THE EFFECT OF SUPPLY CHAIN MANAGEMENT

PRACTICES ON THE ORGANIZATIONAL

PERFORMANCE (IN CASE OF CARE ETHIOPIA)

A Thesis Submitted to the School of Graduate Studies of Jimma University in

Partial Fulfillment of the Requirements for the Award of the Degree of Master of
Business Administration (MBA)
BY:
GETACHEW ALEMU

Under the Supervision of

Dr, TAYE AMOGNE

And
Mr. KEDIR ABRAHIM

MBA Program, Department Of Management, College Of Business and Economics,

Jimma University, Jimma, Ethiopia
May, 2020
 ABSTRACT

The main objective of this study was to investigate the effects of supply chain management
practices on the performance of CARE Ethiopia. In order to meet the objectives of this
research, the study adopted quantitative method and the relationships proposed in the
framework were tested using descriptive and explanatory research method. The primary data
was collected from 157 employees of CARE Ethiopia by using Likert scale type questionnaires
as measuring instrument for collection of the employees’ perception towards the variables
then, the collected data were analyzed using descriptive statistics, correlational and multiple
regression analysis. The study result of the study indicates that supply chain management
practice has statistically significant effect on the organizational performance of CARE
Ethiopia. The practice of strategic supplier partnership, customer relationship practice,
internal operation and information sharing also needs improvement. To sustain in the
organization performance develops multi-skill working capacity, on internal systems
automation, framework agreement, create collaboration with business partners and relocate
the resource in proper manner.

Key Words: Supply chain management; SCM Practice; organizational Performance.

i
 DECLARATION

I, Getachew Alemu the under signed, declare that the research Report entitled “The effect of

supply chain management practices on organizational performance; In Case of CARE

Ethiopia” submitted to Research and Postgraduate Studies’ Office of Business and Economics

College is original and it has not been submitted previously in part or full to any university.

Declared by:

Getachew Alemu

Date: __________________

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 CERTIFICATE

We certify that the Research Report entitled “The effect of supply chain management

practices on the organizational performance: In Case of CARE Ethiopia’’ was done by

Mr. Getachew Alemu for the partial fulfilment of Master’s Degree under our Supervision.

Dr, Taye Amogne Mr. Kedir Abrahim

_________________________ _________________________

(Main Advisor) (Co-Advisor)

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 ACKNOWLEDGEMENT

First and foremost, praises and thanks to the God, the Almighty, for His showers of blessings
throughout my research work to complete the research successfully.

I would like to express my deep and sincere gratitude to my research supervisor, Dr. Taye
Amogne in Jimma University, for giving me the opportunity to do research and providing
invaluable guidance throughout this research. His dynamism, vision, sincerity and motivation
have deeply inspired me. He has taught me the methodology to carry out the research and to
present the research works as clearly as possible. It was a great privilege and honor to work
and study under his guidance. I am extremely grateful for what he has offered me.

I am extremely grateful to my parents for their love, prayers, caring and sacrifices for
educating and preparing me for my future. I am very much thankful to my wife for her love,
understanding, prayers and continuing support to complete this research work. Also I express
my thanks to my sisters, brothers, for their support and valuable prayers. My Special thanks
goes to my friends Zemed Yimenu and Wubie Taye for the keen interest shown to complete
this thesis successfully.

I am extending my thanks to my colleagues providing me any support which I need for the
research work and special thanks for Gelgelo Wario, Tewodros Negash, Aklilu Degsew for
their support on distribution and collection of questionnaires and for their kindness.

Finally, my thanks go to all the people who have supported me to complete the research work
directly or indirectly.

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 Table of Contents
Abstract ......................................................................................................................................... i

Declaration .................................................................................................................................. iii

Certificate ........……………………………………………………………………...................iii

Acknowledgement ...................................................................................................................... iv

Table of Contents...……………………………………………………………………………...v

List of tables ................................................................................................................................ ix

List of figures ............................................................................................................................. x

List of Acronyms and Abbreviations ......................................................................................... xi

CHAPTER ONE: INTRODUCTION……………………………………..………………….1

1.1 Background of the Study ............................................................................................... 1

1.2 Background of the Organization ................................................................................... 4

1.3 Statement of the Problem .............................................................................................. 4

1.4 Research Questions ....................................................................................................... 6

1.5 Objective of the Study ................................................................................................... 6

1.6 Significance of the Study .............................................................................................. 7

1.7 Scope of the Research ................................................................................................... 7

1.8 Limitation of the Study ................................................................................................. 8

1.9 Organization of the Paper .............................................................................................. 8

CHAPTER TWO: REVIEW OF LITRACTURES…………………………………………8

2.1 Theoretical Litrature review……………………………………………………………..9

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 2.1.1 Concepts and definition of supply chain management ............................................ 11

2.1.2 Supply Chain Management Measurement ............................................................... 14

2.1.2.1 Supplier Relationship Management ..................................................................... 15

2.1.2.2 Customer Relationship ......................................................................................... 16

2.1.2.3 Information Sharing ............................................................................................. 17

2.1.2.4 Internal Operation ................................................................................................ 18

2.1.3 Organizational performance .................................................................................... 19

2.1.3.1 Measurement of Organizational Performance ..................................................... 20

2.1.3.2 Performance of Humanitarian Organizations ...................................................... 21

2.1.3.3 Organizational performance /Effectiveness/ ........................................................ 22

2.2 Empirical literature review ............................................................................................. 22

2.2.1. Supply Chain Management Practices and Organizational Performance ................. 23

2.2.2. The effect of supply chain management practices on organizational performance 25

2.3 Hypothesis....................................................................................................................... 28

2.4 Research framework ....................................................................................................... 29

2.5 Identified literature gap ................................................................................................... 30

2.6 Summary of literature review ......................................................................................... 31

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY.…………………32

3.1 Research approach .......................................................................................................... 32

3.2 Research Design.............................................................................................................. 33

3.3 population and sampling techniques ............................................................................... 33

3.3.1 Population ................................................................................................................ 33

3.3.2 Sampling Frame ....................................................................................................... 33

3.3.3 Sampling Techniques .............................................................................................. 34

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 3.3.4 Sample size determination ....................................................................................... 34

3.4 Sources of data ................................................................................................................ 35

3.5 Data Collection Procedures............................................................................................. 35

3.6 Ethical consideration ....................................................................................................... 37

3.7 Validity and Reliability ................................................................................................... 37

3.7.1 Assessing Reliability ............................................................................................... 37

3.7.2 Analysis of Validity ................................................................................................. 37

CHAPTER FOUR: RESULT AND DISCUSSION..……………………………………….38

4.1.1 Response rate ........................................................................................................... 38

4.1.2 Reliability of the research instrument ...................................................................... 39

4.1.3 Data processing........................................................................................................ 40

4.2. Descriptive Analysis ....................................................................................................... 40

4.2.1 Demographic Data of the Respondents ................................................................... 40

2.2.1.1 Departments of the Respondents in the organization .......................................... 41

2.2.1.2 Employee job position of the Respondents in the organization ........................... 41

2.2.1.3 Educational Qualification of Respondents........................................................... 42

2.2.1.4 Service Year of the Respondents’ ........................................................................ 43

4.2.2 Supply chain management practices ........................................................................ 44

4.3. Correlation and regression analysis ................................................................................ 46

4.2.3 Correlation analysis of variables ............................................................................. 46

4.2.4 Regression analysis.................................................................................................. 48

4.2.4.1 Assessment of ordinary least square assumptions ............................................... 48

4.2.4.2 The regression results and hypothesis testing ...................................................... 54

4.2.4.3 The effect of SCM on organizational performance ............................................. 54

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 4.2.4.4 Hypothesis test ..................................................................................................... 58

4.4. Discussion of the results ................................................................................................. 60

CHAPTER FIVE: CONCLUSION & RECOMMENDATION……..…………………….60

5.1. Summary of Findings ...................................................................................................... 62

5.2. Conclusions ..................................................................................................................... 65

5.3. Recommendations ........................................................................................................... 66

5.4. Direction for future research ........................................................................................... 67

References .......................................................................................................................................... 67

Annex 1-Questionnaire of the Survey ............................................................................................ 74

Contact Address .................................................................................................................................. 75

Part II: 1. Instruments of Supply chain management practice ...................................................... 76

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 LIST OF TABLES

Table 2, 1: Supply chain management practices by scholar………………………………………………..25

Table 3, 1: Number of supply units, sample ratio and sample for each stratum…………………...35

Table 4.1: Response Rate…………………………………………………………………38

Table 4.2: Reliability Test of Constructs………………………………………………….39
Table 4.3: Demographic respondent………………………………………………………….45
Table 4.4: Mean and Standard deviation Descriptive statistics result………………………..46

Table 4.5: Correlations among variables……………………………………………………...50

Table 4.6: Multicollinearity Correlation Matrix………………………………………….50
Table 4.7: Multicollinearity statistics…………………………………………………….53

Table 4.8: Durban-Watsun [Auto correlation assumption Test result]……………………......54

Table 4.9: Regression Model summary…………………………………………………...55

Table 4.10: ANOVA Output SPSS……………………………………………………….56

Table 4.13: Coefficients Output SPSS……………………………………………………61

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 LIST OF FIGURES

Figure 2.1: Conceptual Framework Developed by the Researcher……………………………30

Figure 4.1: The percentage of the respondents’ in each Unit.…………………………………42

Figure 4.2: Position of the Respondents’ in the

organization…………………………………..42

Figure 4.3: Educational level of respondents ….……………………………………………....43

Figure 4.4: Respondents Work experience/years of
service……………………………………44
Figure 4.5: Linear Multiple Regression Assumption…………………………………………..49

Figure 4.6: Homoscedasticity Multiple Regression Assumption……………………………...51

Figure 4.7: Normality Distribution Histogram…………...……………………………………52

x
 LIST OF ACRONYMS AND ABBREVIATIONS

CARE Cooperative for Assistance and Relief Everywhere, Inc.

SCM Supply Chain Management

NGO Non-governmental organization

IO Internal Operation

SM Supplier Management

CM Costumer Management

IS Information sharing

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 CHAPTER ONE
INTRODUCTION

This chapter consists of the background of the study, statement of the problem, research
questions, and objectives of the study, significance of the study, and delimitations of the study.

1.1 Background of the Study

From global supply chain management has tremendously gained importance since the past
decades due to the global competitive business environment, (M, Christopher 2011) stress on
the need of supply chain design for global operations and the researcher argued that the choice
of supply chain strategy impacts competitive performance. The internationalization or
globalization of supply chains has increased foreign competition in the countries’ local
markets. For this reason, companies must make quick and wise decisions at strategic and
operational levels.

Supply chain is system of organizations, people, technology, activities, information and

resources involved in moving a product or service from supplier to customer. Supply chain
activities transform natural resources, raw materials and components into a finished product
that is delivered to the end customer. The Council of Supply Chain Management Professionals
defines supply chain management as follows: “Supply Chain Management encompasses the
planning and management of all activities involved in sourcing and procurement, conversion,
and all logistics management activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers, intermediaries, third-party service
providers, and customers (Rostami, Rostami, Jalali, & Nazemi, 2013). Supply chain
management is a concept that is gaining in popularity and importance and there is still much to
investigate, since there is no universally accepted definition yet. As a result of that, there are
not many empirical researches on the benefits of supply chain management and certainly
studies and analysis will improve if a single definition would be adopted. The evolution of the
recent competitive environment resulted in an even greater interest in the management of the
activities external to the production system. The new focus of managers is addressed to the

1
synchronization of the production system with the upstream and downstream activities of the
firms. There are some key factors underlying the transition from a traditional management of
the internal activities to an innovative handling of the internal processes in the broader
environment of a supply chain (ASCARI, 2015).

Due to the number of rival companies expanding both locally and globally, companies not only
have to re-establish themselves to produce higher-quality products and services, decrease waste
and are able to respond to the market but also to handle their supply chain management
efficiently. Organizations are facing different kinds of challenges in their effort of competing
in today’s dynamic global markets. To remain competitive, organizations must recognize the
importance of supply chain practices that improve not only their own organizational
performance, but also coordinate with their supply chain partners to improve their joint
performance. Yet, despite the significant advances in research and practices, many
organizations continue to struggle to understand the complex issues associated with the
coordinated planning and supply activities amongst the members of their supply networks
(Cook, Heiser, & Sengupta, 2011).

As global competition increases, manufacturing companies should be more involved in how

their suppliers and customers conduct their businesses. To compete successfully in today’s
challenging business environment manufacturing companies should be able to effectively
integrate the internal functions within an organization and effectively link them with the
external operations of suppliers and supply chain members. They need to focus on supply chain
management practices that have impact on enhancing SCM activities and ultimately
performances (Agus, 2011). However, several external factors continue to strive the
organization to adopt the new way of conducting businesses i.e. increasing globalization,
decreased barriers to international trade, improvement of information availability through
information technology and increasing customer demand (Sahay & Mohan, 2003),
(Gunasekaran & Ngai, 2003). In order to effective operation organization must be able to
reduce cost, improve quality and provide fast response to the customer needs. One of the ways
of achieving that competitive edge is through the implementation of SCM practices
(Muhammad, 2004) the nature of competition has also changed to the extent that companies no

2
longer compete against other companies on the bases of quality as traditionally practiced in the
80s (Fawcett, Ellram, & Ogden, 2007). However, the new source of business competition lies
outside the walls of an organization, and is determined by how effectively companies link their
operations with their supply chain partners; suppliers, distributors, wholesalers, retailers and
end costumers (Petrovic-Lazarevic, Sohal, & Baihaqi, 2007). Being able to create business
relationships with customers, suppliers and other strategic partners anchored on trust and long
term commitment then becomes a crucial competitive parameter (Mattson, 2002). For this, and
factors like shorter product lifecycle and customer expectations, businesses have had to invest
and re-focus greater attention on relationship with customers and suppliers. Consequently, an
organizations supply chain has become a strategic agenda driving decision making at senior
management level (F. Chen, Drezner, Ryan, & Simchi-Levi, 2000).

