THE ROLE OF SUPPLY CHAIN INTEGRATION ON ORGANIZATIONAL

PERFORMANCE
(The Case of Selected Food Oil Factories in Amhara Region)

A proposal Submitted to the College of Business and Economics Department of

management in partial fulfillment of the Requirements for the Award Degree of
Masters of business administration.

DEPARTMENT OF MANAGEMENT

SCHOOL OF MANAGEMENT AND PUBLIC ADMINSTRATION

COLLEGE OF BUSINESS AND ECONOMICS

UNIVERSITY OF GONDAR

By: Sofia Jemal

Advisor: Asmamaw Argeta (PhD)

Feburuary, 2022
Gondar,Ethiopia
 Contents
Introduction....................................................................................................................................................3
1.1. Background of the Study:..................................................................................................................3
1.2. Statement of the Problem...................................................................................................................6
1.3. Objective of the study......................................................................................................................11
1.3.1. General objective.........................................................................................................................11
1.3.2. Specific Objectives......................................................................................................................11
1.3.3. Research Question.......................................................................................................................11
1.4. Significance of the Study.................................................................................................................12
1.5. Scope of the study............................................................................................................................13
1.6. Limitations of the study...................................................................................................................14
REVIEW OF RELATED LITERATURE...................................................................................................15
2.1. Introduction......................................................................................................................................15
2.2. Conceptual Definition......................................................................................................................15
2.3. Theoretical Framework....................................................................................................................16
2.4. Supply Chain Integration.................................................................................................................16
2.6. Demand uncertainty.........................................................................................................................19
2.7. Supply Chain Operational Performance:.........................................................................................19
2.8. Organizational performance.............................................................................................................19
2.8.1. Relationship between SCI and organizational performance........................................................20
2.9. Empirical Reviews.......................................................................................................................21
2.10. Conceptual Framework & Design...............................................................................................23
Research Methodology................................................................................................................................24
3.1. Research Approach..........................................................................................................................24
3.2. Research Design...............................................................................................................................24
3.3. Population of the Study....................................................................................................................25
3.4. Sampling Technique........................................................................................................................25
3.5. Sample Size Determination..............................................................................................................25
3.6. Data type and source........................................................................................................................26
3.7. Data Collection Method & Procedure..............................................................................................27
3.8. Data Analysis Method......................................................................................................................27
3.9. Reliability.........................................................................................................................................28
3.10. Validity........................................................................................................................................28

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4. Work Plan and Budget.........................................................................................................................29
4.1. Time plan.........................................................................................................................................29
4.2. Budget..............................................................................................................................................30
Conclusion...................................................................................................................................................30
References....................................................................................................................................................32

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 CHAPTER ONE
 Introduction

The primary purpose for this study is to provide the comprehensive, quantitative and integrative
analysis of supply chain integration role on the overall organizational performance. The study
explores the role of supply chain integration, evidence of correlation and regression Analysis
between supply chain integration and the organizational performance.

The chapter deals with the background of the study which covered supply chain integration and
organizational performance. Studies on supply chain integration and performance of organization
in case of the three well known oil factories in Amhara region namely Tsehay Farmers
Cooperative Union Limited factory, PhiBela Edible Oil Factory and WA Oil factory as well as
gaps of those studies on the extents of supply chain integration and organizational performance
are reviewed and addresses respectively in the problem statements of this study.

This study is organized in to five chapters. Chapter one contains background of the study,
statement of the problem, research objectives, hypothesis of the study, significance of the study,
justification of the study, and limitation and scope of the study. Chapter two provides literature
review informing the reader of what is already known in this area of study. Chapter three
discusses the methodology employed in the study, data source and method, procedure of data
collection and data analysis. Chapter four includes important analysis such as descriptive,
correlation and regression analysis. The last chapter deals with conclusion and recommendation
of the result and the paper.

