The impact of total quality management on supply chain...

International Journal of Production ResearchVol. 49, No. 11, 1 June 2011, 3405–3424

The impact of total quality management on supply chain management

and firm’s supply performance

Assadej Vanichchinchaia* and Barbara Igelb

aGraduate School, Sripatum University, Chonburi Campus, Chonburi, Thailand;bSchool of Management, Asian Institute of Technology, Pathumthani, Thailand

(Received 18 January 2010; final version received 23 April 2010)

This research investigates the relationships among total quality managementpractices (TQMP), supply chain management practices (SCMP) and firm’s supplyperformance (FSP) in the automotive industry in Thailand. The measurementinstruments for SCMP, TQMP and FSP were developed based on an extensiveliterature review and verified by experts, pilot test and various statisticaltechniques to ensure reliability and validity in structural equation modelingconstructs. The hypothesized model was tested through a path analysis.Qualitative case studies of two large first-tier automotive suppliers wereconducted to obtain more in-depth information. We found that the set ofSCMP, TQMP and FSP measures are reliable and valid for Thailand’sautomotive industry. TQMP not only has a significant direct positive impacton SCMP and on FSP but also a significant indirect positive impact on FSPthrough SCMP.

Keywords: TQM; supply chain management; supply performance; supply chainquality management; automotive; Thailand

1. Introduction

In a dynamic international market, quality is not enough. Supply at the right time, placeand cost is also critical for competitive advantage (Chin et al. 2004, Robinson andMalhotra 2005). The global business competition is no longer between the organisationsbut between their supply chains (Kuei et al. 2001, Li et al. 2006). Therefore, leadingcompanies have adopted supply chain management (SCM) and total quality management(TQM) to strengthen their organisational performance. However, a simultaneousimplementation of both systems is challenging and consumes a considerable amount ofresources due to the extended scope that covers not only internal functions but also theoperations of external business partners. If the simultaneous implementation can beaccomplished, the organisation should reap great benefits. If it fails, the impact on thebusiness performance would be serious.

Although, both SCM and TQM are critical for organisational competitiveness, thesubjects have been, most of the time, studied separately (Kuei et al. 2001, Gunasekaranand McGaughey 2003, Casadesus and Castro 2005, Robinson and Malhotra 2005).This research aims to investigate the relationships among total quality managementpractices (TQMP), supply chain management practices (SCMP), and firm’s supply

*Corresponding author. Email: [email protected]

ISSN 0020–7543 print/ISSN 1366–588X online

� 2011 Taylor & Francis

DOI: 10.1080/00207543.2010.492805

http://www.informaworld.com

performance (FSP) with respect to the internal supply performance of the automotivepart suppliers, a critical component of the whole supply chain. The automotive industryin Thailand was employed as a case study; because, the automotive supply chain is verycomplex and the Thai automotive industry is very active in both SCM and TQM. Also,it is one of the major globally competitive industries of Thailand.

2. Relationship between SCM and TQM in the automotive industry

Quality management (QM) especially performance management and SCM have beenpredominantly discussed in operations management journals (Taylor and Taylor 2009).Ideally, QM should be a critical success factor for SCM to deliver quality products to thecustomer(s) in time and at competitive cost. Without providing empirical evidence,Gunasekaran and McGaughey (2003) suggested that TQM could play a key role inimproving SCM. Similarly, Bandyopadhyay and Sprague (2003) stated that TQM could beimplemented in a supply chain to enhance competitiveness, especially in complex supplynetworks, such as the automotive supply chain. Although an average automobile consistsof over 15,000 components, only a few are manufactured by the final assemblers(Perez and Sanchez 2001), while most are manufactured and supplied by a network ofspecialised vendors. Therefore, price, quality and delivery of an automobile dependsignificantly on those of its components, which in turn are influenced by quality andefficiency of all partners along the supply chain. As a result, the automotive industry is oneof the most active industries in the development of supply networks. Most companies inthis industry have implemented just in time (JIT) purchasing and operations which sharemany principles with SCM (Scannell et al. 2000, Tan 2001, Gimenez 2004, Narasimhanet al. 2008). JIT aims to achieve on-time delivery and to minimise unnecessary inventorycost. To achieve JIT delivery, quality of the whole internal operations as well as that of theexternal partners must be assured. Gonzalez-Benito and Spring (2000) studied theimplementation of JIT purchasing in the Spanish automotive component industry andconcluded that the automotive assemblers tended to develop a partnership with mostsuppliers, but applied JIT logistics to only some of them. In the U.S. automotive industrysupply chain, Scannell et al. (2000) found that JIT purchasing significantly associated withflexibility, conformance to specification and low production cost performance.

