The Effect of Supply Chain Management Practices on Supply

Chain and Manufacturing Firms’ Performance

Purpose – This paper theorises and develops seven dimensions (strategic supplier partnership,
level of information sharing, quality of information sharing, customer service management,
internal lean practices, postponement and total quality management) into a SCM practices
(SCMPs) construct and studies its causal relationship with the conceptualised constructs of
supply chain performance (SCP) and manufacturing firms’ performance (MFP). The study
also explores the causal relationship between SCP and MFP.
Design/Methodology/Approach – Data was collected through a survey questionnaire
responded by 249 Jordanian manufacturing firms. The relationships proposed in the
developed theoretical framework were represented through three hypotheses: H1: there is a
significant relationship between SCMPs and SCP; H2: there is a significant relationship
between SCMPs and MFP; and H3: there is a significant relationship between SCP and MFP.
Linear regression, ANOVA and Pearson correlation were used to test the hypotheses. The
results were further validated using structural equation modelling (SEM).
Findings – The results indicate that SCMPs have a positive effect on SCP (H1), which in
turn also positively affect MFP (H3). Despite this intermediary positive effect of SCMP on
MFP through SCP, the study also suggests that SCMPs have a direct and positive effect on
MFP (H2).
Practical Implications – This study provides hard evidence indicating that higher levels of
SCM practices can lead to enhanced supply chain and firms’ performance. It also provides
SC managers of manufacturing firms with a multi-dimensional operational measure of the
construct of SCMPs for assessing the comprehensiveness of the SCM practices of their firms.
Originality/Value – This study is among the very first SCM researches conducted on the
Jordanian manufacturing sector, particularly, in relation to the practices that manufacturing
firms in this country need to adopt to make their supply chains a solid competitive vehicle for
their development. The results have broader implications for all manufacturing companies,
particularly in developing economies where the growth of manufacturing and the
development of integrated supply chains are key stages in economic development.

Keywords: Supply chain management, practices, manufacturing firms’ performance, supply

chain performance.

Paper Type: Research Paper

1. Introduction
Supply chain management (SCM) has nowadays become a crucial strategy for firms to
enhance their profitability and stay competitive (Li et al., 2006). Thus, SCM has been
recognized as an important phenomenon that has generated extensive interest among

1
managers and academic researchers. Thus, over the last decade, scholars have increased the
degree of attention paid to SCM. This has resulted in a rich stream of research, mainly
focused on particular aspects of the field of SCM that include, among others; supplier
selection (e.g. Igarashi et al., 2013; Inemek and Tuna, 2009), supplier involvement (e.g.
Johnsen, 2011), supplier alliances (e.g. Kannan and Tan, 2004; Lee et al., 2009), supplier
management (e.g. Reuter et al., 2010), upstream supply chain related research (e.g.
Oosterhuis et al., 2012; Finne and Holmström, 2013), manufacturer and retailers linkages
(e.g. Li and Zhang, 2015), supply chain resilience (e.g. Carvalho et al., 2014), SCM
practices (e.g. Zimmermann and Foerstl, 2014; Li et al., 2006; Li et al., 2005), sustainable
and green supply chains (e.g. Choi, et al., 2016; Kumar et al., 2015), etc.
The wide and diverse stream of research conducted into different aspects of SCM may be
explained by the interdisciplinary nature of this subject area. Therefore, SCM is considered
as a multidisciplinary field that has been explored from many different perspectives
(Papakiriakopoulos and Pramatari, 2010). Mainly, the concept of SCM has been considered
from two alternative perspectives: purchasing and supply management. These perspectives
emphasize purchasing and materials management as a basic strategic business process, rather
than a narrow specialized supporting function (Narasimhan et al., 2008; Sandberg, 2007);
transportation and logistics management, which focuses on integrated logistics systems (e.g.
inventory management, vendor relationships, transportation, distribution, warehousing and
delivery services) that lead to inventory reduction both within and across firms in the supply
chain (Banomyong and Supatn, 2011; Cook et al., 2011).
However, despite the rich stream of research in this subject area, Cigolini et al. (2004) and
Li et al. (2006) consider that scholarly research has been limited in contributing to the
practice of SCM. They have attributed this not only to the interdisciplinary nature of SCM
but also to its evolutionary characteristics, which according to them have created a conceptual
confusion in its understanding. Although these factors may have contributed in the creation of
a gap between the SCM theory and its applicability to practice, the generic nature of the
research conducted may have also played a significant role on this. Thus, studies of the
precise SCM practices adopted by specific countries and industries allow their distinctive
characteristics to be understood within particular contexts. This therefore contributes in
bridging the gap between the SCM theory and its application. In this line, various SCM
studies have been conducted in various sectors such as automobile (Blos et al., 2009; Zhu et
al., 2007), pharmaceutical (Papalexi et al., 2016), toy (Wong et al., 2005), apparel/textile
(Abylaev et al., 2014), chemical (Foerstl et al., 2010), telecommunication (Reyes et al.,
2002), agriculture/food (Dani and Deep, 2010), aerospace (Sinha et al., 2004), electronics
(Blos et al., 2009), construction (Saad et al., 2002), etc. Similarly, studies of various SCM
aspects tend to be focused on developed countries and their interaction with developing
economies as sources of supply as well as on some developing nations such as China (Zhu et
al., 2007), Brazil (Blos et al., 2009; Diniz and Fabbe-Costes, 2007), Taiwan (Chow et al.,
2008) and Kyrgyz Republic (Abylaev et al., 2014). Taken together, these studies present the
efforts made by researches to understand SCM practices within specific industrial and
country contexts. However, despite this, there is a lack of studies on SCM in relation to the
practices that manufacturing firms in developing countries need to adopt to make their supply
chains a solid competitive vehicle for their development. Jordan’s economic, political and
geographical characteristics as well as its current state of expanding manufacturing sector,
and potential gateway to North Africa and the Middle East, makes the supply chains of its
manufacturing sector different to all those previously studied (e.g. Zhu et al., 2007; Blos et
al., 2009; Abylaev et al., 2014). Jordan’s developing economy dominated by manufacturing
SMEs and with limited but developing transport infrastructure, makes it a unique context that