1.1. Background of the Study:

Today the new source of competition lies outside the walls of organizations Bogale, and is
determined by how effectively companies link their operations with their Supply Chain partners
such as suppliers, distributors, wholesalers, retailers and end customers A.(2016). Each firm in a
Supply Chain therefore, directly or indirectly affects the performance of other Supply Chain
members, as well as the overall performance of the Supply Chain (Sengupta, Heiser, & Cook,
2006).

Integration is the nature of cooperation that exists among groups to accomplish a compelling,
effective and joined framework. According to Flynn, Huo, and Zhao (2010), supply chain
integration is characterized as how much a producer deliberately works together with its supply
chain partners and cooperatively oversees intra-and between organization processes.

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Supply chain integration (SCI) has become increasingly critical for organizational success in the
long run (Huo, Qi, Wang, & Zhao, 2014). In order to survive, firms need to integrate with their
suppliers and customers and have extensive collaboration with them. SCI refers to the strategic
collaboration between manufacturers and their supply chain partners in order to leverage internal
and external resources and capabilities across the whole supply chain (Flynn et al., 2010).(Kumar
et al., 2017)). (Devaraj, Krajewski, & Wei, 2007; Mohammadi, 2014) Supply chain integration is
a system that improves all activities which carried out by organization. Supply chain
management is a complex system which covers all supportive activities from suppliers to after
sales services. (Shafqat) stated that collaboration in supply chain plays a dominant role for
improving organization’s performance and gaining competitive advantage(Van Hoek, 1998).
(Shafqat)

(Khalid, 2021) It is for the most part recognized that SCI is basic in accomplishing performance
and competitive advantages.

(L. Zhao, Huo, Sun, & Zhao, 2013) seeks to enhance competitive performance by closely
integrating the internal functions within a company and effectively linking them with the
external operations of suppliers, customers, and other channel members. Achieving SCI is a
complex task. The benefit of such SCI can be attained through efficient linkage among various
supply chain activities, and the linkage should be subject to the effective construction and
utilization of various supply chain practices for integrated supply chain. This means that a firm
that is pursuing the effective construction of SCM practices needs to pay attention to SCI.

The larger part of past examinations has concentrated on researching the impacts of various sorts
of SCI (e.g. internal and external integration) on firm performance. Such an arrangement of SCI
is too abstract to reveal the essence of the effectiveness of various SCI practices. This
arrangement might be one of the main reasons for contradictory findings in previous SCI and
firm performance studies. For instance, environmental uncertainty had a varying effect on the
efficacy of internal and external integration. Thus, it is necessary to explore the effect of SCI on
firm performance at a more detailed level. In this study, (Kim & Chai, 2016).

In this study the relationship between SCI and performance will be investigated from the
perspective of organizational performance. Thus, SCI can be viewed as internal and external
integrative capabilities that lead directly or indirectly to company performance.

Therefore, it seems that its worth to study the role of supply chain integration processes and
activities on organizational performance, so this study will investigates the roles of supply chain
integration on organizational performance for selected food oil factories in Amhara region.

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1.1.1. Background of the Organization

The word oil is derived from the Latin word oleum, originally used for olive oil, but nowadays it
means any of numerous combustible and unctuous substances that are liquid at room temperature
(this distinguishes them from fats) and soluble in many organic solvents but not in water. Edible
oils are derived from plants and chemically composed of triglycerides and several other minor
components. They are major components of the human diet, along with carbohydrates and
proteins.

Ethiopia’s Edible Oil

Ethiopia has favorable agro-climatic conditions for the cultivation of oil seeds and is one of the
centers of origins in the world for several oil crop plants like rape seed, Niger/noug seed, and
castor beans. Other oilseeds like linseed, soybeans, groundnuts, sunflower, and safflower seeds
are produced in different parts of the country. Production and export of sesame seed has
increased dramatically in the last ten years and thus Ethiopia the most common edible oils in
Ethiopia are of two types. These are the imported and the one locally produced. The common
edible oils currently in Ethiopian markets are vegetable oils such as palm oil, sesame seed oil,
soya bean oil, sunflower seed oil and groundnut seed oil.

