DSpace at VNU: Supply chain quality management practices and performance: An empirical study

Supply chain quality management practices and performance:An empirical study Jing Zeng&Chi Anh Phan&Yoshiki Matsui Received: 11 May 2012 / Revised: 8 November 2012 / Accepted: 18 Decembe

Supply chain quality management practices and performance:

An empirical study

Jing Zeng&Chi Anh Phan&Yoshiki Matsui

Received: 11 May 2012 / Revised: 8 November 2012 / Accepted: 18 December 2012 / Published online: 13 January 2013

# Springer Science+Business Media New York 2013

Abstract This study proposed a conceptual framework to

study the relationships among three dimensions of supply

chain quality management (SCQM)– in-house quality

man-agement practices (internal QM), interaction for quality with

suppliers on the upstream side of supply chain (upstream QM),

and interaction for quality with customers on the downstream

side of supply chain (downstream QM)– and their impact on

two types of quality performance (conformance quality, and

customer satisfaction) Survey data were collected from 238

plants in three industries across eight countries and structural

equation modeling was used to test this framework The results

indicate a dominant role of the internal QM in SCQM which

has a positive impact on the other SCQM dimensions and two

types of quality performance Downstream QM is found to

mediate the relationship between internal QM and customer

satisfaction, while there is a lack of direct impact of upstream

QM on either type of quality performance

Keywords Supply chain Quality management Quality

performance Empirical study

1 Introduction

As competition intensified and markets became global in the 1990s, supply chain management (SCM) began to take center stage as a means to respond rapidly, correctly, and profitably to market demands This is a holistic approach advocating the

“philosophy by which firms can operate inter-organizationally and merge both strategic initiatives and upstream and down-stream processes in order to achieve business excellence” (Robinson and Malhotra,2005, p.316) The concept of SCM has evolved from two separate paths:“purchasing and supply management, and transportation and logistics management” (Li et al.,2006, p.108), and quality management (QM) usually

is not considered as a significant dimension of SCM (Robinson and Malhotra,2005)

Since 1980s, QM has been widely adopted by many organizations as an approach to achieve competitive advan-tage However, research in QM has besen criticized for focusing too much on the internal view of quality (Foster,

2008) The adoption of the system approach implicit in SCM necessitates externalizing the view of quality improve-ment by focusing on customers and developing suppliers (Foster and Ogden,2008) Quality practices must advance even further “from traditional firm centric and product-based mindsets to an inter-organizational supply chain ori-entation” (Robinson and Malhotra,2005, p.315)

A merging of these two approaches can be seen within recent research as “Supply Chain Quality Management” (SCQM) (Kuei et al., 2001; Lin et al., 2005; Sila et al.,

2006) However, this merging is still far from complete and

“essential features that lead to achieving SCQM have not yet been fully explored” (Lin et al.,2005, p.356) The purpose

of this study is therefore to empirically examine the rela-tionship among critical factors for SCQM and their impact

on quality performance The practices of SCQM are pro-posed to be a multi-dimensional concept, including the

J Zeng ( *)

International Graduate School of Social Sciences,

Yokohama National University,

Yokohama, Japan

e-mail: zengzx1028@yahoo.co.jp

C A Phan

Department: Faculty of Business Administration,

University of Economics and Business - Vietnam

National University, Hanoi,

Hanoi, Vietnam

e-mail: anhpc@yahoo.com

Y Matsui

Faculty of Business Administration,

Yokohama National University,

Yokohama, Japan

e-mail: ymatsui@ynu.ac.jp

Oper Manag Res (2013) 6:19–31

DOI 10.1007/s12063-012-0074-x

upstream, internal and downstream QM from a supply chain

perspective In addition, two types of quality performance–

conformance quality, and customer satisfaction– are examined

A conceptual framework is developed in this study to postulate

causal linkages between these SCQM dimensions and quality

performance Data for this study were collected from 283 plants

in eight countries across three industries and the framework is

tested using structural equation modeling (SEM)

