ASSESSMENTS OF THE IMPACT OF CROSS FUNCTIONAL

INTEGRATION ON SUPPLY CHAIN PERFORMANCE: IN THE

CASE OF MOHA SOFT DRINK HAWASSA

BY:-HABTSEW EBRAHIM

ID.NO: 1411/17

ADVISOR NAME: ENDRIS ALI

A RESEARCH PAPER SUBMITTEDTOPARTIAL FULFILLMENT OF THE

REQUIREMENT OF BA DEGREE IN LOGISTICS AND TRANSPORT
MANAGEMENT

DILLA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF LOGISTICS AND TRANSPORT

MANAGEMENT

JANUARY,2021
 DILLA, ETHIOPIA

2
 APPROVAL SHEET

DILLA UNIVERSITY
COLLAGE OF BUSINESS AND ECONOMICS
Department of logistics and Transport Management

Title: impact of cross functional integration to supply chain performance (In Case of
hawassa)

Approved By the Committee of Examiners:

Name Date Signature

___________________________ _________________ _______________

Department Head

___________________________ _________________ _______________

Advisor

___________________________ _________________ _______________

External Examiner
 Declaration
I declare that this work entitled Study on impact of cross functional integration to supply chain
performance. I have produced it independently except for the guidance and suggestion of the
research advisor. This study had not been submitted for any degree in this University or any
other University. It is offered for the partial fulfillment of the degree of bachelor of art in
Sociology.

Name: _____________________________

Signature_____________________________

Date of submission: ___________

This paper has been submitted for examination with my appropriate approval as university
advisor.

Name: _____________

Signature:_____________
Date: _____________
 ACKNOWLEDGEMENT
First, I would like to thanks my almighty GOD for his great love, protection and helps at every
step in my life. I also would like to express my deepest gratitude to my advisor Endris Ali who
scarifies his time to review my paper and give me all necessary information without boring with
constructive feedback. With the same tone, I wish to express my heartfelt thanks for all teachers
of our department those I have learn from them about logistic and transport management and for
their valuable contribution in these three years educational life Finally, I would like to thanks to
my beloved families and friends foe their financial and moral assistance in my academic
achievement.

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 ABSTRACT
This research was conducted the impact of cross functional integration to the supply chain
performance in case of Hawassa moha soft drink factory. The main objective this research
would be identifying the impact of cross functional integration and supply chain
performance and it significance would be given clear knowledge about the relationship
between cross functional and supply chain performance, to meet the main objective of the
study both primary and secondary data would be the primary source of data would be
collect by questionnaires and interview which would be used to get more information
about the organization and secondary data referring different book and others. He research
used explanatory research method the relevant data would be using non probability
sampling technique particularly purposive sampling. The organization, also to suggest the
possible constructive recommendation conclusion and summery. For the existing problem
study generates important finding of the significant and positive relationships between
cross functional integration and supply chain performance.

ii
Acronyms
SCM supply chain management

SRM supply relationship management

CRM customer relationship management

CFT cross functional term

GSP green supply performance

iii
 TABLE OF CONTINENTS
ACKNOWLEDGEMENT................................................................................................................i
ABSTRACT....................................................................................................................................ii
Acronyms.......................................................................................................................................iii
TABLE OF CONTINENTS...........................................................................................................iv
LIST OF TABLE............................................................................................................................vi
CHAPTER ONE..............................................................................................................................1
1.INTRODUCTION........................................................................................................................1
1.1.Background of the study........................................................................................................1
1.2. Statement of the problem......................................................................................................2
1.3 Basic researches Question......................................................................................................4
1.4 Objectives of the study...........................................................................................................4
1.4.1 General objective.............................................................................................................4
1.4. 2 Specific objective...........................................................................................................4
Specifically, this study has the following specific objectives..................................................4
1.5 Significance of the study........................................................................................................5
1.6.Delimitation /scope of the study............................................................................................5
1.7.limitation of the study............................................................................................................5
1.8.Definition used term...............................................................................................................6
1.9 organization of the study........................................................................................................6
CHAPTER TWO.............................................................................................................................7
2.REVIEW OF RELATED LITERATURE....................................................................................7
2.1 Theoretical literature..............................................................................................................7
2.1.1 Definition of SC and SCM..............................................................................................7
2.2 The primary focus and objectives of supply chain................................................................8
2.3 Supply chain management internal linkage...........................................................................8
2.4 Benefits of functional integration..........................................................................................9
2.5 Functions those are to be integrated.......................................................................................9
2.5.1. Purchasing....................................................................................................................10
2.5.1.5Purchasing Research....................................................................................................13
2.5.2 Operation.......................................................................................................................13

iv
 2.5.3 Marketing /Sales............................................................................................................16
2.6. Supply chain performance..................................................................................................18
2.6.1. Key performance indicators.........................................................................................18
TABLE2.1Supply Chain Measures Using the Balanced Scorecard Ayers, (2000)...............21
2.7. Requirements to be integrated.............................................................................................21
2.8. Empirical literature.............................................................................................................22
CHAPTER THREE.......................................................................................................................24
3.RESEARCH DESIGN AND METHODOLOGY..................................................................24
Introduction....................................................................................................................................24
3.1 Research Design...................................................................................................................24
3.2 Target Population, Sampling Technique and Sampling Size...............................................25
3.2.1 Target Population..........................................................................................................25
3.2.2 Sampling Technique......................................................................................................25
3.2.3 Sampling Size................................................................................................................25
3.3 Method of Data collection....................................................................................................26
3.3.1 Types and Source of data..............................................................................................26
3.4 Method of Data collection Instrument.................................................................................26
3.5 Method of Data Analysis.....................................................................................................26
CHAPTER FOUR.........................................................................................................................27
4.DATA PRESENTATION, INTERPRETATION AND ANALYSIS........................................27
CHAPTER FIVE...........................................................................................................................38
5.SUMMERY CONCLUSION AND RECOMMENDATION....................................................38
5.1 Summery and conclusion.....................................................................................................38
5.2 Recommendation.................................................................................................................39
5.3 suggestions for future research............................................................................................39
Refernce ........................................................................................................................................40
Appendix........................................................................................................................................41

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LIST OF TABLE

vi
 CHAPTER ONE
1.INTRODUCTION
1.1.Background of the study

Mentzer argues that in recent years supply chains (SC) have received significant attention from
both practitioners and academics. Supply chain management (SCM) is the systematic and
strategic coordination of traditional business functions. In addition, SCM represents the flow of
materials, products, information, and money within a particular company, as well as across
businesses from suppliers to manufacturers to customers in the SC to improve the long-term
performance of the companies and the SC as a whole cited in Huo (2012).
Soosay, Ferrer, Santa and Hyland (n.d) defined integration as the combining and coordinating of
separate parts or elements into a unified whole. Webster (1966 as cited in Germain and Iyer,
2006; pp. 32) specifies “the unified control of a number of successive or similar economic or
especially industrial processes formerly carried on independently”.

According to[ CITATION ste06 \l 1033 ] all the functions accounting, finance, hospitality, truism
management, Information technology, and others shall be integrated each other for the
organization growth. the success level of the supply chain management is the outgrowth of
results of performance of the individual trading partners The primary focus of supply chain
management it to customer with excellent goods and service against minimum possible cost
response time[ CITATION alt05 \l 1033 ].

Narasimhan and Das, (2001); Pagell, (2004); Trent and Monczka, (2003) defines cross-
functional integration in short, as the interaction and collaboration of the PSM function with
other functions, such as product development, production and manufacturing, and marketing

Cross-functional integration can have significant advantages for the development of new
products by increasingboth communication frequency and the amount of information flow in the
organization (Randolph and Posner 1992).For example, Pinto and Pinto (1991) find that hospitals
witha high level of cooperation across functions are characterized by a high level of informal
communication and successful project teams. Information integration in the cross functional
structure helps employees achieve a commonunderstanding about the product and enhances

1
consistencyamong decisions made throughout the new product development process, both of
which are considered critical forsuccess Sethi(2000).

Although the integration of different functions may increase the success ofnew products through
effective communication, functionaldiversity can also increase decision complexity and
confusion (Sethi 2000). The informal communication patterns,participative decision making, and
consensual conflict resolution in cross-functional integration can be more time consuming and
less efficient than more centralized and bureaucratic processes (Olson, Walker, and Ruekert,
1995).Employee satisfaction and success can suffer if workloadsincrease because of new inter
functional tasks along withexisting home function duties (e.g., Karlsson and Åhlström1996).
Working with other employees who have differentbackgrounds and perspectives on work and
goals can generate conflict over resources, technical issues, pay, and personnel assignments (e.g.,
Olson, Walker, and Ruekert1995). The resultant increased costs to the organization(e.g.,
overhead, staff, efforts, delayed decisions) can combine to reduce the success of new products.

