Relationship between supply chain quality management practices and their effects on organisational performance.
Azar, Adel ; Kahnali, Reza Ahmadi ; Taghavi, Allahvirdi 等
Abstract
In today's global market place, the traditional approaches to
supply chain management increasingly prove to be ineffective. This paper
investigates the relationship between supply chain quality management
practices, as well as the direct and indirect effects of these practices
on firm performance. A conceptual model was developed and tested through
path analysis using the cross-section data collected from automotive
industry in Iran. The findings support the relationship between supply
chain quality management practices and the positive effect of these
practices on organisational performance, suggesting that organisational
performance could be enhanced through improved supply chain quality
management.
Key Words: Quality management; Supply chain management;
Organisational performance
**********
In today's global market place, competition among firms hinges
critically on their supply chain (Wipple and Frankle, 2000); supply
chains have thus attracted considerable attention among managers. On the
other hand, traditional approaches to managing supply chain have proved
inefficient (Kanji and Wong, 1999; Flynn and Flynn, 2005). Therefore,
quality is held to be a key strategic variable not only within the
single firm, but also across the supply chain (Forker et al, 1997;
Romano and Vinelli, 2001; Kannan and Tan, 2005; Sila et al, 2006; Kaynak
and Hartly, 2007).
Quality management practices have been extensively investigated at
firm level (Ahire et al, 1996; Flynn et al, 1994; Saraph et al, 1989),
and several studies have also examined the relationship between quality
management practices and organisational performance (Dow et al, 1999;
Kaynak, 2003; Samson and Terziovski, 1999). However, the issue of
quality management has not been sufficiently investigated in supply
chain, specifically in west Asian countries.
This study, hence, attempts to identify the potential relationship
between supply chain quality management (SCQM) practices, and the direct
and indirect effects of SCQM practices on the performance of automotive
companies in Iran, based on the data obtained from 150 firms and
analysed. It contributes to the literature by extending the examination
of QM into the supply chain. It provides guidance for the effective
management of the supply chain, through allocation of resources to
improve practices that bring optimal results for farms.
Literature Review
Companies all over the world are aware of the importance of meeting
the customers' needs as an important factor in their success in a
competitive marketplace. To survive in such an environment,
organisations should not operate as an "isolated and independent
entity" (Christopher, 1998). On the contrary, they must seek to
cooperate with others in order to identify sources of competitive
advantages (Knowles et al, 2005). The companies have also found that the
involvement of suppliers, which is critical to the improvement of
quality and fulfillment of the customers' specifications, can
enhance their performance (Kanji and Wong, 1999).
Forker et al (1997) have investigated the impact of quality
management practices throughout supply chains and have found that
management of supplier quality throughout the chain is directly related
to the higher levels of quality conformance. On the other hand, Kanji
and Wong (1999) have proposed a structured model for supply chain
management to demonstrate the relation between supply chain management
and quality management principles.
Romano and Vinelli (2001) have analysed the performance of a
textile and apparel manufacturer operating in two different supply
chains. They have reported that the whole supply network could be
improved to meet the expectations of the final consumer in terms of
quality through the joint definition and co-management of quality
practices.
Choi and Rungtusanatham (2001) compared the implementation of QM
practices across three levels in the supply chain (that is, final
assemblers, top-tier suppliers, tertiary tier suppliers) and across
several manufacturing industries. They observed no differences in QM
practices across the three levels in supply chain. The only difference
across industries was the implementation of strategic planning.
Further, Kuei et al (2001) have tested the association between
supply chain quality management practices and organisational performance
and have found that perceived improvements in organisational performance
are associated with improvements in supply chain quality management.
Analysing the empirical data collected from Taiwan and Hong Kong,
Lin et al (2005) have identified the factors affecting supply chain
quality management. Their findings reveal that quality management
practices are significantly correlated with the supplier participation
strategy and this has an important impact on organisational performance.
They found significant correlation between quality practices and
supplier selection stra-tegy.
Another study by Bandyopadhyay and Sprague (2003) describes how the
implementation of TQM could help the manufacturing sector attain SCQM
using the United States automotive industry as a case example. The
authors have argued that making TQM as an integral part of a supply
chain could help manufacturing companies improve quality and make them
more competitive.
