566 Int. J. Productivity and Quality Management, Vol. 24, No.

4, 2018

Supply chain management in developing countries:

empirical evidence from Vietnamese manufacturing
companies

Minh Hue Nguyen*

University of Economics and Business,
Vietnam National University,
144 Xuan Thuy, CauGiay, Hanoi, Vietnam
and
Yokohama National University,
79-4 Tokiwadai, Hodogaya-ku, 2408501, Japan
Email: nguyen-minh-zk@ynu.jp
Email: nguyenhueminh146@gmail.com
*Corresponding author

Anh Chi Phan

University of Economics and Business,
Vietnam National University,
144 Xuan Thuy, CauGiay, Hanoi, Vietnam
Email: anhpc@vnu.edu.vn

Yoshiki Matsui
Yokohama National University,
79-4 Tokiwadai, Hodogaya-ku, 2408501, Japan
Email: ymatsui@ynu.ac.jp

Abstract: This study aims to investigate the relationship between supply

chain management practices and operational capabilities in Vietnamese
manufacturing companies. The relationship is examined separately in both
upstream and downstream supply chains of the firms. Data were collected from
25 Vietnamese manufacturers operating in automobile, machinery and electric
and electronics industries in 2014. After testing the reliability and validity of
each measurement scale, multiple regression analysis is utilised to test the
relationship between supply chain management practices and operational
capabilities. Analysis results indicate positive linkages between supply chain
management practices on all aspects of manufacturing capabilities. In
particular, the downstream supply chain management practices show more
significant effect on manufacturing capabilities than the upstream ones. The
paper contributes to enriching the literature on supply chain management in
developing countries, and providing insight into how Vietnamese
manufacturers would improve manufacturing capabilities through better supply
chain management practices.

Keywords: supply chain management; SCM; manufacturing capabilities;

Vietnamese manufacturing; Vietnam.

Copyright © 2018 Inderscience Enterprises Ltd.

 Supply chain management in developing countries 567

Reference to this paper should be made as follows: Nguyen, M.H., Phan, A.C.
and Matsui, Y. (2018) ‘Supply chain management in developing countries:
empirical evidence from Vietnamese manufacturing companies’, Int. J.
Productivity and Quality Management, Vol. 24, No. 4, pp.566–584.

Biographical notes: Minh Hue Nguyen is a PhD student at the Graduate

School of International Social Sciences, Yokohama National University in
Japan and a Researcher at Center for Business Administration, VNU-University
of Economics in Vietnam and Business. Her research fields are quality
management, service quality, and supply chain management. She has published
papers on VNU Journal of Science, Economics and Business, International
Journal of Productivity and Quality Management, Asian Social Science, and so
on.

Anh Chi Phan is a Director of Center for Business Administration,

VNU-University of Economics in Vietnam. His career relates with consulting
and training on quality management and productivity improvement in
manufacturing sectors in Southeast Asia. His research fields are quality
management and just-in time production. His articles can be found in the
publications of the Asian Productivity Organization, Vietnam Productivity
Center, International Journal of Production Economics, Operations
Management Research, International Journal of Productivity and Quality
Management, and so on.

Yoshiki Matsui is a Professor of Operations Management at the Faculty of

International Social Sciences, the Department of Business Administration,
Graduate School of International Social Sciences, and the College of Business
Administration, Yokohama National University in Japan. His research topics
cover various issues of manufacturing management, supply chain management,
quality management, just-in-time production and new product development. He
has published papers on International Journal of Production Economics,
International Journal of Operations and Quantitative Management, Operations
Management Research, Management Research Review and so on.

1 Introduction

When globalisation has become a world-wide trend, intensive competition has forced
companies work more closely with each other to improve efficiency and become more
competitive. Organisations are unable to work independently from their suppliers and
distributors. Supply chain management (SCM), therefore, has been becoming a highly
concerned topic.
Supply chains nowadays are not simply within national boundaries but extending to
access new markets and resources (Flynn and Flynn, 2005). Developing countries such as
Vietnam, China, India, etc. are potential supply chain nodes since they not only possess
huge markets but also hold massive and inexpensive materials and labour sources
(Babbar et al., 2008). Those are valuable resources of competitiveness for global
corporations especially the manufacturing sector. It is obvious that many multinational
corporations have off-shored productions in developing countries. However, limited
literature provided insight about effective managing supply chain networks in those
countries.
568 M.H. Nguyen et al.

