Journal of Business & Industrial Marketing

A case study for predicting the success possibility of supply chain practices implementation using AHP
approach
Shrikant Gorane Ravi Kant
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 1

A Case Study for Predicting the Success Possibility of Supply Chain

Practices Implementation Using AHP Approach

1. Introduction

As competition in the 1990s intensified and markets became global, the organizations began to
realize that it is not enough to improve efficiencies within an organization, but their whole
Supply Chain (SC) has to be made competitive. It has been recognized that understanding and
practicing Supply Chain Management (SCM) has become an essential prerequisite to staying in
the competitive market (Li et al., 2006). SCM can be defined as the management technique
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which integrates suppliers, manufacturers, logistics, and customers for improving the long-term
performance of the individual organization and the SC as a whole. The SCM implementation
results in customer satisfaction by providing customers with the right product (Dale et al., 1994)
of right quality (Bhagwat and sharma, 2007) and quantity (Chan and Qi, 2003) from a right
source (Carr and Smeltzer, 1999) at right price (Chin et al., 2004), and finally the utilizing the
right technology (Vinod et al 2009).

The success of the SCM lies in the successful implementation of Supply Chain Practices (SCPs).
SCPs can be defined as the set of activities adapted to improve the performance of an individual
organization and to improve the performance of the entire supply chain. Organizations today
operate in an uncertain and competitive business environment (Chong et al., 2011) and
globalization has driven many organizations to focus not only internal practices, but shifting
towards external collaboration and networking outside the boundaries of the organization
(Sundram et al., 2010). Shifting the focus from internal operation to external environment leads
to develop the supplier and customer relationship. The supplier and customer relationship can be
developed by using information sharing. For fast and real time information sharing can only be
possible by implementation of information and communication technology (ICT). Over the
period of time the other SCPs are developed that help the organization improve the overall SCM
performance. SCPs balance the internal and external activities of the organizations (Sundram et
al., 2010) and effectively integrate suppliers, manufacturers, distributors and customers for
improving the long-term performance of the individual organizations and the SC as a whole
(Chopra and Meindl, 2001).
 2

The main objective of this paper is to identify the success possibility of SCPs implementation in
the case organizations using AHP approach. The implementation of SCPs requires not only
substantial investment in the technology, but also changes in the culture, organizational structure
and top management support. It requires careful scheduling at all levels of the organization to
ensure that the implementation will achieve the proposed goals. It is a complex process with
many factors to be considered before the full benefits of SCPs can be realized. A preliminary
study on the potential use of the analytical hierarchical process (AHP) has been proposed to help
the organizations in planning the SCPs implementation process. The model developed in this
study can also serve as a guide in providing information and creating awareness to the users
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regarding the SCPs or the methodological approach (selection of SCPs, organizations selected,
data collection and AHP methodology to predict the success possibility) can simply act as a
possible research model and the data as an example that can be utilized for other studies. The
same model can be extended to others studies with guided methodology mentioned in this study.

The SCPs selected in this study are derived theoretically from various literature sources and
experts discussion. Some SCPs are extracted from the work of those who have explored SCM in
general or have addressed a particular SCP in detail. Although different researchers have used
different terminologies to indicate these SCPs, they can be represented by generic themes. In
addition, they have also been mentioned in the literature with a mixed extent of emphasis and
coverage.

The remainder of the paper is organized as follows. Section 2 explores the overview of SCPs
followed by methodology in section 3. The section 4 describes the background information of
two organizations. Case analysis of two organizations using AHP is illustrated in section 5.
Section 6 represents the conclusions and scope for further research.

2. Overview of SCPs

SCPs can be defined as a set of activities undertaken in an organization to promote effective

management of its SC. Any activities within the SC that improves the overall performance of the
organization can be treated as SCPs. Most of the authors have empirically investigated limited
numbers SCPs. The research conducted by Donlon (1996) included SCPs namely, supplier
partnership, outsourcing, cycle time compression, continuous process flow and Information
Technology (IT) Tan et al. (1998) empirically tested the SCPs namely, purchasing, quality and
 3

customer relationship. Tan (2001) included SCPs namely, flow of materials, information sharing,
postponement strategy and mass customization. Similarly Tan (2002) studied the SC and
supplier evaluation practices namely, supplier and customer management, geographical
proximity, JIT, Information sharing, product and delivery assessment. Sahay and Mohan (2003)
focused on four SCPs namely, SC strategy, SC integration, inventory management and IT. Sahay
et al. (2003) conducted the research on SCPs in India and described the SC initiative to meet the
competitive challenges. Chin et.al (2004) conducted survey in Hong Kong manufacturing
organizations to examine the extent to which Hong Kong manufacturers are using the SCPs
namely building customer-supplier relationships, implementing ICT, re-engineering material
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flows, creating corporate culture and identifying performance measurements. Li et al. (2006)
conceptualizes five dimensions of SCPs namely, strategic supplier partnership, customer
relationship, the level of information sharing, quality of information sharing and postponement.
Saad and Patel (2006) proposed that the concept of SCPs is not fully incorporated by the Indian
automobile sector and highlight the difficulties associated with SCPs implementation. Srivastava
(2006) comprehensively examine and present the state of logistics and SCPs in India namely SC
collaboration and partnerships, SC structure, facilities network design, transportation and
logistics and the role of Information and Communications Technologies (ICT). Koh et al. (2007)
grouped the SCPs in two factors namely, outsourcing and multi-suppliers (outsourcing, E-
procurement, Third Party Logistics (3PL), subcontracting, many suppliers) and strategic
collaboration and lean practices (close partnership with suppliers, close partnership with
customers, JIT supply, SC benchmarking, strategic planning, holding safety stock, few
suppliers). Sundram et al. (2011) studied SCPs namely, supplier partnership, information
sharing, risk and reward sharing, information quality, postponement, customer relationship and
agreed vision and goals. Chong, et al. (2011) evaluated SCPs namely, supplier partnership,
customer relationship, information sharing, information technology and training. Anuar and
Yusuff (2011) focused on best SCPs and their effect on SC performance. Ou et al. (2010)
concluded that a successful SCPs implementation leads to better customer satisfaction and finally
customer satisfaction leads to better financial performance. Definitions of SCPs and literature
support are presented in table 1.