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demands further investigation. This justifies the opportunity of studying the SCM practices of
the Jordanian manufacturing sector, in its own right, for the SCM theory to be able to
understand its particular characteristics and in this way contribute to its practice.
The purpose of this study is therefore to empirically test a framework identifying the
relationships among the SCM practices of Jordanian manufacturing firms, the performance of
their supply chains, and the performance of their whole firm. To conduct this study, SCM
practices are defined as a multi-dimensional concept, including both sides of the SC (i.e.
downstream and upstream). The seven SCMPs considered in this study were developed,
tested and validated in the literature by researchers such as Li et al. (2006), Green Jr et al.,
(2008), Tan (2002) and Cook et al. (2011). These practices are considered crucial, and they
cover both upstream and downstream sides of the SC. Using data collected through a survey
questionnaire, operational measures developed for the constructs are empirically tested.
Inferential statistics and structural equation modelling (SEM) are used to test and validate the
hypothesized relationships. This study thus aims to help researchers, and specifically,
manufacturing firms to better understand the scope and activities associated with their SCM
practices that have a prominent role not only on the performance of their SC but also the
entire firm. By considering both sides of the SC, this study allows researchers to test the
antecedents and consequences of SCM practices, and also in the context of a specific
developing sector and country. The study therefore provides a useful guidance for Jordanian
manufacturing firms as well as a validated instrument for them to measure and implement
SCM practices. The study also contributes to the academic theory by expanding the limited
current body of knowledge on SCM in developing countries context (e.g. Li et al., 2006; Min
and Mentzer, 2004; Cigolini et al., 2004).
This study aims at addressing the following research questions: 1) What SCM practices
apply to manufacturing firms in Jordan? and 2) Is there any relationship between the current
SCM practices that are adopted by manufacturing firms in Jordan and manufacturing firms’
performance?
The rest of this paper is organised as follows: Section 2 presents the theoretical research
framework and provides a review on the definitions and theory that underline the constructs
and dimensions that comprise it; the research methodology and analysis of results are then
presented in Sections 3 and 4 respectively; these results are then discussed in Section 5; while
Section 6 provides the conclusions derived from this study.

2. Theoretical research framework

Figure 1 illustrates the theoretical research framework developed for this research. The
framework allows the understanding of the antecedents and consequences of SCM as
described by the causal relationships between SCM practices, SC performance and MFP (see
Figure 1). The framework is underlined by the rationale that a high degree of SCM practices
will lead to higher levels of SC performance and hence the enhancement of firm’s
performance. In particular, the framework proposes that SCM practices will not only have a
direct impact on firm’s performance but also an indirect effect through SC performance (Li et
al., 2006). As a consequence, SCM practice is conceptualised through a seven-dimensional
construct as indicated in the SCM practices’ box in Figure 1, whereas SC and firms’
performance are conceptualised through four and two-dimensional constructs respectively
(see Figure 1). These dimensions were tested and validated by various researchers (Li et al.,
2006; Green Jr et al., 2008; Tan, 2002; Cook et al., 2011), and were considered as significant
factors that affect manufacturing firm performance.

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2.1 SCM Practices
SCM includes a set of individual functional entities and practices for enhancing the long-term
competitive performance of individual firms and their supply chain as a whole by integrating
the internal functions within the firm and effectively linking them with the external
operations of suppliers, manufacturers, distributors, customers and other channel members
(Kim, 2006). SCM encompasses all activities, which are involved in planning and
management, sourcing and procurement, conversion and all logistics management activities
as well as coordination and collaboration with channel partners (Soosay et al., 2008).
There are many definitions of the SCM concept in the literature. According to Feldmann
and Muller (2003), there is no generally accepted definition of SCM in the literature. SCM
definitions are classified into three categories: integrated logistics management, purchasing
and supply management, and integrated SCM. Some of these definitions are presented in
Table1.

Insert Table 1 in here

From the previous definitions, it is clear that the SCM concept reflects the reality of SCM
as a strategic, managerial philosophy, and practice containing all SC partners – from
suppliers, manufacturers, to customers – achieving better performance, gaining competitive
advantage, and increasing customer satisfaction. For this research, SCM is defined as “a
process of coordination of the business functions across the businesses within the firm and
across businesses within other firms in supply chain for providing and improving products
and information flows from suppliers till end customers in order to enhance firm
performance and satisfy customer needs, wants, and requests”, which is aligned with the
integrated SCM stream.
SCM practices are implemented to achieve and enhance performance through supply
chain, which require an internal cross-functional integration within the firm and external
integration with suppliers and customers to be successful (Kannnan and Tan, 2010; Kim,
2006). In developing countries, Jordan in particular, most of the entrepreneurs and managers
generally ignore the concept of SCM, and even where it is applied, it is done partially lacking
its true spirit and totality (Jraisat, 2010; Abu-Alrejal, 2007).
Traditional production/distribution processes have been radically changed across many
countries and most firms are obliged to redesign their manufacturing network (Chan and
Lam, 2011). Many firms began to realize that it is not enough to improve efficiencies just
within the firm, but also in their whole supply chain. The growth and development of SCM is
not driven only by internal motives, but also by a number of external factors such as:
increased globalization, reduced barriers to international trade and improvements in
information availability, and environmental concerns. Therefore, some factors that provided
stimulus for the development of existing trends in SCM include: computer generated
production schedules, increasing importance of controlling inventory, government
regulations and actions such as the creation of a single European market, establishing
Qualified Industrial Zones (QIZs), and the Guidelines of Global Agreement on Tariff and
Trade (GATT) and World Trade Organization (WTO) (Gunasekaran et al., 2004). Practicing
SCM is considered an essential prerequisite to staying in the competitive global race and to
growing profitability (Moberg et al., 2002).
Various researchers have represented SCM practices from a multiplicity of perspectives,
but all of them converge in the fact that their ultimate goal is to improve the performance of