Particularly in Vietnam, apart from FDI firms, SCM practices as a whole have been
recently noticed in local firms. Before that, they are more familiar with separate concepts
of logistics, transportations, and warehouse management – parts of the broad SCM
concept which refers to activities managing the total flow of a distribution channel from
suppliers to ultimate users (Cooper et al., 1997). According to the test results of a training
on ‘basics of SCM’ for Vietnam’s companies by CEL Consulting, over 80% of personnel
working in supply chain and logistics only get 30% of requirement score (Ho Chi Minh
City People’s Committee, 2014). This means Vietnamese employees still have limited
knowledge on the overall SCM in spite of doing supply chain works every day. From
academic perspective, one recent publication was found in early 2017 on ‘SCM practices
and firms’ operational performance’ in Vietnamese garment enterprises (Truong et al.,
2017). SCM practices’ measurement constructs used in this study, however, is more
likely an extension using of quality management practices’ constructs including:
1 process control and improvement
2 top management support
3 customer focus
4 supplier management.
This raises a question on how SCM practices in Vietnamese firms affect their operational
capabilities.
To address this need, the purpose of this study is to investigate the effect of SCM
practices on manufacturing capabilities in Vietnamese manufacturing companies. The
linkage between SCM and performance has been attracted much attention in the literature
(Truong et al., 2017). Previous literature commonly examined some certain parts of
supply chain such as internal supply chain (Tan, 2001; Pagell, 2004), upstream supply
chain (Alam, 2016; Bode and Christoph, 2015; Grimm et al., 2014; Maurya et al., 2013;
Prajogo and Olhager, 2012; Min and Mentzer, 2004; Shin et al., 2000; Vonderembse and
Tracey, 1999), downstream supply chain (Clark and Lee, 2000; Alvarado and Kotzab,
2001), or general supply chain as a whole (Hult et al., 2008; Ulusoy, 2003; Chen and
Paulraj, 2004). These studies mainly collected data from single respondent of focal firms.
However, from our best knowledge, there has been no study separately collecting and
testing the data from upstream supply chain and downstream supply chain managers. To
fill out this research gap as well as to analyse the supply chain more comprehensively,
this study will separately test how the upstream SCM practices and downstream SCM
practices impact on manufacturing capabilities of Vietnamese firms.
Following the introduction, the literature review on SCM and research framework of
this study will be summarised and provided in the next section. The third section
describes data collection and measurement test, followed by data analysis and results in
the forth section. Finally, we conclude with the discussions, implications and suggestions
for further research.
 Supply chain management in developing countries 569

2 Literature review

2.1 Supply chain orientation vs. SCM

The concept of SCM has been widespread from 1990s (Cooper et al., 1997; Mentzer
et al., 2001). A supply chain has been defined as “the alignment of firms that bring
products or services to market” (Lambert et al., 1998), “a network of organizations that
are involved, through upstream (suppliers) and downstream (distributions) linkages, in
the different processes and activities that produce value in the form of products and
services delivered to the ultimate consumers” (Christopher, 1992; Mentzer et al., 2001).
This network entirely manages information flow, material flow and cash flow of a
business (Chen et al., 2006).
Mentzer et al. (2001) tried to define and distinguish two concepts related to supply
chain: ‘supply chain orientation (SCO)’ and ‘SCM’. SCO is an essential antecedent of
SCM. In other word, a firm needs to have a SCO before implementing SCM (Mentzer
et al., 2001; Esper et al., 2010). SCO is “the recognition by an organization of the
systemic, strategic implications of the tactical activities involved in managing the various
flows in a supply chain” (Mentzer et al., 2001). Another definition of SCO is that a SCO
is “the extent to which there is a predisposition among chain members toward viewing
the supply chain as an integrated entity and on satisfying chain needs in an integrated
way” (Hult et al., 2008). SCO is supported by the strategic choice theory which is
concerned that management’s decisions play an important role in shaping organisation’s
values, orientations, and direction (Hambrick and Phyllis, 1984; Kotter, 1990; Mentzer
et al., 2001) which, in turn, result in organisation’s success or failure (Ketchen and Hult,
2007). Once management recognises the beneficial implication of SCM, they will make a
strategic orientation for an effective SCM system.
As one of the pioneer works on SCO, Min et al. (2007) stressed that without SCO
inside the firm, it is impossible to implement SCM within a supply chain. Since SCO
plays an essential role in orienting firms to build and maintain internal behavioural
elements such as trust, commitment, cooperative norms, organisational compatibility, and
top management support to develop strong relationships with supply chain partners.
Without top management support, members of a firm are unwilling to pursue a SCO that
requires resources, time and efforts. Credibility, Benevolence, and Alignment are
concerned as cooperative norms, which regulate intra-network collaboration, share values
and norms across the firm as well as affect the management and development of supply
chain partnerships. As such, the SCO practices, in this study, were measured based on
four constructs: SCO top management support, SCO credibility, SCO benevolence, and
SCO alignment.
Once possessing SCO inside the firm, the implementation of SCO across suppliers –
company – distributors/customers can be defined as SCM. More specifically, SCM is “the
systemic, strategic coordination of the traditional business functions and the tactics across
these business functions within a particular company and across businesses within the
supply chain” (Mentzer et al., 2001). Selections of suppliers and distributors/customers
570 M.H. Nguyen et al.