The aim of every SCM is to minimize system-wide costs while satisfying customer service
level requirements. Indeed, it is a customer oriented process for integrating business planning
and balancing supply and demand across the entire value chain system. SCM structure,
suppliers and customers are brought together in one concurrent business process which spans
the entire chain from initial source to the ultimate consumer (Lambert & Cooper, 2000),

Non-government organization (NGO) which basically performs towards delivering service to

the beneficiaries is needed with the supply chain practices. This is because a non-government
organization (NGO) is also welfare work related to improve the life of communities with
performing developmental activities and empower the community to sustain in growing.
Performing activities in NGO is not worked in the isolated function rather all functions across
the organization and outside firm’s considered as a party must coordinated to achieve in
effective and efficiently. This concept leads us to the supply chain management which is
undertaking in each organization to have its best practices aiming to improve the overall
organization performance and customer satisfaction by improving delivery to the customers.

Therefore the SCM offers a management philosophy to manage activities and integrate with
downstream and upstream partners as well as firms’ internal supply chain (Ross, 1998). These
state the supply chain management practices includes the supply chain integration through
internal operation, customers management, suppliers management and information sharing and

3
information quality which are undertaking in the organization to assure the whole supply chain
activities that could be contributes on the performance of the organization

This study examined the effect of supply chain management practices on the performance of
organization in meeting the set objectives. It included the assessment of supply chain
management and practices adopted to bring the overall objective of supply chain management
channels set in the organization which expected to increase organizational performance in
effective manner.

1.2 Background of the Organization

CARE is an international NGO works in more than 90 countries, reaching over 50 million
people through over 950 poverty-fighting development and humanitarian aid programs. With
the mission of “CARE works around the globe to save lives, defeat poverty and achieve social
justice” and its vision “Seek a world of hope, tolerance and social justice, where poverty has
been overcome and all people live with dignity and security” CARE started working in
Ethiopia in 1984 in response to severe drought and famine that devastated the Population and
claimed the lives of nearly one million people. Since then, the organization’s activities have
expanded to address the root causes of poverty and vulnerability.

1.3 Statement of the Problem

According to (Haftom, 2014), the study conducted in ethio telecom, argue that Supply chain
inefficiencies in the organization lead to incur additional cost and receive many complaints
from the customers who lost their trust on the company. Some of these efficiencies mentioned
are: longer time lag in the process of delivering the goods to end customers, fragmented
contract with suppliers and internal & external integration problem.

In addition studies conducted by (Sukati, Hamid, & Baharun, 2013) concluded that the
effective implearementation of the supply chain management practices are viewed to be related
to supply chain responsiveness which will increase the supply chain performance and then lead
to organizational performance.
4
CARE Ethiopia is one of the biggest humanitarian organizations in the country, entails
effective and efficient logistics coordination towards humanitarian supply chain management.
But according to the organization consecutive year’s annual reports (2016, 2017 and 2018)
indicated that the departmental integration of the organization is poor to meet the expected
service delivery and to meet organization mission and vision. Besides the internal audit report
2018 also indicated that the organization has showed the presence of poor internal integration
especially unsatisfactory performance in the end-to-end business process. Such gap has also an
impact on the moral and motivation of the staff to meet the service delivery requirement for
high quality in terms of time efficiency and cost effective manner.

Much of the current theoretical/ empirical research in SCM focuses only on the upstream or
downstream side of the supply chain, or certain aspects/perspectives of SCM (Li, Ragu-
Nathan, Ragu-Nathan, & Rao, 2006). Topics such as the role of relationships with suppliers in
improving supplier responsiveness (R. B. Handfield & Bechtel, 2002), and the antecedence and
consequences of buyer-supplier relationship (I. J. Chen & Paulraj, 2004) have been researched
on the supplier side. Studies such as those by (Clark & Lee, 2000), and (Alvarado & Kotzab,
2001), focus on the downstream linkages between manufacturers and retailers. A few recent
studies have considered both the upstream and downstream sides of the supply chain
simultaneously. (K. C. Tan, Kannan, & Handfield, 1998) explore the relationships between
supplier management practices, customer relations practices and organizational performance;
(Frohlich & Westbrook, 2001) investigate the effects of supplier customer integration on
organizational performance; (K. C. Tan et al., 1998) study SCM and supplier evaluation
practices and relate the constructs to firm performance; (Min & Mentzer, 2004) develop an
instrument to measure the supply chain orientation and SCM at conceptual levels; (Kushwaha,
2012) study operational performance through SCM (Ghatebi, Ramezani, & Shiraz, 2013) study
the impact of supply chain management practices on competitive advantage.

However, the relationship of SCM with performance cannot be regarded as conclusive (Squire,
Cousins, & Lawson, 2006). Despite the increase of empirical research in the last few years,
important differences in research design undermine comparability: lack of consensus about the
definition and dimensionality of the SCM practice (s), use of different units of analysis, and

5
different approaches to performance measurement. As far as the knowledge of the researcher is
concerned, there is no empirical study that is conducted in the area of SCM practices and
organizational performance (i.e. from perspectives of strategic suppliers partnership, customers
relationships, level of information sharing and internal operation on organizational
performances) which incorporate upper and down streams on humanitarian organization in
Ethiopia particularly on CARE Ethiopia.

Therefore, since the effort to achieve generalization of the causal relationship between SCM
practices and Organizational performance calls for empirical confirmation in diverse
environments, especially emerging economies,

This paper is to contribute to the debate by testing the effect of SCM practices on
organizational performance in the case CARE Ethiopia. And also transform the E2E
procurement process to meet service delivery requirements for high quality, on time, cost-
effective programming, ensure project beneficiaries receive maximum impact, ensure donor
requirements are met, and address audit compliance findings. Build capacity of and empower
staff to continuously improve the process. Test the usefulness of the Lean approach for
transforming Ethiopia business processes.

1.4 Research Questions

Based on the above statement of the research problem, the following key questions have been
addressed:

 To what extent supply chain management activities are being practiced at CARE
Ethiopia?
 How does the SCM practice related to Organizational Performance of CARE Ethiopia?
 How does a SCM practice affect the organizational performance of CARE Ethiopia?

1.5 Objective of the Study

In this section, both the general and specific objectives of the study which were analyzed in the
results and discussions part are separately elaborated.
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1.5.1 General objective
The objectives of the study is about to analyze the effect of supply chain management practice
on organizational performance of CARE Ethiopia.

1.5.2 Specific objectives

Specific objectives of the study are:

I. To determine the extent to which the supply chain management practice implemented
in CARE Ethiopia.
II. To establish the relationship between supply chain management practices and
organizational performance of CARE Ethiopia.
III. To examine the effect of supply chain management practice in terms of Supplier’s
Management, Consumer Management, Information Sharing and internal operation on
the organizational performance of CARE Ethiopia.

1.6 Significance of the Study

Investigating the practices of supply chain management practices and it’s on the performance
of the organization in this complex and dynamic business world is believed to have the
following importance’s to the academicians, corporate managers, policy makers; and generally
for business practitioners, and specifically, for the case organization, CARE Ethiopia.

Specifically, this study has the following main significances:

It paves the way for educators or training institutions to consider when designing training on
the issues relating to the SCM and it also serves as a spring board to conduct further and more
detail study in the area; this is because at the current situation there are only few researches
were conducted in humanitarian organizations and the related area in Ethiopia, especially in
CARE Ethiopia.

1.7 Scope of the Research

SCM encompasses vast areas of managerial practices. However, it is difficult and
unmanageable to conduct the study in all areas that summarizes SCM in terms of time, finance,
and research manageability. Therefore, the scope of this study is delimited to SCM practices

7
(SM, CM, IS and IO) and organizational performance of the national office and selected six
field offices located at different parts of the country in terms of topic.

The subject scope of this study is also delimited to the organization’s point of reference
towards the supply chain management practices (strategic supplier partnership, customer
relationship, level of information sharing, and internal operation) and the organizational
performance was delimited to operational (effectiveness). The area of the study is also
delimited to the case organization i.e., CARE Ethiopia.

1.8 Limitation of the Study

Due to time limitation other humanitarian organization practices and variables are not included
in the research. It is difficult to cover entire domain of supply chain just in one study. The
research sample didn’t incorporate all the supply chain participants namely: the suppliers and
customers due to time and financial constraint so that it couldn't be generalized/applied to the
complete chain of the organization under investigation. On the other hand constructs of SCM
are not only limited to SCM practices selected in this study. Therefore it is not representing all
constructs that could explain SCM practices.

1.9 Organization of the Paper

This paper was organized into five chapters. The first chapter include introduction which
includes background of the study, statement of the problem, objective of the study, basic
research questions, significance of the study and scope and limitation of the study. The second
chapter deals with review of related literature from different sources. The third chapter
involves methodologies applied in the study. The fourth chapter presents data analysis and
interpretation. The fifth chapter includes summary of the study, conclusions, recommendation
and suggestion.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE

This chapter focused on the literature review as conducted by the researcher. It includes a
review of the various studies that have been conducted by other researchers relating to the
effect of supply chain management practices on the performance of both humanitarian and
commercial organizations. Among the areas reviewed include: supply chain management
practice, performance of humanitarian organizations and effect of supply chain management
practice on organizational performance. The chapter also provides the research gaps identified
and a comprehensive conceptual framework.

2.1 THEORETICAL REVIEW

This study is based on the social network theory, the resource based theory and relief
coordination theory. Social network theory which is also called the Network theory; network
analysis (Carrington, Scott, & Wasserman, 2005) has nodes and links as independent construct
and node size, density, link strength as dependent constructs. The power of social network
theory stems from its difference from traditional sociological studies, which assume that it is
the attributes of individual actors whether they are friendly or unfriendly, smart or dumb
among others that matter. One of the defining elements of social network theory that
differentiates it from other sociological sciences is the weight it gives to the relationships
between the nodes, as opposed to the attributes of the nodes themselves. Social networks
havealso been used to examine how humanitarian organizations interact with each other,
characterizing the many informal connections that link executives together as well as
associations and connections between individual employees at different humanitarian
organizations (Layton, 2006). These networks provide ways for humanitarian organizations to
gather information, deter competition, and even coordinate in setting operational policies
(Layton, 2006).

9
According to (Eisenhardt & Martin, 2000), resource-based theory holds that the firm can be
considered as a bundle of resources that are heterogeneously distributed across it in this case,
humanitarian organizations with enduring differences between them. This theory posits that a
company must secure an efficient bundle and flow of the right type of resources from its
operating environment to stay relevant and prop up its performance (Rungtusanatham,
Salvador, Forza, & Choi, 2003). In this theory, resources refer to physical or tangible assets
that include plants, equipment; as well as intangible assets such as knowledge, expertise, and
other organizational assets.

According to (Zacharia, Sanders, & Nix, 2011), Resource Based Theory (RBT) is critical to
many firms due to its competency in logistics and that it can be expensive if a company opts to
invest in it. This is because competency is a source of sustainable competitive advantage that
humanitarian organizations can have over a period of time and whose realization is pegged on
the practicability of taking advantage of the resources that a company has to achieve efficiency
and effectiveness by utilizing even the resources it does not own.

Humanitarian organizations have therefore relied on outsourcing to gain access to other firm’s
valuable resources in the competitive market. With the growing need for such resources,
humanitarian organizations searching and providing such services become reciprocally adapted
towards one another and more value dependent. The theory thus suggests that coordination
enables firms to be accessible to complementary resources and create much more competitive
resource bundles, providing them with a competitive advantage (Zacharia et al., 2011).

(Seybolt, 1997) and; (McEntire, 1997) mentioned relief coordination theory posits that it is
possible to orchestrate the efforts of diverse organizations and the orderly and organized
direction of activities. (Minear, 2002) indicates that the humanitarianism project offers a more
specific and often cited definition of the concept as: managing information; mobilizing
resources and assuring accountability; orchestrating a functional division of labor in the field;
negotiating and maintaining a serviceable framework with host political authorities; and
providing leadership.

Analysts and scholars also often suggest that coordination is important to improve service
delivery effectiveness. Indeed, while effectiveness is rarely defined, it is most often given as
10
the reason why achieving coordination among service providing agencies is important (Minear,
2002). According to (McEntire, 1997) an effort to reduce duplication, often framed as securing
or improving organizational efficiency, is also frequently offered as a rationale for why
humanitarian organizations should seek to coordinate their assistance operations.

2.1.1 CONCEPTS AND DEFINITION OF SUPPLY CHAIN MANAGEMENT

Supply chain management was defined by different authors, (Simchi-Levi & Kaminsky, 2000)
define supply chain management as “the integration of key business processes among a
network of interdependent suppliers, manufacturers, distribution centers, and retailers in order
to improve the flow of goods, services, and information from original suppliers to final
customers, with the objectives of reducing system-wide costs while maintaining required
service levels”. The Council of Supply Chain Management Professionals (Wilson, 2005)
defines SCM as: “SCM encompasses the planning and management of all activities involved in
sourcing and procurement, conversion, and all logistics management activities, including
coordination and collaboration with suppliers, intermediaries, third-party service providers, and
customers”. (Cooper, Ellram, Gardner, & Hanks, 1997) define SCM as the management and
integration of the entire set of business processes that provides products, services and
information that add value for customers. The term "supply chain management" first appeared
in (Oliver & Webber, 1982). Around 1990, academics first described SCM from a theoretical
point of view to clarify the difference from more traditional approaches and names (such as
logistics), to managing material flow and the associated information flow (Cooper et al., 1997).

The concept of SCM has received increasing attention from academicians, consultants, and
business manager’s as mentioned by (Feldmann & Müller, 2003); (K. C. Tan, 2002); The
concept of SCM has been considered from different points of view in different bodies of
literature (Croom, Romano, & Giannakis, 2000) such as purchasing and supply management,
logistics and transportation, operations management, marketing, organizational theory, and
management information systems.

(K.-C. Tan, Kannan, Handfield, & Ghosh, 1999) attempted to link certain supply chain
management practices with firm performance. In particular, they examined the effects of
quality management, supply base management and customer relations practices on firm
11
financial performance. They found that some aspects of quality management use of
performance data in quality management, management commitment to quality, involvement of
quality department, and social responsibility of management all were positively related to firm
performance (Gillyard, 2003). Managing the supply base was found to have a significant
impact on firm growth but not on overall performance. The significance of supply chain
management highlights the need for companies to actively manage their supply chain to
maximize their performance. As (Mentzer et al., 2001) said, a supply chain will exist whether a
firm actively manages it or not.