Moreover, Sila et al (2006), analysing the state of supply chain
quality management in manufacturing companies in the USA, have reported
that although companies believed that SCQM would have a positive impact
on the quality of the final product, they did not fully implement it.
Their study has also indicated that quality is the most important factor
for companies in their relationships with suppliers and customers.
Moreover, Kaynak and Hartley (2007) have replicated and extended
the relationships among the QM practices and their effects on firm
performance suggested in Kaynak (2003) using survey data gathered from
firms operating in the USA. The result indicates that there is a
significant relationship between quality management practices, which
affect the firm performance.
Conceptual Framework
Several authors have found significant correlations among TQM
practices (Ahire et al, 1996; Samson and Terziovski, 1999) and also
between TQM practices and performance (Powell, 1995; Hendricks and
Singhal, 2001) in the individual firms. However, only a few studies have
investigated the relationship between QM practices and their effects on
performance in the supply chain context (Kaynak and Hartely, 2007; Kanji
and Wong, 1999).
A review of the relevant empirical literature (see Table 1) reveals
that six TQM factors, that is, leadership, strategic planning, customer
focus, human resource management, process management, and supplier
management are the most often extracted factors.
Considering the factors mentioned, a conceptual model is developed
in order to demonstrate 16 hypotheses regarding the relationships among
these factors. It should be noted that previous studies have also
supported these relationships. This model is represented in Figure 1.
[FIGURE 1 OMITTED]
In the result section, a brief account of the literature related to
each hypothesis is provided. The arrows in the model suggest a
hypothesised direct effect from one factor to another..
Leadership
Leadership, an important factor in successful TQM implementation,
acts as a driver of QM. It creates values, goals, and systems to satisfy
customer expectations and improve organisation's performance (Ahire
et al, 1996). This factor is not only documented by quality gurus
(Deming, 1982; Juran, 1988), but also it is mentioned in empirical
studies (Table 1). Leadership can improve performance by affecting other
TQM practices (Ahire and O' Shaughnessy, 1998; Anderson et al,
1995; Wilson and Collier, 2000).
Moreover, leadership is a critical factor in achieving strategic
and operational objectives and changes in supply chain (Van Hoek, 2002).
Thus, supply chain represents an ideal area where optimising activities
implemented by strong leadership can yield considerable synergy and
competitive advantage (Venkatesh et al, 1995). Leadership in supply
chain management should go beyond company walls. On one hand, it should
provide the resources necessary to implement quality management and
motivate employees to develop and utilise their full potential; on the
other hand, it should help suppliers to provide customers with the best
services.
Supplier Quality Management
Many studies have pointed out that supplier quality management or
supply management is an essential component in TQM (Ahire et al, 1996;
Fernandez, 1995; Saraph et al, 1989) because poor supply quality results
in high levels of inventory and order backlogs (Shin et al, 2000).
Supplier quality management refers to various management-driven efforts
aimed at enhancing the overall quality performance through more
effective management of quality on the supply side (Caddick and Dale,
1998; Carr and Pearson, 1999; Shin et al, 2000).
Since supplier quality management requires a fundamental shift in
buyer-supplier relationship from an arm's length model to the
long-term business partnership (Lo and Yeung, 2006). Companies should
select suppliers based on quality rather than price or schedule (Galt
and Dale, 1991) and improve supply quality with the assistance of
operation improvement on the supplier's side. (Dale, 1999)
Human Resource Management
The total quality management approach is able to provide a
considerable potential for improvement if accompanied with appropriate
human resources. Indeed, human resource management is at the core of
quality management because employee involvement and commitment is
essential for both successful introduction and implementation of total
quality management (Redman et al, 1995; Chen, 1997; Blackburn and Rosen,
1993).
However, it seems that research on human resource management in SCM
is still in its preliminary stage (Cooper et al, 1997; Leenders et al,
2002; Noe et al, 2003), and the role of people in SCM is often not
explicitly addressed (McCarter et al, 2005). Management and employee
support can overcome the barriers to the implementation of supply chain,
and enhance the value added and the firm efforts to get better results
than their competitors (Gowen and Tallon, 2002).
Strategic Quality Planning
Quality planning is necessary in order to manage quality throughout
the organisation (Juran, 1988; Saraph and Sebastian, 1993). Therefore,
strategies used to support quality are fundamental to survival in the
market. Strategy optimises the use of resources and ensures the
availability of trained employees.