It is expected that addressing SCQM practices

simulta-neously from upstream, internal, and downstream aspects

will expand the understanding of the scope and the activities

in regards to SCQM and the interactions among the

dimen-sions of SCQM Further, the empirical evidence concerning

the impact of SCQM on quality performance would benefit

supply chain members by offering useful guidance for

inte-grating quality initiatives into the supply chain

The remainder of this paper is organized as follows In

the next section, a review of relevant literature on SCQM is

presented Based on the review of the literature, a research

model and related hypotheses are proposed in section three

Section four describes the research methodology Section

five presents the results of hypotheses testing carried out

The main findings and implications stemming from this

research are discussed in section six Section seven contains

limitations of this study and future research Finally, the

conclusions are summarized in the last section

2 Literature

The trend of integrating quality and supply chain

manage-ment has been suggested by several researchers Levy

(1998) refer to“total quality supply chain management” as

a paradigm shift in which supplier-customer relationships

and co-making quality products would emerge as the major

concern instead of the traditionally firm-centered concern

such as price, quality and delivery time Ross (1998) points

out the three general trends leading to an increased emphasis

on supply chain quality: expansion of quality initiatives,

deregulation in the transportation sector, and expansion of

logistics activities SCQM can be seen as“the latest stage in

the total quality movement”, and can be defined as “the

formal coordination and integration of business processes

involving all partner organizations in the supply channel to

measure, analyze and continually improve products, services,

and processes in order to create value and achieve satisfaction

of intermediate and final customers in the market place”

(Ross,1998) Kuei et al (2002) argue that SCQM should be

distinguished from supply chain technology management

The former emphasizes the customer-driven culture, which

is the social base to facilitate the supply chain’s workflow,

while the latter addresses the development of the technical

base to facilitate the information sharing SCQM is more and

more recognized as a significant dimension of the supply chain With a comprehensive literature review, Robinson and Malhotra (2005) point out that SCQM has received scant research attention SCQM is an important emerging field that needs to be further studied (Sila et al.,2006; Foster,2008) Much of the current research on SCQM focuses on only the upstream side of the supply chain Forker et al (1997) demonstrate that the proper implementation and coordina-tion of quality management activities in the upstream side of the supply chain improve supplier quality performance Their work is extended by Park et al (2001), including the supplier’s overall rating as a performance measure Their findings suggest that supplier can obtain a higher rating by its buyer through emphasis on process management and employee satisfaction Trent and Monczka (1999) propose

a hierarchy of QM activities which can support world-class supplier quality performance Shin et al (2000) conclude that an improvement in supply management orientation has impact on both suppliers’ and buyers’ performance, partic-ular in terms of delivery- and quality-related performance Fynes et al (2005) found a positive impact of supply chain relationship quality on quality performance Lai et al (2005) suggest that supplier firms regard a stable relationship as being positively linked to supplier commitment to quality Tracey and Tan (2001) state that customer satisfaction can

be improved through supplier involvement and selecting suppliers based on product quality, delivery reliability, and product performance

Some studies consider quality process integration both with suppliers on the upstream side and with customers on the downstream side simultaneously, however, the internal quality activities and their relationships with the upstream and down-stream quality management have not been addressed Forza (1996) investigates how interactions with suppliers and cus-tomers for quality and flow are related to quality and time performance Salvador et al (2001) demonstrate that by inter-acting with suppliers and with customers regarding materials flow and quality, a firm can obtain better time-related opera-tional performance in terms of speed and delivery punctuality Romano and Vinelli (2001), in their case study, examine the two different supply chains operated by a textile and apparel manufacturer– one is traditionally managed without formal integration, whereas the other is more coordinated with sup-pliers and customers Their findings indicate that the

integrat-ed supply network is able to better meet the quality expectations of the final customers through the joint definition and co-management of quality practices

While SCQM requires simultaneous integration of internal practices, upstream supplier quality performance and down-stream customer requirements, only a few studies have simul-taneously addressed all these dimensions Tan et al (1999) investigate the impact of in-house quality management, supply base management and customer relations practices on corporate