Various theories have offered various insights on specific aspects or perspectives of SCM, such
as industrial organization and associated transaction cost analysis (Ellram & Cooper, 1990),
resource based theory and its extension relational view theory (Mohammed, 2014),

Even though different things contribute for differences on the concepts of SCM, different
researchers tried to describe the concepts of SCM as follows. (Ellram & Cooper, 1990) identify
SCM as an integrating philosophy to manage the total flow of a distribution channel from
supplier to the ultimate customer. Whereas (BELAYNEH, 2018) view the supply chain quite
simply as a “process umbrella” under which products are developed and delivered to
customers.

From a structural viewpoint, they argue, the supply chain refers to the complex network of
relationships that organizations maintain with trading partners to source, manufacture and
deliver products. As (Li et al., 2006) described, SCM is a concept which its goal is to integrate
both information and material flows seamlessly across the supply chain as an effective
competitive weapon. (Li et al., 2006) also stated that SCM applies to show the collaborative
relationships of members of different echelons of the supply chain and refers to common and
agreed practices performed jointly by two or more organizations. In addition, according to
(Agus, 2011), SCM includes managing supply and demand, sourcing raw materials and parts,
manufacturing and assembly, warehousing and inventory tracking, order entry and order
management, distribution across all channels, and delivery to the customer.

Generally, the SCM concept used in the research in its essence assumes that firms set up
alliances with members of the same chain (i.e., upward stream, supplier, and downward stream,
12
customer) to improve its competitive advantage revealed by superior operational performance
of all chain members.

Regarding definitions of SCM, many definitions have also been used to explain the term. The
frequency with which the term SCM is used in today’s environment would suggest that it is a
well understood concept accompanied by an accepted set of managerial practices. However,
definitions of and approaches to SCM vary substantially from organization to organization
because it is influenced by many different fields and researchers in the area of SCM. (K. C.
Tan, Lyman, & Wisner, 2002) defines SCM as the simultaneous integration of customer
requirements, internal requirements and upstream supplier performance. Council of Logistics
Management (CLM) defines SCM as the systemic, strategic coordination of the traditional
business functions and tactics across these businesses functions within a particular organization
and across businesses within the supply chain for the purposes of improving the long-term
performance of the individual organizations and the supply chain as a whole. SCM has been
defined to explicitly recognize the strategic nature of coordination between trading partners
and to explain the dual purpose of SCM: to improve the performance of an individual
organization, and to improve the performance of the whole supply chain (Li et al., 2006).

Supply chain by (Christopher, 1999) defined as a network of various organizations involved

both through upstream and downstream linkages in different kinds of activities and processes.
Meanwhile, (Adebayo, 2012) summed up the many definitions of SCM by various authors and
researchers as ‘the task of integrating organizational units along a supply chain and
coordinating materials, information and financial flows in order to fulfill (ultimate) customer
demands with the aim of improving competitiveness of the supply chain as a whole’. Thus, in
the end produce value whether in the form of products or services to the end user.

The key elements of supply chain and its management from these definitions are therefore the
upstream parties, the downstream parties and the integration of all the organizations involved,
together with the internal function of an organization itself. The upstream parties, as being
described by (R. B. Handfield & Nichols, 2002) consists of an organization’s functions,
processes and network of suppliers while the downstream function on the other hand concerns
the distribution channels, processes and functions where the product passes through to the end

13
customer. Where external downstream and upstream functions are concerned, the managers
involved in each upstream and downstream supplier and functions are responsible in making
sure that the deliveries of products and services are done as scheduled to their destinations. If
there are cases where delays are inevitable, the managers are to ensure that the impact of the
delays to the supply chain and the value it carries will be minimal.

In general, regarding the definition of SCM, the researcher conceptualize it as the strategic
coordination of the traditional business functions (i.e., coordinating the firm/organization with
the supplier and customer) and the tactics across these businesses functions within a particular
organization and across businesses within the supply chain for the purposes of improving short
term and long-term performance of the individual organizations and the supply chain as a
whole.

2.1.2 SUPPLY CHAIN MANAGEMENT MEASUREMENT

SCM practices have been defined as a set of activities undertaken in an organization to
promote effective management of its supply chain. SCM practices are multidimensional which
affect the performance of partners in the supply chain. These SCM practices were seen and
discussed by different researchers from different perspectives. (K. C. Tan, 2002) identify six
aspects of SCM practice through factor analysis: supply chain integration, information sharing,
supply chain characteristics, customer service management, geographical proximity, and just in
time capability. (Alvarado & Kotzab, 2001) include in their list of SCM practices concentration
on core competencies, use of inter-organizational systems such as elimination of excess
inventory levels by postponing customization toward the end of the supply chain. (I. J. Chen &
Paulraj, 2004) presented SCM framework/practice that encompassed three dimensions: supply
network structure, characterized by strong linkages between members, low levels of vertical
integration, non-power based relationships; long-term relationships, managed with effective
communication, cross-functional teams, and early supplier involvement in crucial projects,
planning processes; and logistics integration. (Min & Mentzer, 2004) identify the practices of
SCM as including agreed vision and goals, information sharing, risk and award sharing,
cooperation, process integration, long-term relationship and agreed supply chain leadership.

14
(Agus, 2011) identify SCM dimensions as its encompasses: Strategic Supplier Partnership,
developing trust and collaboration among supply chain partners as well as customers; internal
operation, is associated with continuous pursuit of improving the processes, a philosophy of
eliminating all non-value adding activities and reducing waste within an organization;
Postponement Concept, Postponement involves the process of delaying final product
configuration until the actual order requirement is specified by the customer. Keeping products
in semi-finished would allow more flexibility and customization in completing the final
products and also enables a company to respond more quickly to market demand and New
Technology and Innovation, New technology and innovation refers to the application of the
latest scientific or engineering discoveries to the design of operations and production processes
in SCM .

Thus the literature reveals SCM practices from a variety of different perspectives with a
common goal of ultimately improving organizational performance. In reviewing and
consolidating the literature, four dimensions, including strategic supplier partnership, customer
relationship, level of information sharing and internal operation efficiency, are selected for
measuring SCM practice. The four constructs cover upstream (strategic supplier partnership)
and downstream (customer relationship) sides of a supply chain, information flow and
integration across a supply chain (level of information sharing) and the geographical proximity,
structural aspect (K. C. Tan, 2002), cross functional teams, logistics integration across the
supply chain (internal operation). It should be pointed out that even though the above
dimensions capture the major aspects of SCM practice, they cannot be considered complete.
Other factors, such as Postponement Concept is also identified in the literature. Though these
factors are of great interest, they are not included due to the concerns regarding the length of
the survey and the parsimony of measurement instruments. The present study, therefore,
proposes SCM practices as a multi-dimensional concept.

2.1.2.1 SUPPLIER RELATIONSHIP MANAGEMENT

It is defined as the long term relationship between the organization and its suppliers. Strategic
supplier partnership emphasizes direct relationship and long-term and encourages mutual
planning and efforts to resolve problem. Supplier and organizations can work together more

15
closely and eliminate useless time and effort. According to (Li et al., 2006), effective
partnerships with suppliers can be critical factor to guide supply chain management.
(Sadikoglu & Zehir, 2010) also stated that in strategic supplier partnership, suppliers play more
direct role in an organization’s quality performance.

Through close bonded relationships, supply chain partners are more willing to share risks and
reward and be able to maintain the relationship over a longer period of time (Landeros &
Monczka, 1989). It is designed to leverage the strategic and operational capabilities of
individual participating organizations to help them achieve significant ongoing benefits (Noble,
1997). Such strategic partnerships are entered into to promote shared benefits among the
parties and ongoing participation in one or more key strategic areas such as core raw materials,
technology, products, and markets (Yoshino & Rangan, 1995).

Strategic partnerships with suppliers enable organizations to work more effectively with a few
important suppliers who are willing to share responsibility for the success of the products.
Suppliers participating early in the product-design process can offer more cost effective design
choices, help select the best components and technologies, and help in design assessment (K.
C. Tan, 2002). Strategically aligned organizations can work closely together and eliminate
wasteful time and effort(Blasmeier, 1996). An effective supplier partnership can be a critical
component of a leading edge supply chain (Noble, 1997). The main objective of strategic
partnerships with suppliers is increasing the functional capability of desired supplier
(Rosenzweig, Roth, & Dean Jr, 2003). Therefore, strategically managed long-term relationship
with supplier has positive impact on a firm’s supplier performance (Cooper & Ellram, 1993).

2.1.2.2 CUSTOMER RELATIONSHIP

It encompasses the entire array of practices that are employed for the purpose of managing
customer complaints, building long-term relationships with customers, and improving
customer satisfaction (Claycomb, Dröge, & Germain, 1999).

(Noble, 1997) considers customer relationship management as an important component of

SCM practices. As pointed out by (Day, 2000), devoted relationships are the most sustainable
advantage because of their essential barriers to competition. Focusing and maintaining the
customer relationship will enable the organizations to be more responsive towards customers’
16
needs and will result creating greater customer loyalty, repeat purchase and willing to pay
premium prices for high quality product (Carr & Pearson, 1999).

Besides, the main goals of SCM are customer satisfaction and their loyalty as (Stalk & Hout,
1990), customer relationship management is an important component of supply chain
management practices (Noble, 1997). The growth of mass customization and personalized
service is leading to an era in which relationship management with customers is becoming
crucial for corporate survival (Wines, 1996). Good relationships with supply chain members,
including customers, are needed for successful implementation of SCM programs (Moberg,
Cutler, Gross, & Speh, 2002). Besides (Magretta, 1998), noted lose customer relationship
allows an organization to differentiate its product from competitors, sustain customer loyalty,
and dramatically extend the value it provides to its customers.

As discussed in (Niknia, 2007), the main customer relationship goals are identifying new
business opportunities, reduce missed opportunities, reducing customer defection, creating
customer loyalty, improve customer service, improve organization performance, reduce costs,
and increase revenue. For this research purpose, customer relationship is conceptualized from
the literature review and practicability in Ethiopia as the way of building long-term relation
with customers through creating customer loyalty, reducing defect products, improving
customer services, reducing price/cost, managing customer complaints and working on
improving customer satisfaction.

2.1.2.3 INFORMATION SHARING

Information sharing refers to ability of enterprises to share knowledge and information with
supply chain partners with effective and efficient manner. Information sharing in interactive
system of supply chain includes information between direct partners and all network of supply
chain. For effective and efficient use by partners is needed sharing information. The level of
information sharing is closely linked with accountability and efficiency (RAHMAN & Afsar,
2008).

According to (Stein, 1998), supply chain partners who exchange information regularly are able
to work as a single entity. Together, they can understand the needs of the end customer better
and hence can respond to market change quicker. Effective use of relevant and timely
17
information by all the functional elements in the supply chain is considered as a competitive
factor and distinctive (Ahmadi, 2005).

Failures can occur in case of information delays, shortage or distortion across the supply chain
(D. Power, 2005). In this study supply chain information sharing is associated with the amount
of information shared among supply chain partners in downstream and upstream side of the
supply chain and also the information intensity. In this study, information sharing in supply
chain is conceptualized as the extent of sharing business knowledge formally or informally
with supply chain partners. Also it is associated with the amount of information shared among
supply chain partners in downstream and upstream side of the supply chain and also the
information intensity.

2.1.2.4 INTERNAL OPERATION

In addition to the upstream and downstream integration, SCM also emphasize on the
importance of both effectiveness and efficiency of firm’s internal operations on its
performance. This is due to a significant element of SCM practice is an internal operations and
they are the basis for developing a competitive advantage before embarking into external
integrations. Poor internal operations can lead to failure in coordinating with external partners
(R. Handfield & Nichols Jr, 1999).Internal operation summarizes all activities related to
production system and internal, logistics flow (R. Handfield & Nichols Jr, 1999). To judge the
SCM practice as an effective and value adding the internal operation should be flexible in
responding to changing market needs, which is expressed on the basis of agility principles.
This means that, a production system must be able to perform rapid change over in both order
patterns and mass customization (Lambert & Cooper, 2000). (D. J. Power, Sohal, & Rahman,
2001) find that technology utilization, continuous improvement and computer based
automation in manufacturing are some of characteristics of agile/flexible organization.

Thus, the effectiveness of SCM can be examined by the ultimate effect it would have on
customer satisfaction through responsiveness and lower price resulting from lean internal
operations. Automated orders and automated productions are the key enablers to realize the
quick response program (Perry & Sohal, 2000).

18
2.1.3 ORGANIZATIONAL PERFORMANCE

Every organization exists to achieve a particular goal. Organizational performance is the final
achievement of an organization and contains a few things, such as the existence of certain
targets, has a period of time in achieving these targets and the realization of efficiency and
effectiveness (Blowfield & Dolan, 2010). Thus, efficient and effective organizational
performance could be achieved through good practice of supply chain management practices
with all of the partners in the chain; this study acknowledges the four different dimensions of
SCM (supplier partnership, customer relationship, information sharing, and internal operation)
as an instrument that might have an impact to measure the organizational performance with
respect to key indicators, such as responsiveness, reliability, flexibility, quality and delivery.
Performance provides the basis for an organization to assess how well it is progressing towards
predetermined objectives, identify areas of strength and weakness and decide on the future
initiatives with the goal of how to initiate performance improvement (Van Weele, 2009).

Organizational performance includes multiple activities that help in establishing the goals of
the organization, and monitor the progress towards the target (Kopczak & Johnson, 2003). It is
used to make adjustments to accomplish goals more efficiently and effectively. Organization
performance is what business executives and owners are usually frustrated about. This is
because even though the employees of the company are hard- working and are busy doing their
tasks, their companies are unable to achieve the planned results. Results are achieved more due
to unexpected events and good fortune rather than the efforts made by the employees.
However, for any business to be successful, functions must be defined and accomplished. It is
important for an organization to develop strategies that are designed around the skills that
would enhance the performance of the organization. Organizational performance is affected by
myriad factors including: the lines of communication and command connecting these
individuals (organizational authority structure and the degree of centralization), the resources
and information to which the individuals have access, the nature of the task faced by the
individuals, and the type and severity of the crisis under which the individuals operate
(Devinney, Richard, Yip, & Johnson, 2005).

