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Management of Environmental Quality
ISSN : 1477-7835
Article publication date: 19 August 2019
Issue publication date: 30 July 2020
Sustainable supply chain management (SSCM) is a relatively new sub-field of supply chain management (SCM). The performance of SSCM is based on the triple bottom line approach encompassing people-planet-profit, hence being defined not in only in social and environmental terms, but also the economic. The purpose of this paper is to develop an integrated study which uses antecedent-practices-performance principles in order to determine the drivers of SSCM practices, and the impact of these practices on sustainable supply chain performance. The importance of the study lies in the fact that the Indian Government is making significant efforts to boost the manufacturing sector, and sustainability is among the significant imperatives for Indian manufacturing to be competitive globally.
A conceptual model based on the antecedents-practices-performance principles was developed, and included six constructs identified from the literature: the drivers being the motivators of sustainability, lean management (LM) and supply management (SM), the practices were the environmental and social practices in the supply chain and, finally, the sustainable supply chain performance; eight hypotheses were conceived in the model development process. The survey instrument was conceptualised from an in-depth study of literature and was employed to conduct a survey of 211 operations and supply chain managers and functional heads from the Indian manufacturing industry. The scales were validated by employing the confirmatory factor analysis, followed by structural equation modelling to develop the structural relationships between the constructs using Amos 20.0.
The results of the SEM suggest that the antecedents, i.e. motivators, LM and SM, have a significant bearing on environmental and social practices in the SCM; these practices, in turn, also have a positive relationship with SSCM performance (except the relationship between LM and social practices in SCM) with acceptable goodness-of-fit measures. Thus out of the eight hypotheses, seven can be said to statistically significant.
In addition to the motivators of sustainability, the study based on extant literature has considered LM and SM among the drivers of sustainability in SCM. The study has also identified that in earlier studies, the focus has been on environmental practices, and this integrated study has also included social practices in the supply chain.
This study suggests that sustainability performance may also be realised through lean and SM principles; an integrated perspective has been adopted with the consideration of both environmental and social practices. Further, the proposed model represents a novel integration of literature from diverse domains such as environmental management, business ethics and corporate social responsibility as well as performance management.
- Lean management
- Environmental practices
- Sustainable supply chain management
- Environmental and social practices
- Social SSCM performance
Baliga, R. , Raut, R.D. and Kamble, S.S. (2020), "Sustainable supply chain management practices and performance: An integrated perspective from a developing economy", Management of Environmental Quality , Vol. 31 No. 5, pp. 1147-1182. https://doi.org/10.1108/MEQ-04-2019-0079
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International Joint conference on Industrial Engineering and Operations Management
IJCIEOM 2020: Industrial Engineering and Operations Management pp 141–153 Cite as
Supply Chain Management Practices in Small Enterprises: A Practical Implementation Guidance
- Daniela Biccas Ferraz Matos 6 ,
- Luiz Felipe Scavarda 6 ,
- Rodrigo Goyannes Gusmão Caiado 6 &
- Antônio Márcio Tavares Thomé 6
- Conference paper
- First Online: 30 October 2020
Part of the Springer Proceedings in Mathematics & Statistics book series (PROMS,volume 337)
Supply chain management (SCM) focused on large companies has received much attention from academics and industry practitioners. However, there is a dearth of studies covering SCM in small enterprises due to the differences between the realities of large and small enterprises, making it challenging to harness the existing accumulated knowledge of SCM for smaller ventures. Small enterprises are of great importance to the economy of many countries, especially in emerging markets such as Brazil. In this context, this article aims to expand the knowledge of SCM in small enterprises by analyzing SCM practices in companies in the State of Rio de Janeiro (Brazil). The practices analyzed in this research are customer relationship management, operations management practices, planning and business processes, and supplier relationship management. It provides a practical guide to implement and manage SCM practices in small enterprises successfully.
- Operations management
- Business process
- Empirical study
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The following research agencies supported this work: Coordination for the Improvement of Higher Education Personnel—Brazil (CAPES) (Finance Code 001), Brazilian National Council for Scientific and Technological Development (CNPq) (Grant Numbers 404682/2016-2, 304931/2016-0 and 311757/2018-9) and Research Support Foundation of the State of Rio de Janeiro (FAPERJ).
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Pontifical Catholic University of Rio de Janeiro (PUC-Rio), Marquês de São Vicente Street, Rio de Janeiro, RJ, 22451-900, Brazil
Daniela Biccas Ferraz Matos, Luiz Felipe Scavarda, Rodrigo Goyannes Gusmão Caiado & Antônio Márcio Tavares Thomé
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Industrial Engineering Department, Pontifical Catholic University of Rio de Janeiro, Rio de Janeiro, Brazil
Antônio Márcio Tavares Thomé
Engenharia de Produção, Federal Center for Technological Education, Rio de Janeiro, Brazil
Rafael Garcia Barbastefano
Departamento de Engenharia Industrial, Pontifical Catholic University of Rio de Janeiro, Rio de Janeiro, Brazil
Luiz Felipe Scavarda
DEGEIT and GOVCOPP, University of Aveiro, Aveiro, Portugal
João Carlos Gonçalves dos Reis
Marlene Paula Castro Amorim
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Matos, D.B.F., Scavarda, L.F., Caiado, R.G.G., Thomé, A.M.T. (2020). Supply Chain Management Practices in Small Enterprises: A Practical Implementation Guidance. In: Thomé, A.M.T., Barbastefano, R.G., Scavarda, L.F., dos Reis, J.C.G., Amorim, M.P.C. (eds) Industrial Engineering and Operations Management. IJCIEOM 2020. Springer Proceedings in Mathematics & Statistics, vol 337. Springer, Cham. https://doi.org/10.1007/978-3-030-56920-4_12
DOI : https://doi.org/10.1007/978-3-030-56920-4_12
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Original research article, supply chain management practices influence supply chain performance with mediation role of innovation and moderation role of top management support.
- 1 Economics and Management School, Wuhan University, Wuhan, China
- 2 School of Economics, Lanzhou University, Lanzhou, China
The study focuses on supply chain management practices, innovation, top management commitment, and supply chain performance at companies. The study's main objective is to investigate the association between supply chain management practices and supply chain performance and the intervening effect of innovation, the interaction effect of top management commitment. In this study, a simple random sampling technique and the sample size selected with G * power software ( N = 208). The readymade questionnaire was used to collect data from National Logistic Corporation (NLC), Food and Beverage Companies Groups (FMCG) at China. The data analyzed through Smart-PLS (SEM → small and medium enterprises) and SPSS software. Meanwhile, innovational significant and positively mediated the relationship between supply chain management five practices and organizational performance. The findings of this study will help managers of SMEs enhance their performance. The results showed that SCMP directly and significantly affected supply chain performance, and customer relationship management was insignificant with supply chain performance. Supplier and customer relationship management both have a significant impact on innovation. In addition, innovation is considered a significant positive predictor for supply chain performance with the intervening approach. But top management commitment proved insignificant for customer relationship management and supply chain performance. The study further concluded that supply chain management practices would not be productive for supply chain performance if the top management does not apply innovative technologies in the organizations.
The development of new techniques has made possible Supply Chain Management (SCM) in the global markets to improve competitive advantages for distributing the products and services among customers. These services and products supply to the right customer, with the lowest cost, at the right time, and to the right place as discussed by Karmil and Rafiee ( 1 ). A review of the most important alternatives literature focuses on SCM, which is necessary for diverse areas, and its practices are required for the competition model in the business. In this way, the Supply Chain Management Practices (SCMPs) were considered unique to help and improve an organization's financial and supply chain market performance. No doubt, SCM has some historical issue with supply chain performance, and it is one old strategy in the supplier and distributor domain. Some serious concerns should be taken to address the strategic environment of SCM and then possibly addressed. For instance, supply chain management professionals do not train their suppliers and distributor for a firm's good performance. Although, some SCM professionals know the SCMPs technique and its critical role in Supply Chain Performance (SCP). SCMPs measure is mandatory for the supply chain and then efficiently evaluates the role of the supply chain system in future work. The SCMP's top criteria are lead time, delivery, flexibility resources, performance, customer satisfaction, product quality, supply chain, goods demand as narrated by Ayman et al. ( 2 ). The performance of the supply chain depends upon on planning, producing and products making, delivering process. With the development of SCMPs in recent years, it is now possible to evaluate supply chain performance. The supply chain is described as such entire method of producing and selling manufactured goods from material procurement to product production, delivery, and sale at covering all stages. Any corporation is looking to succeed in supply and distribution, and it must be able to manage its supply chain management practices effectively. The conceptualization of supply chain management gives a management practice and manages different activities in its domain. Such as upstream, downstream, and internal supply chains in the firm as conceptualized by Fand and Stevenson ( 3 ), Mostean et al. ( 4 ), and Ross ( 5 ).
