The Role of Supply Chain Management and Logistics Control on Organisation Performance in the UK Clothing Manufacturing Sector

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Executive Summary

The research aimed to investigate the impact that supply chain management and logistics control has on organisational performance, focusing on clothing manufacturing companies in the UK. The quantitative, cross sectional survey was based on positivism research philosophy and deductive research approach. Consequently, the study used descriptive and regression to analyse primary data gathered from a purposive sample of 12 UK clothing manufacturing companies. As per the findings, UK clothing manufacturers have adopted supply chain management practices but at varying extent. Inventory management is the practice that has been adopted greatly followed by transportation management and supply chain integration with strategic partnership recording low adoption. Moreover, the findings revealed the relationship between supply chain integration and the organisational performance of UK clothing manufacturers is not statistically significant at 5% confidence level. Similar, findings were revealed when supply chain integration, transportation management and strategic partnership were related with organisation performance. However, the findings have also revealed that while the different supply management practices are not predictive enough on their own statistically, taken together the practices influence organisational performance. AS such, the research recommends that firms in the UK clothing manufacturing sector need a holistic approach to supply chain management and logistic control if they are to derived the desired benefits.

1. Chapter One; Introduction

1.1 Research Background

The main purpose of any business undertaking is to make profits. Thus, businesses have to employ a myriad of strategies and processes to realise these profits. For manufacturing companies, it is necessary for the produced goods to reach the market to make profits which underscores the need for an effective supply chain management (SCM) practice. Christopher (2016) defines SCM as the management of the flow of goods and services within and without an organization; a practice that enables businesses to reduce costs and increase customer value. Similarly, Yang et al. (2016) posit that logistic control, which is the real-time tracking of the delivery of goods, can help businesses to gain a competitive advantage over their peers. In the United Kingdom (UK), manufacturing industries have employed the practices to gain an edge over both domestic and international rivals. There is growing interest in the relationship between SCM, logistics control and organizational performance. Some scholars are of the opinion that it is possible to improve business performance using SCM and logistics control. This is especially important in a world where shareholders and customers constantly demand for improved value from the business. Therefore, managers acting as the agents of the shareholders have to develop new strategies pertaining to supply chain management and logistics control to satisfy customers, and consequently improve shareholders’ values. For instance, Ristovska (2017) conducted a study that revealed that businesses can use logistics control to gain efficiency, competitive edge and customer satisfaction. These factors are crucial for increased business performance of any organization, especially organizations in the manufacturing industry. Further, some theories such as total quality management, supply chain roadmap, and the theory of constraints are crucial in revealing the importance of SCM improving business performance. Based on the aforementioned statements, this research seeks to analyse the impact the impact that SCM practices and logistics control have organisational performance, focusing on clothing manufacturing companies in the UK.

1.2 Research Problem

The modern world has experienced technological and telecommunications infrastructure improvements that have changed consumer behaviour as evidenced by activities such as online shopping (Sam & Sharma, 2015). Consequently, companies are compelled to come up with ways to meet the ever changing and ever deepening consumer needs and expectations. As one of the ways to boost efficiency and increase overall customer satisfaction companies have sought to enhance their SCM practices. This issue is not only unique to manufacturing companies but also companies in the retail industry, especially now that people are shifting to online retail services. There have been several researches that have been conducted to determine the impact of supply chain management and logistics control on the firm performance of various companies in various sectors. For instance, Kumar et al (2017) studied the impact of supply chain integration on the performance of companies in the UK food sector and found that integration enhanced the supply chain management performance. Another study by Sergeyev (2016) investigated the role of logistics control in financial performance of Russian companies. The researcher established that by lowering cost, logistics control can come in handy in enhancing firm performance. Further, some studies have revealed conflicting findings on the impact of the two variables on the firm performance. While Christopher (2016) and Yang et al (2016) reveal a positive relationship between supply chain management and logistics control on organization performance, Kyeremeh and Dza (2018) reveal tit is at the production stage where value is created. As such, SCM has limited influence on performance. Also, Green et al (2008) downplay the importance of SCM on the financial performance of companies and thus argue that companies can optimize marketing to improve financial performance. Additionally, there lacks clear studies on the impact to manufacturing companies in the UK. Thus, this paper will focus on manufacturing industries in the UK to determine how SCM and logistics control practices affect their performance.

