Supply Chain Management, Product Quality and Business Performance

Supply chain management (SCM) has been increasingly recognized as critical factors in improving bottom-line performances. In addition, more and more firms are increasingly making use of SCM to improve their performance. The study aims to understand and determine critical variables of SCM that would be able to enhance product quality and business performance in manufacturing companies. The study measures senior production or SCM managers' perceptions regarding SCM and level of performances in their companies. Two hundred and fifty responses are received and analyzed using SPSS. The study specifically investigates relationships between SCM, product quality and business performance and these associations are analyzed through structural equation modeling (SEM). The SEM result demonstrates that SCM dimensions namely 'lean production', 'new technology and innovation', 'strategic supplier partnership' and 'postponement concept' appear to be of primary importance and exhibit significant effects on product quality and business performance. Findings of the study provide a striking demonstration of the importance of SCM in enhancing bottom line performances of Malaysian manufacturing companies. The result indicates that manufacturing companies should emphasize greater attention to the waste elimination program through lean production as well as the technological aspects of SCM and a greater degree of management support for SCM enhancement initiatives.