Journal of Technology and Operations Management: Vol. 17.

Number 2 Dec 2022: 70-84

JOURNAL OF TECHNOLOGY AND OPERATIONS

MANAGEMENT
e-journal.uum.edu.my/index.php/jtom

How to cite this article:

Omigie, O., & Kubeyinje, G. T. (2022). Journal Of Technology And Operations Supply Chain Management And Performance :
Evidence From Manufacturing Organisations In Nigeria. Journal of Technology and Operations Management, 17(2), 72–84..
https://doi.org/10.32890/jtom2022.17.2.7

SUPPLY CHAIN MANAGEMENT AND PERFORMANCE: EVIDENCE

FROM MANUFACTURING ORGANISATIONS IN NIGERIA
ISamuel Obehi Omigie & 2Gabriel Tuoyo Kubeyinje

1
Department of Business Administration, Faculty of Management Sciences, University of Benin, Benin
City, Nigeria
2
Department of Marketing, Faculty of Management Sciences, University of Benin, Benin City, Nigeria

Corresponding Email: [email protected]

Received: 25/08/2022 Revised: 29/09/2022 Accepted: 24/11/2022 Published: 29/12/2022

ABSTRACT

This study examined how supply chain management (SCM) impacts the performance of
manufacturing organizations in Nigeria. Specifically, the study examined the impact of
procurement outsourcing, information flow management, and order process management on
the performance of manufacturing organizations in Nigeria. Survey research was used through
questionnaire administration to the staff of production, procurement, warehouse, logistics, and
marketing departments of two manufacturing organizations operating in Edo state, Nigeria.
Statistical tools used in analyzing the data obtained include mean, standard deviation,
correlation, and regression analyses. The study found that a positive and statistically significant
relationship exists between supply chain management variables such as procurement
outsourcing, information flow management, and order process management, and the
performance of manufacturing organizations in Nigeria. The study, therefore, recommends that
the management of manufacturing organizations conduct a benchmarking exercise for the top
players in the industry as a means to enhance their procurement outsourcing procedures and
attain unmatched performance of their supply chains; manufacturing organizations should
concentrate on the production and services they have the expertise on and outsource those
functions other firms or individual can do better for them.

Keywords: Information, Manufacturing, Order, Performance, Procurement, Supply chain.

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INTRODUCTION

Continuous improvement in organizational operations is fundamental in guaranteeing business

sustainability and optimal performance of the organization, especially in a competitive environment.
However, achieving optimal performance is challenging especially in manufacturing organizations in a
developing economy such as Nigeria (Oyewo et al., 2019). Studies have shown that effective supply
chain management which requires a total understanding of the day-to-day transactions and collaboration
with relevant stakeholders greatly determines organizational performance (Memia, 2018; Puska et al.,
2020). Manufacturing organizations in Nigeria and other developing nations in Africa have not yet
adopted SCM principles as a crucial business integration strategy that gives the company a competitive
edge (Oyewo et al., 2019; Thoo et al., 2011). Some of the supply chain management-related challenges
manufacturing organizations in Nigeria are confronted with include a lack of effective suppliers
relationship management, inadequate information flow management, poor customers relationship
management, inadequate order process management, low level of procurement outsourcing and
regulations awareness, inadequate manufacturing flow management, poor implementation of health and
safety measures. Other challenges include the use of poor material disposal procedures, ineffective
communication system, application of poor goods and storage/handling procedures, lack of effective
risk control measures, low level of employees’ competency, production of substandard goods/low-
quality products, and inappropriate production and distribution practices.

Aside from these challenges, most previous studies on supply chain management focused more on
developed economies (Davis-Sramek, Germain, & Stank, 2010; Fugate, Mentzer, & Stank, 2010;
Green, Zelbst, Meacham, & Bhadauria, 2012). The relationship between supply chain management and
performance is determined by the cultural, social, economic, and environmental factors of each country
(Kaufmann & Carter, 2006; Miguel & Brito, 2011). For instance, Keebler and Plank (2009) claimed
that it was impossible to generalize US business findings to other nations or the entire universe of
companies. The developed economies such as Europe, America, and some portions of Asia, also had
more advanced business structures than emerging nations, which made the introduction of supply chain
management ideas much easier. It was necessary to do empirical research in numerous environments,
notably developing economies like Nigeria, to generalize the causal relationship between supply chain
management and the performance of manufacturing organizations.
Although, in Africa and other developing countries, related research has been done in the area of supply
chain management and performance; their findings are mixed and inconsistent. For example, the
empirical finding of Mutimos (2014) regarding the reuse products effect (reverse logistics practices) on
performance is inconsistent with the result of Kabergey and Richu (2015). So also, the empirical finding