In their conceptual work Mentzer et al., (2008) argue that the purchasing, logistics, production
management as well as marketing functions are dependent on each other for effective supply
chain management. While each of these functions has its own functional space, they also have
some overlap with other functions. Thus, integration across functional perspectives is necessary
to align and execute overarching supply chain strategies as I have seen the internal integration
are more sophisticated to identify the problems of the organization to improve cross functional
integration among SC In moha soft drink Company.

Different companies highly need the supply chain management practice in order to utilize the
scarce resources among those factories, Moha is one of the factories which highly need the SCM
practice in order to produce soft drink

1.2. Statement of the problem

Guan and Rehme (2012) found that the most important factors driving the manufacturer's vertical
integration of distribution were the demands of large retail chains and the manufacturer's
decisions to focus on developing its positioning strategy in the supply chain. Vertical integration
has transformed the manufacturer into a supplier to large timber products resellers, offering the

2
firm a greater potential to provide integrated solutions and, therefore, become a strategic partner
to its customers.
Pellathy (2016) defined cross-functional integration in the supply chain as an on-going process in
which different functional areas of the supply chain collaborate, coordinate, and communicate in
an effort to maximize outcomes for their organization.
Davenport (1993); Hammer and Champy (1993) reported that in order to achieve effective cross-
functional integration, many have advocated that the activities of a firm be organized as business
processes. Further, Lambert and Pohlen (2001) argues that most corporations are organized
around business functions where individuals often engage in behavior that is not customer or
shareholder friendly. Much of this is driven by the metrics employed where each individual is
trying to optimize their functional metrics, frequently at the expense of the overall performance
of the firm. While it is often suggested that processes should replace functional silos Hammer
(2001).
SuhaizaZailani (2005) mentioned that the need to react to market changes and the critical role of
the supply chain in meeting this need, and the potential benefits of integrating the supply chain,
can no longer be ignored. This potential, however, wasbe realized only if the interrelationships
among different parts of the supply chain are recognized, and proper alignment is ensured
between the design and execution of the company's competitive strategy.
Huo (2012) shows that internal integration improves external integration and that internal and
external integration directly and indirectly enhance company performance. In addition, partial
mediating effects among SCI and company performance are identified, and therefore explain the
inconsistent findings in previous studies regarding the impacts of SCI on performance.
Even Though, the above scholars identified the impact of cross functional integration problem
under supply chain management, this research would be concerned how the organization of
internal integration impact on the overall supply chain performance in case of study in moha soft
drinks factory.
Yet limited researches have been conducted in the area (i.e. from perspectives of. manufacturing
strategy, outsourcing strategy channel strategy, customer service strategy, asset network on supply
chain and organizational performances). Hence, studies have been needed to fill those existing gaps
and deficiency. Furthermore, this research has been motivated by existing gaps, namely lack of
adequate knowledge of managers in supply chain management the trend of managing supply chains

3
from suppliers to customers being traditional which is not more than just a buy and sale
(Transactional) relationship. In addition to this, to find out the effectiveness and efficiency of the
existing supply chain system and to know the existing problems and hindering factors in the product
manufacturing and distribution processes. Further, to determine whether internal integration on the
impact overall supply chain performance the case study of moha soft drinks factory.
In this gap that initiated the conduct of research on the title “cross functional integration impact
on the overall supply chain performance in case study of moha soft drinks factory. As have seen
the internal integration are more sophisticated to identify the problem of cross functional
integration in SC performance in moha soft drink. so therefore, This manufacturing company
improve internal management system, to control inventory, safety of warehousing and to
increase highly skilled man power, may the organization have to improve cross functional
integration among SC.

1.3 Basic researches Question

1. What purchasing department impacts the supply chain performance?
2. How production practices affect SC performance?
3. How logistics affects SC performance?
4. How information sharing affect SC performance?

1.4 Objectives of the study

1.4.1 General objective

The general objective of this study would be investigate the impact cross functional
integration on supply chain performance in case of Moha soft drink factory.

1.4. 2 Specific objective

Specifically, this study has the following specific objectives

 To identify the impacts of purchasing practice on SC performance.
 To evaluate the impacts of firms production practice on SC performance.
 To analysis the effects of logistics on SC performance.
 To understand the impact of cross functional integration of SC performance.

4
1.5 Significance of the study
The integration of SC performance is very essential issue for any business organization to run
their business and it helps to manipulate their performance with other compotator environment in
order to generate or maximize the revenue of the organization. Mainly the research would be
important to the following points. First to the discipline by adding new finding on the area,
second it would address the organization how cross functional integration is important to the
organization as well as to the overall supply chain, third It would be used as a reference for other
researches and lastly for the research it would be increase the research experience, skill,
knowledge and attitude.

1.6. Delimitation /scope of the study

To generalize the impact of cross functional integration to the supply chain performance
depending up on a single company is difficult, but due to time and budget constraint was decided
to conduct Moha soft drink.

To conduct a research to overall supply chain area is impossible therefore would be

obligated to do on cross functional integrations impact on supply chain performance. Also
to take all departments in a company in order to measure their integration is complex,
Therefore, this research would be focus on purchasing, production and marketing
departments integration, impact on supply chain integration in case of Moha soft drink
factor

1.7. Limitation of the study

In order to collect the primary data’s the research would be used only open end questions that is
linkers scale as it is easy to fill, but it hides a response that are beyond the research watch out.
Due to time constraint data analysis would be collected through percentage, and average other
than co-relation which is beast to analysis causal research. The research would be tried to
investigate the impact of cross functional integration to the supply chain performance based on
three departments integration it also limits the finding since it hides other departments thinking.

5
 1.8. Definition used term
Suppl.y chain: Supply chain is Life cycle processes comprising physical, information, financial,
and knowledge flows whose purpose is to satisfy end-user requirements with products and services
from multiple linked suppliers[ CITATION Jam00 \l 1033 ].

Purchasing:Purchasing is a functional group (i.e., a formal entity on the organizational chart) as

well as a functional activity (i.e., buying goods and services) [ CITATION Rob11 \l 1033 ].

Operation: Operations are the facilities, organizations, and supplier networks required to deliver
the product or service [ CITATION Jam00 \l 1033 ].

Marketing: - American Marketing Association (AMA) in 1985 defines: “Marketing is the process
of planning and executing the conception, pricing, promotion and distribution of ideas, goods and
services to create exchanges that satisfy individual and organizational objectives.

Supply chain performance: and supply chain performance measurement and evaluation systems
contain a variety of measures [ CITATION Rob11 \l 1033 ]

1.9 organization of the study

This research consists of five chapters. The first chapter is given to introduction parts, and it
consists of background of the study, statement of the problem, objective of the research,
significance of the study, limitation of the study, scope of the study, limitation of the study and
organization supply chain management definition up to specific parts which are related with the
study is discussed by reviewing what others say about the study. Under the third chapter the
paper discuss research methodologies those are used on the research. The fourth chapter analysis
present and interpret the data’s collected from the survey. Summery conclusion and of the study
the second chapter discuss about review of related literature. Starting from recommendations is
discussed under the last chapter. Abstract, acknowledgment Appendix and reference are also
available on the

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1 Theoretical literature

2.1.1 Definition of SC and SCM

Supply chain is a sequence of event intended to satisfy a customer [ CITATION don03 \l

1033 ]. Supply chain is Life cycle processes comprising physical, information, financial, and
knowledge flows whose purpose is to satisfy end-user requirements with products and services
from multiple linked suppliers[ CITATION Jam00 \l 1033 ]. A supply chain consists of all
parties involved, directly or indirectly, in fulfilling a customer request. The supply chain includes
not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even
customers themselves. Within each organization, such as a manufacturer, the supply chain
includes all functions involved in receiving and filling a customer request. These functions
include, but are not limited to, new product development, marketing, operations, distribution,
finance, and customer service [ CITATION Sun07 \l 1033 ].

For [ CITATION kno01 \l 1033 ] supply chain management is the synchronization of a firm’s process
with those of its supplies and customer to match the flow of material, services, and information
with customers demand. [ CITATION Rob11 \l 1033 ] defines SCM as a strategic approach to
planning for and acquiring the organization current and future needs through effectively
managing the supply base, utilizing a process orientation in conjunction with cross functional
term (CFT) to achieves the organization mission. Supply chain is the process that seeks to
provide for the management and coordination of all activities from sourcing and acquisition,
through production, where appropriate, and through distribution channels to the
customer[ CITATION Mic00 \l 1033 ]. Supply chain management, then, endorses a supply chain
orientation and involves pro-actively managing the two-way movement and coordination of
goods, services, information, and funds (i.e., the various flows) from raw material through end
user. According to this definition, supply chain management requires the coordination of
activities and flows that extend across boundaries. Organizations that endorse a supply chain
orientation are likely to emphasize supply chain Management [ CITATION Rob11 \l 1033 ].