--------------------------Table 1-----------------------------

3. Methodology
 4

The possible research model presented in this study intends to be exploratory with the aim to
predict the success possibility of SCPs implementation based on ten selected practices using the
AHP approach in two sample organisations. The two organizations are selected to avoid the
vagueness in establishing the degree of preference of each pairwise comparison. The degree of
preference for strength of each SCP can be easily obtained by benchmarking the organization. A
case study protocol was designed and used to guide the structured interviews and data collection
(Yin, 1994). It consists of questions pertaining to the selected SCPs, company background and
business environment information.

Though the numbers of practices are available to increase the overall efficiency of SC and every
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sector of the organizations is benefiting, but now a day, the organizations have been facing
critical challenges. Until now, the most important parameters for SC designs have been related to
cost efficiency and on-shelf availability. As a result of the growing importance of emerging
issues, new factors are becoming increasingly critical, such as increasing volatility of customer
demand, increasing consumer expectations about customer service/product quality, increasing
pressure from global competition, increasing volatility of commodity prices, increasingly
complex patterns of customer demand, increasing environmental concerns, geopolitical
instability, increasing financial volatility (e.g. Currency fluctuations, higher inflation), growing
exposure to differing regulatory requirements related to the environment, etc. Considering these
challenges the existing SCPs must be strengthened like cost reduction, customer service, getting
products or services to market faster (Flexibility), reducing carbon footprint/create a greener
SC, recycle the product by strengthening reverse logistics. Over a period of time some new SCPs
has evolved like complete partnership form supplier- manufacturer and customer, real time
information flow across the SC and end customer, identification and transportation of end of life
products from customer to manufacturer etc.

Concern with all the issues discussed above, the extensive literature review was carried to obtain
the different sets of SCPs. For literature review, we considered the representative journals which
were considered by Melnyk et al. (2012) for assessing the state of research in SCM. The selected
journals were Decision Sciences Journal (DS), Journal of Business Logistics (JBL), Journal of
Operations Management (JOM), Journal of Purchasing and Supply Management (JPSM),
Journal of supply chain management (JSCM), International Journal of Manufacturing
Technology and Management (IJMTM), International Journal of Production Economics (IJPE).
 5

According to Melnyk et al. (2012) these journals are appropriate and representative of research
in the field of SCM and thus they should be representative of the best practices.

The word supply chain practices was searched in each journal. Around 850 articles related to
SCPs are found. These articles are more or less discussed the various SCPs namely JIT, lean
manufacturing, postponement, agile manufacturing, mass customization, strategic planning,
TQM, Six sigma, continuous improvement, benchmarking and performance measurement,
supplier evaluation and rating, supplier and customer relationship, information sharing, agreed
vision and goals, top management commitment and support, employee motivation, employee
training, employee involvement, environmental management system (EMS), green
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manufacturing, green purchasing, reverse logistics, information technology, RFID, technology

for agile manufacturing, VMI, Outsourcing, 3PL, 4PL, transportation and distribution
management, geographical proximity, E Procurement, JIT purchasing etc.

Based on the content analysis (frequency of occurrence of each SCP from the selected 850
articles) and opinion of academia and industry experts, 10 SCPs were selected (The SCPs
selected in this study can be act as variables. The numbers of variables selected for similar
studies may depend upon the opinion of experts, type of industries and nature of problem). The
list of selected practices and frequency of occurrence in selected literature is shown in Table 2.

--------------------------Table 2-----------------------------

The selected SCPs were again validated from experts from both the organizations selected in this
study. These experts from industry are very well conversant with issues related to SC
implementation in an organization. They were asked to comment on the sufficiency of SCPs and
to add or delete any other SCP. On the basis of personal discussions, the selected SCPs from the
literature were finalized for the analysis.

Again, the extensive literature review was conducted to frame the open ended questionnaire (see
Annexure1) and data were collected against the same. The data collected from both organizations
were analyzed using the AHP methodology. There are many methods available for decision
making, but mainly AHP and fuzzy AHP methods are used. These methods are not competitors
with each other at the same conditions. If the information/evaluations are certain, AHP method is
preferred while the information/evaluations are not certain, fuzzy method is preferred. In this
 6

paper the AHP methodology used as SCPs evaluated by a group of academician and industry
expert (Kreng and Wu, 2007).

