Evaluating the Effectiveness of Supply, Product, and Distribution Factorson the Organizational Performance by Using Structural Equation Modeling

Fatemeh Abdoli Zafarghandi

MSc, Department of Industrial Engineering, Islamic Azad University Qazvin Iranabdoli.fatemeh@yahoo.com 

Mohammad Mahoud

Teaching Assistant, Department of Construction and Engineering Management, MehrAlborz Universitymohammad_mahoud@yahoo.com 

Shayan Hojatpanah

Teaching Assistant, Department of Construction and Engineering Management, MehrAlborz Universityshayan_hojatpanah@yahoo.com 

Abstract

A supply chain includes all facilities, tasks, and activities that areinvolved in the production and delivery of a product or service fromsuppliers to customers. The supply chain management (SCM)coordinates all these activities so that the customers can obtain highquality products and reliable services in minimum costs. Supply chainmanagement can, in turn, provide competitive advantage for theorganization. Effective supply-chain management requires acomprehensive perspective of modules. In this paper, a multi-stagestructure for a supply chain network that includes suppliers, distributioncenters and related issues is being developed. The main feature ofdecision is based on the integration three basic steps of a tactical problems that involves from procurement of raw materials from suppliersto a finished production and final product distribution at the factories. Inaddition, two our main goals are to minimize overall supply-chain costsand also minimize the average time delay to distribution centers. Theobtained mathematical model is a single-objective linear programmingmodel. This paper focuses on integrating and minimizing the total cost inthe supply chain logistics.

Keywords:

Supply Chain Management (SCM), Supply, Production andDistribution, Organizational Performance, Logistics, Structural Equation Modeling.

1-

Introduction

A supply chain includes all facilities (facilities), tasks, and activities that are involved in the productionand delivery of a product or service from suppliers (suppliers and their suppliers) to customers (and theircustomers). and supply chain includes supply planning and management, materials provisions, the production planning service, storage, inventory controlling and distributions, delivery and taking theservices to the customers. (Balo, 1999). the supply chain management coordinates all these activities sothat the customers can obtain high quality products and reliable services in minimum costs. Mostmanufacturing institutes are designed as production networks and distribution sites. One of their mainduties is to provide raw materials and turn them into final and intermediate products and then deliverthem to customers. supply chain management runs these networks. The short-term goal of supply chainmanagement is primarily to increase the productivity, inventory reduction, and total cycle time. Whileits long-term goal is to increase customer satisfaction, market share and profit for all involvedorganizations in the supply chain. For receiving this goal at this essay, we intend to analyze theeffectiveness of supply men, product, and distribution on organization performance. because There isone exact coordination between suppliers, producers, customers to achieve these goals. supply chainmanagement involves integrating supply chain activities as well as information flows by improvingchain relationships to achieve a reliable competitive advantage. (Stevens, 1989) In this research we wantto focus on relationship between the components of integrated supply chain management. When wereview the pervious study, we view different structures of integrated supply chain management, most ofresearchers have ignored to analyze the relationships and effect between 3 main components whichnames supply, product and distributions.

2- Explaining the problem

In this research we want to analyze the impact of any supply, production and distributions factor onorganization performance by using structural equation approach, this model has also described in oneconceptual model.

2-1-

The main goals of this research

•

Investigating the Impact of Supplying Goods on Organizational Performance

•

Investigating the effect of commodity production on organizational performance

•

Investigating the Effect of distribution of goods on organizational performance

•

The functional performance of this research is to provide suggestions to improve theorganizational performance based on the components of supply, production and gooddistributions

identification the impact of supply, production, and distribution components in theorganizational performance is ambiguous part of this research which can be analyzedexpansively in this research.

 3- Supply chain introduction:

Supply chain integration can help improve performance and the efficiency of supply chain network.Indeed, supply chain involves to manage supply chain from the supplying of raw materials production togood distributions. In this research we firstly try to examine the factors affecting the supply chainnetwork and the organization performance. In this research we try to examine the factors affecting onsupply chain network and performance organization.

4- Research methodology:

The first stage it is carried out in the form of a descriptive design and survey method by using structuralequation. The information related to effective factors on organization performance are extracted through

a questionnaire. Then, we try to evaluate the hypotheses in this research by using statistical analysis.The present research is an applied kind and attempts to analyze the impact of supply chain factors onorganizational performance by using structural equations analysis.

4-1- Method description and data collection tools:

The

data related to relationship analysis are collected by using qualitative questionnaires. These data arelikert scale then converted to qualitative then transfer to structural equation. The field method will beused to collect the research data. The method of data collection is fieldwork and this tool is aquestionnaire. The questionnaire has 19 questions about the supplying raw materials at reasonable prices, creating qualitative products and getting final products to distribution channels, wholesalers andretailers and final customers and final organizational performance. The data gathering tools are aquestionnaire with 5 likert spectrum which is related to research variables. The questionnaire validity ismeasured by expert opinions and its reliability is analyzed through the Cronbach alpha and SPSSsoftware.

4-2- Statistical population and sample size

The statistical population in this study is who all those active in supply chain management. It isimpossible to gather data from the entire

statics’

 populations. Therefore, the Cochran formula is used todetermine the sample size. The Cochran formula is used to calculate sample size.