Many firms ignored the function of the supply chain which caused sever damages in the SCP. The role of SCM cannot be ignored in the field of SCMPs for individual or subsidiary business. So the top management role can maintained supply chain advancement and provide latest knowledge, training to the supplier and distributors to improve SCP by Maalouf ( 6 ). Top management support and management performance do improve with CEO support. On the other hand, top management motivates employees to distribute goods and services to their clients with SCMPs as revealed by Waseem ( 7 ). This topic constitutes a new domain with largely unstudied potential such as top management commitment, innovative process, supply chain management practices, supply chain performance. The proposed study examined the influence of supplier and customer relationship management on the supply chain performance and the predictive effect of the innovation.
Moreover, the goal of supply chain management is not just to the developed quality of the products and check the performance in the individual and parent company but also to see the whole process of the supply chain developed by Mentzer et al. ( 8 ). As a result, the primary duty of the supply chain management is to know the business activities, which starts from procurement to raw material, products to manufacturing, distribution to retailing, customer services to final product discarding by Jagan et al. ( 9 ).
Several research groups have been working on the design of customer diversities, supply and distribution challenges, product quality, information sharing, information sharing quality, strategic supplier partnership, and fast delivery of products ( 10 ). The previous study focused on SCMPs with the particular debate of strategic supplier partnership, customer relationship, information sharing, information sharing quality, and information technology with supply chain performance. Similarly, SCMP significantly increases competitive advantages, financial, operational, and market performance ( 11 ). Once developed, SCMPs, innovation, and top management commitment then it significantly impacts supply chain performance, which will further produce a variety of areas for good strategic supplier partnership and its customer relationship. The current consensus of supply chain practitioners is on implementing innovations and creativity, improving organizational performance. A case study of Pakistan textile industries has been reflected chain management practices in response to organizational performance. The effect of innovative culture shared common values and beliefs among the firm's employees did not measure. This particular study explains the product innovation and process with the intervening role of top management commitment to know the supply chain performance. Such innovative culture can bring different improvements in a firm's supply chain performance ( 12 ). According to Khuram et al. ( 13 ), Small Medium Enterprises (SMEs) relationship with SCMPs and company performance and the mediating role of innovation combinedly measured. One previous study delineated the relationship between SCMPs and SCP success that helps suppliers and manufacturing companies to provide many direct and indirect benefits. As a result, supplier management practices directly and significantly affect and motivate SCP ( 14 ). Based on these above empirical justifications, this is a newly developed commercial system to fill the gap in the literature of SCMPs, process or product innovation, top management commitment, and SCP in the logistic companies ( 15 ).
The literature described that supply chain management affects supply chain performance in firms. Supply chain management is one form of practice in the multidimensional supply chain rule with the upstream and downstream approach ( 11 ). Supply Chain Management practices (SCMPs) interlinked with supplier partnership, customer relationship, supplier relationship and production outsourcing flow ( 16 ). Shahin et al. ( 17 ) described that SCMPs is done in the organization, and it is overall influence come on supply chain integration. There are some characteristics of the supply chain, such as customer services management, information sharing, and time management experiences in the organization ( 17 ) and simultaneously narrated that outsourcing and strategic supplier partnership are also related to the supply chain because information sharing, daily time management, and consistent work with products flow are the supply chain management practices. Previous studies showed that some time supply chain works as a quality buying, selling, and customer relationship maintenance in the organization. Some supply chain management fundamentals link SCMPs with information integration, information exchange, native location, and customer awareness ( 18 ).
The supply chain management application works as a bridge between downstream and upward suppliers, which increases customer satisfaction from the firms ( 19 ). The theoretical study of Supply Chain Management (SCM) revealed that upward or downstream supply is considered a suitable tool for supply chain performance. The supply chain is under the ground of supplier selection, and their involvement in manufacturing goods are highly productive for the broader level of organizational performance ( 20 ). Ou et al. ( 21 ) well-defined that SCM, quality management, and financial assessments considered fundamental forces for effective and efficient supply chain performance in the domain of supply code conduct. As a result, the study concluded that SCM has a strong relationship with supplier management, customer relationship, human resource management, information quality, information designing, and SCP. The hypothetical proposed for the current study:
1: SPS has a positive influence on OP. Organizational performance
2: SPS has a positive influence on innovation.
12: Innovation significantly to mediates the relationship between SCPand OP.
Mwale ( 22 ) delineated that Strategic Supplier Partnership (SSP) is essential in the partnership domain, and it is durable for supplier relationships and firms. The Organizational performance (OP) is referred to phenomena of how well enterprises obtain their desired goals. There are various studies available in the past on OP, but still, there is no universal definition that can be used to measure OP. Some of the researchers use financial performance to measure OP. These all tactics are designed to control the strategic partnership on an individual basis and supply products partnership level. In this regard, Ibrahim and Hamid ( 14 ) noted that the SSP has a close relationship with organization performance and significant solid association with suppliers and top management commitment. Zhao and Lee ( 16 ) depicted that strong supplier relationships improve long-term organizational planning and resolve upcoming challenges for the future. The Supplier Relationship Management (SRM) has a direct relationship with SSP, and these both allow suppliers and distributors to improve supply chain performance for the organization's success.
3: LIS has a positive influence on OP.
4: LIS has a positive influence on innovation.
13: Innovation significantly mediates to the relationship between a LIS (Level of information sharing) and OP.
In these content Sharing of information consists of two elements such as quality and quantity; and both elements are significant for supply chain management practices and the modernized firms attract their customers with the help of customer relationship management. The high-quality products are produced for customer needs and requirements with the minimum price and customer expectations maintain with SCM and good Customer Relationship Management (CRM) ( 14 , 23 ). Similarly, Gharakhani et al. ( 19 ) reported that CRM could not be ignored in the SCMPs, and it is an essential part of the ISCP. The CRM has a direct relationship with SCMPs, which enables the improvement of SMP in the organization. The study of Vachon and Klassen ( 24 ) informed that innovation in products and close customer relationships motivate organizational personnel to supply unique products to their customer compared to their competitor in the market. The study revealed that CRM, product innovation and SSP had a positive interrelation with ISCP and it does with successful implementation of SCMPs ( 25 ).
Lambert et al. ( 26 ) defined that ISCP (Internal supply chain process) could be measured by supply chain efficiency in a similar vein. In a general context, supply china efficiency and SCP both fall in a similar domain. Top management commitment affects the supply chain efficiency and performance with the help of delivery and lead time. The efficient supply of the product is part of the supply chain ( 2 ). Correspondingly, cost-containment and SCP are two sides of the coin which can influence any time organizational performance. When SCMPs do not implement, then the expenditure, storage costs, and asset costs of the products are also increased, which further stops reliable revenue.
The SCP is defined as activities and supply chain scope considered durable innovation, which is a highly inflammable source for quick product delivery in the domain of customer satisfaction ( 10 ).
