The impact of the strategies in the supply chain management in Mexico manufacturing SMEs: An empirical study 1

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1 Available Online at (c) EJRE published by International Association of Social Science Research - IASSR ISSN: European Journal of Research on Education, 2014, 2(Special Issue), DOI: /ejre European Journal of Research on Education The impact of the strategies in the supply chain management in Mexico manufacturing SMEs: An empirical study 1 Luis Aguilera Enríquez a *, Octavio Hernandez Castorena b, Martha González Adame c a Research Professor, Av. Universidad 940, Ciudad Universitaria, Aguascalientes, CP: , México b Research Professor and PhD student, Av. Universidad 940, Ciudad Universitaria, Aguascalientes, CP: , México c Research Professor, Av. Universidad 940, Ciudad Universitaria, Aguascalientes, CP: , México Abstract Today, for the SME in Mexico and particularly in the state of Aguascalientes, implementing strategies in the Supply Chain Management will enable these organizations to have better results in the management of material resources and for this, entrepreneurs must have the vision to identify whether their organizations integrate strategies scout type analyzers, defensive or reactive, in order that they can have better results smoothly and that these elements may have better development and growth in their businesses. The results obtained in this study show through structural equation analysis supported by an integrated factors and Management Supply Chain theoretical model, which SMEs in in Aguascalientes, Mexico defensive scout and develop strategies which allows them to have acceptable results in performance and business development. In this sense, the present research exploratory and correlational, a survey was applied through the art of fieldwork to employers under managers of manufacturing SMEs in a sample of 160 firms during the period between August and October 2013, in the state of Aguascalientes, in order to analyze whether the integration of strategies has a positive impact on the management of the supply chain, for which the results were analyzed using exploratory and confirmatory factor analysis structural equation analysis European Journal of Research on Education by IASSR. Keywords: Strategic, Supply Chain Management, SMEs 1 Study presented in III European Conference on Social and Behavioral Science. * address: ohernandez@correo.uaa.mx 149

2 Luis Aguilera Enriquez, Octavio Hernandez Castorena, Martha Gonzalez Adame 1. Introduction Nowadays, Small and Medium Enterprises (SME), a sense of identity as a strategy to be considered by employers, represents a major challenge which allow in this type of organizations have a long-term growth, increased security to maintain for a significant time with staff and so this support, to have a wide range of possibilities in terms of product diversification that can be offered to the market with no problem (Penrose, 1959). That is why the level of business enterprise ( Minzberg, 1993 ) requires the establishment of strategies focused on the continued development of its core activities, based on key elements that enable business growth where in addition, aspects such as competitiveness, allow the SME to be reliable to the increasingly strong demands of the market ( Demuner and Mercado, 2011). In this regard, it is important to note that until now, researchers have been shaped by the results of their research, concepts related to the strategies, which allow other researchers certainly have constructive discussions about what the closest concept to strategies for further reading. To do this, starting with Chandler (1962) has defined the strategy as an element that specifies the basic goals of a company to a long-term, as well as the adoption of action plans and the allocation of resources to achieve goals in organizations. Haugstad (1999) mentions that the strategy is a pattern of actions that make up the goals and procedures of an organization in a coherent sequence of actions that enable the organization to use their resources into a single position from their internal capabilities and on the other hand, Andrews (1997) defines corporate strategy is a pattern of decisions that determine business objectives and goals while also creating plans, policies to achieve them. That is why, in the present research, through a sample of 160 SME manufacturing companies located in the state of Aguascalientes in central Mexico, is to analyze the impact of the strategies in the management of the supply chain. As a research question has been raised as follows: Is the implementation of strategies by entrepreneurs in the SME manufacturing allows the management of the supply chain is more effective and reliable? To do this, the research is organized in three stages. The first stage is comprised of the introduction and review of the literature, the second stage is shaped by the methods and results of research. Finally, the third stage is composed by the findings, study limitations and future research lines. 2. Review of the literature 2.1 Today, there are several researchers who conceptualize strategies in such a way that it is intended to express the importance of the integration of the business strategy. Thus, researchers as Ansoff (1965), highlights that strategies are operational expressions within the administrative system which define operational criteria on the basis of which specific programs can be carried out smoothly, and once implemented, to introduce the idea that every company has a thread between the actions taken and the achievement of the objectives with which it was created. Also, Minzberg (1993 ) notes that the strategy is not only a notion of how to do a deal with competitors in a specific market, but is a way to reconcile the principles of organization with the purposes sought to obtain with a uniform collective perception can search from developing competitive advantages or the survival of the organization. Also, as a way to strengthen the SMEs, especially the manufacturing Minzberg (1993) considered aspects such as location, differentiation, development, business expansion and reconsideration, as strategies to be implemented in its development in order to have business more profitable, on the other hand, Beal (2000) considered relevant to integrate the strategies of cost leadership and product differentiation and so have greater competitive advantages, so the same for Wright and Kroll (1998 ) strategies such as cost minimization, product differentiation and business focus are strategies that should no longer be included in the development plan of the SME manufacturing; Abell (1980) stresses that it is important for entrepreneurs to focus on product differentiation and business approach, for its part Chrisman et al. (1988) make a more detailed classification of strategies consisting of: segmentation cost, benefit segmentation, and segmentation approach in utilities costs. Meanwhile, in their research Porter (1980), addresses the cost leadership strategies that include the pursuit of economies of scale, proprietary technology and preferential access to raw materials, which means that control across 150

