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Management control systems in logistics and supply chain management: a literature review

Management control systems in logistics and supply chain management: a literature review Logist. Res. (2009) 1:113–127 DOI 10.1007/s12159-009-0011-z REVIEW AR TICLE Management control systems in logistics and supply chain management: a literature review Daniel P. Jeschonowski Æ Julia Schmitz Æ Carl Marcus Wallenburg Æ Ju ¨ rgen Weber Received: 4 March 2009 / Accepted: 4 March 2009 / Published online: 25 April 2009 Springer-Verlag 2009 Abstract The purpose of this article is to provide an for further research on MCS in logistics and SCM, from overview of the literature covering the area of management which both research and practice alike will profit. control systems (MCS) in logistics and supply chain management (SCM). It is motivated by the increasing Keywords Literature review attention the two fields of MCS and logistics/SCM have Management control systems (MCS)  Logistics lately attained, fueled by an augmenting competitive Supply chain management (SCM) pressure companies are facing. For logistics and supply chain practitioners to realize the existing potentials, effective MCS are necessary. In order to facilitate future 1 Introduction research in the field of MCS, which consequently also benefits practitioners, it is necessary to consolidate the Over the years, the management of logistics and supply extant literature. To do so and to identify promising ave- chains has turned into a widely discussed topic, both in nues for future research is the purpose of this article. We practice and research. This development was paralleled by provide a literature overview that covers the main aspects the increasing attention the two fields of management con- of MCS in context of logistics and SCM by applying trol systems (MCS) and logistics/supply chain management content analysis. To account for quality of publication, (SCM) have lately attained, fueled by an augmenting com- the analysis is restricted to international top journals. The petitive pressure companies are facing. Additionally, the literature review shows foremost that research into the understanding has grown that well-managed supply chains development and implementation of a holistic MCS for represent a competitive advantage and are a major lever of logistics and SCM should be intensified which could be overall firm performance [1, 2]. For logistics and supply achieved by further case studies as well as survey-based chain practitioners to realize the existing potentials, effec- studies. More conceptual work could be necessary to tive MCS are necessary to serve as the underlying basis. enable a better practical utilization of MCS in logistics and This is especially true today as companies are facing the supply chain settings. We reveal a considerable potential aftermath of the 2008/2009 financial and economical crisis. Yet, the application of state-of-the-art MCS in logistics and SCM still remains partially rudimentary in practice. D. P. Jeschonowski  J. Schmitz  J. Weber (&) Often, essential elements of MCS like the detailed and Institute of Management Accounting and Control, exhaustive consideration of cost issues when designing WHU, Otto Beisheim School of Management, supply chains [3] or general supply chain orientation of Burgplatz 2, 56179 Vallendar, Germany existing MCS are not found in practice [4]. In fact, MCS in e-mail: jweber@whu.edu URL: www.whu.edu/control logistics and supply chains, in many cases, are reduced to mere operational aspects [5]. C. M. Wallenburg Also in research shortcomings can be observed. Logis- Kuehne-Center for Logistics Management, tics and SCM have been studied in depth from a perfor- WHU, Otto Beisheim School of Management, mance perspective [6–11] as well as from a cost Burgplatz 2, 56179 Vallendar, Germany 123 114 Logist. Res. (2009) 1:113–127 perspective [12, 13]. Although introduced already in the Professionals, which particularly highlights the aspects of late 1980s [14] frameworks for the discussion of control in coordination and integration, as also illuminated by a the context of logistics and supply chain are rarely applied. number of authors [4, 25–28]. Logistics is seen as The control process often remains an unspecific adaptation ‘‘that part of Supply Chain Management that plans, of general MCS research which does not address any implements, and controls the efficient, effective for- specific characteristics with regard to the management of ward and reverse flow and storage of goods, services, logistics and supply chains. This is not satisfying as theory and related information between the point of origin and practice demand for techniques and practices adapted and the point of consumption in order to meet cus- to supply chain needs [15, 16]. Further, the intersection of tomer requirements’’ [29]. MCS and logistics and SCM often seems to be unclear. It is characterized by a large degree of heterogeneity and For the definition of the terminus SCM, we follow the decoupled theoretical view [6]. proposition of Mentzer, DeWitt et. al., who define SCM as In order to facilitate future research in the field of MCS, ‘‘the systemic, strategic coordination of the tradi- which consequently benefits practitioners, it is necessary to tional business functions and the tactics across these consolidate the extant literature. To do so and to identify business functions within a particular company and promising avenues for future research is the aim of this across businesses within the supply chain, for the article. purposes of improving the long-term performance of The article is organized as follows. First, fundamental the individual companies and the supply chain as a definitions for this paper are presented. Afterward, relevant whole’’ [2]. literature is identified and the framework used is described. Thereafter, the literature is classified and reviewed. The Following this definition, a supply chain is seen as an manuscript closes with a discussion of the implications and entity with a certain degree of integration inside a particu- directions for further research. lar company and among several companies (thus, according to Min/Mentzer extending functional integration to all firms involved in the respective supply chain [30]). 2 Conceptual basis As will be further elaborated in the course of the literature review, this extension makes the issues of controllability Regarding MCS and logistics/SCM, no commonly agreed that can already be observed in classical intra-firm settings upon definition exists. Moreover, for both areas of interest even more severe [31, 32]. a wide variety of different schools of thought can be identified. Thus, before conducting the literature review, we will sketch the understanding of these terms which is 3 Methodology applied in the following. Some scholars have a very broad view of MCS that To consolidate the existing knowledge on MCS in logistics includes nearly the entire organization of a company (e.g., and supply chains we review the extant literature by [17]). As these approaches include virtually everything that applying content analysis. Content analysis is a well- can be termed ‘‘management’’, we chose to apply a more accepted method used by numerous scholars (e.g., [33– narrow understanding which is well expressed in Simons’ 36]). It aims at a reliable, objective, systematic as well as widely agreed [18–22] definition of MCS: quantitative study of existing publications [33, 37] and allows for the investigation of implicit assumptions as well ‘‘Management Control System are the formal, infor- as explicit statements of texts [33]. Thus, it represents a mation-based routines and procedures managers use promising method for reviewing literature [38]. In order to to maintain or alter patterns in organizational activi- conduct a content analysis, two steps are required: sam- ties’’ ([23], p. 5). pling and categorization [34]. These routines and procedures have the character of Sampling means that in an initial step articles which controls, which have been named and categorized by contribute to the domain of MCS in logistics and SCM scholars in different ways. Merchant/van der Stede, for have to be identified. Given the diversity of available example, differentiates action controls, results controls and publications, this search has to be directed by setting personnel/cultural controls [24], whereas Simons refers to appropriate limits. These limits where operationalized diagnostic controls, interactive controls, and boundary and through the following steps: first, only literature in English belief systems [23]. language and published in academic journals was consid- Logistics (and logistics management) is here understood ered, while dissertations, textbooks, and conference papers according to the definition of the Council of SCM were excluded. To account for quality of publication the 123 Logist. Res. (2009) 1:113–127 115 analyses focus on international top journals. Selection in journals IJPDLM and JBL with a total number of 64 arti- the field of management accounting was done by choosing cles (Fig. 1). Within the management accounting journals the top five journals [39]. These include The Accounting we see a similar pattern, where almost all articles were Review (TAR), Journal of Accounting Research (JAR), published in only two journals: AOS and Management Accounting, Organizations and Society (AOS), Manage- Science, which provide a total of 23 articles. All the other ment Science and Journal of Business. The two journals journals only provide a very limited number of contribu- solely focusing on finance and financial accounting tions (Journal of Business without a single article, Journal (Journal of Finance, Journal of Financial & Quantitative of Operations Management, The Accounting Review, Analysis) were excluded. For the domain of logistics/SCM, Transportation Journal and Journal of Accounting also the top five international journals were included [40]: Research with between two and four articles each over the Journal of Business Logistics (JBL), International Journal 20-year period). of Physical Distribution and Logistics Management Considering Management Science not to be a pure (IJPDLM), International Journal of Logistics Management management accounting journal, but with an equal focus on (IJLM), Journal of Operations Management (JOM), and operations and SCM, the distribution of articles gives the Transportation Journal (TJ). Concerning their year of impression that MCS in logistics and supply chains is publication, a timeframe from 1988 until 2008 was cov- mainly a topic of supply-chain oriented journals. ered, which represents a timeframe we consider adequate Regarding occurrence of articles only a slight increase in because it both captures a large proportion of the devel- number of articles can be observed from 1988 to 2008 opment of SCM [2] and MCS while still being connected to (please note that the last bar only refers to 1 year, while the current research. other bars refer to a 2-year span) (Fig. 2). This might be Second, analyzed literature was limited to the area of seen as an indicator for a slight increase in attention over MCS in logistics and SCM by keyword definition. To ensure the course of time. However, the total amount of articles is the reference to logistics or SCM the keyword search always still low, when considering that every journal provides less included one of the three words ‘‘logistics’’, ‘‘supply chain’’, than one relevant article per year on average. and ‘‘supplier’’. In addition, the titles, abstracts and author supplied keywords also had to contain one of the following phrases to belong to the domain of MCS: ‘‘strategy imple- mentation’’, ‘‘plan implementation’’, ‘‘strategic planning’’, ‘‘target setting’’, ‘‘management control’’, ‘‘managerial 11 11 11 control’’, ‘‘accounting’’, ‘‘performance management’’, ‘‘performance measurement’’, ‘‘cost management’’, ‘‘cost 6 6 control’’, ‘‘behavioral control’’, ‘‘cultural control’’, ‘‘infor- mal control’’, ‘‘task control’’, ‘‘control system’’, ‘‘budget’’, ‘‘reward’’, ‘‘incentive’’, ‘‘compensation’’, ‘‘metrics’’. Our search resulted in a total number of 101 articles in 1988- 1990- 1992- 1994- 1996- 1998- 2000- 2002- 2004- 2006- 2008 the selected ten journals. The majority of these stem from 89 91 93 95 97 99 01 03 05 07 the logistics and SCM journals. Within this group of Fig. 2 Distribution of relevant articles over time journal almost all articles were published in the two Fig. 1 Distribution of reviewed Int. Journal of Physical Distribution & Logistics Mgm t. articles across the journals (shaded logistics/SCM journals) Journal of Business Logistics 27 Accounting, Organizations & Society Mgm t. Science 10 Accounting Review Journal of Operations Mgm t. 3 Int. Journal of Logistics Mgm t. 3 Transportation Journal Journal of Accounting Research 2 Journal of Business 123 116 Logist. Res. (2009) 1:113–127 3.1 Framework strategy [44, 45]. This means that the formulation of logistics and supply chain objectives is not a specific In order to categorize the articles and their content, an application of MCS in the special field of logistics and appropriate framework is necessary. As the focus of our SCM, but rather part of the general MCS. Thus, the review study is on MCS in a certain area of application, the of the extant literature will start with the examination of the framework has to consider a management accounting and process of strategy implementation. In the next step, we will control perspective. A well-established framework [41, 42] review the literature regarding performance management in that fulfills this requirement to be used for the purpose of logistics and supply chain, and consider target setting and this review was developed by Otley [18]. Its character is behavioral aspects. The subsequent step is the topic of rather descriptive than normative [43], and aims at pro- rewards and incentives. Finally, we consider the aspect of viding a holistic view about the existing practices in the information flows including information processing. field of management accounting and control systems. The framework provided by Otley addresses five key areas of management: (1) definition and evaluation of key 4 Findings organizational objectives, (2) process of strategy imple- mentation, (3) target setting as well as performance mea- 4.1 Literature classification surement, (4) rewards and incentive structure used, and (5) flow of information. Prior to analyzing the content of the