Impact of Supply Chain Management Practices on Competitive Advantage in Manufacturing Companies of Khuzestan Province

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1 Impact of Supply Chain Management Practices on Competitive Advantage in Manufacturing Companies of Khuzestan Province Moslem Ghatebi Department Of Accounting, Islamic Azad University, Shoushtar Branch, Shoushtar, Iran Elham Ramezani Department of Business Management, Islamic Azad University, Andimeshk Branch, Andimeshk, Iran Mohammad Ali Enayati Shiraz Department of Industrial Management, Islamic Azad University, Andimeshk Branch, Andimeshk, Iran Abstract Understanding and implementation of supply chain management is a necessary condition to remain competitive in the global competition and improving profitability. This study in term of aim is applied and in term of implement is descriptive and method of data collection is field. The research population is manufacturing companies in Khuzestan province and sampling method is Stratified random sampling. In present research, questionnaire was used to survey managers and experts views in manufacturing companies of Khuzestan province. For data analysis is used Pearson's correlation coefficient. The result obtained show that there is relationship between supply chain management practices and competitive advantage in Khuzestan province's manufacturing companies. Keywords: Supply Chain Management Practices, Competitive Advantage, Manufacturing Companies 1. Introduction Compete in global markets will expand in 1990s, challenges creates related to product and service offerings to the right place, at the right time, with the lowest cost and highest quality. Studies showed that approach of supply chain management (SCM) used increasingly as an opportunity to achieve these goals by many organizations. Therefore, understanding and implementation of supply chain management is a necessary condition to remain competitive in the global competition and improving profitability (Zuckerman, 2004). Organizations need materials, equipment, facilities and suppliers because customers can obtain products and services in the shortest possible time, with minimum cost and high quality. Therefore performance of an organization by other organizations that make the supply chain will be affected. It seems that supply chain management is a new strategy to gain a competitive advantage (Tummala et.al, 2004, p507). The supply chain encompasses all activities associated with the flow and exchange of goods and services from raw material stage to the final product usable by the client and supply chain management emphasis on integration of supply chain activities and information flows associated with them to achieve competitive advantage of continued and reliable through improved supply chain relationships (Zuckerman, 2004). Since the methods of supply chain management is different, thus in this study is tried to investigate impact of supply chain management practices to obtain competitive advantage. So that main question is: Which has practices of supply chain management (SCM) impact the competitive advantage in Khuzestan province's manufacturing companies? 2. Literature Review 2.1. Competitive Advantage Competitive advantage is one factor that an organization is able to create a state of defense against competitors and includes a feature that allows an organization to distinguish itself from its competitors (Li et.al, 2006, p111). The concept of competitive advantage is directly related to desired value of the customer (Mehri & Hosseini, 2004). Competitive advantage includes set of capabilities and factors that always demonstrated better performance of company than competitors (Sadri & Lees, 2001, p108). In other words, competitive advantage is factors or a combination of factors that led to very successful organization than other organizations in a competitive environment and competitors cannot easily imitate it. Therefore, to achieve a competitive advantage, an organization must also pay attention to their external position and internal capabilities (Barny, 1999, p101) Practices of Supply Chain Management (SCM) Practices of SCM define as a series of activities that is done to promote effective management of a supply chain organization. Several methods for supply chain mentioned by several writers and scholars that according to importance, five dimensions of SCM methods including strategic relationships with suppliers, customer COPY RIGHT 2013 Institute of Interdisciplinary Business Research 269