3 The impact of the strategies in the supply chain management in Mexico manufacturing SMEs: An empirical study business indicators such as high efficiency, avoid wastage full, thorough review of the budget and control, have strong operational control mechanisms as well as administrative, have rewards linked to cost reductions and extensive participation of employees in attempts to control costs (Beal, 2000), on the other hand, for Abell, (1980) the focus or segmentation strategy in the SME manufacturing allows to have a better picture of tight competition within a single sector. The implementation of a competitive strategy requires knowing the needs of consumers, which guides the entrepreneur and researchers to work on scientific discoveries, new technologies and new markets (Good, et al, 1999). 2.2 Supply Chain Management The Supply Chain Management (SCM) as Youssef, et al (1996) notes the importance of the integration of different actors in each stage of the supply management aiming at maximum to meet the needs customer. Other authors such as Chopra and Meindl (2004) as well as Christopher and Lynette (1999) highlight that with the intent to better control the processes related to the SCM, managers must recognize that the emphasis should be on meeting both the needs of customers, anticipating their specific requirements, to increase the available products and more efficient production flexibility. For researchers and Llies and Muresan (2008), the SCM, is linked to the activity of sales, production processes and their own management in managing the material resources which in turn allows the customer to influence functional activities and that to be able to share information in an ethical manner, it would more effective to prevent delays in the fulfillment of the supply of material resources. Likewise, Wisner (2003) considers that the practices of the SCM (better customer service, lower cost, higher quality, and greater competitive advantage) are closely related to existing theories on strategic management of the supply. In this sense, strategically Kanji and Wong (1999), there are two essential points in the SCM: The supplier management and management of the organization. For this it is important to note that the organization needs to provide information on the specific needs related to the provider while the provider based on a commitment to produce goods or services that meet the needs of the organization. Likewise, for researchers Guinipero and Brand (1996) and Cooper and Ellram (1993), a good model of SCM should consider while developing the procurement, improve collaboration in the provider- requisitor and ensure internally in the manufacturing SME growth and competitiveness. Finally, Christopher (1992), states that the SCM aims to meet the various needs that a client is at the proper functioning of the supply chain will depend largely on the information you have shared commissary and buyers on points logistics which includes the design process, production process and the distribution process. Morash and Clinton (1997), in their research results define that to be an adequate flow of material resources in SMEs smoothly manufacturing, it is important to have a working plan in which issues such as the needs of the application, the just in time, the clarity of information management and enable logistics control involved not at any time affect the SCM. Wisner (2003) describes that the SCM must integrate a number of key roles in the development of business activities which include procurement, demand management, distribution planning, transport, management quality, production planning and management of materials throughout the supply chain. Therefore, to be important for the SME manufacturing strategy implementation, entrepreneurs must question whether any strategic decision will allow these organizations become more profitable and have higher growth (Miles and Snow, 1986; Mahama, 2006), and in this sense, raises the following hypothesis: H1: The more evidence explorative best strategic application in SMEs. H2: The more evidence analyzer, best strategic application in SMEs H3: The higher the defense evidence, best strategic application in SMEs H4: The more evidence reactive best strategic application in SMEs Likewise, for the SME manufacturing the materials resource management should allow organizations to be more productive as they have the proper management of the supply chain, and a significant reduction in delays of supply of materials, reliability and productivity allow these businesses have greater competitiveness (Wisner, 2003; Frances and Garnsey, 1996; Stump and Heide, 1996; Munday, 1992), and for this, the following hypothesis is posed: 151

