Supply Chain Management (Question 1)

Supply Chain Management (SCM) practices and firm performance: A Survey of the
ON Semiconductor Electronic firm in Seremban, Negeri Sembilan
By
Velaitham Narinasamy, Asian University Malaysia (AEU)

Abstract

Supply chain management (SCM) has become a fundamental element in the electronic
industry to improve the efficiency and productivity in recent decades. Supply chain
management (SCM) is the integration and strategic alliance involving all the value-creating
elements in the supply, manufacturing, and distribution processes from raw material
extraction, the transformation process, and end user consumption. This paper explores the
supply chain management (SCM) activities carried out by ON Semiconductor electronic
firm in Seremban, Negeri Sembilan and determines the correlation between SCM practices
and firm performance. A self-administrated questionnaire based survey technique was
employed to ascertain the status of SCM adoption and the practices in SCM that are
significant for ON Semiconductor electronics firms top and middle management. The
findings suggest that the adoption of SCM activities is reasonably moderate. Anyhow, there
are some solutions can be proposed for the effective use of SCM for optimum the firms
performance as well as emphasizing some crucial points avoiding optimum efficiency and
productivity in the business.

Keywords: Electronics Industry, Firm Performance, Negeri Sembilan, Supply Chain

Practices, Top and Middle Management.

1.0 INTRODUCTION

As competition in the 1990s intensified and markets became global, so did the

challenges associated with getting a product and service to the right place at the right time at

the lowest cost. Organizations began to realize that it is not enough to improve efficiencies

within an organization, but their whole supply chain has to be made competitive. The

understanding and practicing of supply chain management (SCM) has become an essential

prerequisite for staying competitive in the global race and for enhancing profitably (Suhong

and Nathan, 2004).

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 Supply Chain Management (Question 1)

Effective supply chain management (SCM) has become a potentially valuable way of

securing competitive advantage and improving organizational performance since competition

is no longer between organizations, but among supply chains. Supply chain management

(SCM) is the term used to describe the management of the flow of materials, information, and

funds across the entire supply chain; from suppliers to component producers to final

assemblers to distribution (warehouses and retailers), and ultimately to the consumer. In fact,

it often includes after-sales service and returns or recycling (Silver, Pyke, & Peterson, 2001;

Johnson & Pyke, 2000).

Supply chain management has generated much interest in recent years for a number of

reasons. Many managers now realize that actions taken by one member of the chain can

influence the profitability of all others. This study presents the supply chain management

(SCM) practices and firm performance in ON Semiconductor electronic firm in Seremban

Negeri Sembilan.

1.1 Objective of the study

The primary objective described in this paper is to explore SCM practices and the

relationship with firm performance in the ON Semiconductors electronic firm Seremban,

Negeri Sembilan. The research questions are How widely are these SCM concepts

implemented in practice? and How well SCM do practices correlate with firm

performance? For the purpose of this study, twenty-five commonly cited SCM practices

from the literature were identified (Table 1) to describe the construct of SCM practices. These

included practices relating to supply and materials management issues, operations,

information technology and sharing, and customer service. In terms of the firm performance

measurement, it is examine whether the aggregate performance of a firm, as assessed by

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 Supply Chain Management (Question 1)

operations excellence, revenue growth, and customer relationships, is influenced by supply

chain practices. Moreover, the uniqueness of this study to our understanding and knowledge

is implicit as there are no published studies on supply chain management practices in any of

electronics industries in Negeri Sembilan.

1.2 Background of the study

ON Semiconductor electronics company is a Fortune 1000 semiconductors supplier

company. The products include power and signal management, logic, discrete, and custom

devices for automotive, communications, computing, consumer, industrial, LED lighting,

medical, military/aerospace and power applications (Wikipedia, 2016). ON Semiconductor

runs a network of electronics manufacturing facilities, sales offices and design centres in

North America, Europe, and the Asia Pacific regions. ON Semiconductor was founded in

1999. The company was originally a spinoff of Motorola's Semiconductor Products Sector. It

continues to manufacture Motorola's discrete, standard analogue and standard logic devices

(Wikipedia, 2016).