As one of the centers of origins in the world for several oil crop plants grown in diverse agro-
ecological surroundings and soil types, Ethiopia holds several advantages for scaling up its
production of oilseeds. The issues and priorities critical to achieving the potential of the oil seeds
sector in Ethiopia are varied. They range from the general level of growth of the country,
requiring long-term solutions and macro level policies, to those that are specific to the sector.
The country has favorable agro climatic conditions for cultivation; the nature of the sub-sector is
labor intensive; the prevailing business environment conducive; and the substantial local demand
provides sufficient room for crushers to work at full capacity. Despite this potential, however,
both oilseeds commodity production and edible oil processing industry in Ethiopia remain to a
large extent underdeveloped. Issues and priorities of immediate and particular concern to the
sector include production, processing and marketing aspects. Below is a further analysis of each
of these aspects Production. Oil seeds are the third most important commodity in terms of
production and export in Ethiopia. According to the Central Statistical Agency of Ethiopia
(2008/2009), oil crops were cultivated in about 0.86 million hectares, involving close to four
million small holder farmers in the main production areas. The main oilseed crops include
sesame, Niger seed and linseed. Though this production contributes to household income, it is
constrained due to too small-scale and fragmented land holdings. Eighty-six per cent of the sizes
of holdings under oil seeds production fall in the range of less than five hectares, holdings of

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greater than five and less than ten hectares account for twelve per cent and those greater than ten
hectares account for less than two per cent of the total estimated area under oilseeds. A low use
of agro-inputs and poor farm management, and a lack of market-oriented production such as
contract farming, warehouse receipt system together with the high cost and limited availability of
inputs (improved seeds, fertilizer and chemicals) add to overall low productivity. Processing
most domestic oil processing is undertaken by an estimated 850 small-scale and micro oil
processing plants, accounting for ninety-five per cent of the manufacturing base of the edible oil
industry. Capacity utilization in the industrial branch is seriously constrained both by the
quantity and quality of oilseeds available. Many of these small and medium enterprises use
obsolete equipment and technology. Working conditions and the level of sanitary and hygienic
standards is far below acceptable levels. Edible oil refining capacities are limited to some
twenty-six medium and large industries, utilizing about thirty per cent of capacity. Considering
import–intensity (a technical coefficient that measures the share or magnitude of imported
intermediate goods to produce a unit of final demand) the edible oil industry, at less than two per
cent, provides an opportunity/potential to be competitive both domestically and internationally
given the domestic base of the raw material, oilseeds, and integration with the local economy.
The edible oil sub-sector, however, does not perform well in all aspects of its operational
parameters. Capacity utilization of the edible oil sub-sector is by far the lowest among the food
manufacturing sector industries and the average of the Ethiopian manufacturing industries over
the past few years. The subsector has diverse and significant constraints.

Marketing and distribution of oilseeds is mainly done by small and medium scale traders with
poor marketing facilities, especially for collection, storage and transportation, which cause high
post-harvest losses. The marketing chain is long, with many intermediaries adding little value to
the final product, with high transaction costs being incurred. The Lack of access to packaging
services, poor access to financial services, and poor vertical and horizontal collaboration within,
as well as external to the chain, all negatively impact the industry.

The marketing chain was long, with many intermediaries adding little value to the final product,
with high transaction costs incurred. Lack of access to packaging services, poor access to
financial services, and poor vertical and horizontal collaboration within, as well as external to the
chain, all negatively impacted the industry.

