparticipants, includingspeakingthesamelanguage,andclarityabouttherolesand
0
0.2
0.4
0.6
0.8
1
1 2 3 4
ProceduralQuality
Pr
S&OP
Rest
Average
78
responsibilities. Lastly, thememberof the salesdepartment reported someuncertainty regarding theperceivedqualityoftheS&OPprocess.Intheliteratureproceduralqualityisidentifiedasanimportantpredictorforgroupeffectiveness.IntheresearchbyAmbrose(2015)adirectrelationbetweenconstructiveengagementandS&OPperformancewasfound.Thisfindingis in linewiththecasestudyresearchbyOlivia&Watson(2011)whoproposeconstructiveengagementcanactuallypositivelyimpacttheproceduralquality,nottheotherwayaround.This variable is thought to behave is a similar way to information quality, were cross-functionalengagementisarequirementtoachieveanagreed-uponprocessinthefirstplace.Thereforeconstructiveengagementisthoughttopositivelyaffectproceduralquality.Thisleadstotheeighthandninthproposedvariables.ResourcesandtimeThisthesisresearchhasadoptedtheresources/timescalewithsevenquestionsdevelopedbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceivedavailabilityofresourcesandtimeonaseven-pointLikertscale,withthelowestscorebeing“stronglydisagree”,andthehighestscorebeing“stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.ThegraphspresentedinFigure19showtheperceptionsofthethreegroups,aswellastheoverallaveragedline.
Figure19:Resources&timeresponses
Visual inspectionof thegraphs shows the respondentsareundecidedor slightlydisagreewithhavingenoughtime.TheyarealsounsureiftheywillreceiveadditionaltrainingtosupporttheS&OPprocess.Theinformationtechnologyisperceivedasadequate,butonlyjust.
0
0.2
0.4
0.6
0.8
1
1 2 3 4 5 6 7
Resources&Time
Pr S&OP Rest Average
79
In the literaturethe lackof timesandresources is identifiedasapossiblecausefor the lowerpriorityS&OPrelatedtasksreceiveincomparisontooperationactivities.Theavailabilityofadequatetimeandresources, including IT facilities, can affect the levels of constructive engagement. In the research byAmbrose(2015)asignificantrelationwasnotfound.HoweverfromtheobservationsitwasidentifiedthatalackofresourcescandecreasethewillingnesstoengageintheS&OPprocess.Thisleadstothefollowingproposedvariable. ConstructiveengagementCollaborationFigure20:Constructiveengagementresponses
This thesis research has adopted the collaboration scale with four questions developed by Ambrose(2015),basedonindicatorsbyKahnandMentzer(1998)andMinetal.(2005).Theparticipantswereaskedto rate theirperceived frequencyofcollaborationonaseven-pointLikertscale,with the lowestscorebeing“never”,andthehighestscorebeing“veryfrequently”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.
0
0.2
0.4
0.6
0.8
1
C1 C2 C3 C4
Collaboration
Pr
S&OP
Rest
Average
80
FunctionalconflictFigure21:Functionalconflictresponses
ThisthesisresearchhasadoptedthefunctionalconflictscalewithsixquestionsdevelopedbyMassey&Dawes(2007),andadaptedbyAmbrose(2015).Theparticipantswereaskedtoratetheirperceivedfrequencyoffunctionalconflictonaseven-pointLikertscale,withthelowestscorebeing“never”,andthehighestscorebeing“veryfrequently”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.
S&OPperformance
ThisthesisresearchhasadoptedtheS&OPperformancescalewithsixquestionsdevelopedbyWagneretal.(2013),andadaptedbyAmbrose(2015).TheparticipantswereaskedtoratetheirperceivedlevelofS&OPperformanceonaseven-pointLikertscale,withthelowestscorebeing“stronglydisagree”,andthehighestscorebeing“Stronglyagree”.Inthegraphsthelowestscoretranslatesto0,andthehighestscoreto1.
0
0.2
0.4
0.6
0.8
1
FC1 FC2 FC3 FC4 FC5 FC6
FunctionalConflict
Pr
S&OP
Rest
Average
81
Appendix5-SMARTPLSModelandresults
82
SMARTPLSErrormessage–removequestions
83
SMARTPLS–Bootstrappingresults(significance)
84
SMARTPLS–Bootstrappingmethod1variableatatime
85
SmartPLSCorrelations,Mean,%ofMaximumscore,andStandarddeviations 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.1.Centralization 0.929 2.ConstructiveEngagement -0.509 0.640 3.InformationQuality 0.037 0.494 0.658 4.ProceduralQuality -0.339 0.374 0.266 0.685 5.Resources&Time -0.517 0.875 0.299 0.000 0.463 6.Rewards&Incentives -0.701 0.789 0.036 0.214 0.778 0.623 7.S&OPPerformance -0.456 0.686 -0.081 -0.003 0.661 0.625 0.652 8.SocialCohesion -0.509 0.559 -0.317 0.337 0.517 0.817 0.597 0.835 9.SuperordinateIdentity -0.582 0.768 -0.075 0.146 0.837 0.770 0.828 0.782 0.589 10.TopManagementSupport -0.409 0.376 0.668 0.730 0.091 0.170 -0.168 -0.027 -0.017 0.609
Mean 2.5 5.62 3.44 5.32 3.17 2.46 5.43 6.0 5.29 3.5%ofmaximumscore 0.36 0.80 0.69 0.76 0.63 0.49 0.78 0.86 0.76 0.70StandardDeviation 1.07 1.10 0.73 0.97 0.93 0.98 1.21 0.68 1.65 0.68
Resultsfrombootstrapping ConstructiveEngagement Nr. Variable β p-value Result1 SocialCohesion 0.684 0.001 Supported2 SuperordinateIdentity 0.769 0.253 NotSupported3 TopManagementSupport 0.832 0.329 NotSupported4 Centralization -0.713 0.011 Supported5 InformationQuality 0.609 0.454 NotSupported6 ProceduralQuality 0.884 0.267 NotSupported7 Rewards&Incentives 0.901 0.146 NotSupported8 Resources&Time -0.907 0.313 NotSupported
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