Supply chain also needs to respond to market requirements aligned
with the company's business strategy (Hugos, 2003). Strategies
specify the means and activities to realise supply chain opportunities
and achieve competitive advantage (Robinson and Malhotra, 2005). Supply
chain members thus should extend the scope of strategies beyond a
firm' s own boundaries and broaden it into the upstream and
downstream channel members.
Customer Focus
It seems that there is consensus in the literature that the
customer is critical to effective quality management and achieving
customer satisfaction (Ahire and Ravichandran, 2001; Flynn et al, 1995;
Hackman and Wageman, 1995).
Supply chain effectiveness relates to the alignment of the supply
chain value proposition with consumers' requirements (Zokaei and
Simon, 2006). Similarly, SCM is a business process that plays a
significant role in integrating and coordinating the processes
throughout all entities of the supply chain to ensure that the quality
of the product or service leads to the final customer's
satisfaction (Robinson and Malhotra, 2005). Therefore, in addition to
the product, the entire chain of business activities--from raw material
to the final point of consumption-should be effectively managed to
deliver the end-consumer's value (Christopher, 2005).
Process Management
Another critical TQM factor is process management. It refers to how
an organisation designs and introduces products and services, and how it
integrates production and delivery requirements (Evans and Lindsay,
1995). Furthermore, it helps to ensure that variation is kept within the
acceptable limits, in turn, efforts aimed at managing and reducing
process variation lead to continuous quality improvement (Tari et al,
2007).
Supply chain management is defined as the integration of key
business process from end user through original suppliers that provides
products, services and information, which add value for customers and
other stakeholders (Lambert et al, 1998). In other words, SCM offers the
opportunity to capture the synergy of intra-and inter-company
integration and management (Grieger, 2004). Organisations in the supply
chain might be involved in different processes, which often cut across
organisational boundaries; they may be broken or disrupted by lack of
communication and coordination between organisations in supply chain. A
smooth and synchronised linkage between dissimilar processes and/or
operations is, hence, critical to an efficient and operative supply
chain (Robinson and Malhotra, 2005).
Organisational Performance
Organisational performance deals with the extent to which an
organisation achieves its market-oriented and financial goals (Yamin et
al, 1999). The short-term objectives of SCM are increasing productivity
and reducing inventory and cycle time while its long-term objectives are
increasing market share and profits for all members of the supply chain
(Tan et al, 1998). In this study, organisational performance is measured
using both financial and market criteria, including return on investment
(ROI), market share, and profit margin on sales, productivity, cycle
times, total inventory turnover, and overall competitive position.
Sample
The population for this study consisted of manufacturing companies
in automotive industry located in Iran. During 1995-2005, automotive
industry growth in Iran was about 25 per cent. It is estimated that
total sale in this industry was US$8.7 billion in 2005 and it has
created about a million direct and indirect jobs in Iran.
Vehicle production in Iran includes passenger car, pick-up truck,
four-wheel drive vehicles, mini-bus, bus, and truck. Passenger cars
possess the highest share of production (83.5 per cent) while trucks
have the lowest share (3.2 per cent). Iran Khodro and Saipa companies,
as the biggest auto companies in Iran, produce about 96 per cent of
cars, and over 2,000 component manufacturers work within the supply
chain management of these companies.
Components are designed and supplied by SAPCO Co and Saze Gostar Co
for Iran Khodro and Saipa, respectively. On the behalf of these two
companies, 1,000 questionnaires were mailed to the general managers,
quality assurance, and quality control managers of component
manufacturers by the authors, and follow-up was done through the
telephone. After four months, 130 questionnaires were filled up and sent
back.
Instrument
Based on a review of literature and interviews with industry
professionals, 121 indicators are identified to measure the supply chain
quality management practices. A survey with a five-point Likert scale is
used to measure responses on each scale item, where "1" is
equal to "strongly disagree" and "5" means
"strongly agree". The Likert scale, as a uni-dimensional
scaling procedure, is used in this study to eliminate the subjective
judgments made by respondents (Oppenheim, 1966).