performance Kuei et al (2001) extend the QM instrument

proposed by Saraph et al (1989) by including four quality

factors (supplier selection, supplier participation, customer

rela-tions and benchmarking) to study the association between

SCQM and organizational performance Though these two

studies consider the dimensions of SCQM from the internal,

upstream and downstream sides of supply chain, the

relation-ships among these dimensions are not examined Lin et al

(2005) identify three dimensions of SCQM (QM practices,

supplier participation and supplier selection) and investigate

the causal relationship between them and organizational

per-formance using two data sets collected from Taiwan and Hong

Kong The results show that organization performance can be

improved directly by supplier participation strategy which is

significantly correlated with both supplier selection and QM

practices In their study, the construct of customer relations is

not treated as an independent dimension of SCQM but lumped

together with internal quality practices such as training and

employee relations The relationships between customer

rela-tions and internal/upstream quality management are not

exam-ined either Kaynak and Hartley (2008) which uses supplier

quality management and customer focus to extend the causal

framework for QM practices and performance in Kaynak

(2003) into the supply chain This study examines how these

two upstream and downstream practices lead to improved

performance and how other practices mediate those

relation-ships The findings reveal that supply chain members need each

develop interclocking practices based on communication,

col-laboration and integration to improve quality performance at

the end of the supply chain This study examines the detailed

interplay between quality practices both internal and external

A further study which captures SCQM by three major

dimen-sions of internal, upstream and downstream QM would be

valuable to provide more macro guidance for quality

integra-tion throughout the entire supply chain, and help practiintegra-tioners

identify the most significant dimension and leverage its linkage

with the other dimensions

From this literature review, we can see that studies on

SCQM suffer incomplete consideration of the dimensions of

SCQM covering internal, upstream and downstream sides of

supply chain, and insufficient examination of the causal

linkages among these dimensions This empirical study will

try to fill this void by proposing a comprehensive

frame-work covering all these dimensions and testing their causal

linkages as discussed in more detail below

3 Research framework

SCM consists of internal practices, which are contained

within a firm, and external practices, which cross

organiza-tional boundaries to integrate a firm with its customers and

suppliers (Dröge et al., 2004; Li et al., 2006) From the

operations management perspective, flow management and quality management are the two dimensions of the supply chain (Forza, 1996) Maintaining high conformity in the upstream stages helps to avoid the extra inspection activities

or the management of return flows for repairs in the down-stream phases, facilitating the supply chain’s workflow As one significant dimension of supply chain, SCQM not only requires QM to be implemented internally within each sup-ply chain member’s organization, but also requires commu-nication, collaboration, and integration with both upstream and downstream supply chain members with respect to quality (Kaynak and Hartley,2008) Based on this concept,

we conceptualize SCQM as three components: internally implemented QM (internal QM), interaction with suppliers for quality (upstream QM), and interaction with customers for quality (downstream QM) The latter two QM practices, upstream QM and downstream QM, are clearly in the do-main of SCM, and extend QM into the supply chain Based on a comprehensive literature view, QM practices with internal focus have been identified as internal QM– Top management leadership, Strategic planning, Quality informa-tion, Process management, Workforce management, and Product design process Upstream QM contains the following supply management practices identified from the literature, such as a long-term relationship with suppliers, supplier in-volvement in product development and quality improvement, quality focus in selecting suppliers, and supplier certification Downstream QM includes such practices as frequent meetings with customers, customer visits to the plant, encouragement of customer feedback on quality; customer involvement in prod-uct design and use of customer needs survey In addition, we adopt Juran (1992)’s concept of “Little Q” and “Big Q” to examine quality performance.“Little Q” relates to the internal dimensions of quality linking to the production point of view, while“Big Q” considers external or marketplace quality link-ing to the user’s point of view Conformance quality refers to the ability to meet targets for quality within the manufacturing unit (Flynn et al.,1994), and responds to“Little Q” Customer satisfaction reflects not only delivered quality but also intan-gibles such as value and customer expectations (Flynn et al.,

1994; Anderson et al.,1995), and relates to the aspect of“Big Q” The above SCQM practices and quality performance, and the associated supporting literature are showed in Table 1 Figure 1 presents the proposed conceptual framework in a structural equation model In this model, internal QM is presented as a latent construct which is linked to each of its measurement scales (Top management leadership, Strategic planning, Quality information, Process manage-ment, Workforce managemanage-ment, and Product design process)

In addition, the structural relationships depicted by arrows H1-H8 correspond to the hypotheses developed as below From a cooperation perspective, Hillebrand and Biemans (2003) propose that internal cooperation may function as a Supply chain quality management practices and performance: an empirical study 21

prerequisite coordination mechanism for external cooperation.

Also, the literature on supply chain integration suggests that

companies should strengthen their internal integration before

attempting to integrate themselves with suppliers and

custom-ers (King and Teo,1997) Koufteros et al (2005) empirically

demonstrate that internal integration has a positive influence

on customer integration and supplier product and process

integration in new product design Based on the reviewed

literature, we propose that internal QM should precede the

external QM with suppliers and customers and hypothesize the following:

H1: Internal QM has a positive impact on upstream QM H2: Internal QM has a positive impact on downstream QM

In a case study by Carter and Ellram (1994), supplier in-volvement in product design is found to improve defect rate in the later manufacturing stage Shin et al (2000) demonstrate