However, for this study ON Semiconductor Electronics Company in Seremban,

Negeri Sembilan was chosen to determine the SCM practices and the relationship with firm

performance. Actually, this company are located in Lot 55 & 122, Senawang Industrial

Estate, 70450 Seremban, Negeri Sembilan. It is a high volume probe, assembly and test

factory with 175,000 square feet of clean room space, located on a 9 acre campus. And, the

production also involved power & small outline surface mount packages such as QFN/DFN,

DPAK, SM, TSOP, TO, and Leadless. Recently, the enrolments of the workers in ON

Semiconductor Electronics Company in Seremban, Negeri Sembilan are 1204 which consists

of managers, engineers, technicians, maintenances, supervisors, operators and cleaners.

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 Supply Chain Management (Question 1)

(Documentary File of ON Semiconductor, 2016). There are three shifts of working in this

company with comfortable facilities to the employers.

1.3 Definition
1.3.1 Supply Chain Management (SCM)

According to the Council of Supply Chain Management Professionals (CSCMP),

Supply chain management encompasses the planning and management of all activities

involved in sourcing, procurement, conversion, and logistics management. It also includes the

crucial components of coordination and collaboration with channel partners, which can be

suppliers, intermediaries, third-party service providers, and customers. In essence, supply

chain management integrates supply and demand management within and across companies.

More recently, the loosely coupled, self-organizing network of businesses that cooperate to

provide product and service offerings has been called the Extended Enterprise.

Additionally, Supply chain management (SCM) is the management of the flow

of goods and services. It includes the movement and storage of raw materials, work-in-

process inventory, and finished goods from point of origin to point of consumption.

Interconnected or interlinked networks, channels and node businesses are involved in the

provision of products and services required by end customers in a supply chain

(Encyclopedia, 2016).

Furthermore, according to Li et al., (2005) A SCM practice is defined as the set of

activities undertaken by an organization to promote effective management of its supply

chain (Siti Zaleha and Abu Bakar, 2014). The authors further emphasised that SCM practice

is proposed to be a multi-dimensional concept, which has been viewed as a more

comprehensive concept. Thus, the concept includes the downstream and upstream sides of the

supply chains. In addition, according to Zhou and Benton Jr (2010), a group of supply chain

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 Supply Chain Management (Question 1)

practice is regarded as effective supply chain practice if the selected best practices have been

implemented.

1.3.2 Firm practice and performance

The performance of a company will be measured by its output/input ratio or productivity.

Business performance is a combination of management and analytic processes that allows

managers of an organization to achieve pre-determined goals (Business Performance Article,

2013). Other than that, it is also defined as the accomplishment of a given task measured

against preset known standards of accuracy, completeness, cost, and speed. In a contract,

performance is deemed to be the fulfillment of an obligation, in a manner that releases the

performer from all liabilities under the contract. (Business Dictionary, 2016).

1.3.3 Electronic Industry

The electronics industry, especially meaning consumer electronics, emerged in the 20th

century and has now become a global industry worth billions of dollars. Contemporary

society uses all manner of electronic devices built in automated or semi-automated factories

operated by the industry (Wikipedia, 2016). It is also operates the use of many small

electrical parts such as microchips and transistors (Merrian Webster Dictionary, 2016).

Electronics industry known as manufacturers of electronic products considered collectively

(Free Online Dictionary, 2016).

2.0 LITERATURE REVIEW

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 Supply Chain Management (Question 1)

The objective of this section is to perform a literature review of the issues relating to

the practices and performance of SCM. Studies on supply chain management (SCM)

practices in different industrial sectors allow special features to be distinguished to the

applied practices, and a consequent improvement to SCM theories. In this context it is best to

start with a few samples in this area from previous research that are regarded as very

valuable. To date, (Lurquin, 1996), apparel (Darpin, 1992; Christopher & Peck, 1997),

grocery (Fernie, 1995; Zairi, 1998), computer (Magretta, 1998), automobile (Helper, 1991;

Choi & Hong, 2002) were conducted this study on various industrial sectors including

pharmaceutical (Veera Pandian & Govindaraju, 2011).