7
2.2 The primary focus and objectives of supply chain

The primary focus of supply chain management it to customer with excellent goods and
service against minimum possible cost response time[ CITATION alt05 \l 1033 ].

The objective of every supply chain should be to maximize the overall value generated.
The value a supply chain generates is the difference between what the final product is
worth to the customer and the costs the supply chain incurs in filling the customer's
request. For most commercial supply chains, value was be strongly correlated with supply
chain profitability (also known as supply chain surplus), the difference between the
revenue generated from the customer and the overall cost across the supply chain [ CITATION
Sun07 \l 1033 ].

2.3 Supply chain management internal linkage

According to [ CITATION suh05 \l 1033 ] integration can be classified as internal integration,
External integration with suppliers and External integration with suppliers.

[ CITATION Rob11 \l 1033 ] to facilitate integration with other internal functions, a number of critical
communication linkage or interfaces have evolved between supply chain management and other
departments.

Traditional managers are concerned about the functions of their own departments (Premkumar,
2002). Each function is bureaucratic in nature, but this concept is not advisable a successful
supply chain. Cross‐functional behavior is relevant. So, internal functions should be integrated
Narasimhan and Kim, (2002)

As cited by [ CITATION suh05 \l 1033 ] in this globalized era, most industries was not be able to
survive by simply optimizing internal structures and infrastructures based upon business strategy.
The most successful manufacturers seem to be those that have carefully linked their internal
Organizations began to involve strategic suppliers in resource management decisions Morgan
and Monczka, (1996)

The way to avoid problems with fragmented supply chain is to bring the activities together and
conceder logistics not a series of distinct task, but as a single integrated function. Then all the

8
partners work together to get the best overall results for the organization and for its
customer[ CITATION don03 \l 1033 ].

[ CITATION Mic00 \l 1033 ] the business functions which fall within the scope of supply chain
management are included in what is commonly known as the supply chain (or logistics) mix:

• Planning and marketing strategy — the major influences of design and marketing on materials
requirements and distribution requirements

• Purchasing — Source research and selection, negotiation, building supplier partnership

programmers

• Production planning — Plant capacity, location and layout, scheduling, manufacturing

resource planning, and the control and support of work in progress.

Organizations that don’t think in supply chain terms at all certainly fit the functional paradigm.
In this view, companies are a collection of individual departments. In manufacturing companies,
examples of dominant functions are Procurement, Operations, Engineering, and Distribution. In
the functional organization, each department has, to a large degree, its own agenda. Oversight of
links between departments is weak within the company. Between companies in the supply chain,
it’s practically nonexistent[ CITATION Jam00 \l 1033 ].

2.4 Benefits of functional integration

As cited by Zailani and Rajaopal (2005), Davis (1993), and Dyer and Ouchi (1993) similarly
echoed the importance of integrating suppliers and customers into supply chains for developing
new products and processes.
As [ CITATION don03 \l 1033 ] Summarize the effect of integration in three important
observations. There is tradeoff between different activities.
The opportunity to use process integration across functional boundaries is now considered
a key to competitive success Zailani and Rajaopal, (2005).

2.5 Functions those are to be integrated

The three fundamental stages of supply chain – i.e. procurement, production, and distribution
(Thomas and Griffin, 1996). The overall functions within the organization should be integrated
each other but for my research I was try to see the three departments.
9
2.5.1. Purchasing

2.5.1.1 Definition of purchasing

Purchasing is a functional group (i.e., a formal entity on the organizational chart) as well as a
functional activity (i.e., buying goods and services). The purchasing group performs many
activities to ensure it delivers maximum value to the organization [ CITATION Rob11 \l 1033 ].
Purchasing has been referred to as doing “the five rights”: getting the right quality, in the right
quantity, at the right time, for the right price, from the right source. The function of the purchase
section is to procure materials against purchase requisitions received from stock control or other
department. It keeps record of the sources of supply of various items but very often new sources
washave to be developed. The responsibility of purchase section does not stop at places order it
has to insure that materials do arrive at the right time[ CITATION Nai85 \l 1033 ].

Purchasing and supply chain management today reflects a growing emphasis concerning
the importance of supplier. Supplier relationships are shifting from adviser approach to
more co-operative approach with selected supplier. That is purchasing behavior is shifting
dramatically to support the performance requirement of the new area [ CITATION Rob11 \l
1033 ]

The cost of outside material and services makes this an attractive target for cost reduction. This
brings on programs such as sourcing initiatives, supplier reduction programs, and vendor-
managed inventory (VMI). Efforts in companies following the procurement viewpoint reach
outside the company into the upstream supplier base. Their initiatives include “partnering” with
the supplier and shrinking the supplier base. Frequently, especially when the buyer dominates the
seller, partnership talk centers on price reductions. Frequently, this shifts profits from one party
to another in the chain without fundamental improvement [ CITATION Jam00 \l 1033 ].

2.5.1.2 Activities performed by purchasing

The purchasing group performs many activities to ensure it delivers maximum value to the
organization. Examples include supplier identification and selection, buying, negotiation and
contracting, supply market research, supplier measurement and improvement, and purchasing
systems development [ CITATION Rob11 \l 1033 ].

10
1 Supplier scoring and assessment is the process used to rate supplier performance. Suppliers
should be compared based on their impact on the supply chain surplus and total cost.
Unfortunately, sourcing decisions are often driven based solely on the price charged by a
supplier. Many other supplier characteristics, such as lead time, reliability, quality, and design
capability, also affect the total cost of doing business with a supplier. A good supplier scoring
and assessment process must identify and track performance along all dimensions that affect the
total cost of using a supplier [ CITATION Sun07 \l 1033 ].
2 Supplier selections use the output from supplier scoring and assessment to identify the
appropriate supplier(s). A supply contract is then negotiated with the supplier. A good contract
should account for all factors that affect supply chain performance and should be designed to
increase supply chain profits in a way that benefits both the supplier and the buyer [ CITATION
Sun07 \l 1033 ]

2.5.1.3. The Role Of Sourcing in A Supply Chain

The Purchasing Department’s organizational support role requires extensive coordination and
collaboration with other internal departments. While some of these departments—for example,
legal and finance—actually provide services to your purchasing team, all of them constitute the
collective customer base that depend upon you to provide critical purchasing and supply
management functions[ CITATION Fre05 \l 1033 ]. You was be working collaboratively with many of
these groups on cross-functional teams engaged in the development of a new product or service,
for instance. You may also work with them in resolving quality issues in a manufacturing
operation, or, even more likely, selecting a new supplier. Consequently, you was likely spend a
major portion of your time working with them. For this reason, it is important that you
understand other internal departments’ corresponding roles in your organization and the common
activities they perform in fulfilling their missions[ CITATION Fre05 \l 1033 ].
Source covers the identification and selection of suppliers, measurement of supplier performance
as well as scheduling of their deliveries, receiving of products and processes to authorize
payments. It also includes the management of the supplier network and contracts as well as
inventories of delivered products [ CITATION Har05 \l 1033 ].

11
Supply management involves purchasing, engineering, supplier quality assurance, the supplier,
and other related functions working together to further mutual goals. Instead of adversarial
relationships, supply management features closer relationships with specially selected suppliers.
It involves frequent help to suppliers in exchange for dramatic and continuous performance
improvements, including steady price reductions [ CITATION Rob11 \l 1033 ]. Purchasing supports
manufacturing operations by ensuring it has delivered the proper supply of quality materials in
the required quantity and at the right time. Failure to do so often result in unfortunate conditions
where orders are unable to ship on time and the organization loses revenue. In extreme cases, the
inability to ensure supply can lead to plant shutdowns, loss of customers and lay-offs. For this
reason, the Purchasing Department’s responsibility to its manufacturing partners becomes very
clear, and its management of the supply community is a mission-critical obligation [ CITATION
Fre05 \l 1033 ].

Often, the move away from the functional viewpoint begins with efforts to lower the cost of
materials. This viewpoint gave rise to the “supply” in “supply chain.” In many product-making
organizations today, the cost of material is the largest cost component. So, to quote a famous
bank robber, management focuses its efforts “where the money is.” When you talk of the supply
chain, these companies think of suppliers and procurement[ CITATION Har05 \l 1033 ].