Ethiopia’s Edible Oil Supply Chain

Ethiopia’s oilseed sector plays an important role in generating foreign exchange earnings. The
three major oilseed crops (sesame, soybean, and niger seed) contribute to nearly 20% of
Ethiopia’s total agricultural export earnings, second to coffee. In the Year 2018/19 (Oct-Sep),
exports of sesame, Niger seed, and soybeans

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Ethiopia has a large number of local small scale processors. The annual domestic production
ranges from 5000 to 8000 tons for the medium and large scale enterprise. This production is
estimated to be less than half of the full capacity. So the country imports various oils such as
palm oil, soya seed [54]. Due to the above reasons and not having refining technology in
Ethiopia edible oil quality and safety exposed to Physico chemical and microbial safety problem

Table: Estimated Production Volume of Major Oilseeds (metric tons) from 2018-2019 in
Ethiopia

Crop 2018/2019 2019/2010 Value change Volume change

Sesame 300,000 340,000 40,000 13%
Niger seed 300,000 305,000 5000 2%
Soybean 190 200,000 10,000 5%
Total 790,000 845,000 55,000 7%

Table 2: Major oil seeds Crushed by local miller in Ethiopia

Crop Crushed by local miller (Percentage)

Noug 85%
Groundnut 35%
Sunflower 32%
Linseed 25%
Rapeseed 10%

Let we see the background of the three concerned oil factories in Amhara region.

1. Tsehay, the union of farmer cooperatives

In the north of Ethiopia, has been working together with Agriterra since 2012. A lot has
changed since then and there has been progress in different areas (internal capitalisation,
investments, skills and knowledge, market linkage). Tsehay Farmers Cooperative Union
Limited was founded in the year 2000 and has now grown into a union of 142 cooperatives,
working in 10 woredas. The union consists of more than 120,000 small holder farmers, of
which about 94,000 are male and 26,000 female. 100 employees in total work for the union,

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 buying mainly sesame, chickpeas, soybeans, green mug teff and spices from its members and
selling various inputs (fertilizer, improved seeds), consumable products, insecticides and
pesticides to its members at a discount. The Tsehay Farmers’ Cooperative Union, an
Ethiopian farmers’ based union, has invested US$2.46 million (70 million birr) in setting up
a new edible oil processing plant in Amhara Regional State. The processing plant has a daily
production capacity of refining 10,000lt of reports Addis Fortune. The oil factory use
different oil seed for processing plant to produce oil, which uses such as:-
 Sesame seeds
 Niger seed
 Sunflower and Peanuts

Business unit of Tsehay Union

 Supply chain tracking

 Fumigation
 Re-bagging
 Transport and Delivery
 Export rice and vegetables

2. PhiBela Edible Oil Factory

This edible oil factory has Refined, Bleached and Deodorized (RBD) Palm Fractionation
Plant and Refined, Bleached and Deodorized (RBD) Soybean and Sunflower Refinery
Plant. The sources of edible oil refinery are RBD palm oil, water degummed crude
soybean, and crude sunflower oils. The Crude oils are refined to remove free fatty acids
and other non-TAG (triacylglyceride) components which contribute to undesirable flavor,
odor and appearance. The crude soybean and crude sunflower oils are refined using
chemical refining process which involves degumming for the removal of phospholipids,
neutralization for the removal of FFA, and bleaching for decolourization and
deodorization. Because the hydrated content of imported soybean oil would be
degummed, only the remaining non-hydratable gums will be removed using phosphoric
or citric acid in PhiBela refinery plant. The capacity of RBD Palm Fractionation Plant is
more than 800 tons/day and produces high quality palm oil mainly CP6 and CP8 and
palm stearin which is an input for margarine and shortening Industries and Soap
Industries The RBD Soybean and Sunflower Refinery Plant equipped with more than 600
tons/day capacity of the deodorized plant has the capacity to produce high quality RBD
Soybean and Sunflower edible oil from crude soybean and sunflower oil.

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 Taking the government’s manufacturing policy into account; BKIEA is heavily investing
in the manufacturing sector. BKIEA is constructing edible oil refinery complex. The
construction of this edible oil plant is near to completion. The complex covers 30
hectares of land leased from Amhara Regional Government at the industrial town of
Bure. When this huge complex becomes operational, it will cover up to 50% of the edible
oil demand of the country.
The following factories will operate in the same compound:

 A big refinery with a refining capacity of 1400 tons per day.