The initial version of the questionnaire is pilot tested on general
managers of 15 companies. Where necessary, it is modified to improve the
clarity and validity of the questions. The resulting instrument is
reviewed by quality experts and university lecturers, and revised
further to make sure that the measures are valid, reliable, and
user-friendly (Flynn et al, 1990). The final version of questionnaire
consists of 86 items.
Reliability of each item of SCQM and performance constructs is
estimated through calculating Cronbach' s [alpha] (Cronbach, 1951).
It is found that all TQM and perceived performance scales have
acceptable reliability levels, values of [alpha] equal to 0.70 or higher
(Nunnally and Bernstein, 1994).
As claimed by Churchill (1979), relying heavily on the literature
and using experts to evaluate measures may ensure content validity and
since most of the items of the present questionnaire were extracted from
the previous studies and validated by the experts; it has an acceptable
degree of content validity. In addition, the construct validity of each
measure is evaluated through factor analysis, in which each factor must
be one-dimensional. A cut-off loading of 0.6 is used to screen out
variables that are weak indicators of the constructs. All the factor
loading scores are higher than 0.6, indicating acceptable validity
level.
Data Analysis
Path analysis is employed to test the conceptual model. Path
analysis is a form of structural equations modeling (Ullman, 1996) that
empirically estimates the strength of each causal relationship depicted
in a path model (Hair et al, 1998). It represents the correlation
between any two constructs as the sum of the compound paths of causal
relationships connecting the points.
Path analysis breaks a causal model into a set of multiple
regression models, one for each dependent variable. The standardised
regression coefficients are decomposed into their effects to allow a
detailed assessment of potential specification error, which can result
from an improper specification of the functional form of a relationship
as well as the inclusion or exclusion of particular independent
variables (Berry and Feldman, 1985).
Result and Discussion
Table 2 contains the means, standard deviations, and correlations
between TQM factors as well as between these factors and performance.
The highest correlation between each two variables is 0.8, while the
lowest correlation is 0.16. All of the correlation is confirmed at the
significant level of p<0.05 and correlation coefficients were
generally above 0.2.
The goodness-of-fit statistics is used to assess the fit of the
data to the hypothesised model. The results for the proposed model show
that this model does not fit with the data (Table 3). The structural
coefficients, in the proposed model output, reveals that some
hypothesised effects were insignificant, suggesting that a revised model
might result in a better-fitting and more parsimonious model. The Wald
Test suggested the elimination of strategic management-process
management, supplier management-customer focus, customer
focus-performance. All these modifications resulted in a significantly
better fit between the model and the data. Table 3 represents the
goodness-of-fit summary of the proposed and final model.
The results are demonstrated in Figure 2, where most of the effects
hypothesised in Figurel are confirmed. The estimates of path
coefficients represented by standardised regression coefficients (13),
which appear in the figure next to the arrows indicating the direction
of the effects, are all significant at the 0.01 level. The value of
these coefficients indicated the weights of the direct effects of one
variable upon another, and the lines illustrated significant paths (p
< 0.01).
As Figure 2 shows, 12 direct path coefficients are statistically
significant. Thus, hypotheses H1, H2, H3, H4, H5, H6, H7, H9, H10, H11,
H13, and H15 are supported. Three of the 15 hypothesised paths from
strategic planning to process management (H8), from supplier quality
management to customer focus (H12), and customer focus to performance
(H14) are not supported by statistically significant path coefficients.
[FIGURE 2 OMITTED]
In line with the other studies, our findings confirm the
interdependence of TQM practices (Saraph et al, 1989; Ho et al, 2001;
Kaynak, 2003; Lee et al, 2003). Therefore, it seems that quality
management practices should be implemented as an integrated system
rather than as a subset of QM practices (Ahire and Ravichandran, 2001).
Moreover, for the successful implementation of total quality
management in the supply chain, it is necessary that each supply chain
member internally implement QM (Robinson and Malhotra, 2005). Quality
managers also should effectively integrate quality processes with
suppliers as well as customers to enhance quality performance (Kaynak
and Hartely, 2007).
The findings also reveal that leadership is necessary for SCQM
effectiveness because it is directly related to strategic planning,
human resource management, supplier management, and customer focus.
