SUPPLY CHAIN MANAGEMENT PRACTICES AND ORGANIZATIONAL

PERFORMANCE OF THE FURNITURE INDUSTRY IN SULTAN KUDARAT

LEGINE B. ABARRO
JOENEE BABE S. JAVIEN
JOYCE L. OXIMAS
KRISTINE NICOLE T. VALENTINO

SUBMITTED TO THE FACULTY OF THE COLLEGE OF BUSINESS

ADMINISTRATION AND HOSPITALITY MANAGEMENT,
SULTAN KUDARAT STATE UNIVERSITY,
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

BACHELOR OF SCIENCE IN MANAGEMENT ACCOUNTING

JUNE 2023
 Chapter I
INTRODUCTION

Background of the Study

As a result of the outbreak of the coronavirus disease 2019 (COVID-19),

businesses were greatly affected, especially micro, small, and medium

enterprises (MSMEs), which comprise the majority of all businesses in the

country. With the enhanced community quarantine (ECQ) forcing most

establishments to close, MSMEs are struggling to cope with the crisis caused by

the pandemic (Business World, 2020). The problems often encountered by the

furniture industry are typical problems such as lack of capital and limited access

to raw materials, especially seasonal ones. The flow of raw materials for the

furniture industry, such as rattan and wood, has also stalled. Good supply chain

management is required to facilitate the flow of raw material supply (Ralahallo et

al., 2022).

A single supply chain management (SCM) practice will have a specific

impact on organizational performance (OP) (Duong et al., 2019). For

organizations to be and remain competitive, they must understand the

importance of supply chain practices which will help improve their performance.

Moreover, coordination with the supply chain is critical in improving performance.

There must be downstream solid and upstream integration of the networks.

Supply chain management is needed in all sectors (Sutdueana et al., 2019).

 COVID-19 makes it more challenging for the furniture industry to manage

its supply chain conveniently and efficiently. It is necessary to learn and maintain

good supply chain management practices that are useful in bringing the overall

success of the organizational performance of the furniture industry. The arrival of

COVID-19 shows a critical gap between the mentioned variables. Since there is

no existing performance in the area, the researchers must investigate the study.

Statement of the Problem

This study seeks to determine the relationship between supply chain

management practices and the organizational performance of the furniture

industry in the 1st district of Sultan Kudarat.

It specifically seeks to address the following questions:

1. What is the level of supply chain management practices of the furniture

industry in terms of:

1.1 Strategic Supplier Partnership;

1.2 Customer Relationship;

1.3 Information Sharing;

1.4 Quality of Information Sharing; and

1.5 Postponement?

2. What is the level of the organizational performance of the furniture

industry towards:

2.1. Market Performance;

2.2. Operational Performance;

2.3. Customer Satisfaction;

 2.4. Employee Performance; and

2.5. Supplier Performance?

3. Is there a significant relationship between supply chain management

practices and the organizational performance of the furniture industry?

4. Which domain of supply chain management practices best influences the

organizational performance of the furniture industry in the 1st district of

Sultan Kudarat?

Conceptual Framework

The conceptual framework shown in Figure 1 presents the two study

variables.

The independent variable is supply chain management practices and has

the following indicators: strategic supplier partnership, customer relationship,

level of information sharing, quality of information sharing, and postponement. In

comparison, the dependent variable is organizational performance with the

following indicators: market performance, operational performance, customer

satisfaction, employee performance, and supplier performance.

The arrow from the first box pointing to the second box signifies the

association of supply chain management practices to the organizational

performance of the furniture industry in the 1st district of Sultan Kudarat.

 Independent Variable Dependent Variable

Supply Chain Management Practices Organizational Performance

Strategic Supplier Partnership Market Performance

Customer Relationship Operational Performance

Information Sharing Customer Satisfaction

Quality of Information Sharing Employee Performance

Postponement Supplier Performance

Figure 1: Conceptual Framework of the Study

Hypotheses

The following null hypotheses will be examined at the 0.05 level of significance:

1. There is no significant relationship between supply chain management

practices and the organizational performance of the furniture industry.

2. There needs to be a domain of supply chain management practices that

best influences organizational performance.

Significance of the Study

The significance of the study is to understand the supply chain

management practices of the furniture industry in the 1st district of Sultan

Kudarat and the level of organizational performance. This study will significantly

help the following beneficiaries:

 To the furniture industry owners and managers, The study's outcome

can serve as guidance to determine the usefulness of supply chain practices to

improve business operations and management.

