Role of Strategic Sourcing in Supply Chain Competitive Performance.pptx

Role of Strategic Sourcing in Supply Chain Competitive Performance

1. Role of Strategic Sourcing in Supply Chain Competitive Performance Presented by: Syed Qassam Mustafa Sadiqullah Supervisor: Minhaj Ikram

2. Background of the Study In an era defined by globalization, rapid technological advancement, and evolving customer demands, the importance of strategic sourcing in Pakistan has never been more pronounced. The global challenges facing businesses today compel managers to navigate an increasingly competitive advantage, where the design of agile and responsive supply chain strategies becomes paramount (Qi et al., 2011). Many researchers (Fisher, 1997; Christopher and Towill , 2002; Qi et al., 2009;) named the two basic supply chain strategies Lean and Agile. The core objective of the Lean Supply Chain (LSC) is to increase productivity by eliminating waste and reducing costs in the internal and external processes of the company. Narasimhan et al. (2006) used cluster analysis to check agility and leanness. The author found that lean perform better in terms of cost, while agile companies perform better in terms of quality, delivery, and flexibility. In this context, this study aims to examine the impact of strategic sourcing (SS), just like the study of Kocabasoglu and Suresh, 2006; Cankaya 2020), discussing from three dimensions (strategic purchasing, internal integration, sharing information) impact on ASC, LSC and RSC. SS decision-making includes not only the selection and evaluation of potential strategic suppliers, but also the implementation and development of long-term strategic partnerships with these suppliers ( Talluri and Narasimhan, 2004).

3. Research Problem Jaouhari and Azzouz (2022) investigated the relationship between strategic sourcing decisions and the resilience of supply chains. Through an in-depth examination of strategies and best practices, the study aims to uncover the mechanisms through which strategic sourcing contributes to supply chain resilience and competitive advantage. Cankaya (2022) examines the impact of strategic sourcing on lean supply chain and agile supply chain, and studies the impact of these strategies on competitive performance but did not study the role of strategic sourcing sub-dimensions on supply chain resilience and also argue to study the research model in future on larger sample size. According to (Chen, 201 9) stated that, In the context of Pakistan, it is evident that understanding of supply chain strategies in emerging markets remains superficial and limited. While a considerable body of research exists concerning supply chain strategies, their historical context, and outcomes, there is a clear need to investigate deeper into this field.

4. Research Objective & Question Objective of the Study The following research objectives are derived from research questions. The purpose of this research is to examine the impact of strategic sourcing on the lean supply chain. Determine the impact of strategic sourcing on the agile supply chain. Analyze the influence of strategic sourcing on the resilient supply chain. Assess the impact of lean supply chains on competitive performance. Examine the influence of supply chain agility on competitive performance. Determine the impact of resilient supply chains on competitive performance. Research Question This research developed the following research questions: RQ1: What impact does the SS dimension have on the three SCM practices (LSC, ASC, and RSC)? RQ2: What are the supply chain management strategies (LSC, ASC and RSC) that affect competitive performance?

5. Theoretical Background R esource Based T heory (RBT) RBT is recognized as one of the powerful theories used to define, explain, and predict organizational relationships. For this reason, scientists are increasingly using the concept of "resource-based theory" rather than the concept of "resource-based view" (Barney et al., 2011). The foundation of RBT can be traced back to Penrose (1959). It can be said that RBT entered the growth stage from the introductory stage in the 1990s. Today, there is strong evidence that RBT is a mature theory (Barney et al., 2011). RBT aids to explain the company's competitive advantage. In this way, it is possible to better understand how SS and supply chain strategies affect the company's competitive performance Kim et al. (2015).

