Internal and external factors that can affect the supply chain management


1.1. Overview

In this time of globalization, supply chain management plays an essential role in defining and identifying the factors of the success of an organization. Supply chain management manages the movement of raw materials in an organization and coversthe supply side in order to cope up with the challenging environment by maximizing the customer value. Escalating consumer’s desires has become one of the major aspects for achieving competitive advantage. As rising consumers’ expectations has created a need for more adaptable, responsive and aligned supply chain management. Long-term ties of organization and different partners involved in the whole process can be developed through efficient supply cycle management.

Supply chain offers sequence of administration and operations that deals with and manages all the associations with immediate company, supplier’s suppliers as well as clients. When dealing with business to business transaction it is essential to deal with the customers. As supply chain management considers the suppliers and customers as individual entities. In this modern era, the competitive market have opened several options for organizationsspecifically the suppliers giving them the opportunities to shift from one to another. Moreover, this generates different hitches regarding, timely delivery, quality, and pricing of products. The use of effective supply chain management would help to avoid and to cater those hitches. Keeping a good relationship management helps firms to maintain association with its suppliers. This eventually results in improved product quality and timely delivery of goods and services which creates reliability among the customers.

Now a day’s supply chain integration is an essential tool in order to enhance the supply chain capabilities. Increasing global competition requires the manufacturers to apply these capabilities to improve speed, flexibility, delivery and dependability. Main reason behind the supply chain integration is to syndicate resources of the partners in the plans of the organization for motivating individual partners involved the process to contribute the best of it performance. The integration established in this manner can be referred as socialization process and two way involvement of information exchange, problem solving and information sharing between firms and their partners.

1.2. Historical Background

Traditional supply chain management process was entirely based on the push strategies where manufacturing firms uses different sales channels in order to send their goods and services in different marketplaces by ignoring the information of requirements and information related to specifications. This often crafts the mismatching of supply and demand which in turn results in wastage or storage of finished goods. Traditionally firms used to focus only on their individual performance, without any concern of intermediaries. This improper planning in the supply chain process results in non-harmonization amongst partners involved in the process. In recent years the technological advances and incorporation of these technologies in supply chain process has stemmed in improving efficient supply chain management.

Within this existing time, pull processes form the base of supply chain theories that entirely associated with the customer demand patterns and their feedbacks. Corporations are now fully aware of the fact that for the survival in this era of globalization has made it a necessity fr the organizations to innovate or improve products according to the market consumers’ requirements. In this time, organizations keep its supply chain strategies completely aligned with the long term goals of the business and maintain strong network across the channel partners that has resulted in high growth and profitability of the firms.

1.3. Supply Chain Practices around the Globe

Due to rapid increase in globalization, multinational companies have increased their focus on electronic and relationship management. All big organizations that operate in multiple countries aim to maximize the customer’s value by extensively emphasizing on supply chain activities and supply chain relationships.

Wal-Mart being one of the earliest advocates of active supply chain management has reformed the traditional push strategy to pull strategy. It successfully applied pull strategy by superior purchasing and logistics, which are the two fundamental areas of supply chain management. Wal-Mart effusively sends its day-to-day sales information to Wal-Mart’s suppliers through electronic commerce. This exchange of daily information help them to plan their production accordingly and also to develop long term relationship with all the channel parties that are involved in supply chain process. Globalization and increasing competition has made the worldwide organization, for instance, Dell computers, Unilever, the Procter & Gamble Company, Honda, and various other organizations operationally efficient and have improved their supply chain performance..

1.4. Supply Chain Management in Pakistan

Throughout Pakistan, application of informational technology have not been implanted properly, because the changes in supply chain that are by the effective information technology are not willingly being acknowledged by the local manufacturer. Due to increasing competition and availability of choices, customers are fully aware of their requirements regarding to particular products. Multinationals operating in Pakistan has fully adopted the effective supply chain strategies and is continuously working on the factors that can affect the supply chain management. Because of the shrinking product life cycles and the usage of sticky knowledge’s in the processes, new product development (NPD) is an essential strategy for the companies to achieve the competitive edge over others. So while keeping in view the importance of supply chain activities, and also considering the factors that affects the supply chain management, Pakistan based manufacturing companies can satisfy the demand and requirements of customers.

