Impact of SRM on organization performance

Impact of (SRM) On Organization Performance 1
Impact of Supplier Relationship Management on Organization
Performance
M. Naeem Siddiqui
Dr. Masood Ahmed
Iqra University
Abstract
The study was aimed to evaluate that how managing supplier relation can
affect the performance of the organization in different sectors. The survey
approach was used to explore the major determinants of the supplier
relationship management. As this study was purely qualitative in nature,
therefore, the primary source for data collection had been used. To
achieve this objective a comprehensive survey questionnaire had been
prepared to ask relevant respondents to provide rational answers to the
questions. The observation people include employees of the different
organization, Supply Chain Managers, students specializing in Supply
Chain Management, and owners of the business. The statistical test of
Multiple Linear Regression was applied for testing possible hypotheses of
study. The MLR test was run through SPSS software. The study concluded
that supplier relationship management significantly affected organization
performance.
Keywords: Supplier Relationship Management, Supplier Development, Organization
Performance
Chapter 1: Introduction
Overview
Apart from the rapidly changing customer demands, also due to these technological
developments in the past years - the consumer is now more aware of the variety in
products and prices and demands a higher quality for a lower price. This also forces
businesses to continuously improve their processes and output to meet these customer
requirements.
This global competition is growing due to these improved communication possibilities,
and the possibility of outsourcing production, but also opening new branches abroad.
Businesses are now competing on a worldwide scale, products and services must for
example be produced or provided with competitive labor costs and product materials that
meet the quality requirements of the nowadays more demanding consumer.
Therefore to be able to meet these customer requirements and compete in this tensely
competition, the business entities have to be extremely flexible. This starts at the top of
each business, on a strategic level. If the top does not acknowledge the importance of
global competition and the requirements of the nowadays end-consumer the rest of the
company will suffer the consequences. Of course all flexibility aspects are important for
the business to be flexible, thereby meaning also on an organizational level and on an
operational level.

The pre-selection process of suppliers contains two steps: criteria formulation and
supplier pre- selection based on the criteria. The two criteria used in literature were
dependent and independent. The independent criteria are used when screening for eligible
suppliers, and they relate to a supplier’s organization and its prosperity (Boer, Luitzen, et
al,2001). They are classified into four groups: general business environment and financial
issues, organization and strategy, technology, and other factors. The first two groups
relate to the suppliers’ financial well-being, management capabilities, and future plans
and possibilities. The third group covers the technical issues that are linked directly to the
production of the product or the service. The fourth group of criteria focuses more on
sustainability and risks associated with it. Hence, if criteria from each group are used in
the pre-selection, the buying company can ensure holistic evaluation of the suppliers.
Problem Statement
The key objective of this study was analyzing and managing supplier relationship on
organization performance. The relationship between supplier and the company has a key
role in accomplishment of goals in any organization, because all the channels in supply
chain integrate their activities in order to meet market demand.
Background, Objectives and Significance of the study
In the past, companies have relied on inspection to control quality, while utilizing arm’s
length type of relationships with their supplier. However, relying on mass inspection to
control quality is often ineffective and expensive according to Wagner and Stephan
(2006). Mass inspection simply just sort out the defect, and at that point it is too late. The
supplier has already paid to produce those defectives, while the buyer has wasted time
and resources to receive those defectives. Quality results from prevention of defectives
through process improvement, not inspection (Choy & Lee, 2002). A cooperative
relationship between supplier and buyer would suggest a process improvement simply
because the realization of mutual dependence. Supplier quality improvement can be
approached from two different angles Reactive and Proactive. In Reactive, the buyer
reacts to quality problems throughout the flow of materials, and quality improvement is
only initiated to reduce these problems. On the other hand Proactive approach included
working together, with a larger amount of shared information.
“You cannot manage what you cannot measure” (Chan, 2003). Therefore, it is easy to see
that supplier evaluation and measurement are vital parts of supplier management.
Evaluation can and should take place before anything is purchased from a supplier and
continuously during the relationship. The case company of this thesis is dealing with
challenges of how to actually execute these evaluations.
The key objective of this study was analyzing that how supplier relationship if managed
effectively affect organization performance. Suppliers are key to the success or failure of
the organization, if suppliers provide quality materials and less lead time, the
organization will have competitive edge against its rivals and vice versa.
Outline of the Study
This study had comprised of five chapters where chapter number one contains
introduction of the study. An introduction chapter also contains overview of the study,
statement of the problem, background, significant and objective of the study. At the end