To the local government, The result of the study would allow the local

government to understand the essence of supply chain practices in economic

development.

To the local community, The study can provide relevant information to

the community and how they will apply the importance of supply chain practices

in their enterprise.

To future researchers, The study could use for future supply chain

management research.

Scope and Limitation

This study will focus on knowing the supply chain management practices

and level of organizational performance of the furniture industry and the degree

of relationship between the two variables of the study. The respondents of this

study are the furniture industry in the 1st district of Sultan Kudarat, specifically

the municipalities of Columbio, Isulan, President Quirino, and the city of

Tacurong, where the research will be conducted. This study will be conducted for

the academic year 2022-2023.

Operational Definition of Terms

Furniture Industry Businesses, primarily woodworking

shops, create, manufacture, sell, or

distribute functional and decorative

household items, such as chairs, tables,

cabinets, etc.

Organizational Performance relates to how the organization achieves

its market and intrinsic goals.

Supply Chain Management Practices refers to the entire collection of efforts

firms take to increase the efficiency of

their internal supply chain. It focuses on

the effective management of flows of

products and services from suppliers to

manufacturers and dealers to end users.

 Chapter II
REVIEW OF RELATED LITERATURE

This chapter will present the relevant literature that will be used to give

essential insights from various authors about supply chain management

practices and organizational performances.

Supply Chain Management

Supply chain management is the administration of the movement of goods

and services, and it includes all processes that convert raw materials into final

products. It includes proactively refining the business's inventory costing in order

for the business to optimize the value of customers and also obtain a competitive

edge in the marketplace (Investopedia, 2022). As a result, it is a deliberate

attempt by the supply chain entities to establish, develop and operate supply

networks in the most effective & feasible methods (Handfield, 2021).

Supply chain management is a vital procedure used to incorporate

different middle business entities by interacting between primary providers

through its purchaser who will deliver goods, services, and particulars that could

impart further benefits to the consumers. (Fauziah et. al., 2019). In addition, the

Institute for Supply Management pointed out that the development and

integration of people and technological resources are critical to successful supply

chain integration. Therefore, it is the design and management of flows of

products, information, and funds throughout the supply chain (Sanders, 2020).
 Moreover, the primary benefit of supply chain management is the capacity

to substantially increase overall performance when all channel participants—

suppliers, manufacturers, distributors, and customers— act as if they are a single

entity. (Copacino, 2019).

Supply Chain Management Practices

Supply chain management practices refer to the inclusive set of activities

used to improve the internal supply chain of the firm (IGI Global,2022).

Supply chain management practices conceptualize as a four-dimensional

construct. The four dimensions are strategic supplier partnership, customer

relationship, level of information sharing, quality of information sharing, and

postponement. (Karimi & Rafiee, 2014)

Supply chain management practices have a direct impact on the overall financial

and marketing performance of an organization (Stock et al., 2010)

The domain of Supply Chain Management Practices

Supply chain management practices are expected to improve the

organization's overall competitive performance through price/cost, quality,

delivery dependability, time to market, and product innovation. (Lambert &

Cooper,2000; Jabbour et al., 2011). In this study, supply chain management

practices are elicited from the study of Nawaz (2019) with the following

indicators, Strategic Supplier Partnership, Customer Relationship, Level of

Information Sharing, Quality of Information Sharing, and Postponement.

Strategic Supplier Partnership

In supply chain management, strategic supplier partnership is

characterized as creating a framework of credibility and a strong relationship

between the entity's supply chain affiliates and its customer (Agus, 2015). It

established a commitment by linking the supplier and buyer to be in the same

mind concerning the supply and demand of products which eventually help

business entities to increase and improve their business operation. (Fauziah et.

al., 2019).

However, it is necessary to manage supplier relationships effectively to

have functional supplier relationship management. It requires the application of

organizational operations and practices that focus on reforming the foundation of

supply. Furthermore, supplier partnerships and information integration impact the

supply chain's performance (Khan et al., 2015).

Customer Relationship

By maintaining solid client connections, a firm can differentiate itself from

rivals, retain customer attention, and increase the value it gives to clients.
(Banerjee & Mishra, 2017). Customer relationships are commonly used in

businesses aware of customer desires, demands, and brand attachment, even to

how well a service or product fulfills the criteria. (Gawankar et. al., 2017). One of

the entity's core competencies and a probable competitive advantage is its tight

connection with its clients. It is considered adequate if customer relationships are

integrated into the Supply chain management process and decision-making

phase (Yadollahinia et al., 2018). Consequently, customer relationships may

significantly affect how a company manages its supply chain (Gandhi et al.,

2017). Therefore, customer relationships are essential for a firm to survive its

transition to a highly personalized and tailored service stage (Banerjee & Mishra,

2017).