Empirical research explored the relationship between SCM and QM in differentaspects (Kuei et al. 2001, Gunasekaran and McGaughey 2003, Casadesus and Castro2005, Robinson and Malhotra 2005) but there was no consensus about the findings.Casadesus and Castro (2005) could not confirm that ISO 9000 practices fully supportSCM. Romano and Vinelli (2001), in a case in the textile and apparel industry intraditional and coordinated supply chains, found that the coordinated supply chain hadbetter ability to meet customers’ quality expectations than the traditional supply chain.Choi and Rungtusanatham (1999) compared QM at three supply chain levels, i.e., finalassemblers, top-tier suppliers and tertiary-tier suppliers, in the automotive, electronics andother industry groups. They could not identify any statistically different quality levelsacross the supply chains in their samples. Conceptually, Vanichchinchai and Igel (2009)in a review of SCM and TQM literature found that SCM and TQM share similaritiesregarding philosophical perspective, ultimate goal (customer satisfaction) and ultimateintegration (from internal functions and external business partners); but, have differencesin primary goal (quality for TQM and delivery for SCM) and primary integration

3406 A. Vanichchinchai and B. Igel

(from internal functions for TQM and from external business partners for SCM). Thesesimilarities and differences can provide synergy or conflict in a simultaneous implemen-tation. Therefore, it is important to explore and confirm what impact TQM can have onSCM (Gunasekaran and McGaughey 2003). The following research questions address thisneed. (1) Does TQMP have a direct positive effect on SCMP? (2) Does TQMP have adirect positive effect on FSP? (3) Does TQMP have an indirect positive effect on FSPthrough SCMP that address issues targeted by TQMP?

3. Relationships among the practices of SCM, TQM and firm’s supply performance

3.1 TQM practices and SCM practices

SCM and TQM are more than simple tools or techniques. They are managementphilosophies (Sun 2000, Tan 2001, Tan et al. 2002, Chan and Qi 2003, Khan 2003,Vanichchinchai and Igel 2009) implemented as large-scale management systems thatconsist of various sets of practices (Waldman 1994, Hellsten and Klefsjo 2000, Khannaet al. 2003). There are similarities and differences between TQMP and SCMP which couldsupport or obstruct each other. For example, customer relationship management asdefined by the Global Supply Chain Forum (GSCF) framework (Croxton et al. 2001),customer relationship proposed by Li et al. (2005) and Li et al. (2006), long termrelationship and cooperation (Min and Mentzer 2004) are similar to customer and marketfocus measured by the Malcolm Baldrige National Quality Award (MBNQA) criteria(NIST 2007), Brah et al. (2002) and Hoang et al. (2006). Internal lean practices proposedby Li et al. (2005), process integration by Min and Mentzer (2004) and manufacturing flowmanagement in the GSCF framework are similar to process management measured by theMBNQA (NIST 2007), the EFQM excellence model (EFQM 2010), the Thailand qualityaward criteria (Thailand Productivity Institute 2009) and Hoang et al. (2006).

For differences, Gowen and Tallon (2003) concluded that few researchers have studiedhuman resource management in the context of SCM. Many SCM frameworks do notinclude internal human resource practices, for instance, the SCM framework of GSCF(Croxton et al. 2001), Tan et al. (2002) and Li et al. (2005). Conversely, human resourcemanagement related practices are emphasized and included in most TQM frameworks(Hoang et al. 2006, Perdomo-Ortiz et al. 2009, Vanichchinchai and Igel 2009) such asMBNQA (NIST 2007), EFQM excellence model (EFQM 2010), Khan (2003), Pun (2002).Jimenez-Jimenez and Martınez-Costa (2009) also found a positive relationship betweenTQM implementation and human resource management practices of empowerment,teamwork, staffing, training, appraisal and compensation. In conclusion, the similaritiesand differences of management practices among SCM and TQM could either synergiseor conflict and this should be explored further and confirmed empirically. Thus, thehypothesis is as follows.

H1: A firm’s TQM practices have a significant positive direct effect on its SCM practices

3.2 TQM practices and firm’s supply performance (FSP)

Both SCM and TQM aim to achieve customer satisfaction as the ultimate goal(Gunasekaran et al. 2001, Gunasekaran and McGaughey 2003). Basically, customersrequire better product quality, faster delivery and lower cost. However, traditional QMfocuses on specification-based performance or ‘‘small-q’’ (Vanichchinchai and Igel 2009).

International Journal of Production Research 3407

It emphasises inspection to prevent delivering defect products to the customer (Prajogo

and Sohal 2001, Prajogo and Sohal 2004, Sun et al. 2004).The more immediate goal of SCM is satisfying customers through delivery or

time-based performance (Vanichchinchai and Igel 2009). This may be because traditional

SCM focused on physical distribution (Gilmour 1999, Croom et al. 2000). A comprehen-

sive study of the SCM literature by Chin et al. (2004) and Kuei et al. (2001) based on

Jayaram et al. (2000) concluded that the issue of timing receives special attention in SCM

research. SCM aims to respond to customers as quickly as possible, at the right time, place

and cost. Samaranayake (2005) also noted that SCM aims to achieve speed-to-market,

agility and the flexibility to respond quickly to customer requirements at minimum cost.

Moreover, several SCM researchers (Lummus and Vokurka 1999, Lummus et al. 2003,

Chase et al. 2007, Simchi et al. 2008) found that SCM emphasises the flow of materials

and information throughout the entire supply chain. Consequently, a conflict may arise

between delivery and quality goals. Conversely, there may be a synergy in the ultimate

goal, customer satisfaction. The following hypothesis tries to investigate the relation.