4
firms (Li et al., 2006; Li et al., 2005; Tan et al. 1998; Chen and Paulraj, 2004; Min and
Mentzer, 2004). The SCM practice construct used in this research amalgamates these
research findings into the seven dimensions shown in Figure 1. A discussion of the seven
dimensions considered as part of the SCM practice construct is provided below.

Insert Figure 1 in here

2.1.1 Strategic Supplier Partnership

Strategic Supplier Partnership (SSP) is defined by Li et al. (2006) as “the long-term
relationship between the organisation and its suppliers”. It focuses on direct, long-term
association and it is interested in mutual planning and problem-solving efforts (Arawati and
Zafaran, 2008). Therefore, it is designed to enhance the operational and strategic efforts and
capabilities of individual participating firms to achieve their goals (Li et al., 2005). An
effective supplier partnership is a critical component of leading edge supply chains (Arawati
and Zafaran, 2008).

2.1.2 Level of Information Sharing

Level of information sharing (LIS) is defined by Li et al. (2006) as “the extent to which
critical and proprietary information is communicated to one’s supply chain partner”. Shared
information can vary from strategic to tactical in nature and from information about logistics
to customer and general market information (Min and Mentzer, 2004). Increasing attention on
information integration prompts the increase of the establishment of strategic SC partners
(Zhou and Benton, 2007). This construct has been previously tested and validated by various
authors such as Li et al. (2006), Li et al. (2005) and Wong et al. (2005). Knowledge
management (KM) practices can support learning and growth of a manufacturing firm and its
linkage to its supply chain. KM practices are based on information sharing of the supply
chain tiers’ shared experience and practices, and learning with respect to their mutual matters
existed throughout their SC network. The performance indicators for MFP and SCP indicated
in the paper can help measuring the level of development of the firm’s knowledge, skill-set,
and behavioural aspects. This will facilitate producing a harmony within a company about
how operations should be accomplished through internal integration, and it can be responsive
to the supply chain requirements through its external integration to supply chain tiers.

2.1.3 Quality of Information Sharing

This dimension includes facets such as timeliness, accuracy, adequacy and credibility of
information exchanged (Li et al., 2006). According to Li and Lin (2006), ensuring the quality
of shared information plays a key role in achieving effective SCM, and hence Li et al. (2006)
suggest that organisations should ensure that it flows with minimum delay and distortion.
Given the importance that quality of information sharing has been given in the academic
literature in relation to its effect of SCM (Li et al., 2006; Li and Lin, 2006), this has been
included as one of the dimensions of the SCM practice construct.

2.1.4 Customer Relationship Management

According to Lee et al. (2007), customer relationship management (CRM) is “concerned with
planning, implementing, and evaluating successful relationships between providers and
recipients either upstream or downstream of supply chain”. CRM mainly refers to activities
such as sharing product information with customers, interacting with them to manage demand
and satisfy their wants and needs, accept customer orders, having an order placing system,

5
sharing order status with customers during order scheduling, and the product delivery phase
(Lee et al., 2007). CRM has been widely studied in the academic literature as it is considered
a core and key element of successful SCM (Lee et al, 2007; Li et al, 2006; Li et al, 2005; Tan
et al., 1998).

2.1.5 Internal Lean Practice

Lean has gained popularity in a wide range of industrial sectors, beyond manufacturing, all
around the world (Garza-Reyes et al., 2012). It is nowadays considered the most influential
new paradigm in manufacturing (Forrester et al., 2010) enhancing the competitiveness of
organisations (Hines et al., 2004). Lean is focused on identifying and eliminating waste
throughout a product’s entire value stream, extending not only within the organisation but
also along its entire supply chain network (Boyle and Scherrer, 2009). Thus, the concept of
lean supply chains has been widely studied in the academic literature (e.g. Chen et al., 2013;
Qrunfleh and Tarafdar, 2013). In most of the cases, these studies suggest that lean principles
and practices enable the effective management of supply chains. This evidence contributed in
considering this dimension as part of the SCM practices construct developed for this study.
Supply chain key performance indicators such as information sharing, lead time, inventory
policy and product demand with the life cycle stages can be evaluated by means of discrete
event simulation linked to a decision tree classifier algorithm (Dev et al., 2016). Short life
cycles of products will increase variability in lead time that can affect the level of inventory
required to meet the customer service level.

2.1.6 Postponement
Postponement is defined by Li et al. (2006) as “the practice of moving forward one or more
operations or activities (e.g. making, sourcing, and delivering) to a much later point in the
supply chain”. Its main objective is to push final product completion as close to the final
customer as possible in order to reduce inventories and minimise risk of unsold product
(Ferreira et al., 2015). This factor has been widely studied, tested and validated in the SCM
literature by, among other authors, Ferreira et al. (2015), Li et al. (2006) and Li et al. (2005).
This dimension has been included in the SC practices construct due to the highly instable
demand environment in Jordan. Postponement might therefore be a fundamental element of
supply chain practice for Jordanian manufacturing firms.