These direct effects indicate the important role of leadership in the
supply chain and support findings of other studies (Anderson et al,
1995; Flynn et al, 1995, Kaynak, 2003; Kaynak and Hartley, 2007; Lee et
al, 2003; Sila and Ebrahimpour, 2005; Kanji and Wong, 1999). Leadership
is also found to be indirectly related to quality performance.
In addition, findings of this study indicates that human resource
management is directly related to process management as reported by
Anderson et al (1995) and Flynn et al (1995). Thus, it seems that as
quality management extends across organisational boundaries, the
importance of human resource management issues such as training and
empowerment is likely to increase. However, as reported by Sila and
Ebrahimpour (2005), no direct relation is observed between human
resource management and customer focus.
Unlike the findings of Sila and Ebrahimpour (2005), this study
shows that there is a direct relationship between human resource
management and customer focus. If an organisation keeps its workforce
(internal customers) satisfied, it can bring satisfaction to the
external customers, as well. Therefore, considering the role of human
resources in improving the process and fulfilling the customers'
expectations and providing their satisfaction, management should seek to
empower the workforce and keep them happy.
Further, strategic planning is found to have a direct effect on
human resource management, which confirms previous studies (Lee et al,
2003; Sila and Ebrahimpour, 2005; Tari et al, 2007). Nonetheless, the
relation between this factor and process management is not statistically
significant in this study, which is in line with the studies undertaken
by Lee et al (2003) and Taft et al (2007), yet it contradicts findings
of some others (Juran, 1988; Lam, 1997). It seems that more studies are
needed to investigate this issue.
On the other hand, a direct relation is observed between strategic
planning and customer focus. Because strategic planning processes are
aligned with the organisation's focus on customer requirement and
satisfaction, the organisation should gather customer information
through various approaches and use them in the annual planning processes
(Evans, 1996). Thus planning must incorporate customer focus as a
central element.
Our findings also indicate that supplier management is directly
related to process management, which is consistent with the results of
other studies (Kaynak, 2003; Lee et al, 2003; Tari et al, 2007; Flynn et
al, 1995), and that it is related to performance as indicated by similar
studies (Anderson et al, 1998; Flynn et al, 1994; Kayank, 2003; Tari et
al, 2007). Therefore, it appears that supply quality management enhance
the performance of both suppliers and buyers, and this is especially
true when quality and delivery are buyer priorities (Flynn et al, 1995;
Ho et al, 1999; Shin et al, 2000).Whereas it is found that the
relationship between supplier management and customer focus is not
significant.
Still further, the results confirm the relationship between
customer focus and process management as reported in several empirical
studies (Samson and Terziovski, 1999; Lee et al, 2003, Tari et al,
2007). One of the interesting findings is that, contrary to the
widely-held belief, customer focus has no direct effect on business
results. As Wright and Snell (2002) argued, simply having a customer
focus and acquiring customers may not be sufficient for success since
customers can be easily lost if they have a bad experience with the
products and services, or if the new entrants to the market attract
them. Therefore, companies should strive to attain customer loyalty and
retention to achieve improved business results (Wright and Snell, 2002).
Finally, it is found that process management is directly related to
performance, which supports findings of Kaynak (2003) and Lee et al
(2003). However, Flynn et al (1995) and Samson and Terziovski (1999) do
not find a positive and significant effect of process management on
performance.
In order to gauge the effects of the variables included in the
model more thoroughly, the correlations between predictors and variables
criterion are broken into the sum of their direct, indirect and total
effects. Table 4 shows the overall values of the standardised direct,
indirect and total effects.
Conclusion and Limitations
This study attempted to examine direct and indirect relationships
between SCQM and performance. The proposed model suggests 10 links, of
which 15 were supported, either directly or indirectly, while four were
not confirmed. The main finding of this study is that leadership has an
important role in the implementation of quality management in the supply
chain. Leadership affected customer focus, human resource management,
strategic planning, and supplier management. Hence, it should not only
guide and direct individual company efforts, but also encourage
participation and cultivate quality measurement and performance among
all supply chain members.
Another finding of this study is that companies must focus their
efforts to improve the quality of the products they receive from their
suppliers so that they can pass it on to their customers. Supplier
quality management directly affects process management and performance.
The results also support the interdependence of quality management
practices in supply chain and implementation of them as a whole system.
Finally, this study is subject to some limitations: (1) the
cross-sectional nature of the data, (2) the relatively low response
rate, and (3) using a single respondent for data collection within each
organisation that may create the opportunity for bias in the responses.