1.3 Rationale of the Study and Potential Contribution(s)

Despite the UK being a leading economy in the globe, it has experienced decline in its manufacturing sector over the recent past. This has been at a time when the manufacturing industries of emerging economies such as China, India, South Korea, and Brazil have been on the rise globally (Silver, 2020).   According to Romei (2020) of the Financial Times magazine, the UK manufacturing industry in overall has been on the decline for years with December 2019 recording a purchasing managers index (PMI) rate of 47.5, which is the lowest figure recorded since 2012. Such a trend can also be witnessed in the clothing manufacturing sector which has been fighting off competition from companies with manufacturing points in countries characterised by cheaper labour such as China (PWC, 2020). This was seen stakeholders deliberate on the best way to reserve the trend. As underscored by PWC (2020), policy makers and the respective corporate heads need to devise ways to improve the competitive edge of the sector if it is to perform satisfactorily in a rapidly changing and competitive world. This research sees effective SCM practices as one way of achieving this.

Further, this research is motivated by the fact that current empirical studies have shown mixed results when it comes to how SCM influence performance. Some studies reveal that SCM practices can boost performance of a company whereas others show no significant impact of SCM on a firm’s profitability (Kumar et al., 2017; Kyeremeh & Dza, 2018). Also, some studies show that logistics control enhances profitability while others show no significant impact on profitability (Sergeyev, 2016; Green et al., 2008). Therefore, there is a great need to understand in deeper detail the role that SCM and logistics control have on organizational performance. This information will help UK clothing manufacturers optimize these two variables for increased profitability.

Equally, the modern world is experiencing technological changes. One of the significant changes brought by technology is the shopping habits of consumers. Nowadays, people are embracing online retail shopping and it is expected that the trend will continue into the foreseeable future. According to Statista (2020), the value of online retail in the UK as at 2019 stood at £76.04 billion. This represents a share of 19% of the total retail sales projected by Statista (2020) to increase to 34.5% by the year 2023. Therefore, there is an opportunity for manufacturing companies to tap into. One of the ways they can feed into this emerging market is by improving their supply chain management and logistics control to ensure that their goods reach the market in time. Consequently, it will help the firms to improve their financial performance.

As a result of the eminent differences in viewpoints presented by existing research and the new opportunity presented by technology and consumer trends, it is clear that there is a need for this study that intends to show the impact of supply chain management and logistics control on organisational performance. This study intends to perform an up-to-date empirical study on the subject matter which will enable stakeholders and managers of firms in the UK clothing manufacturing to maximise business performance.

1.4 Research Questions

This empirical investigation seeks to answer the following research questions;

  1. What is the impact of supply chain integration on the organisation performance of UK clothing manufacturing firms?
  2. What is the impact of strategic partnership on the organisation performance of UK clothing manufacturing firms?
  3.  What is the impact of transportation management on the organisation performance of UK clothing manufacturing firms?
  4. What is the impact of inventory management on the organisation performance of UK clothing manufacturing firms?  

1.5 Research Aim

The core aim of this empirical investigation is to evaluate the impact that SCM and logistics control have on organisation performance of UK clothing manufacturing firms.

1.6 Research Objectives

To realise this aim, the research seeks to meet the following specific objectives;    

  1. To evaluate the impact of supply chain integration on the organisation performance of UK clothing manufacturing firms;
  2. To evaluate the impact of strategic partnership on the organisation performance of UK clothing manufacturing firms;
  3.  To evaluate the impact of transportation management on the organisation performance of UK clothing manufacturing firms;
  4.  To evaluate the impact of inventory management on the organisation performance of UK clothing manufacturing firms.  

1.7 Research Method  

This research will adopt the positivism research philosophy. The philosophy is suitable for this empirical investigation since it ensures objectivity (Sergeyev, 2016). In line with the research philosophy, the researcher will deploy a quantitative research design. Specifically, the empirical investigation will deploy regression analysis method to investigation the correlation between the research variables. Further, descriptive statistics will be used to summarise the key attributes of the research data.

Regarding sampling, the researcher will adopt the purposive sampling technique to come up with a sample of UK clothing manufactures. The respondents will be the supply chain managers of the sampled firms. Data will be gathered from the respondents through questionnaires. This approach is appropriate since it will enable the researcher to gather data on numerous issues pertaining supply chain management, logistic control, and organisational performance.          

1.8 Research Structure

This research is structured around five chapters. The first one is the introductory chapter. The second chapter is the literature review. Chapter three discusses the methods adopted to meet the research objectives. Conversely, chapter four presents the research findings. On its part, the final chapter concludes the whole research and provides several recommendations.  

1.9 Chapter summary

The first sections of this introductory chapter are the research background, problem, and rationale. The subsequent sections are the research questions, aim, objectives, and method. The final section outlines the research structure.  

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