SUPPLY CHAIN RESPONSIVENESS AND ORGANIZATIONAL PERFORMANCE

SUPPLY CHAIN RESPONSIVENESS AND ORGANIZATIONAL PERFORMANCE

This study aims to investigate the relationship between supply chain responsiveness and organizational performance. The following objectives are premised on the conceptual framework for the study:

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CHAPTER ONE

INTRODUCTION

Background of the Study

Organizations are referred to by the generality of studies as instruments of purpose or goals. They are viewed as comprising of coordinated efforts and channeled energy (Richard, 2000). The major premise for the continuity of organizations is therefore their ability to achieve or perform by their purpose or goals. In this way, they are assessed with regards to their effectiveness (goal realization), efficiency (functionality), and quality (satisfaction of customers) (Chavan, 2009). Thus, leading to the ability of an organization to sustain the delivery of quality products and service; this is imperative to its long-term success.

In their study, Owen, Ron, Will, and Robert (2001) argue that there are three major factors to sustaining high performance, first is the leadership or the management of the organization which is expected to have an accurate understanding of the marketplace, or the environment in which the organization must compete, second, the behavior required to successfully implement the business strategies or systems which are suited to the marketplace requirement and third, the adoption and implementation of organizational systems and process which are supportive of the organization’s overall version and strategy (Owen, Ron, Will, & Robert, 2001).

Also, organizational performance describes the actual output or results of an organization as measured against its intended outputs, goals, and objective (Jon & Randy, 2009). This description of the organizational performance draws from the goal-setting model and recognizes four types of organizational performance measures, first human resource outcomes, second organizational outcomes, third financial accounting outcome, and lastly capital market outcomes. Human resource outcomes related to change in employee behavior which included employee satisfaction, turn over, and absenteeism. Organizational outcomes contain productivity, effectiveness, efficiency, customer satisfaction, and quality of product services. Financial accounting outcomes included three measures such as returns on assets, return on equity, and profitability. Capital market outcomes reflect how the market evaluates an organization that consists of the three indicators which are stock price, the growth rate of the stock price, and market returns (Dyer & Reeves, 1995).

This is as Rowold (2011) observed that a high-performance work system and practices have been identified as playing a key role in the achievement of business goals and improved organizational effectiveness. While there is no agreement on an ideal configuration or bundle of such systems and practices. The logic is that high-performance work systems influence and aligns employee’s attitude and behaviors with the strategic goal of the organization and they increase the overall functionality or efficiency of the organization through a systematic alignment of operations with demands or the expectations of the organizations market.

Accordingly, one such system identified in the literature is that of the supply chain which is expected to respond efficiently and effectively quickly to the market. By concentrating on the time, the quick reaction of response to the market demand, organizations will be well suited to sustaining their position and relevance to the market. These factors translate into the supply chain responsiveness of the organization. The supply chain responsiveness of organizations (SCR) has received extensive interest from researchers as well as practitioners in the field and is a developing subject in the increasingly changing and competitive global market. It includes the responsiveness or adaptability of all activities and components within a supply chain (Chong, 2013).

The supply chain responsiveness (SCR) is a component of the supply chain management (SCM) which is a broader and more complex topic to understand because it encompasses the management of many activities, and involves multiple role-players across divisional functions and organizations. Supply chain responsiveness has been researched by several different disciplines including marketing, logistics, information management, operations management, economics, and systems dynamics (Fiala, 2004). However, there are many different variations in the understanding and conceptualization of supply chain responsiveness, identify this lack of coherence as one of the issues faced by anyone studying the topic (Du Toit & Vlok, 2014). This is as Lummus and Vokurka (1999), observe that many studies confuse the term supply chain responsiveness with the supply chain management phenomenon – such as supplier partnerships, inventory management, and process integration – instead of acknowledging the distinct scope of supply chain responsiveness – systems responsiveness, logistics process responsiveness and supplier network responsiveness.

With the increasingly sophisticated customer demand and recent events of supply disruptions; supply chains are required to respond rapidly and perform in an increasingly changing business. It is incumbent on managers and researchers to strive for a better understanding of the responsiveness concept at the inter-organizational level. Since today’s organizations strive to achieve supply chain responsiveness advantage to survive and thrive in a fast-paced business environment (Lee, 2004; Christopher & Peck, 2004; Gosain, Malhotra & Sawy, 2004).

