Measuring supply chain

management practices
Ana Beatriz Lopes de Sousa Jabbour, Alceu Gomes Alves Filho, Adriana Backx
Noronha Viana and Charbel Jose´ Chiappetta Jabbour
framework studies suggest six constructs for measuring
proposed the supply chain management practices
is based framework. However, in this study a
on a framework was achieved with four constructs
survey of supply chain management practices,
that was namely, supply chain (SC) integration for
carried out production planning and control (PPC)
on 107 support, information sharing about products
Brazilian and targeting strategies, strategic relationship
Ana Beatriz Lopes de Sousa Jabbour is Assistant Professor companie with customer and supplier, and support
in the Department of Industrial Engineering, Sa˜o Paulo s. customer order. This framework has adequate
State University, Sa˜o Paulo, Brazil. Statistical levels of validity and reliability.
technique
Alceu Gomes Alves Filho is Full Professor in Industrial s were Research limitations/implications – The main
Engineering in the Department of Industrial Engineering, employed limitation of this study was that only a small
Federal University of Sa˜o Carlos, Sa˜o Paulo, Brazil. to verify,
sample of companies in a single sector and
validate,
country were surveyed, and therefore there
and test
Adriana Backx Noronha Viana is Associate Professor in the needs to be further research considering the
Business Administration and Charbel Jose´ Chiappetta reliability special conditions in other countries.
Jabbour is Assistant Professor of Business of the
Administration, both at The University of Sa˜o Paulo constructs Originality/value – This study investigated
Business School – Ribeira˜o Preto (FEA-RP/USP), and their statistically set indicators to discuss the topic
indicators. ‘‘supply chain management practices’’. The
Sa˜o Paulo, Brazil. To validate framework obtained has good quality of
this validity and reliability indicators. Thus, an
framework alternative framework has been added to
principal measure supply chain management practices,
componen which is currently a popular topic in the supply
t analysis chain mainstream literature. Both defined
and constructs and the validated indicators can be
structural used in other studies on supply chain
equation management.
modeling
Summary technique
Keywords Supply chain management,
s were
Working practices, Performance
used.
Purpose – This paper aims to perform an empirical measurement (quality), Brazil
investigation about the constructs and indicators of the
supply chain management practices framework. Findings –
Paper type Research paper
In general,
previous
Design/methodology/approach – The measuring
effecti . With the purpose of Currently, the topics that can
1. Introduction ve managing the supply chain be considered essential to
ways actions for realizing research suggestions in SCM
for improvement in enterprise include: supply chain
Supply chain management (SCM) is firms performance, it is necessary coordination, distribution and
an integrated approach beginning to to improve the planning and transport, inventory, order
with planning and control of impro management of activities management, planning and
materials, logistics, services, and ve such as materials planning, optimization, supply chain
information stream from suppliers to their inventory management, integration, reverse logistics,
manufacturers or service providers perfor capacity planning, and supply chain information,
to the end client; it represents a manc logistics (Chandra and supplier and vender selection,
most important change in business e (Ou Kumar, 2000) with suppliers and green SCM (Hu et al.,
management practices (Fantazy et et al., and clients. 2010).
al., 2010). SCM is one of the most 2010)
15 NO. 2 2011, pp. 18-31, Q Emerald Group
PAGE 18 j MEASURING BUSINESS EXCELLENCE j VOL.
Publishing Limited, ISSN 1368-3047 DOI 10.1108/13683041111131592
While interest in SCM is increasing day-by-day, there is no consensus about the
conceptual and methodological research bases of SCM, generating gaps in the state-of-
the-art of this research field (Burgess et al., 2006). It is impossible to develop sound SCM
theory without acceptable frameworks and definitions of terms (Stock and Boyer, 2009). In
addition, the lack of a comprehensive view of SCM practices and the lack of a reliable
measure of the concept have constrained guidelines to the practice of SCM and further
research on the topic (Li et al., 2005).

For this reason, the validation of SCM practices issue has been attracting the attention of
researchers. For example, Li et al. (2005) conceptualize, develop, and validate dimensions
of SCM practices constructs. Nonetheless, there are no unanimities in determining the set
of indicators that can adequately address the topic ‘‘Supply Chain Management Practices’’.
Studies performed by Halley and Beaulieu (2010), Bayraktar et al. (2009), Hsu et al.
(2009), Robb et al. (2008), Chow et al. (2008), Koh et al. (2007), Zhou and Benton (2007),
Wong et al. (2005), Tan et al. (2002) and Tan (2002) pointed out different types of
indicators and constructs used.

Therefore, studying SCM practices can contribute to finding a better understanding about
SCM. Hence, this paper aims to do an empirical investigation of the constructs and
indicators of the SCM practices framework.

The following sections include a brief literature review on SCM practices (section 2),
methodological procedures (section 3), analyses and discussions (section 4), and finally,
conclusions (section 5).