2 relationship, level of information sharing, quality of information systems and internal lean practices should be noted. These five methods will be covered top flow the supply chain (strategic cooperative partnership with suppliers) and flow down the supply chain (customer relationship) and the flow of information throughout the supply chain (the share information reporting and quality of sharing information) and process of the internal supply chain (internal lean methods) (Li et.al,2oo6,p109) Strategic Partnerships with Suppliers Nowadays organizations have found that if they worked together, total interest income is over the situation that they work without coordinating with related agencies (Swink et.al, 2007, p151). Strategic partnerships with suppliers are organized efforts to create and maintain of a network of qualified suppliers. This effort includes all activities that are needed to improve the current performance of suppliers. Strategic partnerships with suppliers have been designed to similar the strategic and operational capabilities of separate organizations with suppliers to help them to achieve significant benefits. Strategic partnership emphasizes direct relationship and long-term and encourages mutual planning and efforts to resolve problem. Supplier organizations can work together more closely and eliminate useless time and effort. Effective partnerships with suppliers can be critical factor to guide supply chain management (Li et.al, 2oo6, p110). The main objective of strategic partnerships with suppliers is increasing the functional capability desired supplier (Rosenzweig, 2003, 440) Level of Information Sharing Information sharing refers to ability of enterprises to share knowledge and information with supply chain partners with effective and efficient manner. Information sharing in interactive system of supply chain includes information between direct partners and all network of supply chain. For effective and efficient use by partners is needed sharing information. The level of information sharing is closely linked with accountability and efficiency (Rahmanseresht & Afsar, 2008). Supply chain partners that exchange information regularly able to work together as a single key. They are better able to understand the needs of the final consumer and hence are able to respond quickly to changing market (Li et.al, 2oo6, p120). Effective use of relevant and timely information by all the functional elements in the supply chain is considered as a competitive factor and distinctive (Ahmadi, 2005) Quality of Information Sharing Sharing Information between members of the supply chain should be from reliable source and updated, accurate, timely and credible exchange (Li et.al, 2oo6, p120). Providing and transforms raw material to a product or service and delivers it to the customer is activities that is done in the supply chain. Overall planning of supply and demand, raw material procurement, production planning, inventory control, warehousing, distribution of products and management of information is activities in the supply chain. Hence manufacturing organization in the supply chain should be able to consider inventory demand and according to the number products in stock identified a fraction number the product and do production planning. By determine production schedules, do raw material supply and the schedule of production, distribution of products as well is planned (Chin S. Ou et.al, 2010, pp ) Customer Relationship Customer relationship consists of all the ways that will be used for the purpose of controlling and managing customer complaints, creating long-term relationships with consumers and to improve consumer satisfaction. Also customer relationship management as an important component of SCM procedures has been used and is among the most stable benefits. Nowadays the development of customization and customer expectations lead to a period that customer relationship management is vital to the survival of the company. Good relationships with members of the supply chain, including customers are required to run successful SCM applications. Close relationships with customer organizations enables to distinguish their products to competitors, Retain customer loyalty and this value is protected largely to consumers (Li et.al,2oo6,p121). Customer relationship goals can be mentioned as follows :( Niknia, 2007, p53). Identifying new business opportunities Reduce missed opportunities Reducing customer defection creating customer loyalty Improve customer service Improve organization appearance Reduce costs COPY RIGHT 2013 Institute of Interdisciplinary Business Research 270

