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Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it Chapter-1: Introduction 1.0.

Significance of the Study The study examines the relationship between a firms Supplier Relationship Management (SPRM) adoption and its suppliers capabilities to deliver benefits to it. Its importance can be analyzed by examining critically the views of Cagliano et al (2006) and Manjappa et al (2008). Relating their views to that of Mettler and Rohner (2009) clarifies why the absence of SPRM fails a firm to control cost, elevate sales and maximize profit. The failure diminishes its earning per share, weakens goodwill, retards market value and hinders competitive advantage. From the viewpoint of Poirier (2003) it is the culmination of a firms inability to acquire, apply and process inputs in time, disrupting production schedule; elevating ideal time; weakening output quality etc. This distorts the value of the finished products. Gunasekaran and Ngai (2004) reveal that such weaknesses can be altered by applying SPRM strategy, which enables a firm to connect its database to that of the suppliers. Relating their views to the details in McKinensy report in 2010 illustrates the critical importance of the study from the viewpoint of performance improvement, profit elevation and wealth acceleration. In the context of a firm like Qatar Petroleum (QP) SPRM assumes importance from the point of view of suppliers ability to understand fully its possessing capacity; input demand cycle; inventory policy; cycle time to take decision; and payment history. Such understanding helps it tailor input supplies at the right time, place and price, facilitating production of crude oil, storage and delivery. The adoption of SPRM supports a supplier provided it is founded on a customer oriented approach, improving its integration with a firm. The integration strengthens a suppliers excellence to deliver benefits to the latter, denoting the outcomes of cost control and reduction. It strengthens the capability of the former to differentiate the services based on cost advantage, attracting the latter in a business segment. Hence, SPRM magnifies strategic partnership between the former and latter, heightening their capabilities to develop and deliver benefits. Relating the report of McKinsey and Infosys in 2010 indicates that some firms, QP etc, are integrated fully to suppliers, such as Prosperity Chemicals. Such integration allows the former to acquire suitable raw materials in right quantity, diminishing pressure on working capital; saving cost; improving production etc. These enable it to price end product profitably. They

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it enhance its growth and sustainable competitive advantage in the Gulf Co-operation Council. The above interpretation explains how SPRM implementation solves a firms problem. It helps to maintain optimum inventory, minimizing unwanted inventory accumulation, obsolescence and wastage; ideal time; demand for working capital and pressure on interest cost etc (Ravi and Menzigian, 2003). These enable it to control its overall cost and magnify profit. In view of the above, it is recommended that a study be conducted to examine why a firms, for example QPs adoption of SPRM and suppliers capabilities to deliver benefits to it are related. A positive correlation explains how SPRM minimizes unwanted inventory buildup; diminishes wastage on account of obsolescence; shrinks ideal time contributed by haphazard ordering. It clarifies why these decelerate the demand for working capital and pressure on interest cost. It indicates how they minimize its overall cost, impacting positively profitability. 1.1. Significance of QP in the Study In the context of QP the study assumes importance from the viewpoint of its importance in Qatars economy. The importance can be gauged from the reports of McKinsey and Government of Qatar (www.gsdp.gov.qa) in 2010 and 2011 respectively. They highlight how the firms resource management efficiency elevation (27%) magnifies its profitability (19%), strengthening Qatars national savings (4%) and investment (17%). These enhance its national income (4.73%). The firms resource management efficiency is dependent on supply management excellence. The adoption of SPRM renders the attainment of this feasible. It minimizes total cost; improves profitability; justifies raw material purchases; strengthens collaboration; diminishes supply chain disruptions; and assures supply of customized inputs. The association between these and SPRM can be understood by interpreting the work of Cooper et al (1997). They attribute the association to management and collaboration; optimization; control and growth. The analysis of the first factor highlights role of integrated ICT, linking seamlessly QP to its suppliers. This allows the it to track the actions of latter, like sourcing and procurement; logistics etc. Its ICT usage heightens transparency, improving strategic decisions. These magnify attainment of objectives,

