Chapter 1
Introduction
The main goal of this research is to asses how an effective supply chain management helps an organization like China Foods Holdings Ltd to become successful. The study shall be divided into five chapters in order to provide clarity and coherence on the discussion of the topic. The first part of the study will be discussing the problem uncovered by the researcher and provide ample background on the topic. The chapter shall constitute an introduction to the whole study, the hypothesis, and the statement of the problem in order to present the basis of the study. Moreover, the chapter shall also have a discussion on the scope of its study as well as the significance of the study to society in general and specific effects on individuals.
The second chapter shall be discussing the relevance of the study in the existing literature. It shall provide studies on supply chain management, the manufacturing industry and others. After the presentation of the existing related literature, the researcher shall provide a synthesis of the whole chapter in relation to the study.
The third part of the study shall be discussing the methods and procedures used in the study. The chapter shall comprise of the presentation of the utilized techniques for data collection and research methodology. Similarly, it shall also contain a discussion on the used techniques in data analysis as well as the tools used to acquire the said data.
The fourth chapter shall be an analysis on the tabulated data. After the said tabulation, the data are statistically treated in order to uncover the relationship of the variable involved in the study. With the said data, the chapter seeks to address the statement of the problem noted in the first chapter.
The last chapter shall comprise of three sections, the summary of the findings, the conclusions of the study, and the recommendations. With the three portions, the chapter shall be able to address the verification of the hypothesis stated in the initial chapters of the study.
Background of the Topic
Every business is subject to factors that affect the firm’s function as a whole. These factors are the ones attributed for the success or even the failure of a business. In the light of this, there are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the market place. The marketing concept has been defined as ‘the key to achieving organizational goals’ and the marketing concept rests on ‘market focus, customer orientation, coordinated marketing and profitability’. In a profit making business like supermarket and food industries the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit ( 2000).
In this manner, the management of a certain organization should be guided by strategic management principle to be able to attain its business goal. The management should have the ability to initiate different management technique in order to continuously create business value. One of the important things to consider is the ability to manipulate supply chain from the external environment of the business. The supply chain is traditionally characterized as a stable system in which components and goods move smoothly from supplier to assembly customers. In addition, supply chain refers to the suppliers, distributors, wholesalers and retailers that involved in manufacturing a product and getting it to consumers ( 1995).
Supply chain is also defined as a network of independent or semi-independent corporation bodies collectively accountable for procurement, developing/manufacturing and distribution scheme connected with one or more groups of related products ( 1996, 1995). On the other hand, there is another definition for supply chain that emerges, this definition states that supply chain is regarded as a network of services and distribution options that executes the tasks of procurement of the raw materials, conversion of these raw materials into transitional and finished products and last is the distribution of the output to retailers and customers ( 1995).
Effective supply chain is crucial to the success of a business. One recent study shows that poor coordination among supply chain partners was wasting billion annually which really make an industry fails (1997). This concept can be illustrated by considering the traditional view of a supply chain as similar to a pipe that carries the service of products being provided. If the pipe becomes clogged, the entire system must be flushed to solve the main cause of the problem. Similarly, when a supply chain does not work properly, a business must flush the channel because it cannot pinpoint where the problem is. This causes companies to lose profits and sales.
In order to solve this problems the management of a certain industry must imposed a strategic way of controlling the supply chain. This enters the concept of the supply chain management (2001, 2004). It can be noted that businesses that have strategic supply chain that fits can perform better together because of the potential for skills transfer in procuring materials, greater bargaining power in negotiating in common suppliers, the benefits of added collaboration with common supply chain partners, and or added leverage with shippers in securing volume discounts on incoming parts and components ( 2002).
Rationale of the Study
It was noted that there are a number of literatures that discussed the importance of implementing supply chain management in an organization or industry. However, there had been limited resources focusing on how this management approach enables a manufacturing industry, especially food manufacturing industry become more competitive and successful. Considering the existence of many manufacturing industries, in the world and Hong Kong in particular, it is important that several studies stress this context of assessing the role of the implementation of supply chain management in the success of a manufacturing industry like China Foods Holdings Ltd. Aside from determining the advantages of using supply chain management, it is also important that the success factors that affect its development should be identified.
Through this, the management of the company will understand the value of managing strategically and effectively the supply chain. This study is then conducted to benefit not only the China Foods Holdings Limited but more especially other manufacturing industries in Hong Kong and the international business arena which are experiencing problems in terms of having an effective supply chain management. Also, if such effectiveness is supported this study will be significant in developing underachieving manufacturing companies and organizations as productive and effective entities in the future.
Objectives of the Study
China Foods Holdings Ltd has been regarded as one of the most successful industry in Hong Kong which enables the company to expand in the international level. Such success is based upon the ability of the company to manage effectively its supply chain. Thus, the main objective of this paper is to assess the success factors that enable the company to effectively manage its supply chain and sustain it strategically. Specifically, the study aims on achieving the following objectives:
1. Identify the factors that affect excellent supply chain management system within the company.
2. To know how an effective management system enables the company to perform well both in the local and international market.