Most of the available literature on SCM is concerned with advocating SCM practices.

Fox (1991) and Michael (1996) suggest that manufacturers should synchronize the entire

supply chain as a single business entity and integrate the flows across the supply chain in

order to reduce costs, improve customer service, and ward off impending competitive

pressures in manufacturing (Veera Pandian & Govindaraju, 2011). Balsmeier and Voisin

(1996) highlighted the importance of SCM practices through strategic partnerships,

information sharing and improved communications.

Integrating the supply chain gives the business more options in competitive strategy.

Ragatz et al. (2010) found that supplier memberships in new product development teams

contributed significantly to the success of these teams. The mechanism through which SCM

practices improve a firms performance hinges on lead-time reduction (Towill, 2012).

Literature suggests (Slywotzky et al., 2009) that a firms aggregate performance relative to its

competition comprises operations excellence, revenue growth, and customer relationships.

Operations excellence is the extent of the focal firms responsiveness to customers

and improvements in productivity relative to its competition (Fisher, 1997; Simchi-Levi et al.,

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 Supply Chain Management (Question 1)

2007). Customer relationships focus on the bond and loyalty between a focal firm and its

customers, and the focal firms intimate knowledge about customer-related preferences

(Groves & Valsamakis, 1998; Malhotra et al., 2008). Growth in revenues includes sales from

existing products and from new products and markets (Kalwani & Naravandas 1995; Zahra &

George 2005).

According to Guan, (2005) when implementing supply chain management practices

in Asia, company need to recognise other factors such as local norms, ground physical

infrastructure, and ground IT infrastructure (Siti Zaleha and Abu Bakar, 2014). Previous

studies have shown that different industry may also have a different effect on SCM practices

(Mollenkopf and Dapiran, 2005; Jharkharia and Shankar, 2006).

There are evidences to suggest that different countries may have the different

practices in implementing supply chain management. In a study by Chow et al. (2008), the

authors used different constructs for different country. This is due to the fact that different

managerial perceptions of how supply chain components are related to each other and to

organization, different world views from different country and cultural differences. A further

argument supporting this study is from Halldorsson et al. (2008), that investigated the

Scandinavian and American perspectives on supply chain management.

According to Li et al. (2006), SCM practices may be influenced by contextual factors,

such as the type of industry, firm size, a firms position in the supply chain, supply chain

length, and the type of a supply chain. Jharkharia and Shankar (2006) investigated the supply

chain practices in four sectors from Indian manufacturing industry, namely; Auto,

Engineering, Process and FMCG (Fast Moving Consumer Goods) sector. The findings

revealed that different sectors were adopting SCM practices based on their own constraints

and working environments.

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 Supply Chain Management (Question 1)

According to Van Donk et al. (2008), uncertainties and complex operational

characteristics increase the need for integration. Therefore, the constructs of SCM practices in

electronics industry will emphasised on integration. Furthermore, Siti Zaleha and Abu Bakar

(2014) also were proposed constructs for SCM practices in manufacturing industry are

customer relationship, close supplier relationship, information sharing, supply chain

integration, logistics, and strategic location. Moreover, Berry et al., (1994) stated that Total

management of the supply chain enhances the competitive edge of all players therein

(Karata, 2009).

In addition, a study by Mollenkopf and Dapiran (2009) in Australia and New Zealand

demonstrated that the motor/transport and the chemicals/petroleum sectors perform the best

while food processing and distribution sectors as well as the clothing and textile sectors

perform weak in their logistics and supply chain competencies. Thus, the evidences seem to

indicate that different industries may have different adoption on certain variable in supply

chain practices. It is clear therefore that a set of supply chain practices may not be suitable for

all industry or sector.

In conclusion, the evidences from previous studies suggest that different country and

different industry may have a different set of SCM practices. Therefore, this study is

important to reveal supply chain practices in electronic industry in Malaysia.

3.0 RESEARCH METHODOLOGY

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 Supply Chain Management (Question 1)

A detailed description of the research method will be discussed, comprising research

design, sampling method and type, measurement of concepts and their operational definitions

and finally the dimensions used to design the questionnaires.