2. Literature background

A high level of confusion has occurred amongst supply chain scholars during the past
decades by the several SCM definitions that have been proposed in the literature (Stock
and Boyer, 2009). Three key subjects emerged from the various definitions: activities,
benefits, and constituents/components. The first theme of SCM definitions, activities,
contains the flow of materials and information, and networks of relationships, focusing on
both internal (within the organization) and external (outside the organization). Second, the
benefits resulting from effective implementation of SCM strategies are to add value and
increase customer satisfaction. Third, the components or constituent parts of SCM; what
organizations, functions and processes involve the supply chain (Stock et al., 2010).

SCM practices are defined as the set of activities undertaken by an organization to

promote effective management of its supply chain (Li et al., 2005, 2006; Koh et al., 2007);
as the approaches applied in integration, managing and coordination of supply, demand
and relationships in order to satisfy clients in effective way (Wong et al., 2005); as tangible
activities/technologies that have a relevant role in the collaboration of a focal firm with its
suppliers and/or clients (Vaart and Donk, 2008); and as the approach to involve suppliers
in decision making, encouraging information, sharing and looking for new ways to integrate
upstream activities. As a consequence, it involves developing customer contacts by
customer feedback to integrate the downstream activities and delivering orders directly to
customers (Chow et al., 2008). In this sense, studying SCM practices supports the view
theory regarding SCM.

Relevant initiatives to identify and validate SCM practices have been reported, but it is
worth noting that there is no pattern in defining and adopting indicators and constructs for
SCM practices.

Tan et al. (2002) and Tan (2002) identified 24 SCM practices from previous studies and
formed six constructs:

supply chain integration;

information sharing;

supply chain characteristics;

 j
VOL. 15 NO. 2 2011 MEASURING BUSINESS EXCELLENCE j PAGE 19
customer service management;

geographical proximity; and

JIT capability.

They used a five-point Likert scale to measure the importance of these practices.

Wong et al. (2005) proposed like indicators of SCM practices in their study:

B
supply chain performance;

B
product differentiation;

B
lead time management;

B
postponement and customization;

B
inventory and cost management;

B
bullwhip effects;

B
information sharing and coordination;

B
buyer-seller relationship;

B
retail strategy; and

B
SCM initiatives.

They used a case study and the practices based on the toy industry.

Six distinctive constructs of SCM practices emerged, including strategic supplier

partnership, customer relationship, information sharing, information quality, internal lean
practices and postponement. All the items were measured on a five-point scale (Li et al.,
2005, 2006).

Zhou and Benton (2007) consider three constructs of supply chain practices (supply chain
planning, just-in-time (JIT) production, and delivery practice), because they have been
shown to be closely related to delivery performance. Each statement required responses
based on a seven-point Likert scale (1 ¼ not implemented, 7 ¼ extensively implemented).
A list of SCM constructs used in previous literature regarding the SCM practices is relying
on the extant literature. Koh et al. (2007) and Bayraktar’s et al. (2009) studies identify a set
of 12 SCM practices: close partnership with suppliers, close partnership with customers,
just in time supply, strategic planning, supply chain benchmarking, few suppliers, holding
safety stock, e-procurement, outsourcing, subcontracting, 3PL, many suppliers. Items were
measured on five-point scales ranging from 1 (not at all implemented) to 5 (fully
implemented). Koh et al. (2007) measuring two constructs and Bayraktar et al. (2009)
measuring three constructs.

A five-point interval rating scale system was used by Chow et al. (2008) with 5 equaling the
highest extent or degree. The constructs were:

B
customer and supplier management;

B
supply chain features;
B
communication and speed; and

B
information sharing.

Robb et al. (2008) considered four constructs in their research:

customer relationships;

supplier relationships;

e-commerce; and

enterprise software.

They used a seven-point Likert scale.

j
PAGE 20 MEASURING BUSINESS

EXCELLENCE j VOL. 15 NO. 2 2011

In research performed by Hsu et al. (2009), respondents were asked to indicate on a five-
point Likert scale (1 – low, 5 – high), the importance of each practice in their firm. The
indicators were:

B
increase suppliers’ just in time capabilities;

B
participating in sourcing decisions;

B
geographical proximity of suppliers;

B
formal information sharing agreements;

B
improving the integration of activities;

B
searching for new ways for integration;

B
communicating future strategic needs;

B
on-time delivery; and

B
reducing response time.

Halley and Beaulieu (2010) used four constructs (nesting, collaboration, financial
incorporation, and distancing) along with 13 indicators from the five-point Likert scale.

Table I summarizes the theoretical studies of constructs pointed out in this section.

Table II shows the constructs, the indicators and conceptual meaning used in this paper to
measure and validate the SCM practices framework. The selection of constructs and
indicators was based on research to reconcile the concepts of SCM (Stock et al., 2010;
Chandra and Kumar, 2000), in which they considered the necessity to manage, plan and
control production and inventory, i.e. the flow of information and materials; the definition of
SCM practices (Wong et al., 2005; Chow et al., 2008), the managed integration and
coordination of supply, demand and relationships; and the most commonly found
constructs and the indicators (Bayraktar et al., 2009; Robb et al., 2008; Chow et al., 2008;
Koh et al., 2007; Zhou and Benton, 2007; Li et al., 2006, 2005; Tan et al., 2002; Tan,
2002). Taking this into consideration, the constructs considered were: supply chain
integration, information sharing, customer service management, customer relationship,
supplier relationship and postponement.

