qualitative thesis

SUPPLY CHAIN MANAGEMENT PRACTICES ON ORGANIZATION PERFORMANCE

IMPACT ON ORGANIZATION PERFORMANCE BY UTILIZING THE SUPPLY CHAIN MANAGEMENT PRACTICES

– CASE STUDY OF MANUFACTURING INDUSTRIES OF PAKISTAN

SIR TEHSEEN JAVAID

ATIF AHMED - 1228SYED AHMED ALI – 0538

MUHAMMAD FARRUKH EJAZ – 0251SHAKIR ULLAH - 0159

SALEEM ABBASI - 0243

The purpose of this paper is to examine is there any impact of Supply Chain Management Practices on Organization Performance in Manufacturing

Industries of Pakistan. We perform that study on the sample of 60 questionnaires.

1 | P a g eSUMMITED TO SIR TEHSEEN JAVAID


ABSTRACT

Purpose: - The purpose of this study is to determine the relationship between the supply chain

management practice on organization performance among purchasing practice, supplier relation

and information system, this studies specially emphasis on in manufacturing industries of

Pakistan.

Methodology: - Data were collected from a sample of 60 questionnaires from different

companies of manufacturing for this study. We have applied a Data Validity Test, Factor

Analysis Test and Regression Test on it.

Finding: - The method for collecting the data and questionnaire is correct because data

reliability is according to the standard. Factor analysis test is also successful and questions select

by us are according to our topics.

Research Limitation: - This study based on narrow focus because we have concentrate only in

the manufacturing sector and ignore the remaining sectors.

Practical Implications: - From the result, we conclude that if the organization uses the supply

chain strategy like betterment or enhancement with the relation from suppliers, sharing the

information and choose the correct way to purchase the goods then the organization performance

becomes comparatively better than the other competitors or even they can take the edge on it.

Keywords: - Supply Chain Management – Organization Purchase – Purchasing Practical –

Supplier Relation – Information System -

Paper Type: - Research Paper



ACKNOWLEDGEMENT

We are deeply grateful to Almighty Allah for enabling us to accomplish this research project.

Our sincere thanks to our supervisor and advisor Sir Tehseen Javiad without his help and

guidance this study would not have been possible.

Further, the respondents are also equally thanked for their support in carrying out this research.

We are also thankful to those who guided us throughout the project.

Last but not the least; we would render great thanks to our Family and others who had directly

and indirectly cooperated with us throughout our research.



TABLE OF CONTENTS

Introduction…………………………………………………………………….………….………5

Literature Review …………………………………………………………………..….…………6

Methodology……………………………………………………………..………………………13

Estimation and Results………………………………………………….………….…….………13

Conclusion & Recommendation……………………………………………...….………………20

Data Sources……………………………………………………………………….……….……21

Appendix…………………………………………………………………………………………22



INTRODUCTION

World become a global village and because of its worldwide a competition is started. Due to

huge advancement in the technologies, a concept of “waste” is converted into the massive

productivity gains. Transportation, sharing of information, identifying the customer’s demand

and enhance the productivity by using the concept of Lean and just in time inventory system,

they all come under the umbrella of Supply Chain Management. Nowadays, the entire advance

corporate especially all the manufacturing companies are collaborate with supplier’s customers

and competitors, share and gather information too. The manufacturing companies using the

supply chain concept and do the practice of purchasing practice, sharing the information, making

a strong supplier relations, analyzing the long term relationship with their suppliers, customers,

transportations, competitors and others so on.

Supply chain management is nowadays live blood for every organization. Purchasing practice

helps them to reduce the costs and make a better quality of goods and services. Lean practice and

just in time, helps them to improve the internal process of an organization. Information system

would help them to tracking the products when they are under the process of logistics, improved

efficiency in the process of transmitting the information in security, fast-tracked quotation and

ordering, customer satisfactory and scrutinizing the vendors. In the year 2002, Ulusoy in her

paper, after the concept of supply chain whole world become a global village, it encourage and

boost the economy of many countries, especially all the manufacturing companies reduces their

waste, enhance their inventory and utilize their resources properly. First, transfer of machinery,

equipment and technologies helps them to reduce their waste. Secondly, with the passage of



time, there are able to reduce their cost of production as well as help them help them to control

their inventories system and select the best possible vendors and share their information with

them, so, they are able to purchase the goods on time (especially the automobile and fast moving

company group companies).