Design collaboration allows the supplier and the manufacturer to work together when designing
components for the final product. Design collaboration also ensures that any design changes are
communicated effectively to all parties involved with designing and manufacturing the Product.
Purchasing, also called procurement is the process by which companies acquire raw materials,
components, products, services, or other resources from suppliers to execute their operations.
Sourcing is the entire set of business processes required to purchase goods and services. For any
supply chain function, the most significant decision I Whether to outsource the function or
perform it in-house [ CITATION Har05 \l 1033 ]

2.5.1.4 Benefits of sourcing decision

[ CITATION Sun07 \l 1033 ] describes some of the following benefits from effective sourcing
decisions:

12
• Better economies of scale can be achieved if orders within a firm are aggregated.
• More efficient procurement transactions can significantly reduce the overall cost of purchasing.
This is most important for items for which a large number of low value transactions occur.
• Design collaboration can result in products that are easier to manufacture and distribute,
resulting in lower overall costs. This factor is most important for supplier products that
contribute a significant amount to product cost and value.
• Good procurement processes can facilitate coordination with the supplier and improve
forecasting and planning. Better coordination lowers inventories and improves the matching of
supply and demand.
• Appropriate supplier contracts can allow for the sharing of risk, resulting in higher profits for
both the supplier and the buyer.
• Firms can achieve a lower purchase price by increasing competition through the use of
auctions.

2.5.1.5Purchasing Research

Purchasing research involves developing long-range materials forecasts, conducting value

analysis programs, assessing supplier capabilities, and analyzing the cost Structure of suppliers.
Although some of these specialized tasks are the responsibility of individual buyers, more and
more organizations recognize the benefit of having specialized research personnel. The
development of product and material plans requires detailed and accurate research [ CITATION
Rob11 \l 1033 ]

2.5.2 Operation

2.5.2.1 Definition of operation and operational management

Production function is that part of an organization, which is concerned with the transformation of
a range of inputs into the required outputs (products) having the requisite quality level.
Production is defined as “the step-by-step conversion of one form of material into another form
through chemical or mechanical process to create or enhance the utility of the product to the
user.” Thus production is a value addition process. At each stage of processing, there wasbe
value addition[ CITATION san081 \l 1033 ]. In the scope of make are processes that transform
material, intermediates and products into their next state, meeting planned and current demand.

13
Make covers processes to schedule production activities, produce and test, packaging as well as
release of products for delivery. Furthermore, make covers the management of in-process
products (WIP), equipment and facilities[ CITATION Har05 \l 1033 ]. Operations are the facilities,
organizations, and supplier networks required to deliver the product or service [ CITATION Jam00 \l
1033 ].
Operations management is concerned with managing the resources that directly produce the
organization’s service or product. The resource was usually consist of people, materials,
technology and information but may go wider than this. These resources are brought together by
a series of processes so that they are utilized to deliver the primary service or product of the
organization. Thus, operations are concerned with managing inputs (resources) through
transformation processes to deliver outputs (service or products) [ CITATION Fra071 \l 1033 ].
Production management is a process of planning, organizing, directing and controlling the
activities of the production function. It combines and transforms various resources used in the
production subsystem of the organization into value added product in a controlled manner as per
the policies of the organization[ CITATION Fra071 \l 1033 ].
Operational management refers to the systematic; design direction and control of process
that transform inputs in to product on services for internal as well as external customer
[ CITATION kno01 \l 1033 ]

2.5.2.2 The Role of Making in A Supply Chain

Supply chain management has a ways closely engaged with the operation, group. Because the
links between operation and SM have been so close, it has not been unusual for SM to report
directly to operational & major link between operational and strategy because SCM directly
support operations it must develop insights into production or service strategic plans
[ CITATION Rob11 \l 1033 ].
Unfortunately, people who actually perform operational roles under this definition are not
always called ‘operations managers’. This makes identifying the operation more difficult
than, say, identifying the financial, marketing or personnel functions. Job titles such as
Hospital Manager,

Technical Director and Store Manager do not have the word ‘operations’ in them, yet they are all
operations management roles. Identifying the operations function is an important task however.

14
In many organizations it is the operations function that accounts for the bulk of the staff, most of
the facilities and the major costs [ CITATION Fra071 \l 1033 ].
The objective of the production management is ‘to produce goods services of right quality and
Quantity at the right time and right manufacturing cost’. Objectives of operations management
can be categorized into customer service and resourceUtilization suersh, (2008)
Products include goods and services, including the sourcing of materials and their distribution
[ CITATION Jam00 \l 1033 ].
The tasks of operations manager
Some of these tasks are outlined [ CITATION Fra071 \l 1033 ],
1 The operations manager must understand what the overall objectives of the operation are.
These objectives are usually the same general areas that type of operation is concerned.
They can be listed as:
■ Quality
■ Speed
■ Dependability
■ Flexibility
■ Cost

2 The operations manager has to plan and control the operations function so that it can meet the
objectives set for it. Even the simplest of operations usually requires a network of interdependent
activities for it to function properly.
3 The operations manager has to undertake responsibility for involved in the design of both the
end service/product and the delivery processes.
4 The operation has to be improved. Knowing what today’s requirements are for quality, speed,
dependability, flexibility and cost and managing to meet them is only a part of the task.
Superior operations also work hard to improve their performance in these areas over time
5 Operations exist in a wider organizational context. Marketing, personnel, finance and design
functions have close links to operations.
If they are all to work successfully to a common goal then good communication between
operations and the other functions of the organization is essential. Operations managers have to
be able to explain their own plans to the other functions. In addition, the operational implications
of what the other functions are trying to achieve need to be made clear. In essence, operations

15
managers need to communicate the capabilities of the operation which they control. They must
therefore be able to understand the different perspectives of these various functions and be able
to communicate with them in an informed manner

2.5.3 Marketing /Sales

2.5.3.1 Definition of marketing

Marketing is about satisfying customer wants and needs and in the course of doing so facilitating
the achievement of an organization’s objectives. By paying attention to customer wants and
needs, organizations are more likely to achieve their objectives in the marketplace. Of course,
organizations have to compete with each other and so also have to satisfy customers’ wants and
needs at least as well as their competitors
American Marketing Association (AMA) in 1985 defines: “Marketing is the process of planning
and executing the conception, pricing, promotion and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational objectives.”

2.3.5.2 The role of marketing on the supply chain

Supply management maintains indirect linkages with marketing. Many new product ideas that
supply management must support start with marketing personnel, who are the voice of a firm’s
end customers. Marketing also develops sales forecasts that convert into production plans.
Supply management must select suppliers and request material to support both marketing and
production plans [ CITATION Rob11 \l 1033 ]
Sales and marketing activities impact purchasing in a variety of ways: increased sales
activities and merchandising campaigns generally create added demand that requires
planning for additional flows of material and slower market demand requires greater agility
in manufacturing to support the increased customer service required to gain business in a
highly competitive environment The potential benefit from strong relationships between
supplier management groups and the sales and marketing efforts of the organization are
frequently overlooked. The supplier community represents a special source of potential
sales for your own organization for rather obvious reasons: Purchasing your goods or
services increases their sales[ CITATION Fre05 \l 1033 ].

16
Competition involves positioning products and services in the minds of customers in such a
way that the products and services are perceived to be different from one another.
Marketing is about the competitive positioning of products and services in the minds of the
customers.

As written[ CITATION suh05 \l 1033 ], (Heikkilä, 2002) says: Information is increasingly

available through modern means of technology, i.e. customer relationship management
(CRM) e‐business, and supply chain management (SCM) solutions, which increases the
possibility of serving customers individually with customized bundles of goods and
services. However, overly focused customization would ruin efficiency. On the other hand,
too rigid an approach to SCM would risk customer satisfaction. Therefore, there need to be
a balance between good customer satisfaction and supply chain efficiency. In order for
operations managers to begin their improvement efforts, it is crucial to start by gaining an
understanding on the situation and need in distinct customer segments. Next is to develop
manageable number of alternative modular service offerings to be adapted to individual
customer situations and needs. The final step is to take the relationship characteristics into
consideration and develop a joint improvement agenda together with the customer to
develop optimum operative efficiency within the constraints set by the objectives important
for the customer; and if the joint improvement agenda is implemented in good co‐
operation, high customer satisfaction was follow.

Demand chain management (DCM) on the other hand is the management of sales and
distribution portion of the value chain, which is the other part of the chain. While SCM
focuses on the supply component, DCM looks at the demand component. SCM is a
network of members formed by autonomous entities and their systems by collaborating and
collective efforts to solve a common problem. While companies pay attention towards the
supply component, the demand component is increasingly playing a vital role as more and
more companies realize the potential benefits when owning an efficient chain management
system. DCM is equally important, as it is crucial for business because it contributes
towards the satisfaction of the customer Zailani and Rajaopal (2005).

