Value chain management practices and supply chain performance in manufacturing industry: the mediating role of supply chain integration

The purpose of this study is to investigate the relationship of three factors: value chain management practices (VCMP) that consists of professional human resource, firm infrastructure, procurement and information and communication technology, supply chain integration (SCI) and supply chain performance (SCP) among manufacturing industry employees in Malaysia. It presents a conceptual model in which VCMP implementation can affect SCP either directly or indirectly, via SCI. This study is perhaps one of the few to address the effect of VCMP towards the overall performance of the SCP in consideration of the mediation effect of SCI. The research design for this study employ quantitative method of stratified random sampling and survey questionnaires that have been developed based on detailed analysis of relevant literature. A pilot study has been conducted to check the strength of the VCMP in Malaysia manufacturing industry, and hierarchical regressions analysis was used to test the relationship between VCMP, SCI and SCP. A total of 379 questionnaires were distributed to manufacturing firms in Johor, Klang Valley and Pulau Pinang. Furthermore, the study sample is focused on the manufacturing sector with respondents from the sector itself. A total of 6 variables of value chain management practices and supply chain integration towards supply chain performance with 35 items have been developed; professional human resource, firm infrastructure, procurement supplies services, information and communication technology, supply chain integration and supply chain performance. In addition, the result of this research presents a good and better recommendation of overcoming the problem of value chain management practices in supply chain for manufacturers who consider in advancing their firm’s performance. Manufacturing companies in Malaysia need to understand and realize that value chain management practices can bring major benefit towards company’s performance and at the same time make own manufacturing company as industrial paradigm of the ideal manufacturing sector. The study successfully manages to obtain 95% of valid responses from the Malaysian manufacturing industry which shows that there is an encouraging level of implementation in value chain management practices among the manufacturing firms, with influence of supply chain integration as mediator to increase the firm’s supply chain performance in a single setting. Moreover, the mediating effects of supply chain integration in Malaysia manufacturing industry have been explained further. Furthermore, this research contributes to the development of a contingency theory of value chain management practices suggesting that the impacts of value chain management practices on supply chain performance vary under different levels of supply chain integration. An organization needs to consider each component of value chain management practices to ensure long-term business operation and the outcome of this research also provide additional insight into supply chain performance. The implications are discussed to provide insights for future research in this area. In addition, the study contributes to the supply chain management literature by clarifying the mediating effects of supply chain integration on the relationship between value chain management practices and supply chain performance. The study offers a foundation for future research in diverse manufacturing contexts.