Supply chain responsiveness literature is highly normative and conceptual with research studies primarily being based on case studies (Holweg, 2005; Storey, Emberson & Reade, 2005). Swafford, Ghosh, and Murthy (2006) however attempt operationalizing the supply chain agility of a firm as a first-order construct. This research adds to the same research pool by operationalizing the supply chain responsiveness construct using different measures than those used in prior empirical studies and further investigates the effect of these measures on organizational performance. This departs from previous studies as it presents first, an assessment of the concept of supply chain responsiveness from a position rarely adopted or examined by previous research, second, as it investigates the relationship between supply chain responsiveness and organizational performance, and third, as it examines the moderating role of organizational technology on the relationship between the supply chain responsiveness and organizational performance in manufacturing firms in Rivers State.

Statement of the Problem

The performance of the organization is a critical and essential behavior as it necessitates features of survival and continuity for the business. Greguras (1996) observed that one of the major challenges of manufacturing firms is achieving and sustaining performance through the implementation of methods or techniques that are suited to the environment of the business (Borman, 2004). Greguras (1996) further stated that organizational performance should reflect and express the organization’s capacity for realizing its goals using systems and processes which are highly adapted to the expectations and changes which are prevalent in the environment or industry of the organization (Luthans, 1998). In his opinion, Luthans (1998) observed that some of the major issues experienced by manufacturing organizations are not the changes in their environment but their adoption and utilization of poor, out-dated, or highly unsuitable systems in their operations and activities.

Aluko (2004) identifies the Nigerian context as being very unpredictable, notorious for an incessant power outage, and also low on security.  Such an environment requires a reconfiguration of systems and supply chain processes which is not only suited to the volatility of the environment but one that is also highly responsive and adaptable. Aluko (2004) further notes that given the fact that the typical manufacturing firm in Nigeria experiences power failure or fluctuations daily, it is imperative to structure operations in line with peak supply periods or demand expectations and thereby avoid waste or inefficiency. Onwuka and Eguanvoen (2009) argued that the adoption of operating systems and methods of functionality that emphasize efficiency and responsiveness are critical to the survival and performance of manufacturing firms, even those within Nigeria. In line with the stated problem and the observations presented above, this study investigates the relationship between supply chain responsiveness and organizational performance of manufacturing firms in Rivers State.

Conceptual Framework

The focus of this study is on the relationship between suppliers’ chain responsiveness and organizational performance. The predictor variable is suppliers’ chain responsiveness which is operationalized using three dimensions: systems responsiveness, logistics process responsiveness, and suppliers’ network responsiveness (Chong, 2013). The criterion variable is an organizational performance that is operationalized using the goal model theory (Jon & Randy, 2009) as such, three measures – organizational efficiency, organizational effectiveness, and product quality. The effect of suppliers’ chain responsiveness on organizational performance is further examined based on the moderating role of organizational technology. Presented in figure 1.1 is the conceptual framework for the study.

Aim and Objectives of the Study

This study aims to investigate the relationship between supply chain responsiveness and organizational performance. The following objectives are premised on the conceptual framework for the study:

1. To identify the relationship between system responsiveness and organizational performance of manufacturing firms in Rivers State
2. To investigate the relationship between logistic process responsiveness and organizational performance of firms in Rivers State
3. To ascertain the relationship between supplier network responsiveness and organizational performance of firms in Rivers State
4. To investigate the moderating effect of technology on the relationship between supply chain responsiveness and organizational performance of manufacturing firms in Rivers State

Research questions

The following research questions are adapted in line with the conceptual framework, purpose, and objectives of this study. They are as follow:

1. What is the relationship between system responsiveness and organizational performance of manufacturing firms in Rivers State?
2. What is the relationship between the logistic process responsiveness and organizational performance of firms in Rivers State?
3. What is the relationship between supplier network responsiveness and organizational performance of firms in Rivers State?
4. How does technology moderate the relationship between supply chain responsiveness and organizational performance of manufacturing firms in Rivers State?

