Effect of Supply Chain Management Practices on Organizational Performance: An Empirical Approach

Effect of Supply Chain Management Practices on Organizational Performance: An Empirical Approach

Aswini Priya S. (VIT University, India), Pulidindi Venu Gopal (VIT University, India), Subashini R. (VIT University, India) and Velmurugan G. (VIT University, India)
DOI: 10.4018/978-1-5225-5424-0.ch009

Abstract

The main purpose of this study is to determine the impact of supply chain management practices (i.e., strategic supplier partnership, customer relationship, level of information sharing, quality of information sharing, postponement, and risk and reward sharing on organizational performance, that is, marketing performance and financial performance). The instrument is adopted, and it is administered to 115 target respondents from 6 organizations in Chennai. A valid of 100 samples is taken for further analysis, and multiple regression analysis is employed to determine the purpose of the study. The findings indicated that supply chain management practices (i.e., strategic supplier partnership, customer relationship, level of information sharing, quality of information sharing, postponement, and risk and reward sharing) have significant and positive impact on organizational performance (i.e., marketing and financial performance). The limitations, discussions, implications, and further research will be outlined and delineated.
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Introduction

As competition is exaggerated in late 1990’s and markets became global, there is an opportunity to get the product and services in the perfect place and time at the lowest cost. It is important that organizations and supply chain should ameliorate efficiencies in order to be competitive. The understanding and experiencing of supply chain management is an important requirement for improving profitability as well as to sustain in the global race of competition (Childhouse & Towill, 2003; Moberg, Cutler, Gross, & Speh, 2002; Power, Sohal, & Rahman, 2001; Tan, 2002). SCM is termed to explicitly recognize the strategic nature of coordination between trading partners and to define the objective of SCM: i.e. to ameliorate the performance of the whole supply chain and individual organization. The main objective of SCM is to combine both material flows and information flawlessly across the supply chain as an efficient competitive weapon (Childhouse & Towill, 2003; Feldmann & Muller, 2003). The theory of SCM has gained augmented attention from practitioners, academicians, business managers, and consultants (Tan, 2002; Feldmann & Muller, 2003; Croom, Romano, & Giannakis, 2000; Van Hoek, 1998). SCM acts as a key component in attaining sustainable competitive edge for most of the organizations for their products and services in augmented swarmed marketplace (Jones, 1998). The model of SCM has been observed from different perspectives from various bodies of literature (Croom, Romano, & Giannakis, 2000) such as purchasing and supply management, logistics and transportation, operations management, marketing, organizational theory, and management information systems. Different theories provided information on perspective on SCM such as industrial organization and associated transaction cost analysis (Ellram, 1990; Williamson O, 1975), resource based and resource dependency theory (Rungtusanatham, 2003), competitive strategy (Porter, 1985), and social –political perspective (Stern & Reve, 1980).

Key Terms in this Chapter

Supply Chain Management Practices: It is termed as an inclusive set of actions which are employed in an organization in order to enhance its internal supply chain.

Risk and Reward Sharing: Risk is termed as uncertainty of expected reward or dissatisfaction of outcome and the decision.

Customer Relationship: It is termed as the relationship between a company and its customers.

Postponement: It is defined as exercising of proceeding forward one or more actions or operations (i.e., making, resourcing, and delivering to a much delayed point in the supply chain).

Level of Information Sharing: It is defined as the level to which all serious and copyrighted information is shared to supply chain partner.

Quality of Information Sharing: The information exchanged should be precise and reliable.

Strategic Supplier Partnership: It is defined as the connection existing between organization and its suppliers.

Organizational Performance: It is termed as how an organization effectively accomplishes or attains its marketing and financial performance.

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