4 Luis Aguilera Enriquez, Octavio Hernandez Castorena, Martha Gonzalez Adame H5: A greater strategy with suppliers, improved supply chain management in the SME. H6: A Greater collaboration and agreements with suppliers, improved supply chain management in the SME. H7: A better implementation of strategies, better supply chain management in the SME. 3. Methodology In the present research, we examine whether the strategies have a significant impact on the Management of Supply Chain SMEs Aguascalientes in Mexico, and it was designed for data collection such an assessment tool survey conducted applied to managers in the period from August to October 2013, with a random sample of 160 companies as the population of this important sector is 442 companies (INEGI, 2013). The assessment tool consists of two blocks called as follows: Section I: with 16 variables classified as EE01 to EE04 (Strategy explorer) EA01 to EA04 (Strategy analyzer); ED01 ED 04 (defensive strategy) and ER01 to ER04Estrategia reactive), measures 1-5 and operationalized Likert scale from strongly disagree to complete agreement (Miles and Snow, 1986). Likewise, the Block II: Managing the Supply Chain with 20 variables classified as CS1 to CS11 ( of providers) and CS12 to CS20 (Collaboration and Agreements with suppliers) 1-5 Likert scale measured and operationalized as low importance to high importance (Wisner, 2003). For statistical analysis, we performed a structural equation model. The research is empirical, whose technique is descriptive and correlational research. Figure No.1 shows the theoretical model of the present research. F1 F2 F3 F4 Explorer Analyzer Defensive Reactive H 1 H 2 H 3 H4 F7 H 7 F8 Supply Chain Management H 5 H 6 F5 F6 Suppliers Collaboration and agreements with suppliers Figure 1. Theorical Model 4. Tables In the current research was conducted confirmatory factor analysis (CFA) in order to assess the reliability and validity of the measurement scales. Also, we used a structural equation model, in order to check whether the model structure is properly designed, and for this, we used the maximum likelihood method in EQS software version 6.1, on the other hand, reliability is been evaluated considering the coefficient Cronbach α and composite reliability index (IFC) (Bagozzi & Yi, 1988). Table 1 shows the values of the IFC exceed the recommended level of 0.7, which provides evidence of reliability (Nunnally and Bernstein, 1994; Hair et al, 1995) and suggests that the model provides a good fit as can be seen in the following results: S - BX2 = , df = 368, p = 0.000, NFI = 0.854, NNFI = 0.943, CFI = 0.948, and RMSEA =

5 The impact of the strategies in the supply chain management in Mexico manufacturing SMEs: An empirical study All items related factors are significant ( p < 0.05 ), the size of all the factor loadings are greater than 0.6 ( Bagozzi and Yi, 1988) and the variance extracted index (EVI) of each pair of constructs is superior 0.5 recommended by Fornell and Larcker (1981). Table 1. Analysis of internal consistency and convergent validity of the theoretical model Variable indic ato r t ro bus t Explorer Strategy (F1) Analyzer Strategy (F2) Defensive Strategy (F3) Reactive Strategy (F4) (F7) suppliers (F5) Collaboration and agreements with suppliers (F6) Supply Chain Management (F8) *** = p < C F > 0.6 carga factorial Load factor squared average lo ad factor 153 Error Prom error alpha cronbach > a 0.6 IF C > 0.7 Composite Reliability Index IV E > 0.5, variance extracted rate EE EE EE Σ EA EA Σ ED ED ED Σ ER ER Σ F F F F Σ CS CS CS CS CS CS CS CS CS CS CS Σ CS CS CS CS CS CS CS CS Σ F F Σ S-BX2 (df = 368) = ; p < ; NFI = 0.854; NNFI = 0.943; CFI = 0.948; RMSEA = a = Parameters related to that value in the identification process 0.407