2.1.7 Total Quality Management

Total Quality Management (TQM) is a management philosophy which emphasises the
necessity to meet the needs of internal and external customers as well as the importance of
doing things correctly at the first time (Al-Khalifa and Aspinwall, 2000). Jabnoun (2002)
argues that there is not an agreement, among authors, regarding what constitutes TQM.
However, benchmarking, supplier relations, continuous improvement, customer satisfaction,
empowerment and top management responsibility are the most cited elements of TQM in the
academic literature (Garza-Reyes et al., 2011). Although there is controversy regarding the
results obtained from the implementation of TQM in relation to firm’s performance
(Mosadeghrad, 2014), the management of quality is one of the main constituents of SCM
practices (Jraisat and Sawalha, 2013). This was the reason for including TQM as one of the
dimensions of the SC practices construct.

2.2 SC Performance
Supply chain performance (SCP) has become a critical source of sustainable advantage in
many industries (WH Ip et al., 2011). SCP is defined by Banomyong and Supatn (2011) as

6
“the efficiency which takes into account multiple performance measures related to supply
chain members, as well as the integration and coordination of members’ performance”.
According to Harland (1999), most of the traditional performance measures are oriented
towards economic performance.
Various studies have suggested and used a set of new measures to respond to the current
requirements for SCP measurement. Stevens (1990) presents SCP measurement in terms of
service level, cost, throughput efficiency, inventory level, and supplier performance; while,
SCP measures according to Pittiglio et al. (1994) fall into one of four categories: customer
satisfaction/quality, cost, time, and assets. Spekman et al. (1998) used customer satisfaction
and cost reduction as the SCP measure. Other qualitative SCP measures such as flexibility,
information and material flow integration, customer satisfaction, supplier performance, and
effective risk management were identified by Beamon (1999). As in practice it is not feasible
to consider all the SCP dimensions found in the academic literature, those suggested by
Beamon (1999) were adopted for this study as they are comprehensive and include all the
dimensions of interest (see Figure 1). External-internal linkage between manufacturing firms
and their supply chain facilitate reconfiguring their manufacturing systems exactly when
needed to meet the requirements infused by market and/or suppliers and/or manufacturing
requirements (Abdi and Labib, 2016). The external-internal linkage help industries to update
their information from the market that includes product demands and their life cycles in time,
and from their suppliers that includes the parts and raw materials during the life cycles before
ending demands. Table 2 presents the dimensions and their definitions.

Insert Table 2 in here

2.2.1 Flexibility of Supply Chain

According to Koh et al. (2007), flexibility is defined as “the firm’s ability to adapt to changes
in its environment”. Many researchers included “velocity” and “speed” into their flexibility
definition and emphasised that flexibility means doing things fast (Li et al, 2006). Therefore,
adaptation of “many suppliers” practice gives the firm an opportunity to increase flexibility
of generating alternative sourcing for procurement by reducing SC risks (Koh et al., 2007).
Thus, building long-term partnership relations with suppliers and customers helps to improve
the flexibility of the SC by creating a mutual understanding among the members (Chang et
al., 2005). Chopra and Meindle (2004) indicated that there are four dimensions of flexibility:
customer service, order, location, and delivery time flexibility. In the literature, there are
several types of flexibility: volume, dynamic operations, range, and response flexibility
(Ferry et al., 2007). Flexibility ensures that changes caused by risky events can be absorbed
by the SC through effective responses (Skipper and Hanna, 2009).
Therefore, some studies found that much of manufacturing flexibility enhancement effort
was not successful and in some situations, flexibility could actually lead to negative results
(Upton, 1994). Thus, firms do not benefit from the matching of internal manufacturing
flexibility in uncertain environment, while it seems that more flexibility is not equivalent to
higher competitiveness. In contrast, there is another group of researchers who confirmed the
positive impact of flexibility on firm performance, for example, Swamidass and Newell
(1987), found the positive effect of product mix and new product flexibility on net profit rate
and sales growth. Additionally, firms which offered various product options were able to

7
increase their market share (Bolwijin and Kumpe, 1990), while, in other studies it is found
that there is a positive effect of volume flexibility on sales growth and net profits (Tannous,
1996).

2.2.2 Integration of Supply Chain

Integration is considered a core success factors for SCM because the implementation of SCM
needs the integration of processes from sourcing, to manufacturing, and to distribution across
SC (Stonebraker and Liao, 2006).
Various researchers have conceptualized SC integration in various ways, which refers to
the extent to which separate parties are able to work together in a cooperative manner to
arrive at mutually acceptable outcomes. Accordingly, this definition encompasses constructs
pertaining to the degree of cooperation, coordination, integration and collaboration (Richey
et al., 2009). According to Frohlich and Westbrook (2001), there are two types of integration
along the SC: the first type involves the forward coordination and integration of the physical
flow of deliveries between suppliers, manufacturers, and customers; the other type involves
the backward coordination of information and flow of data from customers, manufacturers, to
suppliers. Narasimhan and Jayaram (1998) state that internal integration involves the
coordination, cooperation and collaboration between all internal functions within the firm
from raw material management through production, shipping, and sales; while, external
integration emphasizes on the coordination, collaboration and integration with other members
outside the firm such as suppliers and customers (Gimenez and Ventura, 2005). Magretta
(1998) presents that higher level of SC integration will allow firms to meet customer wants
and needs faster and more efficiently than non-integrated firms. Effective and superior SCM
is directly related to highly integrated SC (Cook et al., 2011). Therefore, SC strategies focus
on how both internal and external business processes can be integrated and coordinated
throughout the SC to better serve ultimate customers, while enhancing the performance of the
individual SC members (Green Jr et al., 2008).