4. Background Information of two organizations

In this case study, two luggage manufacturing organizations are selected. Both the organizations
are producing the same product and having 50% common suppliers, geographic market location
is India and abroad. Both the organizations are large scale organizations and operate in the
environment of make to stock (MTS). Both the organizations are having a high reputation in
Indian luggage manufacturing and having a larger market share in the organized luggage
manufacturing. The identity of both the organizations is not disclosed in this study. The data
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were collected from both the organization on the conditions that the data will not be disclosed to
any other organizations. The two organizations are named organization A and organization B

Organization A is a private limited organization belongs pioneered in the year 1997 engaged in
manufacturing and supply of hard and soft luggage in India and abroad. It is ISO9001:2000
organization operates in an environment characterized by high volume and high product variety.
It produces on an average 85000 hard luggage and 65000 soft luggages per month and having the
turnover of 110 Million USD.

Organization B established in 1971 and has sold over 60 million pieces around the world and
has become an epic brand synonymous with the word travel in India. It is ISO 9001:2000 and
ISO 14000 organization. It operates in an environment characterized by high volume and high
product variety. It produces on an average 1, 40,000 hard luggage and 1, 20,000 soft luggage per
month and having the turnover of 160 Million USD.

The background information of the two organizations is represented in table 3.

--------------------------Table 3-----------------------------

5. Case Analysis of two organizations Using AHP

The case analysis was conducted to analyze the success possibility of each SCP in the two
selected organizations. For the case cross analysis the data was collected and same data were
analyzed using the AHP methodology
 7

5.1 Data Collection

The extensive literature review was conducted to frame the open ended questionnaire. It was
then pre-tested by two senior managers (Deputy Director, Design and Development from the first
organization and Deputy General Manager, Supply Chain from the other organization) from the
organizations considered in this case study. On-site interviews and observations were conducted.
Prior to each interview, the questionnaire was shared with the interviewees for the purpose of
their preparing and gathering necessary information. The respondents were also informed of the
purpose of the study. Sources of data collection included interviews, direct observation,
documentation, and archival records. While most of the data were qualitative in nature,
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quantitative data (e.g. Fill rate, rejection rate, inventory ratio) was also collected to verify the
findings. The data collected from both the organizations related to various SCPs is presented in
Annexure 1.

5.2 AHP Methodology

The AHP is a decision aiding method developed by Saaty (Saaty, 1980). AHP helps in selecting
the most suitable alternative, which fulfills the entire set of objectives in multi-attribute decision-
making problem (Wasiland Golden, 2003). The strength of this approach is its ability to structure
complex, multi-person, multi-attribute and multi-period problem hierarchically. Many
researchers have used the AHP methodology in numerous fields which have been published in
the literature (Dong, 2008; Ngai and Chan, 2005). The AHP process consists of three stages,
with an optional concurrent fourth stage. The same stages listed below are followed in the
decision making process using the AHP methodology.

Step1: Determining the relative importance of the SCPs based on a literature survey and
opinion of academia and industry experts.

Step2: Matrix of paired comparison based on the suggested numbers to express degrees of
preference between two SCPs.

Step3: Preparation of normalized matrix which shows the paired comparisons and
calculation of priority weights
 8

Step4: Summary of all paired comparisons and resulting priority weight for possible
outcomes with respect to each attribute for evaluation of the predicting weight.

The model is developed using initiation/ institutional, acceptance, routinization and infusion
(Rajagopal, 2002; Yusuff et al., 2001; Sullivan and Canada, 1989). Each module has its
determinants or factors that are necessary for the particular implementation phase to be
successful. Once the determinants of each module were identified from the literature, pairwise
comparisons of the SCPs can be established using a scale indicating the strength with which one
SCP dominates another with respect to a higher-level element. The degree of preference in the
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choice of each pairwise comparison used in this model is quantified on a scale of 15. Where 1 is
equally important and 5 is absolutely more important (illustrated in Table 4). This scaling
procedure translated into priority weights for alternatives evaluation. The prediction weight is
calculated by multiplying the priority weight and the evaluation rating, based on the judgement
of the user on the strength of each SCP selected in this study. Thus, the result of
prediction=XiYi; where the Xi=priority weight for factor i; Yi= evaluation rating is an
indication of the organization readiness or adequacy for that SCP.

--------------------------Table 4-----------------------------
The AHP method is illustrated above, the same procedure is used for each module and
establishing the prediction weights. Figure 1 shows the possible outcome of implementation and
attributes for the initiation module structured in a hierarchy. This constitutes a three level
hierarchy.

--------------------------Figure 1-----------------------------
5.3 Priority weight of attributes

For each module, the relative importance among the attributes based on various literatures,
opinion of academicians and industry experts was established. Ten practices have been
identified for the SCPs implementation initiation module. The ability of the model to predict
accurately depends on how accurate the users ranked the factors available in the organizations.
The weights are assigned to each attributes from 2 academicians from engineering education
institute and 2 SCM managers from organizations considered in this case study. After assigning
weights, the matrix (Table 5) was developed. After obtaining the pairwise comparisons, a
 9

normalized matrix was developed (Table 6), by dividing each element by the sum of its
respective columns. The average prediction weight is given by the principal vector presented in
the last column of Table 6.