of the chapter number one, definitions of the study variables had also been given to make
easier for reader to understand.
The literature review of the thesis in discussed in chapter number two which was written
from more than fifteen research papers to make clear understanding of the topic under
study. As of the literature review chapter end, possible hypotheses of this thesis research
had been discussed. The purpose of this chapter was to differentiate this study from
previous work.
The research method had been discussed in chapter number three. This chapter contains
method of data collection, technique of sampling to collect data from population, total
sample size i.e. number of observations to be analyzed, data collection instrument such in
this study a comprehensive questionnaire had been developed and statistical technique
applied for the purpose of testing research hypotheses. This had been also divided into
validity and reliability test. The next issue was how research model to be developed.
The results, findings and interpretations of the study had been discussed in chapter
number four. At the end of the chapter number four, hypotheses assessment summary had
been shown to see which hypothesis had been accepted or rejected.
In final chapter of the study, discussions, conclusion, implication and future research had
been discussed.
Definitions
Supplier Relationship Management (SRM) is a practice where organizations make
strategic association with third party (supplier) who provides inputs that are used to
produce something to meet the demands of the specific customers.
Organizational Performance It is the actual results of the organizations’ outputs
measured against inputs to achieve organizational goals.
Chapter 2: Literature Review
This study will signify the firms about how strong relationship with firms’ suppliers
affects the performance of the organization. In the modern era of competitive business
environment the selection of the right supplier is a key to be successful in all operations
of the business to obtain larger share of the customers from the market. The relationship
with supplier helps organizations, reduce risk and improve the overall performance of the
all business activities in which company operates. The research found that there are two
elements of supplier relationship management, first, explicit commitment or promise
between buyers and supplier, second, agreement between suppliers and buyers about
codifying the ideas exchange. This is the very basis of strategic supply chain flexibility,
and aims to evaluate all the parties directly involved in the firms market. Those parties
include its customers, vendors/suppliers and competitors. This is done by looking at these
parties and surveying them, and documenting the results to review and summarize in
brief the company’s existing strategies to focus and direct the supply chain development
effort.
Harrison and Hoek (2011) argued that during the development of the supply chain
management purchasing had gone from being an isolated department from other elements
of the business systems of the company to being greater integrated with other
departments accompanied with more top management involvement; from purchasing to
supply management. An important part of procurement sometimes neglected is the

business alignment of the purchasing department. Business alignment points towards an
alignment around specific business objectives set by top management. If the professional
purchasers are not well informed of the objectives set by the focal firm, they might be
sourcing from suppliers which are not fully right for business needs.
Building Supplier Relationship
Before looking at supplier relationship management, the meaning of a supplier
relationship must be understood. To develop the buyer-suppliers relationship strong the
parties involved in supply chain must understand that:
The firm shares knowledge important for decision making to achieve synchronization
amongst supply chain members, by means of a real-time information sharing system. The
ultimate opposite scenario, is that of no information sharing at all.
Suppliers are selected based on their ability to provide quality, reliable delivery, short
lead-time, capability of supplying/processing other jobs in addition to those for which
they are the original supplier. The ultimate opposite scenario is a supplier chosen solely
based on price. So, consequently, the buying company will try to avoid any long-term
agreements as it may weaken their position for negotiating (Cooper and Gardner (1993).
The firm has multiple suppliers clustered together sharing information and working
together to deliver the best service to your firm. The worst case scenario is only one
supplier. According to Harrison and Hoek (2011) a supplier evaluation is a mechanism to
develop and advance a supplier relationship, and to center relationship management on
business-relevant improvement opportunities. In terms of the actual measurement, the
main focus is around the three output areas: costs, quality and delivery reliability.
However, with a continuous improvement focus, no performance is perfect. Therefore,
there is always room for improvements and supplier expectations are always rising.
Jonsson (2008) stated that materials bought as means of production almost comprise of
higher than 50% percent of the total costs of manufacturing. Therefore, it is crucial to
work with the right suppliers for business needs and to meet the future demands of the
customers. Therefore, a comprehensive method of supplier selection is essential to the
buying company. Furthermore, an assessment approach to acquire reliable results of
supplier performance should be established. This would include an on-site evaluation of
the supplier assessing supplier capabilities and quality system as well as product samples
(Yeung & Chin, 2004).
Rinehart, Eckert, et al, (2002) argued that literature provides many different inter-
organizational relationships such as alliances, partnerships, collaborative relationships
and transactional relationships. The definitions of the various relationships are often used
interchangeably and that’s why a lot of confusion is created. Kerlinger and Lee (2000)
argued that it may be imperative for theory to include single, clear definition in order to
be validated and advanced. Literature should be consistent in their use of inter-
organizational relationships in order to prevent ambiguity. This is important for
companies since indistinctness about the relationships terms can lead to disconnects in
the expectations between suppliers and buying companies. A mutual understanding of
expectations is therefore necessary for making the relationship as efficient as possible to
meet up market demand for the products. In this regard, the companies had been advised
to make potential agreements with suppliers so that supplier can provide Just in Time