should be also concerned as central issues in SCM (Maurya et al., 2013; Ghorbani et al.,
2014) with the purposes of improving the long-term performance of the individual firm
and the supply chain as a whole (Mentzer et al., 2001).
One of the theoretical perspectives in the literature supporting for the positive linkage
between SCM and performance is the resource-based view (Carr and Smeltzer,
2000; Sadler and Hines, 2002; Miguel and Brito, 2011). The original approach of
resource-based view focuses on internal resources of a firm and how an individual firm
can achieve competitive advantage from resources, assets and capabilities within the firm
(Dyer and Singh, 1998). As an extension of resource-based view, Dyer and Singh (1998)
proposed relational view to offer explanation for inter-organisational relations. From the
relational view, Dyer and Singh (1998) illustrated that relationships can be considered as
potential sources of competitive performance; and figured out four determinants of
inter-organisational competitive advantages:
1 relation-specific assets
2 knowledge-sharing routines
3 complementary resources and capabilities
4 effective governance.
A smooth supply chain recognises not only a flow of materials but also a flow of
information (Prajogo and Olhager, 2012). Information sharing is one way to enable
knowledge-sharing activities, indirectly invest in relation-specific assets in terms of
human asset such as transaction-specific know-how, open doors for partners to combine
distinctive resources and capabilities and make them more valuable and rare, as well as
facilitate the effective governance. Information sharing was utilised as a SCM construct
in many previous studies such as Kumar et al. (2015), Miguel and Brito (2011), Min et al.
(2007), Li et al. (2005), and so on. As such, we used Information sharing with suppliers
and by suppliers and Information sharing with customers and by customers as SCM
constructs with expect to interpret the positive impact on manufacturing capabilities.
In short, it can be seen that while SCO is a management philosophy possessed within
the firm boundary, SCM is viewed from a more operational perspective, as an
implementation of SCO. In Vietnam, SCO and management are recent concepts for
manufacturing companies, especially local ones. Therefore, to more comprehensively
investigate the SCM in Vietnamese companies in this period, the authors decided to
examine both SCO and SCM practices. We refer to SCM practices as a common term for
both SCO and management constructs. In this study, we investigate SCM practices
separately in both upstream and downstream supply chain of the firms.

2.2 The linkage between SCO/management practices and performance

Study on SCM has evolved over the past three decades comprising identification of
conceptual boundaries, SCM’s central issues, and measurement constructs (Helmuth
et al., 2015). Many previous studies took efforts to test the relationship between SCO
and/or management and performance in different research settings. Several studies
indicate positive influence of SCO on performance. Min et al. (2007) conducted a study
to examine the linkages between market orientation, SCO, SCM and business
performance. Based on 442 survey questionnaires collected from firms, a structural
 Supply chain management in developing countries 571