3. Increase the awareness and provide a better understanding of the issues and problems concerning most multinational manufacturing industries.
Research Questions
The goal of this study is to assess or investigate how China Foods Holdings Limited became successful through the implementation of an effective and sustainable supply chain management. In particular, the research will attempt to answer the following queries:
1. What are the significant success factors of China Foods Holdings Ltd in maintaining its excellent supply chain management?
2. How supply chain management system enhances the competitiveness of China Foods Holdings for both domestic and international market?
3. What specific alternatives or measures can be implemented to help improve the performance of the supply chains of underachieving manufacturing companies and organizations?
Hypothesis
This study will work on the following hypotheses:
“All participants will be utilizing the correct procedures as outlined in the guidelines for the specific methodology employed,” and
“All participants will answer questions honestly to the best of their ability.”
Chapter 2
Review of Related Literature
Supply Chain Management
Supply chain management is the coordination of the different relationships existing across the supply chain. It involves both intra-business relationships and inter-business relationships. The concept also refers to a series of interconnected relationships and processes related to the entire supply chain. (1997) Supply chain management is defined by the Global Supply Chain Forum (GSCF) as “the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders” ( 2000).
Understanding supply chain management requires the determination of its different elements. The first element is supply chain structure or the number and levels of relationships in the supply chain (1997). The management team of the business as to determine the relationships and processes that requires priority management because the company cannot manage the details of every aspect of the supply chain (1993). The different relationships occurring within the supply chain are classified according to management priorities. The company manages every relationship and processes in the supply chain but in varying degrees. (1996) In doing this, the company has to determine the supply chain members and balancing the allocation of resources to relationships with the importance of the relationship in the supply chain. The company also has to consider the structural scope of the network by determining the horizontal and vertical networks and the position of the company between the continuums of the supply chain. Another consideration is the different process links occurring in the supply chain. (1997) These factors are valuable in the strategic decisions of the company pertaining to the supply chain.
The second element is the supply chain business processes (1998) that reflects a shift from the management of individual tasks or work to integrating the responsibilities of different areas of work throughout the supply chain. The basic processes of procurement of raw materials, storing and allocating resources according to the production schedule and delivering the orders of customers are integrated trough supply chain management. In a more complex supply chain, there are several management considerations. First is customer relationship management that involves the identification of key customers crucial to the business and the specific demands of customers as well as the establishment of a system of collecting and assessing customer feedback to the products and services received at the end of the supply chain. Second is the customer service management process of offering assistance to customers in applying for a product or service and choosing from a variety of product and service options that are appropriate to the needs of the customer or preferred by the customer. Third is demand management that refers to the process of balancing and adjusting the demands of customers to the supply capabilities of the company. One way of doing this is by anticipating when customers are likely to make orders by constantly conducting market studies. Fourth is order fulfillment done by improving order-fill rates through the pre-manufacture of products in anticipation of orders or by producing upon the order of customers. The key management process to be implemented is the smooth integration of the manufacturing, distribution as well as the transportation plan and schedule to minimize cost with optimal customer satisfaction.
Fifth is manufacturing flow management that involves manufacturing products demanded by customers instead of relying on historical forecasts to dictate the manufacture of products to be stored in the warehouse that may not be purchased as expected. The company should employ a strategy that makes production flexible to changes in the demands of the market. Sixth is the procurement process that involves the development of a strategic plan with suppliers in support of the management of the manufacturing flow process and the development and research of new products. The company should categorize suppliers according to their importance to the organization and establish supplier relations based on this. Seventh is product development that includes commercialization that works by integrating customer needs and product development for the company to manufacture new products addressing the changing needs of customers within a reasonable time to deliver profit to the business.
The company should know the communicated and excommunicated needs of the market, decide on suppliers who can provide new raw materials and develop or adopt technological systems of manufacturing new products within shorter cycles. Eighth is the returns process that involves the consideration of returns to determine improvement, opportunities as well as breakthrough projects in productivity. This is an important aspect of achieving competitive advantage as a component of internal supply chain management. ( 1994)
In managing the different aspects of the supply chain, the nature of the process links between the different components differ because of the different characteristics and requirements in developing a relationship between these processes. This is because the movers of integration are contextual differing across the different process links. The integration of the process of procurement and warehouse inventory differs from the integration of transportation and warehouse retrieval. The difference is explained by the fact that there are process links considered as more critical than other links. Because of this, the allocation of resources in the different process links also differs. (1995).
Important Elements for Supply Chain Management
According to authors such as (1998), (1999) and (2000), the significant level of supply chain management programs used across several business sectors have been very well documented in literature. Prior research on supply chain management has progressed along several paths. Some researches have highlighted the partner characteristics as an explanation for supply chain management behavior and outcomes (1999; 2000;2000). In this specific perspective, supply chain management projects are undertaken by firms in order to respond to the demand of the marketplace and the intense global competition. For example, (2000) implied that the intense global market of the past decade has driven many organizations to create cooperative, mutually beneficial partnerships with suppliers, distributors, retailers and other firms within the supply chain. It is said that the objectives of those partnerships is to provide lower cost and higher quality products and services with greater design flexibility (2002).