6. Literature Reviews Author and Title Name Purpose Methodology Conclusion Buendia et al, (2022) The lean supply chain management response to technology uncertainty: consequences for operational performance and competitiveness This study analyze the lean supply chain management (LSCM) strategy’s role as a mechanism to address technology uncertainty and provide organizations with competitive advantage. . An empirical study was conducted of 276 Spanish focal firms in industrial sectors that occupy an intermediate position in the supply chain to investigate the influence of technology uncertainty on LSCM implementation and the latter’s effect on operational performance and competitiveness. A covariance-based structural equation model (CB-SEM) was used to test three hypotheses. This study focuses on the effects of environmental uncertainty on the supply chain. The past literature has focused on the behavior of individual firms to deal with uncertainty, but this work shifts the level of analysis to the supply chain. Therefore, the strategic change to deal with what is happening in the environment is now switched to the supply chain level. Kurdi et al (2022) The effect of process quality improvement and lean practices on competitive performance in the UAE healthcare industry This study examine a theoretical model which identifies the effect of process quality improvement and lean practices on competitive performance in the healthcare industry in the United Arab Emirates (UAE). . The study uses a quantitative research technique with convenient cluster sampling through applying a descriptive, causal and analytical research design. A valid sample size of 270 respondents is used for analysis by linear regression and hypothesis testing using SPSS. The results indicate a direct significant relationship between process quality improvement and a direct significant relationship between lean practices and competitive performance.

7. Literature Reviews Author Purpose Methodology Conclusion Çankaya (2020) The effects of strategic sourcing on supply chain strategies This study examine the effects of strategic sourcing (SS) on lean supply chain (LSC) and agile supply chain (ASC) strategies and investigate the role of these concepts on development of competitive performance. A proposed research model and hypotheses are tested by using cross-sectional e-mail survey data collected from the manufacturing firms operating in Turkey. SS is conceptualized as a second-order factor. Structural equation modeling is used to test the proposed hypotheses. This study reached the conclusion that SS affects LSC and ASC strategies positively. Additionally, it is seen that these concepts are effective in improvement of competitive performance. The results are important in terms of emphasizing the significance of SS in improvement of the lean and agile nature of the supply chain.

8. Research Framework Lean Supply Chain Strategic Sourcing Agile Supply Chain Competitive Performance Strategic purchasing Internal integration Information Sharing Supply Chain Resilience

9. Hypotheses H1. Agile supply chain positively affects competitive performance. H2. Lean supply chain positively affects competitive performance. H3. Resilience supply chain positively affects competitive performance. H4. Strategic sourcing positively affects agile supply chain. H5. Strategic sourcing positively affects lean supply chain. H6. Strategic sourcing positively affects resilience supply chain.

10. Methodology Research Approach Quantitative Research Purpose Explanatory Research Design Correlation Analysis Data Source Primary Data Data Collection Instrument Questionnaire (5 point) Sampling Technique Non-Probability Purposive Sampling Target Population The target population comprises top-level management, middle-level management, and lower-level management of various logistic industries in Pakistan, without gender restrictions. Sample Size 291 respondents ( 276 useful) Statistical Technique PLS-SEM

11. Data Screening Missing Values (Replaced by the value of series mean) Outliers Univariate z score- 0 Multivariate ( Mahalanobis )-15 Useful data remained 276

12. Pilot Testing S# Variable Name No. of Items Alpha 1 Strategic purchasing 3 0.837 2 Internal integration 3 0.753 3 Information Sharing 3 0.939 4 Lean Supply Chain 7 0.778 5 Agile Supply Chain 7 0.796 6 Supply chain resilience 5 0.895 7 Competitive performance 6 0.855 8 Strategic purchasing 3 0.837 N=30

13. Descriptive Analysis (n=276)   Demographics Frequency Percent Industry Chemicals 12 4.1 Cement 8 2.7 Pharmaceuticals 139 47.8 Electronics 6 2.1 Automotive 8 2.7 Fertilizer 3 1.0 Paint 7 2.4 FMCG 54 18.6 Petroleum 9 3.1 Steel 13 4.5 Textiles 26 8.9 Infrastructure 6 2.1 Work Experience Less than 5 years 199 68.4 5–10 years 145 49.8 Above 10 years 54 18.6 Others 0.0 No. of Employees 51–100 37 12.7 101–250 121 41.6 251–500 123 42.3 501–1,000 10 3.4 Above 1,000 0.0 Designation Top level management 111 38.1 Middle level management 134 46.0 Lower level management 46 15.8

