Due to increased competition and deficiencies in their internal capabilities, businesses are increasingly realising that they need to synchronise their internal business operations and strategies with that of their supply chain (SC) partners. This realisation gave rise to the concept of supply chain integration (SCI) (Palma-Mendoza, Neailey & Roy 2014:167).

SCI has two fundamental benefits. Firstly, through SCI, organisations can use their SC partners to mitigate their internal deficiencies, which allows them to focus on their core capabilities and strengths, in order to maximise productivity and returns. Secondly, SCI allows for value-added activities between organisations, suppliers and customers to be made more visible (Jin, Fawcett & Fawcett 2013:206; Klueber & O’Keefe 2013:296; Papakiriakopoulos & Pramatari 2010:1298–1299).

It is clear from previous studies (Jie, Parton & Cox 2013:1003–1024; Mackelprang et al. 2014:71–96; Xu, Huo & Sun 2014:1186–1206) that there is a positive relationship between the level to which organisations pursue enhanced external and internal integration and improvements in organisational performance through improved customer service and reduced costs (Tseng & Liao 2015:86). However, for SCI to be effective, supply chain management (SCM) initiatives such as the following are needed: network redesign, building stronger supplier relationships and initiating lead time reduction programmes. Organisations are aware of the need for these types of initiatives, yet there is little evidence of these initiatives being implemented (Danese & Romano 2010:221).

Beth et al. (2003:64) indicate that, despite much technological and process advancement in SCM, ‘… an agile, adaptive SC remains an elusive goal’. Jin et al. (2013:206) suggest that their research answers an important question: ‘Why are companies not doing better?’ According to them, organisations lack commitment to integrating skills and processes; therefore, few companies take advantage of the improved organisational performance opportunity provided by SCI (Jin et al. 2013:206).

Top management are aware that the decisions they make influence an organisation’s strategy and that correct decisions will ensure increased competitive advantage (Xu et al. 2014:1189). To ensure effective SCI, managerial views need to be changed and lack of commitment to SCI needs to be addressed (Jin et al. 2013:206). Evidence exists that top management favour integration efforts and collaborative relationships (Jie et al. 2013:209), but this requires a strategic framework as well as top management’s commitment to link integration efforts both internally and externally with SC partners (Beheshti et al. 2014:28).

Fawcett and Magnan (2002:358) point out that the marketplace has become more competitive due to globalisation, customers demanding better service and the advancement in technology. Recent research by Han et al. (2013:230–252) identified SCI as a tool that could assist companies to survive in a competitive marketplace. With increased competition, both SC uncertainty and organisational risk increases (Prajogo & Olhager 2012:515).

Xu et al. (2014:1186–1206) suggest that the antecedents of SCI, including relationship commitment, power, trust and dependence, deserve further research attention. This suggestion is supported by several other researchers, including Geménez, Van der Vaart and Van Donk (2010:583–610), Han et al. (2013:230–252), Huo (2012:596–610), Kocoglu et al. (2011:1630–1649), Liu et al. (2011:322–346), Moshkdanian and Molahosseini (2013:184–192), Tseng and Liao (2015:82–106), as well as Wiengarten et al. (2014:51–63). It is also supported by researchers, such as Alfalla-Luque, Marin-Garcia and Medina-Lopez (2012:242–257) and Salam (2011:358–382), who investigated the positive relationships between SCI and organisational performance.

Jin et al. (2013:206) indicate that the environments in which organisations conduct business evolve over time. SCI efforts and their effect on organisational performance must, therefore, be reviewed continuously. Research indicates that the link between SCI and organisational performance may not be well grounded, as research findings cannot be applied to all emerging economies (Liu et al. 2011:322).

A knowledge gap exists regarding the perceptions that plastic manufacturers in Gauteng have about SCI with their suppliers, as well as about these manufacturers’ commitment to SCI and their efforts in this regard. The purpose of this exploratory study was, therefore, to investigate the nature and extent of SCI between 10 plastic manufacturers in Gauteng and their suppliers. The focus was specifically on these manufacturers’ perceptions of and commitment to SCI with their suppliers, as well as on the nature of their SCI efforts.