19
Financial measures do not convey the full picture of a company’s performance, especially in
today’s competitive environment where companies are competing in terms of product, quality,
delivery, reliability, after-sales service and customer satisfaction. None of these services is
measured by the traditional responsibility accounting system, despite the fact that they
represent the major goals of world-class manufacturing companies. Many companies are using
both qualitative and quantitative non-financial indicators such as; quality, lead time, number of
customer complaints and warranty claims, delivery time, non-product hours, and system down
time (Bozec, 2005).

Although non-financial measures are increasingly important in decision-making and

performance evaluation, companies should not simply copy measures used by others. The
choice of measures must be linked to factors such as corporate strategy, value drivers,
organizational objectives and the competitive environment. In addition, companies should
remember that performance measurement choice is a dynamic process - measures may be
appropriate today, but the system needs to be continually reassessed as strategies and
competitive environments evolve (Jayachandran, Sharma, Kaufman, & Raman, 2005).

In conclusion, organizations which do not check adequately how well they are performing in
their processes, procedures and plans experience low performance and higher customer
dissatisfaction and high employee turnover (Artley & Stroh, 2001).

2.2.3.1 MEASUREMENT OF ORGANIZATIONAL PERFORMANCE

Organizational performance is typically refers to the ability of an organization to accomplish
its markets and financial goals (Yamin, Gunasekaran, & Mavondo, 1999) measured over the
planned outcome and normally it is related to both financial performance and non-financial
performance.

(Tracey, Vonderembse, & Lim, 1999) mentioned that whichever firms whose is able to achieve
high customer satisfaction may result in enhancing competitive capabilities and further
increase market performance that will help in increase organizational performance.(Koufteros,
Vonderembse, & Jayaram, 2005) asserted short order cycle time, the high order fill rate,

20
accurate order and shipment information will further enhance on the organizational
performance. (Harison, Cailliet, & Harrison, 2002)in their study found that shorten production
cycle time, reducing order cycle time, reducing inventory costs, and reducing delivery costs
were important operational factor that determining organizational performance. The traditional
way of measuring performance based on cost alone has giving way to more innovative
approach incorporating non-cost performance measures like quality, flexibility, time, and the
need for customer satisfaction (Ashish, 2006).

2.2.3.2 PERFORMANCE OF HUMANITARIAN ORGANIZATIONS

Humanitarian organizations are at the frontline of a given response whenever disasters strike.
When such organizations respond fast enough, they are seen to be efficient and effective in
disaster response. As Davidson (2006) states, when such organizations do not however respond
fast enough in the eyes of the media and the local government, then the blame that is placed on
such organizations tarnishes their names and reputation. This hence affects the organization’s
base and donors. Without donor funding, a humanitarian organization’s entire ability to
continue its operations is in serious danger.

The question of how to measure the performance of humanitarian organizations has recently
become a hot topic mainly because of the disasters that have occurred and the ever-evolving
nature of humanitarian aid. Davidson (2006) continues to argue that the lack of centrally
captured data, limited information, organizational culture and lack of coordination are the key
factors for the inability to answer such a question.

Humanitarian organizations heavily rely on such SCM functions procurement, logistics,

distribution and warehousing in the delivery of the required goods, works and services to the
beneficiary. In 2005, Hurricane Katrina flooded New Orleans, LA, leaving residents without
access to food or clean water. As a result, a massive rescue of the inhabitants had to be made.
During the first weekend of the rescue effort, 1.9 million meals and 6.7 million liters of water
were delivered by humanitarian aid agencies and NGOs. (Gravois, 2012).

A humanitarian organization’s ability to improve the lives of the world’s most vulnerable
communities therefore relies heavily upon its ability to integrate and coordinate its SCM
functions so as to get the desperately needed goods, works and services to the targeted
21
communities. Rodman (2004) states that without sustainable, efficient, transparent and well-
coordinated procurement and logistics processes, the humanitarian sector is at risk of
unnecessary costs and delays which put their vision, efforts and determination to better the
lives of the less fortunate, at risk, hence poor performance.

2.2.3.3 OPERATIONAL PERFORMANCE /EFFECTIVENESS/

It measures the degree to which a business achieves its goals or the way outputs interact with
the economic and social environment. Usually effectiveness determines the policy objectives
of the organization or the degree to which an organization realizes its own goals (Chiang &
Zheng, 2010). (Meyer & Herscovitch, 2001) analyzed organizational effectiveness through
organizational commitment. Commitment in the workplace may take various forms, such as
relationship between leader and staff, employee’s identification with the organization,
involvement in the decision making process, psychological attachment felt by an individual.
(Shiva & Suar, 2010)agree that superior performance is possible by transforming staff attitudes
towards organization from lower to a higher plane of maturity, therefore human capital
management should be closely bounded with the concepts of the effectiveness.

According to (Heilman & Kennedy-Phillips, 2011) organizational effectiveness helps to assess

the progress towards mission fulfillment and goal achievement. To improve organizational
effectiveness the management should strive for better communication, interaction, leadership,
direction, adaptability and positive environment. This study used effectiveness to measure
organization performance. Effectiveness is reflected by using flexibility performance, delivery
performance, customer responsiveness, and time to market (Ibrahim & Ogunyemi, 2012)

2.1 Empirical literature review

Empirical studies by (Ross, 1998), confirmed the theory that, SCM practices considerably
improve performance of organizations. Moreover, the results specifically highlight that
information sharing practice significantly contributes to more performance measures than
supplier and customer relationship practice. With regard to the relationship between SCM
strategies and operational performance, (K. C. Tan, 2002) observed that the following SCM-
related strategies were significantly related to overall product quality and overall customer
22
service: namely determination of customer’s needs, reduction in response time and supplier
delivery time, improvement of integration activities, trust among supply chain members,
communication of future needs, use of information sharing, internal operation and assistance of
suppliers in JIT (just in time) capability.

2.3.2. SUPPLY CHAIN MANAGEMENT PRACTICES AND ORGANIZATIONAL

PERFORMANCE
(Delaney et al. 2006) point that organizational performance can be evaluated by quality service
and products, satisfying customers, market performance, service innovations, and employee
relationships. On the other hand, (Haque & Islam, 2013) in their study of organizational
performance based on balanced scorecard, stated that organizational performance can be
appraised by return of investment, margin on sales, capacity utilization, customer satisfaction
and product quality. In the same way, (Green, Whitten, & Inman, 2008) identified that return
on investment, sales and market growth, and profit are important factors that can be measured
by organizational performance. In all these performance measures, SCM practices have a
positive relationship or generally affects the level of organizational performance.

(Carr & Smeltzer, 1999) have documented how firms with strategic purchasing are able to
foster long-term, cooperative relationships and communication, and achieve greater
responsiveness to the needs of their suppliers. Although other factors, such as restructuring and
governance, and transaction cost economizing are also important for understanding strategic
purchasing and its linkage to supply management, they are beyond the scope of this
investigation. Strategic purchasing fosters communication, which is critical to achieving
effective integration throughout the supply chain.

Eyob (2017) conducted study on SCM Practices of Modern Building Industries in Ethiopia.
The general objective of the study was to assess SCM practices implementation in MBI and its
effect to the overall organizational performance. Key dimensions of SCM practices as well as
operational and market-oriented performance indicators were used for the purpose of
investigating the real scenario. Whereas, valid and reliable instruments for assessing study
variables were used with the help of scientific methods such as chi square test, Spearman’s
correlation and Kruskal Wallis test. Thus, from such analysis, the study had empirically
23
justified and provided a proof to support the conceptual and prescriptive statements made in
the previous studies regarding the role of supply chain management practices in enhancing
organizational performance.

The results of the survey show that the implementation of modern SCM practices is weak in
MBI. Similarly, except degree and quality of information sharing and lean practices, even
though in a weak level, no positive relationship was observed between the other SCM practices
and organizational performance in this firm. It can, therefore be concluded that the firm is
doing business as usual and no attention was given to modern SCM theories and practices in
the firm yet. However, the existing literature advocates that the implementation of SCM
practices can considerably improve organizational performance.

(Jayaratne, 2011)) Conducts a study on Sustainable Supply and Supply Chain Mapping Sri
Lankan Tea industry. This paper looks at the contextual references in supply chain
management and the Sri Lankan tea sector. It recognizes the importance of standard supply
chain management techniques and preliminary connection to sustainable supply chain
management. The researcher suggests that there a huge gap in the understanding of supply
chain resilience on sustainable supply chain management. Furthermore, there is a lack of
research on Sri Lankan tea supply chain and 17 understanding of the macro level supply in this
area. On the other hand, in order to identify the influencing factors on sustainable tea supply in
Sri Lanka, it is essential to map the Sri Lankan tea supply chain.

The study identified that supply chain mapping has not been research extensively. This is
obvious not only for tea supply chain but also for supply chains in manufacturing sector.
Therefore, the research would help to fill the knowledge gap in this area, while the overall
results would help to improve the tea supply chain not only in Sri Lanka but also for other tea
producing countries. Furthermore, the research findings would also assist other agricultural
supply chains and manufacturing sector.

The above empirical studies proof & suggested that a good supply chain management practice
increase organizational performance & companies give attention to supply chain management
practice for the success of any business & to compute in today’s global world.

24
Based on the detailed analysis, there are four main dimensions of SCM practices widely
acknowledged by the researchers as well as suitable to be applied in nonprofit or humanitarian
organization. These four service SCM practices are supplier relationship management,
customer relationship management, information sharing technology management and internal
operation. For the purpose of this study, the effect of SCM practices on organizational
performance in the case of Care Ethiopia, humanitarian organization are conceptualized as a
multidimensional construct comprising of the four dimensions mentioned above.

2.3.3. THE EFFECTS OF SUPPLY CHAIN MANAGEMENT PRACTICES ON

ORGANIZATIONAL PERFORMANCE
Although literature of SCM practices vary in different view and perspectives, its stand as a
mutual understanding purpose of improving organizational performance. Over the literature of
reviewing and consolidating that has been pointed out by different researchers, academicians
and consultant, there are seven distinctive dimensions of SCM practices which are widely
agreed by researchers and received the most consensuses in the researches. These seven
dimensions are outsourcing, strategic supplier partnerships, customer relationships, information
sharing, postponement, quality of information sharing and internal operation. Findings from
these researchers argued that supply chain management practices can encourage the customer
relationship and smooth the information sharing and quality of information sharing flow across
the supply chain processes including outsourcing, strategic supplier partnership, lean practices
and postponement.

Table 2.1 Supply Chain Management Practices by Scholars.

Supply Chain Management Practice Variables
Supplier customer Level of Quality Outso postpon Internal
Scholars managem relationship info. Info. urcing ement Operati
ent sharing sharing on
Donlon (1996) X X X
Tan et al. X X X
(1998)
Tan (2001) X X X
Li et al. (2005) X X X X X X
Charles R X X X
Gowen (2002)
25
Chee and John X X X
(2005)
Lenny and X X X X
Mehmet (2007)
Suhong Li X X X X X
(2004)
Ashish (2007) X X X X X X
Sufian (2010) X X X X X X
Zhao and X X X
Benton (2007)
Chong et al. X X X X
(2010)
Total sum 10 8 10 4 4 7 7
Source: Researcher 2020

Moreover, such SCM practices were said to create the conclusive environment for enhancing
organization performance. The following section will discuss on each of the selected SCM
practices including strategic supplier partnership, customer relationship, level of information
sharing and internal operation and how each of them relates to organizational performance.

2.3.2.1 Effect of Supplier Management on Organizational performance

Supplier relationship implies that companies will tend to work with fewer suppliers. As such,
cost of supplied materials will be reduced due to economies of scale for suppliers (Zhao, Huo,
Sun, & Zhao, 2013). Supplier integration also minimizes the inspections of incoming materials
as the customer firm will have an impetus to assist and certify suppliers on quality management
resulting in improved productivity and quality and better design of parts (De Toni &
Nassimbeni, 2000).Furthermore, integrating suppliers in new product development activities
result in improved product quality, reduced development time and engineering changes,
reduced costs, and early resolved potential problems of the supplier (De Toni & Nassimbeni,
2000). Generally, supplier relationship positively affects lead time performance, integration
performance (Vachon & Klassen, 2008), delivery performance, customer service, and
competitive advantage (Gimenez & Ventura, 2005).

As an argument of (Stuart, 1997) strategic partnership involves continuous improvement

activities, sharing information and joint problem solving effort encourage suppliers to
26
participate to the success of organizational performance. Against this backdrop, strategic
supplier partnership is then conceptualized as the predictor of organizational performance.

2.3.2.2 Effect of Customer Management on Organizational performance

Customer relationship allows companies to enhance customer responsiveness due to increased
ability to anticipate and track customer complaints, demands, and needs (Hausman & Stock,
2003). (Kratochvíl & Carson, 2005) argued that customer relation leads to reduced steps in a
business process and minimized losses by eliminating misunderstanding in the order process,
which subsequently result in lower costs, improved quality and delivery, and increased
customer responsiveness. Companies are forced to identify customer needs and wants in a
timely manner in order to be able to respond to their varying preferences. Integrating customers
allows companies to identify their needs and address them through SC tasks such as continuous
replenishment, flexibility and stock management, and on time delivery (Cox et al., 2003).
Customer relationship enables companies to differentiate their products from rivals and
considerably enhance the provided value to customers and increase customer satisfaction and
loyalty (Cox, 2004).

Besides, Carson in his study further suggest that customer relationships are included customer
services, delivery performance and customer satisfaction which enable an organization to
improve it product design to meet customer requirement as well as expectations that will
overcome the customer satisfaction. (Bommer, O’Neil, & Treat, 2001) in his study also
recognized that customer relationship can be used as organization’s marketing strategy to gain
extra sales and profits. As a result, close and good customer relationship will definitely help in
improving organizational performance.

2.3.2.3 Effect of Information Sharing on Organizational Performance

(Moberg et al., 2002) asserted that timely and shared information in the SC results in more
accurate decisions and can be regarded as a pillar of superior performance. Shared information
enables companies to enhance inventory control and management and increase inventory
turnover. Furthermore, shared information among SC partners improves delivery performance,
logistics communication, and SC planning (Trevile et al., 2004). Additionally, information
sharing significantly reduces costs (Wang et al., 2006), shortens cycle time (Lin et al., 2002),
27
and improves overall performance (Zhao et al., 2002). Hence, information sharing enable the
right information available for the right time, right place and right trading partner which will
contribute to greater organizational performance.