Moreover, any business's success is determined by its ability to

communicate with its customers (Chopra & Meindl, 2012). Maintaining a

competitive edge and understanding consumer behavior need strong customer

connections. As a result, customer relationship management aims to enhance

customer bonds to boost organizational effectiveness and provide particular

insight into consumers' needs. (Reimann et. al., 2010).

Information Sharing

Information sharing is the company's capacity and intensity to share

information about a shared business strategy with related coworkers. In a supply

chain, business partners regularly share information, work together, and

comprehend the final customer's needs. (Chopra & Meindl, 2012). Information

sharing (IS) is fundamental in the supply chain system both hypothetically and

basically because it works on firm execution. Learning its advantages must be

coordinated with other supply chain partners. (Min et al., 2016). The study

conducted by Wardan et al. (2021) reveals that the information-sharing variable

significantly influenced organizations. If information sharing was excellent, the

organization became more productive due to the increasing impact of information

sharing on organizational performance.

Sundram et al. (2018) recognize that sharing information is one of the five

practices that define a trustworthy supply chain relationship. In addition,

Pamulety and Pillai (2011) state that partners who regularly share information

can work together as a single entity. It helps better to understand the customer's

needs as a whole. Panahifar et al. (2018) emphasize the significance of trust in

information sharing. When people have a high level of trust in one another,

information exchange becomes more open and trustworthy. This assertion is

comparable to the conclusion reached by Cai et al. (2010), which affirms the

positive impact of trust on dividing data among firms and their providers.

Likewise, the study of Khan et al. (2018), when investigating the long-term

viability of service supply chain management, shows a positive correlation

between trust and information sharing. Additionally, the extent of information

sharing is significantly influenced by trust (Wang et al., 2014).

Quality of Information Sharing

 IGI Global (2022) explains that the quality of information sharing means

that the information exchanged should be precise and reliable. Quality of

information sharing refers to the what, when, how, and with whom the information

is shared (Ellitan & Muljani, 2017). When considering the impact on customer-

related capabilities,

Setia et al. (2013) studied the banking industry in India and concluded that

information quality has a positive relationship with customer service capabilities.

Zhou et al. (2014) show that firms need to align supply chain practices with the

level of their information quality to achieve enhanced overall business

performance.

Postponement

Postponement is an organizational concept in which various supply chain

actions are delayed until accurate client order information is available. The

fundamental idea of delay is the strategy manufacturing companies use to

address various risks or difficulties in the supply chain and further improve their

performance by boosting revenues (Sima et al., 2016). In addition, there are

several postponement tactics, such as full postponement, when all services or

decision-making are put on hold until further notice (Dong et al., 2019).

Furthermore, how to delay methods are implemented to the needs of the supply

chain may negatively impact their performance level and their ability to make

money (Saghiri & Barnes, 2016).

Organizational Performance
 Organizational performance is the fulfillment of organizational ambition.

Organizations must have measurable objectives, as this is integral to employees'

engagement and commitment to the organization (Abubakar et al., 2019).

Organizational performance comprises the results of an organization or the

actual outputs of an organization, which can be measured against intended

outputs, goals, and objectives. On the other hand, the genuine desire of every

organization and an essential element in an organizational performance is to

reduce supply chain spending and increase benefits aggressively (Khajeh, 2018).

Since competitors are currently changing between "organizations" concerning

"supply chains," larger companies are accepting more SCM performance

(Hussain et al., 2018). For an organization to succeed, it must adapt to new

technologies and trends and develop new products to satisfy customers'

demands (Al-Weshah et al., 2019).

The domain of Organizational Performance

There is no simple or universally recognized definition of performance

(Leitão et al., 2019). Organizational performance is multifaceted and linked to

goals and objectives. It can be summed up as an organization's capacity to make

optimal use of its resources and generate outputs pertinent to its users and

consistent with its aims (Peterson et al., 2003). Analyzing organizational

performance is essential in organizational evaluation (Lusthaus, 2002).

In this study, organizational performance is based on various studies from

Baira and Oracion (2022), Flynn et al. (2010), and Zhang (2021) with the
identified following indicators: market performance, operational performance,

customer satisfaction, employee performance, and supplier performance.