Table 1 Description of the constructs of SCQM and supporting literature

Internal QM

Top management support Involvement in and constant commitment

of the company top management in all its functions to quality improvement

Adam et al.( 1997 ), Ahire et al ( 1996 ), Ahire and O’Shaughnessy ( 1998 ), Anderson

et al ( 1995 ), Flynn et al ( 1994 ), Kaynak ( 2003 ), Saraph et al ( 1989 ), Powell ( 1995 ), Samson and Terziovski ( 1999 )

Strategic planning Designing internal functions to reflect the

organization ’s mission Choi and Eboch (Terziovski ( 19991998) ), Samson and Quality information Availability of information on quality performance

and productivity, charts posted on the shopfloor showing defect rates, schedule compliance and machine breakdowns

Ahire et al ( 1996 ), Choi and Eboch ( 1998 ), Flynn et al ( 1994 ), Kaynak ( 2003 ), Samson and Terziovski ( 1999 ), Kaynak ( 2003 ), Saraph

et al ( 1989 ), Process management Monitoring of manufacturing process through

the techniques and tools applied to a process

to reduce process variation

Ahire et al ( 1996 ), Anderson et al ( 1995 ), Ahire and O ’Shaughnessy ( 1998 ), Choi and Eboch ( 1998 ), Flynn et al ( 1994 ), Forza and Filippini ( 1998 ), Kaynak ( 2003 ), Powell ( 1995 ), Samson and Terziovski ( 1999 ), Saraph et al ( 1989 )

Use of statistical process control to maintain control over production processes and reduce variance in processes (Process control);

Preventive maintenance;

clean and organization of the workplace (Housekeeping)

Workforce management Implementation of employee involvement and

quality circles (Small group problem solving);

provision of quality-related training for all employees (Task-related training for employees);

Adam et al.( 1997 ), Ahire et al ( 1996 ), Ahire and

O ’Shaughnessy ( 1998 ), Choi and Eboch ( 1998 ), Flynn et al ( 1994 ), Forza and Filippini ( 1998 ), Kaynak ( 2003 ), Samson and Terziovski ( 1999 ), Saraph et al ( 1989 )

employee suggestion regarding improvements (Employee suggestion)

Product design process Involvement and cooperation of all affected

departments and the entire staff in design reviews

Adam et al.( 1997 ), Ahire et al ( 1996 ), Ahire and Dreyfus ( 2000 ), Flynn et al ( 1994 ), Kaynak ( 2003 ), Saraph et al ( 1989 ) Upstream QM Long-term relationships with suppliers; supplier

involvement in product development; quality rather than price focus in selecting suppliers;

supplier certification; suppliers involvement

in quality improvement;

Ahire et al ( 1996 ), Flynn et al ( 1994 ); Forza ( 1996 ), Forza and Filippini ( 1998 ), Kaynak ( 2003 ), Lin

et al ( 2005 ), Shin et al ( 2000 ), Tan et al ( 1999 ), Tracey and Tan ( 2001 ), Salvador et al ( 2001 ) Downstream QM Frequent meetings with customers, customer

visits to the plant, encouragement of customer feedback on quality; customers involvement

in product design; use of customer needs survey

Flynn et al ( 1994 ), Forza ( 1996 ), Forza and Filippini ( 1998 ), Tan et al ( 1999 ), Salvador et al ( 2001 )

Quality performance

Conformance quality Conformity to product specifications which

the product reaches at the end of the production process

Ahire and Dreyfus ( 2000 ), Forza ( 1996 ), Forza and Filippini ( 1998 ), Flynn et al ( 1995 ), Juran ( 1992 ), Customer satisfaction Global customer satisfaction as regards

products and services received.

Anderson et al ( 1995 ), Ahire and Dreyfus ( 2000 ), Forza ( 1996 ), Forza and Filippini ( 1998 ), Flynn

et al ( 1995 ), Juran ( 1992 )

that supplier management orientation such as a long-term

relationship with suppliers, supplier involvement in the

prod-uct development process and a quality focus, improves not

only supplier performance but also buyer’s quality

perfor-mance Tracey and Tan (2001) conclude that supplier selection

criterion (quality, delivery and product performance), the

sup-plier involvement in product development and in continuous

improvement programs have positive impact on customer

satisfaction Flynn and Flynn (2005) empirically verify Trent

and Monczka (1999)’s hierarchical model for supplier quality

management practices and demonstrate that co-makership

practices such as supplier product and process design

involve-ment positively influence supply chain performances Lin et

al (2005) suggest that supplier participation in product design

and kaizen projects/workshops improves organizational

per-formance directly Consequently, the following hypotheses

are proposed:

H3: Upstream QM has a positive impact on conformance

quality

H4: Upstream QM has a positive impact on customer

satisfaction

The positive relationships between the internally focused

QM practices examined in this study (top management

leadership, strategic planning, workforce management,

quality information, process management and product

de-sign process) and quality performance has been supported

by many empirical studies, such as Adam (1997), Flynn et

al (1995), Choi and Eboch (1998), Forza and Filippini

(1998), Ahire and Dreyfus (2000), Kaynak (2003), to name

a few Top management’s commitment to quality could act as

a driving force for quality effort As managerial commitment

is translated into specific strategies, employee participation in

decision making processed through training and empowerment are fostered This can support the implementation of designing quality into products and services, and assuring in-process quality through the use of quality information, leading to higher quality performance Tan et al (1998) investigate three firms’ in-house QM approaches (designing quality into the product, process control, process improvement) Their results indicate that these approaches complement with supply base manage-ment to enhance firms’ competitive performance This leads to the following hypotheses:

H5: Internal QM has a positive impact on conformance quality

H6: Internal QM has a positive impact on customer satisfaction

In an effective supply chain network, members maintain and sustain a customer-driven culture, offering the right prod-uct in the right place, at the right time and at the right price (Kuei et al.,2001) The integration and collaboration activities with customers permit customers’ needs to be satisfied in a much more targeted way (Forza and Filippini, 1998) Customer feedback facilitates fast corrective action to be made

to the product or to the process and thus leads to an increase in outgoing conformity Rungtusanatham et al (2003), using the resource-based view of the firm, argue that both upstream linkages with suppliers and downstream linkages with cus-tomers can serve as a resource to provide operational perfor-mance benefits to a firm Tan et al (1999) empirically found that customer relation practices had a positive impact on performance Therefore, we hypothesize:

H7: Downstream QM has a positive impact on confor-mance quality

Fig 1 Proposed model

Supply chain quality management practices and performance: an empirical study 23

H8: Downstream QM has a positive impact on customer

satisfaction

4 Methodology

4.1 Sample

The sample is comprised of data collected through an

interna-tional joint research named High Performance Manufacturing

(HPM) The aim of this project is to study management

prac-tices and their impact on plant performance within global

competition The sample consists of 238 manufacturing plants

which are both traditional and world-class plants, and was

stratified by industry and nation Countries included the

United States, Japan, Italy, Sweden, Austria, Korea, Germany

and Finland, and the industries included machinery, electronics

and transportation Since these industries were the ones in

transition, a great deal of variability in performance and

prac-tices was expected to be present (Schroeder and Flynn,2001)

All plants in the sample represented different parent

corporations and each had at least 250 employees A sample

of 366 plants was randomly drawn from a master list of

manufacturing plants for each country All of these plants

were solicited for participation by calling or personal visit

Two hundred thirty eight plants agreed to participate and

each plant received a batch of questionnaires The question

items were assigned to multiple questionnaires and

distrib-uted to the appropriate respondents The final response rate

accounted for 65 % Table2summarizes the key characteristics

of these plants, by industry and country

4.2 Measures

To operationalize internal QM, upstream QM and downstream

QM, we identify suitable measurement scales from the HPM

database that would be consistent with the meaning of the dimensions Internal QM is a multi-dimensional construct, and its six dimensions – Top management leadership, Strategic planning, Quality information, Process manage-ment, Workforce managemanage-ment, and Product design process have been suggested by the previous literature (Table 1) Among them, process management refers to monitoring of manufacturing process through the techniques and tools ap-plied to a process to reduce process variation, so that it operates as expected, without breakdowns, missing materials, fixtures, tools, etc and despite work force variability (Flynn et al.,1994) Process management includes the use of statistical process control to track process performance for in-production quality assurance (Deming,1986; Ahire and Dreyfus,2000), heavy reliance on preventive maintenance aiming to conduct safety activities and avoid equipment breakdowns through scheduled maintenance (Flynn et al., 1995; Arauz et al.,

2009), and emphasis on housekeeping which keeps the clean-liness and organization of the workplace to avoid clutter that hides defects and their causes (Flynn et al.,1994; Schonberger,

2007) Therefore, Process management is constructed as a super-scale consisting of three individual measurement scales: Process control, Preventive maintenance, and Housekeeping Workforce management should be managed in concert with methodological manufacturing practices (Snell and Dean,

1992), and has been underlined as one of the fundamental dimensions in quality management (e.g Flynn et al., 1994; Forza and Filippini, 1998) The developing and encouraging team problem-solving approaches (Flynn et al.,1995), provid-ing quality-oriented and job-specific trainprovid-ing (Garvin, 1984; Flynn et al.,1994), and taking advantage of employees’ ability

to make proposals for improvements (Forza and Filippini,

1998) all have been highlighted as important areas of work-force management by previous literature Thus Workwork-force man-agement is also constructed as a super-scale by three individual measurement scales: Small group problem solving,

Task-Table 2 Demographic of sample plants

Plant characteristics

Average Market

Share (%)

Average Sale ($000) 284181 1118492 71209 584371 64474 2266962 47705 173621

Average of Number

of Employee

(salaried person)

related training for employees, and Employee suggestions.