14. Construct Validity Construct Validity dictates that the confidence level of how properly an item measurements has been taken from the sample size which represents actual score of the population (Hair et al.,2014) CR>0.7 (Hair Jr et al., 2016) Cronback > 0.7

15. Convergent Validity Convergent validity is the extent of a degree that definitely correlates with alternative measures of an equivalent item (Hair et al ., 2016) Convergent validity has been assessed by methods for Average Variance Extracted (AVE) value and outer loadings. AVE>0.5 (Hair Jr et al., 2016) Outer loadings > 0.7 (Hair Jr et al., 2016)

16. Convergent Validity   Variables   Items Cronbach’s Alpha Composite Reliability Average Variance Extracted ASC 7 0.833 0.901 0.753 CP 6 0.847 0.896 0.684 LSC 7 0.928 0.944 0.740 SCR 5 0.875 0.909 0.668 SS 9 0.835 0.901 0.752

17. Outer Loadings   ASC CP LSC SCR SS ASC1 0.913         ASC2 0.900         ASC7 0.784         CP3   0.804       CP4   0.786       CP5   0.875       CP6   0.841       LSC1     0.884     LSC2     0.905     LSC3     0.886     LSC4     0.890     LSC5     0.872     LSC6     0.709     SCR1       0.734   SCR2       0.887   SCR3       0.860   SCR4       0.800   SCR5       0.797   SP         0.808 IN         0.897 IS         0.893

18. Discriminant Validity Discriminant Validity is the degree to measure the multiple characters that are unrelated ( Alcaron and Sanchez,2015). Discriminant Validity for the model is surveyed by Utilizing Fornell Larcker rule HTMT measure

19. Fornell Larcker rule   ASC CP LSC SCR SS ASC 0.868         CP 0.699 0.827       LSC 0.661 0.433 0.860     SCR 0.320 0.274 0.159 0.817   SS 0.763 0.527 0.816 0.200 0.867

20. Heterotrait-Monotrait Ratio (HTMT)   ASC CP LSC SCR SS ASC           CP 0.818         LSC 0.748 0.475       SCR 0.366 0.309 0.181     SS 0.908 0.625 0.910 0.224  

21. Hypothesis Testing (First Order)   Estimation Standard Deviation T Statistics P Values Decision ASC -> CP 0.712 0.048 14.958 0.000 Accepted LSC -> CP -0.046 0.066 0.695 0.487 Rejected SCR -> CP 0.054 0.042 1.295 0.195 Rejected SS -> ASC 0.759 0.028 27.387 0.000 Accepted SS -> IN 0.903 0.012 76.888 0.000 Accepted SS -> IS 0.882 0.016 54.219 0.000 Accepted SS -> LSC 0.814 0.023 35.210 0.000 Accepted SS -> SCR 0.197 0.052 3.799 0.000 Accepted SS -> SP 0.815 0.029 28.550 0.000 Accepted

22. Hypothesis Testing (Second Order)   Estimation Standard Deviation T Statistics P Values Decision ASC -> CP 0.712 0.048 14.961 0.000 Accepted LSC -> CP -0.046 0.066 0.697 0.486 Rejected SCR -> CP 0.054 0.042 1.294 0.196 Rejected SS -> ASC 0.763 0.027 28.438 0.000 Accepted SS -> LSC 0.816 0.023 35.354 0.000 Accepted SS -> SCR 0.200 0.052 3.859 0.000 Accepted

23. Coefficient of Determination and Predictive Relevance   R2 Q2 ASC 0.583 0.583 CP 0.492 0.272 LSC 0.666 0.664 SCR 0.400 0.310