 Sesame oilseeds processing plant (to add value on the row sesame by hulling and
roasting).
 Liquid soaps, solid soups and detergents manufacturing factory.

The oil factory use different oil seed for processing plant to produce oil, which uses such as:-

 Soybean
 Sunflower
 Palm oil

Vision, mission of Phibela Business Group

Vision

Our vision is to become one of the best business companies in Africa by the year 2025.

Mission

The mission of Belayneh Kindie Import, Export and Associates is to provide competitive high
quality products and services for customers with highly skilled business professionals and staff
who are equipped with Information Technologies (IT). BKIEA is established to:

 Export value added agricultural commodities like sesame seeds, pulses and coffee to the
international market;
 Assemble heavy duty trucks, luxury public transport buses and automobiles in its own assembly
plant and sell the products in domestic markets;

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 Produce edible cooking oil and detergents by creating market linkage between oil seeds grower
farmers and the edible oil factory; distribute the products of the factory to domestic and
international market;
 Produce coffee, oil seeds and other seasonal crops in its own commercial farm;
 Deliver dry cargo, fuel cargo and public transport services to users;
 Provide excellent and preferred guest service with internationally branded hotels for local &
international customers;
 Build standardized all weather roads and modern houses;
 Provide construction machineries rental service.

Business unit of PhiBela

Export of agricultural commodities

Import

Transport

Hotel

Construction

3. WA Oil Factory

WA oil managed to import and distributes ETB 5 billion (USD 200 million) worth of palm oil
through its trading business. WA’s founder vision and hard work in palm oil import and trading
paid off and motivated him to invest in edible oil factory project under the name of WA Oil
Factory and Distribution PLC.
Founded by two Ethiopian Diaspora members in Germany in 2017, Sela Goja Oil Filtration
Factory was established with the vision to provide Ethiopia with healthy and nutritious 10,000
liters of edible oil per day. Workeu Aytenew bought 50% share on it to ensure the business run
with liquid working capital.
WA oil managed to import and distributes ETB 5 billion (USD 200 million) worth of palm oil

10
through its trading business. WA’s founder vision and hard work in palm oil import and trading
paid off and motivated him to invest in edible oil factory project under the name of WA Oil
Factory and Distribution PLC.WA Oil Factory project was kicked off 4 years ago at
Debremarkos in Amhara Regional State, East Gojjam Zone on a leased land size of 101,103m2
and its corporate office is headquartered at Addis Ababa, Bole Sub City.

The oil factory use different oil seed to produce the refining oil such as mentioned below:

 Groundnut
 Nigger Seed
 Sesame Seed
 Soybean
 Sunflower
 Palm

Business unit of WA Oil factory

Export 0f agricultural commodities

Trading

Transport

Real state

Bottling water

Petroleum

All the listed selected oil factories have other business organization in addition to the production
of oil such as transportation, real state, hotel,

1.2. Statement of the Problem

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According to (Li, Ragu-Nathan, Ragu-Nathan, & Rao, 2006)and overall supply chain
performance. This has resulted in increased attention of managers, consultants and business
owners towards proper supply chain management in business organizations (Narasimhan, Kim,
& Tan, 2008). The early attempts of empirical research in SCM have been limited at developing
instruments capable of measuring SCM practices. Most recently, Gibson et al., (2006), Alvarado
et al., (2011). They have used financial and market criteria to organizational performance (return
on investment, market share, profit margin on sales, the growth of return on investment, the
growth of sales and the growth of market share). Also, they investigated the relationship among
SCM practices, operational performance and SCM-related organizational performance. These
studies and others have produced various results due to the performance of the organization
subjectively and objectively.