Each of other four dimensions (Top management leadership,

Strategic planning, Quality information, and Product design

process) is measured by a single measurement scale

respec-tively with the question items shown in theAppendix In total,

a set of ten measurement scales is identified to measure the six

dimensions of internal QM

Upstream QM is measured by one measurement scale

which contains seven question items addressing various issues

regarding supply management for quality, such as supplier

selection, supplier relationship, supplier involvement, etc

Downstream QM is also measured by a multi-item

measure-ment scale constituted by six question items covering various

practices regarding the links with customers for quality The

above twelve measurement scales are measured through

per-ceptual questions over seven-points on the Likert scale, where

a value of 1 indicates the worst performance and a value of 7

indicates the best performance Each of these measurement

scales has multiple respondents from the same plant These

respondents are from nine positions: direct workers, human

resource manager, quality manager, supervisors, process

en-gineer, plant superintendent, inventory manager, member of

product development team, and plant manager

As noted earlier, we consider two measures of quality

per-formances– Conformance quality and Customer satisfaction

The measure of conformance quality was judged by the plant

manager on a five-point Likert scale, where a high score

indicates that plant management perceives that the plant has

been relatively successful pursuing quality conformance

com-paring to its competitors Customer satisfaction was evaluated

by multiple informants on a seven-point Likert scale

(1=strong-ly disagree, 4=neither agree nor disagree, 7=strong(1=strong-ly agree)

Then, we assess the measurement quality of each multi-item

measurement scale, and with satisfactory measurement quality

results, we average the item scores for the measurement scale All scale responses are averaged into a single plant response per scale; analysis is at the plant level Aggregating respondents across respondent category and collecting the same data from different respondents can help to address the issue of common method bias

4.3 Testing measurement instruments

The validation process for the survey instrument includes three steps: reliability, content validity and construct valid-ity The reliability and validity tests for the ten measurement scales for internal QM from Top management leadership to Product design process as well as Upstream QM and Downstream QM in Table 3 are conducted on a dataset at

an individual level consisting of response from each respon-dent Reliability is operationalized through the internal con-sistency method and Cronbach’s alpha is used as the reliability indicator Cronbach’s alpha value of at least 0.6

is considered acceptable, and items that do not strongly contribute to alpha and whose content is not critical are eliminated Table 3 shows the alpha value for all scales and most the scales exceed the lower limit by a substantial margin, indicating that the scales are internally consistent Content validity is ensured through an extensive review

of literature and empirical studies Construct validity meas-ures the extent to which the items in a scale all measure the same multivariate construct It is established through the use

of factor analysis, demonstrating that all scales are one-dimensional Table3presents the summary of the eigenval-ues for each of the scales and the Appendix shows the factor loadings by item The eigenvalue of the first factor for each scale is more than two exceeding the minimum eigenvalue

of 1.00, and all factor loadings meet the criterion of larger

Table 3 Summary of

measure-ment analysis Measurement Scale Mean S.D. Cronbach Alpha Eigenvalue (% variance)

Top management leadership 5.505 0.613 0.795 3.068(51)

Small group problem solving 5.046 0.640 0.824 3.211(54) Task-related training for employees 5.187 0.625 0.792 2.477(62)

Supply chain quality management practices and performance: an empirical study 25

than 0.4, indicating all of items contribute to their respective

scales

After establishing satisfactory measurement performance, a

dataset at the plant level is aggregated by calculating the

average value of all the valid responses at the plant Based on

this plant-level data, the two super-scales Process Management

consisting of Process control, Preventive maintenance, and

Housekeeping, and Workforce Management consisting of

Small group problem solving, Task-related training for

employ-ees, and Employee suggestions are subject to the same process

of testing reliability and validity as above The two super-scales

are found to be reliable and valid as shown at the bottom of

Table3, and then they are computed by averaging the scores of

their corresponding measurement scales respectively

5 Hypothesis testing

Hypotheses are tested using AMOS program A number of

indices are used to determine the fit of the data to the model

(e.g.χ2

/df, CFI, RMSEA and PNFI) The overall fit

statis-tics for the hypothesized model areχ2

=101.383, df=31,χ2

/

df = 3.270, p < 0.01, CFI = 0.922, PNFI = 0.504, RMSEA=

0.091, which are acceptable in terms of model fit While the

closeness of ourχ2

/df ratio to the threshold level of 3 indicates marginal goodness-of-fit, a p value less than 0.01 does not