delivery of the needed quality materials. Long term relationships with supplier also help
organizations to mutually understand the problems faced be both.
Developing the Supplier
Hoejmose and Adrien‐Kirby (2012) argued that steady growth in Corporate Social
Responsibility (CSR) in relation to develop the company’s supplier in terms of plant size,
finance the operations which supplier cannot afford to develop and other likewise actions
since last two decades; nevertheless, at this time in point advancements are yet to
required (Millinton, 2008).
The concept of a „durable arm’s length‟ relationship‟ introduced by Dyer, Sung Cho and
Chu (1998) differs from a traditional arm’s length relationship such as the supplier
selection requires a more long-term approach where capabilities are benchmarked to
determine the lowest cost over a longer period of time, not necessarily for one purchase
as a traditional arm’s length relationship would suggest. Furthermore, two or three
suppliers can be selected as long-term suppliers and be price benchmarked once in a
while to maintain a price competition between the given group of suppliers. A strategic
partnership is sufficient when sourcing strategic items. These items tend to be highly
value adding and differentiating product of local company competitors.
Furthermore, strategic items can sometimes be customized for the buyer and therefore
require a higher grade of dexterity among buyers, suppliers and other channel partners.
For example, for a customized item, the design engineers from the buyer and the supplier
must exchange information to ensure a perfect product fit and a smooth interface.
Furthermore, the buyer’s manufacturing engineers must coordinate with supplier
engineers to make sure that the supplier is capable of assembling the component at their
plant. In other words, strategic items naturally needed higher level of coordination
between supplier and customers. Therefore, cooperative relationship is preferable in such
situations to ensure quality and supply of a given component. However, the buyer has to
benchmark supplier capabilities effectively to ensure that the best possible partners are
chosen.
Supply Chain Flexibility and Service Level Agreement
Supply chain flexibility is a way to react rapidly to the increasingly shifting needs and
wants of the customers. In this regards making close and strong relationship with
suppliers who provide important inputs to the organization, which are used in the
production of specific products to cater the requests and wants of the customers. If the
relationship with supplier is strong and committed, the suppliers will provide customize
goods and services in accordance with the needs of specific customers.
Logistics supply chain flexibility is also necessary for achieving the needed customer
satisfaction. Flexibility is necessary because forecasting is never completely accurate, and
risks overcapacity or lost sales. Variability in demand has always been a problem for
many businesses and is only growing as customer needs are changing and product life
cycles are shortening. A key issue for companies is how to deal with this growing
variability problem.
Logistics service providers are under pressure due to increasing service level
requirements and increasing consumer wishes. The logistics companies must render
quality services to customers to make people satisfy. An increasing importance of details,