2.2.3 Customer Responsiveness

Customer responsiveness is defined as the firm’s speed in response to the customer orders
and requests (Ramanathan et al., 2011). Several researches pointed out that customer
responsiveness is one of the most important factors that can be measured in the performance
of SC. According to Owens and Richmond, (1995), the main objectives of customer
responsiveness are: increasing response to customer wants and needs, deriving costs out of
the system and finally, turning savings into additional value for the customer. Effective
performance measurement can be achieved based on SC metrics linked to customer
satisfaction particularly (Banomyong and Supatn, 2011). Therefore, responsiveness is usually
related with innovative products or products with short lead time, which describes the level
of collaboration needed (Ramanathan et al., 2011).

2.2.4 Supplier Performance

According to Beamon (1999), supplier performance is defined as suppliers’ ability to deliver
raw materials/components/products to the firm on time and in good condition. In practice,
many firms emphasise on the importance to use a limited number of qualified suppliers due
to the fact that a significant shift has occurred in the traditional adversarial buyer-seller
relationship. Therefore, suppliers’ involvement needs to identify buyers’ expectations in
terms of quality, quantity, delivery, service and price, and can help firms to improve them in
overall quality, reduce costs and competition (Morrisey and Pitaway, 2006); when the
expectations are met, this relationship becomes valuable and it turns into a useful tool that
helps the company achieve its objectives (Fierro and Rendondo, 2008).

8
2.3 Firms’ Performance
Firms’ performance is a composite construct that indicates the business performance of a
company. Specifically, it refers to how well a firm fulfils its financial and market goals (Li et
al., 2006). The short-term objectives of SCM are mainly to reduce inventory, increase
productivity and reduce cycle time of products and services, while long-term objectives are to
increase profits, penetrating new markets, increasing quality, and increase market share for
all units of the SC (Tan et al., 1998). Fraser (2006) suggests that to achieve maximum
business performance it is important to align or link operations, such as those of SCs, to
financial metrics. In this line, Fraser (2006) comments that the better a company's system for
measuring and tracking financial and operational performance, the more finances and
operations improve. Thus, it is of paramount importance to investigate the effect that SCM
practices have on the financial performance of manufacturing firms. This is done in this
research through the manufacturing firms’ performance construct (see Figure 1). In line with
previous studies, which have considered the financial as well as market performance of firms
(Li et al., 2006; Zhang, 2001), this dimension has also been included as part of the
performance construct (see Figure 1). Financial measures for typical firms include current
and future sales, operational cost, changeover cost from producing a product type to another,
transportation cost of raw materials and finished products, and current and future profit.
Although, financial performance measures, and particularly profits are the major reason for
the manufacturing firm’s existence and its linkage to the supply chain, non-financial
measures are also important to determine the SCP and MFP.
Balanced Score Card can be used to evaluate firms’ performance. Balanced scorecards can
be used for MP and SCP with consideration of financial indicators derived from historical
information of the company’s financial stance, and non-financial indicators inheriting short-
term, long-term, and operational targets to satisfy all stakeholders reflecting outcomes of the
manufacturing firm in terms of success/failure. Using balanced scorecards external
performance measures related the nature of the relationship between the manufacturing firm
and suppliers and customers are taken into account.

3. Research Methodology
The methodology adopted in this study followed the guidelines recommended in the reviewed
literature (e.g. Li et al., 2006; Li et al., 2005; Tan et al., 1998), which consisted of employing
quantitative data collection procedures to facilitate the analysis and increase the validity and
reliability of results. Thus, a questionnaire survey strategy was used in this study. The
development of the instruments followed the four phases suggested by Li et al. (2006),
namely: (1) item generation, (2) pre-pilot study, (3) pilot study, and (4) large-scale data
analysis. The instruments and their items are presented in Appendix A.

3.1 Item Generation, Pre-pilot Study, and Pilot Study

Proper generation of measurement items of a construct determines the validity and reliability
of an empirical research. Therefore, content validity is considered the main requirement for
an effective measurement. In this case, content validity was initially achieved through a
thorough literature review on SCM practices. This permitted the generation of the items.
Instrument’s validity , according to Fraenkel and Wallen (2003), ensures the ability of an
instrument to measure the intended concept. Consequently, to achieve a good level of
instrument validity, a five-point Likert scale paper-based questionnaire survey was revised-in
the pre-pilot study. The initial pool of generated items-by three specialist academics in

9
operations management and four industrialist practitioner experts in SCM (i.e. logistics,
purchasing, operations management, and information systems) working in manufacturing
firms. The objective of this revision was to ensure that each construct was properly and
accurately addressed. The respondents were requested to provide feedback regarding the
clarity of the questions as well as the organisation, logic, and length of the questionnaire. This
helped to refine the instrument. Based on their feedback, redundant and ambiguous items
were modified, eliminated, and new items were added wherever necessary.
Instrument’s reliability refers to the “consistency of scores or answers from one
administration of an instrument to another, and from one set of items to another” (Fraenkel
and Wallen, 2003). Creswell (1994) states that the reliability score of an instrument indicates
the stability and consistency of items contained and to what limit it measures the concept in a
correct manner. The most popular test of reliability is Cronbach’s alpha, which measures the
internal consistency of an instrument. An alpha score of higher than 0.7 is accepted for all
constructs of this study (Nunnally, 1978).
A small pilot study was performed using fourteen responses (n=14) out of fifty-four
distributed to respondents similar to the target respondents. The survey was in English
language with a cover letter introducing the research and briefly explaining its objectives, and
including instructions for completion. It was responded by CEOs, presidents, vice-presidents,
purchasing managers, supplying managers, operations managers, and planning managers. The
total number of items removed after the pilot study was forty-three out of ninety-six. Table
3a, b, and c summarizes the results of the initial statistical analyses conducted during the pilot
phase for all constructs. The responses were analysed using SPSS statistical software
programme version 16. In this case, corrected-item total correlation (CITC) scores for each
item with respect to a specific dimension of a construct were computed to purify the items.
According to Cronbach (1951), the CITC score is a good indicator of how well each item
contributes to the internal consistency of a particular construct as measured by the
Cronbach’s alpha coefficient. Thus, the next step was to determine the reliability coefficient
(i.e. Cronbach’s alpha) and each item’s and sub-construct’s CITC. Finally, item correlation
matrices were used to identify and drop items that did not strongly contribute to Cronbach’s
alpha for the sub-construct. The optional feature in SPSS - “Alpha if item deleted” statistic-
was also used to determine if the item significantly contributed to alpha. This feature was
particularly useful when an item appeared to fit more than one construct.