Thus, the results may not adequately reflect the target population.
Future studies should explore all critical quality management
factor constructs in supply chain and create a framework that applies in
this context. In addition, they should be examined in both upstream and
downstream network in future studies to determine why some of the
relationships that were claimed to be significant in other studies were
empirically non-significant in the current study.
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Table 1: Supply Chain Quality Management Practices in Literature
QM practices Descriptions Studies
Leadership Top management Forker et al. (1999);
support Top Handfield et al. (1998);
management Bandyopadhyay and Sprague
commitment (2003); Tan et al. (1999);
Specificity of Choi and Rungtusanatham
quality goals. (1999); Kanji and Wong (1999);
Acceptance of Ahire et al. (1996); Anderson
quality et al. (1995); Black and
responsibility. Porter (1996); Caddick and
Importance attached Dale (1998); Flynn et al.
to quality in (1994); Powell (1995); Saraph
relation to cost. et al.(1989); Romano (2002);
Ellram (1995); Mehra et al.
(2001); Yeung et al (2003);
Fernandez (1995); Adam et al
(1997); Kaynak (2003); Samson
and Terziovski (1999), Saraph
et al. (1989), Wilson and
Collier (2000); Sila and
Ebrahimpour (2005); Grandzol
and Gershon (1997); Douglas
and Judge (2001)
Strategic Clear long-term view Choi and Rungtusanatham
Planning Understanding and (1999); Dean and Bowen (1994);
support of mission Juran (1951); Tan et al.
strategy (1999); Park et al. (2001);
Development and Trent (2001); Forker et al.
implementation (1999); Olhager and Selldin
regularly sets and (2004); Kannan and Tan (2005);
reviews short-and Gotzamani and Tsiotras (2001);
long-term goals in Ahire and Dreyfus (2000);
planning Narasimhan and Jayaram (1998),
et al (2002); Paterson et al.
(1999); Krause et al. (2000);
Simatupang Anderson et al.
(1994); Carter and Narasimhan
(1994); Carter et al. (1998);
Dowlatshahi (1998); Ellram
(1995); Krause and Ellram
(1997); Lascelles and Dale
(1990), Sila and Ebra- himpour
(2005);
Human Use cross-functional Handfield et al. (1998); Trent
Resource teams training for and Monczka (1999); Forker et
Management quality tools and al. (1999); Flynn et al.
techniques. (1994); Narasimhan et al.
Employee involvement (2001); Powell (1995); Saraph
in quality et al. (1989); Park et al.
activities. (2001); Carter et al. (2000);
Choi and Rungtusanatham
(1999); Ellram (1995); Ahire
et al. (1996); Black and
Porter (1996); Carter and
Narasimhan (1994); Carter et
al. (2000); Gotzamani et al.
(2003); Fernandez (1995); Adam
et al. (1997); Anderson et al.
(1995); Rungtusanatham et al.
(1998); Kaynak (2003); Wilson
and Collier (2000); Sila and
Ebrahimpour (2005);
Supplier Suppliers selection Kannan and Tan (2005); Caddick
Quality based on quality. and Dale (1998); Hartley and
Management Long-term relations Choi (1996); Watts and Hahn
with a few (1993); Krause and Ellram
suppliers. Education (1997); Krause et al. (1998);
and technical Lascelles and Dale (1991);
assistance provided Hines (1994); Monczka and
to suppliers. Trent (1991); Forkeretal.
Supplier involvement (1999); Hahn et al (1990);
evaluation supplier Hines (1994); Trent and
performance based on Monczka (1999); Krause and
quality. Ellram (1997); Forker et al.
(1999); Newman and Rhee
(1990); Galt and Dale (1991),
Fernandez (1995); Ebrahimpour
and Mongiameli
(1990);Ahireetal. (1996);
Black and Porter (1996);
Stuart (1997); Flynn et al.
(1994); Forza and Flippini
(1998); Ho et al. (2001); Dow
et al. (1999); Kaynak (2003);
Wilson and Collier (2000),
Sila and Ebrahimpour (2005)
Customer Commited to Kuei and Madu (2001); Kanji
Focus customers and Wong (1999); Fernandez
Customers' (1995); Lin et al. (2005); Tan
satisfaction et al. (1999); Mehra et al.