and also of achieving high level of quality services had forced logistics companies to
reform the structures of relationship with customers. The new way of structuring
relationships between supplier and customers is called Service Level Agreement (SLA).
SLA can be defined as a document in which supplier and customer make written
agreement to specify what customer may expect and what the suppliers and/or logistics
providing company will provide in terms of services. SLA had been considered as a
useful document because the quality of the service can be enhanced through clearly
defining, and focusing on main services to meet up customer and business requirements.
The main services that the customers expect from the supplier were called KPIs which
are quantifiable measures that logistics service providers use to determine and contrast
performance of the organization in achieving the day to day and strategic goals.
Although SLAs are implemented in business relationships in various sectors, SLAs are a
recent phenomenon for the logistics sector. SLAs are only implemented by a couple of
logistics service providers and they are only implemented in a couple of business
relationships. There are probably a couple of explanations that prevent them to
implement SLAs in business relationships. How could these explanations be identified?
Is the logistics sector such a different sector in implementing SLAs in business
relationships compared to other sectors? And is it possible to standardize SLAs in
business relationships in the logistics sector? These questions are still too answered by
the research practitioners.
Mentzer and DeWitt, et al,(2001) argued that there are many relationships within supply
chains and it is of the interest to manage these multiple relationships among the actors
involved for optimizing supply chain performance. The relationships among these actors
vary from simple transactional relationships to complex interdependent relationships.
Ganesan (1994); Berry and Parasuraman (1991) argued that value creation in the supply
chain had been achieved through long lasting relationships between customers and
suppliers, and that’s why many companies are moving closer towards long term
relationships with suppliers.
The role of information technology sector in this regard cannot be ignored when talking
about development of the modern economic development throughout the world (Kramer,
Jenkins, & Katz, 2007). It is one of the faster growing sectors with a great influence on
everyday life of the people. However, the industry is facing various problems related to
supply chain management including supplier and buyer relationship. Many of the biggest
ICT corporations have been criticized because of unethical practices of their suppliers.
Bad working conditions, long working hours, limited or missing health and safety
regulations, child labor, and violated human rights are among the most common issues
occurring in suppliers of ICT companies (FLA, 2012).
Besides this, the manufacturing processes and waste streams in the IT sector have an
essential impact on environmental pollution (Chen, Lai, & Wen, 2006; Dawkins, 2005;
Wu, 2013). Another problem refers to data security and usage of information by the
parties throughout the supply chain. For example, suppliers who provide one organization
with input materials are the suppliers of various companies in the region; therefore, they
can manipulate and share the product information with other competing firms.
Supply chain strategy development is to determine the order winning criteria, the object
being to define, prioritize and eventually weight the customers' critical purchasing
(customer oriented) factors. Managing a supply chain included mobilizing all the diverse

operations and actions that may adjoin worth to consumers and simultaneously to
organizations (Lummus, 1998).
Supplier Lead Time Reduction
The suppliers comprise of just about 70% of lead-time troubles (Burton, 1988). In the
environment of lean production just in time (JIT) buying needs supplying companies to
make delivery of raw materials frequently in small batches. This would be possible if
there is perfect coordination between buyer and supplier
Heikkila (2002) argued that in order to make supply chain more responsive and to keep it
away from uncertainty, organizations must work on reducing lead time.
If the lead time decreases it minimizes the possible predicament of delivering inventories
and removes quality issues related to keep buffer inventory.
Organizations which share information with supplier helped to reduce lead time. (Larson
& Kulchitsky, 2000) The research also indicates that logistic relationship between
supplier and buyer under just in time method had vital role where supplier must respond
to the needs of customers regarding both quantity and quality.
Competitive Performance
There has been an extensive literature written on supplier relationship and the
performance of the company. The key performance taken by most research practitioners
are cost reduction, quality improvement, lead time, just in time inventory, flexibility in
operations and delivery. However, these alternative structures must prove to be
beneficial; otherwise they will not deliver a competitive advantage. Additionally to these
actions, the product launching at the right time is also resulting in company’s
performance (Phan, and Matsui, 2011).
Research Hypotheses
The following hypotheses have been developed for this study:
H1: Development of the supplier significantly affects organization performance
H2: Building a relationship of trust with supplier significantly affects organization
performance
H3: Supplier lead time significantly affects organization performance
H4: Information sharing with Supplier significantly affects organization performance
CHAPTER 3: RESEARCH METHODS
The chapter of Research Methods covers the detailed information regarding sources of
data, techniques for sampling of data, size of sample taken from population, data
collection instrument such questionnaire and finally the development of the research
model for this thesis. This chapter also covers detailed explanation of the variables both
independent variables (i.e. Information Sharing with Supplier, Supplier Lead Time, Trust
with Supplier and Supplier Development) and dependent variable (i.e. organization
performance) and calculation of the variables and discussion of different measures of the
variables. In research method part of this thesis, the details about the statistical test or
technique that was applied to test the possible study hypotheses had also been explained.
The statistical test was applied through SPSS software.