3. Methodology

3.1 Survey design

In order to assess the construct of the SCM practices, a questionnaire was developed from
a review of literature (Table II), and the respondents were asked to evaluate each question
in terms of the level of implementation of each specific practice in their company. A five-
point Likert scale (1 – non-implemented and 5 – totally implemented) was adopted
because there are many researches uses the same method.

Prior to this, a pre-test was given to professionals in the SC over a 65-day period, and from
this pre-test some necessary adjustments were done to the questionnaire in order to make
the questions clearer. The questionnaire was sent out to 532 different companies via
personalized e-mails. In all, 107 companies responded (response rate of 20.11 percent)
over a 44-day period (from July to September 2009). The invitation only e-mails were sent
to each of the 532 companies up to three times each.

The participating companies were classified according to the position they occupy in their
supply chain as follows: raw material supplier, component supplier, assembly company,
distributor, or retailer. The companies were also classified according to their size (micro
company, small company, medium company, and large company) and the predominant
bargaining power in their major supply chain.

The data were collected through an e-survey (internet-based survey) conducted with one
respondent from each company (from different areas, such as marketing, operations,
supply, and sales departments) of several different segments of the Brazilian
j
VOL. 15 NO. 2 2011 MEASURING BUSINESS

EXCELLENCE j PAGE 21
Table I Summaries of the theoretical studies of constructs pointed out in this research

Author(s)
Research objective
Construct
Context
Scale

Tan (2002)
The first objective was to derive a
Supply chain integration
Different industries
Five-point

set of SCM practices and compare

Information sharing

Likert

how practitioners ranked these

Supply chain characteristic

practices to enhance competitive

Customer service

position. The second objective was

management

to identify and compare the major

Geographical proximity

concerns in implementing a
JIT capability

successful SCM program. Finally,

the third objective attempted to

identify the practices and the

concerns associated with

successful supply chains

Tan et al. (2002)

The article described a survey

effort to study contemporary supply

chain management and supplier

evaluation practices. This also

related these practices to firm

performance

Wong et al. (2005)

The study explored SCM practices
None
Toy industry – retail (volatile
None

of toy supply chains, and revealed

demand)

their practical and theoretical gaps

Li et al. (2005)
The purpose of research was to
Strategic supplier
Different industries
Five-point

develop and validate a

partnership

Likert

parsimonious measurement
Customer relationship

instrument for SCM practices

Information sharing

Li et al. (2006)
The purpose of study therefore to
Information quality

empirically test a framework

Internal lean practices

identifying the relationships among

Postponement

SCM practices, competitive

advantage and organizational

performance

Zhou and Benton

The purpose of study was to
Supply chain plan
Different industries
Seven-point
(2007)
investigate: the relationship
JIT production
Likert

between information sharing and

Delivery practices

supply chain practice: the influence

of supply chain dynamism on

information sharing and supply

chain practice; and the impact of

information sharing and supply

chain practice on delivery

performance

Koh et al. (2007)

The purpose of study was to
Strategic collaboration and
SME companies from Turkey
Five-point

determine the underlying

lean practices

Likert

dimensions of SCM practices and

Outsourcing and

to empirically test a framework

multi-suppliers

identifying the relationships among

SCM practices, operational

performance and SCM-related

organizational performance with

special emphasis on small and

medium-sized enterprises (SMEs)

in Turkey

Bayraktar et al.
Study sought to determine the
Strategic collaboration and
SME companies from Turkey
Five-point
(2009)
underlying dimensions of SCM and
lean practices

Likert

IS practices. Next, empirically test a

Suppliers’ selection practices

framework identifying the causal

Procurement practices
links among SCM and IS practices,

SCM and IS-related inhibitors

operational performance

(Continued)

j
PAGE 22 MEASURING BUSINESS EXCELLENCE j
VOL. 15 NO. 2 2011

Table I

Author(s)
Research objective
Construct
Context
Scale

Chow et al. (2008)

Through structural equation
Customer and supplier
Compare US and Taiwan
Five-point

modeling critical components of

management
manufacturing
Likert

supply chain management were

Supply chain features
found to have considerable effects
Communication and speed

on organizational performance
Information sharing

Robb et al. (2008)

The relationship between supply
Customer relationships
Furniture manufacturing in
Seven-point

chain/operations practice and

Supplier relationships
China
Likert

operational/financial performance
E-commerce

has been of interest to academics

Enterprise software

and practitioners for many years.