3.2 Large Scale Methods

This study targeted respondents with knowledge and experience on the operations and
management of the supply chain of their firms. Thus, CEOs, presidents, vice-presidents,
purchasing managers, supplying managers, operations managers, and planning managers
were sought as the main source of information. They were requested to refer to their major
customers and suppliers when addressing relevant questions. This study included a total
number of 498 firms from manufacturing sectors such as food processing, beverages, oil
derivative products, furniture, apparel, textile, chemical, tobacco and cigarettes, paper and
packaging, cement, potash, phosphates, fertilisers, rubber products, electrical equipment,
plastics, etc. All these firms had been in business for at least 5 years and employed a
minimum of 51 workers.
E-mail was considered the most effective method for the distribution of the questionnaires.
Szwarc et al. (2005) suggest that this distribution strategy has certain advantages that include
quicker distribution, more professional appearance and lower cost. These advantages,

10
according to Kirkham et al. (2014), contribute to increase the response rate. Cohen et al.
(2007) acknowledge that a response rate of 30–35% provides statistical significance, while
Cook et al. (2000) state a response rate of between 27 and 56% is acceptable. Of the
questionnaires distributed 249 were returned, of which all were useable, giving an overall
response rate of 50%. Besides exceeding the percentage of response rate indicated by Cohen
et al. (2007) and Cook et al. (2000) to achieve statistical significance, the number of firms
surveyed was also higher than comparable studies, for example, those conducted by Li et al.
(2006) and Li et al. (2005). The final survey data was analysed using a number of statistical
techniques such as correlations, regressions, and structural equation modelling (SEM). We
used SEM analysis to cross verify the findings of the correlations and regressions as well as
to provide support for our proposed hypotheses.

4. Analysis of Results
To test the significance of the constructs’ relationships presented in Figure 1, three
hypotheses (i.e. H1, H2 and H3, see Figure 1) were formulated.

4.1 Relationship between Supply Chain Management Practices and Supply Chain
Performance
To test the relationship between SCM practices (SCMP) and supply chain performance
(SCP), null (H0) and alternative hypothesis (H1) regarding the non-statistical and statistical
association between these two constructs were respectively created to form hypothesis 1
(H1). Initially, the effects of the SCMP construct, and its seven dimensions, on every one of
the four dimensions (i.e. SC flexibility, SC integration, customer responsiveness, supplier
performance) of the SCP construct were analysed. However, to obtain an overall insight into
the impact of all SCMPs together on the SCP of manufacturing firms, an overall analysis
including all the dimensions of the SCMP and SCP constructs was conducted. Table 4
presents the results of the (a) linear regression, (b) ANOVA and Pearson correlation
computations for the overall analysis.

Insert Table 6 in here

Tables 4(a) and 4(b) indicate that all SCMPs have a statistical significant difference p <
0.05 and the proportion of variance explains 50.6% (R²=0.506); the F-value was 168.926.
This means that there is a significant positive impact and hence indicates that there is a
relationship between all SCMPs, when considered together, and SCP. Furthermore, the
results shown by Table 4(c) suggest that the Pearson coefficient (r) for H1 is 0.637, while the
correlation has a probability (p) value of 0.000 for 2-tailed test. A moderate, but still
statistically significant positive correlation was found. Thus, the null hypothesis (H0) for H1
was rejected at p<0.05 level, suggesting that there is a statically significant effect of the
SCMPs adopted by Jordanian manufacturing firms on the performance of their supply chain.
To further verify the findings of the correlations and regressions, a full-fledged structural
equation model was constructed (see Figure 2). The best fit SEM model confirmed the
findings of the previous analysis by showing a positive linkage between supply chain
management practices and supply chain performance. The fit indices of the SEM model
shown in Table 5 indicate that all of them are within the acceptable ranges, thus validating

11
the model. The path coefficient value between SCMP and SCP was found to be significant
(.59) at p<.01 level, hence showing the positive causal linkage between SCMP and SCP.

4.2 Relationship between Supply Chain Management Practices and Firms’ Performance
Null (H0) and alternative hypotheses (H2) were also set to test the non-statistical and
statistical significance of the relationship between the SCMP and manufacturing firms’
performance (MFP) constructs. This resulted in the formulation of hypothesis 2 (H2 As part
of an initial study, the effects of the SCMP construct, and its seven dimensions, was analysed
in relation to the market share and financial performance dimensions of the MFP construct.
However, to obtain an overall insight into the impact of all SCMPs together on the
performance of manufacturing firms, an overall analysis including all the dimensions of the
SCMP and MFP constructs was conducted. Table 6 presents the results of the (a) linear
regression, (b) ANOVA and Pearson correlation calculation for the overall analysis.