H2: A firm’s TQM practices have a significant positive effect on FSP

3.3 TQM practices and firm’s supply performance (FSP) through SCM practices

Both SCM and TQM require involvement from all internal functions and collaboration

with all external partners. Oakland (1989) suggested that the word ‘‘total’’ in TQM refers

to every department and every person at every level in the organisation. In the TQM

environment, all employees are treated as internal customers. If the internal customers are

not satisfied, value creation for the external customer is difficult. Therefore, TQM

emphasises employee involvement (Khan 2003). Accordingly, the criteria of most TQM

frameworks such as MBNQA and EFQM excellence model include a measure for human

resources. Hoang et al. (2006) also found that human resource management issues had the

highest coverage in TQM. However, too much focus on internal participation may lead to

difficulty in real TQM implementation. Yeung and Amstrong (2003) reported that a main

barrier of TQM implementation was lack of external focus, as quality improvement effort

were made only in internal issues.SCM requires internal and external business process integration across the whole

supply chain (Gimenez 2004) and its effectiveness and efficiency depend significantly on

the degree of integration (Chin et al. 2004). The external focus of SCM may be due to the

fact that the organisation itself must work with its customers and the suppliers within the

same SCM system. Most SCM frameworks emphasise the relationship with external

business partners and almost ignore the human resource component (Vanichchinchai and

Igel 2009). Although SCM emphasises integration of external business partners, the actual

implementation must begin by integrating internal functions and then moving on to

external integration. From an extensive literature review, Vanichchinchai and Igel (2009)

concluded that SCM targets external business partnerships and TQM emphasises mainly

internal functions to participate. Therefore, an ultimate integration and the difference in

primary focus can be a source for both, synergy and barriers in improving FSP when

implementing a combined set of SCM and TQM systems. Further research is needed to

explore this implication. Therefore, the third hypothesis is as follows:

H3: A firm’s TQM practices have a significant positive indirect effect on FSP through SCMpractices


4. Measures

In this study, a SCMP measurement for the automotive industry in Thailand wasdeveloped based on the research of Li et al. (2006), Min and Mentzer (2004), Tan et al.(2002), Lee and Kincade (2003), Sahay and Mohan (2003), Chin et al. (2004), GSCF inLambert et al. (2005) and Kim (2006). The TQM framework developed for Vietnam byHoang et al. (2006) was the basis for TQMP measures. Given that this TQM frameworkconstituted both hard and soft practices of TQM, covered most prestigious quality awardcriteria widely accepted by TQM experts such as MBNQA and EFQM excellence modeland was designed for industries in developing countries and then tested in the Vietnameseindustries. Supply chain performance measures proposed by Min and Mentzer (2004),Li et al. (2006) and Gunasekaran et al. (2001) were applied to develop the measurementinstrument for the firm’s supply performance (FSP). To improve the content validity, thesemeasurement items were assessed by four academic experts in SCM and TQM and threeindustry experts in the automotive industry in Thailand. As a result, SCMP measuresincluded four sub-constructs, namely information management, lean system, supply chainorganisation and partnership management. While, TQMP measures comprised customerfocus, commitment and strategy, human resource management and information analysis.FSP measures were composed of cost, flexibility, relationship and responsiveness.A six-point Likert scale was applied to validate the existence of the SCMP, TQMP andFSP in the companies surveyed.

Back translation of the questionnaire from English to Thai and back to English wasconducted to avoid linguistic differences in Thai and English technical vocabulary. Then,a pilot survey was conducted to ensure that the respondents had no difficulties incompleting the questionnaire. Twelve companies were selected from the database ofThailand Automotive Part Manufacturer Association (TAPMA) and the directory of ThaiAutomotive Business. The key informants were executives in SCM and TQM systems intheir companies. Since, both the paper-based questionnaire and electronic questionnairewere for the large-scale survey, the pilot questionnaire was prepared in electronic form tobe delivered via email in order to test the applicability of the electronic questionnaire.After receiving the returned questionnaires, the researcher contacted the respondents forfurther comments. Some suggested to provide a definition of SCM in the questionnaire,because SCM was new in Thailand even in the automotive industry. Therefore, itsmeaning, scope and application may not be clearly understood and could be vieweddifferently by different managers and companies. In response to this comment, the SCMdefinition of the GSCF which is ‘‘the integration of key business processes from end userthrough original suppliers that provide products, services and information that add value toall trade partners’’ (Lambert et al. 2005, p. 28) was added. Overall, there was no furthercomment about length, format, content and clarity of the questionnaire.