24. Conclusion This study aims to subsidize to the supply chain literature by examining the relationship between SS, LSC, ASC, SCR, and CP in the context of emerging country using an empirical research approach. Noteworthy results were achieved in this study conducted on Pakistani logistic industries. The results found that, agile supply chain with competitive performance, strategic sourcing with agile supply chain , strategic sourcing with lean supply chain and strategic sourcing with supply chain resilience are supported hypothesis, which means H1, H4, H5 and H6 are accepted. Whereas lean supply chain with competitive performance and supply chain resilience with competitive performance has insignificant effect which tells H2 and H3 are not supported. SS has a positive impact on the company's strategic flexibility and its SC agility (Chiang et al., 2012). Previous studies have confirmed that certain elements of SS have a positive correlation with agility ( Çankaya , 2020; Khan and Pilania , 2008; Narasimhan and Das, 1999; Kim and Chai, 2017). Strong buyer-supplier relationships through SS can reduce supply chain delays, shorten delivery times, and simplify decision-making processes, supporting the achievement of lean supply chain ( Qrunfleh and Tarafdar , 2013). Further Mandal (2020) examine SS role in development of SCR and found positive relationship. Accordingly, we argue that SS would have a positive contribution in developing impact of SC resilience.

25. Conclusion Agility is considered to be a necessary characteristic to gain a competitive advantage ( Bidhandi and Valmohammadi , 2017). Further it is also confirmed that SCA effective in improvement of competitive performance of the firm ( Cankaya 2020) Therefore, the company's ability to respond quickly to changing market conditions is important to gaining and maintaining a competitive advantage. Fuentes (2020) stated that the impact of a lean supply chain on competitive performance is a subject of ongoing debate and varies depending on the specific circumstances and industries in question. In some cases, lean supply chain initiatives may indeed yield insignificant effects on competitive performance. Dubey (2021) investigated the assertion that a resilient supply chain has an insignificant effect on competitive performance warrants consideration within the broader landscape of supply chain management. While resilience in supply chains is crucial for mitigating risks and ensuring business continuity, its direct impact on competitive performance may not always be immediately discernible.

26. Recommendations The results of this investigation can help managers in two ways. First, when managers invest in SS, they can make their chosen supply chain strategy more effective, regardless of lean or resiliency. The results show that SS is an important factor for the success of supply chain strategy. SS pays important information of supply chain strategies via ensuring the development of relationships with suppliers “effective management of the supply network”. Hence, managers should consider the positive influence of SS and consider SS as an essential part of their company's operations. Second this research can help organizations to define the key capabilities needed to gain competitive advantage. Agile and Lean are not simple strategies to apply or imitate. Strategy is a complex practice that requires coordination and integration among the diverse members of the channel. Thus, it is not surprising that companies that apply these strategies successfully survive the competition. Companies that successfully build this relationship will acquire huge gains in improved operating margins, profitability, waste reduction, agility and time-to-market, and an overall sustainable competitive advantage. This research also shows that this relationship cannot be achieved in isolation at the company level. Before defining a supply chain strategy, managers must establish strategic relationships between suppliers and downstream distributors. In the end, this study can help managers implement decisions related to these activities. This study has been conducted on the logistics industry only, however in future other sectors may be studied as well to get comprehensive insight.

27. Direction for Future Studies Due to the paucity of prior attempts in the setting of a specific industry of Pakistan, this study fills a vacuum in the literature. However, I would like to provide a few guidelines for future studies that can be helpful to the researchers who would be willing to explore the same problem in the same setting. Future research could focus on the impact of supply chain strategies and SS on performance in different business contexts ( eg , whether demand is predictable or uncertain). While the effect of lean supply chain with competitive performance and supply chain resilience with competitive performance has insignificant effect . Future studies can further evaluate the validity of the model with an appropriate sampling of all sectors. Due to the uneven sample, some industries may have different views. Therefore, further validation of the model in two or three different but important industrial sectors would certainly help to consolidate the results. Third, these studies can use three or four organizations to assess how the proposed relationship changes over time. Over time, the same research sample can provide more information about the nature of relationships between sectors.

28. Thank You