(Günter, Snoo, Shepherd, Moscoso, & Riedel, 2010)categorize SC performance measures into
five SC processes: plan, source, make, deliver and return or customer satisfaction, whether they
measure cost, time, quality, flexibility and innovativeness and whether they are quantitative or
qualitative measures. Measures can be categorized according to business processes or into
strategic, operational and tactical management levels.

(Li et al., 2006), and many organizations continue to struggle to understand the complex issues
associated with the coordinated planning and supply chain integration among members of their
supply network (Lori, Daniel, & Kaushik, 2011). Footwear is an active product in international
markets with a very stiff competitive market, where shoe producers have a range of costs to
manage with a pa(Günter et al., 2010) reticular focus on raw material and production costs. Other
important costs include regulatory compliance costs, logistics costs, general overheads (such as
utilities) and marketing.

Therefore, for the effort to achieve generalization of the causal relationship between SCM and
firms performance, this paper is to contribute to measure the role of supply chain integration
and organizational performance in the case three well known oil factories.

1.3. Objective of the study

In this section, both the general and specific objectives of the study which were analyzed in
the results and discussions part are separately elaborated.

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 1.3.1. General objective
The general objective of this study is to assess the role of Supply Chain integration on
organizational performances (the case of selected food oil factories in Amhara region).

I.3.2. Specific Objectives

Specific objectives of the study are:

1. To analyze the relationships between supply chain integration and the organizational
performance with the respect to internal, external, information, supplier, customer and
measurement integrations, and non-financial performance (Responsiveness, Reliability,
Flexibility, Quality, Innovation, and Delivery) respectively.
2. Examine the dimensions of supply chain integration with respect to internal integration,
external integration, information integration, supplier integration, customer integration
and measurement integration
3. To assess roles of supply chain integration on organizational performance related to the
internal, external, information, supplier, customer and measurement integrations of
supply chain, and on that of non-financial (Responsiveness, Reliability, Flexibility,
Quality, Innovation, and Delivery) organizational performance (the case of selected
food oil factories in Amhara region).

I.4. Research Question

1. What are the relationships between supply chain integration and the organizational
performance?

2. What are the roles of supply chain integration on organizational performance?

3. What are the extents of supply chain integration dimensions?

4. To what extent is companies supply chain performance is measured?

I.5. Significance of the Study

First, the study will serves as source of reference for further studies in the area of supply chain
integration and management of food oil exporter factories. Hopefully, it will inspire other
students to further deepen their research knowledge while opening the doors to investigate or
reference who wants to study further in this.

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Second, the study will help the management of selected Food oil Factories, specifically
department heads at supply chain management of the organization, in the process of decision
making and organization performance I n exporting. The study will provide extensive
knowledge for the researcher on supply chain management practices and their role and impact on
organizational performance.

Third, the study will also benefit for other similar studies both academicians and other
practitioners as a documented in the future. In addition, the final findings of the research paper
will contribute a lot for food oil companies on how to implement better supply chain integration
that will meet their customer satisfaction and more to be productive.

Key terms and terminologies

Supply Chain:

Supply chain is considered as a system that includes group of activities, processes and sub-
processes such as procurement, operations, transportation, warehousing. It aims to provide the
products and/or services either to consumer or customer starting with purchasing materials and
equipment then transforming it to semi- finished products that will be reprocessed again to
produce the final products. Supply chain management is concerned with the planning and
managing the flow of materials, products and services among and between these processes. The
ultimate goals of managing supply chain is to provide the products at the agreed delivery time,
suitable quality, and competitive price to the customers, and that is reflected by the customer's
satisfaction and the overall organizational performance.