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of Smith and Chang (2010) concerning customer relationship management impact on performance
contradicts the outcomes of Thoo et al. (2011), Iriqat and Abu-Daqar (2017), and Prabusankar (2017)
respectively. It is against such backdrop that the study thus strives to validate the existing findings and
to bridge the gap between supply chain management and the performance of manufacturing
organizations by evaluating the relationship between the supply chain Management variables
(procurement outsourcing, information flow management, and order process management) and
performance of manufacturing organizations in Nigeria.

LITERATURE REVIEW
Conceptualizing Performance
Voss et al. (1997) defined performance as “the measurable outcomes of a firm’s processes such as
productivity, reliability and production cycle turn which affect the overall business performance
measures such as customer satisfaction and market share”. As opined by Richard et al. (2009), the
concept of performance is used in management research to evaluate the effectiveness of all
organizational functions, including procurement, human resources, marketing, operations, finance, and
strategy. Richard et al. (2009) further argued that every process used in an organization's functions is
evaluated to establish its value. Performance for service businesses refers to actions made by service
providers which are measured by productivity, efficiency, responsiveness, and reliability (Stank, et al.,
1999).

Performance metrics for manufacturing organizations include dependability, responsiveness, agility,

cost, and asset management (Sillanpaa & Kess, 2012). More reliable indications are provided by Slack
et al. (2004) and include cost, quality, speed, flexibility, dependability, and increased customer
satisfaction. Both the internal and external procedures of the company are impacted by these, as well as
the customers. Making decisions economically to increase production and efficiency is what cost is all
about (Batista, 2009). Quality represents conformity to clients' specifications regularly (Slack et al.,
2004). Speed refers to moving quickly through a process, such as the time it takes a company to go
from a customer's requirements to the delivery of a product. The ability to adjust to a changing
environment or new requirements is referred to as flexibility (Slack et al. 2004). Dependability means
completing tasks on schedule and in accordance with promises (Batista, 2009).

As posited by Zhang et al. (2005), increasing logistical flexibility enabled quick replenishment of
incoming materials, supply of high-quality components, quick delivery of finished goods, and
dependable services to customers, along with a decrease in customer complaints, an increase in
customer compliments of the business, and a rise in value-added productivity (Tracey & Tan, 2001).
This study primarily focused on the performance dimension of dependability. According to Batista

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(2009), being dependable means completing tasks on schedule and as promised. According to
Nowakowski (2004), the availability of the supply chain system characterizes its reliability.
Over time, dependability develops and ultimately triumphs over all other considerations. No matter how
fast, inexpensive, or inventive a product or service is, if the consumer does not believe that it will be
delivered on time and with the desired quality, the customer will go elsewhere. Dependability within
an organization is also crucial since it eliminates the wasteful use of time and resources, saving time
and money. This is in line with Paiva et al. (2008) submission that dependability promotes stability
inside the organization.

Supply Chain Management

A consultant in logistics coined the concept of a supply chain in the early 1980s (Oliver &Webber,
1992). According to Lummus and Vokurka (1999:11), SCM refers to “all the activities involved in
delivering a product from raw material through to the customer, including sourcing raw materials and
parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order
management, distribution across all channels, delivery to the customer, and the information systems
necessary to monitor all of these activities.” The focus of the supply chain is to facilitate the rapid
identification of requirements, and improve the tendering process, payment, and contract management.
Oisamoje and Areloegbe (2014) outlined its benefits to include effective workflows, lower prices, lower
information and transactional costs, increase in compliance, and speedy processing and delivery of
orders. The following supply chain management variables (procurement outsourcing, information flow
management, and order process management) are discussed, and how they impact the performance of
manufacturing organizations in Nigeria.

Procurement Outsourcing
Tasks that are typically undertaken by internal workers are handled strategically through outsourcing
(Sayed et al., 2021). To reduce expenses for the firm, outsourcing comprises contracting out important
non-core operations to knowledgeable and effective service providers. The primary objective of this
approach in many businesses is that the company will progressively concentrate on the operations that
are in the value chain or those where it has a distinctive advantage. This trend has been particularly
noticeable in financial institutions, where the supply chain services of transportation, inventory
management, and storage have been increasingly outsourced to specialists and experts in those fields.