5. Research method

5.1 Data collection and sample

Multiple responses from each company were encouraged by asking at least tworespondents per company to answer the questionnaire to improve reliability of theinformation obtained. Carr et al. (2000) experienced that many Asian firms would bereluctant to cooperate in research surveys without first developing a relationship with theresearchers. To overcome such potential obstacles, various methods such as personal


requests via telephone, supportive requests from professional organisations and incentives

and rewards for respondents were used to obtain a high response rate.For the electronic questionnaire distribution, target companies were identified through

a directory of Thai Automotive Business and the database from TAPMA, Thailand

Automotive Institute (TAI), Federation of Thai Industries and Industrial Estate Authority

of Thailand (IEAT). Several professional organisations in the automotive industry in

Thailand including TAPMA, TAI, Human Resource Club of Amata Industrial Estate,

Human Resource Club of Laem Chabang Industrial Estate and Human Resource Club

of Eastern Seaboard Industrial Estate, helped distribute electronic questionnaire to their

members. The paper-based questionnaire was manually distributed during three public

seminars about the automotive industry organised by TAI and Thailand Productivity

Institute.The total number of returned questionnaires was 415; 146 questionnaires were

excluded due to missing data or inappropriate respondent profile. Almost all of them

were paper-based questionnaires distributed during public seminars. Single and multiple

responses were obtained from 171 and 40 companies, respectively. Including multiple

responses, the final number of valid samples by company was 211. Organisational

characteristics of the sample firms are shown in Table 1.The profiles of 35 non-respondent companies were checked via telephone, the

company’s website or the database of the IEAT. Chi-square test was applied to compare

the organisational characteristics between the respondent and non-respondent companies

as shown in Table 2. No significant difference between respondent and non-respondent

Table 1. Organisational characteristics.

Characteristics and description Company Percentage (%)*

PositionManaging Director/President/CEO 13 6.2%Director/Deputy Managing Director/Vice President 93 44.1%Manager 105 49.8%

OwnershipThai 75 35.9%Japanese 104 49.8%Other Nationality 30 14.3%Missing 2

Company SizeSmall to Medium5¼ 200 54 25.6%Large4 200 157 74.4%

Tier in the Supply ChainFirst Tier Suppliers 177 87.2%Other Tier Suppliers 26 12.8%Missing 8

Management SystemISO 9000 92 43.6%ISO/TS 16949 155 73.5%JIT or lean manufacturing or Toyota production system 45 21.3%

*Not including missing responses.


samples for every organisational characteristic was found, given the Chi-square value ofcompany ownership at 3.11 for two degrees of freedom, Chi-square value of company sizeand tier in the supply chain were 0.71 and 0.48 at one degree of freedom. All P values werehigher than 0.05 confirming the similarity between respondent and non-respondentsamples. Besides, t-test of the mean score of all items between single and multipleresponding companies showed a P value of 0.663 at 0.05 significant level confirming nosignificant difference between single and multiple responding companies.

5.2 Qualitative case study

We also conducted qualitative case studies of two large first-tier automotive suppliers toobtain more in-depth information about the linkages between SCM and TQM. The firstcompany was a French majority owned company (taken over from a Japanese company)specialised in engineering parts. It represented firms with more mature SCM and QMsystems. The other was a Thai-owned firm producing decorative parts and representingmanagement style with less developed SCM and QM systems. Both companies werecommitted to SCM and QM having departments directly responsible for SCM and QM.They were also leaders in manufacturing and management systems in their marketsegments and had received a number of awards and certificates. The informants were SCMmanagers who had key roles in SCM implementation and were knowledgeable about SCMand QM of their companies. Information about the background and objectives of theresearch were explained to the individual informant via telephone to have a clearunderstanding about the purpose of this case study and to develop a good relationship.The informants were assured that all information collected will be used solely for academicpurposes. The list of questions and necessary information was sent to them about 1 weekprior to the interview. Most of the questions were open-ended questions in order to gaina wide range of responses and frank opinions.

5.3 Reliability and validity

Item-total correlations and Cronbach’s � to examine the reliability of the measurementitems should exceed 0.3 and 0.7, respectively (Nunnally and Burnstein 1994, Hair et al.1998). With careful consideration, for SCMP, five items of lean system and one itemsof partnership management (LS01, LS04, LS13, LS14, LS15 and PM04) were droppedbecause of low item-total correlation values. It was observed that these six items deal with

Table 2. Non-respondent bias test.

Characteristic Response Non-response df Chi-Square P value

Thai 75 (35.9%) 9 (25.7%) 2 3.11 0.211Japanese 104 (49.8%) 23 (65.7%)Other ownership 30 (14.4%) 3 (8.6%)Small-to-medium 54 (25.6%) 10 (28.6%) 1 0.71 0.710Large 157 (74.4%) 25 (71.4%)First-tier 177 (87.2%) 32 (91.4%) 1 0.48 0.479Other-tier 26 (12.8%) 3 (8.6%)


specific operational issues rather than the general management issues of the sample

companies. These items were unique for the individual organisation and products

produced. After the removal, the remaining items had item-total correlation score above

0.3 and their Cronbach’s � values were above 0.7. All TQMP items had item-total

correlation scores well above 0.5 and Cronbach’s � well exceeded 0.8 as shown in Table 3.

Also, all FSP items had item-total correlation score well above 0.5 and their Cronbach’s �well exceeded 0.7. Consequently, all TQMP and FSP item were kept.

