Supply management capabilities, routine bundles and their impact on firm performance

Abstract

a b s t r a c tDespite the generally positive contribution of supply management capabilities to firm performance their respective routines require more depth of assessment. Using the resource-based view we examine four routines bundles comprising ostensive and performative aspects of supply management capabilitysupply management integration, coordinated sourcing, collaboration management and performance assessment. Using structural equation modelling we measure supply management capability empirically as a second-order latent variable and estimate its effect on a series of financial and operational performance measures. The routines-based approach allows us to demonstrate a different, more finegrained approach for assessing consistent bundles of homogeneous patterns of activity across firms. The results suggest supply management capability is formed of internally consistent routine bundles, which are significantly related to financial performance, mediated by operational performance. Our results confirm an indirect effect of firm performance for 'core' routines forming the architecture of a supply management capability. Supply management capability primarily improves the operational performance of the business, which is subsequently translated into improved financial performance. The study is significant for practice as it offers a different view about the face-valid rationale of supply management directly influencing firm financial performance. We confound this assumption, prompting caution when placing too much importance on directly assessing supply management capability using financial performance of the business.

The effect of supply chain capabilities on performance of food companies.

“…Many factors may influence financial performance of companies and each company tries to improve its business processes through selecting a set of effective ways [5]. According to Day et al [6], two factors of supply chain product quality, delivery quality, reduction of cycle time, and reduction of costs. In this way, supply chain management has three main competencies:…”

“…This variable can be measured through dimensions such as priority to improve quality of services, emphasis on quality control and total quality management, importance of reduction of errors in service delivery, completion of service delivery process and finally reduction of service time [10].Another factor which directly affects financial and operational performance of companies is supply chain management capabilities. Superior performance depends on the ability of a manufacturing firm to integrate completely with its partners throughout the supply chain [6]. Supply chain management capabilities refer to the process of interaction and collaboration between suppliers, manufacturers and customers to achieve common goals.…”

“…Another factor which directly affects financial and operational performance of companies is supply chain management capabilities. Superior performance depends on the ability of a manufacturing firm to integrate completely with its partners throughout the supply chain [6]. Supply chain management capabilities refer to the process of interaction and collaboration between suppliers, manufacturers and customers to achieve common goals.…”

Is Chain Affiliation a Strategic Asset or Constraint in Emerging Economies? Competitive Strategies and Performance in the Russian Hotel Industry

“…In this study, we apply it as a subjective variable measuring the respondent's perception on its Revenues per Available Room compared to its competitors on an ordinal scale of 1-7 (from "much below" to "much above"). Managers' perceptions of performance is an appropriate measure of actual performance, as several studies have affirmed a high and statistically significant relationship between perceived and actual measures of performance (recently e.g., Day et al 2015). Similar measure of performance has been also used in a recent study of Wilke et al (2019).…”

The Effects of Trust and Capability in Supply Chain on Firm Performance through Supply Chain Agility and Collaborative Advantage

“…In order to measure trust in the SC, the trust scale suggested by Doney and Cannon (1997) together with 8 questions was used (Doney & Cannon, 1997). In order to measure SC capability, the capability scale suggested by Day et al (2015) was used (Day, Lichtenstein & Samouel , 2015). The scale suggested by Cao and Zhang (2010) was utilised to measure collaborative advantage.…”