3.1 Research Design

A quantitative method was chosen to find out the descriptive and correlation study to

understand the SCM practices and performance of the electronic manufacturing sector of the

selected company in Seremban, Negeri Sembilan. As such, by using this research design and

questionnaires which consists of 25 items, the study explored the supply chain management

(SCM) activities carried out by ON Semiconductor electronic firm in Seremban, Negeri

Sembilan and determines the correlation between SCM practices and firm performance.

3.2 Sampling

There population of employers in the selected company were 1204. Therefore, a non-

probability sampling method was used that specifically employed the convenience sampling

technique where the samples used for this study were only 75 out of 1204 employers. The

questionnaires will be given to the selected managers, engineers, executives, supervisors, and

clerks from the company and had a role and knowledge in the area of operations management

and supply chain management. There are 40 female and 35 male were selected as respondents

of this study.

3.3 Measurement and Scale

The practices of SCM are operationally defined as the level of commitment given by

the organization in implementing the SCM activities. Therefore, the dimensions and elements

used to measure the SCM practices were measured through the managerial and strategic

commitment of the organization in total. A 5-point Likert Scale was used in the

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 Supply Chain Management (Question 1)

questionnaires to elicit responses from the respective respondents ranging from a continuum

of very low, low, neutral, high to very high efforts.

3.4 Questionnaires

A survey instrument in the form of a questionnaire was used based on the constructs

described in Appendix I. This survey questionnaire adapted from Tan (1999) and Tan and

Wisner (1999). This instrument has, thus, been tested and proven in terms of ambiguity,

reliability, and validity. Respondents were asked to indicate, using a five point Likert scale,

the importance of the twenty-five practices in the firms SCM efforts (Table 1). Several other

questions, including demographic information, were also presented in the questionnaire. A

total of 75 questionnaires were distributed and collected which require one to two weeks.

Table 1 : Twenty-five practices in the firms SCM efforts.

No Scale items Very low Low Neutral High Very high

1 Improving the integration of
activities across the supply chain.
2 On-time delivery on your own
purchased materials directly to the
firms points of use.
3 On-time delivery of own firms
products directly to the customers
points of use.
4 Increasing the firms Just-In-Time
(JIT) capabilities.
5 Searching for new ways to integrate
supply chain management activities
6 Determining customers future
needs.
7 Contacting the end users of the
products to get feedback on
performance and customer service.
8 Use of informal information
sharing with suppliers and
customers.
9 Establishing more frequent contact
with members of supply chain.

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 Supply Chain Management (Question 1)

10 Communicating own firms future

strategic needs to the suppliers.
11 Reducing response time across the
supply chain.
12 Creating a greater level of trust
among the supply chain members.
13 Participating in the marketing
efforts to the customers.
14 Communicating customers future
strategic needs along the entire
supply chain.
15 Creating a compatible
communication /information
system with the suppliers &
customers.
16 Use of formal information sharing
agreements with suppliers and
customers.
17 Aiding the supplier in increase their
JIT capabilities.
18 Finding additional supply chains
where the firm can establish a
presence.
19 Involving all members of the firms
supply chain in the product
/service/ marketing plans.
20 Participating in the sourcing
decision of the suppliers.
21 Creating supply chain management
team that include members from
different companies.
22 Extending the supply chain to
include members beyond
immediate suppliers and customers.
23 Locating closer to the customers.
24 Use of a third-party supply chain
management specialist.
25 Requiring suppliers to locate
closer to the firm.

3.5 Procedures for analysis data

All the data was selected and pro-cessed by using the computer program Statistical

Package for Social Sciences (SPSS) version 15.0. The statistical tools used in this study are

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 Supply Chain Management (Question 1)

descriptive. To measure the primary objective of this study, that is, to identify the

organizational adoption level of SCM practices, inferential statistical tools such as the one-

sample t-test were employed. Pearsons correlation was used to reveal the underlining

relationship between each supply chain practice and firm performance.

4.0 FINDINGS

4.1 Demographic factors

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 Supply Chain Management (Question 1)

There are 40 female and 35 male were selected as respondents of this study (Graph 1).