The purpose of this study is to determine the underlying dimensions of supply chain management

of organization practices. We have also done the empirical review literatures on the relationships

among the purchasing practice, information relation and supplier relationship with special

emphasis on manufacturing companies in Pakistan. Manufacturing companies play a very crucial

role to the economies of Pakistan.

1- LITERATURE REVIEW

2.1- Review of Theoretical Literature

The supply chain management implements the organization practice, which have the direct and

indirect impact of purchasing practice, information system and supplier relationship. Patric fung

(1999) had published paper-managing purchasing in a supply chain context evolution and

resolution in Nvo-1999. He argued that purchasing is best practiced a value added service in the

supply chain through a lean supply infrastructure, when management of operation among

internal and external supply chain members help to fulfill the strategic goals of the company. He

applied “Range of task for purchasing and supply chain management” test in his study. He

concluded that, purchasing management is important in supply chain management and mangers



must define their roles in supply chain context. Professionals purchasing must focus on total cost

reduction, on-going quality improvement, restoring to configuration and coordination of different

material management activities of supply chain members. Purchasing and supply chain

management must develop teamwork with corporate and business to match firms; strategies.

Purchasers can achieve theirs objectives only through an analysis of the supply chain system and

performing value-added activates based on that system.

Kabossa A.B. Msimangira (2003) had a published a paper in Nov-2003, the topic was

“purchasing and supply chain practices in Botswana (Developing country)”, this paper was

discussed supply chain practices with emphasis on purchasing in Botswana. The focus is on

problems which is faced by business operations and how to improve the situation. It was

surveyed study and majority of respondent in supply chain management had worked in

purchasing and stores sections in their organizations. He concluded that purchasing practices in

developing countries, particular organizations in Botswana, did not consider as profession and in

some organization and purchasing practices were performed by untrained people in purchasing

and supply chain.



2.1.1- Supply Chain Management Related Organization Performance

The objectives of organization performance in the short term are essentially to enhance

productivity and reduce the inventory and lead-time. While, on the long term, are to increase the

market share and integration of supply chain for all the customers, suppliers and competitor.

There is a vast criterion to calculate the organization performance under the umbrella of supply

chain management; strategic supplier partnership, information sharing, customer relationship,

quality control, internal lean practices. It depends on strategic supplier partnership; build the

long-term relation with the customer (complaint handling, customer satisfactory).

HO1: Organization performance has an insignificant impact between industries.

HA1: Organization performance has a significant impact between industries.


SUPPLY CHAIN MANAGEMENT

DEPENDENT VARIABLES

INDEPENDENT VARIABLES

ORGANIZATION PRACTICE

SUPPLIERS RELATIONSHIP

INFORMATION SYSTEM

PURCHASING PRACTICE


2.1.2- Impact of Purchasing Practice over Organization Practices

Purchasing is on the key factor in every organization but in the manufacturing sector, purchasing

is just like a blood because if the suppliers provide the goods on time then cycle of trade would

be run otherwise no manufacturing companies is able to run their business. For that purpose, it is

essential that goods are purchased from the right buyer at the right time and delivered it at the

right place with right condition. If a trust level with the supplier is higher than the organization is

able to take a risk for cost cutting or for the development of their organization.

HO2: Purchasing practices has insignificant impact on organization performances.

HA2: Purchasing practices has significant impact on organization performances.

2.1.3- Impact of Information System over Organization Practices

Sharing of information means of remitting of words i.e. communication between partners, if it

accurate, adequate, timeliness which means quality of information without any buffer, it would

create a successful relationship for the bright business. Lean and just in time, practice would be

implemented to the organization particularly for the manufacturing sector for eliminating the

waste, low inventory, small lots size and on time delivery. Just in time is very necessary and

essential for them. Postponement is the delay differentiation of products

HO3: Information system has insignificant impact on organization performance.

HA3: Information system has significant impact on organization performance.



2.1.4- Impact of Suppliers Relationship over Organization Practices

Coordinate with the supplier is necessary nowadays, all the industries depends on the suppliers

but manufacturing sector is entirely depends on it, if inventory is not transported on the right

time, it would not only effect on the business but the edge swing towards the competitor side.