The consistency ratio (C.R.) for a comparison is calculated to determine the acceptance of the
attribute priority weight. It is an approximate mathematical indicator or the guide of the
consistency of pairwise comparisons. It is given by following equation:

Consistency ratio (C.R.) = Consistency Index (CI) /Random Index (RI)

Where Consistency Index CI= (max M) / (M-1).

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Here M =10 which depends on the size of the matrix and the value for max in this case is 11.3.
Then the CI value was found to be 0.0514. The standard value of Random Index (RI) for Matrix
size 10x10 is 1.49. Hence, the C.R value was found to be 0.093. If it is not greater than 0.1, the
consistency is generally quite acceptable for pragmatic purposes.

--------------------------Table 5-----------------------------

--------------------------Table 6-----------------------------
5.4 Priority weights for alternatives with respect to attributes

The success possibility of each SCP will be high if the attributes present is strong. Priority
weights for alternatives (success or failure) are a measure to show the preference of the
alternative with respect to an attribute. Thus, if the presence of an attribute is strong with the
organization, it is more likely to be a success, compared to the presence of an attribute which is
weak. To establish the priority weights for alternatives, the strength of each attribute present in
the organization was established using five options that are given as:

Extremely good-5, Very Good- 4, Good- 3, fair- 1, Weak- 1/3, Poor- 1/4, Extremely Poor- 1/5

A rating 5 indicates that the chance of success is high. For example, if the user perceived use of
ICT is strong with the organization, the user will grade the ICT attribute with good (5), which
means success implementation is five times more likely to occur relative to failure. Table 7
illustrates the pairwise comparison of possible outcome with respect to ICT.

The rating to each SCPs (base on the data collected shown in Annexure 1) are assigned by the 2
academicians of engineering education institute and 2 SCM managers from organizations
 10

considered in this case study. The rating assigns to each attribute is given as per the results of an
open ended questionnaire. To avoid vagueness in assigning the rating to each attribute, the rating
assigned based on the comparison of the strength of each attribute in both the organizations. The
rating assigned to each SCP is shown in Figure 2.

--------------------------Table 7-----------------------------

-------------------------- Figure 2 -----------------------------

Table 8 and 9 summarizes the results of evaluating the possible outcome of the implementation
with respect to each of the ten practices for both the organisation.
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--------------------------Table 8 -----------------------------

--------------------------Table 9 -----------------------------

5.5 Priority weights for prediction

Table 10 and 11 summarizes all priority weights, in a form that is convenient for the calculation
of the final result, the vector (priority weights) of the respective outcomes.

The prediction weights (from Table 6) are given across the top of Table 10 and 11.

The evaluation ratings regarding how well each prediction (from Table 8 and 9) is given in
the body of Table 10 and 11.

The weighted evaluation results calculated for each prediction is given in the right-hand
column of Table 10 and 11.

The weighted evaluation of each alternative was obtained by multiplying the matrix of
evaluation ratings by the vector of attribute weights and summing over all the attributes. For the
weighted evaluation for alternative attribute weights, multiply the evaluation rating.

--------------------------Table 10-----------------------------

--------------------------Table 11 -----------------------------
From the Table 10 it can be concluded that the success possibility of 10 SCPs in the organization
'A' is about 4.31 times than that of failure. Similarly from the Table 11 it can conclude that the,
the chance success possibility of 10 SCPs in the organization 'B' is about 3.88 times than that of
failure.
 11

6. Conclusions and Scope for Further Research

The method described in the initiation module can be used for the acceptance, routinization and
infusion modules. The model is generated for successful SCPs implementation in an
organisation. The selected SCPs are determined by literature support and consultation with SCM
managers from the organizations considered in this study. The methodological model then
developed base of the 10 practices. The SCPs decision making model provided in this study can
facilitate the SC managers and expedite the decision making process for improving the
productivity of the organization. The predictive model based on the AHP process proposed in
this study can help organizations in implementing SCPs successfully. The selected SCPs are
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provided in Table 1 help the managers to analyze and assess the organizations ability in
implementing it, and identifying the remedial actions necessary to ensure that the
implementation will be successful. The model also serves as a guide in providing information
and creating awareness to the users on the extent of changes required or simply as a checking
mechanism. This model can facilitate the SCM decision-making process by taking into
consideration the selected SCPs mentioned in this study.

This study has other implications for practicing managers. The practices identified need to be
supported by the management of the SCPs implementing organizations. Other managerial
implications emerging from this study are discussed below:

The important factors affecting SCPs implementation are incorporated into the model to
help managers to analyze and assess the organizations ability in implementing SCPs and
identifying the remedial actions necessary for successful SCPs implementation.

The SCPs implementation decision-making model can facilitate and accelerate the
decision-making process for managers. It helps in determining the potency and priority
that should be given to each SCP.

The predictive model can serve as a guide in providing information and creating
awareness to the users on the extent of changes required or simply as a checking
mechanism. This model can facilitate the SCPs implementation decision-making process
by considering all the practices mentioned in this study.
 12

This model can act as a sample model and data as the example, the methodological
approach provided in this paper can provide the foundation for future research in the area
of SCM and SCPs.