Other researches, on the other hand, have highlighted on supply chain performance measurement (1998; 1998; 1999). For instance, (1999) suggested that the measurements for supply chain management are customer satisfaction, return on trading assets and the flexibility of supply chain management activities. In a similar vein, (1999) recognised resource measures, output measure and flexibility measures to be the three kinds of performance measures as the required components in any supply chain performance management system. Conversely though, (2000) recommended that one of the keys to a successful supply chain management is the creation of and agile supply chain on a worldwide level. According to , agility implies rapid strategic and operational adaptation to large-scale, unpredictable changes in the business environment centering on destroying the bafflers to quick response.
Other academics have recognised various supply change management issues, practices and various strategies that companies undertake in establishing and effectively implementing their supply chain (2000; 2001; 2001;2001). (2000) state that particular enablers should be in place in order to supply chain to function efficiently. These enablers are said to apply to all parties involved and include a similar interest, openness about their practices and processes, transparency in what was expected of them and others.
Other studies have highlighted manufacturers attempt in to incorporate processes and form alliances with suppliers in order for a better and efficient management of the purchasing and supply function (1997; 2000; 2001). (2001) highlighted the drivers and hindrances that affect how supply chains flow and perform. According to them, as the factors which drive a supply chain are essential, the hindrances necessitate more attention. (2001) also suggested that supplier relations is a major issue in global supply chain management and accordingly, the key phrase in supplier relations is a partnership alliance, meaning, closely working together for the mutual benefits of all parties. In addition, (2000) noted four elements as the requirements in the effectiveness in any supply chain namely planning, sourcing making and delivering. On a different perspective though, (2001) suggested that during this era of information technology, the internet offers the opportunity for demand data and capacity data to be transparent and visible to all companies within a manufacturing supply chain; hence, companies are in the position to anticipate demand fluctuations and respond accordingly.
Current Models of Supply Chain Management
Supply chain management (SCM) is a familiar concept in manufacturing, which are now recognizing the value of successfully implementing it. Although certain concepts should be applied while successfully managing a supply chain, companies coordinate their individual supply chains in many different ways. “Thus, in application, supply chain management practices exist along a continuum, from more traditional approaches, where the organization focuses only on the direct affects upon itself, to the more expansive, supply chain, channel-wide perspective” (1997). Appendix 2 compares the traditional approach to channel management to the supply chain approach (1997).
Now, however, companies are implementing a new type of supply chain management, where the firm views the supply channel as a whole system instead of concentrating of each part of the process. The company focuses on all efforts, from the procurement of raw materials to the distribution of the finished product, and how each effort relates to the others (1998). This allows more communication to exist within the pipe and problems to be more easily identified. In Supply Chain Management, there are different tools that can be used.
These tools include making and keeping relationships, implementing new technology in the supply channel, the use of forecasting to increase supply chain effectiveness, outsourcing to increase efficiency, and cost management as a strategic weapon. Relationships: The most important contributor to success in the service industry is building strong relationships with customers. Companies can benefit in numerous ways from loyal customers, including increased revenues, predictable sales and profits, low customer turnover, generation of new business from word of mouth, and costs that can be amortized over a longer period (1998). However, for the relationship to be successful and long term, the customer must also benefit.
There are traditional and modern views of supply chain management. Similarly, service companies can choose between the bow tie (traditional) and diamond (modern) approaches when building relationships with each other (1995). The bow tie idea provides for interaction only between the buyer of one business and the seller of another, while the diamond approach allows all functions to communicate (1997). These processes are represented in Figure 1 (1997).
The traditional process requires a kind of filter, in the form of an account manager (1997). However, this does not maximize communication between the firms, which may decrease relationships and lower efficiency. In the diamond approach, advantageous relationships are more apt to occur and greater communication results. Reasons for forming relationships within a service industry include necessity, asymmetry, reciprocity, efficiency, stability, and legitimacy (1997). On the other hand, the next tool is technology: Changes in technology have extreme effects on how a firm manages its supply chain. Specifically, electronic commerce (EC) is extending value within the SCM process. Businesses use EC to integrate their internal functions with the applications of shippers, suppliers, and customers (1998). Electronic commerce allows shipment status messages to be received instantaneously and provides vendor-managed and continuous replenishment inventory programs (1998). This new technology decreases inventory risks and maximizes the sale of products with short life cycles by reducing the time it takes to reach the broadest possible market (1998). E-Commerce also promotes competitive advantages by having a more accessible order-entry process, decreased paper handling, and less re-keying of information (1998).
Although there are obvious benefits for companies using EC in their supply chain, barriers to this technology also exist. The problem that most often arises is a security breach within the system (1998). Another difficulty is that many organizations lack the resources to integrate EC with their supply chain, including skilled employees (1998). Some firms choose to seek help from consultants and advisors before making mistakes with their technology procurement endeavor (1998). This makes the switch to electronic commerce quite a bit easier.