The study sought to answer the following research questions:

Current literature on SCI is reviewed in the next section.

Internal integration is the extent to which an organisation develops organisational strategies, practices and processes that can be synchronised in order to ensure that they add value to the organisation’s customers (Flynn, Huo & Zhao 2010:59). Internal organisational integration assists with this process by leveraging resources and capabilities of functions for purposes of product development and reducing waste, which provide increased value to customers (Huo et al. 2014:371). Internal integration refers to the integration of departmental functions and activities in order to improve performance across departmental boundaries, increase customer service levels and ensure a competitive advantage (Basnet 2013:153). SCM stretches over several organisational functions, including operations, marketing, sales, manufacturing and information systems. These functions usually operate in isolation, and these ‘silos’ can cause internal conflict (Chelariu, Asare & Brashear-Alejandro 2014:332); contrarily, internal integration indicates that the functions in an organisation must work together in an integrated way and that the barriers that cause departments to operate in ‘silos’ need to be broken down (Zhao et al. 2011:19). Deficient internal integration will cause weak communication, reduce teamwork and increase intra-company conflict, thus making communication and external integration difficult (Huo 2012:604).

When organisations include internal integration efforts in their strategy, SC integration efforts are strengthened, customer service levels are improved and there is a significant improvement in the organisation’s bottom line (Basnet 2013:153–155). Changes in an organisation’s market environment (e.g. shorter lead times, stronger price competition and export growth) and a focus on value-adding strategies should motivate organisations to enhance their integration efforts (Jie et al. 2013:208).

Market positioning and information technology strategies have a favourable effect on SCI (Tseng & Liao 2015:96). An organisation’s market positioning strategy is a vital driving force for SCI because the chosen strategy influences roles, functions and the resources employed (Guan & Rehme 2012:196). The market positioning also mirrors how the organisation creates value for its customers; therefore, the market orientation of the organisation is a fundamental aspect of an organisation’s strategy (Lui et al. 2011:325).

Historically, relationships with suppliers were adversarial and the general approach was to accept the lowest price; so, little integration and collaboration were done (Jie et al. 2013:207). However, organisations are now increasingly focusing on their core capabilities and relying on suppliers to manage non-core activities – which means dependency on suppliers is increasing (Moshkdanian & Molahosseini 2013:188).

Competitive advantage can be increased by promoting effective communication and improving personal relationships with suppliers; therefore, organisations need to evaluate their supplier relationships and build long-term relationships. This can be done through meetings with suppliers and sharing information with suppliers, in order to ensure that joint strategies are developed (Danese & Romano 2010:221). Guan and Rehme (2012:187) indicated that vertical integration with suppliers is an antecedent to SCI, and Simon et al. (2014:286) concluded that supplier relationship management is a crucial strategy, which needs more attention from organisations. Organisations are more likely to engage in collaborative supplier relationships because of the standards that have been set in this area by leading organisations such as Toyota and General Motors (Jie et al. 2013:209).

Supplier integration enhances customer integration efforts, organisational effectiveness and efficiency, but customer integration alone does not affect efficiency (Danese & Romano 2010:222). A higher degree of customer integration influences organisational performance more positively than supplier integration, due to organisations being rewarded by customers, who conclude more sales transactions. However, in order to achieve the highest possible level of organisational performance, all integration dimensions must be developed (Huo 2012:605).

Danese and Romano (2010:220–230) asked the question: ‘Are there synergies that a firm could or should exploit by implementing customer and supplier integration?’ Customer integration is needed in order to intensify customer loyalty and increase the organisation’s market share (Xu et al. 2014:1191). It is also related to a broad range of performance results (Mackelprang et al. 2014:82). Solutions can be obtained to increase efficient performance and solve demand uncertainty and demand volatility by customers sharing their demand information through point-of-sale data, implementing vendor-managed inventory systems and focusing on alignment of demand between SC partners. These solutions will, in turn, reduce costs and increase an organisation’s performance (Danese & Romano 2010:221).

