Measuring supply chain management practices Ana Beatriz Lopes de Sousa Jabbour, Alceu Gomes Alves Filho, Adriana Backx Noronha Viana and Charbel Jose Chiappetta Jabbour Ana Beatriz Lopes de Sousa Jabbour is Assistant Professor in the Department of Industrial Engineering, Sao Paulo State University, Sao Paulo, Brazil. Alceu Gomes Alves Filho is Full Professor in Industrial Engineering in the Department of Industrial Engineering, Federal University of Sao Carlos, Adriana Backx Noronha Viana is Associate Professor in Business Administration and Charbel Jose Chiappetta Jabbour is Assistant
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Professor of Business Administration, both at The University of Sao Paulo Business School – Ribeirao preto (FEA-RP/USP), Summary Purpose – This paper aims to perform an empirical investigation about the constructs and indicators of the supply chain management practices framework. survey that was carried out on 107 Brazilian companies. Statistical techniques were employed to verify, validate, and test the reliability of the constructs and their indicators. To validate this framework principal component analysis and structural equation modeling techniques were used.
Findings – In general, previous studies uggest six constructs for measuring the supply chain management practices framework. However, in this study a framework was achieved with four constructs of supply chain management practices, namely, supply chain (SC) integration for production planning and control (PPC) support, information sharing about products and targeting strategies, strategic relationship with customer and supplier, and support customer order. This framework has adequate levels of validity and reliability.
Research limitations/implications – The main limitation of this study was that only a small sample of companies in a single sector and country were surveyed, and herefore there needs to be further research considering the special conditions in other countries. Originality/value – This study investigated statistically set indicators to discuss the topic “supply chain management practices”. The framework obtained has good quality of validity and reliability indicators. Thus, an alternative framework has been added to measure supply chain management practices, which is currently a popular topic in the supply chain mainstream literature.
Both defined constructs and the validated indicators can be used in other studies on supply chain management. Keywords Supply chain management, Working practices, Performance measurement (quality), Brazil Paper type Research paper 1. Introduction Supply chain management (SCM) is an integrated approach beginning with planning and control of materials, logistics, services, and information stream from suppliers to manufacturers or service providers to the end client; it represents a most important change in business management practices (Fantazy et al. 2010). SCM is one of the most effective ways for firms to improve their performance (Ou et al. , 2010). With the purpose of managing the supply chain actions for realizing improvement in nterprise performance, it is necessary to improve the planning and management of activities such as materials planning, inventory management, capacity planning, and logistics (Chandra and Kumar, 2000) with suppliers and clients.
Currently, the topics that can be considered essential to research suggestions in SCM include: supply chain coordination, distribution and transport, inventory, order management, planning and optimization, supply chain integration, reverse logistics, supply chain information, supplier and vender selection, and green SCM (Hu et al. , 2010). PAGE 18 MEASURING BUSINESS EXCELLENCE VOL. 15 NO. 2 2011, pp. 8-31, Q Emerald Group publishing Limited, ISSN 1368-3047 While interest in SCM is increasing day-by-day, there is no consensus about the conceptual and methodological research bases of SCM, generating gaps in the state- of-the-art of this research field (Burgess et al. , 2006). It is impossible to develop sound SCM theory without acceptable frameworks and definitions of terms (Stock and Boyer, 2009). In addition, the lack of a comprehensive view of SCM practices and the lack of a reliable measure of the concept have constrained guidelines to the practice f SCM and further research on the topic (Li et al. 2005). For this reason, the validation of SCM practices issue has been attracting the attention of researchers. For example, Li et al. (2005) conceptualize, develop, and validate dimensions of SCM practices constructs. Nonetheless, there are no unanimities in determining the set of indicators that can adequately address the topic “Supply Chain Management Practices”. Studies performed by Halley and Beaulieu (2010), Bayraktar et al. (2009), Hsu et al. (2009), Robb et al. (2008), Chow et al. (2008), Koh et al. (2007), Zhou and Benton (2007), wong et al. 005), -ran et al. (2002) and Tan (2002) pointed out different types of indicators and constructs used. Therefore, studying SCM practices can contribute to finding a better understanding about SCM. Hence, this paper aims to do an empirical investigation of the constructs and indicators of the SCM practices framework. The following sections include a brief literature review on SCM practices (section 2), methodological procedures (section 3), analyses and discussions (section 4), and finally, conclusions (section 5). 2.