6 Luis Aguilera Enriquez, Octavio Hernandez Castorena, Martha Gonzalez Adame Table 2 shows the discriminant validity across two test. First, with a range of 95% confidence level, none of the individual elements of the factor containing the value 1.0 (Anderson and Gerbing,1988). Second extracted variance between each pair of constructs of the model is superior to its corresponding IVE (Fornell and Larcker, 1981). Therefore, we can conclude that this research shows sufficient evidence of reliability and convergent and discriminant validity. Table 2. Discriminant Validity across two test Variable Supply Chain Management Supply Chain Management (0.453) Results We performed a structural equation model to test the conceptual model structure and contrast hypotheses, using the Explorer, analyzer, defensive and reactive, likewise for the Supply Chain Management, their relationship to the strategies, collaboration and agreements with suppliers. The nomological validity of the model was analyzed through the performance of the chi-square test, in which the theoretical model was compared with the measurement model (Anderson and Gerbing, 1988; Hatcher, 1994). Table 3. Structural relationship of Theoretical Model 154

7 The impact of the strategies in the supply chain management in Mexico manufacturing SMEs: An empirical study Hypothesis H 1: The more evidence explorative best strategic application in SMEs H 2: The more evidence analyzer, best strategic application in SMEs H 3: The higher the defense evidence, best strategic application in SMEs H 4: The more evidence reactive best strategic application in SMEs H 5: A greater strategy with suppliers, improved supply chain management in the SME H 6: A Greater collaboration and agreements with suppliers, improved supply chain management in the SME Structural Relation Stabdarized Coheficient Valor t Robust Explorer Strategy 0.989*** Analyzer Strategy 0.866*** Defensive Strategy 0.697*** Reactive Strategy 0.140*** suppliers Supply Chain Management 0.882*** Collaboration and agreements with suppliers Supply Chain Management 0.991*** FIT Sized S-BX2 = ; df = 360; p = ; NFI = 0.848; NNFI = 0.932; CFI = 0.940; RMSEA =0.059 H7: A better implementation of strategies, better supply chain management in the SME. Supply Chain Management 0.603*** The assumptions made in the present investigation reported results for that reveal results that are described below: With regard to the first hypothesis H1, the results presented in Table 3 ( β = 0.989, p < ), indicating exploratory strategies that have a positive impact on the strategies applied in SMEs. For the second hypothesis H2 results (β = 0.866, p < 0.001), indicating that deliveries analyzers have a positive impact on the strategies applied in SMEs. As for the third of the hypotheses H3, the results (β = 0.69, p < 0.001), indicating that the defensive strategies have a positive impact on the strategies applied in SMEs. On the fourth of the hypotheses H4, the results (β = 0.140, p < 0.001), indicating that reactive strategies have a slight impact on the strategies applied in SMEs. For a fifth of the hypotheses H5, the results (β = 0.882, p < 0.001), indicating that strategies with suppliers have a positive impact on the supply chain management in the SME. On the sixth of the hypotheses H6, the results (β= 0.991, p < 0.001), indicating that the agreements and collaboration with suppliers have a positive impact on the supply chain management in the SME. And finally for the seventh hypothesis H7, the results (β = 0.603, p < 0.001), indicating that the strategies have a positive impact on the supply chain management in the SME. 6. Conclusions Today, for the SME is necessary to implement strategies in all functional areas in administrative and operational and in this sense, the supply chain management is not exempt from this need. It is therefore important to note that manufacturing companies require a system that allows them to have a cash flow that facilitates materials through the implementation of strategies, avoiding the maximum delivery delay of the operational stoppage within organizations and have better collaboration and agreements with the commissary. For manufacturing SMEs, it is vital that the supply and management of material resources is efficient and reliable as they may be at risk related activities inventories, material flow control, transport control, control operating costs and of course the performance of such organizations which would put further at risk the fulfillment of customer deliveries. In this sense, the SMEs need to strengthen its strategy to detect business opportunities for planning exploration strategies more effective. Likewise, employers need to have better attention on being the first 155