SCI mainly consists of information sharing and operational alignment. Information sharing entails real-time clarity and availability of information, while operational alignment involves the sharing of knowledge and decisions across the SC (Liu et al. 2011:324). Information sharing has a positive impact on operational performance (Moshkdanian & Molahosseini 2013:188) and on new product development and commercialisation (Liu et al. 2011:325). The effective sharing of information between partners is crucial for organisations to compete in an increasingly competitive market, (Tseng & Liao 2015:85) and customer value creation can only be realised when organisations share more than just transactional data (Moshkdanian & Molahosseini 2013:189).

Exchanging information assists suppliers to align their strategic, operational and tactical decisions to improve delivery to their customers (Han et al. 2013:233–234), reduce the cost of inventories, highlight customer demands and react to changing market determinants (Lui et al. 2013:325). Information technology and sharing information between SC partners are the forerunners of SCI; it includes the technological system and the social characteristics required to enable sharing of information and trust between partners (Prajogo & Olhager 2012:515). When organisations consider their SC relationships to be a priority, information sharing becomes crucial for commitment purposes (Salam 2011:365). As commitment between SC partners is enhanced, the inclination to share information is also strengthened (Zhao et al. 2011:21).

Integrated information technology for SCM is important for integration efforts, and this must be considered independently from internal customer and supplier integration efforts. Information technology creates a virtual SC network that aligns all the activities of all partners with the demands of the organisation’s customers (Beheshti et al. 2014:20); this intensifies the potential for SCI (Xu et al. 2014:1190). Information technology assists organisations to manage the increasing magnitude of information between SC partners and provide real-time information on inventory, planning and order status between these partners. Data gathered from the information systems assist by aligning supply and demand in the SCs (Prajogo & Olhager 2012:516). Therefore, SC partners need to adopt more appropriate systems, in order to increase the quantity and to improve the quality of their information (Jie et al. 2013:1003–1024).

A few organisations provide suppliers and customers with information through information systems (Bagchi & Ha 2005:277); however, information technology implementation efforts fail if organisations cannot exchange the most crucial and accurate data necessary for suppliers and customer (Prajogo & Olhager 2012:516). In addition, information technology investment may not result in performance improvement in the short-term, and this needs to be assessed over the long-term (Tseng & Liao 2015:96).

The quality of information sharing between SC partners was highlighted as the most significant element for SC performance, as SC partners use the information to make decisions that affect competitiveness, and management action is necessary to improve information quality and information visibility (Jie et al. 2013:1009). In the rapidly changing business environment, advanced SC systems have proved to impact business and SCs in a positive manner (Jie et al. 2013:1003–1004), and information sharing between partners is the most important aspect to attaining SCI (Moshkdanian & Molahosseini 2013:187).

Salam (2011:364) defines trust as SC partners’ willingness to engage with each other and share expertise. Trust thus increases dependability between SC partners and fosters the realisation that the partnership can deliver long-term benefits through reliability and integrity (Salam 2011:364–365). Commitment, in turn, refers to an agreement or promise to do something in the future (Salam 2011:360). Commitment is the desire from both parties to maintain and strengthen their respective relationships (Salam 2011:360–361).

Strategic SC alliances, trust and commitment are important antecedents of improved SC responsiveness, efficiency and customer satisfaction. The aforementioned antecedents can impact partnerships significantly through the quality of communication shared between partners, trust, coordination of activities and the inter-dependence of those activities, joint problem solving for effective and efficient conflict resolution and joint continuous improvement efforts (Jie et al. 2013:1005–1007).

Jin et al. (2013:206) argue that strategic organisational concerns relating to competitive advantage may reduce trust and commitment between partners if they are fighting for scarce resources and fear losing proprietary information – which means that efforts to integrate with partners will be limited. Trust and commitment can only be achieved with complete willingness to share the information that is necessary for the partnership to perform effectively. Trust is important in order to develop competitive SC structures through vertical integration, which enhances value-added activities and collaboration between SC partners (Jie et al. 2013:1007).