Without innovation, SCP could not improve because innovation is an essential tool for both SCM and SCP ( 12 ). Innovation is directly linked with a firm's competitiveness and has been widely studied as a mediator for product supply and SCP. The results revealed that SCP and innovative business have a direct relationship with SCM. The supply chain has innovated and efficiently improved for organizational performance. Innovative ideas can sufficiently improve the supply of non-material and material resources in the organization. These all innovative ideas implement with the help of top management commitment and SCMPs ( 6 ). Likewise, Buciuni and Pisano ( 27 ) asserted that innovation and top management commitment could improve SCP if the SCMPs were properly implemented. Organizational performance is efficiently evaluated with innovative performance. Nowadays, an innovative technique in the supplier and distributor context is a hot debate in the marketing strategy and SCP. Previously, Maalouf ( 6 ) justified that innovation is more vital for organizations and SCP, and it is due to SCMPs that motivated top management to implement innovative technology for suppliers and distributors. In conclusion, SCMP significantly influences corporate performance, but customer relationship management cannot efficiently implement in organizations ( 4 ).
Many previous studies linked top management commitment with customer relationship management and supply chain performance. Top management commitment is one of the critical success factors, and positively associated with supply chain performance ( 28 , 29 ). Strategic supplier partnership and top management commitment can change the organization vision if they apply the innovative technique. The study showed that supplier relationship management had associated with top management support and innovative practices play an intervening role between SCMPs and SCP ( 30 , 31 ). According to Zhang and Yang ( 32 ), top management support believes in customer relationship management and bring valuable information for the strategic supplier partnership. The company reputation could be evaluated when top management commitment applies SCMPs in their organization ( 33 ).
The conceptual framework is logically derived from the research gaps of the previous empirical studies which is drawn in Figure 1 . The study of Phan et al. ( 34 ) checked the interaction between suppliers and customers and its outcome effect on SCP along with firm performance. In this perspective, SCMPs are continuously derived from supply chain management. However, ensuring the actual value of the entire supply chain would be the most formidable indicator to assessing supply chain performance. SCMPs conceptualized that a set of activities assumed through supply chain performance and its efficient encouraging management in the company. The SCMPs observe dimensions were supplier strategic partnership, customer relationship management, and internal supply chain. These three indicators have a significant influence on supply chain performance. Al Madi ( 10 ) measured plan, source, and delivery for the product in a similar vein, which affects supply chain performance and innovative culture. One of the previous studies framed that SCMPs influence supply chain performance because supply chain efficiency and supply chain effectiveness are SCMPs components ( 2 ). These empirical studies missed the role of innovation and top management commitment in the field of supply chain performance. Primarily study directly encounter the influence of invention and do not highlight the reason of innovation for organizational performance. For instance, taking the study of Khuram et al. ( 13 ), innovation can directly explain organizational performance when implementing SCMPs. The work of Rohana et al. ( 35 ) had limited to the top management commitment role and its impact on supplier and customer relationship in the firms. CRM directly connects to firm performance and alternately influences top management support associated with CRM and marketing performance ( 36 – 38 ). From the above discussion, it was justified that SCMPs, innovation, and top management commitment have an effect on supply chain performance at the organization.
Figure 1 . Conceptual framework.
Innovational unit had a positive effect on OP. The theoretical framework of supply chain management practices is shown in Figure 2 .
Figure 2 . The theoretical framework of supply chain management practices.
Research paradigm is a group of exciting and shared understanding among scholars about research and epistemological viewpoint. This study focuses on the positivistic paradigm. Positivistic relies on a hypothesized-deductive approach to validate a previous hypothesis quantitatively. Positivists believe that a unique truth or idea can be measured and known through the quantitative lens by Singleton et al. ( 39 ). The deductive approach aims to test an existing theory of view and develop a research approach to test the hypothesis ( 39 ). The quantitative method focuses on measuring the objectives through statistical, mathematical and numerical analysis. The results are based on a pre-calculated sample size that describes the entire target population. All phases of study have been carefully planned and prepared before data collection. Researchers use several tools to collect numerical data ( 40 ). The study population was National Logistic Cell (NLC), China Foods and Beverage Company (PFBC), Fast Moving Consumer Goods Companies (FMCG) in China, which are affiliated with the Security and Exchange Commission. These companies are registered with the Security and Exchange Commission and further divided into 344 small companies. Systematic random sampling was used, and it is the ability to select each unit's population simultaneously. The G * power software was used for choosing sample size, and it given us 138 registered companies which were our unit of analysis. From these 138 companies, respondents were randomly selected, and 208 respondents have filled the questionnaire. The respondents have held intermediate and senior positions in the supply chain, procurement, and logistic field. The data was collected from supply chain managers, logistic and procurement officers.
The questionnaires were self-administered, and data was collected with the help of an already developed questionnaire by the previous researchers. In this research, the questionnaire had divided into two parts. In the first part, demographic related statements were asked from the employees, and the second part was based on supplier and customer relationship management questionnaire of Al Madi ( 10 ); Mwale ( 22 ); Sundram ( 41 ), supply chain performance questionnaire of Al Madi ( 10 ), innovation questionnaire by Gharakhani et al. ( 19 ) and top management commitment questionnaire of Singh et al. ( 42 ). This empirical study picked the questionnaires from the above stated studies and collected data from the respondents as mentioned earlier. The data was collected through mediator's and these mediators were working in the same companies.
Data were analyzed through Smart PLS (SEM), which assess the structure with the most substantial relationship within different paths. The criteria of (Fornell-Larcker) and (HTMT) was used to check the discriminant validity of the constructs ( 43 ). The characteristics of the reflective model are to consider covariances indicators zero, and the latent variable is partially out because the two test scores are affected by the same thing by Hair et al. ( 43 ). The study used reflective model assessment to confirm the theoretical prediction and construct reliability, validity, composite reliability, Cronbach's alpha. Bootstrapping step was conducted for measuring path coefficient analysis and structural model with a direct and indirect relationship with the help of t -values and p -values at a significance level. The models assessed by reflective measurement using confirmatory composite analysis such as the estimate of loadings and significance, indicator reliability (items), composite reliability (construct), average variance extracted and discriminant validity by Hair et al. ( 43 ); all of these analyses were conducted through Smart PLS (SEM) and SPSS 21. Version. Confidentiality is the fundamental principle of research ethics. The consent was taken from the participants. The researcher did not share the data with any company owner or CEOs, and data was analyzed impartially.
Data Analysis and Findings
The study of Hypotheses analyzed results in the two ways, such as graphical and numerical representation. Similarly, descriptive analysis was applied to check the normality of the data and countered demographic information, which is part of the survey research and called co-variates. The descriptive statistics, frequency distribution, and cumulative percentage were measured to know the companies' type, ownership type, certification, respondents' designation, age, and experience, which is shown in Table 1 .
Table 1 . Demographic information of the participants ( N = 208).
Table 1 shows that out of 208 respondents, 90.4% (188) employees were from food companies and 9.6% ( 20 ) from the beverages industry. Most responses were from private companies 95.2% (198) as compared to public or MNC. Results indicated that the majority of food and beverages firms' or companies used Halal Certificates with 54.3% (113), and FSMC, ISO, 22000:2018 were 18.3% ( 38 ) and QMS ISO 9001:2015 were 17.7% ( 37 ). According to the empirical results, the supply chain officer's respondents were more with 35.6% (74), while supply chain managers were less with 23.1% (48). The age was measured, and 35.6% (74) employees were between the age group of 40–50 years. Moreover, 33.7% (70) respondents age were between 30 and 40 years and so on. The experience-wise results revealed that respondents' experience 8–11 years was 28.4% (59), which is more than 5–7 years respondents with 26.4% (55). Furthermore, descriptive analysis was encountered to check the normality of the data which is shown in Table 2 .
Table 2 . Descriptive statistics of all study variables ( N = 208).
Table 2 shows the facts and figures of descriptive statistics such as mean, standard deviations with a range of skewness and kurtosis for the study—all these values in an orderly form. Normality was examined through skewness and kurtosis. Scores of all constructs were normally distributed because the values of skewness and kurtosis were between −2 and +2, which is acceptable for the criteria of normal distribution. Likewise, the discriminant validity or Fornell-Larcker of each construct must be <0.85, and the results showed that discriminant validity was good. However, the correlation was measured to evaluate the relationship among study variables in Table 3 .