As written by, suhaiza et al (2005) besides that Lummus et al. (2001) has concluded that
customer closeness also plays an important role in performance of supply chain. However,

17
in the proposed supply chain integration model, customer closeness is adapted as customer
relationship. Extensive research also led to productivity growth noted as an indicator of
supply chain success.

2.6. Supply chain performance

Having mapped the supply chain processes it is important to assign measures to these processes
to evaluate changes and to assess the performance of the complete supply chain as well as of the
individual processes. Thereby it is crucial not to measure “something”, but to find the most
relevant metrics [ CITATION Har05 \l 1033 ]. Modern purchasing and supply chain performance
measurement and evaluation systems contain a variety of measures. Most of these measures fall
into two broad categories: effectiveness measures and efficiency measures [ CITATION Rob11 \l 1033
]
Performance evaluation in these companies typically centers on cost. Procurement is measured
on the purchase cost of material and material overhead rates. Manufacturing has measures such
as direct labor productivity and the cost of quality of delivered products. Distribution
effectiveness is measured on the percentage of selling price represented by distribution cost.
In the functional organization, strong department heads sponsor change projects. “Cross-talk”
among departments is minimal. Information systems also center on the needs of the departments.
Most improvement initiatives are local. They may or may not improve the supply chain as a
whole. In fact, a “local optimum” may be injurious to the whole, yet department heads take
credit for their “savings.” Where the functional viewpoint prevails, the actual impact of
improvement projects on the total supply chain isn’t measured. [ CITATION Jam00 \l 1033 ]

2.6.1. Key performance indicators

As cited by, suhaiza et al (2005) (Krajewski and Ritzman, 2002) Performance of manufacturing
companies can be evaluated by a number of key competitive priorities). Three major categories
are: Quality, delivery, flexibility.
As they tackle different aspects of the supply chain Key performance indicators are grouped into
four categories corresponding to the following attributes: delivery performance, supply chain
responsiveness, assets and inventories, and costs [ CITATION Har05 \l 1033 ].

18
2.6.1.1 Delivery Performance

As customer orientation is a key component of SCM, delivery performance is an essential

measure for total supply chain performance. As promised delivery dates may be too late in the
eye of the customer, his expectation or even request fixes the target. Therefore delivery
performance has to be measured in terms of the actual delivery date compared to the delivery
date mutually agreed upon. Only perfect order fulfillment which is reached by delivering the
right product to the right place at the right time ensures customer satisfaction an on time
shipment containing only 95% of items requested was often not ensure 95% satisfaction with the
customer. Increasing delivery performance may improve the competitive position of the supply
chain and generate additional sales [ CITATION Har05 \l 1033 ].This measure is the amount of time
(in weeks or months) from concept to first shipment or provision of a product or service to the
external customer. The objective is continuous reduction so as to reduce the amount of time it
takes to achieve breakeven of investment and also to be first to market with the product or
service [ CITATION Rob11 \l 1033 ].

2.6.1.2 Supply Chain Responsiveness

Responsiveness describes the ability of the complete supply chain to react according to changes
in the marketplace. Supply chains have to react to significant changes within an appropriate time
frame to ensure their competitiveness [ CITATION Har05 \l 1033 ]. These measures indicate the
degree to which suppliers are able to meet customer schedule requirements [ CITATION
Rob11 \l 1033 ].
Assets and Inventories

Measures regarding the assets of a supply chain should not be neglected. One common indicator
in this area is called asset turns, which is defined by the division of revenue by total assets.
Therefore, asset turns measure the efficiency of a company in operating its assets by specifying
sales per asset. This indicator should be watched with caution as it varies sharply among
different industries [ CITATION Har05 \l 1033 ].
[ CITATION Rob11 \l 1033 ] the measurement of inventory as an asset for a single enterprise may
include a number of typical unit or aggregate inventory measures such as the following:
• Dollar value of inventory investment (following appropriate accounting rules)
• Inventory turnover

19
• Days/weeks/months of supply of inventory
The objective is to reduce inventory cost by increasing the velocity of throughput or reducing
inventory carrying cost. A unique use of this measure is its application across inventory
throughout various stages within a firm’s supply chain and, more importantly, across firms in the
aggregate supply chain (external to your firm) with specified future targets[ CITATION Rob11 \l 1033
].
Another indicator worthy of observation is inventory turns, defined as the ratio of total material
consumption per time period over the average inventory level of the same time period. A
common approach to increase inventory turns is to reduce inventories [ CITATION Har05 \l 1033 ].

2.6.1.3 Costs

Last but not least some financial measures should be mentioned since the ultimate goal was
generally be profit. Here, the focus is on cost based measures. Costs of goods sold should always
be monitored with emphasis on substantial processes of the supply chain. Hence, an integrated
information system operating on a joint database and a mutual cost accounting system may prove
to be a vital part of the supply chain [ CITATION Har05 \l 1033 ].The measures in this category focus
attention on efforts to reduce purchase costs. Cost-effectiveness measures fall into two general
categories: cost changes and cost avoidance. The use of cost-effectiveness measures requires a
word of caution. The method used to achieve cost reductions is critical[ CITATION Rob11 \l 1033 ].
[ CITATION Rob11 \l 1033 ] Rather than following the common practice of limiting measurement to
financial information, the balance is provided by four perspectives:
1. Financial perspective.
2. Customer perspective. How the organization measures up in the opinion of customer
expectations.
3. Internal business perspective. What the organization must excel at to be successful.
4. Innovation and learning perspective. How the organization can improve and create value. All
four areas are susceptible to enhancement through supply chain innovations.

20
Balanced Scorecard Measures Supply Chain Examples

Financial perspective Supply chain changes can improve balance

sheets and
Cash flow. Profits can increase from providing
targeted
premium services
Customer perspective Changes in the supply chain can reduce the time
it takes
To serve customers.

Internal business perspective Restructuring the supply chain produces

fundamentally
different ways of doing business
Innovation and learning Shifting to product- or customer-centric supply
Perspective chains
Offers the chance to learn new skills.

TABLE2.1Supply Chain Measures Using the Balanced Scorecard Ayers, (2000).

2.7. Requirements to be integrated

Good communication skills are the essential cornerstone to building meaningful relationships
with other internal departments. Unless your customers clearly understand your goals and
objectives and how you work to achieve them, you run the risk of being held at arm’s length and
excluded from critical internal communication activities. Similarly, those in your department
need to have a clear understanding of the activities of other groups you was provide services for
in order to more effectively meet their needs. If the communication is not clear and timely, both
groups run the risk of misunderstandings that can result in ineffective team performance. Keep in
mind, improving total operational performance is your primary objective in developing effective
communications. To do so, you was require the active participation of those with whom you
interface[ CITATION Fre05 \l 1033 ].
Cross Functional integration supply chain performance

21
 Purchasing department
Supplier

F
Purchasing
I

Operation R
department
M Operation

Marketing

Marketing department
Customer

Fig 2.1the impact of cross functional integration to the supply chain performance (Own source:
developed from the literature)

2.8. Empirical literature

The study that has been conducted by(Mengstu,2012).on supply chain performance measurement
framework this study focus on supply chain performance measurement framework that applies
to the manufacturing sector in developing context.
The study aims to develop and to apply an integrated supply chain performance measurement
framework. This frameworks was be developed across decision making levels (strategic, tactical
and operational)as well as across supply chain macro processes, which integrates up stream
suppliers( supply relationship management)and downstream(customer relationship management
with firm (internal supply chain management). Additionally the study wasfacilitate cross
organizational learning.

22
 According to Morgan, (2007), every organization faces the strong pressure of the world
competition. Companies are constantly in search of new ways to improve the performance of
their supply chain in order to reduce costs to improve quality and to increase productivity. the
organization are finding the activities of monitoring and improvement of supply chain
performance as an increase complex task in order to solve these problems many researchers
conduct the research on these area.
Supply chain management is a concept that originated in the manufacturing industries in the
early 1980s. It is developed from innovations such as just in time (JIT) (Vrijhoef and Koskela,
2000) and total quality management (TQM) (Wong and Fung, 1999). Supply chain management
can be seen as an example of evolutionary and cumulative innovation, which is often described
as emanating from internal programs aimed at improving overall effectiveness Saad et al.,
(2002).