Moreover, this research will particularly examine the actual components that have an impact on the supply chain management in organizations that are B2B. Relationships between the businesses fall in two categories. It includes partner like relationship and contract like relationship. Association amongst partners helps organizations to avoid the future uncertainties and it can improve their performance. Supply chain performance also depends on the country itself like use of information technology, size of that country, distribution systems, and availability of expertise. Furthermore, the control of government over the country’s limited resources also affects the performance of supply chain process. Apart from these factors there are some external and internal factors which affect the organization’s supply chain management regardless of the country size or the resources provided.

The dependent variable for this study is taken as supply chain management. Acknowledgement of different factors resulted by analyzing the sophisticated supply chain network used by the companies. Factors like information sharing, trust, communication holds an immense importance in managing the healthy and long-term relationships with the channel partners. Many studies draw an attention on the importance of information sharing in this process, as the exchange of information will help the partners to avoid the cross-country barriers.

1.5. Research Question and Significance of Study

What are internal and external factors that can affect the supply chain management?

The significance of this study is two-dimensional as it can help the firm that is engaged in the transactions with other parties. In addition, it would help the suppliers to fully understand the factors that improve the supply chain process. The findings of this study would help both parties (supplier and firms) to implement all the positive aspects in their network and discard all the elements that can weaken their relationship. This would in turn improve the overall efficiency and will enhance the associations of supply chain partners. This study would explain that how the internal factors i.e. trust and communication can affect the organization’s supply chain management and it will particularly focus on how external factors like information sharing will effect an organization’s supply chain management.



Claro and Claro (2009) in their study focused on the relationship between the downstream information exchange and the buyer supplier relationship and networks. The downstream information, different sources of data, and the control variables served as the independent variables and dependent variable is collaboration. For this flower industry and Dutch potted plant was considered. A sample of 174 suppliers and 67 buyer responses were collected the pretest and interviews were done. The results show that the information from the retailer and wholesaler influences assistance in a buyer-supplier relationship and have positive impact. The downstream information permits firms to focus their endeavors on the most important sources of information instead of on the whole network.

Fynes, Voss, along with Burca (2004) conducted a research that examined the importance of supply chain relationships within the overall performance of the organization. The report seemed to be primarily based on determining different supply chain relationships such as the trust, commitment and adaption and examining its impact on the standards of organization’s performance. In order to investigate the hypothesis, the research used mail surveys as its methodology. Purpose of data collection led to take the manufacturing companies in the electronic sector as sample in the Ireland Republic. Furthermore, 821 companies were taken to form a sampling frame, as large size competition prevailed on the basis of quality performances In the electric industry. Findings in the study clearly confirmed the existence of relationship between supply chain quality relationship and design quality. However, it had no association with performance quality. Additionally, research suggested various management viewpoints for instance, mutual trust and commitment both displayed dominance as an additional rational method for handling supply chain relationship quality. Likewise, the finding showed that suppliers can become additionally more active in the design and new product development process.

Narasimhan in addition to Nair (2005) completed the study within the formation in addition to connection involving strategic management are going to be influenced throughout the buyer in addition to seller relationship. The main reason involving executing this kind of study has been to look at the difficulties relevant to operation that could affect the actual advancement of a strategic cohesiveness. Legitimate facts has been utilized to perform the study, which usually analyzed the actual twenty-five various kinds of provide sequence routines within the well-designed in addition to corporate and business level. The actual questionnaire strategy has been in addition used in this kind of study to be able to verify the actual precision from the facts. The study found that revealing involving top quality details one of several seller in addition to buyer high quality hope on the aspect from the supplier in addition to believe in making one of several a couple get-togethers will have a principal affect the actual friendship from the provide sequence management. Furthermore, additionally, it reviewed what sort of style of buyer-seller romantic relationship brings a direct impact within the effects and also the making from the strategic organizing. Examine finally disclosed the actual forerunners position from the believe in, revealing details, in addition to good hope by supplier aspect will certainly impact within the friendship from the provide sequence management.