Selection criteria depends of the VDI concepts in which best vendor is selected because it could

reduce the waste, deliver the goods on time, cross training workforce, process and selection of

routes for deliveries the goods on time, etc. The new technologies, innovation and development

of a new product are also achieved with joint effort in such ways closer control also take place

because transactions are could be managed more centrally in supply chain management.

HO4: Supplier relationship has insignificant impact on organization performance.

HA4: Supplier relationship has significant impact on organization performance.

2.2- Review of Recent Empirical Literature

Kenneth W. Green JR, Dawayane Whitten and R. Anthony Inman had published paper in 2008

and the title is “The impact of logistics performance on organizational performance in a supply

chain context’’. This paper aim was to theorize and assess a logistics performance model

incorporating logistics performance as the focal construct with supply chain management

strategy as antecedent and organizational performance, both marketing and financial, as

consequences. In this paper sample data was taken from 142 plant operations managers and

analyzed using structural equation modeling methodology. They concluded that to compete at



the supply chain level, coordination of key external processes such as purchasing, selling, and

logistics with supply chain partners. Their focus was limited to the impact of logistics

performance on organization performance within the supply chain context.

Blandine Ageron, Angappa Gunasekaran and Alin researched study and published a paper in

May- 2012 and their title was “IS/ IT as supplier selection criterion for upstream value chain”.

The purpose of study was to examine and evaluate the importance of IS/IT criterion in the

suppliers arising from the integration of these criterions and to determine difficulties companies

face resulting from this deployment. In this study data was collected from 90 French companies

and subsequently analyzed to understand the IS/IT criterion used for supplier selection along the

upstream value chain. Their finds and suggestions were that IT/IS is a significant supplier

selection criterion within supply chain context because of the rapid proliferation of information

sharing across upstream chains.

Forza (1995) investigates the relationship between the factor information systems on quality

performance by using sample contract strategy. The collection of data is done through

questionnaire, by the different 19 respondents per plane relationship between quality

management practices and quality performance, quality management practices and quality

information flows and quality performance and the combination of quality management

practices, quality information technologies for quality has been studied in this study. The test

applied on this study is correlation and canonical correlation analysis to study the relationship

between the variables. The result indicates that quality management has positive significant

relationship with information system and the upstream with supplier and downstream



management of quality. It has been recommended that further empirical studies need to be

conducted on the same topic to get deep understanding the relationship of variables with

information system.

Seth and Tripathi (2005) investigate the relationship between TQM and TPM implementations

factors and business performance of manufacturing industry in India. The empirical study based

on sample size of 108 manufacturing companies. The variables study in this research are Focus

on customer satisfaction, Leadership for improvement, strategic planning for improvement,

employee and training, information architecture performance measurement system, materials

management equipment management, process management and management of financial

resources. The test applied on this study is multiple regression rests or reliability validity and

identification of factors, test for content validity and test for construct validity; factor analysis.

Result indicates that factors are grouped in two categories. The first group factors are universally

significant for performance in India and second category includes specific factors like equipment

management for TPM and focus in customer satisfaction as well as employee empowerment and

involvement for TQM.



2- Methodology

The model estimates the impact of brand image, brand association and brand attitude on brand

loyalty of product in parametric form is defined as follows:

Y = α0 + α1 PP + α2 IS + α3 SR + e

Where Y is the Organization Practice, PP is the Purchasing Practice and SR is the Supplier

Relationship. e is representing the error term. The model is estimated by using 60 questionnaire

fill by random sampling.

3- ESTIMATION AND RESULTS

4.1- RELIABILITY TEST

We use Reliability test (Cronbach's alpha) is the most common measure of internal consistency

("reliability"). It is most commonly used when you have multiple Likert questions in a

survey/questionnaire that form a scale and you wish to determine if the scale is reliable. If you

are concerned with inter-rater reliability, we also have a guide on using Cohen's (κ) kappa that

you might find useful.



4.1.1- Reliability Test All Variable wise

To check reliability test we see Cronbach’s alpha value, our results shows the value of

Cronbach's Alpha is 0.947 which is greater than the benchmark which is 0.7 and its means that

our results are reliable.

