University of Wollongong

Research Online
Faculty of Commerce - Papers (Archive) Faculty of Business

2012

Identifying barriers to internal supply chain

integration using Systems Thinking
Franciscus Bakker
University of Groningen

Tillmann Boehme
University of Wollongong, tbohme@uow.edu.au

Dirk Pieter van Donk

University of Groningen

Publication Details
Bakker, F., Boehme, T. & van Donk, D. (2012). Identifying barriers to internal supply chain integration using Systems Thinking. 4th
Production and Operations Management World Conference (pp. 1-10). Amsterdam: EurOMA.

Research Online is the open access institutional repository for the University of Wollongong. For further information contact the UOW Library:
research-pubs@uow.edu.au
Identifying barriers to internal supply chain integration using Systems
Thinking
Abstract
This exploratory site-centred research investigates barriers to internal supply chain integration in practice,
using systems thinking. A multi-method procedure termed the Quick Scan Audit Methodology is applied to
four engineering to order case companies from two different country settings to identify and categorize the
actual barriers to internal supply chain integration. The study establishes that the case-significant barriers to
internal supply chain integration chiefly relate to behavioral / cultural factors and the organizational
arrangement / structures imposed on employees. A cross-case comparison reveals two major clusters of
supply chain integration barriers termed “fire-fighting” and “functional-silo mentalities”. The fundamental
structures of these clusters are identified.

Keywords
barriers, systems, identifying, integration, chain, supply, internal, thinking

Disciplines
Business | Social and Behavioral Sciences

Publication Details
Bakker, F., Boehme, T. & van Donk, D. (2012). Identifying barriers to internal supply chain integration using
Systems Thinking. 4th Production and Operations Management World Conference (pp. 1-10). Amsterdam:
EurOMA.

This conference paper is available at Research Online: http://ro.uow.edu.au/commpapers/2778

 Identifying barriers to internal supply chain integration
using Systems Thinking

Frans Bakker (f.p.bakker@rug.nl)

Department of Operations, University of Groningen, The Netherlands

Tillmann Böhme
School of Management and Marketing, University of Wollongong, Australia

Dirk Pieter van Donk

Department of Operations, University of Groningen, The Netherlands

Abstract
This exploratory site-centred research investigates barriers to internal supply chain integration
in practice, using systems thinking. A multi-method procedure termed the Quick Scan Audit
Methodology is applied to four engineering to order case companies from two different country
settings to identify and categorize the actual barriers to internal supply chain integration. The
study establishes that the case-significant barriers to internal supply chain integration chiefly
relate to behavioral / cultural factors and the organizational arrangement / structures imposed
on employees. A cross-case comparison reveals two major clusters of supply chain integration
barriers termed “fire-fighting” and “functional-silo mentalities”. The fundamental structures of
these clusters are identified.

Keywords: Barriers to integration, supply chain integration, systems theory

1. Introduction
Integration of supply chains – either within or between organization - continues to be a subject
of significant research and debate within academe (Towill et al., 2002; Vickery et al., 2003;
Droge et al., 2004; Swink et al., 2007; Flynn et al., 2010). The concept of integration originates
from a systems perspective: because trade-offs and wider ranging decisions can be made based
on shared information and coordination, optimization of the whole system is held to achieve
better performance than a string of optimized sub-systems (Christopher, 1998). The purpose of
linking internal functions, suppliers, customers and hence of removing barriers that impede the
flow of materials and information is accordingly to improve organizational performance and/or
supply chain performance. (Van der Vaart & Van Donk, 2004; Goldman et al., 1995; Sabath,
1998). In-depth investigations of the internal barriers to supply chain integration are rare
though; noteworthy exceptions include those by Bagchi and Skjoett-Larsen (2002), van Donk
and van der Vaart (2005), and Whipple and Frankel (2000). Giménez (2004) pronounced that
the barriers to supply chain integration lack a commonly agreed classification schema. Pagell
(2004), Giménez (2004), Lambert and Cooper (2000) stated that there is still a lack of
understanding of the inhibitors/barriers to internal supply chain integration. According to
Richey Jr. et al. (2009), Stevens (1989), Lambert and Cooper (2000) such a lack of knowledge
regarding the internal chain would make the successful removal of seams and obstacles in the
entire supply chain a challenge. The limited research concerned with barriers in the internal
supply chain has focused on organizational structure, measurement and reward systems,

