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5.0 INTRODUCTION
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Companies whose annual turnover is above Rs. 100 Cr are considered as
Large firms in terms of turnover and who’s annual turnover below Rs. 100 Cr are
considered as Small firms.
This section deals with the Responses from the respondents through the
Questionnaire.
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5.2.2 Number of Employees
Cumulative
No. of Employees Frequency Percent
Percent
Below 200 26 11 11
201 – 500 49 20 31
501 – 1000 51 21 52
Above 1000 121 49 100
Total 247 100
The years of SCM practices indicates that the firms in India are practicing
SCM quite considerable time. 174 companies, which contribute 70% respondent
companies out of 247 companies, are practicing Supply Chain Management for more
than 5 years. This is indicated by the other observations such as usage of SCM
specific IT tools and the present performance of Supply Chain, majority of the
companies opined that they are managing supply chain with the available common IT
tools and a few are using SCM specific IT tools.
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5.2.4 Present Supply Chain performance
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Around 38% of the respondents opined that no proven ROI on IT enablement is the
biggest obstacle to convince top management to consider on IT investment. And 21%
of the respondents opined that lack of top management commitment to adopt
new/emerging technologies. It can be ruled out that lack of top management
commitment to invest in IT is due to no proven ROI in IT investment alone. Top
management may think investment in IT enablement in many views. In case of
willingness to re-engineer business processes, companies need to convince supply
chain partners, mainly suppliers.
Around 43% companies opined that the major concern for IT enablement is
across the total supply chain. IT enablement across the entire supply chain needs total
revamp of the business processes. If the organization is willing to re-engineer their
businesses this option will be strategic. If the organization is willing to concentrate on
either up-stream or down-stream, then the option would be simple. In order to
implement IT along the up-stream side, dedicated software, hardware may be required
calling a need to adopt customized or proprietary SCM specific IT tools to get
strategic benefits. Whereas implementation along the down-stream side, common IT
tools such as Internet, XML, collaborative portals are sufficient and this offers an
advantage of minimum investment on IT when compared to SCM specific IT tools.
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5.3.1 Research question 1
The results were expected, because the common IT tools such as Internet,
XML, EDI, and RFID are very popular in Indian companies because of increase in
bandwidth of Internet and availability & service of other common tools are within the
reach and affordability of even small firms in India. Where as SCM specific IT tools
such as customized IT tools for Inventory Management, collaborative portals, etc.,. In
fact, large companies having high annual turnover are normally well adapted to the
technology as compared to the small companies.
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5.3.2 Research question 2
When asked for most significant benefit expected form the IT enablement of
SCM, more than half of the respondents (67%) said ROI on IT enablement and
lowering Total Operating Costs as the significant benefits. Also, SCM literature
extensively supports that the most significant benefit anticipated through the adoption
of IT for SCM depends on individual firm’s choice, which in turn depends on the
nature of business, relationship aspects with the suppliers, strategic benefits such as
reduction in costs, improved customer satisfaction, better supplier and customer
relationships, reduction of lead-time across the supply chain, inventory optimization
etc.,. These anticipated benefits further can be discussed as a complementary to the
main benefits purely based on the suppliers side and customer side i.e., upstream side
or downstream side respectively.
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5.3.3 Research Question 3
To investigate the impact of SCM specific IT tools usage on the supply chain
performance.
Hypothesis 3: adoption of SCM specific IT tools in present supply chain with
suitable re-engineering of the supply chain will improve its performance
ANOVA between the respondents response “present supply chain
performances is satisfactory in fulfilling the expectations” and “extent of usage of
"SCM specific IT tools for managing your Supply Chain” revealed the significance
relationship between them. This elaborates the reasons for the poor performance of
the present supply chain is due to inadequate usage of IT tools, especially usage of
SCM specific IT tools are predominant. Literature strongly supports the fact that poor
performance of the supply chain is due to the following reasons
• Poorly designed supply chains
• Lack of information sharing facilities and procedures
• Inadequate IT infrastructure
• Poor collaboration among the supply chain partners
• Lack of top Management support to IT adoption
• Absence of supply chain integration
• Poor visibility of the supply chain
• Resistance to change, both within the organization and across supply
chain
• Lack of trust among the supply chain partners
• Absence of SCM specific IT tools to enable upstream and down stream
information flows
• Disparity in trading partners capabilities etc
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Chi-square test:
In order to test the hypothesis, Chi-square test is conducted. Calculated Chi-
Square value from the MS Excel chi-square statistical tool is 0.105905.