When comparing the ages of the respondents, there are 22 respondents with the age of 26 to

30; 26 respondents with the age of 31 to 35; 9 respondents with the age of 36 to 40; 13

respondents with the age of 41 to 45 and the rest were 46 to 50 ( Graph 2). There are 20

Indians, 35 Chinese and the rest are Malays (Graph 3) Furthermore, there are 20 of them are

diploma holders, 34 of them were degree holders and 9 of them are master and the rest are

PhD holders (Graph 4). Respondents are also categorized into five departments in the

selected firm (Graph 5).

Graph 1: Analysis of Gender

Gender
42
40
38 Gender

36
34
32
male female

Graph 2: Analysis of Respondents Age

age
30
25
20
age
15
10
5
0
26 to 30 31 to 35 36 to 40 41 to 45

Graph 3: Analysis of Ethnic of respondents

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 Supply Chain Management (Question 1)

ethnic
40
35
30
25 etnic
20
15
10
5
0
Indian Chinese Malay others

Graph 4: Analysis of Education Background

education background
40
35
30
25 education background
20
15
10
5
0
diploma degree masters PhD

Graph 5: Analysis of Respondents Department of work

Name of Department
40
30
20
10 Name of Department
0

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 Supply Chain Management (Question 1)

4.2 Firms Supply Chain Activities

How extensively is SCM adopted in Malaysia especially in electronic company

namely, ON Semiconductor in Seremban, Negeri Sembilan? Businesses competing globally

are under more intense competitive pressure to gain efficiency and efficacy in their supply

and logistics systems. Thus, they could be expected to be on the leading edge of the

implementation of SCM. To answer this question the respondents were presented with 25

SCM activities and asked to indicate the level of adoption in their business. The survey result

was tested by a one sample T-Test to identify the organizational adoption in the practice of

SCM activities.

4.2.1 Descriptive Analysis and Reliability Analysis

After the survey had been completed the reliability of the scale was further examined

using coefficient alpha (Cronbachs alpha). All scales were found to exceed the minimum

threshold of 0.7 suggested by Nunnally (2005) and cited by Panayides (2004). Convergent

validity is indicated by a high Cronbachs alpha being attained when the individual variable

scores are combined into a single scale. The actual result of the scale reliability analyses are

reported in Table 1. The descriptive analysis (Table 2) below, mainly the measurement of

central tendency (mean value and standard deviation), strongly indicate that on-time

performance (including JIT), determining customers needs and supply chain integration are

the most highly adopted SCM practices.

Table 2: Descriptive analysis and reliability of SCM practices items

Alpha
Itemtotal Coeff.
No Scale Items Mean SD if item
correlation Alpha
deleted

Supply Chain Management Practices 0.81

1 4.66 0.48 0.45 0.79

Improving the integration of activities across

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 Supply Chain Management (Question 1)

the supply chain.

On-time delivery on your own purchased

materials directly to the firms points of use.
2 4.62 0.49 -0.02 0.82

On-time delivery of own firms products

directly to the customers points of use.
3 4.50 0.51 0.01 0.82

Increasing the firms Just-In-Time (JIT)

4 capabilities 4.50 0.51 0.26 0.80

Searching for new ways to integrate supply

chain management activities.
5 4.50 0.51 0.02 0.82

6 Determining customers future needs. 4.34 0.48 0.35 0.80

Contacting the end users of the products to get

feedback on performance and customer
service.
7 4.20 0.37 0.37 0.80

Use of informal information sharing with

suppliers and customers.
8 3.75 0.44 0.38 0.80

Establishing more frequent contact with

members of the supply chain.
9 3.75 0.44 0.38 0.797

Communicating own firms future strategic

needs to the suppliers.
10 3.75 0.44 0.38 0.80

Reducing response time across the supply

11 chain. 3.72 0.46 0.31 0.80

Creating a greater level of trust among the

supply chain members.
12 3.53 0.51 0.26 0.80

Participating in the marketing efforts to the

13 customers 3.38 0.49 -0.09 0.82

Communicating customers future strategic

needs along the entire supply chain.
14 3.25 0.44 0.02 0.81

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 Supply Chain Management (Question 1)