In order to obtain goods and provide services, procurement functions are outsourced to a third party. It
entails utilizing a third party to complete specific tasks that would cost more to be completed by a
company. Outsourced procurement may result in lower costs, better compliance, increased productivity,
and greater performance. The factors that support procurement outsourcing include the desire to
increase profits by having vendors purchase goods at a lower cost, the rise in confidence as a result of

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the apparent benefits of procurement outsourcing, limitations caused by insufficient resources and out-
of-date skill sets in the firms, and revenues and profits resulting from procurement outsourcing
(Skipworth et al., 2020; Sayed et al., 2021; Van-Thai et al., 2021).

Information Flow Management

Since client tastes and preferences are constantly changing, prompt and effective reactions are essential
to fostering successful corporate operations (Han & Trienekens, 2009). Information flow is described
as "the flow of data in diverse directions with variable contents across various databases (departments)
within an organization" (Harisson & van Hoell, 2002). Supply chain partners must be willing to
explicitly communicate information with one another to maintain supply chain competitiveness.
Establishing an impeccable supply chain requires access to precise and current marketing data (Huo et
al., 2021; Tai et al., 2022). Information flow management is one of the essential characteristics of a
robust supply chain relationship (La Londe, 1998). In their study, Wardaya et al. (2013) found that
information flow management had grown to be a key indicator of teamwork within supply chain
management and organizational success. In line with Wardaya et al. (2013) submission, all businesses
must have access to current information on the quantity and location of inventory, sales information,
order status, production schedules, delivery capacity, and organizational performance.

Order Process Management

According to Stevenson and Spring (2009), “order process management involves identifying the
collective tasks associated with fulfilling an order for goods or services placed by a customer including
all activities necessary to define customer requirements, design a network, and enable the organization
to meet customer requests while minimizing the total delivered cost”. Three primary tasks—creating a
flow of information prior to, during, and following the delivery of the goods—define order process
management (Christopher, 2005).

Theoretical Underpinning
The stakeholder theory is the foundation of this work. Any individual or group that has an interest in or
is impacted by the organization is considered a stakeholder (Freeman, 1984). According to the
"stakeholder hypothesis," a company has relationships with both internal and external stakeholders, and
its actions may have a positive or bad impact on those relationships. Each stakeholder's proportional
importance depends on specific problems the company is facing and is subject to change over time
(Buysse & Verbeke, 2003). A stakeholder's influence over a firm grows as they gain urgency, authority,
and legitimacy (Buysse & Verbeke, 2003).

Competitors, suppliers, customers, academicians, shareholders, the government, non-profit

organizations, and the general public are a few examples of stakeholders. Rogers and Tibben-Lembke

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(1999) opine that fierce competition has caused many businesses to relax their return policies.
Therefore, it is obvious that stakeholders such as competitors do have an impact on a firm's operations.
However, by streamlining procedures to increase efficiency and reduce time wastage, reverse logistics
can help businesses enhance performance. Reverse logistics may be implemented by a company out of
concern about potential harsh penalties and fines for breaking environmental laws. They may as well
use reverse logistics to gain financial advantages, such as in second-hand markets, given that
shareholders desire bigger profits (De Brito & Dekker, 2004). Because consumers or customers want
better quality and faster delivery, businesses may use the information obtained through reverse logistics
to improve the quality of their products and the speed of their delivery services.

METHODOLOGY

This study employed the survey research design through the use of questionnaires to establish the
relationship between supply chain management variables (procurement outsourcing, information flow
management, and order process management) and the performance of selected manufacturing
organizations in Benin City, Nigeria. The population of the study consists of all employees of the
Production Department, Procurement Department, Warehouse Department, Logistics Department, and
Marketing Department distributed across two randomly selected manufacturing organizations amongst
quoted manufacturing organizations operating in Edo state of Nigeria namely Seven-Up Bottling
Company Plc, Benin City, and Presco Plc, Benin City. However, these two manufacturing organizations
with different product lines were selected to observe their outcomes. A sample of two hundred
employees from the two companies was taken. However, 186 copies of the questionnaire administered
were validly filled and used for the study.