Table 3 . Intercorrelation between customer relationship management, innovation, supply chain performance, supplier relationship management, and top management commitments ( N = 208).
The results revealed a positive relationship between customer relationship management, innovation, supply chain performance, supplier relationship management, and top management commitments. Whereas, supplier relationship management higher correlation with supply chain performance with ( r = 707). Similarly, Figure 3 showed the measurement model of all study variables and Table 4 depicts reliability and validity of constructs.
Figure 3 . Measurement model.
Table 4 . Construct reliability, validity, factor, and cross loadings ( N = 208).
Table 4 indicates that Cronbach's alpha value must be >0.70, and the values demonstrate that all items were reliable for further analysis. Composite reliability must be >0.80, and AVE fulfills the standard criterion of the construct, and all the values were >0.50. Hence the current study satisfies the requirements of composite reliability. Similarly, factor loadings values were good for each item, and HTMT values were calculated for discriminant validity (see Table 5 ).
Table 5 . Heterotrait-monotrait ratio (HTMT) ( N = 208).
Table 5 shows that the HTMT ratio should be >0.85 to ensure discriminant validity, and it is one of the practical approaches to consider discriminant validity. All the values in the results were >0.85. Figure 4 depicts hypotheses testing with bootstrapping approach.
Figure 4 . Structural model.
The Structural Model and Hypothesis Testing
To determine the direct relation of supply chain management practices such as =/', CRM, and Innovation on supply chain performance. Figure 4 demonstrates whether the beta, significant and t -value are confirming hypotheses acceptance or rejection, Table 6 depicting hypotheses testing.
Table 6 . Direct relationships between customer relationship management, innovation, supplier relationship management and supply chain performance ( N = 208).
The study further hypothesized that SRM has a significant influence on supply chain performance (H1). Similarly, CRM significantly affect the supply chain performance also (H2). And thirdly, SRM has a significant influence on innovation (H3). Fourthly, CRM has a significant influence on innovation (H4). Lastly, innovation has a significant influence on supply chain performance (H5). In these above-stated hypotheses, the Smart-PLS (SEM) reflective model was applied to check the predictive relationship; and an interaction effect was found inside the proposed model. Moreover, four hypotheses have a significant predictive association between it, and only hypothesis (H2) has rejected out of the five. Supposed that CRM has effect on SCP with beta (β = 0.221, t -value = 2.405, P ≤ 0.001) it means when CRM has increased then its effect come on the SCP. Controversially, CRM does not affect supply chain performance and rejected the (H2) because it was not fulfilling the criteria of beta (β = 0.047, t -value = 0.451, P ≤ 0.001), which is clarified that there is no predictive effect of CRM and supply chain performance. Furthermore, SRM has a favorable effect on innovation with beta (β = 0.240, t -value = 3.327, P ≤ 0.001), it confirmed that when SRM improve then their direct influence come on innovation. Meanwhile, the SRM has a favorable effect on innovation with beta (β = 0.427, t -value = 6.241, P ≤ 0.001), supporting the proposed model theory (H4). There was a direct relationship found between SRM and innovation whenever SRM increase, so ultimately, it improves innovation in the company performance. And lastly, the proposed model accepted the theory (H5) of innovation and its effect on supply chain performance with beta (β = 0.258, t -value = 2.816, P ≤ 0.001). The results portrayed that innovation could bring immediate improvement in the supply chain performance if the organization adopted the future products' supply model. This particular process forwards the researchers toward mediating effect between study variables, presented in Table 7 .
Table 7 . Indirect relationships between customer relationship management, innovation, supplier relationship management and supply chain performance ( N = 208).
The Hypothesis Testing About SRM
An intervening relationship was measured to test the proposed theory, such as innovation explain intercorrelation between SRM and supply chain performance (H6). On the other hand, it was hypothesized that innovation mediates the relationship between CRM and supply chain performance (H7). The hypothetical model confirmed that innovation strongly and favorably mediates the interaction between SRM and SCP with beta (β = 0.062, t -value = 2.186, P ≤ 0.001). It means innovation positively improved the customer relationship management and supply chain performance for the company if applied. Likewise, innovation has significantly impact on both CRM and SCP (H7), acknowledged that innovation has positive significant influenced and interaction effect on CRM and SCP with beta (β = 0.110, t -value = 2.453, P ≤ 0.001). However, the interaction effect was countered to evaluate the moderating effect, which is shown in Table 8 .
Table 8 . Indirection relationships between customer relationship management, supply chain performance, supplier relationship management, and top management commitments ( N = 208).
Moderation Hypothesis Testing
The role of top management commitment was measured in relationship to SRM, CRM, and supply chain performance. It was further hypothesized that top management commitment moderates the relationship between SRM and supplychain performance (H8). However, top management commitment moderates the relationship between CRM and supply chain performance (H9). The results revealed that top management commitment did not interaction effect between SRM and supply chain performance with beta (β = 0.063, t -value = 0.688, P ≤ 0.001). Similarly, top management commitment partially moderates the interaction between SRM and SCP in a statistically way with beta (β = −0.127, t -value = 1.659, P ≤ 0.001) and did not accept our supposed hypothesis (H9). The results found that top management commitment negatively influences the relationship between CRM and supply chain performance. It means when top management commitment increases, then CRM and supply chain performance decrease with inverse relationship, which does not support our proposed hypothesis. Table 9 was evaluated for the predictive measure of the innovation and supply chain performance.
Table 9 . The predictive relevance of the model supply chain performance and innovation ( N = 208).
Table 9 depicts that supply chain management practices justify 37.5% of the variance in supply chain performance (R 2 = 0.375). In this respect, supply chain management practices explain 38.5 % of the variance in innovation (R 2 = 0.385). It is cleared that supply chain management practices bring changes between innovation and supply chain performance.
The aim of the existing research was to determine the influence of SCMP on OP with the mediating effect of innovation. The findings have revealed that a SPS had insignificant influence on OP. The findings are consistent with the other results ( 41 ). Moreover, SPS had a significant influence on OP and H2 was accepted. The results are similar to the results Maalouf ( 6 ). LIS had no influence on OP and H3 was not accepted. SCMP directly influences organizational performance. The intervening association between strategic supplier partnership and customer relationship substantially affects organizational performance supply chain performance. In practice, we find that these SCMPs are sufficient to supply chain performance ( 12 ). This particular study hypothesized that innovative culture mediately affects supply chain and firm performance ( 12 ). Our results also reveal that innovation plays mediating role between SCMPs and supply chain performance, and we did not measure firm performance in our study because it was a limitation of our study.
On the other hand, a survey of SMEs found that supplier partnership, innovative technology, and information have not significantly affected overall organizational performance. The conclusion was put forward to the policymakers that information sharing quality, internal supply chain process, and lean practices directly influence organizational performance, and further research should be conducted on the SRM, CRM, innovation, and overall supply chain performance ( 13 ). The current study also concludes that innovation is intervening between SCMPs and supply chain performance. The study's strength was that we measured the SCMPs, innovation, and top management commitment whole together and predictive effect on the supply chain performance. At the global level, Mwale ( 22 ) claimed that SCMPs had found a direct influence on organizational performance, and innovation has found a significant direct and indirect predictor for organizational and supply chain performance. The current study results were more controversial than the previous study, and customer relationship management does not affect supply chain performance. It is to be noted that SCMP is thoroughly linked with strategic supplier partnership. The lean supply chain role was significant for organizational performance.
Ayman et al. ( 2 ) noted that SCMPs, internal integration, information sharing, and postponement were positively significant for supply chain and efficiency performance. The present study results certainly suggest that SCMPs, innovation, top management commitment is a viable design for the supply chain performance, and their top management commitment can improve companies' performance with innovative adaptability. In contrast, supplier and customer integration were not significant for supply chain efficiency performance in the organization ( 44 ). It was hypothesized in the present study that CRM affects supply chain performance. But in our case, CRM has no significant impact on the supply chain performance, and the proposed theory was rejected.