1
information technology, and operational skills e.g. Wisner et al. (2005), Ellinger et al. (2006),
Barki and Pinsonneault (2005), and Barratt (2004). Still, Storey et al. (2005) stated that much
of the supply chain literature underestimates organizational and behavioral complexities while
Ellinger et al. (2006) observed ‘a compelling need to develop a more comprehensive
understanding of the behavioral factors that facilitate (or inhibit) inter-functional
collaboration’. This remains an important issue since, despite more than 20 years of academic
study, there exists a significant gap between supply chain theory and practice, and with many
scholars reporting that only few companies engage in extensive or advanced supply chain
integration practices (Akkermans et al., 1999; Halldorsson et al., 2008; Towill et al., 2002,
Zailani & Rajagopal, 2005).
This leads us to believe that although the existence of barriers to supply chain
integration is acknowledged and the barriers categorized, research into the deeper behavioral
roots of these barriers is still needed. The main aim of our research is thus to further explore the
underlying behavioral grounds of barriers to supply chain integration by an explorative
method. The empirical context of this paper is four case studies in The Netherlands and in New
Zealand. The remainder of this paper is structured as follows: A review of relevant literature is
followed by description of the methodology used to expose the barriers to SCI in the four
cases. The four case companies are briefly described, findings are discussed and future research
avenues are highlighted.

Literature Review
Supply chain integration is perceived both as the extent to which an organization manages its
intra- and inter-organizational processes to achieve effective and efficient flows of products,
services, information, money and decisions with the objective of providing maximum value to
its customers (Bowersox et al., 2002, Frohlich & Westbrook, 2001; Naylor et al., 1999), and as
the endeavor of removing barriers that impede the realization of the utopian, fully integrated,
seamless supply chain (e.g. Childerhouse et al. 2011). The focus of this research will be on the
challenge of achieving a seamless supply chain rather than on the state of the supply chains
investigated (the barriers in the supply chains). Walker et al. (2008) discern that the majority of
barriers tend to be internal rather than external. Richey Jr. et al. (2009) conclude that it is more
meaningful to examine internal barriers because these are the ones a firm can directly control.
The scope of the present study is hence limited to close examination of internal supply chains,
which makes it different from the majority of papers that focus on inter-organizational SC
integration.
The academe generally agrees that careful examination of the barriers between and
within organizations is important as an understanding is crucial to their removal (Giménez,
2004; Romano, 2003). Storey et al., (2005) concentrated on the barriers to customer-responsive
supply chain management, which include factors inhibiting the integration of operations,
purchasing; Pagell (2004) targeted barriers in logistics; Walker et al., (2008) addressed barriers
to environmental supply chain management. The amount of research on how to achieve an
integrated supply chain is limited though, and a comprehensive study of the factors inhibiting
or enabling integration among the key internal supply chain functions is lacking (Pagell 2004).
In a recent review of 35 articles that were variously concerned with internal and external
benefits, barriers, and bridges to effective supply chain management, Fawcett et al. (2008)
concluded that the resisting forces arise both from the nature of the organization itself, as well
as from the people comprising the organization’s workforce and earlier, Fawcett et al. (2006)
revealed that managers at many firms find it more difficult to collaborate within the four walls
of their own company than with outside channel members. It is evident from the literature that
barriers to supply chain integration appear in many guises and that they also influence each
another (Jharkharia & Shankar, 2005). Nevertheless, relatively little research is devoted to