The paper proposed and

developed a model exploring these

connections, utilizing data from a

survey of 72 furniture

manufacturers located throughout

China

Hsu et al. (2009)

The research analyzed the roles of
None
Different industries
Five-point

operations capability and supply

Likert

chain management practice on firm

performance

Halley and
The paper described the use of
Interlinking
Different industries
Five-point
Beaulieu (2010)
supply chain management
Consultation

Likert

practices and shows that their use

Sharing

is dependent on the nature of the

Detachment
business partners (i.e., upstream or

downstream positioning of

partnership in chain logistics of

businesses studied), business field

(i.e., sector of activities in which the

business operates), and

organizational size

electro-electronics sector (industrial automation, electrical and electronic components,

generation, transmission and distribution, informatics, telecommunications, etc.). Based on

a list provided by the Brazilian Electrical and Electronics Industry Association (ABINEE),

e-mails were sent to the listed companies inviting them to participate in the survey by
responding to an online multiple-choice questionnaire. The electronic sector was chosen as

it is one of the most important components of Brazil’s gross domestic product (GDP), which

is also the same selection criterion used by Law et al. (2009).

Table III shows the profile of the respondent companies. It is observed that customers drive

these supply chains, since they have the most bargaining power; that most of the

respondents are small to midsized companies and that the respondent companies in

generally occupy the position of manufacturers in the chains.

3.2 Data analysis

In the first step, the principal component analysis was applied to all indicators. The principal

component analysis was applied to study the interrelationships between the variables based

on the data reduction to explain their relationship, i.e., the way the indicators are combined

to form the constructs of SCM practices. Thus, the principal component analysis divides the

indicators (questions) into groups (factors), summarizing their relationship pattern.

The principal component analysis resulted in a framework with four factors (Figure 1).

Then each of these four factors was analyzed for quality measures. These quality measures were obtained using the SPPS
and SmartPLS software packages. SPSS proved to be useful for verifying the measures, such as the adequacy of the sample.
When applying principal component analysis (four limiting factors/constructs), we were able to obtain the measures
j
VOL. 15 NO. 2 2011 MEASURING BUSINESS

EXCELLENCE j PAGE 23
Table II The constructs, indicators and theoretical meanings used in this paper to measuring and validate SCM practices
construct

Construct
Indicator
Meaning
Code

Supply chain integration

Customer integration
Integration of the products development in the
V1

downstream supply chain (customer)

Supplier integration
Integration of the products development in the
V2

upstream supply chain (suppliers)

Customer involvement in the plans

Involvement of the downstream supply chain in
V3

products/services/marketing plans

Supplier involvement in the plans

Involvement of the upstream supply chain in
V4

products/services/marketing plans

Supplier collaboration demand forecasting

Collaboration of the upstream supply chain
V5

members with demand forecasting

Customer collaboration demand forecasting

Collaboration of the downstream supply chain
V6

members with demand forecasting

Supplier collaboration stock planning

Collaboration of the upstream supply chain
V7

members with stock planning

Customer collaboration stock planning

Collaboration of the downstream supply chain
V8

members with stock planning

Supplier collaboration production planning

Collaboration of the upstream supply chain
V9

members with production planning

Customer collaboration production planning

Collaboration of the downstream supply chain
V10

members with production planning

Creation of multifunctional teams

Creation of multifunctional logistics and quality
V11

teams that include members of other teams

Information sharing
Cost information sharing customer
Formal information sharing about production
V12

costs with customers

Information sharing product launching

Formal information sharing about new
V13

supplier
products launching with suppliers

Participation in customer marketing

Participation in the customers’ marketing effort
V14

Customer future needs

Determine customer future needs
V15
Supplier communication future strategy
Communicate suppliers of future strategies
V16
Customer service
Customer feedback
Obtain final customers feedback on services
V17
management

adequacy

Customer relationship
Customer support new product decision
Consult customers to support decisions about
V18

new products

Consult customer production programming

Consult customers about production
V19

programming changes

Supplier relationship
Consult supplier production programming
Consult suppliers about production
V20

programming changes

Supplier support product development

Consult customer to support new products
V21

development

Postponement
Assembly near customer
Assembly products near final customer
V22

of quality of the framework using the partial least squares (PLS) statistical technique. The main results of our analysis
are shown below.

4. Results and discussions

The first step to data analysis was to calculate the global Cronbach’s alpha of the indicators of SCM practices. The
general value of 0.942 was obtained, which was considered excellent.

The data reduction of all variables (V1-V21) was performed using the principal component analysis method with varimax.
This procedure resulted in a framework with four factors that can explain the variance value of 67.547 percent. The
global KMO test that verifies the adequacy of the sample was 0.885, and is considered adequate. In order to refine the
results, the principal component analysis only shows variable loadings higher than 0.5 and factors with eingenvalues
higher than 1 and coefficients of the diagonal of the matrix
j
PAGE 24 MEASURING BUSINESS EXCELLENCE j
VOL. 15 NO. 2 2011
Table III Profile of the respondents’ companies

Position

Raw material supplier

0.9

Components supplier

15.9

Assembly company

76.6

Distributor

4.7

Retail
1.9

Size

Micro company

10.3

Small company

31.8

Medium company

42.1

Large company

15.9

Bargain power

Own suppliers

8.4

Own company
10.3

Own customers

81.3

Figure 1 Created framework based on principal component analysis

V1

V13

V10

V16

V5

V17

V6

V18

V7
FACTOR 1
FACTOR 2
V19
V8

V20

V9

V21

SCM Practices

V14

V11

V15

V12

V2
V22
FACTOR 4
FACTOR 3
V3

V4

anti-image higher than 0.6. We also checked the commonalities for each variable (Hair et
al., 2005).

