The impact of supply-chain management capabilities on business performance

• Published in: Supply chain management 2005-07, Vol.10 (3), p.179-191
• Main Authors: Tracey, Michael, Lim, Jeen-Su, Vonderembse, Mark A.
• Format: Article
• Language: English
• Subjects: Brand loyalty; Competition; Competitive advantage; Customer satisfaction; Customers; Impact analysis; Inventory; Inventory control; Logistics; Manufacturing; Order processing; Studies; Suppliers; Supply chain management
• ISSN: 1359-8546; 1758-6852
• DOI: 10.1108/13598540510606232

Purpose - The purpose of this article is to empirically test the impact of supply-chain management (SCM) capabilities on business performance so as to determine to what degree customer-oriented SCM issues influence competitive position and organizational performance.Design methodology approach - A rigorous methodology is employed to generate a reliable and valid measurement instrument. Responses from 474 manufacturing managers are then utilized to test a causal model using LISREL®.Findings - The results indicate significant positive relationships exist among three types of SCM capabilities (outside-in, inside-out, and spanning) and business performance (perceived customer value, customer loyalty, market performance, and financial performance).Practical implications - The article demonstrates that strategically developing SCM capabilities such as efficient inbound and outbound transportation, warehousing, and inventory control, production support, packaging, purchasing, order processing, and information dissemination enable a manufacturing firm to identify and take advantage of opportunities in the global marketplace.Research limitations implications - The sample was drawn from manufacturing firms in the USA across four SIC codes. Future studies could collect more extensive data to confirm, refine, and expand upon the model presented and the associated construct measures utilizing confirmatory factor analysis. Extending the research to include additional industries and firms from outside of the USA would enhance the generalizability and usefulness of the findings.Originality value - The paper statistically validates that managers should regard the cultivation of SCM capabilities as a proprietary resource that facilitates competitive advantage. It also contributes a concise instrument that may be used by academics interested in the areas of supply-chain management processes and firm performance.