Collins,Sun and Li (2012) conducted a study to analyze the relative importance of consumers and suppliers relationship as well as the country’s organization environment for the food supply chains that were being traded Australia to China throughout 2012. They analyzed the connection of Chinese as well as Australian firms with their business partners. Primary data had been used to conduct this study; surveys of 84 wholesalers, retailers, and importers in China and 22 Australian wholesaler sand exporters were used. An instrument was used to collect the responses which contained two explicit sections that focused on association of firms with their speedy associates as well as others for interpreting the whole chain relationship. T-tests in addition to chi-square assessments were used to measure the relationship differences of two countries with their partner firms.The study concluded that the supply chains are more sensitive to the business environment than to the buyer supplier relationships. In addition, Australian firms have strong relationships firms and are more satisfied by their partners than Chinese firms are as they are more involved with their partners in exploring the new opportunities.

Houet \’s., (2014) done the analysis to look at, what sort of spread involving risk in addition to effects involving energetic provide sequence management might be affected due to believe in device. The primary goal of this study has been to find out the actual level involving believe in device that could affect the actual provide sequence system. A few different types have been utilized to look for the romantic relationship between believe in and also the stronger provide sequence management, the actual provide sequence system style, the actual believe in style and also the company broker style. The actual researches experienced played around with in these kinds of designs to investigate the actual have an effect on from the believe in device in provide sequence effectiveness in addition to risk expansion beneath circumstances involving external agitations, interest rate, in addition to competition on the brand new rivals on the market. The actual simulation strategy has been used in the analysis to deliver empirical final results to the study problem. The data has been gathered on the 671 manufactures to be able to perform this kind of study definitely disclosed that economic performance from the company can be influenced by the level of believe in amongst seller in addition to customers because of their affect the actual provide sequence system.

Handfield and Bechtel (2002) inside their review investigated the importance of trust along with the relationship framework which is used in making the supply chains more receptive. In order to reduce cycle times between the entities involved in the supply chain process, managers built strong relationships based on trust. The previous studies suggested a design which involves investing in property and human resources results in building a strong trust based relationships. Experts’ analysts proposed a constructive link between responsiveness and investment in HR and trust. The author has conducted the research by using primary data like mail survey method was used to collect data from a sample of purchasing managers in North American manufacturing firms. In order to yield the results t-tests were applied on the responses. The researchers concluded that managers who really wanted to bring improvement in the supply chain responsiveness should put effort in promoting greater levels of trust. Moreover, the model showed that investment in human assets and site-specific assets leads to building strong relationships of trust amongst the parties which then helps improving the supply chain responsiveness.

Lofti et \’s., (2013) done their study to investigate that what sort of useful details revealing throughout provide sequence could produce powerful final results in addition to elevated the actual organizational performance throughout producing field. This study in addition centered on the actual boundaries in addition to paybacks involving details revealing that led to enhanced integration throughout provide sequence routines amongst businesses. Firms experienced much better their competitive advantages as a result of useful details program come simply by worldwide launch involving long lasting co-operation in addition to coordination. Shared details can lead to much better social ties in addition to build robust relationships involving users active in the provide sequence course of action. Qualitative study ended up done and it also has been concluded that details integration throughout necessary throughout improving the actual organizational performance mainly because it ends up with much better supply management, improve productiveness and will entirely get rid of the bull-whip result.

A research was conducted by Ryu, Tsukishima and Onari (2008) for investigating the conducts that connects supply chain (SC) performance and various forms of information-sharing methods. Main argument of the researchers was that it is due widespread trade of technologically advanced equipment used in supply chain process throughout the world that has led to substantial uncertainty in the whole SC. Such uncertainties can be caused by unskilled workforce and frequent malfunction in the production facilities which affects the demand and supply side of the product. These uncertainties can result in poor inventory management and in order to deal these situations, information sharing is a necessary tool. The first type of information-sharing process is recognized as Planned Demand Transferring method (PDTM), and the second type is recognized as the Forecasted Demand Distributed Method (FDDM).The study concludes in terms of throughput, the actual performance of FDDM surpasses the PDTM. Also when the forecasting error is quite substantial and the demand variability is also reasonably substantial, FDDM maintains relatively small inventory levels as compared to PDTM. Alternatively, in the event need changes also with a small amount next the overall performance connected with PDTM was discovered being greater in comparison with FDDM.