equation modelling shows significant effect of market orientation, SCO and SCM on
business performance. Especially, SCO indicates the strongest direct impact on
performance, followed by market orientation and SCM. Hult et al. (2008) studied the
SCO in related to different aspects of balanced scorecard performance (internal process
performance, financial performance, customer performance, and innovation and learning
performance). The study collected and analysed a sample of 129 valid responses from
CEOs, presidents, and vice presidents in more than 28 countries. Analysis results strongly
support the direct and positive effect of SCO on each of four dimensions of balanced
scorecard outcomes. Shin et al. (2000) investigated the influence of SCO on operational
performance of suppliers and on competitive priorities of buyers. The authors collected
176 valid responses from the US automotive industry and utilised structural equation
model method to analyse data. The results illustrate that an improvement in supply
management orientation lead to improve both supplier performance and buyer
performance. Furthermore, SCO has a stronger impact on delivery and quality
performance than on cost or flexibility performance.
Some studies found positive impact of SCM on performance. Kumar et al. (2015)
studies critical factors for successful implementation of SCM in SMEs in India as well as
confirmed the impact of these factors on performance by empirically analysis on
251 enterprises working in plastic, auto component, light engineering and
electrical/electronic industries. The results reveal that long-term vision, commitment
from top management, focusing on core strengths, investing in resources for supply
chain, and developing effective SCM strategy are highly important factors of SCM in
Indian firms. Miguel and Brito (2011) empirically tested the impact of SCM on
operational performance in Brazil. By analysing a set of data from 103 companies, results
indicate positive impact of SCM on four dimensions of operational performance
including cost, flexibility, quality and delivery. Koh et al. (2007) identified dimensions of
SCM practices and investigated the relationship between these dimensions and
organisations’ operational performance and SCM related organisational performance.
The study focused on SMEs in Turkey’s manufacturing sector. Based on a sample of 203
enterprises, analysis results indicated that SCM practices have directly and significantly
positive impact on operational performance but insignificantly direct effect on
organisational performance. However, the study found that SCM practices have a
significantly indirect impact on organisational performance through operational
performance.
In an effort to improve SCM, several studies investigated supporting elements for
more effective SCM system. For example, Silveira and Cagliano (2006) examined the
adoption of inter-organisational systems (IOS) in SCM. Another research conducted by
Koh et al. (2014) emphasised on the influence of the enterprise resource planning (ERP)
on supply chain performance. Mefford (2010) found that lean production is able to
promote a sustainable global SCM. Senthilkumar et al. (2012) reviewed the integration of
the Six Sigma with SCM from previous studies and proposed a managerial model of ‘Six
Sigma SCM’ as well as validated the model by a case study in an Indian SME. These
systems are demonstrated to foster the effectiveness of SCM systems, and in turns,
contribute to better business performance.
Despite the findings about the positive influence of SCO and management on firm
performance, a few studies such as Krause et al. (2007), Vereecke et al. (2006), and
Fynes et al. (2005) found week support for the impact of SCM on performance
improvement. These conflicting results motivated us to test the relationship between SCO
572 M.H. Nguyen et al.

and management practices and manufacturing capabilities in Vietnam – a steady

economically growing country.

Figure 1 Analytical framework

Upstream supply chain management

• SCO top management support (suppliers)
• SCO credibility (suppliers)
• SCO benevolence (suppliers)
• SCO alignment (suppliers) Manufacturing
• Information sharing with suppliers capabilities
• Information sharing by suppliers
• Quality
• Cost reduction
• On-time delivery
Downstream supply chain management • Delivery speed
• Flexibility
• SCO top management support (customers)
• SCO credibility (customers)
• SCO benevolence (customers)
• SCO alignment (customers)
• Information sharing with customers
• Information sharing by customers

A research framework (Figure 1) is proposed to depict separately the linkage between

upstream SCM and manufacturing capabilities, and the linkage between downstream
SCM and manufacturing capabilities. Manufacturing capabilities are evaluated by
quality, cost reduction, on-time delivery, delivery speed, and flexibility which are widely
adopted constructs in previous studies (Miguel and Brito, 2011; Koh et al., 2007, Li et al.,
2005; Chen and Paulraj, 2004). Upstream SCM are measured by SCO with suppliers
including SCO top management support (suppliers), SCO credibility (suppliers), SCO
benevolence (suppliers), SCO alignment (suppliers), and information sharing with
suppliers and by suppliers. Downstream SCM are assessed by SCO with customers
including SCO top management support (customers), SCO credibility (customers), SCO
benevolence (customers), SCO alignment (customers), and information sharing with
customers and by customers.
We expect that SCM would result in improvements in manufacturing capabilities as
the dominant findings in previous studies, especially as proven results in developing
countries such as India (Kumar et al., 2015), Brazil (Miguel and Brito, 2011), and Turkey
(Koh et al., 2007). In this study, we will test the hypothesis separately with upstream
supply chain and downstream supply chain. Thus, we propose hypotheses as followed:
Hypothesis 1 Upstream SCM practices positively impact on manufacturing capabilities.
Hypothesis 2 Downstream SCM practices positively impact on manufacturing
capabilities.
 Supply chain management in developing countries 573

3 Methodology/data collection and measurement analysis

3.1 Data collection

The measurement constructs, in this study, were adopted from the high performance
manufacturing (HPM) project. An English version questionnaire was established. The
questionnaire, then, was translated into Vietnamese and checked back and forth three
times by researchers, experts, and company managers to make sure that the questionnaire
was correctly translated and understandable. Final Vietnamese questionnaire version was
sent to manufactures by direct handling and by email.
We aimed to collect cross-sectional data at the plant level. We targeted multiple
respondents within a firm who are mainly directors, vice directors, plant managers,
upstream and downstream supply chain managers to avoid regular bias. The HPM project
in Vietnam obtained data from a sample size of 25 companies including both local and
FDI ones. These manufacturing companies are operating in three industries – automotive,
electronics/electrical, and machinery – in Vietnam. Among 25 participated firms, the
majority is electronics/electrical firms (40% of total respondents). Transportation and
machinery firms accounted for smaller proportions with 32% and 24% of the sample,
respectively.
The validity and reliability of collected data were tested through confirmatory factor
analysis and Cronbach’s alpha values. Finally, regression analyses were conducted to
examine the relationship between upstream SCM, downstream SCM and manufacturing
capabilities. SPSS 20.0 software was utilised to analyse the data.

