Supply chain practices and organizational performance

Abstract

PurposeThe purpose of this paper is to empirically test a framework which identifies the relationships between various supply chain practices (SCPs) and organizational performance (operational performance (OP), customer satisfaction, and financial performance) in the context of Indian manufacturing organizations.Design/methodology/approachFrom the literature, ten SCPs are selected which finally influences the organizational performance. In order to understand the interactions between SCPs and organizational performance, this paper grouped the ten SCPs into four constructs namely: information and communication technology, supply chain (SC) integration, operational responsiveness, and closed loop green practices. Three levels of firm performance are also examined, including OP, customer satisfaction, and financial performance. The paper-based and web-based survey yielded 292 responses from the Indian manufacturing organizations. The data collected were put through rigorous statistical analysis to test for the content, construct, and criterion-related validity, as well as reliability analyses. Further a structural equation model was developed to test the relationships between SCPs and organizational performance.FindingsThe finding suggests that a successful SCPs implementation not only improves the OP, but also enhances customer satisfaction and financial performance. In addition, higher financial performance is also attributable to better customer value resulting from the achievement of better customer satisfaction.Research limitations/implicationsSCPs are complex constructs. While this study shows the effect of broadly accepted SCPs on organizational performance, not all possible practices are covered in this study. Again the study can be further extended to sector specific so that the results can be further refined.Practical implicationsThis is one of the few studies which attempts to investigate whether there is any relationship exits between SCPs and organizational performance. The finding will help decision makers in the organization to know the importance of SCPs and how SCPs influence the organizational performance. Second, this study has developed and validated a multi-dimensional construct of SCPs, which can assist decision makers of Indian organizations to evaluate the competence of their current status of SCPs in the organization.Originality/valueAs per the knowledge of the authors, this is the first kind of study which empirically investigated the relationships between SCPs and organizational performance in the context of Indian manufacturing organizations.