Market Performance

The first indicator of organizational performance is market performance. A

company's effectiveness and performance can also be seen in its performance

on the market. Among other things, market share, innovation, growth, and profit

are the areas to include to measure market performance (The Enterprise World,

2021). According to Britannica.com, market performance may also include the

relationship between selling price and costs, volume produced, production

efficiency, and other factors.

The concepts of quality and marketing now have a new dimension

because of new modern technology and a shifting market environment (Wang et

al., 2012). The organization's strategic orientation determines the success of

businesses operating in a specific environment, and the level of market

orientation is related to this success (Navarro et al., 2011).

A company can succeed over time if it adjusts to changing market

expectations and develops new products or procedures (Hamister, 2012).

Operational Performance

The second indicator of organizational performance is operational

performance. A company's operational performance represents its productivity,

firm's operation management means maximizing profits based on limited

resources (Yu et al., 2018).

Information on the state of particular processes within the management

system is provided through operational performance indicators. As a result, when

monitored over time, such indicators help project future status and planning while

providing information on the status of change inside the management system

(Podgórski, 2015). Any performance indicator system's ultimate objective is to

offer information. Thus, it results from considering all areas of interest,

stakeholders, and influencing factors in a specific environment (Alegre et al.,

2016).

Customer Satisfaction

Customer satisfaction measures how happy customers are with a product

or service. Furthermore, it is the difference between success and failure for many

businesses. It measures how well a company's products, services, and overall

customer experience meet customer expectations. It reflects a business' health

by showing how well products or services resonate with buyers (Franklin, 2021).

In his book Marketing Metrics, Paul Farris (2010) defines customer

satisfaction as ‘the number of customers, or percentage of total customers,

whose reported experience with a firm, its products, or its services exceeds

specified satisfaction goals.

Employee Performance
 People are the most vital component of a company because it serves as a

planner, executor, and controller in meeting its goals (Harini et al., 2020). Albino

(2018) asserts that organizations strive to achieve organizational performance.

The evaluation of organizational performance is based on completing a set of

work activities in terms of quantity, quality, efficiency, and effectiveness.

Based on the study of Gumilar and Sunarsi (2020), supply chain strategy

has a significant impact on employee performance. Furthermore, other

researchers indicate that supply chain strategy has a positive and insignificant

effect on job satisfaction as an employee performance intervention. Hazen et al.

(2017) state that employees with competencies are assets that can be used

strategically to outperform competitors. As a result, supply chain strategy

dimensions such as knowledge, skills, attitudes, and behaviors impact

performance. The performance characteristics of a person are the cause and

effect of his or her effectiveness at work.

Supplier Performance

Based on the study of Wu et al. (2010), supplier performance refers to

how well a supplier supplies the required products to the buyer and is manifested

as the outcome of the operations in terms of quality, delivery, responsiveness,

cost, and technical support. Therefore, supplier selection and evaluation,

development, and integration must be considered to improve supplier

performance. (Akamp & Müller, 2013). Organizations must also consider

improvement in a working place. In the study of Yuan and Woodman (2010),

improvement of working conditions in the suppliers' locations resulted in accident

reductions, fewer disruptions, and less delay in product delivery – these, in turn,

improve the performance of suppliers in the form of more reliable supply, less

lead time.

A positive relationship between supplier social sustainability practices and

supply chain performance mediated by supplier performance. In addition, the role

of the buyer's commitment and investment moderates both suppliers' and supply

chain performance. This proved that supplier social performance plays a positive

role in enhancing the buying firm's operational performance. Furthermore,

important implications for the practitioners are that supply chain management

performance can be enhanced by ensuring social sustainability adoption

practices in emerging economies (Mani et al., 2018).

Supply Chain Management and Organizational Performance

Supply chain management practices could affect the firm's competitive

edge and organizational performance (Sutdueana et al., 2019).

Considering the impact of resources and capabilities and their positive

impact on supply chain management and organizational performance can bring a

competitive advantage to the firm and its supply chain level. (Gunasekaran et al,

2017). The previous study proves that better supply chain management

practices can lead to better competitive advantage for the firm (Sukati et al.,

2012).

Supply chain management benefits an organization's performance and a

competitive edge. They emphasize even more how beneficial supply chain

management techniques impact flexibility performance, output levels, and the

effectiveness of the available resources throughout the company. (Abdallah et.

al., 2014)

Supply chains that are effective and flexible foster the development of

entrepreneurial, inventive, learning, and knowledge transformations, resulting in

an overall SC transformation for the companies (Arora et al., 2016). Evaluating

supply chain performance is problematic because it involves several actors

working together to achieve logistical and strategic goals. (Estampe et. al., 2013)
 Chapter III
METHODOLOGY

This chapter describes the methods and procedures used in the study's

execution. It includes the research design, study respondents, data gathering

instrument, data gathering procedure, and statistical treatment to achieve the

research objectives.