Gather timely and (2001); Choi and
reliable customer Rungtusanatham (1999); Romano
information (2002); Kannan and Tan (2005);
Customer involvement Ahire et al. (1996); Black and
Porter (1996); Adam et al
(1997); Douglas and Judge
(2001), Dow et al. (1999),
Flynn et al (1994); Forza and
Flippini (1998); Grandzol and
Gershon (1997); Powell (1995);
Samson and Terziovski (1999);
Wilson and Collier (2000),
Tari et al. (2007); Kaynak and
Hartley (2007)
Process Use SPC Forkeretal (1999);
Management Less reliance on Bandyopadhyay and Sprague
inspection. (2003); Kuei et al (2002);
Fool-proof process Kanjl and Wong (1999);
design. Anderson et al (1994); Dean
Employee self- and Bowen (1994); Romano and
inspection Vinelli (2001); Mehra et al.
Product design. (2001); Fernandez (1995); Tan
Continuous et al (1998); Choi and
improvement Rungtusanatham (1999); Trent
of processess. (2001); Ellram (1995);
Involvement Vonderembse and Tracey (1999);
of all affected Carter and Narasimhan (1994);
departments in Trent and Monczka, (1999);
design Reviews. Ahire et al. (1996); Black and
Porter (1996); Flynn et al.
(1994); Forza and Flippini
(1998); Grandzol and Gershon
(1997); Kaynak (2003); kaynak
and Hartley (2007); Powell
(1995); Rungtusanatham et al.
(1998); Samson and Terziovski
(1999); Saraph et al. (1989),
Wilson and Collier (2000);
Sila and Ebrahimpour (2005)
Table 2: Descriptive Statistics and Correlations
Mean SD [alpha] 1 2
1. Leadership 4.14 0.60 0.90 1
2. Human resource
management 3.56 0.74 0.84 0.62 ** 1
3. Strategic management 3.50 0.81 0.87 0.65 ** 0.73 **
4. Customer focus 3.49 0.60 0.72 0.60 ** 0.62 **
5. Supplier management 3.40 0.71 0.80 0.75 ** 0.69 **
6. Process management 613.00 0.65 0.80 0.58 ** 0.46 **
7. Performance 3.90 0.62 0.73 0.44 ** 0.26 **
3 4 5 6 7
1. Leadership
2. Human resource
management
3. Strategic management 1
4. Customer focus 0.80 ** 1
5. Supplier management 0.52 ** 0.39 ** 1
6. Process management 0.47 ** 0.43 ** 0.54 ** 1
7. Performance 0.36 * 0.31 * 0.32 ** 0.44 ** 1
* p < 0.05.
** p < 0.01.
Table 3: Goodness of Fit Summary
Recommended
Goodness Values for
of Fit Proposed Final Satisfactory
Statistics Model Model Fit to Data
[chi square]/df 3.28 2/33 <3
RMSR 0.11 0/06 <0.08
NFI 0.81 0/98 0.8-0.9
NNFI 0.69 0/97 >0.9
CFI 0.83 0/99 >0.9
Table 4: Direct, Indirect and Total Effects
Effect from Effect to Direct Indirect Total
Effect Effect Effect
Leadership Human Resource
Management 0.47 0.14 0.61
Leadership Strategic
Management 0.53 -- 0.53
Leadership Customer Focus 0.44 -- 0.44
Leadership Supplier
Management 0.45 -- 0.45
Leadership Process --
Management 0.66 0.66
Leadership Performance -- 0.27 0.27
Human Resource Process
Management Management 0.64 -- 0.64
Human Resource Performance -- 0.16 0.16
Management
Human Resource Customer Focus 0.19 -- 0.19
Management
Strategic Human Resource
Management Management 0.38 -- 0.26
Strategic Process
Management Management 0.10 0.10
Strategic Customer Focus 0.31 -- 0.31
Management
Strategic Performance -- 0.04 0.04
Management
Customer Focus Process
Management 0.30 -- 0.30
Customer Focus Performance -- 0.13 0.13
Supplier Process
Management Management 0.27 -- 0.27
Supplier Performance 0.33 0.12 0.45
Management
Process Performance 0.43 -- 0.43
Management
