Multi-Group Moderating Effect of Goods Produced in the Manufacturing Industry: Supply Chain Management Context

Abstract

The purpose of this research paper is to explore the moderating effects of goods types produced on the relationship between supply chain management and performance of the manufacturing industry.

Based on the review of literature relating to supply c h a i n m a n a g e m e n t a n d p e r fo r m a n c e o f manufacturing firms, a conceptual model was framed and the resulting hypotheses were empirically tested using structural equation modelling (SEM). Primary data was collected using the personal interview method from the executives of manufacturing firms by administering a well structured questionnaire. This data was tested for the moderating effects of goods produced by manufacturing firms. The finding depicts that the types of goods produced by manufacturing firms act as a significant moderating effect on the relationship among supply chain management and performance.

Introduction

The value of the Indian consumer market is almost 250 billion USD. The Indian logistics segment is nearing intonation and value of the world logistics industry is almost USD 3.5 trillion. The cost of logistics generally ranges from 9 to 20% of GDP. The Indian logistics market contributes almost 13% of GDP and the market is expanding at a whopping rate of 20% (Sahay and Mohan, 2003). India is attracting enormous FDI, especially in automobile and electronics industries. This is projected to have a favourable effect on growth of the country. The Government’s proposal to allow FDI in the retail sector is anticipated to have a major impact on the economy. Furthermore, development of organised retailing and agricultural processing activities is expected to exert a significant effect on economic growth. The country is highly blessed with enormous human, technological and methodical resources. High entrepreneurial talent is available abundantly in the country. Developments in the economy such as economic reforms, growth in productivity, cheap credit, rising income of the middle class, introduction of Value Added Tax (VAT) and a growing educated middle class fuels consumption, which enhances production, and subsequently the growth of the economy. The challenges posed by the aforementioned discussion can be well countered by Indian manufacturing enterprises only if their quality and service is dramatically enhanced. Towards this endeavour, it becomes inevitable to address the deficiencies encountered by manufacturing enterprises on their SCM front. Only this will render the Indian manufacturing enterprises viable and competitive in the liberalized and globalised scenario. In light of the above situation, it has become inevitable for business firms to focus strictly on SCM to ensure that they are not eroded by the highly competitive global environment. Consequently, Indian companies have initiated measures placing utmost importance to master the SCM process. Numerous research studies have been conducted in the field of SCM and Indian enterprises have to comply with the requisites spelt out in these research studies about their respective SCM practices and adopt an effective SCM which is compatible with the Indian scenario. Innovative, unique and superior supply chain practices adopted by some Indian cases and companies such as Amul, the Shakti project of Uniliver, Dabbawalas of Mumbai, Asian Paints and Marico industries have enabled their companies to outsmart their competitors and manage better profitability and counter the extensive competition waged in the current LPG scenario.

Despite numerous research studies involving SCM being conducted in the western countries, Indian enterprises have not tuned their SCM process at par with their western and other Asian counterparts. This is attributed to the fact that foreign studies on SCM have yielded strong theoretical knowledge but this cannot be replicated to the Indian context blindly. Results of the western authors have to be suitably customized to aptly suit the Indian environment. This requires a comprehensive study on the various factors which impact SCM practices of Indian firms and the inter-relationships of these factors have to be studied closely by giving due importance to the Indian context. Consequently, studies concentrating on the postliberalization SCM functions of manufacturing firms have started gaining momentum. The proposed research aspires to address the research gap existing in India by providing a theoretical framework regarding the various components related to SCM in India and their impact on the organizational performance of the manufacturing firms. The research article is structured as follows: First, we have framed the theoretical support of this research work and prose of the conceptual framework. Then, we provide the research methodology and results. In the following section, we discuss the results of this study. Finally, the conclusions of the study are presented along with their potential implications for managers and further research.

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