Next is forecasting: A company can effectively use customer data to synchronize its supply chain operations with consumer needs. This can be done through customer supplied forecasts, which many people deem a necessary part of managing a supply chain. Robert who is vice president of business management in the Duracell North Atlantic Group, states that, “the latest emphasis of forecasting has been in the areas of scheduling and logistics, renamed ‘Supply Chain Management’” (1998). Another article says, “Forecast horizons can impact a host of functional areas in the supply chain” (1998).
An accurate sales forecast can have numerous advantageous results in the process of SCM. Effective forecasts provide vendors with more accurate data, improve efficiencies in product distribution, reduce supply chain inventories, and enhance customer service (1999). In general, forecasting helps businesses serve their customers more efficiently, without the constant fear of excess inventory. However, if SCM uses an erroneous forecast, the results will be felt throughout the entire system.
The fourth is the concept of outsourcing: Manufacturing and service industries are grappling with the decision of whether to make or buy the parts used to manufacture their products. To answer this question, a company must weigh the cost factors. Experts believe that companies are heading toward greater specialization and outsourcing for the materials needed to make their product (1999). Product complexity and. commercial uncertainty is linked to how much technology is involved and the degree of risk for the business (1999). In the service industry satisfying the customer is the highest priority. Businesses must link the decision to make or buy based on which option provides optimal customer satisfaction and the most cost-effective methodology. This is why procurement is being recognized as an important tool for improving a service corporation’s bottom line (1998). Generally, the end product and ultimately the customer will benefit from outsourcing in the service industry (2000). This importance is being pushed on the outsourcer to ensure that materials will arrive on time and in good condition. Service firms must consider quality, reliability, transportation costs, the costs of acquiring and managing, and the value of the final product to the customer (1998).
And lastly, the company must be able to determine the concept of cost Management: Cost management is an important strategic weapon for a business. External purchases of products and services account for more than 50 percent of total costs ( 1999). Without sacrificing quality, services must create a reliable, cost effective supply chain to be competitive in the marketplace. Technology has increased the reliability of cost management systems through the use of computer packages designed for specific companies (1998).
A mathematical model has been created to weigh the different costs of a supply chain. The objective of this model is to choose the right combination of suppliers, with the particular criteria important for the purchasing decision. The model’s benefits include the ability to compare the cost savings from one year to the next. Results can even be used as a negotiation tool with a firm’s suppliers (1998). An effective way to save money is for a business to increase efficiency through technology and improved accounting systems.
Alternative Measures in Ensuring Effective SCM
The advent of the twenty-first century has been characterized by constant change and not one organization can escape the effects of operating in a turbulent, dynamic and an ever-changing environment. The forces of change are so great that the very success and survival of any organization is dependent on how well they respond to change and whether they can actually stay ahead of change (2002). In addition, change from forces such as globalization, persistent technological innovations, exceptional competition, political upheaval and the opening of new markets puts forth constant pressure on firms of various sizes and types. Consequently, these firms are starting to shift their gears in responding to evolving advancements of the world (2002).
Indeed, change has driven firms to rethink and review their current strategies. Companies have now begun to think globally in order to remain competitive in the business field. In addition, companies have now also operated internationally in response to the changes occurring in the environment. Such strategies in response to the demands of the competitive business field also include the shift of domestic supply chain management into global supply chain management.
Managing the supply chain for global competitiveness must take a close examination at the core functions of global supply chain management which includes product design, planning and forecasting, sourcing, outsourcing, manufacturing logistics, distribution and fulfillment. In addition, practitioners must also examine and embrace the latest developments in technology and process design in order to create a data-rich and integrated supply chain.
The rising of globalization, as well as offshore sourcing has led multinational companies to consider global supply chain management as an important issue in their businesses. Similar to the traditional supply chain management, the fundamental factors behind the trend are lessening the costs of procurement and reducing the risks associated to purchasing activities. The major difference between the traditional supply management and the global supply chain management is that global supply chain management engages a company’s international or worldwide interests and suppliers rather than simply a local or national orientation.
Product Design
According to (1993), a good design has high reliability, long useful life, low maintenance costs, low costs and high quality. As customers are the ultimate judges of a product design, the design should be able to satisfy the requirements of the customers, as well as fulfill its purpose. The product should be able to work under the worst of conditions, easy to install, operate and maintain. Moreover, novelty, ergonometric tractability, quality, cost, pleasant impression and other important factors can make the product design efficient.
A good product design will be able to project a pleasant image for the corporation, provide excellent brand quality and maximize customer satisfaction. (1991) says that design may soon be the only element that will differentiate one product from another (1993). Even though the design activity does not receive as much attention as it should from the finance-oriented top management as it only consumes a very small fraction in the development budget, design actually locks in more than 60 to 80 percent of total product costs. It must also be noted that product design influences and affects materials, processing and assembly strategies, distribution methods and the overall competitiveness of the product. To make it brief, product design is one strategic activity ( 1993).
Technology Management
The term technology management is such a broad concept. To many, technology is synonymous with “high” technology or leading edge consumer or industrial products; and technology management is mainly product development management ( 1994). However, management technology has been defined as the linkages between “engineering, science and management capabilities to shape and accomplish the strategic and operational objectives of an organization” (1994).