2
human factors and to the question of whether these human factors could perhaps form the
underlying causes for the barriers to supply chain integration recognized in literature. Because
of the systems foundations of the quest for supply chain integration and because of the
presumed interdependencies between the factors inhibiting that integration, a systems
perspective is occupied. According to Fawcett et al. (2007) Systems thinking is the holistic
process of considering both the immediate local outcomes and the longer-term system-wide
ramification of decisions. Whereas traditional functional thinking seeks the local optimum –
often at the expense of the overall system’s performance – systems thinking aligns efforts;
getting everyone to pull in the same direction. (pp. 74-75). Providing both a means of
understanding the situation and of communicating this understanding to others, systems
thinking offers a methodology for describing, analyzing, and planning complex systems of
different kinds (Jenkins, 1972; Parnaby, 1979). In this study, systems thinking is hence used in
studying inhibitors to supply chain integration and in uncovering their underlying causes.

Methodology
Systems theory forms the underlying basis for Quick Scan Audit Methodology (QSAM) and is
hence judged to be suitable to investigate barriers to internal supply chain integration in
practice. QSAM is a ‘rich picture’ procedure originating from the Logistics Systems Dynamics
Group at Cardiff University. A key characteristic of QSAM is that it aims to achieve an
optimum compromise between qualitative and quantitative methods of management theory
research, by making maximum use of resources (primarily) in field-based activities in the
search for ‘meaning of evidence’ (Eisenhardt, 1989). A comprehensive overview of the QASM
can be found in in Naim et al. (2002).
A key element of QSAM is that data extracted from the supply chain system is
analyzed using systems thinking principles to create a cause-effect diagram (Childerhouse and
Towill, 2004). Such procedures fulfill the integrated/systems thinking perspective requirement
of Edwards and Ram (2006), and also have two further strengths: the cause-effect diagram is
developed jointly by the onsite research team members (researcher triangulation is achieved);
and, by adopting a holistic/systems perspective, specific issues are combined to provide a
complete ‘rich picture’ of the focal company situation. In addition to the visual depiction of the
causes of observed uncertainties, rich pictures of cause-effect feedback loops also act as a
guide for future 'high leverage' (maximum benefit/minimum effort) process improvements.
Lindberg et al. (2003) emphasize that a chief advantage of the rich picture is in providing an
important focus for debate and understanding between various functions in an organization; so
that recommended process changes translate into informed agreement. Figure 1 presents one
example of such a rich picture.
Figure 1, which is based on an actual feedback session, indicates the main obstacles and
barriers obstructing the integrated flow of one Dutch based case company. These collectively
give rise to the observed ‘major pains’, labeled 'loss of spare-parts market share' and
'considerable inefficiencies' that emerged in the situation. The root causes for the identified
major pains are predominantly located in strategic management. The organization positions
itself as an engineering to order company. Yet, the company culture through all functions and
ranks remains manufacturing focused and over the past decade NL1 acquired and upgraded
much of the required manufacturing capabilities to allow for efficient production. The company
is financial performance criteria driven which results in a “busy focusness” and ultimately to
high levels of internal uncertainty resulting in the previously mentioned major pains.

3
 Policy  D eployment
Perceived  as  
manufacturing   Poor  KPI  
Company Irrelevant Consistency
company  vision Poor  Library  
Wanting  Policy   Management
Implicit  Core   Deployment
Competence
Fragmented  Strategy

Financial  
focus Financial   Busy-­‐focus  
performance   Company   on  Shop  
criteria  only Considerably   Low  Modularization  
focus  on   Floor
being  busy Inefficiencies &  Standardization
(lack  of)  
Reflection

Busy  F ocus

Complex  
material  Flow   Low  
Patterns Planning  
Accuracy
High  Machine   Loss  of  (spare-­‐ High  
Utilization  Objectives Queuing   High  re-­‐
parts)  market   Figures
work  ratio
share