The SCPs selected in this study can be act as variables. The numbers of variables selected
for future studies may depends upon the opinion of experts, type of industries and nature
of problem.

The organizations can adopt the methodology developed in this study for the functional
benchmarking and can be benefitted with the same.
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The methodology adopted in this paper having some limitations as follows:

The priority weights are subjective and assigned as per the judgment of SCM managers
from both the organizations considered in this study. Further the priority weights can be
obtained from more industry experts through a questionnaire.

In this model, only 10 practices are taken into consideration for successful SCPs
implementation, more SCPs may be included in future research.

Further, validation of model can be carried out by raking the SCPs from same academia
and industry experts using the fuzzy AHP methodology.

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--------------------------Annexure 1 -----------------------------

Author Biographies
Er. S. J. Gorane is research scholar, at the Department of Mechanical Engineering, SardarVallabhbhai
National Institute of Technology, Surat, India. He is doing his Ph. D. in the area of Supply Chain
Management. He has about 6 years of industry experience and 12 years of teaching and research
experience.
 18

Dr. Ravi Kant is currently working as a Assistant Professor at the Department of Mechanical Engineering,
Sardar Vallabhbhai National Institute of Technology, Surat, India. He has done his Ph. D. in the area of
Knowledge Management and Supply Chain. His areas of research interest include Knowledge
Management, Supply Chain Management and Production and Operation Management. He has about 7
years of experience in industry, teaching and research. He is an Engineering graduate and M. Tech in
Industrial Engineering & Management. He has published more than 50 papers in international journals
and conferences
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 Agile Manufacturing

Customer
Relationshipimplementation
Green SCM Success
Implementation
Information Sharing

Information and Communication

Satisfactory Technology
Prediction ofInitiation
Module of SCPs
Lean Manufacturing
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Outsourcing
Failure
Postponement Implementation

Reverse Logistics

Supplier Relationship

Figure 1: Hierarchy diagram of Initiation Module of SCPs

Implementation

3 Organisation 'A'
Organisation 'B'
2

0
1 2 3 4 5 6 7 8 9 10

Figure 2: Rating to each SCPs base on the data collected from Organization A and Organization B
 Table 1: Definitions of SCPs and Literature Support

SCPs Definitions Literature support

Agility The ability of a production system to achieve its operational Zhang et al. (2006), Chi et al.
goals in the presence of supplier, internal and customer (2009), Vinodh and
disturbances Kuttalingam (2011), Vinodh
et al. (2009)
The ability to rapid changeover on a manufacturing line,
from one product to another is a key prerequisite for
increased flexibility, lead time reduction and responsive
manufacture.

Customer It is the relationship of management with customer for Shahin and Nikneshan 2008,
Relationship managing customer complaints, building long-term Kimita et al. (2009)
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relationships with customers, and improving customer

satisfaction

Green SCM The process of using environmentally friendly inputs, Jabbour and Jabbour (2009),
transforming these inputs into outputs that can be reclaimed Massoud et al. (2011),
and re-used at the end of their life cycle, thus, creating a Boubekri et al. (2010),
sustainable SC ElTayeb et al. (2010)

Information and Information technology is a SC tool to enhance the Maheshwari et al. (2010),
communication information and communication system with supplier, Kamaruddin and Udin (2009),
technology customer, within the firm, distribution centre, retailer, whole Balocco et al. (2009),
(ICT) seller, etc. Perego et al. (2011)

Information The extent to which critical and proprietary information is Jonsson and Gustavsson
sharing communicated to ones SC partner (2008), Fawcett et al. (2009),
Sezen (2008), Tai and
Share of complete, accurate, quality, relevant, ease to access
Ho(2010)
information and data with minimum distortion

Lean Elimination of everything that does not add value to the Singh et al. (2009), Bhasin
Manufacturing product service (set up time, material flow, inventory etc.) (2011), Boyle et al. (2011),
Angelis et al. (2011)
Close integration from raw material to customer through
partnership

Outsourcing Olson and Wu (2011),

Sourcing activities that were previously conducted in-house
Agndal and Nordin (2009),
Another firms employee carrying out tasks previously
Wu and Park (2009)
performed by ones own employees

Postponement Delaying final manufacturing/assembly until the customer Forza et al. (2008), Trentin
order received and Forza (2010)

Reverse The process of planning, implementing and controlling the Jack et al. (2010), Kumar et
Logistics (RL) efficient, cost-effective flow of raw materials, in-process al. (2009), Hanafi et al.
inventory, finished goods and related information from the (2008), Srivastava (2008)
point of origin to the point of consumption for the purpose of
recapturing value or proper disposal
 Supplier Supplier Relationship is the discipline of working Park et al. (2010), Koulikoff-
relationship collaboratively with suppliers in order to maximize the value Souviron and Harrison (2007),
creation Lau et al. (2010)
A system strategically aims for collaboration with suppliers,
so that an organization can develop a new product
competitively and produce goods efficiently.

