The Strategic Supplier Partnership in a Supply Chain Management with Quality and Business Performance

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INTRODUCTION

Over the last decades, Malaysian manufacturing companies have embraced a wide variety of management programs to improve product value and to enhance business performance. In addition, the increase of competition, global economy and the business challenges have made many Malaysian manufacturing companies to integrate diverse competitive strategies into the operation system. Due to intense business competition in the global arena, manufacturing companies need to increase their strategic competitiveness. These manufacturing companies can no longer be satisfied with only one traditional competitive advantage which they could have relied on previously. At present they have to create multiple possible niches to become more competitive and productive. An area that the manufacturing companies can focus on is the enhancement of their supply chain management (SCM) to optimize their outcomes. Interestingly, several researchers have suggested that the understanding and practicing of SCM is an essential prerequisite for staying competitive in the global race and for enhancing profitability (Li, Ragu-Nathan, Ragu-Nathan, and Rao, 2006; Wei, Liang and Wang, 2007; Kim, 2007; Li and Wang, 2007). Cagliano, Caniato, and Spina (2006) highlighted that a huge number of contributions to the operation management literature are now focused on how companies should integrate their activities with customers and suppliers, and how SCM practices should be aligned with the company strategy. Many organizations have begun to recognize that SCM is the key to building sustainable competitive edge for their products and services in an increasingly competitive marketplace today (Maheswari, Kumar, and Kumar, 2006; Li and Wang, 2007).

Supply Chain Management (SCM) is one of the most popular management concepts to impact the business and the logistics concept in the 1990s. The Problems relevant to the concept of SCM include (1) the lack of research on what it means to practice SCM, (2) how to implement a SCM program, and (3) how to measure the performance of a supply chain. Many definitions for the supply chain have been offered in the literature (Harrington, 1995; Davis, 1993; Hammel and Kopczak, 1993; Stevens, 1989). These definitions are too limited in their scope because they imply that the supply chain focuses on just manufacturing or logistics processes. Because this research examines the supply chain as an enterprise-to-enterprise model, the following definition for the supply chain is used: An integrated collection of organizations that manage information, product, and cash flows from a point of origin to a point of consumption with the goals of maximizing consumption satisfaction while minimizing the total costs of the organizations involved (Caplice and Sheffi, 1994).

A different set of metrics that capture all aspects of the supply chain must be developed. Caplice and Sheffi (1994) state that measures used to capture the performance of a transformational process fall into one of three primary dimensions: utilization, productivity, and effectiveness. A consortium of companies and academic institutions, under the guidance of Pittiglio, Rabin, Todd, and McGrath (1994), developed a comprehensive set of agreed-upon supply chain metrics that can be used as standards and can pass assessment using the eight criteria stated above. These measures fall into one of four categories: customer satisfaction/quality, time, costs, and assets.

Research has indicated that the firms that use a supply chain strategy might use different types of performance metrics than the firms that do not utilize the concept of supply chain (Chow, Heaver, and Henriksson, 1994). No research was found indicating whether the firms believed their measures for evaluating performance are effective, regardless of SCM implementation.

The strategic supplier partnership identifies optimum practices that can facilitate supply chain process alignment and integration. …