Yeunget al., (2009) empirically studied the impact of strong powers and trust on the supply chain network. The impact was largely not known even after extensive accounts accomplished coming from a lot of researchers. Techniques consumed at the research for the purpose of data collection was mainly aimed at the manufacturer in China, because it is becoming linkage involving firms that will generally employed supply cycle networks. In addition, facts ended up being collected from your five major metropolitan areas and the list of questions ended up being built relation to the actual service provider integration, have confidence in as well as coercive forces (powers). In conclusion of this study, it showed that there should be combination of trust and powers. Together, these two should be used by the firms to improve supply chain network. Additionally, seller combination cannot prosper without suppliers’ input of competence and information. In terms of seller integration, sellers’ usage of strong power will always be supportive to boost buyers’ seller combination, even when buyers did not find trust within sellers. This conclusion delivered an important and fresh understanding for firms leading trade in China.

Walter (2003) carried out a research in an attempt to analyze the different characteristics of close relationships and to examine that how they impact the overall supplier’s involvement in the process of new product development (NPD). Primary method was used to collect the data in which the managers directly involved in network as well as connection management chores documented 247 answers. Theoretical framework results helped the actual speculation as well as recommended supplier’s effort with NPD is determined by having trust as well as on supplier’s responsibility. Study also concluded that customer’s adaptations will positively affect supplier’s commitment and trust.

Nyaga, Whipple, as well as Lynch (2009) conducted examination in quest for discovering the actual variables that will permit effective effort through collaboration and the buyer-suppliers perception. Surveys were conducted from both buyer firms and supplier firms. Structural equation modelling was used to test the hypothesis .The study confirmed that tough supplier and buyer enter into an agreement to gain mutual benefits though in reality it is incorrect. It ended up being far more focused on the partnership aspect while service provider respected guarding his or her deal. Final results in addition figured combined activities as committed ventures as well as info discussing bring about far more responsibility as well as have confidence in, that may sooner or later strengthen pleasure as well as performance involving supply cycle.

Panayides and Lun (2009) study analysed trust as a vital component for the development of sociable funds with Enterprises. Accomplishment of major Japanese people automobile around the globe is actually attributed to have confidence in staying a fundamental portion of collaborative perform in between various supply restaurants. In addition to trust, innovativeness and the motivation to check fresh suggestions is actually linked to boosting supply cycle management. The cardstock done a good interlink in between have confidence in as well as innovativeness by means of hinting that the makers rely upon the selected service provider can favourably influence the actual firm’s innovativeness, that is very therapeutic for supply cycle performance. The illustration of an customer survey conducted on BRITISH makers was presented with to increase harden the actual speculation. Even so, the idea acknowledged cantering solely on BRITISH makers created the study constrained with setting.

In accordance to (Arshinder, 2008) cooperation is usually a core lever involving SCM. This great article in essence refers to sun and rain involving coordination with supply cycle management and gives a summary regarding it. This great article discloses that will effort, integration as well as synergy are common phrases which might be linked jointly to supply cycle coordination (SCC). this particular examine accomplished study on supply cycle coordination (SCC) through the use of second facts my spouse and i. e. selection directories covering a simple array of journals So link between this content afforded a good perception in to the incredible importance of synergy in the supply cycle multilevel as well as influence can result in more modern as well as efficient strategies to success.

Hausman, as well as Johnston (2009) inside their study cardstock outlined the actual intricate using influence for you to form conclusion producing all over relational partners in the supply cycle. Distinct emphasis ended up being paid on affect being employed in promoting conformity together with distinct actions and also to increase performance. The cardstock located connection in between non-coercive influence or coercive affect together with conformity while latter located any connection in between conformity as well as coercive affect. Housman as well as Johnston (2009) started on any quest for you to bring in a involving factor composition, that is generally applied with future reviews involving scientific tests. The cardstock in addition presented a detailed analysis involving just how affect is employed being a encouraging mechanism to raise synergy as well as conformity with relational partners.