Initially, using the SPSS software, the quality of the proposed model by principal
component analysis was analyzed (four factors) by verifying:

the adequacy of sample for each individual factor by the KMO test;

Cronbach’s alpha of each factor;

the eigenvalue of each factor, where they were extracted factors with eigenvalues greater
than 1; and

an accumulated explained variance.

 j
VOL. 15 NO. 2 2011 MEASURING BUSINESS EXCELLENCE j PAGE 25
The high alphas, the high KMO, accumulated explained variance and eigenvalues show partial evidences that the scales
are adequate. Table IV shows the formed factors and their measures of quality.

Next, the partial least squares (PLS) was used to run scale’s validity and reliability. PLS is a second-generation structural
equation modeling technique and is especially useful when working with theory in early stages of development. A
framework was created containing the four constructs obtained from the principal component analysis, as explained
above. The aim of this procedure was to test the validity and reliability of the principal component analysis model. The
analyses were conducted using the software SmartPLS 2.03 (Sosik et al., 2009).

Good quality indicators for the proposed framework have been achieved in terms of average variance extracted,
composite reliability, and communality (Table IV). The loadings of all indicators on their corresponding constructs reached
acceptable levels (over than 0.6). To reach satisfied reliability and validity, the composite reliability value should be higher
than 0.7 while the average variance extracted value should be higher than 0.5. Construct reliability was assessed using
composite reliability. Convergent validity examined the average variance extracted measure. Table IV shows that all of
the values of composite reliability are higher than 0.7 and all of the values of average variance extracted are higher than
0.5 (Foltz, 2008).

The cross loading matrix was checked (Table V) and all indicator loadings were located where planned. A bootstrap of
300 subsamples was used to estimate the statistical significance of proposed relationships between indicators and
constructs (Table IV)

In Table VI, the italicized diagonal representing the square root of the average variance

extracted exceeded the off-diagonal elements in the construct

correlation
matrix.
Table IV Quality measures for the proposed framework

Factor

1
2
3
4

Label
SC integration for PPC
Information sharing about
Strategic relationship
Support customer

support
products and targeting
with customer and
order

strategies
supplier

Indicators
Supplier collaboration
Consult customer production
Supplier involvement
Assembly near

stock planning (V7)

planning (V19)
plans (V4)
customer (V22)

Supplier collaboration
Consult supplier production
Customer involvement
Cost information

production planning(V9)
planning (V20)
plans (V3)
sharing customer

Customer collaboration
Decision support new
Customer marketing
(V12)

stock planning (V8)

customer product (V18)
participation (V14)
Multifunctional team

Customer collaboration
Customer feedback (V17)
Customer future needs
creation (V11)

production planning (V10)

Supplier support product
(V15)

Customer collaboration
development (V21)
Supplier integration (V2)
demand forecast (V6)
Supplier communication

Supplier collaboration
future strategy (V16)

demand forecast (V5)

Information sharing product

Customer integration (V1)

launching supplier (V13)

Average variance

extracted
0.7214
0.5631
0.6083
0.5893

Composite reliability
0.9474
0.8997
0.8853
0.8110

Cronbach’s alpha
0.9345
0.8700
0.8375
0.6621

Kaiser-Meyer-Olkin
measure of sampling

adequacy
0.848
0.840
0.760
0.655

Communality
0.7214
0.5631
0.6083
0.5893

Eigenvalue
10.237
1.920
1.395
1.309

Accumulated explained

variance (%)
25.741
44.326
58.582
67.547

j
PAGE 26 MEASURING BUSINESS EXCELLENCE j
VOL. 15 NO. 2 2011
Table V Variables cross-loadings matrix and level of significance