Method of Data Collection
Because this study purely was a qualitative in nature, therefore, the primary source for
Data collection had been used. To achieve this objective a comprehensive survey
questionnaire had been prepared to ask relevant respondents to provide rational answers
to the questions provided in questionnaire.
Sampling Technique
The simple random technique for sampling of the data had been applied in this thesis for
the purpose of collecting data from the relevant sample.
The Sample Size
This study contained the sample of 315 observations or respondents for the purpose of
analysis. The respondents included employees of the different organization, Supply Chain
Managers, students specializing in Supply Chain Management, and owners of the
business.
Instrument of Data Collection
A well-furnished research questionnaire was developed to receive possible responses
from the selected sample size for the purpose of collecting data. The questionnaire
included 15 questions (3 questions for each independent and dependent variable)
prepared at Likert Scale containing 5 options such as Strongly disagree, Disagree,
Neutral, Agree, Strongly Agree.
Validity and Reliability Test
The reliability test was applied to verify whether data collected through particular
questionnaire is truly reliable for the analysis or not. The criteria is that if the value of the
test is greater than 0.50, it would be considered that the data is truly reliable. But on the
other hand, if the value is less than 0.50, then it would be considered that the data is not
truly reliable. When the test was applied through SPSS software, the following results
were generated.
The following results had been generated of reliability test.
The table 3.1 mentioned above shows the case processing summary about how many
observations had been used as sample for the analysis of the study and how many cases
are valid and or excluded. The above table shows that N or number of cases or
Table 3.1
Case Processing Summary
N %
Cases Valid 315 100.0
Excludeda
0 .0
Total 315 100.0
a. List wise deletion based on all variables in the procedure.

observations included in this study are 315 and all the cases are valid (100%) and no case
had been excluded from the study analysis.
Table 3.2
Reliability Statistics
Cronbach's Alpha N of Items
.786 15
The Cronbach’s Alpha value (0.786) is greater than 0.50 (i.e. 0.786>0.50), that suggested
that Categorical Data used in this study is truly reliable for Multiple Linear Regression
Analysis. On the basis of Reliability test, now the Regression analysis would be applied
to explore that how supplier relationship management affect performance of the
organizations.
Research Model Developed
Following Research model was developed for the study
Figure 3.1
SRM Model (Source: Self-made)
Statistical Technique
In this study the Multiple Linear Regression (MLR) test had been applied to analyze the
possible hypotheses of the study. The MLR test was applied through SPSS (Statistical
Package for Social Sciences) software.
CHAPTER 4: RESULTS
This chapter of Results covered up research findings and interpretation of the results. The
objective of this chapter was to analyze the data and found and extract some possible
results of this thesis. The key aim of the thesis was to examine that how supplier
Information Sharing with Supplier
Supplier Lead Time
Trust with Supplier
Organization Performance
Supplier Development

relationship management (i.e. Information Sharing with Supplier, Supplier Lead Time,
Trust with Supplier and Supplier Development) affect organization performance. To
achieve this objective a comprehensive survey questionnaire was developed to gather
data. As for as statistical test was concerned the Multiple Linear Regression (MLR) test
had been chosen for inspecting supplier relationship management effect on performance
of the organization. The MLR test was applied through SPSS software.
Findings and Interpretation of the results
Below was the output or results that were generated through SPSS software. Onwards the
interpretation of the results was discussed and hypothesis was analyzed.
Table 4.1
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate Durbin-Watson
1 .574a
.330 .321 .4442510 1.690
a. Predictors: (Constant), Information Sharing with Supplier, Supplier Lead Time, Trust with
Supplier, Supplier Development
b. Dependent Variable: Organization Performance
The model summary mentioned above in Table 4.1. The R in the above table is
coefficient of correlation between the variables which is 57.4% which is greater than 50%
that means the correlation between study variables both independent and dependent was
statistically strong and significant. The R Square in above table is coefficient of
determination. The value of R square (0.330) shows that independent variables (i.e.
Information Sharing with Supplier, Supplier Lead Time, Trust with Supplier and Supplier
Development) explained 33% variation in Organization Performance (i.e. dependent
variable). The value (0.330) of the model is close to 0.50, therefore, data shows that study
model is almost fit as per data provided by the respondents.
Along with R square, the multiple regression analysis also gives us value for Durbin
Watson. The test values can vary from 0 to 4. In this study the value of Durbin Watson is
1.690 which is less than 2 (1.690<2), therefore, study found positive correlation between
the adjacent residuals.
Table 4.2
ANOVA
Model
Sum of
Squares Df Mean Square F Sig.
1 Regression 30.101 4 7.525 38.130 .000a
Residual 61.181 310 .197
Total 91.283 314
a. Predictors: (Constant), Information Sharing with Supplier, Supplier Lead Time, Trust with Supplier,
Supplier Development
b. Dependent Variable: Organization Performance