3 Increase revenue decrease rework marketing Internal Lean Practices Another supply chain management practices is the use of internal lean practices. Internal lean practices refer to consume less system resources uses with the same speed mass production and offers greater variety to customers. One of the fundamental ideas in internal lean practices is removed surplus (Hassanzadeh & et al, 2010). The most famous of internal lean practices can be mentioned timely and lean produce. Production of lean and timely is production system that its aims are to optimize processes and production process by reducing waste and other inefficient factors. This attitude for the first time in 1950 in Toyota plant by Ohno (Technical Deputy of Factory) was designed and implemented (White, 1993, p40). 3. Research Methodology This study in term of aim is applied and in term of implement is descriptive and method of data collection is field. The research population is manufacturing companies in Khuzestan province and sampling method is Stratified random sampling. In present research, questionnaire was used to survey managers and experts views in manufacturing For validity of questionnaire is used content validity and for reliability of questionnaire is used Cronbach's alpha coefficient. Cronbach's alpha coefficients for the variables in the questionnaire is obtained higher than 70%, thus questionnaire is reliable. For data analysis is used Pearson's correlation coefficient. 4. Data Analysis First hypothesis: there is relationship between strategic supplier partnerships (SSP) with competitive advantage in manufacturing According to the obtained results was observed that correlation coefficient between strategic supplier partnership and competitive advantage is equal to 58/7 percent and given the level of sig in this test the obtained less than 0/05, thus research hypothesis is confirmed and there is relationship between strategic supplier partnerships with competitive advantage in manufacturing Second hypothesis: there is relationship between Customer Relationship (CR) with competitive advantage in manufacturing According to the obtained results was observed that correlation coefficient between CR and competitive advantage is equal to 43/3 percent and given the level of sig in this test the obtained less than 0/05, thus research hypothesis is confirmed and there is relationship between CR with competitive advantage in manufacturing Third hypothesis: there is relationship between level of information sharing (LIS) with competitive advantage in manufacturing According to the obtained results was observed that correlation coefficient between LIS and competitive advantage is equal to 43/3 percent and given the level of sig in this test the obtained less than 0/05, thus research hypothesis is confirmed and there is relationship between LIS with competitive advantage in manufacturing Fourth hypothesis: there is relationship between quality of information sharing (QIS) with competitive advantage in manufacturing According to the obtained results was observed that correlation coefficient between QIS and competitive advantage is equal to 53/4 percent and given the level of sig in this test the obtained less than 0/05, thus research hypothesis is confirmed and there is relationship between QIS with competitive advantage in manufacturing Fifth hypothesis: there is relationship between internal lean practices (ILP) with competitive advantage in manufacturing According to the obtained results was observed that correlation coefficient between ILP and competitive advantage is equal to 48/2 percent and given the level of sig in this test the obtained less than 0/05, thus research COPY RIGHT 2013 Institute of Interdisciplinary Business Research 271

4 hypothesis is confirmed and there is relationship between ILP with competitive advantage in manufacturing 5. Conclusions and Recommendations 1) Test results indicate that strategic partnerships with suppliers can impact on competitive advantage. Lowest mean 3/64 is related to participate in the program to improve the performance. Therefore following recommendations for further strengthening the strategic partnership of suppliers in manufacturing companies are offered: Establishing training courses and learning supplier (eg statistical process control techniques to improve the quality and delivery JIT) and upgrade product and process technology to create value added for both parties. 2) Test results indicate that Customer Relationship has impact on competitive advantage. About variable Customer Relationship the lowest mean 3/98 is related to expectations of customers. It is explained further strengthen the customer relationship in manufacturing company can be used to identify customer needs approaches. It is need to create and activate the necessary mechanisms in order to interact, collect data and analyze it to understand and handle customer's requirements and expectations. Discussion directly with customers, get feedback from employees, analyze customer complaints and comments, market research, expert programs, ask questions via questionnaires, telephone and interviews, discussion with groups consumer protection, investigate the attitude of visit and the customer and the company's major customers, each of them can be useful in order to make this knowledge. Also managers of manufacturing companies must measure and assess customer satisfaction continually In order to predict a customer's future expectations and provide the conditions necessary for customers order to be accepted as their representative. However, customers willing to give us this information just when know we use them and make efforts to update information, registration requirements, demands and customer satisfaction that is constantly changing, it will not end. 3) Test results indicate that level of information sharing has an impact on the competitive advantage separately but integrated with other supply chain management practices on competitive advantage of the present investigation is ineffective. Lowest mean 3/24 is related to share of trade changes. Thus following suggestions to improve the level of information sharing between partners and manufacturing companies are offered: Managers of manufacturing companies make aware business partners any changes related to their business before making. Possible corporate managers are committed to share information and knowledge associated with business processes with business partners and make aware of issues that affect their business. 4) Test results indicate that Quality of information sharing has an impact on competitive advantage. Lowest mean 3/24 is related to accuracy of the information. In order to further strengthen information quality is necessary that managers of manufacturing companies share Information of accurate, complete, reliable and timely with supply chain partners. 5) Test results indicate that internal lean practices affect the competitive advantage. Lowest mean 3/85 is related to the delay in setting up the production line. Therefore the following recommendations to strengthen internal lean practices in manufacturing companies will be provided: Can reduce delays in setting up the production line through simplify and standards of tools, simplify and standards of procedures. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 272

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