3.2 Measurement test

Validity test
Since the measurement items used in this study were adopted from the HPM project,
question items were thoroughly tested and confirmed reliability and validity in previous
rounds of the project. Therefore, in this study, the authors test the validity of the
measurement constructs by using confirmatory factor analysis. The test was conducted
with 17 summated scales: six scales measuring upstream SCM, six scales measuring
downstream SCM, and five scales measuring manufacturing capabilities (question items
are detailed in the Appendix).
The results show that KMO and Bartlett’s Test values measuring sampling adequacy
are greater than 0.5; question items in a construct are convergence to measure its latent
variable with a minimum eigenvalue of 1; most of items’ factor loadings are greater than
0.5. Some items with smaller than 0.5 factor loadings were rejected from the scale (see
the Appendix). The constructs with remaining question items were confirmed the validity
in this study.
574 M.H. Nguyen et al.

Reliability test
Reliability of the measurement was test through Cronbach’s alpha value which is the
average correlation coefficient of each item with each other in one construct (Cronbach
and Meehl, 1995). In this study, Cronbach’s alpha values for all constructs are higher
than the requirement threshold of 0.6 (suggested by Nunnally, 1978). Most of measuring
items have corrected item-total correlations greater than accepted value 0.3. A few items
with smaller than 0.3 corrected item-total correlation value were rejected from the
construct (see Appendix). It can be concluded that measurement constructs with
remaining items are reliable and accepted to be analysed in the next step of this study.

4 Data analysis and results

Regression analysis was utilised to test the relationship between SCM and
manufacturing capabilities. Multiple regression models are established with independent
variables are six constructs of upstream SCM and six constructs of downstream SCM,
and dependent variables are five constructs of manufacturing capabilities. Variance
inflation factor (VIF) values are calculated to examine possibility of multi-collinearities
among independent variables. VIF values in both two multiple regression models
(Table 1 and Table 2) are all smaller than 4 – the acceptable VIF value, indicating that
multi-collinearities do not have any undue effect on regression results.
Table 1 Regression analysis with upstream SCM

Dependent variables
Cost Delivery On-time
Quality Flexibility
reduction speed delivery
R 0.83 0.63 0.79 0.83 0.87
2
R 0.69 0.39 0.63 0.70 0.76
Adjusted R2 0.56 0.15 0.48 0.57 0.66
Sig. 0.00 0.21 0.01 0.00 0.00
Coef. Coef. Coef. Coef. Coef. VIF
Constant –1.82 –0.99 –3.19 –2.08 –3.47
SCO top management support –0.02 –0.11 0.24* 0.21* 0.07 2.12
(suppliers)
SCO credibility (suppliers) 0.48** 0.72 0.13 –0.15 0.44** 2.35
SCO benevolence (suppliers) –0.32* 0.02 –0.18 0.29* –0.38* 3.57
SCO alignment (suppliers) 1.14*** –0.03 1.11** 1.30*** 1.33*** 2.47
Information sharing with suppliers –0.04 0.36 0.08 –0.12 0.06 3.14
Information sharing by suppliers 0.11 0.16 0.24 –0.13 0.23 2.63
Notes: ***Significant level < 0.01 (one-tailed).
**Significant level < 0.05 (one-tailed).
*Significant level < 0.10 (one-tailed).
 Supply chain management in developing countries 575

Table 2 Regression analysis with downstream SCM

Dependent variables
On-time
Quality Cost Speed Flexibility
delivery
R 0.89 0.94 0.93 0.90 0.98
2
R 0.80 0.89 0.86 0.81 0.96
Adjusted R2 0.71 0.84 0.80 0.73 0.95
Sig. 0.00 0.00 0.00 0.00 0.00
Coef. Coef. Coef. Coef. Coef. VIF
Constant –1.33 –1.45 –1.92 –1.64 –2.61
SCO top management support 0.12 0.21 0.43** 0.40** 0.17** 3.34
(customers)
SCO credibility (customers) 0.69** –0.03 0.03 0.33* 0.47*** 3.30
SCO benevolence (customers) 0.19 0.66** –0.15 0.35* –0.09 3.68
SCO alignment (customers) 0.36* –0.20 0.47* 0.34* 0.68*** 3.93
Information sharing with customers 0.07 0.90*** 0.36** 0.19* 0.48*** 1.73
Information sharing by customers –0.12 –0.24 0.28** –0.29** –0.08* 2.84
Notes: ***Significant level < 0.01 (one-tailed).
**Significant level < 0.05 (one-tailed).
*Significant level < 0.10 (one-tailed).