The validity of each sub-construct was tested by first-order confirmatory factory

analysis (CFA) with maximum likelihood estimate to remove the items with weak loading

coefficients, below 0.5. Two items of information management, two items of lean system

and one item of strategy and organisation (IM01, IM02, LS05, LS07 and SO03) were

eliminated because of low loading coefficient. This was because the sample companies

were mostly the first-tier part suppliers that sell products to the automotive assemblers

rather than to the automotive users. The automotive assemblers assess the end users’

requirements and then convert those requirements to product specifications. Therefore, the

automotive part suppliers merely respond to the automotive assemblers’ requirements and

pay less attention to end user requirements. No TQMP and FSP item was dropped. The

multiple goodness of fit index, namely �2=df, GFI, CFI, NNFI and SRMR were applied to

assess the overall goodness of fit of each sub-construct. Generally, �2=df ratio should be

less than 3. GFI, CFI and NNFI should be at least 0.9 and SRMR should be less and 0.1

(Hair et al. 1998). As shown in Table 3, every sub-construct of SCMP, TQMP and FSP

well met these requirements.Reassessment of Cronbach’s � of SCMP after eliminating items with low loading

coefficients, composite reliability and average variance extracted confirmed reliability of

the measurement models (Netemeyer et al. 1990) as shown in Table 3. Composite

reliability of every sub-construct was well above the required value of 0.60 and average

variance extracted exceeded 0.50 except for information management, lean system and

partnership management. Considering Cronbach’s �, composite reliability and average

variance extracted together, all sub-constructs were sufficiently reliable.The second-order CFA was conducted to confirm that these sub-constructs were

sub-constructs of broader constructs (Hair et al. 1998). During the second-order constructs

validation process, no item was dropped, given that the loading coefficients between the

second factors and their sub-constructs in every second-order construct were well above

0.5 as shown in Table 4. All t values were higher than 1.96 for 0.05 significance level. The

overall fit of every second-order construct was good as shown in Table 5. In conclusion,

SCMP, TQMP and FSP construct comprised the proposed sub-constructs and items in

accordance with their supportive theories.Moreover, all measurement models were tested for convergent, discriminant, and

nomological validity as shown in Table 3. Nine of 12 models had average variance

extracted value exceeded 0.50, suggesting acceptable convergent validity (Shock et al.

2004). Discriminant validity was assessed by examining correlations between pairs of

latent variable (Anderson and Gerbing 1988). Their correlation coefficients were much

below one confirming that the sub-constructs were distinct. Therefore, discriminant

validity could be assumed. Besides the GFI, CFI and NNFI which had been measured and

confirmed, AGFI, IFI and RMSEA were added to assess nomological validity (Steiger

1990). They confirmed that the measurement models were well nomologically valid. Based

on the overall results, these measurement models were found fit and valid.


Table

3.Reliabilityandmultiple

fitindexes

ofsub-construct.

Sub-construct

No.of

item

sCronbach’s�

Composite

reliability

Average

variance

extracted

�2=dfPvalueGFICFINNFISRMR

SRMEA

IFI

AGFI

Supply

chain

managem

entpractice

Inform

ationmanagem

ent

50.7573

0.78

0.42

0.656

0.5755

0.99

1.00

1.00

0.0310

0.000

1.00

0.98

Leansystem

90.8529

0.84

0.37

1.631

0.0631

0.98

0.99

0.98

0.0490

0.055

0.99

0.92

Partnership

managem

ent

60.7541

0.77

0.36

1.358

0.2014

0.98

0.99

0.98

0.0350

0.041

0.99

0.96

Strategyandorganization

60.8706

0.87

0.54

1.552

0.1566

0.99

1.00

0.99

0.0220

0.051

1.00

0.95

Totalquality

managem

entpractice

Customer

focus

30.8228

0.83

0.62

0.030

0.8638

1.00

1.00

1.00

0.0048

0.000

1.00

1.00

Commitmentandstrategy

40.8526

0.85

0.58

0.570

0.4513

1.00

1.00

1.00

0.0056

0.000

1.00

0.99

Humanresourcemanagem

ent

70.8983

0.90

0.57

1.326

0.2094

0.98

1.00

1.00

0.0220

0.093

1.00

0.95

Inform

ationanalysis

30.8721

0.87

0.70

1.020

0.3119

1.00

1.00

1.00

0.0310

0.010

1.00

0.98

Firm’ssupply

perform

ance

Cost

30.7962

0.81

0.59

2.180

0.1398

0.99

0.99

0.98

0.0450

0.076

0.99

0.96

Flexibility

30.7996

0.80

0.58

0.080

0.7772

1.00

1.00

1.00

0.0082

0.000

1.00

1.00

Relationship

40.8460

0.84

0.57

0.860

0.3546

1.00

1.00

1.00

0.0079

0.000

1.00

0.98

Responsiveness

30.8510

0.87

0.69

0.090

0.7613

1.00

1.00

1.00

0.0097

0.000

1.00

1.00


6. Findings and discussion

The structural model of this study is shown in Figure 1. The overall fit of the model, �2=dfratio¼ 1.329 was well below 3 with a P value 0.082. GFI¼ 0.96, CFI¼ 1.00, NFI¼ 0.99,