Internal  Uncertainty
Silo  
Value  Stream  basics mentalities
Low  operator  
Lack  of   functionality
Customer   Poor  &  Internal  
Appreciation Value  Stream  
Poor  understanding   Definitions

of  Value  S tream  
Concept

Figure 1- Cause-effect diagram for case company NL1

In total four QSAM audits were conducted between 2006 and 2010. The focal companies
comprised two engineering to order companies from the Netherlands and two engineering to
order companies from New Zealand. The scope of the research was limited to the investigation
of internal processes and here in particular the Product Introduction Process and the Product
Delivery Process. Minor attention has been paid to the Marketing and Sales Process. All four
companies are of medium size, allowing for broadening the scope to more interdisciplinary
research including strategic management, finance as well as information systems (Böhme et al.,
2012). NZ1, NL1, and NL2 have a great amount of commonalities including product, market,
and value adding steps. NZ2 instead is best described as a boutique foundry, which includes in-
house patternmaking capabilities. The selection of New Zealand and Dutch engineering to
order companies allow for investigation of two distinct environmental settings, as well as
cross-case comparison. Table 1 provides a summary of the four case companies.

Table 1: Summary of the four medium-sized engineering to order case companies

Case Company Year Products Value Adding
NZ1 2006 Multi-tonne machine deployed Engineering, sheet cutting,
in construction sites machining and assembly

NZ2 2008 Design and manufacturer of Engineering, patternmaking,

special purpose machinery and foundry, large scale machining
components and welding

NL1 2010 Multi-tonne machine deployed Engineering, machining,

in the mining industry assembly, and testing.

NL2 2010 Multi-tonne machine deployed Engineering, procurement,

in the refinery industry assembly, and testing

4
Some 100 researcher-days in total were spent in the field investigating real world barriers to
integration. Those research days were approximately matched by the Quick Scan sponsor
through employee involvement of the sponsoring organizations. In all four cases, the general
procedures of QASM were maintained. To facilitate data triangulation, care was taken to
acquire overlapping data from different sources. In off-site meetings, researchers assessed the
acquired data to come to preliminary clustering of data in preparation of further on-site
research. After the second company visit the team of researchers convened to codify the data
acquired through interviews and to realize a final clustering of factors impeding supply chain
integration. Subsequently, the team of researchers constructed cause and effect models based
on the clustered data. With the help of the thus formed cause and effect models, causes were
identified as being root-causes (either because an identified factor appeared to be at the
beginning of a causal chain or because a hidden factor could be identified as a cause for a
phenomenon emerging from the cause and effect model).

Findings
Individual case findings
The key barriers to internal supply chain integration were identified from examination of the
four cause-effect diagrams. These barriers were then categorised using the Business Process
Reengineering (BPR) change model by Childerhouse et al. (2003) as the authors previously
applied this framework to a large variety of case examples with some success. Table 2 shows
the identified barriers to internal supply chain integration for each case company.

Table 2: Identified barriers within each category

Case Companies

Barrier Identified barriers to internal supply chain integration NZ1 NZ2 NL1 NL2
• Defensive culture, silo focus, negative towards change R R B B
Culture • Lack of skilled management staff R R - -
• Lack of skilled shop floor staff B B B -
• Union activity creates ‘us vs. them’ attitude - B - -
• Poor knowledge management. - B B B
• History - B R R

Overall Barrier Height (OBH): H H H H

• IS system supports finance/ accounting only B B - B
Technology • Multiple independent information systems B B B B
Overall Barrier Height (OBH): M M L M
• Lack of willingness to invest in sc improvement B B B -
Finance • Unable to invest in sc improvement - - - -
Overall Barrier Height (OBH): L M M L
• Organizational structure B B - -
Organization • Lack of staff training B B B -
• Reward System B N/A - -
• Geographical dispersion B - - -
• Lack of top management support - R R -
• Strategic misalignment B R R B
B B B B
• Competing value streams
R B B B
• Insufficient/ inconsistent value stream measures
B B B -
• Poor material flow
Overall Barrier Height (OBH): H H H M