4.1 Impact of upstream SCM on manufacturing capabilities

In the regression analysis examining the impact of upstream SCM on manufacturing
capabilities, it can be seen that upstream SCM have statistical impact on quality, delivery
speed, on-time delivery and flexibility capabilities at 5% significant level, but not on cost
reduction capability.
Among SCM practices, SCO Alignment reveals the most significant effect on
dimensions of manufacturing capabilities. This practice has the highest coefficient values
of 1.14, 1.30, and 1.33 for quality, on-time delivery, and flexibility capabilities,
respectively at 1% significant level, and the coefficient value of 1.11 for delivery speed
capability at 5% significant level. That means the more willingness to share problems
with suppliers, openly collaborating with suppliers to find mutual beneficial and effective
solutions with suppliers, the higher operational capabilities would be. Credibility with
suppliers is an important factor contributing to quality and flexibility capabilities with the
coefficient values of 0.48, and 0.44, respectively at 5% significant level. Top
management support for the relationship with suppliers also has influence on the delivery
speed and on-time delivery capabilities at 10% confident level.
Interestingly, Benevolence in the relationship with suppliers, on the one hand,
presents positive impact on on-time delivery with the coefficient of 0.29 at 10% confident
level, on the other hand, shows negative effect on quality and flexibility with the
coefficient of –0.32 and –0.38, respectively at 10% confident level. It is likely that if the
company shares problems with suppliers, they would improve the on-time delivery.
However, once the company highly counts on and even depends on suppliers, the
benevolence would result in worse quality and less flexibility.
576 M.H. Nguyen et al.

4.2 Impact of downstream SCM on manufacturing capabilities

In comparison to upstream SCM, downstream SCM practices have more significant
impact on all five dimensions of manufacturing capabilities.
Information sharing with customers presents the strongest positive effect on cost
reduction with the coefficient of 0.9 at 1% significant level. In addition, this practice also
has great influence on delivery speed and flexibility at 5% confident level, and on-time
delivery at 10% confident level. That means sharing with customers important
information regarding cost, demand change, inventory, productivity, production capacity,
etc. greatly contributes to improvement of plants’ operational capabilities, especially in
terms of cost and delivery performance. Information sharing by customers, on the one
hand, shows statistically positive effect on delivery speed capability with the coefficient
of 0.28 (at 5% significant level), on the other hand, indicates negative impact on on-time
delivery and flexibility with the coefficients of –0.29 (at 5% significant level) and –0.08
(at 10% significant level), respectively.
Experiencing similar pattern with upstream SCM, Top management support for the
close relationship with customers illustrates strong and positive influence on speed,
on-time delivery and flexibility with the coefficient values of 0.43, 0.40, and 0.17,
respectively at 5% confident level. Credibility with customers has the strongest influence
on quality capability, and leads to an improvement in flexibility and on-time delivery.
Alignment with customers shows positive impact on quality, speed, on-time delivery (at
10% confident level), and flexibility (at 5% confident level). Different from upstream
SCM, Benevolence in the relationship with customers has no statistical relationship with
quality and flexibility capabilities but shows positive impact on cost reduction and
on-time delivery capabilities of the plants.

5 Discussions and conclusions

The analysis results show that SCO and management practices significantly contribute to
the improvement of the manufacturing capabilities in Vietnam in terms of quality, cost
reduction, delivery speed, on-time delivery and flexibility. This empirical evidence, once
again, confirmed the theoretical implication of Relational view (Dyer and Singh, 1998) in
a developing country. Supported findings were found in manufacturing SMEs in India by
Kumar et al. (2015), manufacturing SMEs in Turkey by Koh et al. (2007), Brazilian
companies by Miguel and Brito (2011), the US automotive industry by Shin et al. (2000),
consumer goods industry in Malaysia by Sukati et al. (2011), cross-national companies
by Hult et al. (2008), cross-sectional companies belonging to Council of SCM
Professionals by Min et al. (2007).
An important finding of this study is that downstream SCM practices show more
generally significant impact on manufacturing capabilities compared to upstream SCM.
Particularly, whereas information sharing with/by suppliers reveals no statistical impact
on operational capabilities, information sharing with/by customers at the downstream
supply chain presents significant impact on cost reduction, speed, on-time delivery, and
flexibility capabilities. It can be seen that more communication with customers will not
 Supply chain management in developing countries 577