Zhang as well as Dhaliwal (2009) researched on the idea for you to prove which it enabled technological innovation incorporates a beneficial effect on the actual supply cycle multilevel as well as might help to improve the interior coordination as well as transmission inside the corporation and quite a few important outside transmission with all the supply multilevel, adding the whole supply cycle to produce businesses management easier for the business with it enabled technological innovation; this could not only guide this company by itself yet all of the suppliers linked to the idea. Corporations that will take part in inter-organizational effort incorporate an array of THAT to their business techniques as well as businesses so that you can perform business together with customers as well as suppliers in an electronic form. This great article ends together with the belief that adopting interior as well as outside THAT enabled systems might certainly increase price towards business as well as allows the actual corporation to experience a aggressive advantage within this globalized age; nevertheless THAT process adaption could take challenges want it should be handled by means of all of the partners in the supply cycle multilevel as well as each and every service provider has to speak as well as coordinate appropriately as well as must train his or her staff concerning this particular automated work with. Therefore the write-up with its speculation as well as study construction establishes that there is a positive influence from it enabled technological innovation on service provider cpa networks, as well as might be a major cutting-edge.

Hawkins et al., (2007) conducted a research on the relationship between Transaction Cost Analysis (TCA) and buyer-seller traditions. It was suggested that a key tenant of TCA is opportunism. In this context opportunism was defined as being the product of Western capitalism, which focused on the selfish nature of firms to gain a competitive edge over their rivals in the marketplace. The paper questioned whether the assumption of opportunism being ‘bad’ is necessarily true, especially in situations where it is beneficial for a supply chain to be opportunistic. The paper assessed empirical research on the consequences of opportunistic behaviour as defined by the TCA. It confirmed that indeed opportunistic behaviour does have an effect on the way a firm performs and also impacts a firm’s relationship with its trading partners. Thus in order to have an effective and prosperous supply chain, a better understanding of opportunism is required via further empirical research.

Koçolua et al., (2011) inside their study acknowledged the need for just a far more one as well as centralised approach in between supply cycle users to further improve performance and gaze after superb client price on the least expensive feasible cost for you to each and every person in the actual supply cycle. The item outlined just how info discussing significantly improved material movement; low costs for those stakeholders of the supply cycle; enhanced as well as strengthened contact between your stakeholders; speeded way up shipping and delivery occasion thus ultimately causing better client satisfaction. The cardstock acknowledged as well as outlined three probable breaks with study that will had not been researched in depth formerly. These were: Empirical evidence to aid the partnership in between SCI as well as info discussing when it comes to integration together with clients, integration together with suppliers as well as intra-organizational integration. The item deducted by means of reaffirming the need regarding companies to use info discussing for you to the max probable so that you can strengthen his or her supply cycle performance.


3.1 Research Type

For examining the factors affecting supply chain management, both quantitative and qualitative methods were used. Quantitative method like questionnaires was used in order to get objectivity and generalize the opinions of representatives. On the other hand, qualitative research was used as it can often bring important insights not found in quantitative studies. Also, this approach provides a deeper understanding of the phenomenon and delivers a view that is more holistic.

3.2 Data type and research period

In this study, the primary data was collected and used to analyze the various factors that affects the supply chain process. In order to achieve the objectives of the study cross sectional research was conducted and a questionnaire survey was designed. The research period was from October 2015 to April 2016.

3.3 Population and Planned Sample

The research population consisted of all the managers and employees belonging to the supply chain department of Metro, Hyper Star, Faisal Spinning Mills, Nestle, and Nishat Textile Mills The questionnaires were distributed to 156 of the supply chain management managers and employees, randomly selected on the basis of their availability, years of experience and education. As taken by many previous studies, Likert scale measurement was used to quantify the three scopes of the perceived justice. In this measurement, “strongly agree” was the highest scale taken. Whereas, the lowest scale taken was “strongly disagree” for measuring the Trust, Commitment, Satisfaction, Cooperation Communication, and Adaption.

3.4 Instrument Description

Instruments Creators Year No. of items

Trust Ray Collins 2012 5

Commitment Ray Collins 2012 5

Communication Ray Collins 2012 6

Adaptation Ray Collins 2012 3

Cooperation Ray Collins 2012 2

Satisfaction Ray Collins 2012 3

SCM Benton 2005 3

3.5 Research hypothesis

H1: There is a significant relationship between Trust and Supply Chain Management

H2: There is a positive significant relationship between Commitment and Supply Chain Management

H3: Communication is significantly related to Supply Chain Management

H4: There is a significant relationship between Adaptation and supply chain management

H5: Satisfaction has a significant relationship with supply chain management

H6: There is a significant relationship between Cooperation and supply chain management

3.6 Techniques

Statistical techniques would be used in carrying out the research. This includes Cronbach’s alpha that would be utilized for testing the dependability of the instrument. Also CFA (Confirmatory Factor Analysis) would be utilized to comprehend the imparted change of the measured variables and to check whether information fit the hypothesized estimation model or not. Moreover, regression analysis will also be used to confirm and distinguish the relationship among dependent and independent variables. These measures will be used for testing the hypothesis, in order to see the existence of a relationship amongst observed variables.