Radas and Božić ( 45 ) expressed those organizations and suppliers' activities are indirectly influenced by innovation and renewal of a growing product. It was concluded that supply partnership performs the role of supply chain management if the organization has inclined toward adopting an innovative strategy. The relationship of SCMPs cannot limit because it could expect to strengthen the market share, sales strategy, profit margin, investment, and competitiveness in the market. The present study findings revealed that innovation positively increased customer relationship management and supply chain performance. This study recommended that SCMPs alternately devoted organizational performance toward more struggle with other competitive stakeholders ( 11 ). Likewise, the current study conveyed that innovation constructively mediates the interaction between SRM and supply chain performance. Further investigation can be undertaken to explore the supply chain performance in the Covid-19 qualitatively because it disturbed supply and distribution process in the national and global supply chain market.
Our findings confirm that subjects with no innovative technique can increased risk for the supply chain performance in logistic and supply companies. This is one of the conclusions derived from this work: supply chain management practices, customer and supplier relationship management will not be productive for supply chain performance if the implementation of innovative technologies could not be applied by top management. Researchers find evidence that traditional and typical belief in supply chain performance is not fruitful in the supply and distributive markets. No previous study has used this conceptual model to investigate the effects of SCMPs concerning innovative and top management commitment on the supply chain performance. Different alternatives aimed to improve these SCMPs techniques, but our conducted research proved that SRM and CRM practices could bring changes in the supply chain performance.
Limitations and Future Directions
The present research has lots of strong points but there are also some limitations. First, the current study has used a smaller sample size and there is a need to increase sample size in future. Second, the current study uses five practices of SCM and future researchers can increase more practices with the same mediator and dependent variable. The current study has used innovation as a mediating variable between SCMP and OP. There is a need to use moderating variables (demand uncertainty and strategic goals) also in future between SCMP and OP.
Data Availability Statement
The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author/s.
Ethics approval was not required for this study in accordance with national guidelines and local legislation. The patients/participants provided their written informed consent to participate in this study.
HX and CZ contributed to conception and design of the study. CZ organized the database, performed the statistical analysis, and wrote sections of the manuscript. HX wrote the first draft of the manuscript. All authors contributed to manuscript revision, read, and approved the submitted version.
This study was supported by the National Social Science Key Fund of China (under Grant 18AGL006).
Conflict of Interest
The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.
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Keywords: SCMPs, innovation, supply chain performance, top management commitments, National Logistic Corporation, Food and Beverage Companies Groups
Citation: Xu H and Zhao C (2022) Supply Chain Management Practices Influence Supply Chain Performance With Mediation Role of Innovation and Moderation Role of Top Management Support. Front. Public Health 10:813828. doi: 10.3389/fpubh.2022.813828
Received: 12 November 2021; Accepted: 03 May 2022; Published: 01 June 2022.
Copyright © 2022 Xu and Zhao. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
*Correspondence: Changheng Zhao, email@example.com
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10 Best Practices for Supply Chain Management
Successfully managing a supply chain may be the most difficult aspect of your business, yet, it stands as one of the most crucial. Your supply chain management could be the difference between substantial growth or the gradual dwindling of business.
Historically, supply chain management was only concerned with moving items from Point A to Point B. Today, companies must break down their supply chain in an ever-growing competitive market. Successful supply chain management is no longer bound only to delivering a shipment, but doing so in a qualitative manner while simultaneously lowering the associated costs. Transportation spend management has emerged as a vital aspect of any supply chain that could effectively change the course of your company’s growth.
We’ll guide you through the most important practices for successful supply chain management that we’ve identified at Trax.
- Set up a supply chain council
- Establish a supply chain structure
- Leverage technology
- Create alliances
- Focus on the total cost of ownership
- Strategically source suppliers
- Move contract management to the supply chain
- Optimize inventory for reduced cost
- Establish regular reviews
- Set control and risk levels
- Mature Your Transportation Company
1. Set up a supply chain council
One of the most important factors to consider with your supply chain is to ensure that your company’s objectives, strategies, mission, and vision are met by your supply chain. A disparity between the visions of corporate management and supply chain management can lead to loss of profit, time, and effort across the company. A simple solution is to set up a supply chain council.
A supply chain council helps to structure your supply chain through a macro view of your company’s needs and operations. A diverse council can take into consideration the needs of all the departments and functions of a company and make informed decisions that positively affect all aspects of a company. Such a council often consists of key players: the supply chain head, corporate executives, department directors, business unit heads, and influential leaders within the company.
Although supply chain management is one of the most flexible and critical parts of any company operation, a supply chain may suffer from a company’s inability to comprehend the importance of advanced supply chain management. A strategic council aids in providing higher management with a better view of the supply chain’s effects.
A council helps boost a company’s bottom line through advanced cost analysis. This allows the company to make decisions based on data rather than speculations and gut instincts. The more advanced the supply chain’s tools, the better view that the council has on the costs the company or their departments incur.
For example, transportation spend management helps companies directly understand the cost of delivery, so sales can better analyze the profit margin and reconsider their POS. The more mature your transportation spend management, the more diverse and valuable insights your supply chain council gains into increasing your bottom line. Take the Trax Transportation Spend Management (TSM) Maturity Model. This is a framework that provides a roadmap for large, global transportation enterprises to go from a lack of visibility and control to a fully optimized transportation supply chain that is based on accurate detailed data.
2. Establish a supply chain structure
In order to optimize processes and streamline a supply chain, a solid foundation must be in place. The success of a supply chain mirrors the integrity of its structure. A company must know what it requires from a supply chain in order to structure it in a way to best meet your company’s needs.
Many companies prefer a centralized supply chain management methodology, while others see decentralization as a method to success. Many dynamic and modern companies, however, have conceived a hybrid approach—centralized strategy and decision-making and decentralized operations and workloads. This offers a more flexible and adaptive structure.
A hybrid system offers dynamic benefits. First, it allows supply chain management to better collaborate with corporate management and, ultimately, align the supply chain with corporate goals and objectives. Second, decentralizing operations utilizes the experience and real-time response of workers in the field. This system makes it easier to deal with unexpected problems and/or new developments.
Once a structure is set in place, hiring and recruitment must then take center stage. Many companies now place purchasing, procurement, planning, contract management, and logistics under the supply chain head. In order to optimize your supply chain structure, it’s crucial to instate the right people in your council.
3. Leverage technology
Adopting technology into supply chain processes is no longer considered proactive, but a standard operation. The trick is to choose a platform that meets your needs. Reshaping your supply chain structure to work around the platform can seriously hurt your company.
Platforms, such as ERPs and SAPs, are a great tool to streamline processes, increase visibility, minimize paperwork, and automate certain activities. Transportation management systems and transportation spend management systems are ideal tools for the bigger picture in your supply chain—they help increase efficiency, reduce risk, and provide data-driven insights into business decisions. A strong platform helps streamline supply chain management and works in tandem with your company’s strategy.
Some of the most potent tech a company can utilize concerns increasing clarity of data and costs. Many transportation spend management, data management, rate management, and cost allocation platforms provide decision-makers with a clear view of where and how they spend money throughout their supply chain.
At Trax, we’ve seen that choosing a platform that not only meets your needs but can integrate with vendors or clients helps mature your supply chain to the next level. For example, platforms that can automate purchase orders, depending on a set methodology, and send it directly to a vendor reduces lead time and frees up resources for other tasks.
4. Create alliances
One of the most important factors in managing a supply chain is having collaborative partners. Establishing a healthy relationship comes from a strong foundation of communication, common goals, increased transparency, and mutual collaboration. Without these alliances, your supply chain management can become a losing uphill battle that suffers in efficiency and profitability, and can even be detrimental to your own customers’ experiences (through late or damaged deliveries).
To aid in strengthening a relationship, define a set of measurable objectives for continuous improvement, as well as a clear issue resolution plan. Tools like carrier scorecards are an excellent way to track performance, highlight and communicate any issues, and much more, helping to mature your company’s transportation spend.