Factor

Variables
1
2
3
4
p value

V1
0.7103
0.5553
0.6710
0.3443
0.0000
V2
0.6964
0.6340
0.7799
0.2988
0.0000
V3
0.6552
0.4400
0.8127
0.4148
0.0000
V4
0.6156
0.5081
0.8662
0.4481
0.0000
V5
0.8245
0.5583
0.6874
0.3202
0.0000
V6
0.8597
0.5354
0.6477
0.4321
0.0000
V7
0.8933
0.6091
0.5706
0.4402
0.0000
V8
0.8885
0.5367
0.5475
0.4771
0.0000
V9
0.9022
0.6570
0.6143
0.4360
0.0000
V10
0.8514
0.5940
0.5526
0.4365
0.0000
V11
0.4949
0.4498
0.5302
0.8251
0.0000
V12
0.3239
0.4326
0.3144
0.7516
0.0000
V13
0.5582
0.7604
0.6307
0.4562
0.0000
V14
0.3963
0.5385
0.7384
0.4351
0.0000
V15
0.3943
0.5832
0.6908
0.3799
0.0000
V16
0.6418
0.8056
0.6152
0.5081
0.0000
V17
0.3400
0.6802
0.4340
0.3460
0.0000
V18
0.4139
0.6547
0.4277
0.2624
0.0000
V19
0.4243
0.7394
0.3875
0.3655
0.0000
V20
0.5762
0.8152
0.5197
0.3432
0.0000
V21
0.5556
0.7822
0.5642
0.4005
0.0000
V22
0.2479
0.2813
0.2506
0.7226
0.0000
Table VI
Construct correlation matrix

Factor 1

Factor 2
Factor 3
Factor 4

Factor 1
0.8494

Factor 2
0.6819

0.7504

Factor 3
0.7208

0.6918
0.7799

Factor 4
0.4868

0.5182
0.5030
0.7677

Consistent results were obtained. After testing the quality of the proposed scale, we can
then analyze the best label for each factor. This analysis is intended to ensure content
validity. Content validity refers to the extent to which a measure represents all facets of a
given construct.

The indicators have been taken based on the highest incidences in the definition of SCM,
on the discussion of SCM practices and current research topics (integration, relationship,
information exchange, matching of supply and demand), as explained in section 2.

Four factors were found. Factor 1 combines indicators of the ‘‘SC integration’’ construct and
Factor 2 combines indicators of ‘‘information sharing’’, ‘‘customer service management’’,
‘‘customer relationship’’, and ‘‘supplier relationship’’ constructs. Factor 3 gathers indicators of
‘‘SC integration’’ and ‘‘information sharing’’ constructs and Factor 4 consists of the indicators of
‘‘postponement’’, ‘‘information sharing’’, and ‘‘SC integration’’ constructs.

Factor 1 combines the indicators that support the PPC (production planning and control) of
an assembly company. Thus, this factor can be called ‘‘SC integration for PPC support’’.
The customers and suppliers contribute to a better visualization of their common
processes through collaborations with production planning, demand forecast, or stock
planning.

Factor 2 consists of hybrid indicators of different constructs, focusing on information

sharing and strategies such as product development and future strategies, thus, this factor
can be entitled ‘‘information sharing about products and targeting strategies.’’
j
VOL. 15 NO. 2 2011 MEASURING BUSINESS

EXCELLENCE j PAGE 27
Factor 3 comprises indicators of almost all attributes, but those indicators share the required
good and long-term relationship with suppliers and customers in order to adopt each practice.
Therefore, this factor is labeled ‘‘strategic relationship with customer and supplier’’.

Factor 4 gathers indicators that share integration issues with the customer, either by
postponing assembly or by clear cost accountability to facilitate the business between
customer and supplier, i.e. organizing multifunctional teams to facilitate the combined
operations. Therefore, this factor can be called ‘‘support customer order’’.

The factors defined based on the indicators of the constructs of SCM practices make it easy to
understand their interrelationship and enable a better outline of their constructs since they were
summarized. The constructs of practices from literature review were condensed into four
resulting in a better specification of each one based on the indicators involved. For example, the
‘‘SC integration’’ construct was refined to PPC activities. The ‘‘information sharing’’ construct
was better specified and advanced, and it was labeled ‘‘information sharing about products and
targeting strategies’’. Several other constructs were condensed into a single one, ‘‘strategic
relationship with the customer and supplier’’. The last construct included only three indicators,
and was termed ‘‘support customer order’’.

5. Conclusions

This study aimed to identify a valid framework to measure SCM practices. A survey was
conducted to collect data on the degree of implementation of SCM practices in Brazilian
companies. Using these data, it was possible to perform a statistical analysis, based on
principal component analysis and structural equation modeling, to determine the measures
of sampling adequacy, reliability and validity of the adopted scale. The statistical analysis
demonstrated that the indicators chosen in the literature review and grouped into four
factors/constructs are suitable for the measurement of SCM practices, achieving the
proposed objective for this research.

Li et al. (2005) developed and validated an instrument to measure SCM practices using six
factors to represent the construct of SCM. Based on Li et al. (2005) and other studies, we
have proposed six theoretical latent variables (constructs) and obtained four factors from
principal component analysis. This resulted in improvement and parsimony in
understanding the construct of SCM practices. We started with very general latent
variables (SC integration, information sharing, customer service management, customer
relationship, supplier relationship and postponement), and after the analysis we obtained:

B
SC integration for PPC support;

B
information sharing about products and targeting strategies;

B
strategic relationship with customer and supplier; and

B
support customer order.