Insert Figure 2 in here

Insert Table 5 in here

Tables 6(a) and 6(b) show that all SCMPs have a statistical significant difference P < 0.05
in relation to all MFP dimensions together. This suggests that all SCMPs play an important
role and have a significant positive and direct effect on the overall MFP. The proportion of
variance explains 73.3% (R²=0.733); the F-value was 678.504. This means that there is a
significant positive impact and hence indicates that there is a relationship between all
SCMPs, when considered together, and all MFP dimensions. In addition, the results shown in
Table 6(c) indicate that the Pearson coefficient (r) for this hypothesis is 0.856, while the
correlation has a probability (p) value of 0.000 for 1-tailed test. Thus, a strong positive and
statistically significant correlation was found. For this reason, the null hypothesis (H0) for H2
was rejected at 0.05 level, suggesting that there is a statically significant effect of the SCMPs
adopted by Jordanian manufacturing firms on their firms’ performance. The outcome of the
SEM analysis also supported the findings of the correlations and regressions as the path
coefficient (.26) was found to be significant at p<.01 level, thus showing that SCMPs have a
positive influence on the MFP.

Insert Table 6 in here

4.3 Relationship between Supply Chain Performance and Firms’ Performance

In order to test a third hypothesis (H3) to investigate the relations between SCP and MFP,
null (H0) and alternative (H3) hypotheses related to the a non-significant (H0) and significant
(H1) relationship between these two constructs were formulated. As part of an initial study,
the effects of the SCP construct, and its four dimensions, was analysed in relation to the
market share and financial performance dimensions of the MFP construct. However, to obtain

12
an insight into the overall impact of the SCP of Jordanian manufacturing firms on their firms’
performance, an overall analysis including all the dimensions of the SCP and MFP constructs
was conducted. Table 6 presents the results of the (a) linear regression, (b) ANOVA and
Pearson correlation calculation for the overall analysis.

Insert Table 7 in here

The results shown in Tables 5(a) and 5(b) suggest that the total SCP dimensions have
statistical significant differences P < 0.05 in relation to all MFP dimensions together. This
means that all dimensions of the SCP play an important role and have a significant and direct
positive impact on the overall performance of manufacturing firms. The proportion of
variance explains 73.3% (R²=0.733); the F-value was 666.158. This means that there is a
significant positive impact and an existent relationship between all SCP dimensions together
and total MFP dimensions. Moreover, the results shown in Table 7(c) indicate that the
Pearson coefficient (r) for H3 is 0.854, while the correlation has a probability (p) value of
0.000 for 2-tailed test. Hence, a strong positive and statistically significant correlation was
found. Therefore, the null hypothesis (H0) for H3 was rejected at 0.05 level. A positive path
coefficient (.62) in the SEM model further verified the findings of the correlation and
regression analysis.

4.4 Summary of Results

The three hypotheses formulated and tested in the previous sections represent three causal
relationships in the theoretical research framework, see Figure 1, studied in this work. The
analyses and findings are summarised in Table 8. In general, they indicate that there are
significant and direct relationships between SCMPs and SCP; SCMPs and MFP; and SCP
and MFP. These findings were also verified using the SEM analysis as path co-efficients
were found to be positive, thus showing the positive causality between the SCMP, SCP and
MFP. We also tested the role of MFP as a mediating variable however our analysis shows
that the mediation effect of MFP was not stronger than the direct effect of SCMP on SCP.

Insert Table 8 in here

Table 9 presents a summary of the correlation matrix for the three proposed hypotheses.
This table indicates that SCMPs directly affect SCP (H1). Thus, SCMPs are considered vital
and have an impact on improving the SCP of manufacturing firms. Therefore, these practices
play a vital role to facilitate the flow of products and raw materials and for enhancing the
SCP efficiency of these firms (R²=0.406). The results in Table 9 also show that the Pearson
coefficient (r) for H1 is 0.637; the correlation has a probability (p) value of 0.000 for 2-tailed
test. Hence, a moderate positive and statistically significant correlation was found. Therefore,
H0 was rejected for H1; see Table 8, at the 0.05 level.
The direct relationship between SCMPs and MFP indicates that SCMPs directly affect
MFP. This suggests that, within the context of manufacturing firms, the adoption and
successful implementation of SCMPs will directly improve their financial and market share
performances in the long-run. This effect is in line with comparable previous studies found in
the literature (Shin et al, 2000; Tan et al., 1998), which had not taken into consideration any
intermediate variable(s) such as competitive advantage or SCP. The results show that there
13
exists an immediate impact of SCP on MFP. MFP is also indirectly influenced by SCP. The
results shown in Table 9 indicate that the Pearson coefficient (r) for H2 is 0.856; the
correlation has a probability (p) value of 0.000 for 2-tailed test. Hence, a strong positive and
statistically significant correlation was found. Therefore, H0 was rejected for H2; see Table 8,
at the 0.05 level.
Finally, the direct relationship between SCP and MFP indicates that SCP directly affects
MFP. This suggests that well-managed and well-executed SCP in terms of flexibility and
integration of the SC, responding quickly to customers, and having a few highly dependable
suppliers will directly have a positive effect on MFP. The results shown in Table 8 indicate
that the Pearson coefficient (r) for H3 is 0.854; the correlation has a probability (p) value of
0.000 for 2-tailed test. Hence, a strong positive and statistically significant correlation was
found. Therefore, H0 was rejected for H3; see Table 7, at the 0.05 level.