For example, at Trax, we believe that a collaborative relationship between the shipper, carrier, and Trax, helps all partners perform better and provide superior customer service. Let’s say that customers complain of damaged shipments. Because of the collaborative carrier-shipper relationship, the shipper can bring this issue to the carrier’s attention. After discussion and investigation, it turns out that the shipper has a weakness in the packaging process that’s resulting in easily damaged shipments. Without this collaborative relationship, the packaging issue may have taken months to identify, costing the shipper lost revenue and customers, as well as damage to the brand reputation.
5. Focus on the total cost of ownership
Progressive companies are shifting to focus on the total cost of ownership (TCO) rather than limiting their view to purchase costs. Considering that the acquisition costs normally amount to less than half of the total cost, it’s logical for companies to consider TCO instead.
TCO offers a unique view that enables companies to break down costs and profit margins to the most minuscule of details. The more managers and/or department heads involved in the process, the more accurate the data is—another good reason to set up a supply chain council.
Going a step further from internal input, buyers and sellers can work together to reduce TCO. At Trax, we’ve found this to often be one of the most efficient cost-cutting policies that large companies can implement.
Prioritizing TCO may seem like a foreign concept to some corporations, as the spotlight is often on cutting direct costs rather than focusing on value. Yet, focusing on working with selected investors that can help reduce cost significantly through either quality, timeliness, risk management, or otherwise can be much more fruitful than sending out the traditional tender.
6. Strategically source suppliers
Shifting focus to TCO rather than the bottom line on a bid requires you to look for suppliers who share the same mindset. Factors other than price can have a huge impact throughout the entire process, either lowering or raising costs significantly. For example, suppliers who provide low costs but come with low quality can result in refunds (lost money) or lost sales—in the end, costing you a lot of money.
Operating, training, maintenance, warehousing (especially if goods need special warehousing), quality levels, and transportation are all costs that must be considered.
Creating a dynamic procurement department that can source a strong partner equipped with the right mindset can help offset some costs . This helps make the entire process more lucrative in the long run.
7. Move contract management to the supply chain
Centralizing contracts in the supply chain can be one of the most effective practices in contract management. When contracts are scattered throughout multiple divisions, such as finance, legal, purchasing, or operations, it can lead to overlooking important factors or worse—losing entire contracts.
Having the supply chain management division handle all contracts ensures more compliance, better contract standardization, and a more detailed perspective. Signing, maintaining, and revising contracts becomes more streamlined and efficient.
In addition, centralizing contracts to the supply chain division gives leaders the ability to leverage the company’s overall spend in services, which can lead to greater savings and minimized costs , as well as improved risk mitigation.
8. Optimize inventory for reduced cost
Inventory management is often a disregarded, yet integral, part of supply chain cost management. Warehousing practices vary in such a way that it’s difficult for companies to pinpoint the best strategy while positively impacting the bottom line.
The cost of holding inventory can reach up to a colossal 40% of the original acquisition cost . Hence, competitive companies find ways to better manage inventory strategies in order to lower the TCO and increase profit margins.
Toyota is a great example of the need for mature transportation spend management. The company has a renowned just-in-time inventory and manufacturing process. Toyota doesn’t hold inventory at all. Parts arrive and go directly to manufacturing, and then products are released to the market. Zero inventory, zero cost. Without the mature transportation management element, there’s a large risk to Toyota—spot freight rates, high claims volumes, late deliveries, accessorial charges, and other factors that could easily result in severe financial losses. Mature transportation spend management makes Toyota’s extremely optimized, low-cost inventory process possible.
9. Establish regular reviews
It’s crucial to constantly monitor and evaluate your supply chain in order to maintain a high standard. Regular reviews and consistent data collection and analysis not only help finetune your supply chain management, but it gives the visibility you need to mitigate future risk.
For example, Trax’s Transportation Spend Management (TSM) Maturity Model is a framework that provides a roadmap for large, global enterprises to go from a lack of visibility and control to a fully optimized transportation supply chain through detailed, accurate data. As companies mature in transportation spend and utilize tools, such as carrier scorecards or forecasting and budgeting, your ability to be proactive rather than reactive exponentially increases. Evolving through the maturation of efficiency optimization, financial optimization, etc., provides insights into risks and allows for data-informed business decisions now and in the future.
10. Set control and risk levels
Identifying risk factors throughout the supply chain process can transform your processes to be more flexible and prepared to deal with any issues that may arise.
One of the main areas where risk should be identified is in the sourcing decision process, as many external factors play a part in increasing risk. To mitigate risk in sourcing:
- Identify risks and adopt methodologies that help identify them throughout the entire sourcing process.
- Analyze risk probabilities and effects.
- Evaluate the cost and financial impacts incurred if a risk was to happen.
- Grade or evaluate risks to prioritize them for the scrutiny and frequency in which they should be monitored.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.
Supply chain sustainability: introductory considerations, using freight audit data as carbon emissions management, drive efficiency and savings with your supply chain and freight bill audit solution, supply chain: disruption as usual, steve beda featured in supplychainbrain: executive insights on co2 in the supply chain, 5 key challenges to building a supply chain with environmental sustainability in mind.
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30 up-to-date case studies illuminate every aspect of modern supply chain management
• Risk management, analytics, global supply chain issues, and much more
• Innovative processes, technologies, strategies, and tactics
• An indispensable resource for both students and practitioners
This casebook brings together 30 focused cases addressing virtually every aspect of supply chain management, from procurement to warehousing, strategy to risk management, IT to supplier selection and ethics. A global team of contributors presents key challenges in industries ranging from pharmaceuticals to fashion and previews issues ranging from the “limits of lean” to the potential of 3-D printing.
Cases vary in length and complexity, offering maximum flexibility to both instructors and readers; a convenient table provides fast access to specific topics. Qualitative cases are supported by relevant discussion questions and sample responses; quantitative cases are supported by completed numerical solutions, and, where applicable, associated spreadsheets.
Table of contents
- About This eBook
- Copyright Page
- Dedication Page
- About the Author
- Objectives of the Book
- Organization of the Book
- Salvation Army: Origins and Purpose
- United States Southern Territory and Salvation Army–Dallas ARC
- Discussion Questions
- Products and Markets
- Vertically Integrated Supply Chain
- The Manufacturing Process
- Investment in Collaborative Planning, Forecasting, and Replenishment (CPFR)
- Stanford Blood Center: “Give Blood for Life”2
- A Snapshot of the SBC-SUMC Supply Chain in 2006
- Company Background
- Financial Risk Management Background
- The Automobile Industry in China
- Toyota China’s Production Planning and Demand Management
- The Company
- BESSI Leather Goods
- The Central Role of Planning
- The Challenge
- Appendix 7-1 Gantt Chart of the Fashion Product Collection Definition (from Grid Definition to Start of Production)
- Appendix 7-2 Fashion Product Collection Definitions
- Appendix 7-3 Demand Forecasting Process
- Case 9. Multi-Echelon Inventory Decisions at Jefferson Plumbing Supplies: To Store or Not to Store?
- The Indian Pharmaceutical Industry
- The Indian Pharmaceutical Supply Chain
- Upstream Supply Chain for High-Range Cements
- Appendix 13-1: Baseline Data and Three Solutions Offered by UPS
- Organization Background
- Organizational Structure and Facility Layout
- Operations Management
- Supply Chain Management
- Two Different Perspectives
- Overview of Fair Trade
- The Fair Trade Supply Chain
- Criticism of Fair Trade
- Starbuck’s Fair Trade Policy
- Company Overview
- The Rebranding Process
- Background for the Cooperative and the Industry
- Transaction Costs Approach
- COAPEL Supply Chain
- Process Reforms
- Organizational Operations
- Case 24-1: Helmets
- Case 24-2: Puffs
- Case 24-3: Sirop
- Case 24-4: Blower
- Jacket’s Decisions
- The Meeting
- Plant Visit
- Bangalore: City Statistics1
- Collection of Waste
- Role of Non-Governmental Organizations (NGOs)
- About the Company
- The Power Sector in India
- Cloud Computing
- Supply Chain Structure of CEL
- Appendix 27-1: CEL’s Balance of Plants Business in the Power Sector
- Appendix 27-2: Trends in Installed Generating Capacity of Electricity Nonutilities in India from 1970–71 to 2010–11
- Appendix 27-3: Business Process of CEL Sourcing
- Spare Parts Supply Chain Management at IGNYS Automotive
- Industry Background
- Introduction of the Case Companies
- Search for an International Partner
- Joint Business Development and Complementary Service Offering
- Joint Project Illustrations
- Mutual Benefits from International Logistics Partnership
- Classification of Risks
- General Supply Chain Resilience Model
- European Case Study
- Appendix 30-1
- Financial Times Press
- Title: The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM
- Author(s): Chuck Munson
- Release date: June 2013
- Publisher(s): Pearson
- ISBN: 9780133367300
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Professionals in supply chain management use various methods to determine how to improve the performance of supply chain operations. Analysis of case study is certainly one of the most popular methods for people from business management background. In order to accelerate the learning, this article has gathered 20+ most sought-after supply chain case studies, analyzed/categorized them by industry and the findings are presented.