NNFI¼ 1.00 were above the recommended critical value at 0.9 and SRMR¼ 0.023 was

much lower than the cut-off point at 0.1.For path analysis, all t values were well above 1.96 and significant at 0.05 level as

shown in Table 6. TQM practices had strong relationship with SCM practices as

illustrated by the high standardised estimate 0.79 and t value of 9.56, thus H1 wassupported. This can be explained by similar practices such as customer relationship in

SCM and customer focus in TQM. In recent years, TQM has been broadened toinclude all best practices (Vanichchinchai and Igel 2009) even the SCM-related one

(Martinez-Lorente et al. 1998). Thus, TQM practices facilitate SCM practices implemen-

tation. Similar findings by Flynn and Flynn (2005) of the synergies between QM and SCMin the machinery, electronics and transportation components industries in the US,

Germany, Italy, Japan and England showed that QM and SCM can be implementedtogether. Kannan and Tan (2005) also found that TQM, SCM, and JIT reinforced each

other. However, the result of our study was different from some other studies. Hsu et al.

(2009) investigated the relationship between operations capability including TQM, SCMand JIT and business performance and could not confirm a significant relationship

between TQM capability and SCM. They explained this surprising finding by the measuresemployed to assess TQM capability that focused mainly on internal quality initiatives and

Table 4. Second-order confirmatory factor analysis.

Second-order construct Sub-constructStandardised

estimate t value

Supply chain management practice Information management (IM) 0.788 8.15Lean system (LS) 0.898 8.42Partnership management (PM) 0.808 8.63Strategy and organization (SO) 1.000 11.30

Total quality management practice Customer focus (CF) 0.786 9.15Commitment and strategy (CS) 1.000 12.10Human resource management (HR) 0.982 11.92Information analysis (IA) 1.000 14.52

Firm’s supply performance Cost (CT) 0.805 11.15Flexibility (FL) 0.690 7.65Relationship (RL) 0.960 10.91Responsiveness (RS) 1.000 12.07

Table 5. Multiple fit indexes of the second-order construct.

Construct �2=df P value GFI CFI NNFI SRMR

SCMP 0.820 0.9776 0.94 1.00 1.00 0.0379TQMP 1.223 0.0704 0.94 1.00 1.00 0.0302FSP 0.647 0.9627 0.98 1.00 1.00 0.0223


did not explicitly address boundary spanning quality issues such as supplier quality.Casadesus and Castro (2005) surveyed firms certified by ISO 9000 standard in Spain andcould not confirm that ISO 9000 implementation fully supported SCM. The conflictbetween Casadesus and Castro’s finding (2005) and ours can be explained by differences inthe measurement frameworks applied in both studies. Our TQM framework covers a morecomprehensive superior QM system; while, Casadesus and Castro (2005) applied the ISO9000 framework which contains only a subset of overall TQM requirement (Kartha 2004).Similarly, Yeung (2008) found that strategic supply management that focuses on thedyadic supply relationship between a manufacturer and its key suppliers significantlysupports QM implementation but not the adoption of ISO 9000.

A firm’s TQMP significantly and positively impacts its firm’s supply performance(FSP). The standardised estimate of their relationship was 0.51 with a t value of 5.46,thus H2 was supported. TQM targets customer satisfaction as the ultimate goal(Vanichchinchai and Igel 2009) which also covers FSP such as responsiveness.Moreover, former empirical researches, for instance, Rahman (2001), Sun (2000),

CF

CS

HR

IA

IM

LS

PM

SO

CT

FL

RL

RS

SCMP

TQMP

FSP

0.79 (9.56) *

0.51 (5.46) *

0.42 (4.55) *

0.71

0.89

0.93

0.93

0.76

0.92

0.71

0.89

0.84

0.69

0.85

0.82

0.51 (5.46) *0.51 (5.46) *

Figure 1. Relationships among TQMP, SCMP and FSP. �2=df¼ 1.329, P value¼ 0.082, GFI¼ 0.96,CFI¼ 1.00, NFI¼ 0.99, NNFI¼ 1.00, SRMR¼ 0.023. *Significant at 0.05.

Table 6. Relationships among TQMP, SCMP and FSP.

Path Total effect Direct effect Indirect effect

TQMP! SCMP 0.79 (9.56) 0.79 (9.56) –TQMP!FSP 0.85 (11.98) 0.51 (5.46) 0.34 (4.15)SCM!FSP 0.42 (4.55) 0.42 (4.55) –


George and Sherry (1998), Danny and Mile (1999), Khan (2003), Hendricks and Singhal(1997), Prabhu et al. (2000) and Hsu et al. (2009) confirmed that QM/TQM can improvenot only quality performance but also the organisational performance as a whole. FSP isa subset of the business performance. Besides, MBNQA criteria which are acclaimed as themost accepted TQM framework (Black and Porter 1996) are referred to as criteria forperformance excellence (NIST 2007). The TQM framework in this research also adoptedprinciples of MBNQA criteria and EFQM excellence model.