Table 2: Frequency of articles for each SCP

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Sr. No Name of SCPs Percentage

1. Agile Manufacturing 6.54

2. Green SCM (GSCM) 8.01

3. Information Sharing (IS) 7.97

4. Information and Communication Technology (ICT) 8.51

5. Supplier Relationship 12.22

6. Customer Relationship 8.42

7. Lean Manufacturing 6.62

8. Outsourcing 5.62

9. Postponement 5.25

10. Reverse Logistics (RL) 3.05

 Table 3: Background Information of two organizations

Background Information Organization A Organization B

Product sector Hard and soft luggage bags Hard and soft luggage bags
manufacturing manufacturing

Nature of business Make to stock Make to stock

Geographic market location India and European India and European

countries countries

Demand pattern Approximately forecasted Approximately forecasted

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Product variety 250 370

Product life 8 to 10 years 8 to 10 years

Annual turnover 110 Million USD 160 Million USD

Hard luggage produces per month 85,000 per month 1,40,000 per month

Soft luggage produces per month 65,000 per month 1,20,000 per month

Permanent workers 180 520

Contract workers 250 200

Managerial staff 110 230

Number of suppliers 130 140

Table 4: Preference Degree Between Two SCPs

Preference Preference number

Equally important 1
Weakly more important 2
Strongly more important 3
Very strongly more important 4
Absolutely more important 5
 Table 5 :Matrix of paired Comparison For SCPs
AM CR GSCM IS IT LM OS PT RL SR
AM 1 1/5 3 1/3 1/3 1 3 4 5 1/3
CR 5 1 5 1 1/3 5 5 5 5 1
GSCM 1/3 1/5 1 1/4 1/4 1/4 1/3 3 1 1/4
IS 3 1 4 1 1/5 3 3 5 5 1
ICT 3 3 4 5 1 3 3 5 5 5
LM 1 1/5 4 1/3 1/3 1 1/3 3 5 1/2
OS 1/3 1/5 3 1/3 1/3 3 1 3 5 1/3
PT 1/4 1/5 1/3 1/5 1/5 1/3 1/3 1 2 1/5
RL 1/5 1/5 1 1/5 1/5 1/5 1/5 1/2 1 1/5
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SR 3 1 4 1 1/5 5 3 5 5 1

Table 6: Normalized Matrix of Paired Comparisons and Calculation of Priority Weights

AM CR GSCM IS IT LM OS PT RL SR Row Perditio
Total Weight
(Averag
AM 0.058 0.028 0.102 0.034 0.098 0.046 0.156 0.116 0.128 0.035 0.802 0.080
CR 0.292 0.139 0.170 0.104 0.098 0.230 0.261 0.145 0.128 0.105 1.672 0.167
GSCM 0.019 0.028 0.034 0.026 0.074 0.011 0.017 0.087 0.026 0.026 0.349 0.035
IS 0.175 0.139 0.136 0.104 0.059 0.138 0.156 0.145 0.128 0.105 1.286 0.129
ICT 0.175 0.417 0.136 0.519 0.297 0.138 0.156 0.145 0.128 0.526 2.637 0.264
LM 0.058 0.028 0.136 0.034 0.098 0.046 0.017 0.087 0.128 0.021 0.654 0.065
OS 0.019 0.028 0.102 0.034 0.098 0.138 0.052 0.087 0.128 0.035 0.721 0.072
PT 0.015 0.028 0.011 0.021 0.059 0.015 0.017 0.029 0.051 0.021 0.267 0.027
RL 0.012 0.028 0.034 0.021 0.059 0.009 0.010 0.014 0.026 0.021 0.234 0.023
SR 0.175 0.139 0.136 0.104 0.059 0.230 0.156 0.145 0.128 0.105 1.378 0.138

Table 7: Matrix of Paired Comparison For Possible Outcomes and Normalized Matrix And Priority
Weights of Possible Outcome
Information and Communication
Normalized Matrix
Technology (ICT)
Success Failure Success Failure Row total Average
Success 1 5 1/1.2 = 0.833 5/6 = 0.833 1.666 0.833
Failure 1/5 1 (1/5)/1.2 = 0.166 1/6 = 0.166 0.332 0.166
Total 1.2 6 1.00 1.00 2.00 1.00
 Table 8: Summary of All Paired Comparisons and Resulting Priority
Weight For Possible Outcomes For SCPs for Organization A
SCPs Success Failure Priority Weights

AM Success 1.00 5.00 0.83

Failure 0.20 1.00 0.17
CR Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
GSCM Success 1.00 5.00 0.83
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Failure 0.20 1.00 0.17

IS Success 1.00 3.00 0.75
Failure 0.33 1.00 0.25
ICT Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
LM Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
OS Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
PT Success 1.00 2.00 0.67
Failure 0.50 1.00 0.33
RL Success 1.00 2.00 0.67
Failure 0.50 1.00 0.33
SR Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
 Table 9: Summary of All Paired Comparisons and Resulting Priority
Weight For Possible Outcomes For SCPs for Organization B
SCPs Success Failure Priority Weights

AM Success 1.00 4.00 0.80

Failure 0.25 1.00 0.20
CR Success 1.00 4.00 0.80
Failure 0.25 1.00 0.20
GSCM Success 1.00 3.00 0.75
Failure 0.33 1.00 0.25
IS Success 1.00 3.00 0.75
Failure 0.33 1.00 0.25
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ICT Success 1.00 5.00 0.83

