A Hierarchical Model of Supply-Chain Integration: Information Sharing and Operational Interdependence in the US Grocery Channel

This paper examines costs of and motivations for interconnectivity within the grocery supply chain, employing evidence from multiple case studies and survey data to develop a seven-level model of technology-enabled supply-chain connectivity and channel interdependence. This theoretical model, built around a modified transactions-costs framework, is illustrated using examples of processes that span multiple levels of interconnectivity and interdependence within the grocery channel between different groups of customers and suppliers. Our analysis suggests that while a discernible hierarchy of levels of IT-enabled interorganizational connectivity exists, not all relationships necessarily evolve to the highest level of “virtual integration”. Indeed, limits on executive attention preclude this level from being achieved by more than a small fraction of trading partners. The model generates eight testable hypotheses for further study.