5
Results for the Culture category in Table 2 show that work culture and attitude in all four case
companies are cause for management concern. More importantly, in both New Zealand cases
culture and attitude has been identified as a root cause. Hence, managers in these companies
struggle to implement supply chain or process improvement programmes due to a culture that
encourages resistance to change. Further, lack of skilled management staff is also a frequent
root cause in New Zealand’s engineering to order sector; particularly due to a lack of strategic
appreciation of supply chain management. In NZ1 and NZ2 the majority of key supply chain
staff had no tertiary qualifications and gained most of their knowledge by on the job
experience. In the case of NZ2, key supply chain positions are held by engineers who lack
general management and supply chain management skills. Poor knowledge management is
identified as a critical Barrier in NZ2, NL1, and NL2 where many supply chain staff are long-
time employees with in-depth tacit knowledge of the plant. In light of the many root causes
present, the Culture category overall barrier height (OBH) in all four case companies is
indicated in Table 2 as being High.
In the Technology category, it was noted that every case company operates with
multiple independent and loosely coupled information systems. These provide inadequate and
incomplete end-to-end information to employees, who consequently tend to have little faith in
the information provided. It was also noted that most of the available supply chain data is
financial in nature. Although this shows the (alleged) bottom line status of the focal company
this is not sufficient for supply chain management and operational decision making. Presenting
as a common barrier, although with no root causes, the Technology category overall barrier
height (OBH) is indicated in Table 2 as being Medium for most case companies.
In the Finance category, the research revealed a stable financial situation for all four
case companies. Differences occurred only in their willingness to invest in supply chain
process improvement projects and in the bureaucratic procedures involved in working with
overseas headquarters. Overall, the Finance category overall barrier height (OBH) for the two
of the four case companies is judged medium because NZ2 and NL1 struggle with the top
management support/ willingness to invest in supply chain improvements.
In the Organization category, both New Zealand case companies are hierarchically
managed and functionally orientated. Lack of top management support was identified as a root
cause in two of the four case companies. However, top management support is essential when
sub-optimizing one function for the overall good of the end to end process. Misalignment and
fragmentation of the overarching company strategy with supply chain strategy creates barriers
to process improvement. In the case of NZ2 and NL1 strategic issues were identified as root
causes. In all four cases competing value streams are limiting supply chain integration. In most
of the cases product flow is frequently interrupted because multiple products require identical
resources. This causes queues and large increases in production lead time. The research also
reveals a lack of value stream measures in all four case companies. In light of the many root
causes present the organization overall barrier height (OBH) for three of the four case
companies is indicated in Table 2 as being Major Pain NZ1: Inefficiencies and lost
opportunities due to excessive fire fighting. These are rooted in lack of knowledge and training,
functional driven KPI’s combined with a shop floor attitude vs. management attitude and a
highly inconsistent S&OP process (ambiguity is the norm rather than the exception).

Cross-case analysis
Even so, the QSAM revealed that each organisation suffers from a unique set of interrelated
barriers; a cross-case analysis was conducted in the search for pattern. The cross-case
comparison of the cause and effect diagrams helped in identifying predictor variables and
causal interactions (Stuart et al., 2002). Two major patterns emerged termed (1) functional silos
(2) problem solving via fire fighting. Figure 2 reflects a detailed cause and effect situation

6
frequently observed in the case companies, and shows the interrelation of company culture,
people, and organisation factors that act to reinforce the functional silos.

STRUCTURAL

Reward Organisational   Information  

System Structure System

-­‐ -­‐
Functional  Silos

Culture  /   Systems  
Attitude Thinking  
Skills
Geographical  
Union
Dispersion/
Isolation

History

BEHAVIOURAL

Figure 2- A systems perspective on functional silos

It can be seen that the origins of functional silos are often entrenched in the company history,
which influences workplace culture and attitude directly and also indirectly via long-term
relations with workplace unions. Also, the physically separation of departments further
impacting culture and attitude and reinforcing the functional silos. The presence of independent
and loosely coupled information systems also discourages cross functional communication
(Disney et al., 2008) and offers poor supply chain visibility. Furthermore, reward systems
aligned to hierarchical organisational structures serve to cement in place the functional silo
mentality. Finally, Figure 2 indicates that geographically dispersion causes problems for
companies attempting to attract qualified staff, which directly impacts the supply chain skills
that are available to a company. Hence, the behavioural aspects often observed within culture
and attitude can form a negative reinforcing loop with the structural elements within a
company resulting in a deep entrenchment of silo mentalities.