Halley and Beaulieu (2010) said that supply chain practices were used more intensively with
clients than with suppliers. Olhager and Selldin (2004) identified that to some supply chain
partners, the downstream direction is more often considered dominant than upstream.
According to Mouritsen et al. (2003), the strong tier in the chain tends to influence the actions of
integration with other tiers. The fact that customers are the strong tier in the supply chain of the
companies studied in this research can explain the greater adoption of practices aimed at
integration with customers by assemblers. This argument can explain the use of a factor
(support customer order) with greater emphasis on customer service practices.

Thus, the major contributions of this research are:

the testing and measurement of indicators of SCM practices to obtain appropriate values
of reliability and validity, which may identify indicators and latent variables (constructs) to
represent SCM practices, and thus support the search for a common understanding of
SCM practices;
 j
PAGE 28 MEASURING BUSINESS EXCELLENCE j VOL. 15 NO. 2 2011
a study of a specific sector where it is possible to discuss the contextual and contingent
considerations for proposing the latent variables, which represents a gap in the literature,
according to Li et al. (2005), Wong et al. (2005), Jharkharia and Shankar (2006) and
Halley and Beaulieu (2010); and

even though only one industry was studied, we considered the mainstream of literature
and used generic statistical analysis procedures, and therefore the results may be applied
to any country and any industry, given some refinement or contextualization.

Regarding practical and managerial implications, with the knowledge on indicators of the
construct of SCM practices, supply chain managers are able to conduct research and
benchmarking of the level of adoption of SCM practices with customers and suppliers, and
thus direct efforts to improve performance.

Regarding the social implications, this paper can contribute to a better understanding of
SCM and its management practices. Any improvement in the management of the supply
chain can be targeted for new investment, and consequently the generation of employment
and income.

A major limitation of this study is that the research has focused on companies from a single
sector with a relatively small sample size that has only targeted one country, and therefore
requires further research covering various sectors and taking into consideration the
specific conditions in other countries.

It is recommended that future studies replicate the framework presented here, generating
new ideas and refinements.

References

Bayraktar, E., Demirbag, M., Koh, S.C.L., Tatoglu, E. and Zaim, H. (2009), ‘‘A casual analysis of the
impact of information systems and supply chain management practices on operations performance:
evidences from manufacturing SMEs in Turkey’’, International Journal of Production Economics, Vol.
122 No. 1, pp. 133-49.

Burgess, K., Singh, P.J. and Koroglu, R. (2006), ‘‘Supply chain management: a structured literature
review and implications for future research’’, International Journal of Operations & Production
Management, Vol. 26 No. 7, pp. 703-29.

Chandra, C. and Kumar, S. (2000), ‘‘Supply chain management in theory and practice: a passing fad
or a fundamental change?’’, Industrial Management & Data Systems, Vol. 100 No. 3, pp. 100-13.

Chow, W.S., Madu, C.N., Kuei, C., Lu, M.H., Lin, C. and Tseng, H. (2008), ‘‘Supply chain management
in the US and Taiwan: an empirical study’’, Omega, Vol. 36 No. 5, pp. 565-79.

Fantazy, K.A., Kumar, V. and Kumar, U. (2010), ‘‘Supply management practices and performance in
the Canadian hospitality industry’’, International Journal of Hospitality Management, Vol. 29 No. 4, pp.
685-93.

Foltz, C.B. (2008), ‘‘Why users (fail to) read computer usage policies’’, Industrial Management & Data
Systems, Vol. 108 No. 6, pp. 701-12.

Hair, J.F. Jr, Babin, B., Money, A.H. and Samouel, P. (2005), Fundamentos de me´todos de pesquisa
em administrac¸a˜o, Bookman, Porto Alegre.

Halley, A. and Beaulieu, M. (2010), ‘‘A multidimensional analysis of supply chain integration in
Canadian manufacturing’’, Canadian Journal of Administrative Sciences, Vol. 27 No. 3, pp. 174-87.

Hsu, C.C., Tan, K.C., Kannan, V.R. and Leong, K.G. (2009), ‘‘Supply chain management practices as
a mediator of the relationship between operations capability and firm performance’’, International
Journal of Production Research, Vol. 47 No. 3, pp. 835-55.

Hu, Z.H., Yang, B. and Huang, Y.F. (2010), ‘‘Hot research topics and trends of SCM; a statistical review’’,

Information Management and Engineering (ICIME), The 2nd IEEE International Conference, pp. 107-11.
 j
VOL. 15 NO. 2 2011 MEASURING BUSINESS

EXCELLENCE j PAGE 29
Jharkharia, S. and Shankar, R. (2006), ‘‘Supply chain management: some sectoral dissimilarities in
the India manufacturing industry’’, Supply Chain Management: An International Journal, Vol. 11 No. 4,
pp. 345-52.

Koh, S.S., Demirbag, M., Bayraktar, E., Tatoglu, E. and Zaim, S. (2007), ‘‘The impact of supply chain
management practices on performance of SMEs’’, Industrial Management & Data Systems, Vol. 107
No. 1, pp. 103-24.