articles, this section Using a contingency theory approach, Otley deduces the gives an overview regarding the methodologies and general objectives of the company at the top level as his approaches used. This is done based upon the suggestion of first area. These objectives form the foundation for the Sachan/Datta by differentiating the research design into a company-specific MCS and are subsequently translated quantitative (e.g., construct validity tests, math models) into strategies, followed by an implementation process in and a qualitative (e.g., case study, action research) design the subdivisions. This connection of objectives and strategy [11]. Further, the articles are distinguished into empirical is examined in the second area. It links the company level (survey based) and desk research (e.g., conceptual). with a more operational level. The third part focuses Based on these two dimensions, four main types of on effectiveness and efficiency. It aims to describe and article design can be identified: empirical quantitative, analyze techniques of goal setting and goal attainment, empirical qualitative, desk quantitative, and desk qualita- performance measurement as well as behavioral aspects. tive. Articles may also apply a multi-method approach by Bearing these performance targets in mind, the fourth combining more than one of the four main types. This, for question deals with both incentives and rewards to achieve example, is the case when a survey is accompanied by defined targets. It considers not only financial rewards but case-study interviews to gain in-depth insights into the also intangible factors. Information flow, as fifth area, quantitative results (for an overview of the usage of case refers to feed-back and feed-forward information. It studies in logistics research, see [46]). enables ex-ante preventive action, ex-post corrective Remarkable differences between the two selected groups action, and learning. of journals can be observed. As displayed in Fig. 3, the Within the literature review the focus will be on the last articles from the management accounting journals mainly four areas of MCS. This is due to the fact that the formu- focus on desk research with emphasis on quantitative lation of a dedicated logistics and supply chain strategy is methods, while the articles in the logistics and supply chain commonly considered as a part of the overall company journals are almost evenly distributed among quantitative Fig. 3 Use of research methods Articles from accounting journals Articles from logistics journals for accounting and logistics journals Qualitative Quantitative Qualitative Quantitative 9% 24% 22% 36% 11% 21% 31% 46% Desk Empirical Desk Empirical Logist. Res. (2009) 1:113–127 117 and qualitative work, with an emphasis on qualitative desk missing implementation of a logistics and supply chain work and quantitative empirical work. strategy, logistics decisions are often taken with inadequate Within the group of management accounting, the two information, solely based on intuition [47]. For this reason, main contributing journals AOS and Management Science the selection and deduction of logistics and supply chain show very different styles. While most of the articles in strategies have been discussed for several decades, and is Management Science are desk quantitative and use math- well covered in the academic literature [1, 2, 25, 48–50]. In ematical modeling, articles in AOS are more empirically contrast to a mere ‘‘top-down’’ definition, research on the oriented and often utilize qualitative case-based research. actual implementation of these functional strategies is rare. The two main contributing journals in the field of logistics This is problematic, as deducting or selecting a strategy and SCM, JBL and IJPDLM, are quite similar with respect does not equate to a completed implementation. to the employed research designs. The main difference is In practice, terminology and benefits derived from def- that IJPDLM employs slightly more empirical qualitative inition and implementation of strategy in logistics and research based on case studies, whereas JBL presents a supply chain contexts seem not to be completely clear. For little more quantitative empirical work. example, Novack speaks of standards being synonymous to When analyzing the selected articles more deeply, general objectives the organization tries to attain [14]. This almost an even distribution across the main methods (sur- lack of an agreed definition of strategy in general and vey, simulation/experiment, interviews, math modeling, logistics and supply chain strategy specifically can lead to a case study, pure conceptual modeling or other, e.g., liter- certain degree of disappointment, which can be observed ature review [11]) can be observed (see Fig. 4). Exceptions when it comes to translating strategy into action and from this are simulations, which are employed relatively deducing corresponding plans [51]. seldom only, and surveys, which are used more often than However, there are also several cases, where in practice, other methods. a development toward supply chain strategies (so called ‘‘functional strategies’’) can be observed, which are well 4.2 Categorization defined [44] and implemented. The observations made can be interpreted as the result of the intention to increase After having performed the literature classification, namely logistical performance through appropriate supply chain the assessment of different research types used, the next strategies [45] and, in conjunction with other functional step was literature categorization. It is based on Otley’s strategies, also enhance overall firm performance [52, 53]. framework as described earlier [18]. The implementation and transfer of a (howsoever formu- lated) strategy into operation is answered in several dif- ferent ways in literature. Morash illuminates how an 4.2.1 Strategy implementation overall business strategy (or ‘‘competitive strategy’’ [54]) Any system that is controlled requires objectives against and the corresponding specific supply chain strategy may which it can be assessed. Without a proper logistics and be transformed into defined supply chain capabilities and supply chain strategy, or even an imperfect definition or an increased supply chain performance [45]. 27% 16% 15% 14% 12% 11% 5% Survey Case stud y Concep tual Math modeling Interview Simulation/ Other modeling Experiment (e.g. literature review) Fig. 4 Use of research methods aggregated 123 118 Logist. Res. (2009) 1:113–127 The actual degree of implementation of logistics and Across organizations, the topic of coordination between supply chain strategy has been shown to depend especially companies as a strategic enabler has been one of the central on the stage of logistics development [53, 55], which may issues for research [59]. The simplest form to implement a range from mere ‘‘distribution logistics’’ over ‘‘integrated strategy in this context is via market- and cooperation- logistics’’ to ‘‘logistics and supply chain management’’ mechanisms. In this respect, a large amount of research representing strategic capabilities of the overall firm. focuses on pricing and contracting as primary source of According to Kent and Flint [56], several distinct levels of coordination and thus neglects the explicit need for MCS development can be observed (these include logistics as a [59]. The corresponding articles not only deny the need for pure transportation function, the beginning inclusion of explicit coordination mechanisms, but also the logistics and inter-firm information flows as well as integrated and supply chain strategies need to be translated into action strategic applications of logistics on advanced levels). through means and measures. Many authors state the importance of sequential capa- Additionally, the links and interfaces have to be con- bility building and logistics development. Whenever cer- sidered when analyzing and preparing strategy implemen- tain stages or levels have not been fully operationalized, tation. Free [60] (as one of the few scholars published in the subsequent development stages will suffer from a dis- AOS that deals with supply chains) focuses on MCS spe- connection of strategy and measurements [31]. cifically with respect to inter-organizational aspects. Such Within a certain organization, operative budgets can be aspects inevitably arise with, for example, logistics out- seen as the simplest way to transform a logistics and supply sourcing [61] or generally within supply chains and are chain strategy into practice. According to Novack [14], addressed by different authors [53, 60]. The literature shows budgets are the instrument most easily recognized as well as that the general idea of trust in this context has a severe analyzed from a research perspective within this domain. impact in supply chains [62, 63]. The concept of trust (see They are acknowledged as being a tool that helps to com- [64] for an overview) represents an emerging body of municate plans and to coordinate a company’s activities. accounting research. This assertion is supported by the fact Even simple budgets can cover total cost aspects of logistics that a number of areas exist in which logistics and supply [57, 58] (and supply chains, when broadened to inter- chains are not a mere field of application of MCS but are organizational settings). Strategy, thus, becomes translated directly involved in the progress of MCS research [65–67]. into action by planning, monitoring, and reporting. At the Some authors derive the need for special MCS in same time, it forms an important prerequisite for rewarding logistics and supply chain contexts from observations they and incentivizing employees. The planning activities also were able to make in companies, especially regarding include related areas like forecasting and estimation [9, 51]. existing interdependencies. Dechow and Mouritsen [68] The field of logistics and SCM to a large degree involves describe the large interdependencies of logistics and joint and common costs. Therefore, in practice, it can in accounting in context of enterprise resource planning sys- most cases only be insufficiently addressed by standard tems. This comparatively recent article also shows that costing systems [47]. theoretically well-settled ideas of MCS have diffused into A broader approach for practice is consequently pro- logistics and SCM research, but not to the same extent into posed by Novack/Dunn, who introduce the concept of logistics and SCM practice. In practice, focus is mostly on ‘Logistics Optimizing’ and ‘Operational Plans and Systems issues of cost accounting, described by a number of authors (Loops)’, which implies a broader view that tries to address with more or less specific techniques for cost accounting in specific characteristics of logistics and supply chains [44]. logistics and supply chains [12, 69]. However, this does not The tool aims to facilitate the communication and interac- imply that no need for the specific design of MCS exists. In tion between corporate planners and logistics planners and fact, extraordinary efforts into MCS can be translated into thus contributes to the company’s strategy implementation. obvious competitive advantages and visible success [70]. Accordingly, strategy implementation via operational plans and systems loops follows a stringent practice-oriented 4.2.2 Target setting and performance measurement pattern: a six-step logic is applied. Step one and two con- sider the actual formulation of the logistics strategy, step Having described the process of (high level) strategy three analyzes the capabilities of the company with regards implementation, the next step in both analyzing and to logistics and supply chains, step four elaborates on neces- establishing a coherent MCS in logistics and supply chains sary efforts to further increase performance, and steps five consists of appropriate target setting and subsequent per- and six establish actual performance goals. This approach formance measurement. The literature agrees on the may serve as a general method to analyze own strengths and importance of both [10, 30, 71, 72]. weaknesses as well as external factors that influence the Target setting and performance measurement may be logistics performance of the company. seen as part of a ‘‘logistics performance audit’’ [51]. 123 Logist. Res. (2009) 1:113–127 119 It includes first identifying the performance measures to In practice, this manifests itself in an arbitrary situation: be used and the service levels to be met and afterward although a general overview with regard to commonly comparing the degree to which the targets were met. This used performance measures exists (e.g., [72]) companies part of MCS is the logical consequence of strategy often refrain from an extended usage. In many cases, implementation. companies restrain on traditional performance measures Several studies point out how difficult it is to measure (i.e., non-cash oriented and non-value oriented ones) logistics performance [6, 14, 47]. This particularly affects with a focus on minimizing direct costs [73]. Therefore, and complicates the definition of accurate standards and performance evaluation is often done by applying classical targets [14]. This difficulty is not caused by a lack of measures only. This is particularly severe as, e.g., theoretical considerations. Cavinato [83] shows: information needs are much higher In practice, performance is ensured with the help of than the data provided by classical budgetary systems. systems for performance measurement [5, 73], and within This is problematic as Mentzer and Konrad [84] mention these measurement systems, both financial and non-finan- the importance of accurate data as a basis for an efficient cial measures are applied [7]. Forslund [74] states ‘‘high performance measurement. The literature only offers little performance logistics require the discipline of measure- advice how these information needs should best be ful- ments’’. Especially, because goals positively reinforce filled as the corresponding articles often are either very employees and can help to motivate them [14]. To ensure broad or very technically and narrowly defined (for this, performance measurement should incorporate at least example, Kleinsorge et. al. [47] and Clarke Gourdin [85] three aspects: (1) the systematic collection of data, with the example of (fractional) linear programing tech- (2) consistency in reporting, and (3) consistency in inter- niques or Novack [14] explaining statistical process pretation [75]. control). The literature offers different, competing classifications Coherently, not only inside the single company, but also for performance measures. Kleinsorge et al. [75] differen- across several companies and along the supply chain, a tiate between the evaluation of quality and the evaluation lack of implementation can be observed. Empirically seen, of operational efficiency, dividing both domains further here many of the elaborated measurement techniques into investment-oriented, transaction-oriented, and rela- developed in the literature lack practical relevance—so far tionship-oriented measures. They further highlight the last only few successful applications can be found in practice two types of measures to be comparably difficult to collect [81]. Instead, companies most often apply tools and mea- and report. Since, this classification has been widened from sures known from classical managerial accounting (e.g., a non-logistics context which differentiates market-based, matrices with individual weights for different involved hierarchical, and alternative controls (see e.g., [62, 76, 77], factors, see [75]). for a comparative view or [78] for the differentiation For example, qualitative measures and targets are rarely between coordination via price mechanisms and coordi- used. Often, cost efficiency is the primary driver of mea- nation that incorporates non-price mechanisms). sures and target setting [75]. Especially in early stages of Another research stream classifies performance indica- the logistics and supply chain evolution the focus of tors with regard to their perceived practical usefulness. measurement is often placed on production and transpor- Depending on the author different foci can be observed. tation costs, and not on capturing the whole scope of Whereas several authors recommend the use of very activities and an exhaustive fulfillment of the strategy [55]. practical variables including lead time, percentage of One reason for this can be seen in the fact that financial on-time delivery or inventory availability [45, 51, 74], data is easy to report [10, 75] and comparable across dif- others include broader meta-valuation (e.g., overall ferent companies. supplier performance, consistency of quality) [51, 79]or These empirical observations come along with the ‘‘value-based’’ ones [80]. phenomenon of aggregating measures too much [47]. By Theoretically, these ‘‘value-based’’ considerations doing so, companies neglect internal impacts of individual directly link to the approach of total cost of ownership, decisions within the supply chain system. which is not completely well established in logistics and A further problem when considering inter-company supply chain [81, 82]. The advantage of total cost of settings stems from the fact that different understandings of ownership considerations is that these concepts cover the the term performance prevail [6, 79]. Further, logistics overall value chain and thereby all steps, starting from a often involve inter-firm relationships, which creates vari- potential supplier selection up to an ongoing management ous problems [62], starting with different companies within of logistics activities and helps to cover aspects including a relationship having a different idea of what constitutes general performance measurement as well as target setting logistics performance [47] and ending with conflicting [81]. views about how high-specific targets should be set [74]. 123 120 Logist. Res. (2009) 1:113–127 As stated, research about performance evaluation and applied and a game-theoretical view used. One important target setting with regard to broader aspects of MCS is practical topic is the aspect of confidentiality and incen- rarely found. Literature only in a limited number of articles tives for them [97] as well as the type of contract and the deals with aspects of logistics dyads covering both parties included incentives for information sharing [98]. involved in the relationship. There are few exceptions, Li [99] especially examines incentives to companies for showing the application of agency theory [86, 87], col- information sharing in vertical relationships. In contrast to laborative network theory [88] or transaction cost and this, Lee and Whang [93] refer to decentralized supply resource-based theory [89] for example. This is especially chains in focusing on the misalignment of incentives and problematic, because performance measurement systems the development of a performance measurement scheme to for logistics and supply chains become incomplete when- avoid this misalignment in order to achieve overall supply ever strategic performance measures are disaggregated into chain efficiency. For this they recommend transfer pricing, several performance dimensions, organizational units, and consignment costs, penalties, and shortage reimbursement different periods of time without a proper reflection [90]. [93]. Further, incentive problems are discussed that arise In practice, this issue is not solved either: the practical in buyer–supplier relationships based on incomplete con- implementation of targets and measures often lacks tracts. Possible solutions to these problems are seen in trust appropriate foundation. This seems to be somehow con- enhancement, through contract design, asset ownership or tradictory, as supply chains can be seen as systems that are organizational effects (e.g., number of suppliers and influenced by the threat of instability and contradictory monitoring [96]). norms [91]. This per se calls for effective MCS. Rewards and incentives is the only part of Otley’s Mentzer and Konrad (see [84], p. 39) state that perfor- framework where a commensurable proportion of research mance measures have to ‘‘be consistent with the manage- from new institutional economics can be observed. Dekker ment reward system’’ in order to be effective—a practical [63], for example, addresses opportunistic behavior and suggestion that links to the Sect. 4.2.3. how this may be avoided. He proposes a financial incentive system, based on a mutual fund for necessary investments, 4.2.3 Rewards and incentives with the aim to align the partners’ objectives with the alliance’s goals. Further, benefit sharing may also be used Target setting and performance measurement are con- as an incentive tool [63]. Simatupang and Sridharan [92] nected with the implementation of an adequate incentive regard incentive alignment as a central aspect of collabo- system. This connection is observable for example in the ration and use it as one of three factors to measure supply research of Simatupang and Sridharan [92], who show that chain collaboration. For them ‘‘incentive alignment refers decision synchronization in connection with incentive to the degree to which chain members share costs, risks, alignment leads to an improvement in fulfillment perfor- and benefits’’ ([92], p. 46). Within inventive alignment they mance. In contrast to this view of incentive alignment as a focus on financial rewards and only integrate one non- means to achieve performance, Lee and Whang [93] regard financial factor, i.e., delivery guarantee. performance measurement as a means for incentive align- Another stream of research is based on agency theory— ment. These different views show the interacting relation- sometimes described as economic theory of incentives ship of both incentives and performance measurement. [100]—in the context of supply transactions. Apart from Rewards and incentives not only refer to financial incentive contracts, objective performance measurement, aspects but also include intangible factors as reputation or formal (ex ante) contracts, subjective assessment, and appreciation [18] of employees. Yet, this is not reflected in relational contracts can also be used as incentives. Gibbons the literature on rewards and incentives. Only one article [100] highlights that also career concerns, i.e., belief of the [94] exists that covers logistics- and employee-centered worker’s abilities based on observable performance and by aspects. The empirical results indicate that non-financial this future compensation, as well as the promise of pro- factors (socialization opportunities and sense of commu- motion and future supplier value form possible incentives. nity) have a stronger impact on employee turnover than Another agency-theory based article addresses incentive financial rewards have [94]. contracting like those based on game-theory. It is shown A significant number of articles cover coordination- that product architecture decisions and the occurrence of related aspects in inter-company settings. The emphasis on product failure are connected with incentive efficiency this field can be explained by the importance the avail- [101]. ability of information has in enhancing supply chain per- There is a strong connection between incentive systems formance [95] and consequently by the necessity to provide on the one hand and information flow and information adequate incentives for sharing information [96]. Com- sharing on the other hand (as documented especially in monly, in this research stream mathematical modeling is several articles published in Management Science). 123 Logist. Res. (2009) 1:113–127 121 It can be concluded, that the existing literature mainly to organizational design and control in inter-organizational considers financial incentives as a means of coordination relationships, on the one hand informal meetings and and goal alignment, while non-financial incentives rarely communication, on the other hand formal information are researched. This may be attributed to a problem already processing, e.g., shared forecasting, are relevant to achieve faced for performance measurement and target setting: the coordination and enhance value. general difficulty in modeling and measuring soft factors as As information flows represent the overarching basis for opposed to hard monetary incentives. Logistic-specific effective and efficient MCS in logistics and supply chains, questions are addressed only to a minor degree; often an many of the reviewed Management Science articles not application of incentive considerations from other areas is only cover the topic of incentives (as highlighted in the done more or less without reflection [94]. Most articles previous section), but also information aspects and refer to research buyer–supplier and other supply chain relation- the effects that follow from information sharing [95, 97– ships. Possible reasons for this may lie in the fact that 99]. Li [99] points out that information sharing should not incentive misalignment causes greater problems in inter- be considered isolated, because for example the reaction of organizational settings than internally and that the need for other firms (e.g., competitors) has to be examined at the coordination often is higher between companies than same time. Other authors in contrast refer to the concept of within [26]. decentralized information to avoid the problems connected with information sharing (e.g., inventory levels, coordina- 4.2.4 Information flows tion problems, and hidden information) [93]. Additionally, information flow in connection with the operating policies Information flows can be seen as the overarching basis of of demand monitoring and ordering is considered to MCS. This is also reflected in the large number of articles achieve cost reduction and higher efficiency through which can be found in the academic literature in logistics improved information utilization [103]. and SCM. Almost half of the articles finally considered Formalized information flows are often supported by IT deal with information and its flow, which is a clear indi- systems. This fact is considered by a number of authors. cation for the importance of this area of MCS. These systems and their capabilities as well as special Within the logistics journals, several research streams information tools (e.g., electronic data interchange, EDI) can be identified. They consider design and implementation are a first area of research. Information systems and current of information systems in general, their connection with the and comprehensive information are seen as a means for organizational or supply chain structure, and the effect on effective coordination, within a company as well as along coordination and cooperation including performance the supply chain [31, 83, 104–107]. Within this research stream, the use of EDI is often measurement. Novack [14] states that information plays a major role discussed. EDI is seen as a tool to facilitate data sharing for effective control, and emphasizes the importance of across company boundaries [104]. Furthermore, EDI is current and adequately detailed data for decision-making seen as an enabler for value-adding partnerships and the and control. The basis for an efficient information flow lies coordination of inter-organizational processes, and by this in the implementation of information technology and as an essential for high logistics performance [108]. information systems. For just-in-time (JIT) manufacturers, reliable and up-to- The information needs mentioned by Novack as the date data is very important. Here, EDI is seen as a possi- justification and motivation for research on information bility for efficient information handling. Empirical data flows are addressed by a number of other authors as indicates that ‘‘JIT firms realize more benefits using EDI well. Tomkins [65] examines differences in information than non-JIT firms’’ ([109], p. 31). Overall, customer sat- requirements that depend on the type of alliance or network isfaction is enhanced by improved communication and the parties are engaged in and shows that the extent to integrated use of information technologies based on EDI. which information is needed is determined by trust: the In connection with strategic supply chain planning the use more the relationship is based on trust, the less formal and design of decision support systems (DSS) is discussed. information processing is necessary. However, contrary Koutsoukis et al. [110] highlight how the process from data ideas exist in research. Dekker [63] categorizes information generation to knowledge creation is integrated into a DSS. sharing explicitly as a form of formal control. He, there- Information is considered in several ways. First, with fore, sees information sharing and transparency as an regard to forecasting and the hardware and software used, essential basis for trusting relationships. In dyadic rela- furthermore the information flow connected to order