Boeing wants to encourage more flight frequency and direct route using a smaller capacity aircraft. Then they decide to outsource many things such as the design, testing and production of key components to key industrial partners and try to reduce number of components that go to assembly. The ultimate goal is to finish the final production process within 3 days. Airbus takes a bit different marketing approach. They want to utilize high capacity airplane to help airlines drive the operating cost down. They decide to selectively outsource the production of parts and keep the design and production of key components in-house.
Supply Chain of fashion industry involves a time based competition. Many customers have the unique product needs but a competition is very fierce because of the low barriers of entry. Many new players try to offer specialized products to customers all the time. This section features the supply chain case studies of H&M, Benetton, Zara and Adidas. – H&M aims to be the price leader in the fashion market.In order to materialize its vision, H&M tries to eliminate the middlemen in various stages of supply chain and consolidate the buying volumes. Product design is also the central part of its strategies. They don’t try to follow the high fashion designs but try to adopt the street trends which are easier to produce. At the end of the day, they can bring products to market within 2-3 weeks. – Benetton , in contrast, chooses to have a full control of its production but allow its licensees to operate the stores so they can focus on production and quality control. The reason is that they would like to create the worldwide brand awareness. For fast moving products, they use the production facilities in Europe. Asian suppliers will perform production for standardized products. – Zara is very famous for its time based strategy. In order to launch a new product within 15 days, Zara uses a small lot production. A new product will be tested in pilot stores. If product sales is good, a larger batch will be ordered. Otherwise, remaining products will be removed from the shelves and sold as mark-down in other stores. This creates the perception among consumers that Zara’s products are unique and you have to take it while stock lasts. Vertical integration contributes to the success of Zara, they own the majority of its production facilities and stores (this is the reason why Quick Response can be effectively implemented). Its automated distribution centers are strategically located between the center of populations so products are delivered to stores quickly. Zara also works with Air France, KLM Cargo and Emirates Air in order that they can coordinate directly with the airlines to make the outbound shipments to its stores and bring back some raw materials and semi-finished materials with return legs. The last supply chain case study in the fashion retailing industry is Adidas . In order to cope with changing customers’ demand, they decide to undertake Mass Customization strategy. The whole idea is to develop, market and deliver the product variety that most customers will find what they want. The first steps towards mass customization is to strategically offer the product choices. Too few variations will disappoint a customer but too many variations will simply postpone a buying decision. After that, Adidas asks the same key suppliers to produce custom components in order to achieve the economy of scale. In order to compensate a long waiting time, Adidas uses air freight or courier service. The reason why they can do this is that customized products are sold directly to customers so they have the higher profit margin to compensate the higher transportation cost. Supply chain strategy of the fashion retailing industry is summarized as below,
FMCG industry is typically the products sold to customers at a low cost and will be completely consumed within 1 year. The nature of this industry is the short product life cycle, low profit margin, high competition and demand fluctuation. This section will present the case studies of P&G, Unilever and Coca-Cola respectively. Forecasting and new product introduction has always been the issues for many FMCG companies, P&G is no exception. To cope with this, P&G conducts a merchandise testing at the pilot stores to determine the customer’s response to new product before the launch. The result is that the forecast accuracy is improved because a demand planner has an additional source data to make a better decision. Moreover, products can be shipped to stores in-time then lost sales is minimal. – Unilever also feels that the competition in FMCG industry has significantly increased. They have to launch the new products on regular basis but the forecasting of new product is difficult. So they create a better classification of new products (base, relaunch, repack, new) using a regression model to identify potential forecast errors for each type of new product. – Coca-Cola doesn’t really have many stock keep units when compared with other companies in the same industry. However, products go to over 2.4 million delivery points through over 430 distribution centers. Managing transportation at this scale is the absolute challenge. In order to streamline the delivery, Coca-Cola implemented a vehicle routing software. The reason is that is the software vendor has a very good relationship with Coca-Cola’s legacy ERP software vendor. Moreover, the vendor has a solid connection with the university who can help to develop the algorithm that fits in with the business’ needs. The result is that transportation planners at each distribution center can use the new tool to reduce travelling time/distance on daily basis.
Lean manufacturing concept has been implemented widely in the automotive industry so the case studies about lean manufacturing is very readily available. Due to the increasing competition in the automobile industry, car manufacturers have to launch a new model to the market more frequently. This section will show you how BMW manages a long term planning, how Ford applies lean concept to the new product development and how Hyundai manages the production planning and control. – BMW uses a 12-year planning horizon and divides it into an annual period. After that, they will make an annual sales forecast for the whole planning horizon. After the demand is obtained, they divide sales into 8 market and then select the appropriate production sites for each market, considering overall capacity constraints and total cost. As you may notice, this kind of a long range planning has to be done strategically. – Ford calls its product development system as “work streams” which include the body development, engine development, prototyping and launch process . The cross-functional team are the experts and their roles are to identify key processes, people, technology necessary for the development of new prototype. Each work stream team is responsible to develop timeline of each process. Detailed plan is usually presented on A3 sized paper. They clearly identifying current issues they are facing with supporting data, drawings and pictures. On weekly basis, they organize a big group meeting of all work stream team to discuss the coordination issues. – Hyundai deploys a centralized planning system covering both production and sales activities across the facilities and functional areas. They develop a 6-month master production plan and a weekly and a daily production schedule for each month in advance. During a short term planning (less than one month), they pay much attention to the coordination between purchasing, production and sales. Providing a long term planning data to its suppliers help to stabilize production of its part makers a lot.
Life cycle of technology products is getting shorter and shorter every day. Unlike FMCG, the launch of a new product in the hi-tech industry requires the investment in research and development quite extensively. Then, a poor planning will result in a massive loss. This section will cover JIT and outsourcing by Apple Inc, Supply Chain Risk Management by Cisco System, Technology Roadmap by Intel, Supply Chain Network Model by HP, Mass Customization by Dell and Quality Management by Sam Sung. Steve Jobs invited the Tim Cook to help to improve Apple’s Supply Chain in 1998. Jobs told Cook that he visited many manufacturing companies in Japan and he would like Cook to implement the JIT system for Apple. Jobs believed that Apple’ supply chain was too complex then both of them reduced the number of product availability and created 4 products segment, reduced on hand inventory and moved the assembling activities to Asia so they could focus on developing the breathtaking products that people wanted to buy. – Cisco Systems would like to be the brand of customer choice so they implement a very comprehensive supply chain risk management program by applying basic risk mitigation strategies, establishing appropriate metrics, monitoring potential supply chain disruptions on 24/7 basis and activate an incident management team when the level of disruption is significant. – Intel ‘s new product development is done by the process called Technology Roadmap. Basically, it’s the shared expectations among Intel, its customers and suppliers for the future product lineup. The first step to prepare the roadmap is to identify the expectations among semiconductor companies and suppliers. Then they identify key technological requirements needed to fulfill the expectations. The final step is to propose the plan to a final meeting to discuss about the feasibility of project. Some concerning parties such as downstream firms may try to alter some aspects of the roadmap. Technology Roadmap allows Intel to share its vision to its ecosystem and to utilize new technology from its suppliers. – HP ‘s case study is pretty unique. They face with a basic question, where to produce, localize and distribute products. Its simple supply chain network model is presented below,
From this example, only 3 possible locations result in 5 different way to design the supply chain. In reality, HP has more production facilities than the example above so there are so many scenarios to work with. How should HP decide which kind of a supply chain network configuration they should take to reduce cost and increase service to customer? The answer is that they use the multi-echelon inventory model to solve the problem. – Dell is one of the classic supply chain case studies of all time. Many industries try to imitate Dell’s success. The key ingredients of Dell’s supply chain are the partnership with suppliers, part modularity, vendor managed inventory program, demand management and mass customization. Also, you can find the simplified process map of Dell’s order-to-cash process as below,
– Sam Sung has proven to be the force to be reckoned with in the hi-tech industry. The secret behind its supply chain success is the use of Six Sigma approach. They studied how General Electric (GE), DuPont and Honeywell implemented six sigma. After that, they have created their own implementation methodology called DMAEV (define, measure, analyze, enable, verify). They use the global level KPI to ensure that each player in the same supply chain is measured the same way. Also, they utilize SCOR Model as the standard process. Any process changes will be reflected through an advance planning system (APS).