3.7 Data analysis

For the purpose of data analysis, SPSS and AMOS Software’s will be used. Responses from questionnaires will be coded in SPSS and then the data will be transferred to AMOS which will help in the process of comparing, estimating and hypothesizing the models. . Regression analysis and Cronbach’s will be carried out in SPSS and with the help of AMOSS; CFA (confirmatory factor analysis) would be calculated.

3.8 Data interpretation

After gathering the results generated with the help of running statistical techniques, the interpretation of data would be done based on the responses collected by the different people involved in the supply chain management field. The data would be compiled, investigated and would be analyzed using the tables, graphs and regression results.


3.9 Theoretical framework


Data Analysis

The results chapter of the research paper comprises of the analysis of the data collected in two stages. The first stage included confirmatory factor analysis for the examinations of measurement model. The measurement model is being evaluated through CFA(confirmatory analysis); (i) individual reliability of the items (i.e., factor loadings) (ii) AVE (iii) internal consistency and (iv) discriminant validity among constructs /(ASV).The reliability of the construct was also examined through Cronbach’s alpha being calculated through IBM SPSS 20 apart from internal consistency measure calculated through Amos Graphics. Lastly, for testing the proposed hypothesis for the research, structural equation model was being analyzed.

4.1Confirmatory Factor Analysis (CFA)

According to Kuo et al., (2009) confirmatory factor analysis (CFA) is carried out to see that how well the model is constructed to test the hypothesis and also to check the validity and reliability of the model constructed. The benchmark for factor loading is 0.5 and above according to Bagozzi & Yi, (1988) and Hair et al., (1998). The result shows that there are total seven variables which include supply chain management, trust, commitment, adaptation, communication, satisfaction, and cooperation. Each of these variables should have factor loading greater than the benchmark which is of 0.5 (Hulland, 1999). Trust has five items and all factor loading ranging from 0.514 to 0.759. So none of the item is deleted as the factor loading for each item of trust is greater than 0.5. The factor loading of all five items lies between the arrays of 0.646 to 0.696 which is more than 0.5. Adaptation has three items having factor loading 0.67 to 0.803 that is above 0.5. The factor loading of satisfaction has three items with factor loading ranging from 0.447-0.716.The two of its items have factor loading above 0.5., and one item has factor loading of 0.447 but by rounding off we consider it around 0.5. In the case of communication has factor loading, ranging from 0.468 to 0.670, for all its six items. Cooperation has two items and both have factor loading above 0.5. There were two questions in Cooperation had factor loading below 0.5 bench mark so they were deleted to make the model fit. (See Appendix B table 4.1)

4.2. Convergent validity and Construct reliability

Average variance extracted (AVE) measures the amount of variance that is captured by the construct in relation to the amount of variance due to measurement error and can be calculated using the following formula: (summation of squared factor loadings)/(summation of squared factor loadings) (summation of error variances) (Fornell and Larcker, 1981). If the average variance extracted is less than .50, then the variance due to measurement error is greater than the variance due to the construct. In this case, the convergent validity of the construct is questionable (Fornell and Larcker, 1981).. The bench mark of AVE is of 0.45 (Hair, 2006). The AVE of all the independent variables lies between 0.40-0.691. All of variables except communication and trust have AVE greater than the benchmark of 0.45 which means that the model is reliable except for communication.