pro- tionships, information precision and reliability are relevant cessing [51]. for the implementation of vendor managed inventory and Also warehouse and distribution information systems for enhancing supply chain profitability [102]. With regard are seen as relevant [14]. In this context, the kind of 123 122 Logist. Res. (2009) 1:113–127 warehouse information systems used (standard vs. tailor- when implemented well, but it is a clear hindrance and made) and the relationship of warehouse complexity with influences performance negatively when missing [120]. An the planning and control structure is researched [111]. improvement in information exchange leads to a higher Especially software and non-financial informational control responsiveness. As aforementioned, Simatupang and are said to be important [112]. Additionally, forecasting Sridharan [92] develop an instrument for supply chain col- processes and systems are dependent on the information laboration measurement, of which information sharing is technology used [113, 114]. one of three parts. While inventory and fulfillment are This research stream also makes reference to the strongly affected by information sharing in a positive way, implementation of boundary-spanning collaborative plan- responsiveness is only improved slightly. ning, forecasting and replenishment systems, data genera- With regards to performance, a high level of commit- tion, and by this, the need for software usage [113]. ment leads to a high value of information systems support Moreover, information and communication technologies [116]. Dysfunctional ERP systems and data processing are are regarded as a success factor for an efficient SCM [115]. one problem of the integration of performance manage- In this context, establishing communication channels, as ment in buyer–supplier dyads. Additionally, the necessity well as web-based IT tools, decision support systems, and of performance feedback for corrective actions is pointed the security of information transmission are relevant. out [121]. Varila et al. [12] highlight the aspect of data However, practical implementation of enterprise resource collection and information systems in connection with the planning systems cannot be found very often, whereas development of a highly accurate cost accounting system simple, non-integrated forms of communication like emails for warehouse logistics. and faxes are commonly used. Standard databases, uniform In the early 1990s, a general need for workflow and coding schemes, and order placements, for example, are process redesign is proclaimed to sustain lasting benefits similarly seldom used, even though these technologies from EDI [108]. However, literature does not give a clear would provide the possibility to coordinate and align answer whether this goal has been reached almost 20 years operations across the supply chain. Especially in context of later. reverse logistics, the necessity of information systems Information systems as one of the supporting factors for support is stated, but is found to be not sufficient and has to JIT manufacturing have been identified quite early, too be linked with behavioral aspects [116]. [122]. The development of an integrated supply chain is Baiman and Rajan [96] point out that the accounting found to be highly influenced and enabled by information information systems represent only one of several inter- technology and information sharing. Even though a reluc- organizational design instruments, which are influenced by tance toward information sharing is present in practice, this various contingency factors. Integrative information, i.e., could be overcome through similar values and visions information on cause–effect linkages within the supply [119]. Due to information technology, centralized opera- chain, is essential for strategic performance measurement tions are not seen as necessary anymore to achieve control. systems. Furthermore, it is highlighted that these systems Additionally, central strategic planning and fulfillment on a form the basis for learning which is linked with strategic decentralized level are facilitated by information technol- outcome [19]. ogy [105]. Information systems and computer technology, This leads to the next important research stream which by this the link between supply chain partners, along with considers links and interfaces (especially in an inter-orga- the organizational structure, are also seen as crucial for the nizational setting); efficient SCM and coordination of implementation of integrated distribution concepts [123]. partners is not possible without adequate information. Referring to a basic logistics function, it was identified that There is a certain focus on special technologies or settings a warehouse information system ‘‘plays a crucial role in the observable, for example, logistics coordination, and the planning and control structure to achieve the desired high usage of EDI [108], or information sharing in vendor- warehouse performance’’ ([111], p. 392). managed inventory with special focus on the problem of From an overall MCS perspective, interdependence information availability and reliability is researched [117, between information and performance is often proclaimed. 118]. Spekman et al. [119] see the information flow as a This connection between information and performance is basis of interaction, along with Germain Iyer [107], who explicitly stressed quite early in the literature [84, 124] and refer to information systems as a basic enabler for inte- until today articles directly broach this issue [121]. Infor- gration and additionally highlight the importance of mation, especially in case of information sharing and con- behavioral aspects. tracts, is either seen as system integrated and contract Information exchange between supply chain partners not relevant, or as an enabling factor. Performance measure- only has a positive effect on time efficiency and demand ment delivers information for decision-making [31]; infor- transparency (both together referred to as ‘‘responsiveness’’) mation sharing and implemented information technologies 123 Logist. Res. (2009) 1:113–127 123 lead to inventory reduction, improved decision-making, This literature review also shows that management order and delivery time flexibility as well as higher accounting and logistics journals neither cover the topic of responsiveness [125]. Furthermore, it is hypothesized that MCS in logistics and SCM in a holistic way considering information connectivity mediates the relationship between the complete MCS, nor in a large number of articles. The flexible logistics and performance [126]. linkage between all four of Otley’s segments is essential Unfortunately, even on these basic ideas of use and for an effective MCS. Until today, this is not researched in effects of information systems literature does not agree. a sufficient way. Due to the relevance of logistics and Daugherty et al. [116], for example, especially refer to the supply chains with their related costs, their cost reduction connection of reverse logistics performance and information and coordination possibility, a comprehensive MCS to systems support. In their research, a linkage between achieve effectiveness and efficiency is important. Our information systems support and operating/financial per- review shows that there are several topics still to be formance could not be detected. With regard to the rela- researched within this field. tionship commitment between the buyer and the supplier the In order to gain a deeper understanding of the overall performance is enhanced. They could also not establish a structure of MCS research in logistics and SCM and to link between information systems support and satisfaction. make the aforementioned links more obvious, we classified Overall, the main focus of the literature lies on ‘‘linear’’ the content of all selected articles based on the dimension supply chains, i.e., buyer–supplier relationships. A broader, chosen in the respective cases. As shown in the respective network-based view is rarely taken [63]. Only few articles sections of this review, an intra-organizational and inter- refer to logistics and information in a comprehensive way organizational perspective can be chosen. Although one [12, 51, 112]. Here, a trend along with the general change might expect to find by far more articles in the inter- of focus from logistics to SCM can be seen. Over time organizational setting, this is not the case—the 101 articles another change can also be noted. Of the earlier papers are almost evenly distributed between intra-organizational many have high interest in technology and systems possi- (48) and inter-organizational (53) focus. However, over the bilities [51, 104, 127]. Later on, trust, behavioral and years the number of inter-organizationally focused articles organizational aspects as well as the process of information clearly outweighs the intra-organizationally focused ones. sharing become additionally relevant [83, 92, 96, 107]. While the number of intra-organizational articles has been Despite this, information availability and ways of infor- rather constant over the last 20 years at 2.5 articles per mation exchange are still important today [106, 117]. year, the number of the inter-organizational articles has steadily grown and has significantly grown after 2000 and reached levels of around 5 articles per year since then. 5 Conclusion and suggestions for further research Based on this differentiation, the depiction of a network- and interrelation chart is possible, showing the joint and Generally speaking, management accounting journals only reclusive occurrence of topics. The chart can be read as rarely address specific issues associated with logistics and follows: numerals in circles show the number of articles SCM; this includes both, theoretical and practical aspects. which consider the respective part of Otley’s framework. Although logistics and supply chains in some cases serve For reason of exhaustiveness, these include all articles as a specific example for the application of dedicated stating the respective part of the framework (in the other accounting and control tools [128, 129] or the description parts of this review article, only the significant ones are of general management control issues in inter-firm con- mentioned). All articles covering more than one area of texts, only a small number of articles explicitly focus on the framework constitute the lines between the circles this field. The majority of research published in manage- (numerals show number of articles considering the ment accounting journals has a rather general approach respective two aspects). [102, 130, 131]. One interpretation for this could be that With respect to our classifications, target setting and management accounting scholars do not see any need for performance measurement is the topic discussed most often the development of new and more specific accounting (indicated by the size of the circles in Figs. 5 and 6). techniques [65]. Instead, various authors elaborate known Additionally, this part of Otley’s framework has the highest methods and apply them to logistics and supply chain number of interrelated/shared articles. contexts [132]. This would correspond to the view of Concerning the number of articles considering intra- Dechow and Mouritsen [68], who cite arguments for a organizational aspects, there is neither an increase nor coexistence of both the physical, business-process oriented decrease observable from 1988 to 2008. For inter-organi- logistics and the formal, information-oriented account- zation aspects, however, there is an increase in number of ing—a view which would explicitly deny the need for articles, which becomes particularly observable from the dedicated MCS in logistics and supply chains. year 2000 onwards (not shown in diagrams). 123 124 Logist. Res. (2009) 1:113–127 Infor- mation Target Setting and Strategy (12) flows Performance Imple- (22) Measurement mentation (32) (19) (11) (9) (8) (12) (18) Target Setting and Strategy (14) Performance imple- Measurement mentation Information (36) (19) (16) flows Rewards and (30) Incentives (22) (5) (2) (3) Fig. 6 Topics covered in selected articles (inter-organizational) (4) connection with motivational/behavioral aspects. Espe- cially on the intra-organizational level, further research is necessary, as motivated employees can raise productivity and enhance firm performance. In this context, as well as for the supply chain level, not only financial rewards but Rewards also the effect and implementation of non-monetary and Incentives incentives, the optimum combination of both reward (5) schemes and the measurement scale for incentive granting should be further examined. Regarding information flow, Fig. 5 Topics covered in selected articles (intra-organizational) especially the examination of broader relationships, i.e., networks, and their information needs is relevant for the For the intra-organizational perspective (see Fig. 5), the future. Connected to this is the consideration of informa- links between all circles are much weaker than for the tion flows in various industries and their differences. inter-organizational perspective (see Fig. 6). Further, in the Moreover, possibilities for an efficiency increase in infor- intra-organizationally focused articles the topic of rewards mation flows should be researched. Further emphasis is and incentives is often treated uncoupled from the other also encouraged toward the aspect of feedback and learning aspects of MCS, while the interrelation between the other in supply chains. three areas is at least at a medium level. The overall outlook reveals a considerable potential for The inter-organizational perspective on the other hand further research on management control systems in logis- (see Fig. 6) shows a more holistic pattern of research that tics and SCM, from which both research and practice alike better considers interrelations between different areas of will profit. MCS. Here, only the interface between strategy imple- mentation and rewards/incentives is rarely considered. All other links can be considered to be medium to strong and thus represent a research perspective which is on its way to References a comprehensive and interrelated view. 1. 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Management control systems in logistics and supply chain management: a literature review

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Copyright © 2009 by Springer-Verlag