On the other hand, as for technology, it plays a very important role in the success of the global supply chain management as it provides to reach its full potential. One of the greatest benefits that technology has provided to the supply chain concept is the ability for companies to collaborate. However, this can only be achieved through an effective technology management. The said “collaborations” are designed such that all parties will have mutual benefits. For example, a supplier of consumer goods may be associated to one of its distributors via the internet so that as the supply gets too low, an order for more of those goods can be placed automatically. This way, the distributor does not have to worry about running out of a product or disappointing customers. In addition, the supplier does not have to worry too about sustaining a very large inventory in expectation of demand. Collaboration done this way makes better use of existing resources and paves way for a greater profit margin on all sides of the equation.
As the benefits of supply chain management are evident in several situations, using technology to attain those benefits does have two main shortcomings: one is resistance from vendors and the other is resistance from employees. Suppliers of goods are often doubtful to this new type of collaboration as there are high initial costs associated in setting up their own end of supply chain management system, in addition to the lack of trusting relationships with their buyers. To overcome this hindrance, there must be strong relationships facilitated by the firm’s technology management. also, the seller needs to be able to see the profit potential on their end of the arrangement. Similarly, many employees have learned to develop a hate-hate relationship with new innovations as they feel that their work is more tedious or more complex. Furthermore, software mistakes, unavoidable at the beginnings of the implementation, may cause other employees to lose faith on the system. The management technology must be able to build a trusting relationship as well between the employees and technology and the company
Fusing Product Design and Technology
In product designing, as resources are always at a premium, engineers necessitate tools that will be able to provide visual accuracy and higher levels of performance. Their computing systems must be powerful and sophisticated as to be able to support multiple simultaneous processes and fluid manipulation of great and complexly detailed datasets. Companies must be able to recognize that the greatest productivity gains will be those that seek to fully take advantage of state-of-the-art technological capabilities and the developed extent of individual responsibility that new technologies may be able to provide.
Before, there was the “traditional product design” (Please see figure 1) which involves a largely sequential process. The traditional product design has been the primary process in manufacturing industries until the early 1990s wherein each department does its work and passes off the product to the next department for the next step in the process.
Figure 1: Traditional Product Design
Source: (2000)
The next wave of product designing has been called “concurrent product design” (Please see Figure 2 for reference) because upon designing, stylists, designers and engineers work concurrently and information flows between them; nevertheless, their respective roles still remain distinct. In this specific product design, departments work closely together, yet each process is significantly discrete. Concurrent design which was practiced widely in the 1990s up to this day produces quicker development cycles compare to the traditional product design.
Figure 2: Concurrent Product Design
Source: (2000)
In the new millennium, top companies still continue to drive for faster time to market and further improvements in their processes; hence, it is critical for these companies to influence their key engineering talent as effectively as possible. Today, new combinations of hardware and software have made it possible for design professionals to execute more than one task on desktop workstations. This combination of powerful and increasingly realistic computer graphics systems along with dramatic increases in computer system speed have changed the extent of how professionals can use computers to speed up the design processes. According to (2000), the consequential convergence of manufacturing workflow, also known as the “integrated product design” (Please see figure 3) is said to be the next logical step in manufacturing design practices.
Figure 3: Integrated Product Design
Source: (2000)
In integrated product design, roles and responsibilities of design professionals are rewritten in order to gain maximum productivity from the firm’s key engineering talent. Here, there is technical and organizational support allowing individuals to have a broader ownership of the product while seeking out specialists within the company to facilitate the completion of the process; in example, a designer working on a personal communication device can do the first usability simulations and make iteration to the design before calling the engineer for final analysis evaluation.
Chapter 3
METHODOLOGY
This chapter discusses the research methods available for the study and what is applicable for it to use. Likewise, the chapter presents how the research was implemented and how it came up with pertinent findings. Moreover, this chapter also presents the various procedures and strategies in identifying the sources for the needed information to know how the China Foods Holdings Ltd. has become successful in using a strategic supply chain management system. It specifies the research design that was followed, the process of data gathering and the data analysis method that would be used.
Research Design
This study uses the descriptive approach. This descriptive type of research will utilize observations in the study. To illustrate the descriptive type of research, (1994) will guide the researcher when he stated: “Descriptive method of research is to gather information about the present existing condition. The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena.”
The research described in this document is based on qualitative and quantitative method. The qualitative method permits a flexible and iterative approach, while the quantitative research method permits specification of dependent and independent variables and allows for longitudinal measures of subsequent performance of the research subject. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan.
The value of qualitative research can best be understood by examining its characteristics. One of the primary advantages of qualitative research is that it is more open to the adjusting and refining of research ideas as an inquiry proceeds. Also, the researcher does not attempt to manipulate the research setting, as in an experimental study, but rather seeks to understand naturally occurring phenomena in their naturally occurring states. Inductive reasoning, as opposed to deductive reasoning, is common in qualitative research, along with content or holistic analysis in place of statistical analysis (1995).