8 Luis Aguilera Enriquez, Octavio Hernandez Castorena, Martha Gonzalez Adame to innovate because doing so competition would be at a serious disadvantage, likewise, entrepreneurs must have among its priorities the exploration of new markets to identify the immediate needs customers and with this information to be anticipating competition activities. However, it is important to mention that certainly innovate represents high risk for reasons related to the topic of investment and market preferences, something that the employer should consider in their strategic planning. With these references already described, it is important to note that on the other hand, employers have serious problems to anticipate customer needs by not having systems or mechanisms that enable them to provide quality this need and this puts them at a disadvantage in the strategies if competing firms can implement. Finally, it is important to consider that although vision and preparation are important employers in this manufacturing sector, there is no confidence to share the information handled internally with the procurement, this with leads to collaboration agreements and depend on some degree of information and interests that have at the moment which threatens business objectives and commitments to be taken with customers. In a business environment which is handled at present, have agreements and collaboration with the procurement is elementary and it is recommended that employers establish strategies that would maximize the information that both have for your business and business plans have a greater performance and business competitiveness. 6.1 Limitations of the study The present research work has been conducted with a sample of 160 SME companies located in the state of Aguascalientes, Mexico, which has been analyzed and measured through the use of a survey instrument type, the impact of the implementation of strategies supply chain management. 6.2 Future lines of research Since the activity in business is different depending on the line of business that these are, the implementation of strategies is elementary and in this sense, the research required to complement and assess the level of competitiveness and performance that this type of SME manufacturing companies currently has, likewise the levels of innovation in order to establish mechanisms to integrate or rethink entrepreneur implementing their business strategies to have better development and customer relationship is stable and long-term. References Abell D. E. (1980). Defining the business: starting point of strategic planning. N. J.: Ed. Prentice-Hall Englewood Cliffs. Anderson, J. and Gerbing, D. (1988). Structural equation modeling in practice: a review and recommended two-step approach, Psychological Bulletin, 13, Andrews, K. (1997). The Concept of Corporate Strategy. En N. Foss, Resources, firms, and strategies: a reader in the resource-based perspective (pp ). New York: Oxford. Ansoff, H. I. (1965). Corporate strategy. New York: McGraw- Hill. Bagozzi, R. and Yi, Y. (1988). On the evaluation of structural equation models, Journal of the Academy of Marketing Science, 16(1), Beal, R. M. (2000). Competing effectively: environmental scanning, competitive strategy, and organizational performance in small manufacturing firms, Journal of Small Business Management, 38(1), Bueno, E., Lizcano, J., and Casani, F. (1999) Formación de la estrategia empresarial: un análisis de las dinámicas del proceso estratégico. Revista española de financiación y contabilidad (100), Chandler, D. (1962). Strategy and Structure. M.T.I. Press, 464. Chopra, S. and Meindl, P. (2004). Supply Chain Management, Second Edition, Upper Saddle River, Prentice Hall. Chrisman, J., Hofer, CH. and Boulton, W. (1998). Toward a system for classifying business strategies, Academy of Management Review, 13(3), Christopher, M. (1992). Logistics and Supply chain management, Pitman Publishing, London. Cristopher, M. and Lynette, R. (1999). Supply Chain Strategy: Its Impact on Stakeholder Value, The International Journal of Logistics Management, 1(1), 1-10 Cooper, M.C. and Ellram, L.M. (1993). Characteristic of supply chain management and the implications for purchasing and logistics strategy, International Journal of Logistic Management, 4 (2), Demuner, M.R. and Mercado, S.P. (2011). Estrategia Competitiva y Tecnología de la Estructura Productiva en PyMEs Manufactureras de Autopartes del Estado de México. Estudio de Caso Múltiple, Panorama Socioeconómico, 29(42), 4-23 Denue, Inegi (2013). Instituto Nacional de Estadística y Geografía, Aguascalientes, México. 156

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