The ability of an organisation to integrate with its partners relates directly to the organisation’s inclination regarding partnerships and its commitment to partnerships (Zhao et al. 2011:18). Commitment can be seen in efforts to strengthen SC partnerships through stabilising relationships and making sacrifices in the short term for the greater good of the relationship in terms of long-term benefits. Once this commitment is established, collaboration exists between SC partners; and as the relationship matures, dependence increases and the partners increasingly realise the need to work on the strategic relationship (Salam 2011:360–361).

Collaboration and long-term partnerships are viewed as the most influential factors through which organisations can achieve a competitive advantage, due to the benefits arising from SC partners sharing knowledge and resources (Vaidya & Hudnurkar 2013:293). Relationships between manufacturing organisations and suppliers have changed dramatically in the past few years, including a move from short-term contracts to long-term relationships- which reduces the supplier base of organisations- and a change from arms-length supplier relationships to suppliers being incorporated into organisations as key strategic alliances. This has motivated suppliers to invest in resources to improve relationships with their customers (Prajogo & Olhager 2012:516).

Top management support can be described as the perceived support from top management for integration, both internally and externally. Commitment from top management is necessary to link efforts with SC partners (Behesti et al. 2014:28). Participants identified support from top management; however, one participant felt that they could get more support from top management:

The perceived meaning of SCI, from participants interviewed and their organisation’s strategy, paints a picture of the importance of SCI in the organisation’s strategy. Internal organisational integration favoured external integration and participants stressed the need to start integrating more externally. There was, however, little knowledge of their competition’s strategies and integration efforts. One organisation had to change their integration efforts to adapt to new markets they were penetrating:

These observations are in line with existing literature on SCI. If organisations want to achieve an advantage in the market, or expand their market share, SCI is the decisive factor that must be embraced and investigated (Danese & Romano 2010:220). When organisations include integration efforts in their strategy, SCI efforts are strengthened (Basnet 2013:153). A competitive strategy is the enabler between SCI and organisational performance (Huo et al. 2014:369). Jie et al. (2013:209) state that evidence exists which indicates that top management favours integration efforts, and that these efforts require a strategic framework (Behesti et al. 2014:28) as well as the elimination of structural barriers by management to ensure effective SCI (Jin et al. 2013:206).

SC partnership: SC partnership can be defined as the management of a relationship between a supplier and customer that includes close collaboration, trust, commitment, transparency and information and resource sharing to benefit both parties (Jin et al. 2013:205).

Collaboration can be described as working with suppliers to determine improvements beneficial to both the customer and supplier (Jin et al. 2013:205). Collaboration is relevant to the study because it forms the basis of a relationship with a supplier. Participants indicated that collaboration with suppliers is not just based on price and quality, but is based on a relationship. Supplier bases were reduced and suppliers were chosen because of their skill sets and strengths after risks and threats were investigated. Weaknesses were addressed using supplier evaluation tools. Two participants indicated that price is still predominantly the order winner, but one participant did not agree with their respective organisation’s view and indicated that service and quality are more important. Participants indicated changing attitudes from suppliers and their organisations:

Trust is the mutual belief between supplier and customer that the other is reliable and truthful (Salem 2011:360–361). It was highlighted as being stronger when there was more experience with the supplier. Trust is important due to the sensitive nature of the information exchanged between the parties and used to make decisions. Organisations implemented non-disclosure agreements to indicate the importance of information sensitivity. Participants noted the importance of trust and felt that their reputations are at risk. Trust increases dependability between SC partners, and could lead to long-term benefits, and is therefore an important aspect of SCI efforts (Salem 2011:364), as indicated by the participant quotes:

Commitment can be described as a pledge, or promise, between a supplier and customer whereby they agree to be dedicated to the relationship and the SC cause. Commitment and trust is an expectation that both parties will consistently meet their obligations in the SC (Jie et al. 2013:1005). Participants mentioned that commitment is a two-way street and, if a commitment is not honoured, it puts pressure on the SC. Overall, participants were happy with perceived commitments, whereas one participant struggled with suppliers’ commitments. Commitment can be directly related to the ability of an organisation to integrate with partners, as shown by participant quotes:

Competitive pricing can be described as setting a price for a product or service in line with what the competition or market is charging (Guan & Rehme 2012:189). Transparency, as well as increased collaboration, was highlighted as influencing customer price pressures. One participant mentioned that the best price wins, but it was the same participant who struggled with commitment from suppliers. Competitive pricing allows closer collaboration and is, therefore, relevant to the study, as is illustrated by the following quotation:

Suppliers and customers share each other’s resources and/or assist one another by making resources available for the benefit of the SC. Cash flow was underscored as a main concern to organisations. Organisations emphasised that they are more vulnerable where they spend money unnecessarily and could not absorb resulting overstocks. Pressure from overstocks and cash flow constraints improved integration with suppliers, as the following quotes indicate:

These observations are in line with the reviewed literature and indicate that trust, commitment and collaboration are crucial for consistent performance between SC partners (Jie et al. 2013:1005–1007). Jin et al. (2013:206) indicate that strategic dealings reduce trust and commitment due to partners fighting for the same resources and fearing losing proprietary information. Participant observations differed from this view because organisations stopped buying from suppliers if they felt they could not trust them. Reduced available resources and market price pressures strengthened collaboration with suppliers, as indicated by Guan and Rehme (2012:191–196).

SC information management: SC information management can be described as the sharing of SC information between suppliers and customers (Guan & Rehme 2012:190). This information can be shared with the suppliers’ supplier and is a mutual process of sharing formally or informally through information systems.

Information sharing is crucial to integrating with suppliers. Shared information observed by participants includes forecasts, direction of business and new projects. Certain types of information are not shared with suppliers and information sharing differed from one supplier to the next. Information sharing also differed between who the participants perceived as critical and non-critical suppliers. Critical and non-critical suppliers are distinguished through risk analysis conducted on the organisations’ supplier base. Participants mentioned that it is easier to obtain information from their suppliers and customers. Mostly, more easily obtained types of information mentioned were limited to forecasts and new projects. Transparency was mentioned as an important aspect of information sharing. The following quotes reflect on information sharing:

It gives them an indication how busy you are, if you [are] growing, so all of that sort of thing. (P6, Male, Supply Chain Manager)

System integration refers to information systems being implemented between supplier and customer (Tseng & Liao 2015:85). No evidence was found that the plastics manufacturers included in this study integrated their systems with their suppliers, and participants seemed to prefer personal interactions with suppliers. One participant mentioned that while the infrastructure existed, they did not see any benefit in using it. Internal integrated systems assisted with information visibility, whereas a lack of internal system integration left participants feeling blind:

Developments in technology improvements through information technology applications strengthen information sharing through the possibility to integrate standalone information systems (Tseng & Liao 2015:85). The participants mentioned that senior management is thinking along these lines and receiving requests for system integration. One participant mentioned that their biggest supplier was conducting business online. These requirements would ease integration with suppliers:

These observations are in line with reviewed literature indicating that information sharing has a positive impact on reduced inventories (Moshkdanian & Molahosseini 2013:188) and new product developments (Liu et al. 2011:325). Benefits were realised when organisations shared more than simply transactional data (Moshkdanian & Molahosseini 2013:189) and suppliers could align their strategic goals and directions with the organisations (Han et al. 2013:233–234). There was, however, little evidence of information technology helping to align partner activities (Behesti et al. 2014:20), and it was found that organisations still prefer personal interactions. One organisation was actively involved in investing in information technology to assist with operations and provide real-time inventory information, thereby more effectively managing information flow. This finding is in line with the findings by Bagchi and Ha (2005:277), who found there are few organisations capable of providing information through implemented information systems.