indicate good fit However, this measure is particularly

sensi-tive to sample size and assumptions of normality (Hu and

Bentler,1995) Consequently, in large samples“almost any

model with positive degrees of freedom is likely to be rejected

as providing a statistically unacceptable fit” (Long, 1983)

Accordingly, alternative measures of fit need to be considered

Our CFI which has the value of 0.922, is optimal, since it has

to be greater than 0.9 for the model to be considered very good

(Bentler,1990) PNFI should be higher than 0.5 for the model

to be considered very good; on this measure, our results

(PNFI=0.504) indicates good fit RMSEA is another fit

statistics which adjust the sample discrepancy function by

degree of freedom An absolute RMSEA value under 0.1 is

acceptable, particularly a RMSEA value less than 0.05

sug-gests a good fit, and a RMSEA value between 0.05 and 0.08

indicates a reasonable fit (Browne and Cudeck,1993) The

model has a RMSEA value of 0.091, and this is almost good From these fit statistics, it is concluded that the overall model demonstrates an acceptable level of fit

In addition to a good fit of the structural model, a good structural equation model needs to have a good measure-ment model Table 4 presents the estimated values of the standardized path coefficients of all measurement constructs

to the related latent construct internal QM, and the relative p-value One construct does not present p-values in that the relative path coefficient is fixed at 1 as suggested in SEM theory The six constructs of internal QM all have signifi-cant estimates of coefficients between 0.424 and 0.856, demonstrating a good measurement model of internal QM Table5presents estimated values of the standardized coef-ficients which link with their constructs, and the relative p-value It can be seen that five links between constructs hypoth-esized are statistically significant at a level of 1 % Among eight hypotheses, five are supported and three are rejected The results show that internal QM positively affects both upstream

QM and downstream QM, supporting H1 and H2 The results also indicate that upstream QM has no significant impact on either type of quality performance, while internal QM has direct and positive impact on both of conformance quality and cus-tomer satisfaction, suggesting rejection for H3 and H4 and support for H5 and H6 Further, downstream QM only shows significant impact on customer satisfaction rather than confor-mance quality, and thus H7 is rejected while H8 is supported Figure2presents the summary of the findings above

We tentatively delete the three non-significant paths to check whether model fit can be significantly improved Accordingly, a set of overall fit statistics are obtained:

χ2

=105.911, df = 34, χ2

/df = 3.115, p < 0.01, CFI = 0.920, PNFI=0.550, and RMSEA=0.087 A chi-square difference test

is then executed by calculating χ2

diff =105.911−101.383= 4.528 with 34−31=3° of freedom This statistic is not signifi-cant (p-value=0.210), indicating that omitting these paths does not lead to a significant better model fit Deleting the non-significant paths should assume that upstream QM has no impact on performance, which is not acceptable given that the theory on SCQM has highlighted the importance to upstream

QM Therefore, the originally proposed model should not be revised

Table 4 Results for the

mea-surement model Construct name Measure variable Standardized coefficient p-value

6 Discussion and managerial implications

In this section, we discuss over the main findings and

impli-cations for management First, our study confirms the

multi-dimensionality of the SCQM construct (Kuei et al.2001; Lin

et al.,2005; Kaynak and Hartley,2008) Internal QM appears

to be a key driver for SCQM, because it has significant impact

on both upstream and downstream QM The implication is

that a prerequisite for moving towards SCQM is an effective

implementation of QM within an organization to establish a

quality-culture base for subsequent collaboration and

integra-tion with upstream and downstream organizaintegra-tions for quality

Second, our results reject H3 and H7 and suggest that

conformance quality is not directly affected either by upstream

or downstream QM Forza (1996) also reports a similar

find-ing: interaction with suppliers and customers with regard to

quality are not correlated to internal quality It appears that the

reduction of process defect rates above all requires an internal activity with no particular need for interaction between cus-tomers and suppliers He suggests the necessity to examine the role of internal actions which were not included in its analysis This study verifies the dominant role of internal quality activ-ities in achieving conformity As SCM has become popular, many companies have been exhorted to implement initiatives linking to their suppliers and customers However, our study suggests that these initiatives can not replace the role of internal quality activities to achieve conformance quality Managers are recommended not to rely on co-makership alone

as a quick-fix solution to enhance conformance quality with-out enough commitment to internal quality system