only reduce the cost but also facilitate fast delivery and flexibility performance. This
result might change SCM strategy of many companies which previously more focus on
maintaining long-term relationship with suppliers but somehow neglect keeping close
communication with customers.
A managerial implication from the results of this study is that supply chain managers
should pay balanced attention to and investment in both upstream and downstream SCM.
This finding is supported by Truong et al. (2017) in a study on Vietnamese garment
industry. Truong et al. (2017) found that customer focus is an important factor for better
understanding market opportunities as well as balancing demand and supply in the
garment supply chain network. As a result, garment companies are able to better satisfy
customer requirements.
This finding, in addition, also implies an applicable suggestion for Vietnam’s
seafood supply chain. Currently, a brief material flow of seafood supply chain is
from farmers/fishermen to processing enterprises, and then to imported
countries/supermarkets/customers. All players in this supply chain network fully aware of
the importance of harmonious cooperation among them, but Vietnam’s seafood supply
chain has still experienced unexpected situations such as unable to meet demanded
quantity or out of stock. Common reasons pointed out are the fluctuation in the demand
of importers or the limited barriers of importing countries. This situation of the seafood
supply chain would be immeasurably improved if all actors of the supply chain could
well connect and share information with each other. Especially, information shared by
customer side (imported enterprises or supermarkets) on their demand plays an important
role as a starting point for the information flow of this network.
At the upstream supply chain side, SCO has a greater impact on quality and delivery
capability than on cost reduction. This finding is also highlighted in the study by Shin
et al. (2000). It seems in the mindset of supply chain managers, strategic SCO towards
improving quality and delivery performance rather than cost reduction.
The paper is expected to contribute to enriching the literature on SCM in developing
countries, and providing insight into how Vietnamese manufacturers would improve
manufacturing capabilities through better SCM practices. Many academic studies
examined a dyad relationship between suppliers and focal firms but a few works
investigated and compared it with the customers – firm relationship. By separately
examining the upstream supply chain and downstream supply chain, the study has filled
out this research gap.
Limitations of this paper are gathering data via self-reported method from a small
sample size of cross-sectional enterprises in Vietnam. Therefore, the study still somehow
reflects subjective biases. For the future research, these limitations would be overcome by
collecting data from larger sample size and analysing by more comprehensive techniques.
As such, conclusions of this study would be further improved.

Acknowledgements

This research is funded by Vietnam National University, Hanoi (VNU) under project
number QG.16.53.
578 M.H. Nguyen et al.

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Appendix

Table A1 Measurement constructs: results of reliability and validity test results

Factor
Question items
loadings
SCO top management support (suppliers) (Cronbach alpha = 0.80)
*Relationships with our suppliers are considered to be of critical importance to our -
plant’s top managers.
Sharing valuable information with our suppliers is considered critical by our top 0.91
managers.
Our top managers repeatedly tell us that sharing supply chain risks and rewards 0.91
with our suppliers is critical to our plant’s success.
Our top managers support us in resolving conflicts with our suppliers, when they 0.70
occur.
SCO credibility (suppliers) (Cronbach alpha = 0.74)
The promises that our plant makes to its suppliers are reliable. 0.89
*Our organization has a good reputation when we are doing business with our -
suppliers.
*Our plant does not make false claims to our suppliers. -
Our plant is open in dealing with our suppliers. 0.89
Note: *Rejected items after reliability or validity test.
 Supply chain management in developing countries 581

Table A1 Measurement constructs: results of reliability and validity test results (continued)

Factor
Question items
loadings
SCO benevolence (suppliers) (Cronbach alpha = 0.83)
*When making important decisions, our suppliers treat us fairly. -
When we share our problems with our suppliers, we know they will respond with 0.93
We can count on our suppliers to consider how their decisions and actions will 0.93
affect us.
*When it comes to things that are important to us, we can depend on our -
suppliers’ support.
SCO alignment (suppliers) (Cronbach alpha = 0.74)
We are comfortable sharing problems with our suppliers. 0.91
In dealing with our suppliers, we are willing to change assumptions, in order to 0.88
find more effective solutions.
Cooperating with our suppliers is beneficial to us (we believe that cooperating 0.51
with our suppliers is beneficial).
We emphasize openness of communication in collaborating with our suppliers. 0.63
Supply chain information sharing with suppliers (Cronbach alpha = 0.88)
Cost information 0.79
*Delivery information -
*Demand change information -
*Demand forecast information -
Information about plant manufacturing capabilities 0.68
Inventory information 0.75
Production capacity information 0.90
Productivity information 0.87
*Quality information -
Schedule information 0.69
Sensitive information (for example, financial information, proprietary process 0.86
information, etc.)
Supply chain information sharing by suppliers (Cronbach alpha = 0.85)
Cost information 0.48
Delivery information 0.81
Demand change information 0.53
*Demand forecast information -
*Inventory information -
Production capacity information 0.45
*Productivity information -
Quality information 0.82
*Schedule information -
Sensitive information (for example, financial information, proprietary process 0.48
information, etc.)
Note: *Rejected items after reliability or validity test.
582 M.H. Nguyen et al.