Failure 0.20 1.00 0.17
LM Success 1.00 4.00 0.80
Failure 0.25 1.00 0.20
OS Success 1.00 5.00 0.83
Failure 0.20 1.00 0.17
PT Success 1.00 2.00 0.67
Failure 0.50 1.00 0.33
RL Success 1.00 2.00 0.67
Failure 0.50 1.00 0.33
SR Success 1.00 4.00 0.80
Failure 0.25 1.00 0.20
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Table 10: Summary of Priority Weights for Organizational A

AM CR GSCM IS IT LM OS PT RL SR Prediction
Weights
Prediction Weight 0.080 0.167 0.035 0.129 0.264 0.065 0.072 0.027 0.023 0.138
Success Priority Weights 0.83 0.83 0.83 0.75 0.83 0.83 0.83 0.67 0.67 0.83
Failure Priority Weights 0.17 0.17 0.17 0.25 0.17 0.17 0.17 0.33 0.33 0.17
Success 0.0666 0.1388 0.0290 0.0965 0.2189 0.0543 0.0598 0.0180 0.0157 0.1144 0.8118
Failure 0.0136 0.0284 0.0059 0.0322 0.0448 0.0111 0.0123 0.0088 0.0077 0.0234 0.1883

Table 11: Summary of Priority Weights Organization B

AM CR GSCM IS IT LM OS PT RL SR Prediction
Weights
Prediction Weight 0.080 0.167 0.035 0.129 0.264 0.065 0.072 0.027 0.023 0.138
Success Priority Weights 0.80 0.80 0.75 0.75 0.83 0.80 0.83 0.67 0.67 0.80
Failure Priority Weights 0.20 0.20 0.25 0.25 0.17 0.20 0.17 0.33 0.33 0.20
Success 0.0642 0.1338 0.0262 0.0965 0.2189 0.0523 0.0598 0.0180 0.0157 0.1102 0.7955
Failure 0.0160 0.0334 0.0087 0.0322 0.0448 0.0131 0.0123 0.0088 0.0077 0.0276 0.2046
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Annexure 1: Data collected from two organizations related to 10selected SCPs

Data Related to Supplier Relationship
Performance Measures Organization A Organization B
Supplier due date performance Delivery performance measured on lot to lot basis Delivery performance measured on a monthly
basis
Supplier rejection rate 300 PPM More than 1000 PPM
Cost reduction trend The cost of each product/subassembly/assembly is 50-55% suppliers are using lean manufacturing /
calculated by the system which includes scrape rate, TOC techniques for reduction in cost
process capability, cycle time, the profit margin of
the supplier etc.
Delivery lead time Local 30 Days, Imported 90 Days Local 30 to 40 days
Flexibility All the suppliers are loaded only 80% to the full 4- 5 days
capacity so flexibility between 2- 3 days
ISO certified suppliers 90% 98%
Vendor development No separate vendor development department, but a No separate vendor development department, but
team of QA, development and materials regularly a team of QA, development and materials
visit the suppliers to check process capability, lead regularly visit the suppliers to check process
time etc. capability, lead time etc.
The manufacturer shared risk with a supplier No Quantity off takes are shared with the suppliers
and reward for the benefit depending on sale, so suppliers get benefited

The manufacturer does financial investment at All the moulds are supplied to vendor by In very few cases
the suppliers site for mutual benefit Organization A. For some vendors, the whole line
is set by the Organization A
Supplier participates in early product design, R Involvement of supplier on the component basis and For all new products, from sample stage to final
and D process etc. not for the whole assembly product development, all key suppliers are
involved.
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The manufacturer provides on the job training Complete line at the suppliers site is set by the For critical processes, the organization calls
to supplier for skill enhancement Organization A and also on the job training suppliers and provides them in-house training
provided to suppliers
Both organizations have a conflict resolution Conflict resolution systems comprise of people from Issues are discussed with suppliers and is backed
system different department like QA, development and up by corrective action
materials
How old suppliers are 2-12 Years (some from foundation) 25-30 years (some from foundation)
Whether suppliers implemented KAIZEN/ 50% suppliers have implemented Lean system 70% suppliers have implemented Lean system
LEAN/ SIX SIGMA
Data Related to Customer Relationship
Feedback from customer Through website/phone/booklet Through website and mail
Delivery lead time (supply chain lead time) 30 days 40 days
Product development cycle time Variant- 60 days Variant- 60-90 days
New product development-120 days
Order fill rate/ service level index/delivery 95% 92%
reliability
Separate service department Full fledge service department at company stores A full fledge service department at company
stores (recently started)
Complaints receive to how many peoples After sales service, plant head and marketing head After sales service, plant head, marketing head,
quality head and production head
Separate marketing and sales wing Separate marketing and sales wing at every state Separate marketing and sales wing
Reliability/ accessibility Reliability of luggage tested through luggage Reliability of luggage tested through 12 tests
standard (SLS). The luggage tested though 21 tests,
including the temperature test.
Data Related to Information Sharing