2.3.2.4 Effect of Internal Operation on Organizational Performance

Internal operation allows companies to meet and improve production scheduling through cross-
functional integration, supply and demand planning, production scheduling and planning, and
customer demand management (Stratman & Roth, 2002)). Internal operation minimizes
conflicts and misinterpretations, facilitates the flow of information among different functions,
and focuses all the efforts towards fulfilling customer orders and requirements in a timely
manner. Well integrated functions result in reduced inventories, enhanced delivery speed, and
increased customer responsiveness. Therefore, internal operation is then conceptualized as the
predictor of organizational performance.

2.3 HYPOTHESIS
Supply chain management practice is expected to increase an organization’s market share,
return on investment (Shin, Collier, & Wilson, 2000), and improve overall performance
(Person, Gardella, Theroux, & Oberlander, 1999). Previous studies have indicated that various
components of supply chain management practices have an effect on the performance of the
organization; supplier partnership can improve supplier performance, reduce time to market
(Ragatz, Handfield, & Scannell, 1997), and increase the level of customer responsiveness and
satisfaction (D. J. Power et al., 2001). Information sharing leads to high level of supply chain
integration (Jarrell, 1998) by enabling organizations to make dependable delivery and
introduce products to the market quickly.

Several statements of supposition can be made in view of the effect and relation of supply
chain management practice on organizational performance in the case of CARE Ethiopia
humanitarian organization. In light of the research objective the study has designed the
following directional hypothesis.

 Ha1: Supplier’s relationship management has significant effect on organizational

performance in the case of CARE Ethiopia.

28
  Ha2: Customer relationship management has significant effect on organizational
performance in the case of CARE Ethiopia.
 Ha3: Information sharing practice has significant effect on organizational performance
in the case of CARE Ethiopia.
 Ha4: Internal operation has significant effect on organizational performance in the case
of CARE Ethiopia.

2.4 RESEARCH FRAMEWORK

The motive behind the literature review is to collect and generate structure reference related to
the research problem from research articles, books and other reliable and valid sources of
information which was published in recent past. Various articles have been published in the
recent past in reputed journals which have relationship with the proposed research work. For
example, (Li et al. 2005), (Chow et al. 2006), (Cohen and Mallik 1997), (Chong et al. 2010),
(Larry et al. 2008) , (Ashish 2007) and (K. C. Tan, 2002) have provided a strong base for this
research work.

The proposed framework for this research is illustrated in Figure 2.1. The framework shows
the effect of SCM practices; supplier relationship management, customer relation management,
information sharing practice and internal operation practice on organizational performance of
CARE Ethiopia.

The independent variables: - are the supply chain management dimensions which include:

I) Relationship with suppliers: The variable is measured or indicators are continuous

improvement activities, sharing information, joint problem solving effort and the supplier’s
participation level.
II) Customer relation management: - Indicators for the variable, reduced steps in a business
process, minimized losses, improved quality and delivery, and increased customer
responsiveness.
III) Information sharing: - Indicators are right information available for the right time, right
place within the organization and right trading partner

29
IV) Internal operation: - Indicators are cross-functional integration, supply and demand
planning, production scheduling, planning, and customer demand management
Dependent Variable: - is the Organizational Performance through the operational
effectiveness. Organizational performance are represented through: delivery on time, compliant
handling and improving responsiveness, minimizing inventory cost, departmental integration
and team works within the organization.

Figure 2.1: Conceptual Framework Developed by the Researcher

Independent variables Dependent variable

SCM Practice

- Supplier’s management
Organizational
- Customer management Performance

- Information sharing

- Internal Operation

Source: adopted from (Li et al. 2005); (Sufian, 2010) modified by the researcher.

2.5 IDENTIFIED LITERATURE GAP

On the above empirical review, the researcher observed and understands that all previous
studies related to the effect of supply chain management practices on organizational
performance was concentrated on the same type of organization. But still the researcher could
not get any researches that directly align with supply chain practices of humanitarian
organization or non-profit making organizations like CARE Ethiopia. So, the researcher
encountered to fill the gaps on this study, the effect of supply chain management practice on
organizational performance in the case of CARE Ethiopia, humanitarian organization and also
the researcher focused on four supply chain dimensions i.e. Suppliers relation Management,
30
Consumers relation Management, information sharing and internal operations of the
organization.

2.6 SUMMARY OF LITERATURE REVIEW

From theoretical perspective the study assesses different books & articles that discuss the
relationship between supply chain management practice & organizational performance. These
literatures indicate supply chain management practices are a fundamental to organizational
performance in today’s globalized business all firms get their competitive advantage by
managing various challenges. Effective SCM provides benefits that go beyond the entities or
the organization itself and those firms may comprehend their potential of integrating their
external relationship with external suppliers, customer and also the firm’s internal operational
practices. Strategic supplier partnership is creating a long-term relationship with suppliers,
collaborating & working together for mutual benefit.

Information sharing is an important aspect in achieving seamless integration in the supply

chain. Good practice of information follow leads the organization towards a success, on the
other hand poor practice of information sharing leads to many serious problems. The practice
of internal operation is the other component of organizational performance. Internal operation
is pillar point to develop effective organizational performance through increasing supply chain
integration & minimize operational cost of the organization

31
 CHAPTER THREE
RESEARCH DESIGN AND METHEDOLOGY
This chapter describes the research design and methodologies used in this study. It includes,
the choice of particular research approach, research design, data type and source of data, data
gathering techniques and instruments, sampling and sampling techniques, methods of data
analysis techniques.

2.1 RESEARCH APPROACH

Both quantitative and qualitative study approach was conducted in order investigate
humanitarian logistics coordination role, practice and challenges aligning with the relationship
with organizational performance in SCM practices of the organization. Quantitative research
technique was employed in order to obtain the logistics and supply chain team perceptions on
logistics coordination and supply chain practices in the organization. Qualitative research
method allows the use of historical analysis.

According to Creswell (2013), mixed research method is suitable for the development of
concepts which help us to understand social phenomena in natural (rather than experimental)
settings, giving due emphasis to the meanings, experiences and views of the participants. It is
generally used to gain an understanding of underlying reasons as well as to uncover the
implementation of supply chain management practices and their effect on the performance as
well as to find answers to the research problem.

Structured questionnaire was employed as a data collection tool. Information was collected
from the logistics, procurement and supply chain department and those who provide related
service to the program. Therefore, employees of CARE Ethiopia staff who are engaged in
logistics activities and supply chain management were included in the data collection process.

32
2.2 RESEARCH DESIGN
Descriptive and causal research design was used in this particular study. Descriptive research
design was used in order to understand and systematically examine the implementation level of
humanitarian supply chain management practice. More so, a descriptive study was conducted
in order to ascertain and be able to describe the characteristics of the variables of interest in a
situation. The design was used to identify the most influential variables that affect SCM efforts
and its relationship with organizational performance. A causal research design can be used for
studying a cause and effect relationship between dependent and independent variables and
regression analysis (whether simple or multiple) is termed as causal analysis between two or
more variables. In quantitative studies, researchers advance the relationship among variables
and pose this in terms of questions or hypotheses. Quantitative research is based on the
measurement of quantity or amount. It is applicable to phenomena that can be expressed in
terms of quantity. A case study method can deploy cross sectional data collection technique in
a given organization or organizations (Kothari, 2004).

2.3 POPULATION AND SAMPLING TECHNIQUES

2.3.1 POPULATION
The population of the study is the employees who work in CARE Ethiopia head office and
field offices of the organization which has a total of 1031 employees. Population is defined as
the entire set of individuals or other entities to which study findings are to be generalized
(Schutt, 2011). The target population for this study comprised of 300 employees of CARE
Ethiopia, who have engaged in supply chain related activities and who have the knowhow
about supply chain management practices and organizational performance.

2.3.2 SAMPLING FRAME

33
The sampling frame was consists list of 300 employees of CARE Ethiopia; employees working
on the supply chain department found at national office, employees working on area program
which found under each field offices and head office and employee of six field offices found at
different locations by taking data from human resource department of the organization.

2.3.3 SAMPLING TECHNIQUES

A sample is the number of items selected to represent the whole population (Kothari, 2004). For
the purpose of this study probability sampling particularly stratified sampling technique was
adopted. According to (Kothari, 2004), a stratified sample is a probability sampling technique in
which the researcher divides the entire target population into different sub-groups, or strata, and
then randomly selects the final subjects proportionally from the different strata. This type of
sampling is appropriate when the researcher wants to highlight specific subgroups within the
population. The target population for the study was classified into four strata based on the sectional
division of the organization. Then the researcher takes samples from each stratum according to
their proportion to the total population. Since the information required for the study needs different
people who have knowledge and awareness about different supply chain management
practices/dimensions, and organizational performance of the organization, stratified sampling
technique was adopted to have the right proportion of people from every concerned department or
section. The departments considered as stratum were: supply chain management (Strata1), finance
and property management (Strata2), logistic & facilities management (Strata3) and ICT department
(Strata4).

2.3.4 SAMPLE SIZE DETERMINATION

The target population for this study is 300 employees; they were directly engaged in supply
chain related activities. A sample size of 171 employees was selected since the entire
population of interest could not be selected. To arrive at the desired sample size this study used
the formula given by (Toro, 1967).

2
n= N/ (1+N (e)

Where, n = the sample size

34
 N = the population size

e =Margin of error acceptable or measure of precision is 0.05

Therefore, by using the above parameters the researcher has obtained the sample size as follows:

= 171 Respondents

Table 3.1: Number of sample units, sample ratio and sample for each stratum
Item Strata to be Sampling unit Sample ratio for each Sample from each
no sampled of each strata strata strata

1 Strata1 85 85*100%/300=19% 28% of 171=48

2 Strata2 72 72*100%/300=19% 24% of 171=41

3 Strata3 65 65*100%/300=19% 22% of 171=37

4 Strata4 80 80*100%/300=19% 26% of 171=45

Total population 300 100%=100 171

Source: Own author’s 2020

2.4 SOURCES OF DATA

To achieve the specified objective, both primary and secondary data sources were used. The
primary data was collected from respondents who are related to the program or supply chain
management and logistics activity through questionnaire designed by the researcher. They
include program managers, area office logistics supervisors, logistics officers, transportation
managers, IT managers, warehouse managers and SC officers. In addition to the primary data,
secondary data was gathered from published and unpublished sources.

2.5 DATA COLLECTION PROCEDURES

In order to investigate the SCM practice role on performance, in case of CARE Ethiopia, both
primary and secondary sources were used as a supply of data. The primary data was collected
from CARE Ethiopia (both head and field office) by distributing questionnaire. The secondary

35
data was collected from different article reviews, books, and documents from the organization
data base were reviewed to supplement the primary data.

Based on the research conceptual model addressed in the literature review section, 4 constructs
were determined as the supply chain management dimensions. 28 items from these constructs
are obtained from the literature of which the questionnaire was adapted to address the supply
chain management practice in the organization. The questionnaire consists of four sections so
as to cover objectives of the research including: introduction, respondents‟ profile,
implementation practices of supply chain management, supply chain management practice and
performance. An organization based case study cross-sectional study design using quantitative
methods of data collection was employed. To determine the performance of humanitarian
organization, 1 construct and 6 items were adapted. Furthermore a total of 28 items were used
to investigate the implementation level of SCM practice in the organization.

Close- ended questions were used to collect data from selected respondents (staff of the
organization) that work with logistics provision and supply chain. The question for both
questionnaires were short, precise and clear in a manner that they were understandable to get
necessary information from the respondents.

Nominal scale was designed to get information on respondent profile which composed of
mutually exclusive category. A five point Likert scale was designed to ask respondents for
scoring items ranging from 1 = to strongly disagree to 5 = to strongly agree in which the
subjects indicate their degree of agreement or disagreement with each of a number of
statements to get answer for the research objectives. Modification of the questions was done
based on the experts‟ advice and respondents‟ feedback to increase reliability of the
instrument.

The questionnaire was addressed to CARE Ethiopia staff that has direct relationship with
logistics activity through email and personally by the researcher. The questionnaire was
prepared in English language since all the respondents know the language well as CARE
Ethiopia working language is English.

36
2.6 ETHICAL CONSIDERATION
Each discipline should have its own ethical guidelines regarding the treatment of human
research participants (Johnston & Vanderstoep, 2009). Research ethics deal with how we treat
those who participate in our studies and how we handle the data after we collect them. The
researcher had kept privacy (that left any personal questions), anonymity (protecting the
identity of specific individuals from being known) and confidentiality or keeps the information
confidential (Saunders, 2007). In addition, the questionnaire distributing to voluntary
participants and have a clear introduction and instruction parts regarding the purpose of the
research.

2.7 VALIDITY AND RELIABILITY

2.7.1 ASSESSING RELIABILITY
According to (Bell & Bryman, 2007), reliability analysis is concerned with the internal
consistency of the research instrument. As multiple items in all constructs were used, the
internal consistency/reliabilities of SCM practices and organizational performance were
assessed with Cronbach’s Alpha and the reliability values for all constructs are confirmed as
greater than 0.7, which are considered acceptable (Nunnally & Bernstein, 1978).

2.7.2 ANALYSIS OF VALIDITY

(Compbell, 1960) identified the most commonly used methods for demonstrating validity are
referred to as content-related, criterion related, & construct-related validity. Validity refers to
the test or measurement strategy measures and how well it does so. This study addressed
content validity through the review of literature and adapting instruments used in previous
research. It refers to the relevance of the instrument or measurement strategy to the construct
being measured. On the other hand (Groth-Marnat & Baker, 2003) define content validity the
extent to which the test or measurement strategy measures a theoretical construct or trait.
37
 CHAPTER FOUR

RESEARCH FINDINGS AND INTERPRETATIONS

This chapter presented the results of the analysis of the data obtained from the respondents
through questionnaires and has three main sections. In the first part discussed about
demographic related results, on the second section also discussed about the descriptive result
and at the end the inferential analysis (correlation and multiple regression) results were
presented and discussed.

4.1.1 RESPONSE RATE

A total of 171 questionnaires were distributed to the respondents and the response rate is
presented in Table 4.1.
Table 4.1: Response Rate
Category Frequency Percentage

Response 157 91.8

Non-response 14 8.2

Total 171 100

Source: Research Data (2020)

The results in Table 4.1 show that out of 171 questionnaires administered 157 responded
giving a response rate of 91.8% while those respondents who failed to respond accounted for
8.2%. According to (Mugenda & Mugenda, 2003), a response rate of 50% is adequate for
analysis and reporting rate of 60% is good and a response rate of 70% and above is excellent.