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Engineering; Engineering Economics, Organization, Logistics, Marketing; Logistics; Industrial and Production Engineering; Simulation and Modeling; Operation Research/Decision Theory
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1865-035X
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10.1007/s12159-009-0011-z
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Abstract

Logist. Res. (2009) 1:113–127 DOI 10.1007/s12159-009-0011-z REVIEW AR TICLE Management control systems in logistics and supply chain management: a literature review Daniel P. Jeschonowski Æ Julia Schmitz Æ Carl Marcus Wallenburg Æ Ju ¨ rgen Weber Received: 4 March 2009 / Accepted: 4 March 2009 / Published online: 25 April 2009 Springer-Verlag 2009 Abstract The purpose of this article is to provide an for further research on MCS in logistics and SCM, from overview of the literature covering the area of management which both research and practice alike will profit. control systems (MCS) in logistics and supply chain management (SCM). It is motivated by the increasing Keywords Literature review attention the two fields of MCS and logistics/SCM have Management control systems (MCS)  Logistics lately attained, fueled by an augmenting competitive Supply chain management (SCM) pressure companies are facing. For logistics and supply chain practitioners to realize the existing potentials, effective MCS are necessary. In order to facilitate future 1 Introduction research in the field of MCS, which consequently also benefits practitioners, it is necessary to consolidate the Over the years, the management of logistics and supply extant literature. To do so and to identify promising ave- chains has turned into a widely discussed topic, both in nues for future research is the purpose of this article. We practice and research. This development was paralleled by provide a literature overview that covers the main aspects the increasing attention the two fields of management con- of MCS in context of logistics and SCM by applying trol systems (MCS) and logistics/supply chain management content analysis. To account for quality of publication, (SCM) have lately attained, fueled by an augmenting com- the analysis is restricted to international top journals. The petitive pressure companies are facing. Additionally, the literature review shows foremost that research into the understanding has grown that well-managed supply chains development and implementation of a holistic MCS for represent a competitive advantage and are a major lever of logistics and SCM should be intensified which could be overall firm performance [1, 2]. For logistics and supply achieved by further case studies as well as survey-based chain practitioners to realize the existing potentials, effec- studies. More conceptual work could be necessary to tive MCS are necessary to serve as the underlying basis. enable a better practical utilization of MCS in logistics and This is especially true today as companies are facing the supply chain settings. We reveal a considerable potential aftermath of the 2008/2009 financial and economical crisis. Yet, the application of state-of-the-art MCS in logistics and SCM still remains partially rudimentary in practice. D. P. Jeschonowski  J. Schmitz  J. Weber (&) Often, essential elements of MCS like the detailed and Institute of Management Accounting and Control, exhaustive consideration of cost issues when designing WHU, Otto Beisheim School of Management, supply chains [3] or general supply chain orientation of Burgplatz 2, 56179 Vallendar, Germany existing MCS are not found in practice [4]. In fact, MCS in e-mail: jweber@whu.edu URL: www.whu.edu/control logistics and supply chains, in many cases, are reduced to mere operational aspects [5]. C. M. Wallenburg Also in research shortcomings can be observed. Logis- Kuehne-Center for Logistics Management, tics and SCM have been studied in depth from a perfor- WHU, Otto Beisheim School of Management, mance perspective [6–11] as well as from a cost Burgplatz 2, 56179 Vallendar, Germany 123 114 Logist. Res. (2009) 1:113–127 perspective [12, 13]. Although introduced already in the Professionals, which particularly highlights the aspects of late 1980s [14] frameworks for the discussion of control in coordination and integration, as also illuminated by a the context of logistics and supply chain are rarely applied. number of authors [4, 25–28]. Logistics is seen as The control process often remains an unspecific adaptation ‘‘that part of Supply Chain Management that plans, of general MCS research which does not address any implements, and controls the efficient, effective for- specific characteristics with regard to the management of ward and reverse flow and storage of goods, services, logistics and supply chains. This is not satisfying as theory and related information between the point of origin and practice demand for techniques and practices adapted and the point of consumption in order to meet cus- to supply chain needs [15, 16]. Further, the intersection of tomer requirements’’ [29]. MCS and logistics and SCM often seems to be unclear. It is characterized by a large degree of heterogeneity and For the definition of the terminus SCM, we follow the decoupled theoretical view [6]. proposition of Mentzer, DeWitt et. al., who define SCM as In order to facilitate future research in the field of MCS, ‘‘the systemic, strategic coordination of the tradi- which consequently benefits practitioners, it is necessary to tional business functions and the tactics across these consolidate the extant literature. To do so and to identify business functions within a particular company and promising avenues for future research is the aim of this across businesses within the supply chain, for the article. purposes of improving the long-term performance of The article is organized as follows. First, fundamental the individual companies and the supply chain as a definitions for this paper are presented. Afterward, relevant whole’’ [2]. literature is identified and the framework used is described. Thereafter, the literature is classified and reviewed. The Following this definition, a supply chain is seen as an manuscript closes with a discussion of the implications and entity with a certain degree of integration inside a particu- directions for further research. lar company and among several companies (thus, according to Min/Mentzer extending functional integration to all firms involved in the respective supply chain [30]). 2 Conceptual basis As will be further elaborated in the course of the literature review, this extension makes the issues of controllability Regarding MCS and logistics/SCM, no commonly agreed that can already be observed in classical intra-firm settings upon definition exists. Moreover, for both areas of interest even more severe [31, 32]. a wide variety of different schools of thought can be identified. Thus, before conducting the literature review, we will sketch the understanding of these terms which is 3 Methodology applied in the following. Some scholars have a very broad view of MCS that To consolidate the existing knowledge on MCS in logistics includes nearly the entire organization of a company (e.g., and supply chains we review the extant literature by [17]). As these approaches include virtually everything that applying content analysis. Content analysis is a well- can be termed ‘‘management’’, we chose to apply a more accepted method used by numerous scholars (e.g., [33– narrow understanding which is well expressed in Simons’ 36]). It aims at a reliable, objective, systematic as well as widely agreed [18–22] definition of MCS: quantitative study of existing publications [33, 37] and allows for the investigation of implicit assumptions as well ‘‘Management Control System are the formal, infor- as explicit statements of texts [33]. Thus, it represents a mation-based routines and procedures managers use promising method for reviewing literature [38]. In order to to maintain or alter patterns in organizational activi- conduct a content analysis, two steps are required: sam- ties’’ ([23], p. 5). pling and categorization [34]. These routines and procedures have the character of Sampling means that in an initial step articles which controls, which have been named and categorized by contribute to the domain of MCS in logistics and SCM scholars in different ways. Merchant/van der Stede, for have to be identified. Given the diversity of available example, differentiates action controls, results controls and publications, this search has to be directed by setting personnel/cultural controls [24], whereas Simons refers to appropriate limits. These limits where operationalized diagnostic controls, interactive controls, and boundary and through the following steps: first, only literature in English belief systems [23]. language and published in academic journals was consid- Logistics (and logistics management) is here understood ered, while dissertations, textbooks, and conference papers according to the definition of the Council of SCM were excluded. To account for quality of publication the 123 Logist. Res. (2009) 1:113–127 115 analyses focus on international top journals. Selection in journals IJPDLM and JBL with a total number of 64 arti- the field of management accounting was done by choosing cles (Fig. 1). Within the management accounting journals the top five journals [39]. These include The Accounting we see a similar pattern, where almost all articles were Review (TAR), Journal of Accounting Research (JAR), published in only two journals: AOS and Management Accounting, Organizations and Society (AOS), Manage- Science, which provide a total of 23 articles. All the other ment Science and Journal of Business. The two journals journals only provide a very limited number of contribu- solely focusing on finance and financial accounting tions (Journal of Business without a single article, Journal (Journal of Finance, Journal of Financial & Quantitative of Operations Management, The Accounting Review, Analysis) were excluded. For the domain of logistics/SCM, Transportation Journal and Journal of Accounting also the top five international journals were included [40]: Research with between two and four articles each over the Journal of Business Logistics (JBL), International Journal 20-year period). of Physical Distribution and Logistics Management Considering Management Science not to be a pure (IJPDLM), International Journal of Logistics Management management accounting journal, but with an equal focus on (IJLM), Journal of Operations Management (JOM), and operations and SCM, the distribution of articles gives the Transportation Journal (TJ). Concerning their year of impression that MCS in logistics and supply chains is publication, a timeframe from 1988 until 2008 was cov- mainly a topic of supply-chain oriented journals. ered, which represents a timeframe we consider adequate Regarding occurrence of articles only a slight increase in because it both captures a large proportion of the devel- number of articles can be observed from 1988 to 2008 opment of SCM [2] and MCS while still being connected to (please note that the last bar only refers to 1 year, while the current research. other bars refer to a 2-year span) (Fig. 2). This might be Second, analyzed literature was limited to the area of seen as an indicator for a slight increase in attention over MCS in logistics and SCM by keyword definition. To ensure the course of time. However, the total amount of articles is the reference to logistics or SCM the keyword search always still low, when considering that every journal provides less included one of the three words ‘‘logistics’’, ‘‘supply chain’’, than one relevant article per year on average. and ‘‘supplier’’. In addition, the titles, abstracts and author supplied keywords also had to contain one of the following phrases to belong to the domain of MCS: ‘‘strategy imple- mentation’’, ‘‘plan implementation’’, ‘‘strategic planning’’, ‘‘target setting’’, ‘‘management control’’, ‘‘managerial 11 11 11 control’’, ‘‘accounting’’, ‘‘performance management’’, ‘‘performance measurement’’, ‘‘cost management’’, ‘‘cost 6 6 control’’, ‘‘behavioral control’’, ‘‘cultural control’’, ‘‘infor- mal control’’, ‘‘task control’’, ‘‘control system’’, ‘‘budget’’, ‘‘reward’’, ‘‘incentive’’, ‘‘compensation’’, ‘‘metrics’’. Our search resulted in a total number of 101 articles in 1988- 1990- 1992- 1994- 1996- 1998- 2000- 2002- 2004- 2006- 2008 the selected ten journals. The majority of these stem from 89 91 93 95 97 99 01 03 05 07 the logistics and SCM journals. Within this group of Fig. 2 Distribution of relevant articles over time journal almost all articles were published in the two Fig. 1 Distribution of reviewed Int. Journal of Physical Distribution & Logistics Mgm t. articles across the journals (shaded logistics/SCM journals) Journal of Business Logistics 27 Accounting, Organizations & Society Mgm t. Science 10 Accounting Review Journal of Operations Mgm t. 3 Int. Journal of Logistics Mgm t. 3 Transportation Journal Journal of Accounting Research 2 Journal of Business 123 116 Logist. Res. (2009) 1:113–127 3.1 Framework strategy [44, 45]. This means that the formulation of logistics and supply chain objectives is not a specific In order to categorize the articles and their content, an application of MCS in the special field of logistics and appropriate framework is necessary. As the focus of our SCM, but rather part of the general MCS. Thus, the review study is on MCS in a certain area of application, the of the extant literature will start with the examination of the framework has to consider a management accounting and process of strategy implementation. In the next step, we will control perspective. A well-established framework [41, 42] review the literature regarding performance management in that fulfills this requirement to be used for the purpose of logistics and supply chain, and consider target setting and this review was developed by Otley [18]. Its character is behavioral aspects. The subsequent step is the topic of rather descriptive than normative [43], and aims at pro- rewards and incentives. Finally, we consider the aspect of viding a holistic view about the existing practices in the information flows including information processing. field of management accounting and control systems. The framework provided by Otley addresses five key areas of management: (1) definition and evaluation of key 4 Findings organizational objectives, (2) process of strategy imple- mentation, (3) target setting as well as performance mea- 