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it such as cost reduction (16.72%), obsolescence reduction (7.29%) and profitability enhancement (19%). The second factor clarifies the role an integrated system. This helps QP to nurture and maintain a single data repository, rendering it feasible to develop and assign distinct workflows across all the suppliers. Such an initiative strengthens its exception management capabilities. These help it to attach priority to key issues, improving utilization of time and resources by 78% and 93% respectively. They minimize process disruptions by 86%, heightening its agility to respond to customers demands, like Indian Oil, Ceylon Petroleum Corporation, Pakistan State Oil Company etc. QPs Control is strengthened by 97% due to the availability of information which is shared with all the suppliers, like Yokogawa, Siemens, Honeywell etc. ICT supported SPRM improves their awareness and learning about its demand. They help these vendors in a network to take corrective actions, minimizing waste, maximising savings, elevating performance and profitability. In view of the above, the study in QP assumes importance. It clarifies how its SPRM adoption and suppliers capabilities to deliver benefits to it are related. 1.2. The Statement of Problem Bowersox et al (2000) highlight in which way a firms SPRM adoption strengthens its ability to identify and net-work with the most important suppliers, signifying the importance of importance investment in ICT, people, processes etc. SPRM is founded on ICT which helps to acquire, analyze and present data, helping to rank, rate and optimize planning and scheduling raw material supply. These may enable a firm like QP to replenish stock in time, enabling it to reduce cost (16.72%) and risk (32%), which strengthen profit (19%). In the absence of SPRM adoption QPs demand for time, capital and other resources is elevated by 65%, 12% and 9% respectively. It renders the strategic initiative burdensome, diminishing its profitability by 8%. This is attributed to the failure on the part of the vendors to conform to the standards; intellectual bankruptcy of their employees to understand the firms needs, preferences, demands etc. They signal the impact of the absence of synergy between the two. They render reduction of unwanted inventory build-up, obsolescence, wastage, ideal time, interest cost, production etc ineffective. Such inefficiency elevates the firms incremental loss by 3.93%. It

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it alteration signals the importance of OPs adoption of SPRM, strengthening suppliers capabilities to deliver benefit to it. 1.3. The Conceptual Model The conceptual model of this is based on the relationship between a firms Supplier Relationship Management (SPRM) adoption and its suppliers capabilities to deliver benefits to it. From the viewpoint of Bowersox et al (2000) and Steinberg (2006) this proposition relates to the importance of a firms adoption of SPRM. This strengthens its competence to net-work with the suppliers. It facilitates acquisition of ICT, deployment people, application processes etc. These enhance a firms, such as QPs, efficiency to gather data; analyze and interpret them, optimizing raw material planning. The optimization signals suppliers ability deliver raw material in time, improving the firms stock replenishment effectiveness. Hope-Ross (2002) and Ravi and Menzigian (2003) explain how it minimizes unwanted inventory accumulation, obsolescence, wastage, ideal time, working capital requirement and pressure on interest cost. These justify the utility of a firms seamless integration with the suppliers. This renders acquisition of customized inputs in right quantity feasible. It diminishes the pressure on working capital, denoting fund utilization efficiency, which impacts positively QPs production. The impact denotes productivity improvement, saving cost, minimizing risk and maximizing profit. 1.4. The aim of the study The study aims to examine the association between a firms SPRM adoption and its suppliers efficiency to deliver benefits to it. 1.5. The objectives of the study The objectives of this study: i. Examine how a firms SPRM adoption improves its collaboration with the suppliers. ii. Evaluate why a firms SPRM adoption heightens suppliers awareness about its demands.

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it iii. Assess the relationship between a firms SPRM adoption and minimization of its overall production cost. In view of the above, the study aims to answer the following research questions: i. Can a firms SPRM adoption assure suppliers raw material delivery in time? ii. Can a firms SPRM adoption help the suppliers to customize output? iii. Can a firms SPRM adoption elevate its productivity? 1.6. Nature of study The methodology and methods are presented to examine the impact of a firms SPRM adoption on the suppliers capabilities to deliver benefits to it. This involves conformity to specification; input delivery in time; cost minimization; value elevation etc. The attainment of these depends on a suppliers proficiency to determine a firms, input possessing capacity; input demand cycle; policy to maintain inventory; cycle time to take decision; and payment history. The researcher aims to analyse these to study the impact. This is attained by studying the variables propounded by Helper (1995), Lee (2002), Lee et al (1997a), Manrodt et al (1997), Shah et al (2002) and Watson (2002). Subsequently, the methodologies and methods used in this study are discussed. 1.6.1. Methodology Lee (2002), Lee et al (1997a), Manrodt et al (1997) and Shah et al (2002) clarify the role of epistemology to examine how SPRM adoption yields lead time minimization; cost reduction and benefit elevation. These are attributed to a firms seamless connectivity with the suppliers, allowing them to understand input possessing capacity; input demand cycle; policy to maintain inventory; cycle time to take decision; and payment history of the former. A suppliers access to such information strengthens performance, building benefits. An interpretation of Shah et al (2002) and Watson (2002) explains the extent to which this standpoint highlights the philosophical alignment between a firms sourcing initiatives and suppliers value delivery capabilities, through the use of empirical tools. Linking their views to the