The result obtained shows that the chi-square test is significant at α = 0.05
level. The calculated chi-square value 0.105905 obtained to test t is less than 26.3 at
95% confidence level, Null Hypothesis is accepted i.e., hypothesis: there exists a
significant relation between the firms present supply chain performance and usage of
SCM specific IT tools. Further, it is significant even at α at 0.10 and 0.001. ANOVA
and Chi-square test results are presented in annexure – III which supports the
hypothesis
H4: Present Supply Chain needs Re-design based on the BPR in the context
of Information flows and Business processes to get strategic benefits
Respondents of the survey questionnaire provided valuable information on re-
design/re-engineering requirement of present supply chains.
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present supply chain. Business process re-engineering demand complete revamp of
the existing business processes with a strategic view to minimize lead-times and align
the entities along the entire supply chain. The major hurdle in this regard is differing
organizational cultures among the supply chain partners.
F-test results on the sample for variances among the most significant benefits
perceived by the companies and the most significant obstacles for IT enablement
show that there exists a strong relation between the perceived benefits and the
strategies of organization in viewing IT investment. Hence the companies in India
have to think strategically to identify the most significant benefits from IT
enablement. Each of the available benefits in turn decides the scale of IT enablement.
If the company wants to identify the benefit that leads to performance improvements
either across the entire supply chain, along the up-stream or down-stream, the
company can assess the level of IT enablement to get strategic benefits. F-test Results
are presented in Annexure-IV
What are the direct and indirect impacts of IT enablement on the supply
chain performance?
H6: Usage of SCM specific IT tools has direct and indirect impact on the
firm’s supply chain performance
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Also, Annual Turnover of the Company: ANOVA results supports that there
exists no significance between Annual turnover of the company and the usage of
SCM specific IT tools for Indian companies. Also literature on SCM supports that
ability and affordability of the organization does not influence the investment in
acquiring various enablers like IT enablement, Collaborative portals, RFID etc., This
indicates a strategic perception of the companies in investing such assets.
5.4 CONCLUSIONS
Out of an initial population of over 900 small, medium and large Indian
companies, a randomly selected 588 companies were invited to participate in the
survey questionnaire. 247 companies were responded with complete data through
questionnaire leading to a response rate of 42%.
Around 69% of the respondent company’s present supply chain not fulfilling
the expected performance. SCM literature indicates that this may be due to poor
supply chain planning and design, organizational resistances in re-engineering the
business processes, lack of proper information flow strategies and overall
management of supply chain by better utilizing available technologies.
IT enablement across the entire supply chain needs total revamp of the
business processes. If the organization is willing to re-engineer their businesses this
option will be strategic. If the organization is willing to concentrate on either up-
stream or down-stream, then the option would be simple. In order to implement IT
along the up-stream side, dedicated software, hardware may be required calling a need
to adopt customized or proprietary SCM specific IT tools to get strategic benefits.
Whereas implementation along the down-stream side, common IT tools such as
Internet, XML, collaborative portals are sufficient and this offers an advantage of
minimum investment on IT when compared to SCM specific IT tools. In case of
willingness to re-engineer business processes, companies need to convince supply
chain partners, mainly suppliers.
When asked for most significant benefit expected form the IT enablement of
SCM, more than half of the respondents (67%) said ROI on IT enablement and
lowering Total Operating Costs as the significant benefits. Also, SCM literature
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extensively supports that the most significant benefit anticipated through the adoption
of IT for SCM depends on individual firm’s choice, which in turn depends on the
nature of business, relationship aspects with the suppliers, strategic benefits such as
reduction in costs, improved customer satisfaction, better supplier and customer
relationships, reduction of lead-time across the supply chain, inventory optimization
etc.,. These anticipated benefits further can be discussed as a complementary to the
main benefits purely based on the suppliers side and customer side i.e., upstream side
or downstream side respectively.
64