On the other hand, quantitative method is compatible with the study because it allows the research problem to be conducted in a very specific and set terms (1998). Besides, quantitative research plainly and distinctively specifies both the independent and the dependent variables under investigation.
Respondents of the Study
The main purpose of this case study is to determine the critical success factors used by China Foods Holdings Ltd upon the used of supply chain management system. Hence, the respondents of this study include 30 managers of the company. The managers are chosen because the respondents find them more reliable for this study. In addition, the managers of the company chosen are those who have been knowledgeable in the context of supply chain management. The true identity of the respondents is not revealed for confidential purposes.
After selecting the appropriate population, the researcher use inferential statistics in order to draw a concrete conclusion. Inferential statistics is used to be able to know a population’s attribution through a direct observation of the chosen population or simply the sample. This is because it is easier to observe a portion or a part than observe the whole population. However using a sample has also its own disadvantages; hence, there is a need to choose the most suitable sample from any population.
Data Collection and Analysis
The study use questionnaires and interviews to gather pertinent data. Moreover, the researcher also uses previous studies related to supply chain management and compares it to its existing data in order to provide conclusions and competent recommendations. A self-administered structured questionnaire is employed by the researcher so as to save time and effort in the organization of the answers that will be gained. In the interview, the researcher hopes that those questions that are not tackled by the questionnaires will be gathered from using the interview. The straightforward approach of the interview guarantees that there would be a response generated by the researcher with regards to the questions asked.
In this research the utilization of secondary and primary data were used by the researcher. The secondary sources of data are collected from published articles from business journals, theses and related studies on supply chain management and critical success factors. The primary source of data comes from a questionnaire and interviews conducted by the researcher. The primary data frequently gives the detailed definitions of terms and statistical units used in the survey. These are usually broken down into finer classifications.
Herein, the researcher constructed a questionnaire and administered them to the respondents, the mechanics of the telecommunications company. The respondents were requested to answer the inquiries in the survey-questionnaire, each grading the statements using the Likert scale. The equivalent weights for the answers will be:
Range Interpretation
0.00 – 1.49 Strongly Agree
1.50 – 2.49 Agree
2.50 – 3.49 Undecided
3.50 – 4.00 Disagree
4.50 – 5.00 Strongly Disagree
In the Likert technique, a set of attitude statements are presented, where subjects of a study are asked to express agreement or disagreement using a five-point scale. The degree of agreement is given a numerical value ranging from one to five, thus a total numerical value can be calculated from all the responses (2004).
Validation of the Instrument
For validation purposes, the researcher pre-tested a sample of the set survey questionnaires. This was done by conducting an initial survey to at least five respondents from the chosen respondents of the companies. After the respondents answered, the researchers then asked them to cite the parts of the questionnaire that needs improvement. The researcher even asked for suggestions and corrections from the respondents to ensure that the survey-questionnaire is effective. Automatically, these five respondents were not included as respondents for the study.
Administration of the Instrument
The researcher excluded the five respondents who initially used for the validation of the instrument. The researcher also tallies, score and tabulate all the responses in the provided interview questions. Moreover, the interview used is a structured interview. It is consisted of a list of specific questions and the interviewer does not deviate from the list or inject any extra remarks into the interview process. The interviewer may encourage the interviewee to clarify vague statements or to further elaborate on brief comments. Otherwise, the interviewer attempts to be objective and tries not to influence the interviewer’s statements. The interviewer does not share his/her own beliefs and opinions. The structured interview is mostly a “question and answer” session.
Statistical Treatment of Data
After all the data from the researcher-made questionnaire were collected, the following statistical formulae were used:
1. Percentage – to determine the magnitude of the responses to the questionnaire.
n
% = ——– x 100 ; n – number of responses
N N – total number of respondents
2. Weighted Mean
f1x1 + f2x2 + f3x3 + f4x4 + f5x5
x= ——————————————— ;
xt
where: f – weight given to each response
x – number of responses
xt – total number of responses
Chapter 4
PRESENTATION, INTERPRETATION AND ANALYSIS OF DATA
This part of the study shall be discussing the findings based on the self-administered questionnaire conducted by the researcher. The primary objective of this study is to determine the critical success factors used by China Foods Holding Ltd in line with its supply chain management approach. The study intends to investigate the concept of supply chain management and how it can be used as an effective tool for enhancing the competitiveness of an organisation. Prior to the initiation of the interview process, the purpose, the significance and objectives of the study were relayed to the participants. They were also assured that all the information they had provided are solely for the purpose of the study while their identities would remain confidential.
For this study, primary research and secondary research are used. Primary research was conducted using anonymous questionnaires that were sent to 30 managers of China Foods Holdings Ltd. The questionnaires have been to collect quantitative data. The conduct of this study entails the level and position of the respondents. It is assumed that the attributes of the respondents influence on their behaviour and answers on the survey questions.
The researcher also conducted closed questions. The questionnaires were used to collect quantitative data and the interviews were used to provide qualitative insights into the data collected. This study was divided into two parts. The first part shall provide the profile of the respondents, the personal description which includes the age, gender, length of service to the company.