Law, K.M.Y., Helo, P., Kanchana, R. and Phusavat, K. (2009), ‘‘Managing supply chains: lessons
learned and future challenges’’, Industrial Management & Data Systems, Vol. 109 No. 8, pp. 1137-52.

Li, S., Ragu-Nathan, B., Ragu-Nathan, T.S. and Rao, S.S. (2006), ‘‘The impact of supply chain
management practices on competitive advantage and organizational performance’’, Omega, Vol. 34,
pp. 107-24.

Li, S., Rao, S.S., Ragu-Nathan, T.S. and Ragu-Nathan, B. (2005), ‘‘Development and validation of a
measurement instrument for studying supply chain management practices’’, Journal of Operations
Management, Vol. 23 No. 6, pp. 618-41.

Mouritsen, J., Skjott-Larsen, T. and Kotzab, H. (2003), ‘‘Exploring the contours of supply chain
management’’, Integrated Manufacturing Systems, Vol. 14 No. 8, pp. 686-95.

Olhager, J. and Selldin, E. (2004), ‘‘Supply chain management survey of Swedish manufacturing firms’’,

International Journal of Production Economics, Vol. 89 No. 3, pp. 353-61.

Ou, C.S., Liu, F.C., Hung, Y.C. and Yen, D.C. (2010), ‘‘A structural model of supply chain management
on firm performance’’, International Journal of Operations & Production Management, Vol. 30 No. 5,
pp. 526-45.

Robb, D.J., Xie, B. and Arthanari, T. (2008), ‘‘Supply chain and operations practice and performance in
Chinese furniture manufacturing’’, International Journal of Production Economics, Vol. 112, pp. 683-99.

Sosik, J.J., Kahai, S.S. and Piovoso, M.J. (2009), ‘‘Silver bullet or voodoo statistics?: A primer for
using least squares data analytic technique in group and organization research’’, Group &
Organization Management, Vol. 35 No. 5, pp. 5-36.

Stock, J.R. and Boyer, S.L. (2009), ‘‘Developing a consensus definition of supply chain management:
a qualitative study’’, International Journal of Physical Distribution & Logistics Management, Vol. 39 No.
8, pp. 690-711.

Stock, J.R., Boyer, S.L. and Harmon, T. (2010), ‘‘Research opportunities in supply chain management’’,

Journal of the Academy Marketing Science, Vol. 38 No. 1, pp. 32-41.

Tan, K.C. (2002), ‘‘Supply chain management: practices, concerns, and performance issues’’, Journal
of Supply Chain Management, Vol. 38 No. 1, pp. 42-53.

Tan, K.C., Lyman, S.B. and Wisner, J.D. (2002), ‘‘Supply chain management: a strategic perspective’’,

International Journal of Operations & Production Management, Vol. 22 No. 6, pp. 614-31.

Vaart, T. and Donk, D.P. (2008), ‘‘A critical review of survey-based research in supply chain integration’’,

International Journal of Production Economics, No. 111, pp. 42-55.

Wong, C.Y., Arlbjorn, J.S. and Johansen, J. (2005), ‘‘Supply chain management practices in toy supply
chain’’, Supply Chain Management: An International Journal, Vol. 10 No. 5, pp. 367-78.

Zhou, H. and Benton, W.C. Jr (2007), ‘‘Supply chain practice and information sharing’’, Journal of
Operations Management, Vol. 25 No. 6, pp. 1348-65.

About the authors

Ana Beatriz Lopes de Sousa Jabbour has a PhD in Industrial Engineering from The
Federal University of Sa˜o Carlos – UFSCar, Brazil. She is Assistant Professor in Sa˜o
Paulo State University. Her research interests include supply chain management and
operations management. Ana Beatriz Lopes de Sousa Jabbour is the corresponding
author and can be contacted at: abjabbour@feb.unesp.br
j
PAGE 30 MEASURING BUSINESS

EXCELLENCE j VOL. 15 NO. 2 2011

Alceu Gomes Alves Filho has a PhD in Industrial Engineering from The University of Sa˜o
Paulo – USP, Brazil. He is Full Professor of Industrial Engineering at The Federal
University of Sa˜o Carlos – UFSCar (Sa˜o Carlos). His research interests include supply
chain management and operations management.

Adriana Backx Noronha Viana has a PhD in Engineering from The Campinas State
University – Unicamp, Brazil. She is Associate Professor of Business Administration in The
University of Sa˜o Paulo Business School – Ribeira˜o Preto (FEA-RP/USP). Her research
interests include applied statistics and business administration.

Charbel Jose´ Chiappetta Jabbour has a PhD in Industrial Engineering from The University
of Sa˜o Paulo – USP, Brazil. He is Assistant Professor of Business Administration in The
University of Sa˜o Paulo Business School – Ribeira˜o Preto (FEA-RP/USP). His research
interests include business administration, environmental management in companies and
operations management.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our
web site for further details: www.emeraldinsight.com/reprints
j
VOL. 15 NO. 2 2011 MEASURING BUSINESS

EXCELLENCE j PAGE 31
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

PDF to WordX