The ANOVA matrix had been mentioned above in table 4.2. The sig value (0.000) in the
table is less than 0.05 (α=0.05), (0.000<0.05), hence, the study rejected the null
hypothesis and failed to reject (i.e. accept) alternate hypothesis that supplier relationship
management significantly affect organization performance.
Table 4.3
Coefficients
Model
Unstandardized
Coefficients
Standardized
Coefficients
T Sig.
95.0%
Confidence
Interval for B
Collinearity
Statistics
B
Std.
Error Beta
Lower
Bound
Upper
Bound Tolerance VIF
1 (Constant) 1.675 .237 7.076 .000 1.209 2.140
Supplier Development .128 .037 .184 3.491 .001 .056 .200 .781 1.280
Trust with Supplier .023 .046 .026 .495 .621 -.068 .114 .800 1.250
Supplier Lead Time .038 .046 .042 .835 .404 -.052 .128 .856 1.168
Information Sharing with
Supplier
.448 .050 .459 8.872 .000 .349 .547 .806 1.241
a. Dependent Variable: Organization Performance
H1: Supplier Development significantly affects organization performance.
In the above table 4.3 the sig value for Supplier Development is 0.001 which is less than
set level of significant (α=0.05), the signs of the confidence interval are the same (+ve),
and the value of the VIF (Variance Inflator Factor) 1.280 which is less than 2, therefore,
the recommended null hypothesis was rejected and HA was accepted that Supplier
Development significantly affects organization performance. Thus study found that if the
organizations strive to develop the suppliers in term of technology, operations etc., then
the performance of the organization will be augmented.
H2: Trust with Supplier significantly affects organization performance
The table 4.3 also shows the sig value (0.621) for 2nd variable (Trust with Supplier) is
greater than set level of significant (α=0.05), (0.621>0.05), the signs of the confidence
interval are not the same (one positive and one negative), therefore, the study failed to
reject suggested null hypothesis. But the value of the VIF (Variance Inflator Factor)
1.250 which is less than 2 is acceptable for the study. Overall, the study found that Trust
with Supplier had not significantly affected organization performance. Therefore, the
study suggested, as per data provided, that no supplier had unconditional relationship and
mutual trust with the organizations and there was the possibility that supplier may share a
secret information of the company with the competitors of the company.
H3: Supplier Lead Time significantly affects organization performance
In table 4.3, the sig value for 3rd variable is 0.404 which is greater than set level of
significant (α=0.05), (0.404>0.05), the signs of the confidence interval are also not the
same (one positive and one negative), therefore, the study failed to reject suggested null
hypothesis, that Supplier Lead Time had not significantly affected organization
performance. But the value of the VIF (Variance Inflator Factor) 1.168 which is less than
2 is acceptable for the study. Overall, the study found that suppliers and organizations

had neither mutual understanding nor organizations panelize suppliers to reduce lead time
and promote Just in Time system.
H4: Information Sharing with Supplier significantly affects organization performance
In table 4.3 exhibited above, the sig value for 4th variable i.e. Information Sharing with
Supplier is 0.000, which is less than 0.05 (α=0.05), also, the signs of the confidence
interval are the same (+ve), and the value of the VIF (Variance Inflator Factor) 1.241 that
is also less than 2, therefore, suggested H0 was rejected and the study accepted the
alternate hypothesis (HA) that Information Sharing with Supplier has significant impact
on organization performance. Thus, the study found that if the company may share
information with their key suppliers in terms of product quality, state of the art
technology, materials etc. then it will enhance the performance of the organization.
Therefore, it suggested that companies should share information with supplier if
organizations desire to increase the performance.
Table 4.4 Hypotheses Assessment Summary
The summary to assess hypotheses had been given below:
Table 4.4
Hypotheses Assessment Summary
S. No Hypothesis Sig Value Empirical Conclusion
1.
H1: Supplier Development significantly affects
organization performance. .001 Accepted
2.
H2: Trust with Supplier significantly affects
organization performance. .621 Rejected
3.
H3: Supplier Lead Time significantly affects
organization performance .404 Rejected
4.
H4: Information Sharing with Supplier significantly
affects organization performance .000 Accepted.
CHAPTER 5: DISCUSSIONS, CONCLUSION, POLICY IMPLICATIONS AND
FUTURE RESEARCH
This chapter covered detailed discussions of the study which ranging from introduction,
background, data collection, sample size, statistical technique and the findings of the
study. This chapter also covered the conclusion, policy implication and the future
research.
Discussions
In recent years, building strong relationships with suppliers have become very important
to sustain competitiveness, customer attractiveness and to achieve larger market share.
Many firms activities directed towards suppliers are uncoordinated, possibly carried out
by different departments and thus not integrated into an overall supplier management.
This stands contrary to growing opportunity concerning effect of the purchasing function
on overall value creation. Different aspects of supplier management provide valuable
insights and approaches. Still an overall framework integrating all these insights into a