Multiple  
Independent  
IS  Systems
High  L evels  of  
Poor  Value  
Process  and  
Stream  
Poor   Control  
Design
Strategic   Uncertainty
Alignment

Fragmented   Problem  Solving   via  

Strategy Fire  Fighting

Single   Engineers  
(Cost)  KPI by  Heart

Busy
Focus

Figure 3- A systems perspective on problem solving via fire fighting

7
 The second commonality observed across all four cases is termed problem solving via
fire-fighting (see Figure 3) originated from a partly fragmented and often unclear company
strategy. Company visions and strategies were often expressed in financial KPI’s resulting in
low levels of understanding and buy-in from middle management and shop-floor staff
members. The strategic issue filters through resulting in poor strategic alignment and hence
poor value stream design; which then leads to high levels of process and control uncertainty.
These levels of uncertainty are further enhanced by multiple independent and often
inappropriate information systems encouraging high levels of fire fighting activities within the
business. The financially driven company strategy encourages cost foci KPI’s; which results in
a company-wide “obsession” of being busy.
In all four cases, functional silos and a fire-fighting mentality was acknowledged by
members of the organization during the feedback presentations (a fire-fighting mentality being
indicated on several occasions during the on-site research and explicitly mentioned in the
feedback presentations). In the NL2 case, engineers considered themselves to be fire fighters at
heart, this worldview permeating the whole organization.

Discussion and Conclusion

The main aim of this paper is to further explore the underlying behavioral grounds of barriers
to supply chain integration by an explorative method. First, the current research confirms that
the majority of the barriers to internal supply chain integration occur on a cultural and
organization level (Lambert & Cooper, 2000; Mentzer et al., 2000; Petersen et al., 2005;
Shapiro’s, 2001; Storey et al., 2005; Whipple & Frankel, 2000). Lack of top management
support, poor strategic management and alignment, and insufficient and inconsistent
measurement were identified as common root-causes for hampered supply chain integration. In
all four cases competing value streams were constraining internal integration.
Second, the cross-case comparison of the cause and effect diagrams helped in
identifying predictor variables and causal interactions (Stuart et al., 2002). Two major
behavioural patterns emerged from this exertion are coined (1) “fire-fighting” and (2)
“functional-silo mentalities”. Both are found to have their roots in the World Views of
managers and employees and the soft, sociological characteristics of the organizations and
departments investigated. Systems thinking via QSAM enabled the researcher to provide
detailed insights into the fundamental structures of these two patterns.
Arguably internal barriers are partially influenced by industrial norms (here engineering
to order) and environmental settings these companies are operating in. The geographical
isolation of the two New Zealand case examples resulted in a poor uptake of supply chain
principles because high caliber supply chain professionals were hard to attract to those remote
areas. Also, the two Dutch cases operate in an industry that reintroduces middleman to the
supply chain for liability reasons, which results in information distortion and hence an increase
in control uncertainty.
In addition to the usual research constraints of time, finance, and access to data several
limitations of this research offer avenues for further study in this important area. First, more
research is required to validate the various barriers; their categories and the two forthcoming
cross case behavioral grounds. Second the research discussed the importance and influence of
industry standards and environmental factors to internal supply chain integration; however a
stronger contingency theory approach is expected to share even greater insight into the current
topic. In addition researchers need to find ways to remove barriers to integration, or at least
mitigate their effects. In the future, research initiatives to aid understanding of barrier
mitigation may involve a number of key disciplines, including: systems thinking, information
theory, industrial dynamics, production economics, social theory, game theory and production/
systems engineering among others.

8
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