23
 CHAPTER THREE
3.RESEARCH DESIGN AND METHODOLOGY

Introduction
This chapter would be involves discussion of the research design, Target population, Sampling
Technique and Sampling Size, source and data types, method of data collection and method of
data collection and instruments, finally method of data analysis

3.1 Research Design

According to Kerlinger and Lee (2000), research design has the purpose of providing answers
to research questions and controlling variance, when the research design must enable researchers
to answer research questions as validity, objectively, accurately and economically as possible.
Therefore, it is important to select the research design that would best satisfy the research
questions as identified; there are three types of research, exploratory research, descriptive and
explanatory research. Exploratory Research It is a study of new phenomenon. Exploratory
research is characterized by its flexibility. When a problem is broad and not specifically defined,
the researchers use exploratory research as a beginning step. Exploratory studies are a valuable
means of understanding what is happening; to seek new insights; to ask questions and to assess
phenomenon in a new light (Yin, 1994).Descriptive Research When a particular phenomenon is
under study, the research is needed to describe it, to clarify and explain its inner relationships and
properties (Huczynski and Buchana, 1991).Explanatory Research When the focus is on
cause-effect relationships, the study can be explanatory explaining which causes produce which
effects (Yin, 1994). Our concern in casual analysis is how one variable affects, or is „responsible
for‟, changes in another variable. The stricter interpretation of causation is that some external
factor produces a change in the dependent variable. Thisresearchwould be explanatory research
isfocus on cause and effect relationships between them the impact of cross functional integration
of SC performance

24
3.2 Target Population, Sampling Technique and Sampling Size

3.2.1 Target Population

This research was included moha soft drink factory particularly in hawassa. This moha soft drink
company of hawassa branch is found south of Addis Ababa. The distance is 265 km for from
Addis Ababa.

3.2.2 Sampling Technique

There are two types of sampling techniques: probability or representative sampling and non-
probability or judgmental sampling.According to Kothari (2004) non-probability sampling is a
sampling technique where the samples are gathered in a process that does not give all the individuals
in the population equal chances of being selected. he target population of the study would be all
employee in hawassamoha soft drink factory in logistics and transport management .sampling
would be determine 46 employees that selected from 87 total populations of the organization by
using judgmental sampling techniques .that judgmental sampling the researchwould be used to
judgmental sampling because this types of sampling techniques would be essential for the
research to select any that may to the questions and research beliefs better information would be
gathered from concerned departments.

3.2.3 Sampling Size

The sample size is determined by three factors: the level of certainty that the characteristics
of the data collected represent the population, the margin of error that can be tolerated, and
the type of analyses to be performed. The final sample size is often a matter of judgment as
of calculation due to the constraints above.

As indicated below, by using Taro Yamane, (1967) formula to determine the sample size
published a formula for an effective and efficient method of determining a representative sample
size of a given population using the following formula. Thus, in the present study the sample size
was determined by using this formula.

25
 Sample size =N/1+N(e)2
Where
n = sample size,
N = population size,
e = Margin of error (e = 0.1)
n = 87 / [1 + 87 (0.1 ¿ ¿2] = 87/1.87=46.5240642
n=Approximately46

3.3 Method of Data collection

3.3.1 Types and Source of data

In this study data would be collect from both primary and secondary source. Primary sources are
a source of data that provide firsthand information for the use of immediate purpose Limb
(2001).

And secondary sources exist as storage of previously collected information (Limb 2001). Usually
they are published or unpublished materials. The researchwould be collect a primary data by
making interview questionnaire and observations with, in hawassamoha soft drink factory and
secondary data from magazines, previous research paper, newspaper, magazines, books, and
internet.

3.4 Method of Data collection Instrument

The researchwould be used gathered from primary andsecondary data source the research would
be collect secondary data from magazines, previous research paper, newspaper, magazines,
books, and internet. Data collection instruments are interview, observation and questionnaires,
would be consider as the major means of data gathering tools. In addition to this the research
may use field observation.

3.5 Method of Data Analysis

The collected data for the impact of cross functional integration to the supply chain
performance, data analysis through weighted mean and percentages, and the deception is
expressed in terms of table and through word

26
 CHAPTER FOUR
4.DATA PRESENTATION, INTERPRETATION AND ANALYSIS
This chapter devoted to data presentation analysis and interpretation of the study on data from
respondents of employees of Moha soft drinks factory Hawassa. All the data collected through
close end questionnaires a sample respondent was selected by using quota sampling techniques
46 copies of questionnaire were distributes to employees and all 46 questionnaires would be
collected from employees the information obtain from the three departments i/e marketing,
operation and purchasing in accordance with its proportional quota, 5, 5 and 16 respectively

Table 4.1 respondent background information

No Description Responded in
Option No %
1 What is your position or status in General manager - -
the organization?
Dep't manager 2 4.34%
Senior employees 44 95.66%

Total 46 100%
2 Year of services in the 0-2 years -
organization.
2-4 years 14 30.43%
Over 4 years 32 69.57%
Total 46 100%

3 What is your level of education? 12th complete 2 4.35%

Diploma 23 50.%
Degree 21 45.65%
Master -

Above master -

Total 46 100%
4 Sex: Male 26 56.52%
Female 20 43.48%
Total 46 100%

Source: own survey; (2020)

27
From the above table 4.1 item-1 the respondent request to indicate their position or status ,
95.66% of the respondent are employees of the origination and the remaining 4.34%of the
respondent are managers of the organization. Most of the respondents are employees of the
organization.

On the same table 4.1 item -2 the respondents request to indicate their service of year in the
organization. From total respondent, 95.66% of the respondents give service above four years in
the organization and the remaining 4.34% of the respondent give service 2-4 years in the
organization. This indicates that major of the respondents give service above four years in the
organization. These increase the organization productivity and reduce training cost.

As it can be seen in the above table 4.1 item -3 the respondent request to indicate their level of
education , 45.65% of the respondent are diploma holder,50.% of respondent are degree holder
and the remaining 4.35% of the respondent are 12th completed. These indicate that majority of
the respondent diploma and degree holder. From these one can understand the organization have
qualified work force.

On the same table 4.1 item -4 as it can be seen above, 56.52% of the respondent are male and the
remaining 43.48% of the respondent are female. These indicate the organization workers are
both male and female equally participate.

Table 4.2 information technology and a paper work

No Description Respondent in

Option No %
1 Does your company reduce Yes 18 39.13%
paper work by implementing No 25 54.34%
information technology? I do not know 3 6.53%
Total 46 100%
Source: own survey; (2020)

From the above table 4.2 the respondent request to indicate the company reduces paper work by
implementing information technology. Table 4.2 reveal that 54.34% of the respondent replied no,
39.13% of the respondent replied yes and the remaining 6.53% of the respondent said I do not
know.

28
Implementing information technology increases the efficiency of organization by speed up
information transfer, elimination of human error, and reduction of cost. But from the above data
Hawassamoha soft drink factory not implement information technology for reduce paper work.
Therefore, it is better that the organization implement information technology.

Table 4.3.Integrated supply chain

No Description Respondent in s
Option No %
2 Does your organization is Yes 18 39.13%
highly integrated with their No 28 60.83%
partners (supplier, distributer I do not know - -

and customer) Total 46 100%

3 If your answer is yes for RFID _ -
question NO #1 what type of EDI 4 54.14%
information technology is
used? Extra net - -

intra net 3 42.86%

Total 7 100%

Source: own survey; (2020

As it can be seen the above table 4.3 item-1 question for the organization is highly integrated
with their partner (supplier, distributor and customer), 60.83% of the respondent replied no and
the remaining of the respondent 39.17% replied yes. Integration of supply partners help the
organization to work coordinated manner, access to information, data inter change and improve
customer and supplier relationship. But, Hawassamoha soft drink factory has less integrated with
their partner. Therefore, the organization should be integrated with supply chain partner.

On the same table 4.3 item-2 in relation with what type of information technology is used to
integrate with their partner, 54.14% of the respondent electronic data interchange is used and the
remaining 42.86% of the respondent said intra net is use.

29
 Table 4.4 Analysis of purchasing variables

Strongly Agree non opinion Disagreed Strongly disagree

Ite Purchasing agree (5) (4) (3) (2) (1)
m Variables Num % numbe % Numbe % numbe % numbe %
ber r r r r
1 Works 3 12% 8 31% 10 38% 4 15% 1 4%
collaboratively
with suppliers
2 Set specification 11 42% 10 38% 5 19%
with concerned
bodies
3 The purchasing 6 19% 14 44% - - 6 23%
group works
with operation
department in
resolving quality
issues in a
manufacturing
operation
4 The purchasing - - 7 27% 13 50% 5 19% 1 4%
group is
working
collaboratively
with many of
these groups on
cross-functional
teams engaged

Source (own survey may; 2020)

According to the above table 4.1 item 5, the respondent’s response shows majority 38% of
respondents neutral. The remaining 38% of respondents response split in to four responses that is
31%of the respondent agree, 15% disagree 12% strongly agree and the remaining 4% disagree.
this reflects that the purchasing department is in a middle condition of collaboration with
suppliers.