Supply Chain Integration:

Due to the intense of global competition, the organizations create cooperative and mutually
beneficial relationship among supply chain partners (Wisner & Tan, 2000). (Frohlich &
Westbrook, 2001) pointed out that organizations or companies need to implement supply chain
integration to meet the new challenges of the global competitive environment. Many studies
propose different supply chain definitions. (Hamid, Ibrahim, & Abdelkareem, 2020), defined
integration of supply chain as a process of collaboration in which companies work together in a
cooperative manner to arrive at mutually acceptable outcomes. (X. Zhao, Huo, Flynn, & Yeung,
2008) described supply chain integration as “the degree to which an organization strategically
collaborates with its supply chain partners and manages intra- and inter-organization processes to
achieve effective and efficient flows of products, services, information, money and decisions,
with the objective of providing maximum value to its customers”.

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Organizational performance:

The concept of organizational performance is the comparison of an organization's goals and

objectives with its actual performance in three distinct areas: financial performance, market
performance, and shareholder value. Financial performance refers to an organization's results
with regard to return on investment and return on assets. The market performance refers to a
company's ability to make and distribute their outputs in the most cost effective way and to set a
price that returns a reasonable amount to suppliers. In addition, market performance refers to the
ability of a company to meet the demands and expectations of consumers regarding the good or
service produced. Some organizations also measure market performance with regard to how
great a share of the market they possess relative to their competitors, and some measure their
ability to achieve social responsibility (or stewardship of the environment and responsibility to
the community). Finally, shareholder value refers to the value of 8 | P a g e what a person
holding shares in the firm possesses. These three measures determine whether an organization is
meeting its goals (Jameadows 2017).

I.6. Scope of the study

This study intends to identify the role of supply chain integration on organizational performance.
For this objective the researcher used role of supply chain integration on organizational
performance of food oil factories in Amhara region. This study is delimited to only supply chain
management department and organizational performance. The supply chain integration that are
included in the study are strategic supplier partnership, customer relationship, level of
information sharing and quality of information sharing and extent of internal lean practices. In
addition to this the study shows the right way of exporting seed oil product of supply chain
integration from food oil companies to the right wholesaler and retails.

I.7. Limitations of the study

1. Target population willingness is a big challenge to pursued to fill the questioner.

2. The research data will be collected in different areas of Amhara region so the data
collection will be difficult in a short period of time.
3. The expected staff member of the factories may not be available at the right time for the
interview and data collection.

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 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1. Introduction
This chapter focuses on the literature review as conducted by the researcher. It includes a review
of the various studies that have been conducted by other researchers relating to the need for
integration of SC partners and the performance of organizations. Among the areas reviewed
include: supply chain integration, supply chain integration and organizational performance, the
drivers of supply chain integration, the benefits of supply chain integration. The chapter also
provides the research gaps identified and a comprehensive conceptual framework

2.2. Conceptual Definition

 Supply chain integration: the degree to which an organization strategically collaborates
with its supply chain partners and collaboratively manages intra-and inter organization
processes (Flynn et al., 2010).
 Supply Chain: Ivy Wigmore (2013) stated that a supply chain is the network of all the
individuals, organizations, resources, activities and technology involved in the creation
and sale of a product, from the delivery of source materials from the supplier to the
manufacturer, through to its eventual delivery to the end user (FARHAN, 2021).
 Supplier partnership: a commitment over an extended time to work together to the
mutualbenefit of parties, sharing relevant information and the risks and rewards of the
relationship (H. Deshpande, 2017).
 Firm performance: The concept of organizational performance is the comparison of an
organization's goals and objectives with its actual performance in three distinct areas:
financial performance, market performance, and shareholder value. Financial
performance refers to an organization's results with regard to return on investment and
return on assets. The market performance refers to a company's ability to make and
distribute their outputs in the most cost effective way and to set a price that returns a
reasonable amount to suppliers.
 Internal integration: Internal integration is defined as the strategically aligned and
coordinated internal processes and functions for the purpose of achieving maximum
performance of an organization (Kumar et al., 2017).