Insert Table 9 in here

5. Research implications and limitations

5.1 Research implications
This research has several important practical and theoretical implications. Firstly, the
traditional paradigm of competition between firms has shifted to a competition between
supply chains (Andersen and Skjoett-Larsen, 2009; Li et al., 2006). For this reason, more and
more firms are increasingly adopting SCM practices to achieve cost-reductions, improving
their efficiencies and quality, and ultimately enhancing their competitiveness. However, there
are still doubts regarding the potential benefits of SCM over existing practices and under
certain environmental conditions (Trkman and McCormack, 2009; Meehan and Muir, 2008).
Thus, the findings of this study confirm that effective SCM is a potentially valuable approach
in improving supply chain and firm’s performance through the adoption of some specific
SCM practices, e.g. those presented in the SCMP construct shown in Figure 1. The findings
of this research thus demonstrate and highlight the importance of SCM practices to firms.
Secondly, since SCM has been poorly defined and hence there is a high degree of
variability in its meaning and understanding (Li et al., 2006; Cigolini et al., 2004), various
researchers have identified several practices of SCM that firms can adopt. For instance, many
firms still consider SCM as simply being related to purchasing and supplier management
(Banfield, 1999), or as a synonym of transportation and logistics management that focuses on
inventory reduction (Rudberg and Olhager, 2003). In this line, although most firms recognise
and emphasise the importance of adopting SCM practices, many of them still do not know
exactly what and which practices they should implement. The findings of this study
demonstrate that firms should not only focus on traditional SCM activities such as purchasing
and supplier management or transportation and logistics management but also consider the
importance of more contemporary SCM practices, including building strategic supplier
partnership, leveraging the level of information sharing with trading partners, and
implementing an effective internal lean system. Therefore, the results of this study should
encourage these firms in developing the effectiveness of these practices. In this context, this
study has provided SC managers of manufacturing firms, particularly those in developing
economies, with a useful multi-dimensional operational measure of the construct of SCM
practice for assessing the comprehensiveness of the current SCM practices of their firms.

14
 The research findings are generic and can be adapted to the supply chains of any
manufacturing industry e.g. automotive industries and eclectic/electronic production with
variable demands in a developing country with similar logistic infrastructure to that of
Jordan. The findings can assist manufacturing managers and researchers to better understand
elements influencing supply chain performance in developing countries with similar
characteristics. Similar developing countries can include Middle Eastern countries, that are
emerging economies experiencing manufacturing growth, developing essential transportation
infrastructure, fundamental IT and communication infrastructure e.g. Internet, suitable
legislation for information sharing across the supply chain tiers, and potential capability for
integration of supply chain. The proposed model can be adapted to the supply chain network
along with adjustment of the research findings for informed decision and policy making.
Production type of the beneficial industry is not limited to specific products or processes
that may include manufacturing/assembly industries with multi-stage manufacturing supply
chain. However, the reconfiguration parameters may vary from a system to another and must
be redefined accordingly.

5.2 Research limitations

Despite the practical and theoretical contributions of this research, it presents various
constraints. First, this study only relies on a quantitative research methodology based on the
collection and analysis of hard numerical evidence. In future studies there is a need to follow
this type of methodology for all constructs and then gather qualitative data to explore their
relationships to not only validate the results from this research, but also expand its context by
obtaining more in-depth insights on firms’ attitudes, thoughts, and actions, specially related
to their SCM practices and the relationships with the constructs studied.
Second, in this research, a limited number of SCM practices were considered. These SCM
practices were selected, based on the literature review and the input from practicing managers
as those that would be the most important for the specific case of manufacturing firms.
Therefore, some other SCM practices and constructs, such as infrastructure and competitive
advantage, can also be considered for future research. This is part of the future research
agenda derived and proposed from this study. Finally, we are proposing that Jordan is a
typical case of a developing economy but there is a broad range of development stages for
countries and further research in more countries on the spectrum of development would
provide more insight into the practicalities of developing the antecedents of SCP presented in
this paper.

6. Conclusion
This study represents a significant large-scale empirical effort to explore the causal
relationships of SCM practices with SCP and MFP within the context of the Jordanian
manufacturing sector. Different definitions of SCM exist in the academic literature (Cigolini
et al., 2004; Li et al., 2006), while most of the empirical research has mainly focused on
either the upstream or the downstream side of SCs. In this context, few studies have
empirically considered both sides of SCs simultaneously (Li et al., 2006). The theoretical
framework proposed to conduct this study considers both sides of SCs. This study thus aims
at contributing by stimulating scholars to further study this area in depth, which will lead to a
better understanding the SCM theory. Based on this, firms can develop a deeper and richer
knowledge on their SCs to help them formulate more effective strategies for their effective
management.

15
 To investigate and test the theoretical framework, data was collected through a
questionnaire survey responded by 249 Jordanian manufacturing firms, and the framework
tested by using linear regression, ANOVA and Pearson correlation. The results obtained from
these analyses were further validated using SEM. This study contributes to the body of
knowledge in the SCM field in a number of ways. First, this study provides a theoretical
framework that explores and identifies multiple constructs, and dimensions, of SCM,
including SCM practices, SC performance, and firms’ performance. In future research this
framework can be extended by adding more constructs and/or dimensions. The constructs
could include relevant aspects that may influence supply chains and their performance, for
example, a country’s infrastructure and firms’ competitiveness.
Second, this study provides strong support of evidence to the literature regarding the
impact of SCM practices on various performance dimensions. The results indicate that a
higher level of adoption, implementation, and improvement in SCM practices will directly
lead to improve SC and overall firms’ performance. In addition, a higher level of SCM
practices will also lead to a higher level of SC performance. Most industrial firms’ theories,
for example, competitive strategy, cost analysis and political economy all highlight the
importance and emphasise the implementation of SCM (Li et al., 2006). Therefore, the
results of this study provide the empirical support to these theories. Third, the results of this
study indicate and highlight the best and specific SCM practices that can be adopted by
Jordanian manufacturing firms to improve their SC and overall firms’ performance.

The research findings also emphasise that the proposed conceptual framework used for the
Jordanian manufacturing supply chain can be well applied to other developing countries with
similar capabilities and circumstances. The proposed model and the research findings have
the potential to help policy makers to design better policies for supply chain and performance
measurement..

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