Purchasing and supply chain management today reflects a growing emphasis concerning the
importance of supplier. Supplier relationships are shifting from adviser approach to more co-
operative approach with selected supplier. That is purchasing behavior is shifting dramatically to
support the performance requirement of the new area [ CITATION Rob11 \l 1033 ]. Therefore the

30
 department shall be made integration with other departments. Therefore the research concluded
the works collaboratively with suppliers that majority of the respondent are non-opinion.

From the respondent point of view table 4.4 item 2, indicates that 38%, 42%, 15% of respondents
response agree, strongly agree and disagree respectively, and there is no response strongly
disagree and neutral. From this we can understand that set specification with concerned bodies
that majority respondent are agree.
The above table 4,4 , item 3, shows 54% of the respondent agree, 23% of the respondent
disagree, and 23% of the respondent strongly agree with the purchasing group works with
operation department in resolving quality issues in a manufacturing operation.
Design collaboration allows the supplier and the manufacturer to work together when designing
components for the final product. Design collaboration also ensures that any design changes are
communicated effectively to all parties involved with designing and manufacturing the Product.
Purchasing, also called procurement is the process by which companies acquire raw materials,
components, products, services, or other resources from suppliers to execute their operations.
Sourcing is the entire set of business processes required to purchase goods and services. For any
supply chain function, the most significant decision I Whether to outsource the function or
perform it in-house [ CITATION Har05 \l 1033 ], therefore the department shall improve on it.
Therefore the researcher concluded the purchasing group works with operation department in
resolving quality issues in a manufacturing operation the majority responder are agree.

From the above table 4.4, item 4, we can understand that 50%, 27%, 19% and 4% of the
respondents are neutral, agree, disagree and strongly disagree respectively. This indicates that
there is middle collaboration with cross functional teams in the engagement of new product or
service. Therefore the research understand the purchasing group is working collaboratively with
many of these groups on cross functional teams engaged there is wakens there respondent
majority non opinion

Table 4.5: analysis of operation variables

Strongly agree Agree non opinion Disagreed Strongly
Ite Variables (5) (4) (3) (2) disagree
m (1)
Numbe % numbe % Numbe % numbe % Numbe %
r r r r r

31
1 Share 13 28.26 18 39.14 - - 11 23.91 4 8.69
information % % % %
with others
departments
2 Perform 13 28.26 14 30.44 13 28.26 6 13.04 - -
according with % % % %
customer order
that it received
from
marketing
deprtment
3 The 22 47.82 21 45.65 - - - - 3 6.52
operations % % %
manager has to
undertake
responsibility
for involved in
the design of
the end
service/produc
t
4 The operations 17 36.95 14 30.43 7 15.21 8 17.39 - -
manager has to % % % %
undertake
responsibility
for involved in
the design of
the delivery
processes
5 The operation 16 34.78 10 21.73 16 34.78 4 8.69% - -
group closely % % %
engaged with
Supply chain
management
Source (own survey may 2020

Table 4 5, item 1, Cleary shows The percentage evaluation shows 28.26% of the respondent
agree, 39.14%of the respondent disagree, 23.91% of the respondent strongly agree 8.69% of the
respondent strongly disagree to the operations department works collaboratively with other
departments. Therefore the research concluded the share information with other department that
majority respondent are agree.

32
 According to table 4.2, item 6.53% of the respondents agree, 54.34% of the respondents
disagree, 39.13% strongly agree and the respondents neutral to operations department Perform
according with customer order that it received from marketing department. This indicates that,
for some the department accomplished tasks based on customers order, but it shall be operating
the task based on customer order in order to increase the supply chain performance. this
indicates the researcher understand the perform according with customer order that received
from marketing department the majority respondent are agree .table 4.5, item 3, we can
understand that 47.82%, 45.65%, and 6.52% of the respondents are agree, strongly agree and
strongly disagree respectively. This indicates that the operations manager has to undertake
responsibility for involved in the design of the end service/product highly.This indicates the
researcher understand that the operation manager has to undertake responsibility for involved in
the design of the end the majority are agree.

As it is shown by the above table 4.5, item 4, 36.95% of the respondents agree, 30.43% of the
respondents strongly agree, 15.21% of the respondents disagree, and .17.39% of the respondent
neutral to the operations manager has to undertake responsibility for involved in the design of the
delivery processes. This indicates that the operations manager has undertaken responsibility for
involved in the design of the delivery processes. this indicates that the research concluded that
the operations manager has to undertake responsibility for involved in the design of the delivery
processes that majority are agree.

Supply chain management has a ways closely engaged with the operation, group. Because
the links between operation and SM have been so close, it has not been unusual for SM to
report directly to operational & major link between operational and strategy because SCM
directly support operations it must develop insights into production or service strategic
plans [ CITATION Rob11 \l 1033 ].

Table 4.6 Analysis of marketing variables

Strongly agree Agree non opinion Disagreed Strongly
Item Variables (5) (4) (3) (2) disagree
(1)
Number % Numbe % Number % Numbe % Numbe
r r r
1 Consolidate 18 39.13 26 56.52 2 4.34% - -
orders those % %

33
 comes from
different
customers.
2 The 17 36.95 18 39.13 6 13.04 - - 5 10.86%
company % % %
conduct
Customer or
market
research in
order to get
quantitative
facts about
particular
Markets and
market
segments.
3 Many new 12 26.08 17 36.95 14 30.43 3 6.52% -
product % % %
ideas that
supply
management
must
support start
with
marketing
personnel,
who are the
voice of a
firm’s end
customers
4 the - - 12 26.08 17 36.95 15 32.6% 2 4.34%
forecasted % %
demand are
early and
known by
other
departments
Source (own survey may; 2015)

According to table 4.6, item 1, 56.52%, 39.13%, 4.34% of the respondents are agree, strongly
agree and disagree respectively for marketing departments Consolidate orders those comes from
different customers. The majority of respondents are agree, this indicates that the department is
in a good condition consolidation customer orders. There for the research understands that
consolidate orders those comes from different customers the majority respondent are agree.

34
 As it is shown by the above table 4.6, item 2, based respondent’s point of view the company
conduct customer or market research in a good manner, since39.13 % of the respondent agrees
on it, and The other respondents response shows, 36.95% of the respondent strongly agree,
13.04% neutral, and 10.86% strongly disagree with it. There for it can be concluded that as the
company conduct customer or market research in order to get quantitative facts about particular
markets and market segment the majority respondent are agree.

From the above table 4.6, item 3, we can understand that 36.95% of the respondents are neutral,
30.43% disagree, 26.08% agree, and 3.65% of the respondents are strongly agree on the new
product ideas of that supply management start with marketing personnel, who are the voice of a
firm’s end customers. therefore it can be understand that many new product ideas that supply
management must support start with marketing personnel who are the voice of affirms end
customers less the respondent are agree.

Table 4.6, item 4, Cleary shows that in demand forecasting the marketing department scores is
low based on respondent’s point of view i.e. The majority 36.95% of the respondents are
disagreeing on the forecasted demand are early known by other departments. Other respondent’s
reflection shows, 32.06%, 26.08% and 4.34%of the respondents are neutral, agree and strongly
disagree respectively. This shows the low performance of marketing department on sharing
information in related with the forecasted demand. Therefore it can be understand that the fore
casted demand are early and known by other department that responded are majority dis agree

Table 4, 7; analysis of integration variables

Strongly agree Agree non opinion Disagreed Strongly disagree
Ite Variables (5) (4) (3) (2) (1)
m Number % numbe % Number % numbe % number %
r r
1 The functions 14 30.43 18 39.14 - - 14 30.43 - -
in the % % %

35
 organization
are integrated
each other
2 To facilitate 4 15% 2 77% - - 2 8% - -
integration
with other
internal
functions, a
number of
critical
communicatio
n linkage are
used by the
company
3 The company 3 6.52% 14 30.43 17 36.95 7 15.21 5 10.86%
use process % % %
integration
across
functional
boundaries as
opportunity to
competitive
success
4 The - - 5 10.86 23 50% 13 28.26 5 10.86%
organization % %
performs cot
trade-off
analysis.

Source (own survey may; 2020

As it is shown on the table 4.4, item 1, when we see the percentage responses the majority of
respondents agree i.e. 39.14%. The responses split in to, 30.43% disagree, and 30.43% strongly
agree, and none of the respondent says neutral and strongly agrees. From this we can say that for
some the functions in the organization are integrated each other, but it is not enough. Therefore it
can be understood that the fact in the organization are integration each or he that majority
respondent are agree.