Table A1 Measurement constructs: results of reliability and validity test results (continued)

Factor
Question items
loadings
SCO top management support (customers) (Cronbach alpha = 0.78)
Relationships with our customers are considered to be of critical importance to our 0.90
plant’s top managers.
Sharing valuable information with our customers is considered critical by our top 0.69
managers.
Our top managers repeatedly tell us that sharing supply chain risks and rewards 0.80
with our customers is critical to our plant’s success.
Our top managers support us in resolving conflicts with our customers, when they 0.77
occur.
SCO credibility (customers) (Cronbach alpha = 0.83)
The promises that our plant makes to its customers are reliable. 0.89
Our organization has a good reputation when we are doing business with our 0.80
customers.
Our plant does not make false claims to our customers. 0.74
Our plan is open in dealing with our customers. 0.86
SCO benevolence (customers) (Cronbach alpha = 0.81)
When making important decisions, our customers treat us fairly. 0.89
When we share our problems with our customers, we know they will respond with 0.81
understanding
We can count on our customers to consider how their decisions and actions will 0.83
affect us.
When it comes to things that are important to us, we can depend on our customers’ 0.70
support.
SCO alignment (customers) (Cronbach alpha = 0.84)
Downstream Supply Chain Management 0.76
We are comfortable sharing problems with our customers. 0.88
In dealing with our customers, we are willing to change assumptions, in order to 0.82
find more effective solutions.
Cooperating with our customers is beneficial to us. 0.87
*We emphasize openness of communication in collaborating with our customers. -
Note: *Rejected items after reliability or validity test.
 Supply chain management in developing countries 583

Table A1 Measurement constructs: results of reliability and validity test results (continued)

Factor
Question items
loadings
Supply chain information sharing with customers (Cronbach alpha = 0.91)
Cost information 0.85
*Delivery information -
Demand change information 0.63
*Demand forecast information -
Information about plant manufacturing capabilities 0.83
Inventory information 0.91
Production capacity information 0.94
Productivity information 0.85
*Quality information -
*Schedule information -
*Sensitive information (for example, financial information, proprietary process -
information, etc.)
Supply chain information sharing by customers (Cronbach alpha = 0.83)
Demand change information 0.73
*Demand forecast information -
Inventory information 0.70
Production schedule information 0.88
Productivity information 0.77
Sensitive information (for example, financial information, proprietary process 0.77
information, etc.)
Ability to meet customers’ quality needs (Cronbach alpha = 0.84)
Quality is the most important criterion used by our customers in selecting us as a 0.90
supplier.
Our customers involve us in their quality improvement efforts. 0.72
Our customers can rely on us for quality products. 0.88
We are selected by our customers because of our reputation for quality. 0.81
Ability to meet customers’ cost needs (Cronbach alpha = 0.81)
Low cost is the most important criterion used by our customers in selecting us as a 0.90
supplier.
*Our customers involve us in their cost reduction efforts. -
Our customers can rely on us for low cost products. 0.88
We are selected by our customers because of our reputation for low cost. 0.81
Note: *Rejected items after reliability or validity test.
584 M.H. Nguyen et al.

Table A1 Measurement constructs: results of reliability and validity test results (continued)

Factor
Question items
loadings
Ability to meet customers’ speed needs (Cronbach alpha = 0.83)
Fast delivery is the most important criterion used by our customers in selecting us 0.85
as a supplier
*Our customers involve us in their time reduction efforts. -
Our customers can rely on us for fast delivery. 0.83
We are selected by our customers because of our reputation for fast delivery. 0.92
Ability to meet customers’ on-time delivery needs (Cronbach alpha = 0.82)
On-time delivery is the most important criterion used by our customers in 0.87
selecting us as a supplier
Our customers select us because we deliver just-in-time for their needs. 0.86
Our customers can rely on us for punctual delivery. 0.86
We are selected by our customers because of our reputation for on-time delivery. 0.62
Ability to meet customers’ flexibility needs (Cronbach alpha = 0.92)
Flexibility is the most important criterion used by our customers in selecting us as 0.93
a supplier.
Our customers select us because we deliver flexibly for their needs. 0.90
Our customers can rely on us for flexibility. 0.88
We are selected by our customers because of our reputation for flexibility. 0.91
Note: *Rejected items after reliability or validity test.