Reliability Statistics

Cronbach's Alpha N of Items

0.947 17

4.1.2- Reliability Test Variable wise

To more confirm our data reliability we check all variable separately and apply Cronbach's alpha

test

Table 4.1.2.1- Purchasing Practice



0.83 4



Table 3.1.2.2- Information system

Information system



0.807 2

Table 4.1.2.3- Responsiveness

Responsiveness



0.799 3

Table 4.1.2.4- Supplier Relationship



0.847 3



Table 4.1.2.5- Organization Performance



0.885 5

After checking all variable, our results shows that all

variable are reliable our have confirm it.

4.2- FACTOR ANALYSIS

KMO should be > 0.5

Bartlett’s should be significant <0.05

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.896

Bartlett's Test of Sphericity

Approx. Chi-

Square761.26

df 136.00

Sig. 0.00

Our Result shows that KMO value is 0.896, which is greater than 0.5and Bartlett’s value is 0.00

which less than 0.05. It means that our data is reliable as well as our questionnaire is also correct

that is why only signal component is made.



Component Matrixa

Component

1

All raw materials arrive within the range of required date .783

The quality of material purchased in inventory meets the company's quality performance objective

.807

All raw materials are purchased on best cost .704

Our major suppliers situated near our factory location .701

Suppliers have access to our production schedules and plans .643

There is a visibility to access supplier's operations related to quality of product .627

On time delivery performance is better in comparison of our competitors .772

We achieve the planned daily production targets .784

Our accuracy rate of order processing for customer is high .731

The company hold long term relationship with suppliers .751

Being a manufacturing industry, material delivery from suppliers is on frequent basis

.775

Company works on supplier's development to become efficient .816

The company evaluates management performance annually .772

The Products and services delivery is faster than our competitors .779

The Products and services quality is better than our competitors .767

The operating cost are lower than our competitors .738

Our Company is continiously increasing market share .674

Extraction Method: Principal Component Analysis.a. 1 components extracted.



4.3- REGRESSION ANALYSIS

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .815a .665 .641 .45992

a. Predictors: (Constant), SR, ISV, Re, PP

ANOVA

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 23.093 4 5.773 27.293 .000b

Residual 11.634 55 .212

Total 34.727 59

a. Dependent Variable: OP

b. Predictors: (Constant), SR, ISV, Re, PP

Coefficients



Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.B

Std.

Error Beta

1 (Constant) .597 .211 2.828 .007

PP .151 .153 .153 .983 .330

ISV -.010 .079 -.015 -.132 .896

Re .365 .145 .357 2.523 .015

SR .351 .127 .379 2.754 .008




4- CONCLUSION & RECOMMENDATION

The overall result suggests that there is highly impact of Impact of Supply Chain Management

Practices on Organization Performance in Manufacturing Industries of Pakistan. Result of

Cronbach’s Alpha of both (Reliability Test of overall variables and reliability test of single

variables) are excellent, the sig value of the entire test is above 0.5. Factor analysis Our Result

shows that KMO value is 0.896 that is greater than 0.5 and Bartley value is 0.00 which less than

0.05. The outcome of factor analysis is satisfactory because the value of KMO is greater than 0.5

and the Bartkley value is less than 0.5. The result of regression is also worthy. In the model

summary, the value of R indicates the value of correlation that means that how much our

multiples independence variables are correlated with the dependent variables. Our result is 0.815

means 81.5% our independent variables correlated with the dependent variable. The result of

coefficient of determination (statistical measure which tell us that how well our regression line

approximates with our real data points) which is represented by R Square is 0.665 which means

that 66.5%. So, each and every organization there should be supply chain implemented and the

organization has to practice it. Through, the sharing of information with the suppliers, customer

and competitors they are able to deal with the customers on time and able to use the lean concept

in their organization. Making a relationship strong with the suppliers, so, would be able to

advance them or take a risk for the cost cutting or innovated in their manufacturing. Purchasing

from the right buyer is important because if the suppliers provide the right goods at the right time

and at the right place, give the organization edge on competitor and able them to spread in the

market.



5- DATA SOURCES

Seth, D., & Tripathi, D. (2005). Relationship between TQM and TPM implementation factors

and business performance of manufacturing industry in Indian context. International Journal of

Quality & Reliability Management, 22(3), 256-277.

Forza, C. (1995). The impact of information systems on quality performance: an empirical

study. International Journal of Operations & Production Management, 15(6), 69-83.

Ageron, B., Gunasekaran, A., & Spalanzani, A. (2013). IS/IT as supplier selection criterion for

upstream value chain. Industrial Management & Data Systems, 113(3), 443-460.