Literature background A high level of confusion has occurred amongst supply chain scholars during the ast decades by the several SCM definitions that have been proposed in the literature (Stock and Boyer, 2009). Three key subjects emerged from the various definitions: activities, benefits, and constituents/components. The first theme of SCM definitions, activities, contains the flow of materials and information, and networks of relationships, focusing on both internal (within the organization) and external (outside the organization).
Second, the benefits resulting from effective implementation of SCM strategies are to add value and increase customer satisfaction. Third, the components or constituent parts of SCM; what organizations, unctions and processes involve the supply chain (Stock et al. , 2010). SCM practices are defined as the set of activities undertaken by an organization to promote effective management of its supply chain (Li et al. , 2005, 2006; Koh et al. , 2007); as the approaches applied in integration, managing and coordination of supply, demand and relationships in order to satisfy clients in effective way (Wong et al. 2005); as tangible activities/technologies that have a relevant role in the collaboration of a focal involve suppliers in decision making, encouraging information, sharing and looking or new ways to integrate upstream activities. As a consequence, it involves developing customer contacts by customer feedback to integrate the downstream activities and delivering orders directly to customers (Chow et al. , 2008). In this sense, studying SCM practices supports the view theory regarding SCM.
Relevant initiatives to identify and validate SCM practices have been reported, but it is worth noting that there is no pattern in defining and adopting indicators and constructs for SCM practices. Tan et al. (2002) and Tan (2002) identified 24 SCM practices from previous studies and formed six constructs: . supply chain integration; 2. information sharing; 3. supply chain characteristics; VOL. 15 NO. 2 2011 MEASURING BUSINESS EXCELLENCE PAGE 19 4. customer service management; 5. geographical proximity; and 6. JIT capability. They used a five-point Likert scale to measure the importance of these practices.
Wong et al. (2005) proposed like indicators of SCM practices in their study: B supply chain performance; product differentiation; lead time management; postponement and customization; inventory and cost management; bullwhip effects; information sharing and coordination; buyer-seller relationship; etail strategy; and SCM initiatives. They used a case study and the practices based on the toy industry. Six distinctive constructs of SCM practices emerged, including strategic supplier partnership, customer relationship, information sharing, information quality, internal lean practices and postponement.
All the items were measured on a five-point scale (Li et al. , 2005, 2006). Zhou and Benton (2007) consider three constructs of supply chain practices (supply chain planning, Just-in-time OIT) production, and delivery practice), because they have been shown to be closely related to delivery performance. Each statement required responses based on a seven-point Likert scale (1 h not implemented, 7 h extensively implemented). A list of SCM constructs used in previous literature regarding the SCM practices is relying on the extant literature. Koh et al. (2007) and Bayraktar’s et al. 2009) studies identify a set of 12 SCM practices: close partnership with suppliers, close partnership with customers, Just in time supply, strategic planning, supply chain benchmarking, few suppliers, holding safety stock, e-procurement, outsourcing, subcontracting, 3PL, many suppliers. Items were measured on five-point scales anging from 1 (not at all implemented) to 5 (fully implemented). Koh et al. (2007) measuring two constructs and Bayraktar et al. (2009) measuring three constructs. A five-point interval rating scale system was used by Chow et al. 2008) with 5 equaling the highest extent or degree. The constructs were: customer and supplier management; communication and speed; and information sharing. Robb et al. (2008) considered four constructs in their research: 1 . customer relationships; 2. supplier relationships; 3. e-commerce; and 4. enterprise software. They used a seven-point Likert scale. PAGE 20 MEASURING BUSINESS EXCELLENCE VOL. 5 NO. 2 2011 In research performed by Hsu et al. (2009), respondents were asked to indicate on a five-point Likert scale (1 – low, 5 – high), the importance of each practice in their firm.