The construct reliability (CR) is another dimension for measuring the reliability of the model. It has a benchmark of 0.6 (Fornell and Larcker, 1981). and the values in the table indicates that the model is fit and reliable as each variable has the CR value greater than 0.65.The values for construct reliability lies in the range of 0.818-0.512. As the construct reliability of trust, communication, cooperation, adaptation and commitment is greater benchmark except satisfaction that has a value 0.512 which is less than the benchmark. (See Appendix B Table 4.2)

4.3 Discriminant Validity

Discriminant validity measures the difference of one variable from the other variables in model (Carmines and Zeler, 1979). In this research discriminant validity exits among all the variables as the squared co-variances for each variable is less than average value extracted Discriminant validity is that AVE shall be greater than the square of covariance of majority of the variable with the other variable (Fornell and Larcker, 1981), except trust and satisfaction that does not holds the discriminant validity. (See Appendix B table 4.3)

4.4. Model Fitness Indices

According to Hair et al., (1998) Goodness-of-fit of model is being evaluated by several measures of indices. CMIN/DF has an acceptable value between 1 and 3. The result shows that the value is in the acceptable region. According to Hair et al., (1998) AGFI, GFI, TLI, NFI and CFI shall be greater than 0.9 but 0.7 is also acceptable. So, results shows that the chi square in Amos known as CMIN has a value of 2.460 which is less than 3 and greater than 1 and is within the level of acceptance. CFI value of the model is .721 which is accepted by, J¨oreskog and S¨orbom (1984) and the values of TLI and NFI, are greater than 0.7 but less than 0.9 which indicates that measurement model have good fit but in moderate region. Hence confirmatory factor analysis was acceptable model for this research (See Appendix B table 4.4)

4.5. Reliability analysis

Cronbach is used to measure the internal consistency of the questionnaire that has been used in the research which shows is the reliability of the questionnaire. Nunnally (1978) stated the benchmark for the Cronbach alpha is to be 0.7 and above. To check the reliability of the self-administered-instrument Cronbach’s alpha is highly applicable in this research using SPSS. Guilfiled (1986) in his study established that the greater the Cronbach’s alphas the greater will be the reliability of the instrument. The Cronbach’s of all the variables is greater than 0.7 as it ranges from 0.73 to 0.809. This shows that entire questionnaire is above the benchmark that shows the high reliability of the questionnaire. As far as individual Cronbach’s alpha for all the variables in concerned, it is also above 0.7. This proves that questionnaire is reliable and has high internal consistency among variables. (See Appendix B table 4.5 and 4.6)

4.6. Structural equation Model (Path analysis)

This research paper also includes path analysis which is an extension of multiple regression. It goes beyond regression in that it allows for the analysis of more complicated models. In particular, it can examine situations in which there are several final dependent variables and those in which there are “chains” of influence, in that variable A influences variable B, which in tum affects variable C. Despite its previous name of “causal modelling” path analysis cannot be used to establish causality or even to determine whether a specific model is correct; it can only determine whether the data are consistent with the model. However, it is extremely powerful for examining complex models and for comparing different models to determine which one best fits the data. (Streiner, 2005)

4.6.1Regression Equation:

Supply Chain Management = 1.496- 0.149Trust + 0.186Commitment + 0.227Communication + 0.151 Adaptation -0.002 Satisfaction + 0.210 Cooperation.

The equation has been constructed by using betas from coefficient table. In order to test the impact of various factors on the supply chain management regression analysis is done. Supply chain is taken as dependent variable and factors like trust, commitment, satisfaction, adaptation, communication and cooperation are taken as independent variables. The equation shows that the independent variables which includes, commitment, adaptation, communication and cooperation have positive impact on the supply chain management (dependent variable) as they all have positive sign Collins (2011). Whereas, trust and satisfaction has a negative relation as they are represented with a negative sign. According to Collin (2013) satisfaction impact supply chain in a negative way which is according to the results of this recent study. Athanassopoulos et al. (2001) and Kristal (2011) support that trust and satisfaction is negatively related to supply chain management which is against the previous researches in which they have a positive relation with supply chain management. Hence this further shows that 1 percent increase in commitment will increase Supply Chain Management by 18.6 percent, all else constant. If adaptation is increased by 1 percent it will increase Supply Chain Management by 15.1 percent, all other variables are constant. Increase in 1 percent of the communication will increase Supply Chain Management by 22.7 percent. Moreover, with all else constant, 1 percent increase in cooperation will increase Supply Chain Management by 21percent. However, In addition a 1% rise in trust and satisfaction will decrease supply chain management by 14.9% and 2%. Supply chain management will have a constant value of 1.4960 if we make all the variables equal to zero. (see appendix B table 4.7)

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