Integration logistics capabilities (ILCs)

ILCs involve two dimensions, i.e. internal coordination logistics capabilities and external coordination logistics capabilities. Logistics provides the platform to involve other functional areas to work with closely to plan, integrate and synchronize cross-functional activities (Mentzer et al. 2004; Gligor and Holcomb 2014a). To simplify synchronous and synergistic activities, logistics prompt the implementation of cross-functional policies standardization and procedures standardization, compliance, simplification, and structural adaptation within the organization. Strategic logistics encompasses the ability to coordinate and integrate several interdependent operations simultaneously across major functional areas, thus enabling additional dimensions and ways in which logistics can create incremental customer-value (Langley Jr. and Holcomb 1992). Logistics capabilities are key elements in the strategic integrative process as they constitute a source of expected benefits of enhancing effectiveness (customer service) and efficiency (capital and cost reduction) through information processing and two-way communications (information management) in a strategic context (generating customer value) to gain a sustainable competitive advantage, all expected at long-term organization survival and profitability (Esper et al. 2010). Logistics capabilities should lead to the achievement of competitive customer service superior to the competitors at the lower total-cost possible to generate customer value (Bowersox et al. 2002). Thus, the logistics personnel are in a particular position to dynamically coordinate with other functions the pursuit of two goals, i.e. effectiveness and efficiency, to reach the goal of generating customer value.

Externally, through the expansion of logistics outside the structure of the firm to involve customers as well as suppliers, the parties encompassed in the logistics processes will gain benefits including enhancing customer value, operational effectiveness, and asset productivity (Langley Jr. and Holcomb 1992). The firms that adopt a supply chain perspective perceive logistics as one of the main strategic initiatives of the firm. As a result, logistics constitute a unique capability to synchronize and integrate internal and external resources within and across the supply chain partners, enabling them to generate and develop the firm’s supply

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chain capability by joining operational and systems interfaces to reduce redundancy whereas preserving operational coordination (Mentzer et al. 2004).

In highly uncertain environments affecting the flow of both sides of the supply chain (i.e. upstream and downstream), logistics plays a crucial role to enable a rapid adaptation of the production and decrease inventory, leading consequently to a reduction in the total cost. When information is particularly a core resource in the firm, logistics becomes more important (Småros et al. 2003). In contrast, the logistics boundary-spanning capabilities are not present if potential opportunism (i.e. selfish pursuing behavior with astuteness to take advantage of circumstances (Heritage American Dictionary 2011)) avoids collaborative efforts and relationships between the supply chain partners. Therefore, it is required to build relationships between the different firms that participate in a supply chain before starting to work together in the pursuit of a common goal (Bowersox et al. 1999; Mentzer et al. 2001; Hansen et al. 2008). Additionally, vertical integration/coordination is a feasible option to acquire information from the business environment. For example, Vaaland and Heide (2007) examined empirically the information-technology gap between SMEs and large enterprises, where SMEs clearly place far beyond the large enterprises. The author proposed horizontal cooperation or vertical integration as a feasible solution to address this issue.

Empirical research has showed the positive impact of integrated logistics capabilities across the supply chain partners in both the firm and supply chain performance (Prajogo and Olhager 2012; Gligor and Holcomb 2014b; Mandal 2015; Mandal and Rao Korasiga 2016). The ability to integrate the logistics capabilities existing across the supply chain constitutes a dynamic capability. In markets characterized by high-velocity in the transactions, dynamic capabilities are unstable, experiential and hard to replicate procedures (Eisenhardt and Martin 2000). Thus, from the RBV, the skill to join logistics capabilities across the supply chain partners represents a dynamic capability that might lead to gain a sustainable competitive advantage. The sustainable competitive advantage analyzed in this work is SCF.

The RBV and the constituency-based view provide understanding about the role of logistics in SCM. The constituency-based view maintains that each functional area is an expert contributing with unique resources to the firm (Anderson 1982). Pfeffer and Salancik (2003) stated that the organizational behavior reveals the organization’s coalitional nature and the fashion in which the organization responds to the different forces present in the environment. Further, the authors argued that diverse organizational processes, regarded as “structures of coordinated behaviors”, might be understood by the willing for flexibility and autonomy in

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contrast to the necessity for exchanging resources in a stable way, i.e. sustainable resources exchange. A managed supply chain involves these types of parties as customers, distributors, suppliers, creditors, stockholders, government, labor, among different concerned publics. The firms guarantee the sustained sourcing of core resources by developing cooperative relationships in long-term. Ensuring demand as well as resources is possible as SCM occurs in an expanded supply chain consisting of external alliances or coalitions between suppliers, manufactures, distributors, and carriers, who are functional experts (Mentzer et al. 2001). Like with internal coalitions (i.e. firm’s functional areas), every supply chain partner, taking part in the implementation of SCM, is inhibited by the aims of the other partners. Therefore, SCM entails agreement among supply chain goals, and visions as well as on the logistics’ role within the supply chain. The main goals of SCM is to achieve economic benefits, create customer value and satisfactions and to gain a competitive advantage in the long-term for all the participants as well as the supply chain as a whole (i.e. as external alliance) (Mentzer et al. 2001). These goals are obtained by efficiently coordinating the internal and external transactions and processes.

In conclusion, logistics plays an exclusive role in enabling the implementation of SCM due to is unique attribute of coordinating cross-functional processes and actions, inside and outside the firm to perform a synchronized operation. Further, the role of logistics capabilities in SCM has be explained with respect to the RBV, constituency-based view as well as dynamic capabilities (Mentzer et al. 2004). Through the development of logistics capabilities the organization is able to perform its central competence of design of the supply chains, the development of core capabilities within a joined supply chain (Christopher 2016). Finally, the coordination and development of these logistics capabilities within the supply chain enhances its value-creation activities and they constitute a major source of competitive advantage.