A Pilot test was conducted. Cronbach’s Alpha reliability test was conducted to determine the internal
consistency of the instrument items. The results of Cronbach’s Alpha for each variable are- procurement
outsourcing [POS = 0.876], information flow management [IFM =0.799], and order process
management [OPM =0.894]. The results showed that the instrument is reliable. Data collected were
analyzed using a multiple regression model via SPSS version 24 at a 5% level of significance.

RESULTS
Demographic profile of respondents
The demographics presented here include gender, marital status, age, educational qualification, and
department of the respondents. The results are presented in Table 1 below:
Table 1.
Demographic information of respondents

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Variable Category Frequency Percent Cumulative Percent

Male 113 60.8 60.8
Gender Female 73 39.2 100.0
Total 186 100.0
Single 76 40.9 40.9
Married 109 58.6 99.5
Marital Status
Divorced 1 0.5 100.0
Total 186 100.0
1-20years 10 5.4 5.4
21-40years 87 46.8 52.2
Age
41-60years 89 47.8 100.0
Total 186 100.0
SSCE/GCE 40 21.5 21.5
ND/NCE 71 38.2 59.7
Educational
HND/First Degree 74 39.8 99.5
Qualification
Masters 1 0.5 100.0
Total 186 100.0
Production 100 53.8 53.8
Procurement 31 16.7 70.4
Warehouse 30 16.1 86.6
Department
Marketing 2 1.1 87.6
Logistics 23 12.4 100.0
Total 186 100.0

Table 1 shows that, male respondents are 113 which accounted for 60.8% of the respondents. The
female respondents consist of 73 and account for 39.2% of the total respondents. The marital status
shows that 76 (40.9%) of the respondents were single, while 109 (58.6%) were married. Only 1
respondent representing 0.5% is divorced. The age distribution shows that 89 (47.8%) of the
respondents were between 41 to 60 years old. This is followed by 21-40 years old (87, 46.8%) and 1-
20 years (10, 5.4%). Only 40 employees have SSCE/GCE. This category accounts for 21.5%. 71
(38.2%) of the respondents have ND/NCE while 74 (39.8%) of the respondents have a first degree
(HND/B.Sc Degree). Respondents with postgraduate qualification (Masters) account for 0.5%. The
respondents were grouped into five departments. The majority of the respondents are from the
production department. This category accounts for 53.8%. Respondents from the procurement
department account for 16.7% while respondents from the warehouse department account for 16.1%.
Respondents from the Logistics and Marketing departments account for 12.4% and 1.1% respectively.

Descriptive statistics and correlation analyses

The results are shown in Table 2:

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Table 2
Mean, standard deviation, and Pearson correlation coefficients
Variables PERF POS IFM OPM
Performance (PERF) 1
Procurement Outsourcing (POS) 0.425** 1
Information Flow Management (IFM) 0.323** -0.110 1
Order Process Management (OPM) 0.343** 0.121 0.108 1
Mean 4.24 3.69 4.30 4.40
Standard Deviation 0.263 0.327 0.314 0.232
Note: N = 186; * = P<1%.
The mean and the standard deviation for the variables are performance (X̅ = 4.24; SD = 0.263);
procurement outsourcing (X̅ = 3.69; SD = 0.327); information flow management (X̅ = 4.30; SD =
0.314); and order process management (X̅ = 4.40; SD = 0.232). The results in Table 2 revealed that
performance is positively and significantly related to procurement outsourcing (r =0.425, p < 0.05),
information flow management (r =0.323, p < 0.05), and order process management (r =0.343, p < 0.05).

Regression Analysis Results

The relationship between performance and supply chain Management variables which are procurement
outsourcing, information flow management, and order process management are shown in Table 3:

Table 3
Supply chain Management variables and performance
Unstandardized Standardized
Collinearity Statistics
Independent Coefficients Coefficients
T Sig.
Variables Std.
B Beta Tolerance VIF
Error

(Constant) -1.762 0.598 - -2.949 0.004 - -

POS 0.549 0.075 0.432 7.297 0.000 0.970 1.031
IFM 0.454 0.078 0.343 5.801 0.000 0.973 1.028
OPM 0.454 0.106 0.254 4.291 0.000 0.971 1.030
R2=.381; Adj R2=.371; F-Statistic = 37.40; F-Statistic (Prob) = 0.000;
Durbin-Watson = 2.066; Number of Observation = 186
Dependent Variable: Performance
POS = Procurement outsourcing; IFM = Information flow management; and OPM = order process
management.