Creating a compatible communication

/information system with the suppliers and
customers.
15 3.20 0.37 0.47 0.80

Use of formal information sharing agreements

with suppliers & customers.
16 3.20 0.37 0.47 0.80

17 Aiding the supplier in increase their JIT 3.10 0.30 0.15 0.81
capabilities.

Finding additional supply chains where the

firm can establish a presence.
18 2.90 0.40 0.37 0.80

Involving all members of the firms supply

chain in the product /service/ marketing plans.
19 2.75 0.44 0.53 0.79

20 Participating in the sourcing decision of the 2.63 0.49 0.54 0.79

suppliers.

Creating supply chain management team that

include members from different companies.
21 2.41 0.50 0.78 0.78

Extending the supply chain to include

members beyond immediate suppliers and
customers.
22 2.34 0.48 0.68 0.78

23 Locating closer to the customers. 2.34 0.48 0.68 0.78

24 Use of a third-party supply chain management 2.19 0.59 0.61 0.78

specialist.
25 Requiring suppliers to locate closer to the 1.84 0.68 0.35 0.80
firm.
Source: Survey Result from SPSS data

Whereas, choice of location within the vicinity of the suppliers/customers and

extending the supply chain effort are gener-ally less preferred by the selected respondents

from the manufacturing firms.

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 Supply Chain Management (Question 1)

4.2.2 One Sample T-Test to Determine the Extent of SCM Practices

The following presents the results of hypothesis testing through a one sample t-test,

which indicates the extent or degree of practice of supply chain management among firms in

the electronics sector in Malaysia. The hypothesis testing reveals that the mean value for

overall SCM practices is significantly more than 3 ( = 5%). This confirms that selected

respondents from the electronic manufacturing firms have adopted SCM practices.

Table 3: Correlation of SCM practices versus firm performance

Supply Chain Management Practices Operational Revenue Customer

Excellence Growth Relationship

[= 3.15] [= 3.77] [= 3.35]

Aiding the suppliers to increase their JIT capabilities. 0.393* 0.072 0.145

Locating closer to the customers. 0.339* 0.386* 0.060

Increasing the firms Just-In-Time (JIT) capabilities. 0.382* 0.322* 0.274

Contacting the end users of the products to get feedback on

performance and customer service. 0.440* 0.397* 0.361*

On-time delivery of own firms products directly to the

customers points of use. 0.115 0.398* 0.325*

Use of a third-party supply chain management specialist. 0.276 0.426* 0.326*

Requiring suppliers to locate closer to the firm. 0.052 0.386* 0.351*

Participating in the sourcing decisions of the suppliers. 0.106 0.405* 0.251

Determining customers future needs. 0.222 0.227 0.374*

Participating in the marketing efforts of the customers. 0.191 0.114 0.465*

On-time delivery on your own purchased materials directly

to the firms points of use. 0.149 0.063 0.029

Improving the integration of activities across the supply

chain. 0.118 0.004 0.037

Searching for new ways to integrate supply chain

management activities. 0.141 0.142 0.007

Establishing more frequent contact with members of the

supply chain. 0.180 0.038 0.195

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 Supply Chain Management (Question 1)

Communicating own firms future strategic needs to the

suppliers. 0.180 0.271 0.195

Reducing response time across the supply chain. 0.111 0.038 0.195

Use of formal information sharing agreements with

suppliers & customers 0.180 0.142 0.218

Creating a greater level of trust among the supply chain

members. 0.245 0.012 0.157

Communicating customers future strategic needs along the

entire supply chain. 0.009 0.036 0.107

Creating a compatible communication /information system

with the suppliers and customers. 0.041 0.036 0.107

Use of formal information sharing agreements with

suppliers & customers 0.041 0.096 0.134
.