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it work of Neuman (1997) explains that the outcomes of the study if founded on an epistemological framework tend to favour a deductive approach. This helps to justify the importance of SPRM from the viewpoint of suppliers performance efficiency. In line with the views of Everett and Boydell (1994) the researcher considers phenomenology and qualitative approaches to answer research questions, fostering understanding about the impact. Further, the above explanation highlights the importance of the ontological standpoint that justifies the essence of SPRM in enhancing suppliers performance (Dyer and Nobeoka, 2000, Graves et al, 1998). Through a clear description of the concepts, the role of the former in strengthening the understanding of the latter regarding its input possessing capacity; input demand cycle; policy to maintain inventory; cycle time to take decision; and payment history becomes evident. Thus the qualitative approach shows usefulness in such impact analysis. An interpretation of Reichardt and Rallis (1994) explains how phenomenology facilitates analysis of the belief of a person or a group of persons. It clarifies why the adoption of an in-depth interview method helps to examine the extent to which a firms SPRM adoption improves its suppliers value delivery capabilities to it. Aligning them to the views of Everett and Boydell (1994) justifies the usefulness of the approach to analyse and present a total picture of a phenomenon, emphasizing multiple issues and their interacting realities. Such an analysis unravels meaning and interprets responses of the respondents, conforming to the views of LeCompte et al (1992). It can be attributed to the methods flexibility to enhance interaction between the researcher and respondents in QP, elevating understanding about the association between a firms SPRM adoption and suppliers capabilities to deliver benefits. A review of Miller (1992) highlights the utility of the approach to draw inferences about role of IT based system to accentuate buyers productivity, profitability and competitive advantage. 1.6.2. Methods In their work Cooper and Schindler (1998) explains the importance of methodologies and methods, linking the independent variables with dependent variables. Two

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it distinct approaches, like qualitative and quantitative, can be used to link the variables to test the validity of an impact. The adoption of the former is influenced by their views. In his work Denscombe (1998) indicates the importance of research design to conduct a study. He justifies the importance of a distinctive approach to answer research questions. A research design explains in which way SPRM elevates suppliers awareness about a firms needs of inputs and what best can be done to deliver value to it. Most research designs are based on Action Research, Descriptive Research, Ethnography, Evaluation Research, Grounded theory, Historical Research, Positivism, Phenomenology, Quasi Experimental Research and Randomized Control Trials. The usage of a method or a set of methods is related to the needs of information, helping to examine a phenomenon. The researcher adopts phenomenological approach to examine the how a firms SPRM adoption impacts its suppliers capabilities to deliver benefits to it. Relating the above analysis to the views of Flick (1998) and Neuman (1997) motivates the researcher to adopt qualitative research to examine critically how a firms SPRM adoption improves suppliers efficiency, performance and profitability. The focused group discussion is used to examine the association these. It helps to gather responses of the Managers and Executives in a firm and its suppliers; analyse them; and present the findings. Its choice is attributed to the ability to describe the subject, enumerate the objects, their beliefs and attitudes. It helps to answer the research questions and present inferences about the association between SPRM and total cost minimization; profitability improvement; raw material purchase justification; collaboration elevation; supply chain disruption; raw material customization differentiation. 1.7. The sequence of chapters Chapter-1 explains the design of the study, explaining its significance in QP, aim, objectives, approach and limitations. Chapter-2 contains a critical discussion of some of the major issues in the literature that examines the previous studies and their outcomes, facilitating a review of how a firms SPRM adoption impacts its suppliers capabilities to deliver benefits to it.

Relationship Between A Firms SPRM Adoption & its Suppliers Efficiency to Deliver Benefits to it Chapter-3 outlines the methodology, methods and sources of responses to conduct the study, involving SPRM adoption; cost minimization; productivity elevation etc. Chapter-4 explains the rational of introducing the questions and presents the results. Chapter-5 presents a discussion of the results. These are analysed in the light of researchers own experience, other reports and studies conducted in Qatar and Gulf Co-operation Council. Such an analysis and interpretation facilitate explanation of findings. Chapter-6 outlines the critical review of the study, explaining how the weaknesses are minimized in all other future studies to improve the reliability of interpretations.