SRM framework remains desirable. The performance and past history of the suppliers
help in taking decisions for its selection, as a result selecting the right supplier helps in
getting more improved quality. Quality is a key factor of suppliers by which they can
improve and maintain quality assessment and delivery performance. Therefore the SRM
practices introduced in this research points out its relevance to quality performance. The
key purpose of this thesis was to scrutinize that how supplier relationship management
affects performance of the organization. To achieve this objective, a comprehensive
questionnaire had been prepared containing 15 questions (3 questions for each
independent and dependent variable) from the relevant sample (315 respondents), in
order to gather data. The collected was then evaluated through SPSS software. Finally,
broadly speaking, the study found that supplier relationship management significantly
affects organization performance.
Conclusion
This study concludes that:
There is a significant impact of Supplier Development on organization performance,
because the sig value for 1st variables (Supplier Development) is 0.001 which is less than
set level of significant (α=0.05), the signs of the confidence interval are the same, and the
value of the VIF (Variance Inflator Factor) 1.280 which is less than 2, therefore, the
recommended H0 of study was rejected and the alternate hypothesis (HA) was accepted
that Supplier Development significantly affects organization performance. Thus, study
found that if the organizations strive to develop the suppliers in term of technology,
operations etc., then the performance of the organization will be augmented.
The sig value (0.621) for 2ndvariable (Trust with Supplier) is greater than set level of
significant (α=0.05), (0.621>0.05), also, the signs of the confidence interval are not the
same (one positive and one negative), therefore, the study failed to reject suggested null
hypothesis. But the value of the VIF (Variance Inflator Factor) 1.250 which is less than 2
is acceptable for the study. Overall, the study found that Trust with Supplier did not
significantly affect organization performance. Therefore, the study suggested, as per data
provided, that no supplier had unconditional relationships and mutual trust with the
organizations and there was the possibility that supplier may share a secret information of
the company with the competitors of the company.
The sig value for 3rd variable is 0.404 which is greater than set level of significant
(α=0.05), (0.404>0.05), also, the signs of the confidence interval are also not the same
(one positive and one negative), therefore, the study failed to reject (i.e. accept) suggested
null hypothesis, that Supplier Lead Time did not significantly affect organization
performance. But the value of the VIF (Variance Inflator Factor) 1.168 which is less than
2 is acceptable for the study. Overall, the study found that suppliers and organizations
had neither mutual understanding nor organizations panelize suppliers to reduce lead time
and promote Just in Time system.
the sig value for 4th variable i.e. Information Sharing with Supplier is 0.000, which is
less than 0.05 (α=0.05), the signs of the confidence interval was also the same (positive),
and the value of the VIF (Variance Inflator Factor) 1.241 which was less than 2,
therefore, the suggested H0 was rejected and the study accepted HA or alternate
hypothesis that Information Sharing with Supplier significantly affected organization
performance. Thus, the study found that if the company may share information with their

key suppliers in terms of product quality, state of the art technology, materials etc. then it
will enhance the performance of the organization. Therefore, it suggested that companies
should share information with supplier if organizations desire to increase the
performance.
Policy Implications
According to this study supplier relationship management has a significant influence on
organization performance. Organizations can use this information to align their strategies
to achieve higher degree of performance.
Future Research
For the future, the study can be conducted on different factors which can influence
supplier relationship and organization performance. Also study can be conducted in
overall Pakistan and other countries as this study is confined to Karachi only.
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