Finding additional supply chains where the firm can

establish a presence. 0.009 0.114 0.065

Involving all members of the firms supply chain in the

product / service/ marketing plans. 0.085 0.063 0.087

Creating supply chain management teams that include

members from different companies. 0.124 0.088 0.155

Extending the supply chain to include members beyond

immediate suppliers and customers. 0.124 0.088 0.155

Significant at = 10%

As such the above findings coincide with several other researchers opinion (Berry,

Towill, & Wadsley, 1994; Kim, 2006) on the importance of supply chain adoption, mainly by

the manufacturer. The impetus for such supply chain adoption is due to several performance

based factor, which range from firm level to performance of overall supply chain (Field &

Meile, 2008; Forslund & Jonsson, 2007; Gunasekaran, Patel & Mc-Gaughey, 2004).

Furthermore, correlation test was performed to determine the relationship between SCM

practices and firm performance and the result are shown in Table 3.

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 Supply Chain Management (Question 1)

However, not all correlations were significant statistically. Although causality cannot

be inferred from correlations, it appears that firms wishing to do well in operational

excellence should focus on: increasing the firms Just-In-Time (JIT) capabilities, contacting

the end users of the products to get feedback on performance and customer service, aiding

sup-pliers to increase their JIT capability, and locating closer to the customers.

To improve the revenue growth, firms would do well to ensure on-time delivery of

own firms products directly to the customers points of use, increasing the firms Just-In-

Time (JIT) capabilities, contacting the end users of the products to get feedback on

performance and customer service, participating in the sourcing decisions of the suppliers,

locating closer to the customers, use of a third-party supply chain management specialist, and

requiring suppliers to locate closer to the firm. This correlation between supply chain

practices and organization effectiveness [operational excellence and revenue growth] is

consistent with previous studies (Elmuti, 2002; Falah, Zairi, & Ahmed, 2003; Jharkharia &

Shankar, 2006).

With respect to customer relationship levels, the activities to foster, i.e., the activities

that statistically correlated with this performance measure were: on-time delivery of own

firms products directly to the customers points of use, determining customers future needs,

contacting the end users of the products to get feedback on performance and customer

service, participating in the marketing efforts of the customers, use of a third-party supply

chain management specialist, and requiring suppliers to locate closer to the firm.

These findings complement previous studies (Elmuti, 2002; Jharkharia & Shankar,

2006; Kim, 2006; Lau, Yam, & Tang, 2007) that found a positive relationship between supply

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 Supply Chain Management (Question 1)

chain management practices and customer relationship. The data also indicates that the main

focus of SCM is on revenue growth levels: the number of statistically significant correlations

with revenue growth levels is much more than the corresponding number for either of the two

other firm performance measures.

4.3 The Weaknesses and strength of this organization with regards to supply chain
management

Key Strengths Weaknesses

Measurements must be lined to the Existence of planning Low contribution to
business strategy process. development of business
strategy
Measurement must be balanced and Measurement are at a Measurement are not
comprehensive and need to take financial level (e.g. stock comprehensive enough
into account financial dimension, levels, logistic costs) and the work is made
internal dimension, customers Operational (Service manually
dimension and innovation and level)
learning dimension.
Target must be set on both internal Targets are set Targets dont produce
and external benchmarks development over time
Targets must be achievable Targets achieved at the Target on supplier
achievable level service level are below
the customers needs
Metrics must be highly visible and Measurement are Monitoring at all level
monitored at all levels of the company displayed of organization is
difficult
Measurements must be used as a Present only in some Deployment of use
continuous improvement tools department in the
company

5.0 WAYS TO IMPROVE THE FIRMS SUPPLY CHAIN ACTIVITIES IN FUTURE

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 Supply Chain Management (Question 1)

From the analysis of the current supply chain management and impact on logistic cost

and service level, it was demonstrated how in was at the beginning, when implementation

started, and which are the strengths and weaknesses in this moment. Despite many activities

that have happened since, service level increased, but stock level as one of key components

of logistic cost, has not decreased as it was planned. So this is a point to focus on from now

on. For doing that it is necessary the improvement of the communication between the internal

departments but also with external suppliers.