Frequency of information sharing with supplier The real time information sharing with suppliers and All the real time information sharing with
and customers
Sharing of proprietary information
ICT infrastructure
ICT software
Fund transfers through ICT
Purchase order through ICT
No of supplier connected through ICT
No of stores/ branches connected through ICT
The use of the various information SCM, CRM, BAAN-LN system available
technologies such as Internet, E- commerce,
CRM, SCM and ERP software
Use of jigs and fixture
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stores is carried out using BAAN- LN system suppliers and stores is carried out using the SAP
system
Component basis key information shared with key For complete product the information shared
suppliers with key suppliers
Data Related to Information Technology
All the depot, key suppliers and manufacturing plant All the depot and manufacturing plant is
is connected through BAAN- LN system connected through SAP system
BAAN- LN SAP R3 (ECC6Version)
BAAN-LN connected to RTGS, 100% fund transfer SAP connected to RTGS, 80% fund transfer
through RTGS through RTGS
100% PO through ERP system 100% PO through ERP system
70% suppliers are connected through BAAN-LN 65% suppliers are connected through SAP and
and web portal web portal
All 30 branches and 100 stores are connected All 22 branches and 120 stores are connected
through the system through the system
SAP- R3 system available
Data Related to Lean Manufacturing
95% work carried out through Jigs and fixture. All 60% use of jigs and fixture, 40% manual work.
the fixtures are operated through hydraulic and
pneumatic system. Only 5% manual interference
for some assembly work
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Decentralization of responsibility of production High level of decentralization of authority and High level of decentralization of authority and
line workers and decrease the hierarchic level responsibility at management level responsibility at management level
of organization
Integrated, single piece production flow Every assembly line is a single piece flow system Every assembly line is a single piece flow
system
Small batch size. 250 PCs Up to 500 PCs
Production pull not push with smoothed Implemented KANBAN system Implemented TOC system which is a pull base
demand system
Training to employee for skill enhancement Two 3 days training to workers and three five days No training to workers and two five days
training to managers training to managers
Scarp rate/ production rejection rate 97% yield (3% scrape) 95.5 % yield (4.5% scrape)
Preventive maintenance as per planning 100% as per schedule, each bolt of the mould get 80% as per schedule
replaced after 1 lakh shot
Data Related to Agile manufacturing
Flexibility 2 to 3 Days 4 to 5 Days
The use of advanced manufacturing technology Unigraphics, Semi robots, SPMs CAPP, Rapid Unigraphics, Semi robots, SPMs CAPP, Rapid
leads to greater flexibility (CAD, CAM, CAE, prototyping prototyping
ERP, Robots, Rapid prototyping, FEM, CAPP
Ability of volume and product mix demanded Highly sophisticated machinery equipped with Semiautomatic machineries (some machines are
by the customer hydraulic and pneumatic system take care of volume very old) partially take care of volume and
and product mix product mix
Manpower flexibility As per the load factor the manpower is shifted from As per the load factor the manpower is shifted
one department to another department from one department to another department
Lead time/Order fulfillment time 30 days 40 days
Data Related to Outsourcing
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Percentage of outsourcing compare to 60% 70%

manufacturing in house
No. of outsourcing partners 30 63
The effect of outsourcing on quality/ flexibility The rejection rate is only 300 PPM The rejection rate is more than 1000 PPM
Saving in capital investment due to outsourcing 10 Cr 8-10Cr
Data Related to Postponement
Delay of final product assembly activities until NA NA
customer orders have actually been received
Delay of final product assembly activities until NA NA
the last possible position (or nearest to
customer) in the supply chain
Delay of ordering of raw materials from Yes (used KANBAN system) Yes (used TOC system)
suppliers until customer orders have actually
been received
A delay of some form of value-addition to the NA NA
product until customer orders have actually
been received
Data Related to Green SCM
Environmental compliance and auditing Following the REACH (Registration, Evaluation, REACH compliance followed only for export
programs Authorization and Restriction of Chemicals products
compliance) for all products.
ISO 14001 certification for organization and No Yes
suppliers
Providing design specification to suppliers that Following REACH compliance for all products Following the REACH compliance for only
include environmental requirements for export quality products
purchase item
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Cooperation with customers for cleaner Recently developed indigenous machine which ---
production consume half of the energy than the original
machine.
Cooperation with customers for green Maximum usage of cardboard for packaging and use Maximum usage of cardboard for packaging
packaging of plastic bags more than 200 gauge and use of plastic bags more than 200 gauge
Design of products for reuse, recycle, recovery Every product is recyclable Every product is recyclable
of material, component parts
Providing consumers with information on Following REACH compliance for all products Following the REACH compliance for only
environmental friendly products and/or export quality products
production methods
Training to employee suppliers and society Environmental trainings are provided to managers No environmental training
about environmental concern
Data Related to Reverse Logistics
Organizations maintained traceability of their Traceability of product only up to retail stores Traceability of product only up to retail stores
products throughout the supply chain in order
to handle product recalls and to ensure efficient
use and recycling of distributed stock
Reverse distribution of the material and NA NA
recycled to reduce the raw material
requirement for forward supply chain
The products are returned for defects or Through separate service/after sales service Through separate service/after sales service
damage, customer dissatisfaction, lower than department department
projected sales etc.
Reverse logistics form the closed loop of NA NA
supply chain in which the used products from
the customers returns to the manufacturer