From the respondent point of view table 4.1 item 2 indicates, to facilitate integration with
internal functions, a number of critical communication linkage are used by the company, since
majority of the respondent 4.1. The remaining 77% shows, 15%strongly agree and 8% dis

36
agrees. None of the respondent ticks on neutral and strongly disagrees. this indicated is that
researcher concluded that to facilitate integration with other internal functions a number of
critical communication linkage are used by the company that majority respondents are agree

According to the above table 4.1 item 3 the respondent’s response shows majority of respondents
neutral. The remaining 36.95% of the respondent’s response shows 30.43% 15.21% 10.86%, and
6.52% of the respondent disagree, agree, disagree and strongly disagree on the company use
process integration across functional boundaries as opportunity to competitive success.
The opportunity to use process integration across functional boundaries is now considered a key
to competitive success[ CITATION suh05 \l 1033 ], so the firm shall use it as competition tool.
Therefore the researcher concluded the company use process integration across functional
boundaries as opportunity to competitive success that less the respondent strongly agree.

As it is shown by the above table 4.2, item 4, 50% of the respondents are non-opinion28.26% of
the respondents disagree, 10.86% of the respondents agree and 10.86% of the respondents
disagree on the organization performs cot trade-off analysis. Therefore the research concludes
the organization preforms cot tradeoff analysis that respondent’s majority non opinion.

CHAPTER FIVE

5.SUMMERY CONCLUSION AND RECOMMENDATION.

This chapter summarizes the discussion outlined in previous chapter i.e.findings conclusions
result from the findings, and the recommendation that would be help in improving the supply

37
chain performance based on the findings of the study and their implication are briefly discussed
the directions for future research are outline in this chapter.

5.1 Summery and conclusion

The major purpose of this research was to assess the impact of cross functional integration to the
supply chain performance. According to the discussion and analysis of data presents under
chapter four the following conclusions are made.

 Purchasing department is in a middle condition of collaboration with suppliers

 It has not as such enough the purchasing group works with operation department in
resolving quality issues in a manufacturing operation.
 There is middle collaboration with cross functional teams in the engagement of new
product or service.
 For some the department accomplished tasks based on customers order
 There is a moderate involvement of marketing personnel, in new product ideas of that
supply management.
 There is low performance of marketing department on sharing information in related
with the forecasted demand is low.
 Not enough integration among the functions in the organization are integrated each other.
 The company not use across functional boundaries as opportunity to competitive success.
 The company is performed cost trade-off analysis in medium.

5.2 Recommendation
Based on the findings and conclusions of the study the research gives the following
recommendation that help the firm to resolve. The finding related with problems there by
increasing by increase the positive contribution of cross functional integration to the supply
chain performance.

38
In order to increase firms as well as supply chain performance the firm should perform the
following suggested solutions.

 The purchasing department and other departments shall be exchanging relevant

information’s, and shall be integrated each other.
 Purchasing department shall collaboration with suppliers
 The purchasing group shall works with operation department in resolving quality issues
in a manufacturing operation.
 Cross functional teams shall involve in the engagement of new product or service.
 The operation department should undertake responsibilities to perform tasks based on
customers order.
 The company can use across functional boundaries as opportunity to competitive success.
 The company should perform cost trade-off analysis.

5.3 suggestions for future research

The study was limited to three departments of the organization and the importance to only supply
chain management performance but cross functional integration can be seen in terms of other
benefits as a result the research suggested to other research to conduct on the area.

Furthermore the statistical significance of relationship between the variables and the supply
chain performance should have to be further checked in the future research by making
adjustment sample size, sample technique and target population.

REFERENCE
altkear, r. v. (2005). supply chain managment: cases and consept. new delhi: hall of
india.
Ayers, J. b. (2000). hand book of supply chain management. st. Lucie press.
Frank Rowbotham, L. G. (2007). Operations Management in Context (Second edition
ed.). AMSTERDAM: elsevir.

39
Fred Sollish, C. a. (2005). The Purchasing and Supply Manager’s Guide to the C.P.M.
Exam. San Francisco: Neil Edde.
gray, j. l. (1984). organizational behavior: consept and application (3 ed.). columbus:
chairu e merrill.
haag, s. (2006). information system essentials. botson: MC Graw hill.
handfield, M. G. (2011). sourcing and supply chain management (5 ed.). Australia: south
weastern.
huo, b. (2012). the impact of supply chain integration on company performance: an
organizational capablitiy. supply chain management: an internatinal journal, 17, pp. 596-
610.
knod, e. (2001). organization managment: meeting customer demand (17 ed.). boston:
MC Graw hill.
Nair, N. (1985). purchasing and materials management. new delhi: vikas.
Quayle, M. (2000). Purchasing and Supply Chain Management: Strategies and Realities.
New York: IRM Press.
Robert M. Monczka, R. B. (2011). PURCHASING AND SUPPLY CHAIN
MANAGEMENT.
s. anil kumar, a. N. (2008). Production and Operations Management. New Delhi: NEW
AGE INTERNATIONAL (P) LIMITED.
stadtler, H. (2005). Supply chain management and advanced planning (3rd ed.). (a. e.
Hartmut Stadtler, Ed.) Berlin.
suhaiza zailani, a. p. (2005). supply chain integration and performance: US versus east
Asian companies. supply chain management: an international journal, 10, pp 379- 375.
Sunil Chopra, a. P. (2007). SUPPLY CHAIN MANAGEMENT. New Jersey : Upper
Saddle River,.
walters, d. (2003). logistics: an introduction to supply chain managment. new york:
palgrave.

40
 Appendix
DILLA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF LOGISTICS AND TRANSPORT MANAGEMENT

SURVEY QUESTIONNAIRES

Part One: Respondents Background Information

Dear respondents.

I really appreciate your genuine response for this questionnaire. This questionnaire is Designed
and given to you to collect data about your knowledge, attitude and beliefs on the research title
“the impact of cross functional integration to supply chain performance case of MOHA soft
drink factory in Hawassa branch” as partial fulfillment of the requirement of bachelor degree
(BA) in logistics and transport Management. My name is HabtsewEbrahim undergraduate
student at Dilla University, Here I promised that your response will be kept absolutely
confidential and used only for the consumptions of this paper. After carefully reading each
question, indicate your response by ticking (√) the box which is relevant for you. Thank You.
Part One: Demographic profiles of respondents

1. What is your position or status in your organization?

General Managers Department Manager

Senior employees

2. Year of service in the organization

1-3 3-5 5-10 10 and above

3. What is your level of education?

12 complete Diploma

Degree Master and above

41
Part Two: Main Questions

A) Information technology and paper work

1. Does your company reduce paper work by implementing information technology?

Yes No

II, Integrated supply chain

2, Does your organization is highly integrated with their partners (suppliers, distributer and
customers)?

Yes No I don't know

3. If your answer for question number 2 is yes what type of technology is used?

RFID EDI Extranet Intra net

B) purchasing related question

1) We share information related with the vendors to other departments in the organization.
Strongly agree Agree Disagree Strongly disagree

2 Does purchasing consolidate orders those come from different department

strongly agree agree disagree strongly disagree

3 We purchase products based on the requirement of specification

strongly agree agree disagree strongly disagree

4 Our purchasing departments have been working in collaboration with other department?

Strongly agree agree disagree strongly disagree

5 purchasing working collaboratively with suppliers?

Strongly agree agree disagree strongly disagree

6 purchasing set specification with concerned bodies?

Strongly agree agree disagree strongly disagree

42
 7 purchasing group work with operation department resolving quality issues in
manufacturing operation?

Strongly agree agree disagree strongly disagree

. 8 purchasing work collaboratively with many of these groups on cross functional team.

Strongly agree agree disagree strongly disagree

c) Operation related question

1. Our operation department share information with other department?

Strongly agree agree disagree strongly disagree

2. Our operation department performs activity according to customer order?

Strongly agree agree disagree strongly disagree

3. Our operation manager have undertaken responsibility for involved in the design of delivery
process strongly agree agree disagree strongly disagree.

4 do the operation group closely engaged with supply chain practices?

Strongly agree agree disagree strongly disagree

D Marketing related question .

1 We consolidate orders that come from different customers.
Strongly agree agree disagree strongly disagree
2 We conduct market research in order to get quantitative facts about particular markets

and market segment Strongly agree agree disagree strongly

disagree
D) Question related with integration
1 our cross functional departments are integrate each other within organization.
Strongly agree agree disagree strongly disagree
2 Integration facilitates other internal function.
Strongly agree agree disagree strongly disagree

3 We use process integration across functional boundaries as opportunity to competitive

success.

43
 Strongly agree agree disagree strongly disagree

4 Our organization performs cost trade-off analysis.

Strongly agree agree disagree strongly disagree

44