The indicators were: increase suppliers’ Just in time capabilities; participating in sourcing decisions; geographical proximity of suppliers; formal information sharing agreements; improving the integration of activities; searching for new ways for integration; communicating future strategic needs; on-time delivery; and reducing response time. Halley and Beaulieu (2010) used four constructs (nesting, collaboration, financial ncorporation, and distancing) along with 13 indicators from the five-point Likert scale.
Table I summarizes the theoretical studies of constructs pointed out in this section. Table II shows the constructs, the indicators and conceptual meaning used in this paper to measure and validate the SCM practices framework. The selection of constructs and indicators was based on research to reconcile the concepts of SCM (Stock et al. , 2010; Chandra and Kumar, 2000), in which they considered the necessity to manage, plan and control production and inventory, i. e. the flow of information nd materials; the definition of SCM practices (Wong et al. 2005; Chow et al. , 2008), the managed integration and coordination of supply, demand and relationships; and the most commonly found constructs and the indicators (Bayraktar et al. , 2009; Robb et al. , 2008; Chow et al. , 2008; Koh et al. , 2007; Zhou and Benton, 2007; Li et al. , 2006, 2005; Tan et al. , 2002; Tan, 2002). Taking this into consideration, the constructs considered were: supply chain integration, information sharing, customer service management, customer relationship, supplier relationship and postponement. 3. Methodology 3. 1 Survey design
In order to assess the construct of the SCM practices, a questionnaire was developed from a review of literature (Table II), and the respondents were asked to evaluate each question in terms of the level of implementation of each specific practice in their company. A five-point Likert scale (1 – non-implemented and 5 – totally implemented) was adopted because there are many researches uses the same method. Prior to this, a pre-test was given to professionals in the SC over a 65-day period, and from this pre-test some necessary adjustments were done to the questionnaire in order to make the questions clearer.
The questionnaire was sent out to 532 different companies via personalized e-mails. In all, 107 companies responded (response rate only e-mails were sent to each of the 532 companies up to three times each. The participating companies were classified according to the position they occupy in their supply chain as follows: raw material supplier, component supplier, assembly company, distributor, or retailer. The companies were also classified according to their size (micro company, small company, medium company, and large company) and the predominant bargaining power in their major supply chain.
The data were collected through an e-survey (internet-based survey) conducted with one respondent from each company (from different areas, such as marketing, operations, supply, and sales departments) of several different segments of the Brazilian VOL. 15 NO. 2 2011 MEASURING BUSINESS EXCELLENCE PAGE 21 Table I Summaries of the theoretical studies of constructs pointed out in this research Author(s) Research objective Construct Context Scale -ran (2002) The first objective was to derive a set of SCM practices and compare how practitioners ranked these practices to enhance competitive position.
The second objective was o identify and compare the major concerns in implementing a successful SCM program. Finally, the third objective attempted to identify the practices and the concerns associated with successful supply chains The article described a survey effort to study contemporary supply evaluation practices.
This also related these practices to firm performance The study explored SCM practices of toy supply chains, and revealed their practical and theoretical gaps The purpose of research was to develop and validate a parsimonious measurement instrument for SCM practices The purpose of study therefore to empirically test a framework dentifying the relationships among SCM practices, competitive advantage and organizational The purpose of study was to investigate: the relationship between information sharing and supply chain practice: the influence of supply chain dynamism on information sharing and supply chain practice; and the impact of chain practice on delivery determine the underlying dimensions of SCM practices and to empirically test a framework SCM practices, operational performance and SCM-related organizational performance with special emphasis on small and medium-sized enterprises (SMEs) in Turkey Study sought to determine the nderlying dimensions of SCM and IS practices. Next, empirically test a framework identifying the causal links among SCM and IS practices, SCM and Is-related inhibitors operational performance Information sharing Supply chain characteristic Customer service management Geographical proximity JIT capability Different industries Five-point Likert None Toy industry – retail (volatile None demand) Strategic supplier partnership Customer relationship Information quality Internal lean practices Postponement Supply chain plan JIT production Delivery practices Seven-point Strategic collaboration and lean practices Outsourcing and multi-suppliers