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Table 3 “reveals that performance is positively and significantly related to all the supply chain
management variables (procurement outsourcing, information flow management, and order process
management). The details of the relationship between the dependent variable and independent variables
are shown as follows: performance and procurement outsourcing (β= 0.549; p<0.05); performance and
information flow management (β= 0.454; p<0.05); performance and order process management (β=
0.454; p<0.05). The regression result shows that when the independent variables were regressed on
performance, a coefficient of determination (R2) value of 0.381 was obtained. Given the value of
Adjusted R2 of 0.371 indicates that the independent variables jointly explain 37.1% of the variation in
the dependent variable. The F-statistic of 37.40 is significant at p<0.05. This means that there is a
statistically significant relationship between the dependent variable and the independent variables as a
group.

Hair et al. (2010) opine that to conclude that multi-collinearity is absent in any data set, the tolerance
value must be considered beyond 0.10 while the variance inflation factor (VIF) ought to be below 5.
The results in Table 3 show that the tolerance values ranged from 0.970 to 0.973, evidence of substantial
scores above the minimum threshold. Additionally, the variance inflation factors (VIFs) ranging from
1.028 to 1.031 were above the maximum limit of acceptability.” Finally, the Durbin-Watson statistic of
2.066 in consonance with the collinearity statistics (tolerance and variance inflation factor) rules out
multicollinearity in the model.

DISCUSSION OF FINDINGS

First, the study revealed a positive and statistically significant association between performance and
procurement outsourcing. The result of Kinyanjui's (2014) investigation into the connection between
procurement outsourcing and the performance of manufacturing companies in Nairobi supports this
finding. According to the study, performance and procurement outsourcing are positively correlated. It
also accords with the conclusions of Kogoh (2015), who looked into how outsourcing affected the
performance of the Kenyan logistics sector. It was discovered that the performance of Kenya's logistics
industry was statistically improved by outsourcing order processing, transportation logistics, and
warehousing. However, the finding of this study is inconsistent with Kogoh’s (2015) investigation in
the area where packaging logistics outsourcing does not significantly impact the performance of the
logistics industry in Kenya. Secondly, information flow management has a positive and statistically
significant relationship with performance. Wachira’s (2013) results support our research outcome as
the empirical results show communication has a positive correlation with performance. Here,
communication has to do with information flow/sharing and technology interchanges. The model shows
that communication among other independent variables studied is a suitable predictor of supply chain
performance. Effective and timely responses to ever-changing customer tastes and preferences have

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become a vital mechanism for successful business performance in a dynamic and highly competitive
business environment, hence the significant nature of information flow management on performance.

Finally, order process management was also found to have a positive and statistically significant
relationship with performance. This finding validates the study of Perry (2012), Kogoh (2015), and
Mwangangi (2016) respectively. According to Perry’s (2012) investigation, order fulfillment positively
correlated to organizational performance and competitive advantage. The study of Mwangangi (2016)
established that order process management positively and significantly influences the performance of
firms. However, Kogoh (2015) revealed that order processing outsourcing has a statistically positive
effect on the performance of the logistics industry in Kenya.

CONCLUSION AND RECOMMENDATIONS

This study examined how supply chain management variables impact the performance of manufacturing
organizations in Nigeria. These variables include procurement outsourcing, information flow
management and order process management. Data were collected from the employees of two selected
manufacturing organizations operating in the Edo state of Nigeria and working in different departments
namely: production, procurement, warehouse, logistics, and marketing. The study found that a positive
and statistically significant relationship exists between supply chain management variables
(procurement outsourcing, information flow management, and order process management) and the
performance of manufacturing organizations in Nigeria. The study, therefore, concluded that supply
chain management variables (i.e. procurement outsourcing, information flow management, and order
process management) have a positive and significant impact on the performance of manufacturing
organizations in Nigeria. Based on these findings, the study recommends that the management of
manufacturing organizations conduct a benchmarking exercise for the top players in the industry as a
means to enhance their procurement outsourcing procedures and attain unmatched performance of their
supply chains. Also, manufacturing organizations should concentrate on the production and services
they have the expertise on and outsource those functions other firms or individual can do better for
them.

ACKNOWLEDGMENT

This research provided no specific grant from any funding agency in the public, commercial, or not-
for-profit sectors.

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