4.1 Literature classification surement, (4) rewards and incentive structure used, and (5) flow of information. Prior to analyzing the content of the articles, this section Using a contingency theory approach, Otley deduces the gives an overview regarding the methodologies and general objectives of the company at the top level as his approaches used. This is done based upon the suggestion of first area. These objectives form the foundation for the Sachan/Datta by differentiating the research design into a company-specific MCS and are subsequently translated quantitative (e.g., construct validity tests, math models) into strategies, followed by an implementation process in and a qualitative (e.g., case study, action research) design the subdivisions. This connection of objectives and strategy [11]. Further, the articles are distinguished into empirical is examined in the second area. It links the company level (survey based) and desk research (e.g., conceptual). with a more operational level. The third part focuses Based on these two dimensions, four main types of on effectiveness and efficiency. It aims to describe and article design can be identified: empirical quantitative, analyze techniques of goal setting and goal attainment, empirical qualitative, desk quantitative, and desk qualita- performance measurement as well as behavioral aspects. tive. Articles may also apply a multi-method approach by Bearing these performance targets in mind, the fourth combining more than one of the four main types. This, for question deals with both incentives and rewards to achieve example, is the case when a survey is accompanied by defined targets. It considers not only financial rewards but case-study interviews to gain in-depth insights into the also intangible factors. Information flow, as fifth area, quantitative results (for an overview of the usage of case refers to feed-back and feed-forward information. It studies in logistics research, see [46]). enables ex-ante preventive action, ex-post corrective Remarkable differences between the two selected groups action, and learning. of journals can be observed. As displayed in Fig. 3, the Within the literature review the focus will be on the last articles from the management accounting journals mainly four areas of MCS. This is due to the fact that the formu- focus on desk research with emphasis on quantitative lation of a dedicated logistics and supply chain strategy is methods, while the articles in the logistics and supply chain commonly considered as a part of the overall company journals are almost evenly distributed among quantitative Fig. 3 Use of research methods Articles from accounting journals Articles from logistics journals for accounting and logistics journals Qualitative Quantitative Qualitative Quantitative 9% 24% 22% 36% 11% 21% 31% 46% Desk Empirical Desk Empirical Logist. Res. (2009) 1:113–127 117 and qualitative work, with an emphasis on qualitative desk missing implementation of a logistics and supply chain work and quantitative empirical work. strategy, logistics decisions are often taken with inadequate Within the group of management accounting, the two information, solely based on intuition [47]. For this reason, main contributing journals AOS and Management Science the selection and deduction of logistics and supply chain show very different styles. While most of the articles in strategies have been discussed for several decades, and is Management Science are desk quantitative and use math- well covered in the academic literature [1, 2, 25, 48–50]. In ematical modeling, articles in AOS are more empirically contrast to a mere ‘‘top-down’’ definition, research on the oriented and often utilize qualitative case-based research. actual implementation of these functional strategies is rare. The two main contributing journals in the field of logistics This is problematic, as deducting or selecting a strategy and SCM, JBL and IJPDLM, are quite similar with respect does not equate to a completed implementation. to the employed research designs. The main difference is In practice, terminology and benefits derived from def- that IJPDLM employs slightly more empirical qualitative inition and implementation of strategy in logistics and research based on case studies, whereas JBL presents a supply chain contexts seem not to be completely clear. For little more quantitative empirical work. example, Novack speaks of standards being synonymous to When analyzing the selected articles more deeply, general objectives the organization tries to attain [14]. This almost an even distribution across the main methods (sur- lack of an agreed definition of strategy in general and vey, simulation/experiment, interviews, math modeling, logistics and supply chain strategy specifically can lead to a case study, pure conceptual modeling or other, e.g., liter- certain degree of disappointment, which can be observed ature review [11]) can be observed (see Fig. 4). Exceptions when it comes to translating strategy into action and from this are simulations, which are employed relatively deducing corresponding plans [51]. seldom only, and surveys, which are used more often than However, there are also several cases, where in practice, other methods. a development toward supply chain strategies (so called ‘‘functional strategies’’) can be observed, which are well 4.2 Categorization defined [44] and implemented. The observations made can be interpreted as the result of the intention to increase After having performed the literature classification, namely logistical performance through appropriate supply chain the assessment of different research types used, the next strategies [45] and, in conjunction with other functional step was literature categorization. It is based on Otley’s strategies, also enhance overall firm performance [52, 53]. framework as described earlier [18]. The implementation and transfer of a (howsoever formu- lated) strategy into operation is answered in several dif- ferent ways in literature. Morash illuminates how an 4.2.1 Strategy implementation overall business strategy (or ‘‘competitive strategy’’ [54]) Any system that is controlled requires objectives against and the corresponding specific supply chain strategy may which it can be assessed. Without a proper logistics and be transformed into defined supply chain capabilities and supply chain strategy, or even an imperfect definition or an increased supply chain performance [45]. 27% 16% 15% 14% 12% 11% 5% Survey Case stud y Concep tual Math modeling Interview Simulation/ Other modeling Experiment (e.g. literature review) Fig. 4 Use of research methods aggregated 123 118 Logist. Res. (2009) 1:113–127 The actual degree of implementation of logistics and Across organizations, the topic of coordination between supply chain strategy has been shown to depend especially companies as a strategic enabler has been one of the central on the stage of logistics development [53, 55], which may issues for research [59]. The simplest form to implement a range from mere ‘‘distribution logistics’’ over ‘‘integrated strategy in this context is via market- and cooperation- logistics’’ to ‘‘logistics and supply chain management’’ mechanisms. In this respect, a large amount of research representing strategic capabilities of the overall firm. focuses on pricing and contracting as primary source of According to Kent and Flint [56], several distinct levels of coordination and thus neglects the explicit need for MCS development can be observed (these include logistics as a [59]. The corresponding articles not only deny the need for pure transportation function, the beginning inclusion of explicit coordination mechanisms, but also the logistics and inter-firm information flows as well as integrated and supply chain strategies need to be translated into action strategic applications of logistics on advanced levels). through means and measures. Many authors state the importance of sequential capa- Additionally, the links and interfaces have to be con- bility building and logistics development. Whenever cer- sidered when analyzing and preparing strategy implemen- tain stages or levels have not been fully operationalized, tation. Free [60] (as one of the few scholars published in the subsequent development stages will suffer from a dis- AOS that deals with supply chains) focuses on MCS spe- connection of strategy and measurements [31]. cifically with respect to inter-organizational aspects. Such Within a certain organization, operative budgets can be aspects inevitably arise with, for example, logistics out- seen as the simplest way to transform a logistics and supply sourcing [61] or generally within supply chains and are chain strategy into practice. According to Novack [14], addressed by different authors [53, 60]. The literature shows budgets are the instrument most easily recognized as well as that the general idea of trust in this context has a severe analyzed from a research perspective within this domain. impact in supply chains [62, 63]. The concept of trust (see They are acknowledged as being a tool that helps to com- [64] for an overview) represents an emerging body of municate plans and to coordinate a company’s activities. accounting research. This assertion is supported by the fact Even simple budgets can cover total cost aspects of logistics that a number of areas exist in which logistics and supply [57, 58] (and supply chains, when broadened to inter- chains are not a mere field of application of MCS but are organizational settings). Strategy, thus, becomes translated directly involved in the progress of MCS research [65–67]. into action by planning, monitoring, and reporting. At the Some authors derive the need for special MCS in same time, it forms an important prerequisite for rewarding logistics and supply chain contexts from observations they and incentivizing employees. The planning activities also were able to make in companies, especially regarding include related areas like forecasting and estimation [9, 51]. existing interdependencies. Dechow and Mouritsen [68] The field of logistics and SCM to a large degree involves describe the large interdependencies of logistics and joint and common costs. Therefore, in practice, it can in accounting in context of enterprise resource planning sys- most cases only be insufficiently addressed by standard tems. This comparatively recent article also shows that costing systems [47]. theoretically well-settled ideas of MCS have diffused into A broader approach for practice is consequently pro- logistics and SCM research, but not to the same extent into posed by Novack/Dunn, who introduce the concept of logistics and SCM practice. In practice, focus is mostly on ‘Logistics Optimizing’ and ‘Operational Plans and Systems issues of cost accounting, described by a number of authors (Loops)’, which implies a broader view that tries to address with more or less specific techniques for cost accounting in specific characteristics of logistics and supply chains [44]. logistics and supply chains [12, 69]. However, this does not The tool aims to facilitate the communication and interac- imply that no need for the specific design of MCS exists. In tion between corporate planners and logistics planners and fact, extraordinary efforts into MCS can be translated into thus contributes to the company’s strategy implementation. obvious competitive advantages and visible success [70]. Accordingly, strategy implementation via operational plans and systems loops follows a stringent practice-oriented 4.2.2 Target setting and performance measurement pattern: a six-step logic is applied. Step one and two con- sider the actual formulation of the logistics strategy, step Having described the process of (high level) strategy three analyzes the capabilities of the company with regards implementation, the next step in both analyzing and to logistics and supply chains, step four elaborates on neces- establishing a coherent MCS in logistics and supply chains sary efforts to further increase performance, and steps five consists of appropriate target setting and subsequent per- and six establish actual performance goals. This approach formance measurement. The literature agrees on the may serve as a general method to analyze own strengths and importance of both [10, 30, 71, 72]. weaknesses as well as external factors that influence the Target setting and performance measurement may be logistics performance of the company. seen as part of a ‘‘logistics performance audit’’ [51]. 