The last industry covered here is the general merchandise retailing industry. The critical success factor of this industry is to understand the drivers of consumer demand. Four case studies will be presented, namely, 7-11, Tesco, Walmart, Amazon and Zappos. – 7/11 is another popular case study in supply chain management. The integration of information technology between stores and its distribution centers play the important role. Since the size of 7/11 store is pretty small, it’s crucial that a store manager knows what kind of products should be displayed on shelves to maximize the revenue. This is achieved through the monitoring of sales data every morning. Sales data enables the company to create the right product mix and the new products on regular basis. 7/11 also uses something called combined delivery system aka cross docking. The products are categorized by the temperature (frozen, chilled, room temperature and warm foods). Each truck routes to multiple stores during off-peak time to avoid the traffic congestion and reduce the problems with loading/unloading at stores. – Tesco is one of the prominent retail stores in Europe. Since UK is relatively small when compared with the United States, centralized control of distribution operations and warehouse makes it easier to manage. They use the bigger trucks (with special compartments for multi-temperature products) and make a less frequent delivery to reduce transportation cost. Definitely, they use a computerized systems and electronic data interchange to connect the stores and the central processing system. – Wal-Mart ‘s “Every Day Low Prices” is the strategy mentioned in many textbooks. The idea is to try not to make the promotions that make the demand plunges and surges aka bullwhip effect. Wal-Mart has less than 100 distribution centers in total and each one serves a particular market. To make a decision about new DC location, Walmart uses 2 main factors, namely, the demand in the proposed DC area and the outbound logistics cost from DC to stores. Cost of inbound logistics is not taken into account. There are 3 types of the replenishment process in Wal-Mart supply chain network as below,
In contrary to general belief, Wal-mart doesn’t use cross-docking that often. About 20% of orders are direct-to-store (for example, dog food products). Another 80% of orders are handled by both warehouse and cross dock system. Wal-Mart has one of the largest private fleet in the United States. The delivery is made 50% by common carriers and 50% by private fleet. Private fleet is used to perform the backhauls (picks up cargoes from vendors to replenish DCs + sends returned products to vendors). Short-hauls (less than one working day drive) is also done by the a private fleet. For long-hauls, the common carriers will be used. There are 2 main information system deployed by Wal-Mart. “Retail Link” is the communication system developed in-house to store data, share data and help with the shipment routing assignments. Another system is called “Inforem” for the automation of a replenishment process. Inforem was originally developed by IBM and has been modified extensively by Wal-Mart. Inforem uses various factors such as POS data, current stock level and so on to suggest the order quantity many times a week. Level of collaboration between Wal-Mart and vendors is different from one vendor to the other. Some vendors can participate in VMI program but the level of information sharing is also different. VMI program at Wal-Mart is not 100% on consignment basis. – Amazon has a very grand business strategy to “ offer customers low prices, convenience, and a wide selection of merchandise “. Due to the lack of actual store front, the locations of warehouse facilities are strategically important to the company. Amazon makes a facility locations decision based on the distance to demand areas and tax implications. With 170 million items of physical products in the virtual stores, the back end of order processing and fulfillment is a bit complicated. Anyway, a simplified version of the order-to-cash process are illustrated as below,
Upon receipt of the orders, Amazon assign the orders to an appropriate DC with the lowest outbound logistics cost. In Amazon’s warehouse, there are 5 types of storage areas. Library Prime Storage is the area dedicated for book/magazine. Case Flow Prime Storage is for the products with a broken case and high demand. Pallet Prime Storage is for the products with a full case and high demand. Random Storage is for the smaller items with a moderate demand and Reserve Storage will be used for the low demand/irregular shaped products. Amazon uses an propitiatory warehouse management system to make the putaway decision and order picking decision. After the orders are picked and packed, Amazon ships the orders using common carriers so they can obtain the economy of scale. Orders will arrive at UPS facility near a delivery point and UPS will perform the last mile delivery to customers. Amazon is known to use Sales and Operations Planning (S&OP) to handle the sales forecast. Anyway, this must be S&OP process at product family/category level. To compete with other online retailers, Zappos pays much attention to the way they provide the services to customers. In stead of focusing on the call center productivity, Zappos encourages its staff to spend times over the phone with customers as long as they can so they can fully understand the customer’s requirements. They also upgrade the delivery from 3 days to 1 day delivery in order to exceed customer expectation.
All case study demonstrates that supply chain management is truly the strategic initiatives, not merely a cost cutting technique. Leading companies have a very strong customer focus because almost all of initiatives are something to fill the needs of customers. Relationship management is the unsung hero in supply chain management. It’s the prerequisite to the success of every supply chain. And at the end of the day, it comes down to the quality of supply chain people who analyze, improve and control supply chain operations. – See more at: http://www.supplychainopz.com/2014/04/supply-chain-management-case-study.html#sthash.MrnrGsyY.dpuf
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- Preprint egusphere-2023-1282
Can corporate supply chain sustainability standards contribute to soil protection?
Vojtech cemus, jaroslava frouzova, alena peterkova, vojtech kotecky.
Abstract. Companies increasingly view soil degradation in their supply chains as a commercial risk. They have applied sustainability standards to manage environmental risks stemming from suppliers’ farming operations. To examine the application of supply chain sustainability standards in soil protection, we combined global data on existing sustainability standards and their use in the food retail industry, a key sector in agrifood supply chains, with a case study in a medium-sized European country, to explore companies' options and views.
Soil quality is a priority objective in retail sector sustainability efforts: 41 % of the investigated companies apply some soil-relevant standard. But the standards lack specific and comprehensive criteria. Compliance typically requires that farmers are aware of soil damage risks and implement some mitigation measures; however, no measurable thresholds are usually assigned. This stands in contrast to some other provisions in a number of standards, such as deforestation criteria. There are two probable causes of this difference: Companies and certification bodies have prioritised other environmental challenges (e.g., pesticide use, biodiversity loss in tropical biomes) over soil degradation. Also, there are practical constraints to the useful standardisation of soil sustainability. Effective soil sustainability provisions will require measurable, controllable, and scalable multidimensional interventions and compliance metrics. Often, these are not yet available. The development of necessary practical tools is a priority for future research. In a case study, we developed a set of standards applicable in temperate European farming practice and adapted to the needs of food retailers. Based on discussion with the industry, farmers, and soil experts, the standard is based on specific commodities rather than production units and compliance with specific agronomic practices as opposed to direct measurements of soil quality.
- Preprint (PDF, 1021 KB)
- Preprint (1021 KB)
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Jan Frouz et al.
Status : open (until 17 Oct 2023)
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Data for the manuscript: Can corporate supply chain sustainability standards contribute to soil protection? Vojtech Cemus https://figshare.com/articles/dataset/Data_for_the_manuscript_Can_corporate_supply_chain_sustainability_standards_contribute_to_soil_protection_/23295851