Hypotheses of the study

The following null hypothetical statements are put forward given assessing the relationship between the dimensions of supply chain responsiveness and the measures of organizational performance:

HO₁: There is no significant relationship between system responsiveness and organizational efficiency of manufacturing firms in Rivers State

HO₂: There is no significant relationship between system responsiveness and organizational effectiveness of manufacturing firms in Rivers State

HO₃: There is no significant relationship between system responsiveness and product quality of manufacturing firms in Rivers State

HO₄: There is no significant relationship between logistic process responsiveness and organizational efficiency of manufacturing firms in Rivers State

HO₅: There is no significant relationship between logistic process responsiveness and organizational effectiveness of manufacturing firms in Rivers State

HO₆: There is no significant relationship between logistic process responsiveness and product quality of manufacturing firms in Rivers State

HO₇: There is no significant relationship between supplier network responsiveness and organizational efficiency of manufacturing firms in Rivers State

HO₈: There is no significant relationship between supplier network responsiveness and organizational effectiveness of manufacturing firms in Rivers State

HO₉: There is no significant relationship between supplier network responsiveness and product quality of manufacturing firms in Rivers State

HO₁₀: Organizational technology does not significantly moderate the relationship between supply chain responsiveness and organizational performance of manufacturing firms in Rivers State

Significance of the Study

Research on organizational performance has up to date focused ascertaining the effect of external factors and the impingement of change-related incidences on the functionality of the organization. Most studies have often attributed efficiency and effectiveness challenges to the evidence of economic downturns and unfriendly contextual-variables with little regard for the possibility of poor internal operating systems or supply chain responsiveness. This study, by investigating the relationship between supply chain responsiveness and organizational performance of manufacturing firms in Rivers State, offers a re-direction of focus from the external to the internal processes of the organization. Its findings will serve to identify the underlying effect of supply chain responsiveness on the performance of the organization, and by that, contribute towards the development of models which effectively delineate the extent to which the success or performance behavior of manufacturing organizations are linked to their internal systems and operations.

The study is also justified on the basis that it will contribute to knowledge on the implications of supply chain operations and their level of responsiveness. The will inform decision making with regards to the adoption and application of strategies that address the systems processing activities, logistics management, and the relationships manufacturing organizations have with their suppliers and vendors. By this, the findings from the study are expected to suggest functional features or practices which can enhance the product quality, operational efficiency, and effectiveness of manufacturing firms, especially those operating within Rivers State.

Scope of the Study

This study is delimited based on its content, geographical coverage, and unit of analysis. This as noted by Zeb-Obipi (2007) allows for a more focused and well-aligned structure of the investigation.

Content scope: The literature content for this study is delimited to reviews on the theories which conceptualize, operationalized, and describe supply chain responsiveness, organizational performance, and organizational technology. The study also adopts the capability-based view of the firm as its theoretical framework for assessing the relationship between the variables of the study.

Geographical scope: The geographical scope for this study is delimited to Rivers State. This is as the study will focus on and draw its population from the food and beverage manufacturing firms within the confines of Rivers State.

Unit of analysis: The variables and theories addressed in this study are of the organizational level; as such they address issues and challenges that pertain to the top and middle-level managerial staff of manufacturing firms. Therefore the unit for analysis for this study will focus on managers (top and middle level) of the manufacturing firms in Rivers State.

Definition of Terms

Logistics process responsiveness: This describes the capacity of organizational functions and utilities to modify and adapt to the changes and demands of the environment

Organizational effectiveness: This describes the organization’s ability to actualize and acquire stated objectives or benchmarks

Organizational efficiency: This refers to the organizations capacity to functionality at a low cost and based on the optimal application of its resources

Organizational performance: This refers to the organization’s capacity for optimal functionality and goal realization.

Organizational technology: This refers to the nature and characteristic of information technology systems adopted and utilized by the organization

Product quality: This describes the organization’s capacity to meet up with benchmarks and expected service or production standards expected by the customers or industry.

Suppliers’ network responsiveness: This describes the strength and extent of change response that can be made or achieved through the organization’s network of suppliers or vendors

Supply chain responsiveness: This refers to the ability and capacity of the supply chain to adjust to the changes and expectations of the external environment

Systems responsiveness: This refers to the capacity of the organization’s operational activities to adopt patterns and techniques that are suited to the changes in its environment.