123 Logist. Res. (2009) 1:113–127 119 It includes first identifying the performance measures to In practice, this manifests itself in an arbitrary situation: be used and the service levels to be met and afterward although a general overview with regard to commonly comparing the degree to which the targets were met. This used performance measures exists (e.g., [72]) companies part of MCS is the logical consequence of strategy often refrain from an extended usage. In many cases, implementation. companies restrain on traditional performance measures Several studies point out how difficult it is to measure (i.e., non-cash oriented and non-value oriented ones) logistics performance [6, 14, 47]. This particularly affects with a focus on minimizing direct costs [73]. Therefore, and complicates the definition of accurate standards and performance evaluation is often done by applying classical targets [14]. This difficulty is not caused by a lack of measures only. This is particularly severe as, e.g., theoretical considerations. Cavinato [83] shows: information needs are much higher In practice, performance is ensured with the help of than the data provided by classical budgetary systems. systems for performance measurement [5, 73], and within This is problematic as Mentzer and Konrad [84] mention these measurement systems, both financial and non-finan- the importance of accurate data as a basis for an efficient cial measures are applied [7]. Forslund [74] states ‘‘high performance measurement. The literature only offers little performance logistics require the discipline of measure- advice how these information needs should best be ful- ments’’. Especially, because goals positively reinforce filled as the corresponding articles often are either very employees and can help to motivate them [14]. To ensure broad or very technically and narrowly defined (for this, performance measurement should incorporate at least example, Kleinsorge et. al. [47] and Clarke Gourdin [85] three aspects: (1) the systematic collection of data, with the example of (fractional) linear programing tech- (2) consistency in reporting, and (3) consistency in inter- niques or Novack [14] explaining statistical process pretation [75]. control). The literature offers different, competing classifications Coherently, not only inside the single company, but also for performance measures. Kleinsorge et al. [75] differen- across several companies and along the supply chain, a tiate between the evaluation of quality and the evaluation lack of implementation can be observed. Empirically seen, of operational efficiency, dividing both domains further here many of the elaborated measurement techniques into investment-oriented, transaction-oriented, and rela- developed in the literature lack practical relevance—so far tionship-oriented measures. They further highlight the last only few successful applications can be found in practice two types of measures to be comparably difficult to collect [81]. Instead, companies most often apply tools and mea- and report. Since, this classification has been widened from sures known from classical managerial accounting (e.g., a non-logistics context which differentiates market-based, matrices with individual weights for different involved hierarchical, and alternative controls (see e.g., [62, 76, 77], factors, see [75]). for a comparative view or [78] for the differentiation For example, qualitative measures and targets are rarely between coordination via price mechanisms and coordi- used. Often, cost efficiency is the primary driver of mea- nation that incorporates non-price mechanisms). sures and target setting [75]. Especially in early stages of Another research stream classifies performance indica- the logistics and supply chain evolution the focus of tors with regard to their perceived practical usefulness. measurement is often placed on production and transpor- Depending on the author different foci can be observed. tation costs, and not on capturing the whole scope of Whereas several authors recommend the use of very activities and an exhaustive fulfillment of the strategy [55]. practical variables including lead time, percentage of One reason for this can be seen in the fact that financial on-time delivery or inventory availability [45, 51, 74], data is easy to report [10, 75] and comparable across dif- others include broader meta-valuation (e.g., overall ferent companies. supplier performance, consistency of quality) [51, 79]or These empirical observations come along with the ‘‘value-based’’ ones [80]. phenomenon of aggregating measures too much [47]. By Theoretically, these ‘‘value-based’’ considerations doing so, companies neglect internal impacts of individual directly link to the approach of total cost of ownership, decisions within the supply chain system. which is not completely well established in logistics and A further problem when considering inter-company supply chain [81, 82]. The advantage of total cost of settings stems from the fact that different understandings of ownership considerations is that these concepts cover the the term performance prevail [6, 79]. Further, logistics overall value chain and thereby all steps, starting from a often involve inter-firm relationships, which creates vari- potential supplier selection up to an ongoing management ous problems [62], starting with different companies within of logistics activities and helps to cover aspects including a relationship having a different idea of what constitutes general performance measurement as well as target setting logistics performance [47] and ending with conflicting [81]. views about how high-specific targets should be set [74]. 123 120 Logist. Res. (2009) 1:113–127 As stated, research about performance evaluation and applied and a game-theoretical view used. One important target setting with regard to broader aspects of MCS is practical topic is the aspect of confidentiality and incen- rarely found. Literature only in a limited number of articles tives for them [97] as well as the type of contract and the deals with aspects of logistics dyads covering both parties included incentives for information sharing [98]. involved in the relationship. There are few exceptions, Li [99] especially examines incentives to companies for showing the application of agency theory [86, 87], col- information sharing in vertical relationships. In contrast to laborative network theory [88] or transaction cost and this, Lee and Whang [93] refer to decentralized supply resource-based theory [89] for example. This is especially chains in focusing on the misalignment of incentives and problematic, because performance measurement systems the development of a performance measurement scheme to for logistics and supply chains become incomplete when- avoid this misalignment in order to achieve overall supply ever strategic performance measures are disaggregated into chain efficiency. For this they recommend transfer pricing, several performance dimensions, organizational units, and consignment costs, penalties, and shortage reimbursement different periods of time without a proper reflection [90]. [93]. Further, incentive problems are discussed that arise In practice, this issue is not solved either: the practical in buyer–supplier relationships based on incomplete con- implementation of targets and measures often lacks tracts. Possible solutions to these problems are seen in trust appropriate foundation. This seems to be somehow con- enhancement, through contract design, asset ownership or tradictory, as supply chains can be seen as systems that are organizational effects (e.g., number of suppliers and influenced by the threat of instability and contradictory monitoring [96]). norms [91]. This per se calls for effective MCS. Rewards and incentives is the only part of Otley’s Mentzer and Konrad (see [84], p. 39) state that perfor- framework where a commensurable proportion of research mance measures have to ‘‘be consistent with the manage- from new institutional economics can be observed. Dekker ment reward system’’ in order to be effective—a practical [63], for example, addresses opportunistic behavior and suggestion that links to the Sect. 4.2.3. how this may be avoided. He proposes a financial incentive system, based on a mutual fund for necessary investments, 4.2.3 Rewards and incentives with the aim to align the partners’ objectives with the alliance’s goals. Further, benefit sharing may also be used Target setting and performance measurement are con- as an incentive tool [63]. Simatupang and Sridharan [92] nected with the implementation of an adequate incentive regard incentive alignment as a central aspect of collabo- system. This connection is observable for example in the ration and use it as one of three factors to measure supply research of Simatupang and Sridharan [92], who show that chain collaboration. For them ‘‘incentive alignment refers decision synchronization in connection with incentive to the degree to which chain members share costs, risks, alignment leads to an improvement in fulfillment perfor- and benefits’’ ([92], p. 46). Within inventive alignment they mance. In contrast to this view of incentive alignment as a focus on financial rewards and only integrate one non- means to achieve performance, Lee and Whang [93] regard financial factor, i.e., delivery guarantee. performance measurement as a means for incentive align- Another stream of research is based on agency theory— ment. These different views show the interacting relation- sometimes described as economic theory of incentives ship of both incentives and performance measurement. [100]—in the context of supply transactions. Apart from Rewards and incentives not only refer to financial incentive contracts, objective performance measurement, aspects but also include intangible factors as reputation or formal (ex ante) contracts, subjective assessment, and appreciation [18] of employees. Yet, this is not reflected in relational contracts can also be used as incentives. Gibbons the literature on rewards and incentives. Only one article [100] highlights that also career concerns, i.e., belief of the [94] exists that covers logistics- and employee-centered worker’s abilities based on observable performance and by aspects. The empirical results indicate that non-financial this future compensation, as well as the promise of pro- factors (socialization opportunities and sense of commu- motion and future supplier value form possible incentives. nity) have a stronger impact on employee turnover than Another agency-theory based article addresses incentive financial rewards have [94]. contracting like those based on game-theory. It is shown A significant number of articles cover coordination- that product architecture decisions and the occurrence of related aspects in inter-company settings. The emphasis on product failure are connected with incentive efficiency this field can be explained by the importance the avail- [101]. ability of information has in enhancing supply chain per- There is a strong connection between incentive systems formance [95] and consequently by the necessity to provide on the one hand and information flow and information adequate incentives for sharing information [96]. Com- sharing on the other hand (as documented especially in monly, in this research stream mathematical modeling is several articles published in Management Science). 123 Logist. Res. (2009) 1:113–127 121 It can be concluded, that the existing literature mainly to organizational design and control in inter-organizational considers financial incentives as a means of coordination relationships, on the one hand informal meetings and and goal alignment, while non-financial incentives rarely communication, on the other hand formal information are researched. This may be attributed to a problem already processing, e.g., shared forecasting, are relevant to achieve faced for performance measurement and target setting: the coordination and enhance value. general difficulty in modeling and measuring soft factors as As information flows represent the overarching basis for opposed to hard monetary incentives. Logistic-specific effective and efficient MCS in logistics and supply chains, questions are addressed only to a minor degree; often an many of the reviewed Management Science articles not application of incentive considerations from other areas is only cover the topic of incentives (as highlighted in the done more or less without reflection [94]. Most articles previous section), but also information aspects and refer to research buyer–supplier and other supply chain relation- the effects that follow from information sharing [95, 97– ships. Possible reasons for this may lie in the fact that 99]. Li [99] points out that information sharing should not incentive misalignment causes greater problems in inter- be considered isolated, because for example the reaction of organizational settings than internally and that the need for other firms (e.g., competitors) has to be examined at the coordination often is higher between companies than same time. Other authors in contrast refer to the concept of within [26]. decentralized information to avoid the problems connected with information sharing (e.g., inventory levels, coordina- 4.2.4 Information flows tion problems, and hidden information) [93]. Additionally, information flow in connection with the operating policies Information flows can be seen as the overarching basis of of demand monitoring and ordering is considered to MCS. This is also reflected in the large number of articles achieve cost reduction and higher efficiency through which can be found in the academic literature in logistics improved information utilization [103]. and SCM. Almost half of the articles finally considered Formalized information flows are often supported by IT deal with information and its flow, which is a clear indi- systems. This fact is considered by a number of authors. cation for the importance of this area of MCS. These systems and their capabilities as well as special Within the logistics journals, several research streams information tools (e.g., electronic data interchange, EDI) can be identified. They consider design and implementation are a first area of research. Information systems and current of information systems in general, their connection with the and comprehensive information are seen as a means for organizational or supply chain structure, and the effect on effective coordination, within a company as well as along coordination and cooperation including performance the supply chain [31, 83, 104–107]. Within this research stream, the use of EDI is often measurement. Novack [14] states that information plays a major role discussed. EDI is seen as a tool to facilitate data sharing for effective control, and emphasizes the importance of across company boundaries [104]. Furthermore, EDI is current and adequately detailed data for decision-making seen as an enabler for value-adding partnerships and the and control. The basis for an efficient information flow lies coordination of inter-organizational processes, and by this in the implementation of information technology and as an essential for high logistics performance [108]. information systems. For just-in-time (JIT) manufacturers, reliable and up-to- The information needs mentioned by Novack as the date data is very important. Here, EDI is seen as a possi- justification and motivation for research on information bility for efficient information handling. Empirical data flows are addressed by a number of other authors as indicates that ‘‘JIT firms realize more benefits using EDI well. Tomkins [65] examines differences in information than non-JIT firms’’ ([109], p. 31). Overall, customer sat- requirements that depend on the type of alliance or network isfaction is enhanced by improved communication and the parties are engaged in and shows that the extent to integrated use of information technologies based on EDI. which information is needed is determined by trust: the In connection with strategic supply chain planning the use more the relationship is based on trust, the less formal and design of decision support systems (DSS) is discussed. information processing is necessary. However, contrary Koutsoukis et al. [110] highlight how the process from data ideas exist in research. Dekker [63] categorizes information generation to knowledge creation is integrated into a DSS. sharing explicitly as a form of formal control. He, there- Information is considered in several ways. First, with fore, sees information sharing and transparency as an regard to forecasting and the