Green Jr, K. W., Whitten, D., & Inman, R. A. (2008). The impact of logistics performance on

organizational performance in a supply chain context. Supply Chain Management: An

International Journal, 13(4), 317-327.

Msimangira, K. A. (2003). Purchasing and supply chain management practices in

Botswana. Supply chain management: An international journal, 8(1), 7-11.



6- Appendix

1- RELIABILITY TEST

1.1- Reliability Test Considering entire variables

Case Processing Summary

N %

CasesValid 60 98.4Excludeda 1 1.6Total 61 100

a. Listwise deletion based on all variables in the procedure.

Reliability StatisticsCronbach's Alpha

N of Items

0.947 17

1.2- Reliability Test Variable wise

Purchasing PracticeCase Processing Summary

N %

Cases

Valid 60 98.4

Excludeda 1 1.6

Total 61 100




0.83 4



Information systemCase Processing Summary

N %

Cases

Valid 60 98.4

Excludeda 1 1.6

Total 61 100




0.807 2

ResponsivenessCase Processing Summary

N %

Cases

Valid 60 98.4

Excludeda 1 1.6

Total 61 100




0.799 3

Supplier RelationshipCase Processing Summary



N %

Cases

Valid 60 98.4

Excludeda 1 1.6

Total 61 100




0.847 3

Organization PerformanceCase Processing Summary

N %

Cases

Valid 60 98.4

Excludeda 1 1.6

Total 61 100




0.885 5

2- FACTOR ANALYSIS

KMO and Bartlett's TestKaiser-Meyer-Olkin Measure of Sampling

Adequacy.0.896

Bartlett's Test of Sphericity

Approx. Chi- Square 761.26

df 136Sig. 0

3- REGRESSION ANALYSIS



Variables Entered/Removed

Model Variables EnteredVariables Removed

Method

1 SR, ISV, Re, PP Enter


b. All requested variables entered.

Model Summary

Model R R SquareAdjusted

R Square

Std. Error of the Estimate

1 .815a 0.665 0.641 0.45992

a. Predictors: (Constant), SR, ISV, Re, PP

ANOVA

ModelSum of Squares

df Mean Square F Sig.

1

Regression 23.093 4 5.773 27.293 .000b

Residual 11.634 55 0.212

Total 34.727 59


b. Predictors: (Constant), SR, ISV, Re, PP

Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

BStd.

ErrorBeta

1 (Constant) 0.597 0.211 2.828 0.007



PP 0.151 0.153 0.153 0.983 0.33

ISV -0.01 0.079 -0.015 -0.132 0.896

Re 0.365 0.145 0.357 2.523 0.015

SR 0.351 0.127 0.379 2.754 0.008


QUESTIONAIRE

IMPACT ON ORGANIZATION PERFORMANCE BY UTILIZING THE SUPPLY CHAIN MANAGEMENT PRACTICES

– CASE STUDY OF MANUFACTURING INDUSTRIES OF PAKISTAN

Respondent's Profile

Name Gender

Designation Age

Contact Details

(optional)Education

Company

Please tick the responses that show your opinion about how your operational performance compares to its competitors in your industry.

Sr. No

Strongly Agree Agree

Neither agree nor

disagree

DisagreeStrongly Disagree

1 2 3 4 5

Purchasing Practice

1All raw materials arrive within the range of required date

2 The quality of material purchased in 26 | P a g e

SUMMITED TO SIR TEHSEEN JAVAID


inventory meets the company's quality performance objective

3All raw materials are purchased on best cost

4Our major suppliers situated near our factory location

Information System (Visibility)

5Suppliers have access to our production schedules and plans

6There is a visibility to access supplier's operations related to quality of product

Responsiveness

7On time delivery performance is better in comparison of our competitors

8We achieve the planned daily production targets

9Our accuracy rate of order processing for customer is high

Supplier Relationship

10The company hold long term relationship with suppliers

11

Being a manufacturing industry, material delivery from suppliers is on frequent basis

12Company works on supplier's development to become efficient

Organization Performance

13The company evaluates management performance annually

14The Products and services delivery is faster than our competitors

15The Products and services quality is better than our competitors

16The operating cost are lower than our competitors

17Our Company is continuously increasing market share

Thanks for your precious time . . .


qualitative thesis

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