38
Based on this assertion, the overall response rate of 91.8% was practiced satisfactory to make
conclusions for the study as it acted as a representative.

4.1.2 RELIABILITY OF THE RESEARCH INSTRUMENT

Pilot study (preliminary test) was carried out using convenient sampling method and having the
same characteristics with the participants of the main study. The advantage of doing a pilot
study include; it helps to detect potential defects in the measurement procedures, it assists in
identifying ambiguous items, and it allows the researcher to become aware of nonverbal
behavior that may occur due to the wording question. Therefore, the researcher tried to insures
the reliability and validity of the questionnaire.

To carried out the reliability analysis, Cronbach’s Alpha (α) is the most common measure of
scale reliability and a value greater than 0.700 is very acceptable (Field, 2009; Cohen and
Sayag, 2010) and according to Cronbach’s (1951), a reliability value (α) greater than 0.600 is
also acceptable.

Table 4.2: Reliability Test of Constructs

No. of Items Cronbach’s Alpha
if Item Deleted
Supplier management practice 8 .861
Customer management 8 .852
Information sharing practice 6 .880
Internal operation practice 6 .842
Organizational performance 6 .844
Over all variables 34 .860
Source: Survey result, 2020

The results showed on table 4.2, the Supplier management practice (SMP) had a coefficient of
0.861, Customer management practice (CMP) 0.852, the Information sharing practice (ISP)
0.880, the Internal operation practice (IOP) 0.842, and the Organizational performance (OP)
39
0.844. All of the scales were above the suggested value 0.5 (Nunnally & Bernstein, 1978).
Therefore, the reliability value (α) for all items were greater than 0.700, then the responses
generated for all of the variables’ used in this research were reliable enough for data analysis.

4.1.3 DATA PROCESSING

The completed questionnaires were coded in excel and inserted into SPSS version 21. This
software program was used to analyze the data. Descriptive statistical analysis used to reduce
large amount of data to summarize frequencies, means and standard deviations. Based on the
descriptive statistics the collected data for each question and respondents were summarized and
addition to this to the researcher used multiple regression and correlation analysis with the
support of this software package.

4.1. DESCRIPTIVE ANALYSIS

In this part of analysis, the researcher has divided and describes it in to two parts. The first part
focuses on the demographic information of the respondents so frequencies and percentage used
for the analysis. The second part focused on the basic questions which are intended to acquire
the perceptions and the feeling of the respondents towards supply chain practices i.e. strategic
supplier partnership, customer relationship, information sharing and internal operation
practices in the organization and also focuses on the perceptions of the employees towards the
operational performance of the CARE Ethiopia. Therefore, for the analysis frequencies,
percentage and standard deviation are used to describe the findings.

4.2.1 DEMOGRAPHIC DATA OF THE RESPONDENTS

The profiles of the respondents’ in the selected department (SCM and relate departments) of
CARE Ethiopia are summarized in to four parts in this survey. The first one is about the
respondents’ department, the second is about their employee level (job position) in the
organization, the third is about respondent’s level of education, and the fourth is about their
experience in the selected departments.

40
2.2.1.1 DEPARTMENTS OF THE RESPONDENTS IN THE ORGANIZATION
The employee of CARE Ethiopia is broadly categories in two units, the program employees
and program support unit. Due to the employees detail involvement for the organization supply
chain operational activity, the researcher has selected both two unites of employees for this
survey as the respondent. The following figure shows the frequency and the percentage of
response in the selected departments.

Figure 4.1: The percentage of the respondents’ in each unit

Department
Program
Support
45%
Program
55%

Source: Research Data (2020)

As it can be seen on the figure 4.1, the number of respondents’ on the two selected unit is
proportionate. 55% of them are form program unit and the remaining 45% is form program
support unit. This implies that the responses collected from them acquire detail and end to end
information for the survey. Therefore, the findings can be generalized for the organization.

2.2.1.2 EMPLOYEE JOB POSITION OF THE RESPONDENTS IN THE ORGANIZATION

The other important factor on the respondents’ demographic variable is the respondents’ level
of employment (job position) in the organization. In CARE Ethiopia, there are different levels
of employment and job positions starting form expert level (officer) to the managerial level of
ranking. The following graph shows the respondents’ employment level and position in the
organization.
Figure 4.2: Position of the Respondents’ in the organization

41
 Job Position
88
Frequency %
56.1
39
21 24.8
13.4 9 5.7

Manager Supervisor Expert/Officer Administration

Staff

Source: Research Data (2020)

The study found it essential to establish on the area of operation or work unit of the
respondents in their organization. This data was intended for the purpose of establishing on the
respondents awareness and level of understanding over the operational and organizational
performance. Within these departmental category most of the respondents were categorized
under Expert Officer (56.1 %). Section head or supervisor (24.8 %), Managers (13.4 %) and
the remained (5.7 %) were the Administrative staff officer of the total valid respondents. With
this kind of distribution, the researcher was satisfied that all areas were covered.

Figure 4.2 shows that the very few (6%) administration staffs were respond for this survey.
However, managers, supervisors, and staff level employees on the selected departments of the
organization proportionally respond well to this survey. Out of the 157 valid responses on the
survey, 56.1% of the questioners were form expert (officer) staff level of employees, 24.8% are
from the supervisors and 13.4% are from the manger level of the employees. This implies that
due to their detailed involvement on logistic and supply chain activity of the organization, the
information gathered from them are accurate and relevant for the study.

2.2.1.3 EDUCATIONAL QUALIFICATION OF RESPONDENTS

Education is paramount in enabling the respondents to conceptualize issues related to resource
utilization. This finding was in line with (Katz, 1992) finding that those with higher education
are more successful as they have more knowledge and have modern managerial skills making
them more conscious of the reality of the business work.

42
Figure 4.3: Educational level of respondents

Level of Education
Diploma/TVET and below Bachler Degree Post Graduate Degree

18% 15%

67%

Source: Research Data (2020)

Concerning of the respondents level of education, majority (67.5%) of the respondents had
attained a bachelor degree level of education, (17.2%) respondents attained a Master’s Degree,
(14.6%) respondents were attained a Diploma/TVET and below level of education and very
few (0.6%) were doctorate degree level. This is an indication the respondents are well educated
to understand what is happening in the organization, hence able to provide the right
information. The result shows that majority of the employees are well educated and thus
understand the effects of supply chain management practice on organizational performance in
CARE Ethiopia humanitarian organization.

2.2.1.4 SERVICE YEAR OF THE RESPONDENTS’

It is also important to note the experience level of the respondents on the area of the study for
the successful implementation of the survey. The following figure presents the respondents’
experience on selected departments.
43
Figure 4.4: Respondents Work experience/years of service

Years of Service
%
40.8

29.9

15.3 14.0

2–6 years 6 –10 years over ten years under two

years

Source: Research Data (2020)

Based on the Fig 4.4, almost 86% of the respondents have more than two year experience on the
companies logistic and supply chain department. Specifically, 40.8% of respondents’ have two up
to six year experience, 29.9% have six to ten years’ experience and 15.3% of them have more than
ten years’ experience. However, only 14 % of them have experience less than 2 year. Therefore, we
can conclude that they can understand the supply chain practices their response will be taken as
dependable result.

4.2.2 SUPPLY CHAIN MANAGEMENT PRACTICES

The first research objective sought to examine the implementation practice of supply chain
management in CARE Ethiopia organization. Different organizations adopt different supply
chain management practices depending on the activities that they are engaged in and also
44
which supply chain practice will yield better competitiveness to the firm. Accordingly the
perception of respondents on the SCM practices described in view of supplier strategic
partnership management, customer relationship, internal operation and information sharing
practices of CARE Ethiopia humanitarian organization.

The respondents were asked about their practice of Supply chain management practices
implemented within the organization. As described in the below table 4.4, shows the grouped
responses of all four dependent variables mean and standard deviation result for each variable.
These four variables indicate the extent of CARE Ethiopia organization supply chain
management practice in terms of supplier and customer relationship, way of information
sharing within the supply chain and the organization internal operation efficiency capacity.

According to (Kumer, 2014) ,the ,mean score below 3.39 is considered as low; the mean score
from 3.40 up to 3.79 is considered as moderate and the mean score above 3.8 is considered as
high as it shown in the table below .

Table 4.3: Mean and Standard deviation Descriptive statistics result

Variables N Minimu Maxim Mean Std. Deviation
m um
Supplier management practice 157 2.00 4.88 3.5234 .78190
Customer management practice 157 2.00 4.80 3.3994 .79845
Information sharing practice 157 2.00 4.88 3.5076 .65971
Internal operation practice 157 2.00 4.88 3.4680 .75784
Average Mean 3.47

Source: Research Data (2020)

As presented in Table 4.4 it is understood that the mean values of all variable were between
3.3994 and 3.5234. Of the four independent variables supplier relationship management has the
highest mean (3.52) which is followed by 3.51 mean score for information sharing practices of
the organization. However, internal operation practice and customer relationship management
practices of the organization has the lowest, which is 3.47 and 3.39 respectively.

The average mean value of the all variables is 3.469 and this showed as there is a moderate and
implies that half and above respondent agreed that supply chain management practices
45
positively implemented and giving the advantage to the improvement of organizational
performance through implementing supplier partnership, good customer relation, building and
using internal operation properly and good information sharing follow both downstream and
upstream within the supply chain. As stated in the literature review section selecting the right
suppliers, implementing good customer relationship and, forming strategic supplier partnership
with firms are keys to success.

4.2. CORRELATION AND REGRESSION ANALYSIS

4.2.3 CORRELATION ANALYSIS OF VARIABLES

The second objective of this study is to examine the relationship between supply chain
management practice and the performance of organization, to do so this correlation test was
conducted. Correlation test is show the strength of the association or the relationship between
the variables involved the dependent and independent variables. Correlations coefficients (r)
were calculated by means of Pearson’s product moment and Pearson’s correlation was used to
investigate the relationship amongst the dependent and independent variables.

According to Andy (2006), the measure of correlation value from 0.1 to 0.29 small or weak
correlations, from 0.3 to 0.49 medium or moderate correlations, the value < 0.5 is large or
strong correlation & the value which zero indicated there is no correlation between variables.
To determine whether there is a correlation between supply chain management practices and
organizational performance in CARE Ethiopia Organization. In order to test this Pearson’s
correlation coefficient were used.

Table 4.4: Correlations among variables

Supplier Customer Informatio Internal Organizational
management management n sharing operation performance
Pearson 1 .627** .433** .661** .662**
SM
Correlation
46
 Sig. (2- .000 .000 .000 .000
tailed)
N 157 157 157 157 157
**
Pearson .627 1 .600** .612** .689**
Correlation
CM Sig. (2- .000 .000 .000 .000
tailed)
N 157 157 157 157 157
**
Pearson .433 .600** 1 .591** .641**
Correlation
IS Sig. (2- .000 .000 .000 .000
tailed)
N 157 157 157 157 157
**
Pearson .661 .612** .591** 1 .741**
Correlation
IO Sig. (2- .000 .000 .000 .000
tailed)
N 157 157 157 157 157
**
Pearson .662 .689** .641** .741** 1
Correlation
OP Sig. (2- .000 .000 .000 .000
tailed)
N 157 157 157 157 157
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own survey result, 2020

As per the above table 4.6 correlation among variables indicates that all correlation result
positive this implies that among variables they have positive relationship. As per the above
table correlation result the relation between and among variables is above 0.5 this implies that
there is a strong relationship between or among variables.

The result indicates there is strong relationship between supplier management and
organizational performance with a Pearson correlation coefficient of 0.662 (r=0.662), customer
management and organizational performance with a Pearson correlation coefficient of 0.689
(r=0.689), information sharing and organizational performance with a Pearson correlation
coefficient of 0.641 (r=0.641) and internal operation and organizational performance with a
Pearson correlation coefficient of 0.741 (r=0.741) with the significance level 0.000 is below
47
0.01. This significance value tells that there is a genuine relationship between all independent
variables & organizational performance of CARE Ethiopia humanitarian organization.

4.2.4 REGRESSION ANALYSIS

4.2.4.1 ASSESSMENT OF ORDINARY LEAST SQUARE ASSUMPTIONS

Before using multiple regressions, part of the process involves checking to make sure that the
data can actually be analyzed using multiple regressions. Therefore, it is important to do
because it is only appropriate to use multiple regressions if the data "passes" five assumptions
that are required for multiple regressions to give us a valid result.

a) Linearity assumption
Linearity assumption states that the residuals should be linear relationship with the predicted
dependent variables scores. Linear relationship between independent variables and dependent
variable

This set of assumption can be examined to a fairly satisfactory extent simply by plotting scatter
plots of the relationship between each explanatory variable and the outcome variable. It is
important to check that each scatter plot is exhibiting a linear relationship between variables
(perhaps adding a regression line to help you with this). Alternatively, you can just check the
scatter plot of the actual outcome variable against the predicted outcome. The term residual
considered is the difference between outliers and influential cases a bit further (J, 2010).

The simple outlier influences the line to a far lesser degree but will have a very large residual
(distance to the regression line). The influential case outlier dramatically alters the regression
line but might be harder to spot as the residual is small - smaller than most of the other more
representative points in fact. To examine the scatter plot, you can also use influence statistics
(such as the Cook's distance statistic) to identify points that may unduly influence the model
(Wang, Rosner, & Goodman, 2016).

If it is looked at the scatter plots below, the plot of the below graph indicates that the residuals
are normally distributed. Non-normal if points substantially deviate from the diagonal line.

48
Figure 4.5: Linear Multiple Regression Assumption

Source: Survey data, 2020

b) Multicollinearity
Multicollinearity assumption states that independent variables should not be related to each
other. If they are highly correlated, then multicollinearity exists High predictor-predictor
correlation (r > .85) results in unstable regression model (J, 2010). The table 4.7 below shows
that the relationships between explanatory variables, Supplier Management, Customer
Management, Information Sharing, and Internal Operation, are below the correlation boundary
line (i.e., .85) for all of the independent variables.