hardware and software used, essential basis for trusting relationships. In dyadic rela- furthermore the information flow connected to order pro- tionships, information precision and reliability are relevant cessing [51]. for the implementation of vendor managed inventory and Also warehouse and distribution information systems for enhancing supply chain profitability [102]. With regard are seen as relevant [14]. In this context, the kind of 123 122 Logist. Res. (2009) 1:113–127 warehouse information systems used (standard vs. tailor- when implemented well, but it is a clear hindrance and made) and the relationship of warehouse complexity with influences performance negatively when missing [120]. An the planning and control structure is researched [111]. improvement in information exchange leads to a higher Especially software and non-financial informational control responsiveness. As aforementioned, Simatupang and are said to be important [112]. Additionally, forecasting Sridharan [92] develop an instrument for supply chain col- processes and systems are dependent on the information laboration measurement, of which information sharing is technology used [113, 114]. one of three parts. While inventory and fulfillment are This research stream also makes reference to the strongly affected by information sharing in a positive way, implementation of boundary-spanning collaborative plan- responsiveness is only improved slightly. ning, forecasting and replenishment systems, data genera- With regards to performance, a high level of commit- tion, and by this, the need for software usage [113]. ment leads to a high value of information systems support Moreover, information and communication technologies [116]. Dysfunctional ERP systems and data processing are are regarded as a success factor for an efficient SCM [115]. one problem of the integration of performance manage- In this context, establishing communication channels, as ment in buyer–supplier dyads. Additionally, the necessity well as web-based IT tools, decision support systems, and of performance feedback for corrective actions is pointed the security of information transmission are relevant. out [121]. Varila et al. [12] highlight the aspect of data However, practical implementation of enterprise resource collection and information systems in connection with the planning systems cannot be found very often, whereas development of a highly accurate cost accounting system simple, non-integrated forms of communication like emails for warehouse logistics. and faxes are commonly used. Standard databases, uniform In the early 1990s, a general need for workflow and coding schemes, and order placements, for example, are process redesign is proclaimed to sustain lasting benefits similarly seldom used, even though these technologies from EDI [108]. However, literature does not give a clear would provide the possibility to coordinate and align answer whether this goal has been reached almost 20 years operations across the supply chain. Especially in context of later. reverse logistics, the necessity of information systems Information systems as one of the supporting factors for support is stated, but is found to be not sufficient and has to JIT manufacturing have been identified quite early, too be linked with behavioral aspects [116]. [122]. The development of an integrated supply chain is Baiman and Rajan [96] point out that the accounting found to be highly influenced and enabled by information information systems represent only one of several inter- technology and information sharing. Even though a reluc- organizational design instruments, which are influenced by tance toward information sharing is present in practice, this various contingency factors. Integrative information, i.e., could be overcome through similar values and visions information on cause–effect linkages within the supply [119]. Due to information technology, centralized opera- chain, is essential for strategic performance measurement tions are not seen as necessary anymore to achieve control. systems. Furthermore, it is highlighted that these systems Additionally, central strategic planning and fulfillment on a form the basis for learning which is linked with strategic decentralized level are facilitated by information technol- outcome [19]. ogy [105]. Information systems and computer technology, This leads to the next important research stream which by this the link between supply chain partners, along with considers links and interfaces (especially in an inter-orga- the organizational structure, are also seen as crucial for the nizational setting); efficient SCM and coordination of implementation of integrated distribution concepts [123]. partners is not possible without adequate information. Referring to a basic logistics function, it was identified that There is a certain focus on special technologies or settings a warehouse information system ‘‘plays a crucial role in the observable, for example, logistics coordination, and the planning and control structure to achieve the desired high usage of EDI [108], or information sharing in vendor- warehouse performance’’ ([111], p. 392). managed inventory with special focus on the problem of From an overall MCS perspective, interdependence information availability and reliability is researched [117, between information and performance is often proclaimed. 118]. Spekman et al. [119] see the information flow as a This connection between information and performance is basis of interaction, along with Germain Iyer [107], who explicitly stressed quite early in the literature [84, 124] and refer to information systems as a basic enabler for inte- until today articles directly broach this issue [121]. Infor- gration and additionally highlight the importance of mation, especially in case of information sharing and con- behavioral aspects. tracts, is either seen as system integrated and contract Information exchange between supply chain partners not relevant, or as an enabling factor. Performance measure- only has a positive effect on time efficiency and demand ment delivers information for decision-making [31]; infor- transparency (both together referred to as ‘‘responsiveness’’) mation sharing and implemented information technologies 123 Logist. Res. (2009) 1:113–127 123 lead to inventory reduction, improved decision-making, This literature review also shows that management order and delivery time flexibility as well as higher accounting and logistics journals neither cover the topic of responsiveness [125]. Furthermore, it is hypothesized that MCS in logistics and SCM in a holistic way considering information connectivity mediates the relationship between the complete MCS, nor in a large number of articles. The flexible logistics and performance [126]. linkage between all four of Otley’s segments is essential Unfortunately, even on these basic ideas of use and for an effective MCS. Until today, this is not researched in effects of information systems literature does not agree. a sufficient way. Due to the relevance of logistics and Daugherty et al. [116], for example, especially refer to the supply chains with their related costs, their cost reduction connection of reverse logistics performance and information and coordination possibility, a comprehensive MCS to systems support. In their research, a linkage between achieve effectiveness and efficiency is important. Our information systems support and operating/financial per- review shows that there are several topics still to be formance could not be detected. With regard to the rela- researched within this field. tionship commitment between the buyer and the supplier the In order to gain a deeper understanding of the overall performance is enhanced. They could also not establish a structure of MCS research in logistics and SCM and to link between information systems support and satisfaction. make the aforementioned links more obvious, we classified Overall, the main focus of the literature lies on ‘‘linear’’ the content of all selected articles based on the dimension supply chains, i.e., buyer–supplier relationships. A broader, chosen in the respective cases. As shown in the respective network-based view is rarely taken [63]. Only few articles sections of this review, an intra-organizational and inter- refer to logistics and information in a comprehensive way organizational perspective can be chosen. Although one [12, 51, 112]. Here, a trend along with the general change might expect to find by far more articles in the inter- of focus from logistics to SCM can be seen. Over time organizational setting, this is not the case—the 101 articles another change can also be noted. Of the earlier papers are almost evenly distributed between intra-organizational many have high interest in technology and systems possi- (48) and inter-organizational (53) focus. However, over the bilities [51, 104, 127]. Later on, trust, behavioral and years the number of inter-organizationally focused articles organizational aspects as well as the process of information clearly outweighs the intra-organizationally focused ones. sharing become additionally relevant [83, 92, 96, 107]. While the number of intra-organizational articles has been Despite this, information availability and ways of infor- rather constant over the last 20 years at 2.5 articles per mation exchange are still important today [106, 117]. year, the number of the inter-organizational articles has steadily grown and has significantly grown after 2000 and reached levels of around 5 articles per year since then. 5 Conclusion and suggestions for further research Based on this differentiation, the depiction of a network- and interrelation chart is possible, showing the joint and Generally speaking, management accounting journals only reclusive occurrence of topics. The chart can be read as rarely address specific issues associated with logistics and follows: numerals in circles show the number of articles SCM; this includes both, theoretical and practical aspects. which consider the respective part of Otley’s framework. Although logistics and supply chains in some cases serve For reason of exhaustiveness, these include all articles as a specific example for the application of dedicated stating the respective part of the framework (in the other accounting and control tools [128, 129] or the description parts of this review article, only the significant ones are of general management control issues in inter-firm con- mentioned). All articles covering more than one area of texts, only a small number of articles explicitly focus on the framework constitute the lines between the circles this field. The majority of research published in manage- (numerals show number of articles considering the ment accounting journals has a rather general approach respective two aspects). [102, 130, 131]. One interpretation for this could be that With respect to our classifications, target setting and management accounting scholars do not see any need for performance measurement is the topic discussed most often the development of new and more specific accounting (indicated by the size of the circles in Figs. 5 and 6). techniques [65]. Instead, various authors elaborate known Additionally, this part of Otley’s framework has the highest methods and apply them to logistics and supply chain number of interrelated/shared articles. contexts [132]. This would correspond to the view of Concerning the number of articles considering intra- Dechow and Mouritsen [68], who cite arguments for a organizational aspects, there is neither an increase nor coexistence of both the physical, business-process oriented decrease observable from 1988 to 2008. For inter-organi- logistics and the formal, information-oriented account- zation aspects, however, there is an increase in number of ing—a view which would explicitly deny the need for articles, which becomes particularly observable from the dedicated MCS in logistics and supply chains. year 2000 onwards (not shown in diagrams). 123 124 Logist. Res. (2009) 1:113–127 Infor- mation Target Setting and Strategy (12) flows Performance Imple- (22) Measurement mentation (32) (19) (11) (9) (8) (12) (18) Target Setting and Strategy (14) Performance imple- Measurement mentation Information (36) (19) (16) flows Rewards and (30) Incentives (22) (5) (2) (3) Fig. 6 Topics covered in selected articles (inter-organizational) (4) connection with motivational/behavioral aspects. Espe- cially on the intra-organizational level, further research is necessary, as motivated employees can raise productivity and enhance firm performance. In this context, as well as for the supply chain level, not only financial rewards but Rewards also the effect and implementation of non-monetary and Incentives incentives, the optimum combination of both reward (5) schemes and the measurement scale for incentive granting should be further examined. Regarding information flow, Fig. 5 Topics covered in selected articles (intra-organizational) especially the examination of broader relationships, i.e., networks, and their information needs is relevant for the For the intra-organizational perspective (see Fig. 5), the future. Connected to this is the consideration of informa- links between all circles are much weaker than for the tion flows in various industries and their differences. inter-organizational perspective (see Fig. 6). Further, in the Moreover, possibilities for an efficiency increase in infor- intra-organizationally focused articles the topic of rewards mation flows should be researched. Further emphasis is and incentives is often treated uncoupled from the other also encouraged toward the aspect of feedback and learning aspects of MCS, while the interrelation between the other in supply chains. three areas is at least at a medium level. The overall outlook reveals a considerable potential for The inter-organizational perspective on the other hand further research on management control systems in logis- (see Fig. 6) shows a more holistic pattern of research that tics and SCM, from which both research and practice alike better considers interrelations between different areas of will profit. MCS. Here, only the interface between strategy imple- mentation and rewards/incentives is rarely considered. All other links can be considered to be medium to strong and thus represent a research perspective which is on its way to References a comprehensive and interrelated view. 1. 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Journal

Logistics ResearchSpringer Journals

Published: Apr 25, 2009

References