Third, compared with conformance quality, the situation

is quite different for customer satisfaction Two paths are detected to customer satisfaction One is a direct impact of internal QM, and the other is an indirect impact of internal

Table 5 Results of the structural model

Causing construct Caused construct Hypothesis Standardized coefficient p-value Result

Note: Dashed line: insignificant at 5% level;

Solid line: significant at 1% level

Fig 2 Summary of findings

Supply chain quality management practices and performance: an empirical study 27

QM mediated by downstream QM This supports the notion

that obtaining customer satisfaction requires not only a

sound internal quality system but also great attention to

factors which concern downstream relations with customers

such as their involvement in quality improvement, contact

during design stages etc (Forza and Filippini, 1998)

Managers are encouraged to look beyond their own internal

organizations into the supply chain and actively integrate

with downstream quality process to achieve better customer

satisfaction

Four, the role of quality process integration with suppliers

appears to be quite different from that with customers to

enhance quality performance This supports the suggestion that

“from a supply chain perspective, different approaches may be

needed for integration with customers and with suppliers”

(Kaynak and Hartley,2008) While downstream interaction

with customers for quality has a direct impact on quality

performance, the integration of quality process with suppliers

appears to be more complicated and the impact on quality

performance is less apparent, and this would explain why

customers are integrated into quality processes more often than

suppliers as found by Sila et al (2006) It is also possible that

the upstream integration of quality process would interact with

the internal quality process or the downstream integration of

quality process to influence quality performance

7 Limitations and future research

It is important to view this study in the context of its

limita-tions First, this study suffers the generic limitations for any

empirical study with survey-based subjective and qualitative

data Although the respondents varied by scale, this study

relies on the perceptions of the respondents to operationalize

the survey instruments This may have introduced bias into the

data, which could cause potential concerns regarding

general-izability, reliability, and validity Another limitation relates to

the measure of quality performance It asks managers their

perception of the conformance quality of the products and

customer satisfaction Measurement of quality in the eyes of

the customers would be valuable in future studies Although a

large amount of objective data on quality performance, such

as‘Percentage of scrap and rework’ and ‘Percent of items that

pass final inspection without requiring rework’, was collected

in this project, these data cannot be used in this study due to

industrial difference and a large number of missing values

Future studies should strive to include objective data on

quality performance

While this study has contributed to the body of

knowl-edge in the emerging area of SCQM, we suggest that the

following areas could further enhance and extend theoretical

development First, the lack of direct link between upstream

QM and either type of quality performance points to a need

for detailed investigation of the role of quality process integration with suppliers in SCQM Does the integration

of quality process with suppliers indirectly relate to quality performance through some mediating factor? What is the mediating factor? Second, an examination of the potential effects of contingency factors on the proposed framework could also provide a fruitful field of research endeavor The relationships between different dimensions of SCQM and the ways they impact quality performance may depend on contextual and situational conditions such as industry, coun-try and the position in the supply chain Third, longitudinal research would be very valuable to observe the QM integra-tion process into the supply chain and further test the cause-effect relationships found in this study

8 Conclusions

This study examines the relationships among three dimensions

of SCQM– in-house QM practices (internal QM), interaction for quality with suppliers on the upstream side of supply chain (upstream QM), and interaction for quality with customers on the downstream side of supply chain (downstream QM)– and their impact on different types of quality performance The results suggest that a prerequisite to supply chain quality is the effective implementation of QM internally within individual supply chain members Managers who look beyond their own internal organizations into the supply chain, can find useful benefit through the collaboration, integration and communica-tion among supply chain members with respect to quality Particularly, downstream integration with customers for qual-ity can bring a direct benefit to the improvement of qualqual-ity performance in terms of customer satisfaction In summary, the different ways of different dimensions of SCQM to affect different types of quality performance can provide guidance for the organizations to integrate quality into the supply chain

Acknowledgments The authors appreciate the financial support for this research from the Japan Society for the Promotion of Science by Grant-in-Aid for Scientific Research, No 22330112.

Appendix: Question items of measurement scales

Factor loadings are given in parentheses following each item

Top management leadership

1 All major department heads within the plant accept their responsibility for quality (0.721)

2 Plant management provides personal leadership for quality products and quality improvement (0.815)