49
Table 4.5: Multicollinearity Correlation Matrix
SM CM IS IO
Pearson Correlation 1 .627** .426**
.654**
SM .000 .000 .000
Sig. (2-tailed)
Pearson Correlation .627** 1 .603** .611**
CM
Sig. (2-tailed) .000 .000 .000
Pearson Correlation .426** .603** 1 .601**
IS Sig. (2-tailed) .000 .000 .000
N 157 157 157 157
**
Pearson Correlation .654 .611** .601** 1
IO Sig. (2-tailed) .000 .000 .000
N 157 157 157 157
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Survey data, 2020
A more precise approach to check whether or not a given explanatory variable has a strong
relationship with the other explanatory variables (an issue of multicollinearity exist in the
model), Tolerance and VIF (variance inflation factor) is the good indicators. For example,
Tolerance less than .1 (10%) hint at multicollinearity, and VIF (variance inflation factor) > 10
also implies multicollinearity. So that VIF must be between1-10, otherwise VIF <1 or >10
indicates multicollinearity existence (Ge, 2013). The table 4.8 below describes that both the
tolerance and variance inflation factor (VIF) are greater than 10%, and below 10 respectively.

Table 4.6: Multicollinearity statistics

Model Collinearity Statistics
Tolerance VIF
(Constant)
1 Supplier management practice .481 2.079
Customer management practice .462 2.165

50
 Information sharing practice .556 1.799
Internal operation practice .437 2.289
Source: Survey data, 2020

c) Homoscedasticity
In Homoscedasticity assumption, the variance of error terms is similar across the independent
variables. At each level of the predictor variable(s), the variance of the residual terms should be
constant. This just means that the residuals at each level of the predictor(s) should have the
same variance (homoscedasticity); when the variances are very unequal there is said to be
heteroscedasticity (Field, 2009). According to the statistical solution (2021), to test the linear
relationship assumption, Intellect’s in the statistics plot the standardized residuals verses the
predicted Y' values can show whether points are equally distributed across all values of the
independent variables or not. Biased standard errors lead to biased inference, so results of
hypothesis tests are possibly wrong. For a basic analysis, we first plot *ZRESID (Y-axis)
against *ZPRED (X-axis) on SPSS because this plot is useful to determine whether the
assumptions of random errors and homoscedasticity have been met (Field, 2009).

It could be checked that residuals do not vary systematically with the predicted values by
plotting the residuals against the values predicted by the regression model. And looking for any
evidence that residuals vary in a clear pattern. Look at the following figure 4.6, the data points
appeared fairly randomly distributed with a fairly even spread of residuals at all predicted
values.

Figure 4.6: Homoscedasticity Multiple Regression Assumption

51
Source: Survey data, 2020

This scatter plot is a result of what a scatter plot might look like if the assumption of
homoscedasticity is met. The data points seem to funnel towards both the negative of the x-
axis, and also toward the positive of x-axis indicating that there is equal variability in the
residuals at higher predicted values and at lower predicted values. This suggests that our model
is equal accurate in estimating both lower values and higher values.

d) Normally Distributed Residuals

A histogram of the residuals (errors) in a model can be used to check that the residuals are
normally distributed about the predicted dependent variables scores. However, it is often good
to tell if the distribution is normal from just a histogram, and additionally, a P-P plot should be
used as shown below figure 4.7.

As it could have been seen from the below figure, the expected and observed cumulative
probabilities are matched perfectly. This suggests that the residuals are seamlessly normally
distributed. So in this survey result, the assumption of normality is not violated.

Figure 4.7: Normality Distribution Histogram

52
Source: Survey data, 2020

e) Autocorrelation Assumption Test

The Dubin-Watsun statistic is a number that test for autocorrelation in the residuals from a
statistical regression analysis .The Durban-Watson statistics always between o and 4 .The
value 2 means that there is no autocorrelation in the sample of the study. Values approaching 0
indicate positive auto correlation and values toward 4 indicates negative autocorrelation
(Bryman, 1988).

Table 4.7: Durban-Watsun [Auto correlation assumption Test result]Table 4 1 Response Rate

Model Durbin-Watson
1 1.848
a. Predictors: (Constant), Internal operation practice, Information sharing
practice, Supplier management practice, Customer management practice
b. Dependent Variable: Organizational performance
Source: Own survey result, 2020

53
From the above table 4.10 indicates that the value Durbin-Watson Statistic result 1.848. Thus,
this study has tested for assumption of autocorrelation and there is no autocorrelation from the
above result .Hence, the autocorrelation assumption is fulfilled.

4.2.4.2 THE REGRESSION RESULTS AND HYPOTHESIS TESTING

The multiple liner regression model that were obtained by regressing organizational
performance (OP) by the supply chain management practice those comprises four independent
variables, supplier management (SM), customer management (CM), information sharing (IS),
and the internal operation (IO) were analyze and reported. Finally, the hypothesis tests were
undertaken based on the proposed hypothesis and the regression output results.

4.2.4.3 THE EFFECT OF SCM ON ORGANIZATIONAL PERFORMANCE

The third objective of this study is to examine the effect of supply chain management on the
performance of organization, since correlation cannot determine existence of cause and effect
due to there may be a number of other unmeasured variables which could be interrelated and
responsible for the relationship found. Multiple regression is not just one technique, but a
family of techniques that can be used to explore the effect between one continuous dependent
variable and a number of independent variables or predictors (Beech, 2006).

A multiple regression analysis was conducted to predict the relationship between the supply
chain management practices (supplier relation management (SM), the customer relation
management (CM), information sharing (IS), and the internal operation (IO)) and
organizational performance (OP) using regression analysis. The Model Summary table shows
how much variance is explained by each model. Whether the independent variables are a
significant predictor of dependent variable will be indicated by the value in the Sig. F Change
for this model. Note that the value for the next model reflects all independent variables entered.

R is the population correlation coefficient, and it takes on values between -1 and +1; 0
indicates no linear association; 1 indicates a perfect positive linear relationship; -1 indicates a
perfect negative linear relationship (Ge, 2013).

The multiple correlation coefficient (R) is a measure of the strength of the relationship between
Y (in this case the organizational performance) and the four predictor variables selected for
54
inclusion in the equation as the supply chain practices i.e. SM, CM, IS and IO. Large values of
the multiple R represent a large correlation between the predicted and observed values of the
outcome. R is the population correlation coefficient, and it takes on values between -1 and +1;
0 indicates no linear association; 1 indicates a perfect positive linear relationship; -1 indicates a
perfect negative linear relationship (Ge, 2013).

Adjusted R2 is a measure of the loss of predictive power or shrinkage in regression. The

adjusted R2 tells us how much variance in the outcome would be accounted for if the model
had been derived from the population from which the sample was taken Adjusted R-squared is
always smaller than R-squared, but the difference is usually very small unless you are trying to
estimate too many coefficients from too small a sample in the presence of too much noise.

Table 4.8: Regression Model summary

Model R R Square Adjusted R Std. Error of the Durbin-Watson
Square Estimate
a
1 .825 .680 .672 .37091 1.848
a. Predictors: (Constant), Internal operation practice, Information sharing practice,
Supplier management practice, Customer management practice
b. Dependent Variable: Organizational performance
Source: Survey result, 2020

Based the finding on SPSS generated data above table 11, implies that there are an association
of 82.5% between observed and predicted organizational performance. Therefore; from this
result, it can be interpreted as there is a strong correlation between observed organizational
performance and predicted performance of the organization. R2 is called the coefficient of
determination, it is the proportion of the variance in the dependent variable (organizational
performance) explained by variations in the independent variables, it shows the level of
variance explained by the model; which indicates how the organizational performance varies
with variation in supply chain management practices, supplier relation management, the
customer relation management, information sharing and the internal operation.

The finding shows that, the independent variables (supplier relation management, the customer
relation management, information sharing and the internal operation) that were studied, explain
only 68% the performance of the organization, in case of CARE Ethiopia humanitarian
55
organization as represented by the R2. Therefore, this means that another supply chain
management factors not studied in this research contributes 32% of the organizational
performance. Therefore, further research should be conducted to investigate the others supply
chain management dimensions (32%) that have an effect for the performance of the
organization.

Table 4.9: ANOVA Output SPSS

Model Sum of df Mean Square F Sig.
Squares
Regression 44.498 4 11.125 80.861 .000b
1 Residual 20.912 152 .138
Total 65.410 156
a. Dependent Variable: Organizational performance
b. Predictors: (Constant), Internal operation practice, Information sharing
practice, Supplier management practice, Customer management practice
Source: Survey result, 2020

The findings of the above table 4.12 indicated that the significance value of the model is p<
.0005; which is less than the significance level of 0.05 at a confidence level of 95%, thus the
model is statistically significant in predicting how supplier management (SM), the customer
management (CM), information sharing (IS) and internal operation (IO) affect the performance
of the organization. Since this value of F calculated is greater than the F critical (value = 80.9),
at 5% level of significance, this shows that the overall model is significant.

Table 4.10: Coefficients Output SPSS

Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .749 .177 4.232 .000
1 Supplier management .167 .055 .202 3.048 .003
Customer management .180 .055 .222 3.289 .001

56
 Information sharing .214 .060 .218 3.536 .001
Internal operation .294 .059 .344 4.951 .000
a. Dependent Variable: Organizational performance
Source: Survey result, 2020

The regression coefficient is the independent variable associated with it is contributing

significance to the variance accounted for in the dependent variable.

Y = Βo+β1x1+β2x2+β3x3+…. +βkX+ei

Where:

Y = Organizational Performance of CARE Ethiopia

Βo = Point of Intercept

Xk = Supply chain management practices element in CARE Ethiopia

Βk = Slop of the line

ei= Error term

From the findings in the above table 4.13, the regression equation is:

Y = 0.749 + 0.167*SM + 0.180*CM + 0.214*IS +0.294*IO + ei

Where, SP= Supplier relationship management, CR= Customer Relationship management, IS =
information sharing and IO= Internal operation efficiency

Based on linear regression analysis, the table above reveals the Effect of each supply chain
management element, i.e. the Effect of Supplier relationship management; Customer
relationship management, internal operation, and information sharing practice on
organizational performance of CARE Ethiopia are 0.167, 0.180, 0.214 and 0.294, respectively.
By examining this β weight of data analysis result and level of significant, the finding shows
that, internal operation and information sharing have greater effect on the organizational
performance of CARE Ethiopia on the other hand customer relationship and supplier
relationship management was not that much effect on organizational performance. And this

57
implies that the predicted change in the dependent variable for every unit increase in that
particular predictor.

This signifies a one percent increase in the value of Supplier relationship management; the
organizational performance of CARE Ethiopia will increase by 16.7 percent provided that
other variables remain constant the same is true for other variables for Customer relationship,
information sharing and internal operation of CARE Ethiopia. Therefore we can conclude that
Supplier partnership, Customer relationship and information sharing and internal operation
have statistically significant Effect on CARE Ethiopia organizational performance. On the
other hand, the β value of Supplier relationship management, Customer relationship
management, information sharing and internal operation is 0.167, 0.180, 0.264 and 0.294
respectively and the significance level is greater than 0.05. Therefore we can conclude that
these independent variables have a significant effect on organizational performance of CARE
Ethiopia.

Generally, the main purpose of this study is to analysis the effect of supply chain management
element on the organizational performance of CARE Ethiopia. From the above data analysis,
Supply chain management elements which are, Supplier relationship management, Customer
relationship management, information sharing and internal operation has effect on
organizational performance at 5 % level of significance.

4.2.4.4 HYPOTHESIS TEST

The regression analysis whose results are in the regression model provides a more
comprehensive and accurate examination of the research hypothesis. Therefore, the regression
results obtained from the model were utilized to test these hypotheses. The following
hypotheses test were conducted based on the regression results of Supplier relationship,
Customer relationship, information sharing and internal operation on organizational
performance obtained from the regression output.

Ha1: Supplier Relationship Management has significant effect on organizational

performance in CARE Ethiopia.

58
The result of multiple regression analysis of the table 4.13 above clearly indicates that Supplier
Relationship Management has significant effect on Organizational Performance (p <0.05).

Besides, the value of beta (β= 0.167) and t = 3.048, shows that there is a direct effect of
Supplier Relationship Management on Organizational Performance. This implies that one
percent increase in Customer Relationship Management results 16.7 percent increase in
Organizational performance. (Li et al., 2006) wrote effective suppliers’ partnership can be
critical factor to guide supply chain management & supplies play more direct role in
organizations performance. The main objective of strategic supplier partnership is increasing
the capability of supplies (Rosenzweig et al., 2003). There for create a long-term relationship
& partnership with reliable supplies is a key factor for organization performance. Thus, the
above proposed hypothesis is accepted.

Ha2: Customer Relationship Management has significant effect on organizational

performance in CARE Ethiopia.

The result of multiple regression analysis of table 4.13 above clearly indicates that Customer
Relationship Management has significant effect on organizational performance (p<0.05).
Besides, the value of beta (β=0.180, t = 3.289) shows the positive effect of Customer
Relationship Management on Organizational Performance. This implies that one percent
increase in Customer Relationship Management results 18 percent increase in Organizational
performance. This result supported by findings of (Noble, 1997) argued Customer relationship
management is an important factor in supply chain management practice. Customer
relationship have been recognized as an internal component of an organizations marketing
strategy to increase sales & profit (Bommer et al., 2001).Thus, the above proposed hypothesis
is accepted.

Ha3: Information sharing practice has significant effect on organizational

performance in CARE Ethiopia.

The result of multiple regression analysis of table 4.13 above clearly indicates that Information
Sharing practice has significant effect on organizational performance (p<0.05). Besides, the
value of beta (β=0.264, t= 3.536) shows the positive effect of information sharing on
Organizational Performance. This implies that one percent increase in information sharing
59
results 26.4 percent increase in Organizational performance. In line with the result Information
sharing is an important factor in achieving perfect integration with in the supply chain.
Delivery of on time information by all the functional elements in the supply chain is considered
as a competitive factor and distinctive (Ahmadi, 2005). (Li et al., 2006) also notes that
information sharing must be accurate, so that the best supply chain management solution will
be obtain on time. Therefore the above proposed hypothesis is accepted.

Ha4: Internal Operation has significant effect on organizational

performance in CARE Ethiopia.