Another point may be to reduce non value adding activities and implement the ones

that can really contribute to the result, focus more on effective infrastructure, having a better

visibility on market and more efficient sales order management process like E-Commerce

(Maria & Christina, 2014). When companies perform the supply chain SWOT analysis, they

are able to lower costs and improve upon those approaches that help ensure timely

availability of parts and materials in order to satisfy customer demands. Supply chain is based

on partnerships and cooperation. Without these there wouldnt be any integration of efforts. It

requires sharing of sensitive information about customers, upon request, strategic plans of the

company and transactions.

Focusing on tactics that will increase a supply chains productivity is essential to

achieving positive customer satisfaction. There are some very effective ways to do this

outside of systems, logistical infrastructure and analytics. These tactics require that

communication within the supply chain must be established and maintained with a high

expectation for improvement. Emphasizing the importance of continuous education among

employees and management is also vital to the improvement of processes, products, and

services. Furthermore, the foundation of a performance-driven culture in a supply chain will

result in maximized savings, improved service levels, and an inspired team of talented

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employees. According to Legacy Supply Chain Services, (2016) there are five guidelines to

successfully increase the productivity of your supply chain:

a) Efficient Communication: Communicate with the firms employees in a clear and

concise manner that defines organizational goals and the methods to achieve those

goals. This communication is crucial to a supply chains operations and productivity.

By scheduling daily and weekly meetings devoted to collaborative problem-solving,

management is able to make essential changes regarding performance. This diligent

problem-solving ensures a unified understanding of productivity and operations that

will facilitate open communication between employees and management.

b) Development of Procedure Standards: The development of procedure standards

reduces error within the supply chain and saves both time and money. Focus on the

reduction of probable variation in areas such as receiving, quality control, shipping,

shift scheduling, and facilities management. This is one of the many ways to increase

collective productivity and establish procedure standards.

c) Determination of Importance: Continuous improvement to supply chain

productivity depends on where employees and management focus their time and

attention. Do not waste time measuring an outcome if it is not significant to customers

and shareholders. Instead, try to focus to key performance indicators on 5-7 critical

areas that drive your business, for example: Safety, Service/On-Time Delivery,

Inventory Accuracy/Turns, Productivity, Cost per Unit/Total Landed Cost, Product

Damage/Claims, Customer Satisfaction

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d) Engage, Align, and Empower Your Workforce: Focus on the core skills of

employees and management to empower them. This focus will foster confidence and

result in a continuous increase of productivity. Gaining the buyin of your workforce

makes it possible to create new ways to engage and align, to ultimately increase

productivity. Be sure to define the supply chains goals in a clear and concise method

that will allow employees and management to take advantage of existing and future

opportunities for improvement.

e) Construct a Powerful Training Program: First, formulate a comprehensive plan to

increase productivity, reduce costs, and improve customer service and satisfaction

levels. Then tie an incentive plan into the supply chains core mission, a critical

element to building a performance-based approach. Incorporate workforce into the

culture of the supply chain by emphasizing ways in which employees and

management may improve their workplace strategies and execution. This constructive

training will drive a successful organization and improve supply chain productivity.

Increasing productivity within the supply chain is achieved through a top down

approach everything rises and falls on leadership. Leaders must practice effective

communication, create procedure standards, determine a hierarchy of importance, empower

the workforce, and enact a powerful training program. Working in unison, management and

employees will create and establish a performance-based culture within a company and its

supply chain.

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6. 0 CONCLUSION

The current research provides the supply chain management adoption level of selected

firm in the electronics manufacturing sector in Seremban, Negeri Sembilan, proving that the

firm have adopted SCM activities at a statistically significant level. Nevertheless, the

adoption level is still at the moderate level. Even though, the adoption of SCM in the ON

Semiconductor industry is not very high, those departments have made some progress in

SCM practices have benefited from SCM regarding their performance, especially relating to

revenue growth.

Supply chain management involves common communication and involvement and

that is why many times it uses teams of work which go beyond organizational and functional

boundaries to coordinate movement of products to market. In other words, we need

integration not only in the middle of the company but also with external partners (Butilc,

2012).

This paper is a preliminary study, a pilot study, and was initiated to obtain an insight

into the supply chain practices in the electronics industry and to explore the organizational

effort and commitment towards the implementation of these supply chain management

activities.

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