The second part will be the discussion of the respondents’ perception of the respondents regarding supply chain management, the critical success factors, the advantages of SCM and other alternative system to sustain the competitiveness and success of China Foods Holdings Ltd.
Part A: Demographic Profile
This part will be the discussion of the demographic profile of 30 managers who have been chosen in this study. The description of the respondents includes their age, gender and length of service in the company. It is noted that all the respondents are managers of China Holdings Ltd who are aware of the supply chain management system used in the company.
Age of the Respondents
Table 1
Age in Years
Frequency
Percentage
Below 20
0
0%
20-25
0
0%
26-30
2
6.67%
31-35
9
30%
36-40
10
33.33%
41-above
9
30%
Total
30
100%
Figure 1
Table 1 and Figure 1 show the age range of the respondents. Ten (33.33%) of the respondents’ age ranges from 36-40 years old, showing that most of them were already an experienced person in the job. Respondents of ages between 231-35 and 41 years old and above over all compromised 30% of the total respondents. These also shows the percentage of the ages of the respondents compromised to the following distribution; ages between 36-30 (6.67%), 20-25 (0%), and ages below 20 (0%).
Gender of the Respondents
Table 2
Gender
Frequency
Percentage
Male
18
60%
Female
12
40%
Total
30
100%
Figure 2
The sample populations’ gender depicts an unequal distribution of the sexes. The above table and the figure shows the total respondents based on their gender. The survey results indicate that 18 (60%) of the respondents are male and 12 (40%) are female which indicates that men are more likely to have a position in organization.
Length of Service
Table 3
Number of Years
Frequency
Percentage
Less than a year
0
0%
1-3 years
0
0%
4-6 years
3
10%
7-9 years
5
16.67%
10-12 years
9
30%
13-15 years
7
23.33%
More that 15 years
6
20%
Total
30
100%
Figure 3
The table and the figure above illustrated the number of years of the respondents in their respective companies. It shows that most of the respondents are providing services in 10-12 years (30%) with their respective companies. This means that most of the managers are knowledgeable enough to answer these queries. Further, 7 (23%), 6 (20%), 5 (17%) and 3 (10%) out of the respondents handle managerial position for 13-15 years, 10-12 years and 7-9 years and 4-6 years respectively.
Part B Perception of Respondents
The proceeding sections will present the results in accordance to the Likert technique. It will be remembered that the respondents of the study were presented a set of attitude statements so they can express their agreement or disagreement with the use of a five-point scale, wherein 5 is equivalent to an answer that merits a strong disagreement and 1 as showing a strong agreement (see chapter 3). This will provide a greater understanding about the observations of the following respondents towards their working force and will provide a greater knowledge about supply chain management system.
A. Critical Success Factors
Table 4
Statements
1
2
3
4
5
Interpretation
1. The ability of the management to choose a unique and effective supply chain management system.
0
0
0
0
30
5.00
Strongly Agree
2. The information communication technology capabilities of the SCM system used within China Foods Holdings Ltd is one of the critical success factors of the company
0
0
0
10
20
4.67
Strongly
Agree
3. The online accessibility of the SCM system used within the company makes it applicable as a method for managing successfully the supply chain of the company.
0
0
0
5
25
4.83
Strongly Agree
4. The different methods of having external connection and links with the SCM approach of the company enables them to successfully handles supply chain activities and other logistics
0
0
2
11
17
4.50
Strongly Agree
5. The ability of the management to maximise effective communication is another critical success factors of the company
0
0
0
13
17
4.57
Strongly Agree
6. The next critical success factor is forecasting: A company can effectively use customer data to synchronize its supply chain operations with consumer needs
0
0
5
12
13
4.27
Agree
The table above shows that the dominant answers of the respondents to the statements that were given ranges from strongly agreed and agreed. The managers who have participated in this research strongly agreed that the ability of the management of to choose and implement a unique and effective supply chain management can be considered as the most critical success factors for the success of the company. The respondents strongly agreed that of the fundamental factors which make the supply chain management system implementation within China Foods Holdings Ltd successful is because of the information communication capabilities attached with it.
Further, the managers strongly agreed that the online accessibility, different methods of having external connections and links that was obtained upon using such Supply chain management system allows the company to successful manage its supply chain activities and channels effectively within and outside the organisation. The respondents also strongly agreed that the ability of the management to maximise effective communication can be considered as another essential factor for the success of the company. However, the respondents only agreed that forecasting should be considered as a success factor.
B. How supply chain management system enhances the competitiveness of China Foods Holdings for both domestic and international market?
Table 5
Statements
1
2
3
4
5
Interpretation
1. Supply chain management enhances China Foods Holdings’ competitiveness by letting people become more effective in handling supply chain activities in a particular situation.
0
0
0
5
25
4.83
Strongly Agree
2. Supply Chain Management enables an organisation to be more supplier-oriented and customer-oriented which helps the company gain good reputation for both customers and suppliers.
0
0
0
4
26
4.87
Strongly Agree
3. Supply Chain Management enables an organisation to share a common vision which may lead them to have a better competitive advantage.