In addition, TQMP had a significant indirect positive effect on FSP through SCMP.The standardised estimate of the indirect effect between TQMP and FSP was 0.34 witha t value 4.15 which supported H3. The total effect between TQMP and FSP was 0.85 witha t value 11.98 clearly indicating shared practices and performance. Although, SCMPemphasises external partnership with customers and suppliers, the SCMP implementationmust be strongly supported by internal collaboration among departments becausecoordination within the organisations is a prerequisite of SCM (Lambert and Cooper2000). Therefore, TQM which focuses on internal participation of all employees is acritical foundation for SCM. In turn, both contribute to the firm’s supply improvement.Accordingly, Kuei et al. (2001) reported for Taiwan that companies with higher supplychain quality management tended to perform better than companies with lower supplychain quality management in the performance of cost saving. Moreover, Lin et al. (2005)who surveyed the impact of supply chain quality management in Taiwan and in HongKong found that QM significantly correlated with the supplier participation and selectionstrategy in SCM and this influenced business performance. Tan et al. (1998) who studiedthe linkages between QM, supplier evaluation and supply base management in the USsuggested that QM and supply base management should be implemented together toimprove corporate performance. Kannan and Tan (2005) concluded that there werelinkages between TQM, SCM, and JIT which reinforced each other and then improvedbusiness performance. Kaynak and Hartley (2008) confirmed that the implementation ofQM within each supply chain member’s organisation is a prerequisite for supply chainquality. Flynn et al. (2010) also found that internal integration was significantly relatedto not only operational but also business performance. All studies cited above indicatestrong support that TQM and SCM can be implemented together to create value.

7. Implications and conclusion

This research was one of the first to study the relationships among SCM practices, TQMpractices and firms’ supply performance in a developing country. It can also be used infurther research on the new concept of supply chain quality management (Robinson andMalhotra 2005, Sila et al. 2006, Foster 2008). The findings present insights into the debateconcerning the impact of TQM practices on SCM practices and on firm’s supplyperformance. The quantitative results suggest that TQM practices can directly facilitatethe implementation of SCM and can directly enhance the firm’s supply performance.Moreover, TQM practices can indirectly improve firm’s supply performance through SCMpractices. This is because TQM has been broadened to cover some SCM practices and firmperformance dimensions such as cost and responsiveness. Thus, TQM can be used as afoundation for implementing SCM and improving firm’s supply performance. Findingsfrom qualitative case studies of both companies also confirmed these. As a result althoughTQM and SCM are large-scale management systems, managers should not consider them


as separate. Both could be implemented together to achieve excellent performance in thefirm supply-related business process system.

However, the case companies experienced some negative effects of disruptions causedby QM especially when employees were overly strict with applying QM standards and didnot clearly understand SCM requirements. For instance, when there were contingencyevents such as quality problems, some employees were adhering too strictly to workinginstructions. They made no effort to resolve these immediate problems up front andneglected supportive tasks not specified in job descriptions which lead to delivery delaysand higher cost. However, the French company reacted to these problems better than theThai company because of stronger QM system and awareness. Both companies tried tosolve these problems with stronger awareness building through more training, bettercommunication between QM and SCM staff and goal alignment. The case companies alsorecommended that industry-specific QM systems such as ISO/TS 16949 should beintroduced before implementing SCM. Thus, differences in scope and maturity of QM andSCM implemented or in firm characteristics can affect the results. If the QM foundationis not comprehensive enough, the firm may not be able to use QM to support SCMimplementation. Thus, training in quality awareness, communication, goal alignment oradopting industry-specific QM systems such as ISO/TS 16949 are recommended prior toSCM implementation. Managers should be aware of these issues when implementing SCMand TQM together. Lack of suitable measurement instruments was one of the majorchallenges for this research. Consequently, this study developed measurement instrumentsfor SCM practices, TQM practices and firm’s supply performance for the automotiveindustry in Thailand. These instruments were comprehensively confirmed to be reliableand valid. With some adjustments, they can be applied in research in other industries ordeveloping countries.

8. Limitations and suggestions for future research

The distribution of the paper-based questionnaires was a convenience sampling. Futureresearch should apply different random samples for more generalisation of the results.Only 19% of the sample companies provided more than one response and the singlerespondent in an organisation may cause possible response bias. For future research, otherdata collection methods should be chosen to increase the multiple respondent rates.Although the measurement instruments as well as hypotheses were comprehensivelyconfirmed as reliable and valid with various statistical techniques, further studies based onthe adaptation of these instruments in other industries or developing countries could beconducted to confirm its general validity. The samples in this research comprised only theautomotive part suppliers. In future research, the automotive assemblers and downstreambusiness partners could be studied together with the upstream suppliers in order toinvestigate the relationship along the whole supply chain. The effect of individual TQMpractices on individual SCM practices and individual firm’s supply performancedimensions may also be researched.