The result of multiple regression analysis of the table 4.13 above clearly indicates that internal
operation practice has significant effect on market performance (p<0.01). Besides, the value of
beta in (β=0.294, t=4.951) respectively shows that the positive influence of Internal operation
on Organizational Performance. This implies that a one percent increase in internal operation
results in 29.4 percent increase in Organizational Performance.

As mentioned by (R. Handfield & Nichols Jr, 1999) Internal operation summarizes all
activities related to production system & internal activities including logistics flow When
supply chain management is effective, internal operation should flexible and respond change
for market need. Internal operation is a means able to perform rapid change for order pattern &
mass customization(Lambert & Cooper, 2000). Hence, the above proposed hypothesis is
accepted.

4.3. DISCUSSION OF THE RESULTS

The purpose of this study was to examine the effect of implementing supply chain management
practice on the organizational performance using statistical analysis; both descriptive and
inferential statistics.

A survey instrument tool (questionnaire) was developed and distributed to employees of CARE
Ethiopia organization. Then the result of descriptive analysis implies that the organization is
implementing supply chain management practices (supplier relationship management,
customer relationship management, information sharing and internal operation practices).

60
The inferential analysis results of this study support that the independent variables, supplier
relationship management, customer relationship management, information sharing and internal
operation practices have significant correlation with organizational performance when
calculated using Pearson correlation coefficients. This result is supported by (Salazar, 2012)
from five hypotheses (supplier relationship management practices, customer relationship
management, information sharing and internal operation practices) are positively related to the
performance within an organization.

While, the other inferential analysis, the regression analysis results of this study support the
entire hypotheses that supplier relationship management, customer relationship management,
information sharing and internal operation practices have positive and significant effect on
organizational performance in the case of CARE Ethiopia humanitarian organization.

61
 CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

This chapter summarized and concluded the entire study. It presented recommendations
and the direction for future research. The purpose of the research was to examine the effect of
supply chain management practice on organizational performance in CARE Ethiopia
humanitarian organization. It is important that some of the recommendations made can help
implement the SCM practices which could be employed to bring improvement in the
performance of the organization. Primary data was collected by the use of questionnaire from a
population of 171 respondents, employees of the organization; however 157 of the
questionnaire were retrieved from the respondents and analyzed through descriptive statistics,
mean, correlation and multiple regression analysis.

5.1. SUMMARY OF FINDINGS

The main objective of this study was to assess the effect of supply chain on the organizational
performance of CARE Ethiopia and also it is to assess the implementation of supply chain
practices (Supplier relationship, customer relationship, level information sharing, and internal
operation) in the organization. In line with the objectives the following are the major finding of
the study:

62
The demographic characteristics of respondents of the organization show that the majority of
respondents are male (52.2 %). Also most of the respondents are from the program department
(55.4). All of the respondents are well educated with majority of the respondents having degree
and above. Moreover, the results of the study reveal that the respondents have been working in
the organization more than 2 years and majority of them in the experts and supervisory
position. From the descriptive analysis result, SM has mean of 3.52 and S.D 0.78, CM has
mean of 3.34 and S.D 0.8, IS has mean of 3.51 and S.D 0.66 and IO has mean of 3.45 and S.D
0.76. The mean results of all variables are low and moderate level for contributing the
improvement of organizational performance. The customer management and the internal
operation practices are relatively Implemented lower level.

From the correlation analysis result there were significant positive and strong relationship
between the entire independent variables (supplier relationship management, customer
relationship management, information sharing and internal operation) and organizational
performance at (p<0.01). Therefore, there is significant positive relationship between the
supply chain management practices and organizational performance in CARE Ethiopia
humanitarian organization.

From the regression analysis result, the whole variables supplier relationship management,
customer relationship management, information sharing and internal operation practices have
positive and significant effect on organizational performance, therefore the hypothesis (Ha1),
(Ha2), (Ha3) and (Ha4) hypothesis are accepted.

From the finding the detail results on correlation results are:

 The correlation between supplier relationship management and organizational
performance is positive and significantly correlated at (r=0.662, P<0.01), this shows
that the relationship between the two variables is strong.

 The correlation between customer relationship management and organizational

performance is positive and significantly correlated at ( r=0.689, P<0.01), this shows
that the relationship between the two variables is strong

63
  The correlation between information sharing and organizational performance is positive
and significantly correlated at (r=0.641, P<0.01), this shows that the relationship
between the two variables is strong.

 The correlation between internal operation and organizational performance is positive

and significantly correlated at (r=0.741, P<0.01), this shows that the relationship
between the two variables is strong.

The independent variables selected for the model, (supplier relationship, customer relationship,
internal operation, and information sharing), and 68 % of the variation on organizational
performance, but the rest variations 32% are from extraneous variables. This result implies
Supply chain Management practices factors accounted 68 % of the variance in organizational
performance. So, Supply chain management elements variables explained the organizational
performance of CARE Ethiopia by 68 %.

The finding of hypothesis 1 (Ha1) shows that the path between Supplier relationship
management and organizational performance is insignificant, that is, (β=0.167 p<0.05). In
other word, Supplier relationship management has positive effect on organizational
performance. Hence, the hypothesis is supported. (Li et al., 2006) wrote effective suppliers’
partnership can be critical factor to guide supply chain management & supplies play more
direct role in organizations performance. The main objective of supplier partnership is
increasing the capability of supplies (Rosenzweig et al., 2003). There for create a long-term
relationship & partnership with reliable supplies is a key factor for organization performance.

Regards to hypothesis 2, the result shows that the path between Customer relationship and
organizational performance is significant, that is, (β=0.180, p<0.05). Simply put, Customer
relationship association has positive effect on organizational performance. Hence, the
hypothesis is supported. Applying good customer relationship practice helps organizations
build long term relationship with their customers. Close customer relationship allows
organizations differentiate their product from competitors, sustain customer loyalty and extend
the value it provides to customers Bratic 2011 cited by Eyob (Mengesha, 2017). Customer

64
relationship has been recognized as an internal component of an organizations strategy to
increase sales & profit (Bommer et al., 2001).

According to the finding of hypothesis 3, information sharing and organizational performance

is significant, that is, (β=0.264, p<0.05). Simply put, information sharing association has a
strong positive effect on organizational performance. Information sharing is an important
factor in achieving perfect integration with in the supply chain. Delivery of on time
information by all the functional elements in the supply chain is considered as a competitive
factor and distinctive (Ahmadi, 2005).(Li et al., 2006) also noted that information sharing must
be accurate, so that the best supply chain management solution will be obtain on time. Hence,
the hypothesis is supported.

The finding of hypothesis 4, shows that the path between internal operation and organizational
performance is significant, that is, (β=0.294, p<0.05). In other word, internal operation has a
strong and significant positive effect on organizational performance. Internal operation
summarizes all activities related to production system & internal activities including logistics
flow (R. Handfield & Nichols Jr, 1999). (Rodman, 2004) states that without sustainable,
efficient, transparent and well-coordinated procurement and logistics processes, the
humanitarian sector is at risk of unnecessary costs and delays which put their vision, efforts
and determination to better the lives of the less fortunate, at risk, hence poor performance.
Hence, the hypothesis is supported.

In General on the above Hypothesis finding and result, internal operation, information sharing,
customer relationship and supplier relationship in CARE Ethiopia happens to be the first,
second, third and fourth from supply chain dimension that has a significant positive effect on
organizational performance respectively.

5.2. CONCLUSIONS

The study used four dimensions of independent variables (supplier relationship, customer
relationship practice, internal operation & information sharing) with one dependent variable of
organizational performance of CARE Ethiopia humanitarian organization & for the purpose of

65
this issue a comprehensive, valid & reliable instruments used for accessing supply chain
practice. The study was conducted by using quantitative method, descriptive survey &
questioners were disseminated. Instruments were used to support by scientific methods such as
Pearson correlation & multiple regression analysis and support by empirical reviews. Based on
the research objectives, analysis of the data and finding of the study the following conclusion
are drawn:

The result of the study showed that the practice of supply chain management in CARE
Ethiopia humanitarian organization is moderate and creating partnership with suppliers,
customer relationship, information sharing & internal operation also not well implemented &
give attention in the organization. The organization experience that is close coordination of
departments is poor experience than from other sub variables. The practice of information
exchange, lower operating cost & flexibility with business environment is very low. So, the
organization gives attention to modern supply chain management practices to sustain in
competitive business world.

The correlation result of all variables is moderately positive & internal operation shows the
highest correlation result, which indicates the performance of the organization, is highly
affected by internal operation activity. The regression result also shows customer relationship;
internal operation & information sharing have a strong and significance relationship with
organizational performance in CARE Ethiopia humanitarian organization.

5.3. RECOMMENDATIONS
The study sought to assess the effect of SCM practices on the performance at CARE Ethiopia
humanitarian organization. From the above conclusions, some recommendations are proposed
to alleviate the problems encountered.

 Humanitarian organizations have to work on supply model strategies to attract and

collaborate with local market suppliers specially suppliers of emergency items and
establish strategies to alleviate supply challenges. Therefore, CARE Ethiopia should

66
 involve suppliers in planning stage in order to meet the customer needs and to improve the
supplier partnership and the level of information sharing.

 CARE Ethiopia has to advance and invest on information technology to enable and ensure
efficient delivery of aid services as well as goods. That will help for fast information
exchange, tracking commodities, services and control the supply line so as to increase
service delivery.

 Institutional learning, internal integration and good communication have to be the culture
of the organizations so as to provide enhanced and fastest aid responses. Therefore CARE
Ethiopia has to build or invest on capacity building of logistics staffs so as to get more
experienced staffs.

In general, CARE Ethiopia humanitarian organization can improve organizational performance

by implementing integrated supply chain management practice, evaluating and proactively
implementing change in dynamics business environment.

5.4. DIRECTION FOR FUTURE RESEARCH

The present study’s geographical scope was limited to country office and six field office in
Ethiopia; so that the future studies should have to consider expanding this scope to cover the
whole countries nongovernmental organization. Moreover, the study was also limited to the
CARE Ethiopia only, future studies should have to incorporate partner organizations, such as
supplier, customer, and intra-organizations.

Finally, I would like to suggest that the future studies have to focus on the other supply chain
management dimensions (variables that were not considered on this study).

67
68
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ANNEX 1-QUESTIONNAIRE OF THE SURVEY

JIMMA UNIVERSITY

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 COLLEGE OF BUSINESS & ECONOMICS DEPARTMENT OF MANAGEMENT
FOR PARTIAL FULFILLMENT OF THE DEGREE OF MASTER IN MASTERS OF BUSINESS
ADMINISTRATION

QUESTIONNAIRE

Dear respondents, the purpose of this questionnaire is to gather data on the effect of supply chain
management practices on the organizational performance: In the case of CARE Ethiopia. The
study is purely for academic purpose and thus not affects you in any case. So, your genuine, frank
and timely response is vital for successfulness of the study. Therefore, I kindly request you to
respond to each items of the question very carefully.

In order to investigate the effect of SCM practices on CARE Ethiopia performance, the researcher
prepared the following questions, please tick (√) on the appropriate question number to indicate the
extent to which you agree or disagree with each statement.

The item have five-point Likert type scales, the scales have the following meaning

1. Strongly Disagree
2. Disagree,
3. Neutral,
4. Agree,
5. Strongly Agree
General Instructions

 There is no need of writing your name

 Where answer options are available please tick (√) in the appropriate box.
Contact Address

If you have any query, please do not hesitate to contact me and I am available as per your
convenience at (Mobile: 0912-715702 or e-mail: [email protected])

Thank you for spending your precious time in advance!

PART I: Demographic and Related variables,

1. Gender:
Male [1] Female [2]
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 2. Your Department in the organization
1). Program 2). Program Support
3. Employee Level/ job position
1). Manager 2). Supervisor 3). Expert/Officer 4). Admin Staff
4. Highest level of Educational attained
1). Certificate/diplomas 2) Bachelor degree 3) Master’s degree 4) Doctorate degree
5. Years of service in this organization
A) Less than 2Year B) 2-6 years C) 6-10years D) more than 10years

Part II: 1. Instruments of Supply chain management practice

I. Supplier’s management (1) (2) (3) (4) (5)

We entered into long term contract arrangement

with suppliers
We consider quality as our number one criterion
in selecting suppliers.
We regularly solve problems jointly with our
suppliers.
We have helped our suppliers to improve their
product quality
We include our key suppliers in our planning and
goal-setting activities.
We actively involve our key suppliers in new
product development processes.
Our suppliers are critical to the success of our
organization.
There is trust between our firm and suppliers

II. Customer management (1) (2) (3) (4) (5)

The Organization gives its customers pay

facilities after checking their financial status

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We frequently determine future customer
expectations
CARE facilitates customers’ ability to seek
assistance from us.
CARE employees follow-up procedures for
customer inquiries and complaints
CARE frequently measure and evaluate customer
satisfaction and retention
CARE have frequent interaction with customers to
achieve reliability, responsiveness, and improving
basic standards for the organization
We entered into long term contract arrangement
with reliable customers
We include our key customers in our planning and
goal- setting

III. Information sharing (IS) (1) (2) (3) (4) (5)

CARE inform supply chain partners in advance of

forecast of demands

The information flow between our firm and supply

chain partners is reliable and complete

Information exchange between our supply chain

partners and us is adequate

We used web-based data exchange with our supply

chain partners

Information exchange with our supply chain

partners is timely

CARE often share delivery scheduling data with

our most important suppliers

VI. Internal Operation (1) (2) (3) (4) (5)

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1 Monitoring stock movement has been made easier as a
result of the collaboration between procurement,
logistics and warehouse/ inventory management.

2 There are internal integration of functions and

activities in the organization.

3 Due to information and technology integration, there is

access of tracking performances of SC partners.

4 Our operations system rapidly reallocates resources to

address demand changes
5 Our department works in close coordination and
integration with other departments within the
organization
6 We consult other departments when making our work
decisions

2. INSTRUMENTS OF ORGANIZATION PERFORMANCE

Organizational Performance (1) (2) (3) (4) (5)

1 The organization has maintained Responsiveness and

Flexibility of deliveries.
2 Uncertainty has been minimized in the receiving of
products and services.
3 Cycle time reduced for some goods like that of
assembled.
4 Reduced Inventory level in the organization.
5 Shorter lead times needed for delivery of orders
6 There is sharing of key information, skills and
incentive realignment and teamwork along the supply
chain network.

Thank You

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