Research Design

The study used a quantitative, non-experimental design using correlational

techniques to determine the degree of relationship between supply chain

management and organizational performance. This appropriate research

approach studies one variable's influence on another. Non-experimental designs

are research designs that examine social phenomena without direct manipulation

of the conditions that the subjects experience (Frey, 2018).

Respondents of the Study

The respondents of the study are the licensed furniture industry in the 1st

district of Sultan Kudarat. Most of the manufacturing firms operating in the

province manufacture and process agricultural products. However, the

Department of Labor and Employment's (DOLE) Integrated Livelihood Program

(DILP) included plywood factories, furniture makers, and rattan furniture makers.

The research is conducted in three (3) municipalities and one (1) city in

Sultan Kudarat's first district. Specifically, there are two (2) registered furniture

entities in the municipality of Columbio, six (6) from Isulan, two (2) from

President Quirino, and there are twelve (12) furniture shops in the city of
Tacurong, Sultan Kudarat. A total of twenty-two (22) furniture industries have

been determined to be registered and will be the participants in the study.

The complete enumeration method is used when the sample size equals

the population size. (Singh & Masuku, 2014) Due to the small number of

respondents, researchers will cater to all twenty-two (22) registered furniture

businesses in the 1st district of Sultan Kudarat.

Walters, G. D. (2019). Peer influence or projection bias? Predicting respondent delinquency with

perceptual measures of peer delinquency in 22 samples. Journal of Adolescence, 70, 1-12.

https://www.nngroup.com/articles/summary-quant-sample-sizes/

Data Gathering Instruments

The researchers will utilize an adapted and modified questionnaire to

assess the level and relationship between the two variables. In this study, two

instruments are used. The first instrument measures the level of supply chain

management practices in the furniture industry and is based on the study of

Nawaz (2020). Supply chain management practices have the following

indicators: strategic supplier partnership, customer relationship, level of

information sharing, quality of information sharing, and postponement. The

respondents will indicate their answers using the four-point Likert scale that

ranges from 4-1 with the description of "Always" to "Never."

The scale for interpreting the level of supply chain management practices

is as follows:
 Range of
Descriptive Interpretation Means Level

3.26- 4.00 ewer

.
2.51- 3.25
1.76- 2.50
1.0-1.75.

The second instrument measured the organizational performance of the

furniture industry and adapted from various studies from Baira and Oracion

(2022) and Zulkiffli and Perrera (2011), Flynn, Huo, and Zhao (2010), and Zhang

(2021) with the following indicators: market performance, operational

performance, customer satisfaction, employee performance, and supplier

performance.
 The respondents will indicate their answers using the four-point Likert

scale that ranges from 4-1 with the description of "Always" to "Never."

The scale for interpreting the level of organizational performance is as

follows:

Range of means Mean Level Interpretation

3.26- 4.00 Very High This signifies that the
The organizational
performance of the
firm is the best in the
2.51-3.25 sector
High
The questionnaire will be pre-tested using Cronbach alpha, the most widely used

method for estimating the internal consistency reliability of multi-survey

questionnaires utilizing a Likert scale.

Data Gathering Procedures

The researchers requested permission through a letter to the University

President to conduct the study within the area, which the adviser, Department

Chairman, and College Dean officially noted. After the letter is approved, the

researchers will carry out the survey. A survey questionnaire is created following

the objectives and setting of the study. The researchers conducted the study and

explained the goals and objectives of the study to the respondents.

With the guidance and assistance of the adviser and statistician, the

researchers tallied and computed the data from the research instrument. The
outcome helped determine whether or not the variables have a significant

relationship.

Statistical Tools and Treatment of Data

The gathered data through the questionnaire will be tallied and treated

using the following statistical tools:

Mean is the average of the given sets of numbers. It is calculated by dividing the

sum of given numbers by the total number of numbers.

Pearson Product Moment Correlation is a statistical test that measures

statistical relationships between two variables and is denoted by r. The Pearson

product-moment correlation, r, measures any linear trend between two variables.

https://www.sciencedirect.com/science/article/abs/pii/S0003347214002127

The objective function of to draw a line of best fit through the data of two

variables, and r denotes how far away all these data points are from this line of

best fit.

Multiple regression is a statistical technique that can be used to analyze the

relationship between a single dependent variable and several independent

variables.