0
0
0
2
28
4.93
Strongly Agree
4. Supply Chain Management helps an organisation to become more concentrated in enhancing supply chain activities and other logistics which may lead to an improved organisational performance.
0
0
0
4
26
4.86
Strongly Agree
5. Supply chain management helps the company to perform better because of the potentials for skill transfers in procuring materials.
0
0
0
5
25
4.83
Strongly Agree
6. SCM helps the company to achieve greater bargaining power in negotiating in common suppliers.
0
0
0
7
23
4.77
Strongly Agree
7. SCM enables China Foods Holdings Ltd to gain customer/supplier trust.
Table above shows the statements on how supply chain management enhances the performance of the company for it to become successful. Herein, the result implies that all the respondents strongly agreed that the supply chain management used by the company have been the key factor for the success of the company in its supply chain activities both for domestic and international approach. They strongly agreed that the supply chain management has provides many benefits for the company which makes China foods Holdings Ltd be considered as one of the most competitive manufacturing industry in Hong Kong and other parts of the world. The effective supply chain management also enables the company to gain competitive advantage among its competitors. Moreover, the participants believe that through the supply chain management approach used within the company, China Foods Holdings Ltd are able to gain trust among its suppliers and target markets.
C. Alternative Measures to Improve Supply Chain
Table 5
Statements
1
2
3
4
5
Interpretation
1. Having an effective process of production planning and the corresponding inventory control process.
0
0
0
5
25
4.83
Strongly Agree
2. Ensuring a proficient process of distribution and the underlying logistics process
0
0
0
4
26
4.87
Strongly Agree
3. Ability to measure the performance of the supply chain activities for maintenance and sustainability of the supply chain process within the organization.
0
0
0
2
28
4.93
Strongly Agree
4. Conducting Supply chain evaluation based on customer responsiveness.
0
0
0
4
26
4.86
Strongly Agree
5. Ensuring Customer/client/supplier satisfaction for every supply chain process involved in the company
0
0
0
5
25
4.83
Strongly Agree
6. Having a continuous coordination among important suppliers.
0
0
0
7
23
4.77
Strongly Agree
7. The enterprise network infrastructure must work together seamlessly since its effectiveness depends on the ability of users to access up to the minute information across the supply chain.
0
0
0
4
26
4.86
Strongly Agree
8. Organisations must capitalise on customers’ active participation in organisational activities so as to gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty
0
0
0
7
23
4.77
Strongly Agree
9. Investing in effective and innovative IT systems that would fit to the supply chain management approach of the organization
0
0
0
5
25
4.83
Strongly Agree
The table above shows the alternative solutions that can be suggested by the managers of the China Holdings Ltd to manufacturing companies which are facing problems in terms of managing effectively their supply chain. Supply chain covers the entire integrated process of acquiring raw materials, transforming the raw materials into final products and delivering these products to end customers. The highest level of supply chain involves two integrated processes: first are the process of production planning and the corresponding inventory control process; and second are the process of distribution and the underlying logistics process. (Martin 1994). Herein, the participants strongly believed that this process is a really helpful idea to manage supply chain effectively or successfully.
Production design involves the plan and management of the entire production process. The production process is a cyclical and continuous process but it generally starts with the acquisition of raw materials and other necessary resources followed by the scheduling or allocation of resources in the succeeding production cycles. After which the business develops a manufacturing design and set target outputs for every deadline in its manufacturing schedule. Inventory control process refers to the succeeding development of a plan and system of handling and controlling the flow of resources such as the codes for the different resources and a warehouse storage plan. This also includes a synchronized system of conducting inventories to determine the status of the supply of raw materials and final products and to prevent damage and wastage of raw materials and final products. (1998)
After these processes, a business firm has to develop a distribution and logistics process that involves a system of transporting final products from the warehouse to the distribution outlets and directly to customers. The considerations are inventory retrieval in the warehouse, arrangements for the transportation of products to the different channels of distribution and the delivery of the final products to end consumers. (1998)
These two processes interact in the operations of the business to develop the integrated supply chain of the business. The plan and management of the integrated supply chain determines the extent that the supply chain operates as a unit in attaining the target performance objectives. Determining the performance of a supply chain in goal achievement requires the establishment of a performance measure. The performance measure is used to determine the effectiveness of the current supply chain of the business or to compare alternative systems to find one that is appropriate to the needs of the business. Performance measures may also be used as basis for the design of a system, which means that a system of checks is incorporated into the system to ensure regular evaluation of the implementation of the system. Generally, there are two forms of performance measures, which are the qualitative and the quantitative measures.
Supply chain evaluation based on customer responsiveness involves the achievement of these goals: 1) fill rate maximization or increasing the number of customer orders met on time; 2) product lateness minimization or decreasing the period between the order and actual delivery; 3) customer response time minimization or decreasing the period between the customer order and receipt of product; 4) lead time minimization or decreasing the period between the beginning and end of the production process; and 5) function duplication minimization or eliminating the assignment of a single task to two or more business entity. ( 1994).
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