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Appendix

(1) Supply Chain Management Practice (SCMP)

Information Management (IM)

IM01* We contact the end users of our products to get feedback on product performance andservice

IM02* We work with our trade partners to survey and define customer requirementIM03 We have a common standard for information sharing (e.g. product order, shipment,

inventory) for our trade partners to followIM04 We evaluate formal and informal complaints as well as satisfaction of our trade

partnersIM05 We effectively share information with our trade partners to facilitate business planning

and react to changesIM06 We apply advanced information technology in our supply chainIM07 We have information sharing among functions for the objectives of supply chain

management

Lean System (LS)

LS01* We delay final manufacturing activities until customer orders have actually beenconfirmed

LS02 We reduce inventory levelsLS03 We reduce set-up timeLS04* We reduce inspection of incoming materials/components/productsLS05* We order in small lot sizes


LS06 We streamline business processes (e.g. ordering, shipping, receiving and otherpaperwork) with our trade partners

LS07* We reduce response timeLS08 We have continuous improvement activityLS09 We deliver products directly to points of use (e.g. customer’s assembly lines)LS10 We involve in teams our trade partners to improve our supply chainLS11 We use a pull production system (pull means producing only when there is demand not

to keep high inventory)LS12 We share supply chain management practices or resources (e.g. manufacturing,

warehousing, distribution, marketing, etc.) with our trade partnersLS13* We place our personnel at the business facilities of our trade partners to facilitate

cooperationLS14* We store our goods at appropriate distribution points close to our customersLS15* We design our products for modular or unit part assembly (e.g. brake systems, wiring

harness, air-conditioning systems, steering column, instrument cluster)LS16 We have contingency management system for unexpected events (e.g. order change or

cancellation, computer network down)

Partnership Management (PM)

PM01 We share knowledge about core business processes with our trade partnersPM02 We share improvement benefits as well as other risks and rewards with our trade

partnersPM03 We develop a long-term relationship and trust with our trade partnersPM04* We rely on a small number of quality trade partnersPM05 We participate in the sourcing decisions of our suppliersPM06 We include our trade partners in our product development projectsPM07 We have common goals agreed with our trade partners

Strategy and Organization (SO)

SO01 We have a supply chain performance measurement systemSO02 We certify our suppliers using supply chain performance criteria (e.g. quality, cost,

delivery)SO03* We extend our trade partners to include partners beyond immediate suppliers and

customersSO04 We have organisational structure which facilitates business process integration with our

trade partnersSO05 Our top level managers strongly encourage employee (worker) involvement in supply

chain managementSO06 Our employees (workers) are actively involved in supply chain management-related

activitiesSO07 Our organisation has an open, trusting culture with low bureaucracy. Our working

environment is very good for supply chain management

(2) Total Quality Management Practice (TQMP)

Commitment and Strategy (CS)

CS01 Our top level managers strongly encourage employee (worker) involvement in qualitymanagement

CS02 We have a clear vision, mission, policies, long term objectives and plan for improvingquality

CS03 We have a clear quality goal and short-term business performance plansCS04 Our top managers allocate adequate resources toward efforts to improve quality


Customer Focus (CF)

CF01 We have a system for collecting complaints or suggestions from customersCF02 We actively seeks ways to improve the products in order to achieve greater customer

satisfactionCF03 We have introduced and maintained the ‘‘customer focus’’ philosophy for a long time

Human Resource Management (HR)

HR01 We provide training and training resources to employees (workers) and encouragethem to attend these training programs

HR02 We have many active improvement teamsHR03 We actively evaluate and implement employees’ suggestions related to quality and

supply chain management, if they are suitableHR04 Our line employees (workers) are responsible for and inspect the quality of their own

work (self inspection)HR05 We have an assistance mechanism (problem solving network) to help line employees

solve quality problemsHR06 Our employees (workers) are actively involved in quality management-related activitiesHR07 We provide awards to individuals and groups for excellent suggestions

Information Analysis (IA)

IA01 We have information sharing among functions for the objectives of qualityimprovement

IA02 We display information on quality performance at most of the work stations andeverybody knows it

IA03 We uses quality improvement tools and techniques extensively for process managementand improvement

(3) Firm’s Supply Performance

Cost (CT)

CT01 We have a good overall inventory management performance (e.g. inventory turnover,obsolete, availability)

CT02 We have a good overall financial performance (e.g. ROA, ROI, ROS)CT03 We have an effective and efficient production plan

Flexibility (FL)

FL01 We have the ability to produce products with various specification (e.g. features,options, sizes, colors, special specification)

FL02 We have the ability to rapidly adjust production capacity in response to changes incustomer demand

FL03 We have the ability to handle rapid introduction of new products

Relationship (RL)

RL01 Our suppliers have a good overall performance (e.g. quality, cost, delivery)RL02 We have a good overall relationship with trade partnersRL03 We have an accurate demand forecastingRL04 We have an effective and efficient business process (e.g. less clerical, documentary,

inspection jobs)


Responsiveness (RS)

RS01 We have a good overall delivery performance (e.g. on-time, fast)RS02 We have a good overall quality of products and servicesRS03 We have the ability to provide our customers real time information about their orders

Items marked by an asterisk (*) were removed in the final instrument.


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