The Importance of Supply Chain Management on Financial Optimization
Abstract: Many manufacturing
companies are facing uncertainties and stiff competition both locally and
globally, intensified by increasing needs for sophisticated and high value
products from demanding customers. These companies are forced to improve the
quality of their supply chain management decisions, products and reduce their
manufacturing costs. With today’s volatile and very challenging global market,
many manufacturing companies have started to realize the importance of the
proper managing of their supply chains. Supply chain management (SCM) involves
practices such as strategic supplier partnership, customer focus, lean
production, postpone concept and technology & innovation. This study
investigates the importance of SCM on financial optimization. The study
measures production or SCM managers’ perceptions regarding SCM and level of
performances in their companies. The paper also specifically investigates
whether supply chain performance acts as a mediating variable in the
relationship between SCM and financial optimization. These associations were
analyzed through statistical methods such as Pearson’s correlation and a
regression-based mediated analysis. The findings suggest that SCM has
significant correlations with supply chain performance and financial
optimization. In addition, the result of the regression-based mediated analysis
demonstrates that supply chain performance mediates the linkage between SCM and
financial optimization. The findings of the study provide a striking
demonstration of the importance of SCM in enhancing the performances of
Malaysian manufacturing companies. The result indicates that manufac-turing
companies should emphasize greater management support for SCM implementation
and a greater degree of attention for production integration and information
flow integration in the manufacturing system in order to maximize profit and
tzerimize cost.
Keywords: Supply chain
management, supply chain performance, financial optimization, mediating effect
and regression based mediated analysis
Author: Arawati Agus
Journal Code: jptindustrigg130008