4-3- Supplying raw materials for production

In this paper, the questionnaire includes measuring the effect of supplying raw materials on the production of high-quality products and finally improving organizational performance and it consists of5 questions used in hypothesis 1 and 2. (Seibel Fest 1976)In the above formula, the maximum acceptable error (d) is equal to 0.1, the confidence coefficient is0.90, t = 1.96, and the p and q values are each equal to 0.5 and the community size = N. the P-value isequal to T 0.5. Because if P = 0.5 = n, then it reaches its maximum value, which will cause the sampleto be large enough (Sarmed et al., 2009)

4-4- Perpetuity questionnaire

Cronbach's alpha coefficient was used to check the questionnaire Perpetuity. Cronbach's alphacoefficient was developed by Cronbach and is one of the most important methods to measure thereliability or Perpetuity questionnaire. The purpose of questionnaire reliability or 

Perpetuity is that if theattributes are remeasured by the same instrument and under the same condition at different times, theresults are almost identical. Cronbach's alpha is generally calculated by using one of the fol

In this relationship k is the number of questions, S

I

is the variance of the i-th question,

is the totalvariances. C is the mean of covariances between questions,

V 

 is the varinces of question meaning.(Allen & Yen, 2002)Obviously, as the Cronbach s alpha index is closer to one, the internal consistency between questions becomes more and as the result the questions will become more homogeneous. Cronbach has suggestedthe result of 45% low, 75% moderate and acceptable and 95% high. (Cronbach, 1951) It is obvious ifthe alpha value is low, it should be checked by eliminating which question, it can be increased.

4-5- Data analysis methods

As stated, this research consists of two steps. In the first stage, the analysis is based on structuralequation modeling. Structural Equation Modeling is a very powerful and multi-variable analysistechnique of the multivariate regression family and is more precise about the extension of the "generallinear model" Which allows the researcher tests a set of regression equations simultaneously. StructuralEquation modeling is a comprehensive approach to test hypotheses about the relationships betweenobserved variables which sometimes called covariances structural analysis, causal modeling andsometimes is called LISREL (linear structural relations). (Hooman 1384,11)

4-6- Conceptual modeling of first part

Analyzing the structural equation and finding equation by using LISREL software is to answer thefollowing questions:

•

How can the supply chain issue be modeled as integrated?

•

What is the effect of supplying goods on the organizational performance?

•

What is the impact of production on the organizational performance?

•

What is the goods distribution effect on the organization performance?Also, by using T-test at the 0.95% significant level the following assumption are analyzed based on theweigh coefficient of structural equations analysis, the following assumption are considered:

•

Good supply has the direct and positive impact on organizational performance.

•

Good product has the direct and positive impact on organizational performance.

•

Good distributions have the direct and positive impact on organizational performance.

5- The conceptual model

The conceptual model of this chapter contains hidden variables. Visible variables are used to measurethese hidden variables. For this purpose, a questionnaire has been designed and each of its terms refersto one of the hidden variables. These variables are named visible ones.

5-1- Questionnaire Reliability

The purpose of questionnaire reliability is that if one attribute is measured by the same instrument underthe same conditions at different times remeasured, the results become almost identical. These test resultsare done on the whole questionnaire and on individual items as follows. The presented tables have been extracted from SPSS software

T-Test ResultAssumption

Result Test

T-Value

Good supply has the direct and positive impact on organizational product

Accept

8.99

Good supply has the direct and positive impact on organizational performance

Accept

4.62

Good product has the direct and positive impact on distribution

Accept

6.27

Good product has the direct and positive impact on organizational performance

Accept

5.85

Distribution product has the direct and positive impact on org. performance

Accept

8.336- Conclusion

One of the strategic actions in supply chain management is trying to create an efficient and integratedsystem

that the effects of changes occurs in one loop or more, it is identified in the other loops. Forexample, if customers demand changes at each level, the pervious parts of chain including distribution,sales, warehouse, production, warehouse of raw materials and suppliers at different levels should feelthis change. and tries to adapt themselves with new conditions. Altering in customer demand may beconsequence of technology advancement, introduction products with superior quality by competitors,economic fluctuation in the society. The quick organization reaction that produces our product orservice in the supply chain can be a guarantee our success and continued presence of the organization inthe market. In this research, 5 hypotheses have analyzed based on structural equations as well asstatically test.The first hypothesis is to examine the direct and positive impact of supplying goods on organizational product, the first hypothesis is to examine the direct and positive impact of supplying goods on theorganizational product. And the supply of goods has a direct and positive impact on the production ofthe organization. This hypothesis is accepted. In fact, it can be said that the supply of goods has a directand constructive impact on the production of an organization and increases production. Supply plays animportant role in production. Whatever the supply of goods at the right time with high quality and cost,it increases the quality of production in order to achieve this, the needs and requirements must beaccurately communicated to the suppliers.The second hypothesis examines the direct and positive impact of supplying goods on organizational performance. The supply of goods has a direct and positive impact on the performance of theorganization. This hypothesis is accepted and the supply of goods at the right time with high quality willincrease the performance of an organization. If the supply of goods at the right time and quality at thewill make profit and Attracting customers and reducing costs.The third hypothesis examines the direct and positive impact of commodity production on thedistribution of the organization. The production of goods has a direct and positive effect on thedistribution of the organization. As the result the production of the product is made with high quality ata given time with less waste at the expected cost. we can deliver them to in a timely manner, with the best quality and service.The next hypothesis examines the direct and positive impact of commodity production on theorganization's performance. The production of goods has a direct and positive impact on the performance of the organization. The production of goods has a very important impact on attractingcustomers and reducing costs and profits. It should be noted that the production of goods with predictedcosts and quality and according to the needs of customers at a given time should be produced that willincrease the performance of the organization.

The next hypothesis is related to the effect of distribution of goods on the company's performance.Distribution of goods in the supply chain is as important as supply and production, in fact, without any proper distribution, all efforts at the stages of production and supply of raw materials will be in vain.This hypothesis has been investigated in this study and this hypothesis was clearly accepted bystatistical analysis. In fact, as the result we indicate the correctness of all the hypotheses presented inthis study.

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