17
  External Integration: The ability of two or more companies to develop shared
connections that serve to guide their interactions when working together (i.e., external
relationship management) (Close, 2011).
 Information integration: Information integration refers to the coordination of
information transfer, collaborative communication and supporting technology among
firms in the supply chain (Kumar et al., 2017).
 Supplier integration: Supplier integration is the back down to the suppliers with product
development, flexibility of order of fulfillment, supply of high quality products, process
and specification change information, technology exchange and design support
(Baharanchi, 2011).
 Customer integration: The integration of customers in the supply chain is the
opportunity of having an overview of the requirements and customer’s specific needs as
the advantage of serving them better (Lotfi, Mukhtar, Sahran, & Zadeh, 2013).
 Measurement Integration: It is the performance assessment of the supply chain as a
whole that also holds each individual firm or business unit accountable for meeting its
own goals (Scheinbaum, 2011).

2.3. Theoretical Framework

The theories of supply chain management, organizational performance and perspectives of
supply chain integration have been reviewed in the following sub-topics of this section.

2.4. Supply Chain Integration

A supply chain includes all parties involved in realizing customer demand. In addition to the
manufacturer and suppliers, supply chain includes distributers, wholesalers, retailers, and the end
customers. Inside the organization, supply chain includes the functions related to receiving and
fulfilling customer order. Some of these functions are operations, new product development,
marketing, finance, distribution, and customer service (Lotfi et al., 2013). SCI refers to the level
of strategic collaboration and management of inter- and intraorganizational processes in the
supply chain (Flynn et al., 2010). Most previous studies have considered SCI as an approach to
integrate information among suppliers, manufacturers, distributors, and customers (Pagell, 2004).
While some definitions of SCI emphasize material flows and components, others focus on
information, resources, and cash flows (Flynn et al., 2010).

In general, SCI is divided into internal and external integration (Sagawa & Nagano, 2015).
Internal integration refers to the level at which the manufacturer organizes its internal activities,
processes, and strategies to meet the needs of its customers. It involves collaboration and
coordination across organizational functions through information sharing in order to better

18
understand and address the needs of its customers (Flynn, Koufteros, & Lu, 2016). External
integration refers to collaboration and coordination between the firm and its external supply
chain partners (L. Zhao et al., 2013). Previous studies have taken different approaches to
categorizing external integration. One approach divides external integration into supplier and
customer integration, which refers to coordinated and cohesive links between a firm and its
suppliers or customers (e.g (Hendijani & Saeidi Saei, 2020);(Flynn et al., 2010); Hosseini &
Sheikhi, 2013; Kim, 2009; Oghazi, 2009).

Another approach categorizes external SCI into product and process dimensions (Fabbe‐Costes
& Jahre, 2008); Huo et al., 2014). Product integration refers to the participation of suppliers and
customers in the development of new products (Huo et al., 2014; Khazanchi et al., 2007;
(Wagner & Bode, 2008)). It aims to support the product development activities through close
interaction between the firm and its key suppliers and customers. Process integration refers to the
cooperative and coordinated design and implementation of supply chain processes with suppliers
and customers. The aim is to eliminate non-value added activities and improve the speed and
flow of information, material, and cash flow across the supply chain (Huo et al., 2014; Kim et
al., 2012; (Wagner & Bode, 2008)). In this study, we used the second approach for categorizing
external dimensions of SCI. Thus, we classify integration into internal, product, and process
integration.

This classification has several advantages. First, it helps us to address the impact of SCI on firm
performance from an angel that has been less studied before. Previous studies have mainly
focused on integration with suppliers and customers as the dimensions of external integration.
The use of product and process integration in this study allows us to have a unified approach
towards integration with the main partners in supply chain (i.e., suppliers and customers) and
examine the effect of external integration across the whole supply chain instead of examining the
separate effects of integration with suppliers and customers. Furthermore, combining the
relationship with suppliers and customers assists in developing integrated strategies across the
whole supply chain. This enables firms to use their limited resources more effectively and
improve their performance

2.5. Uncertainty

Uncertainty is the changes in environmental status and the inability to predict the effects of such
changes and their expected consequences on firms (Milliken, 1987). Flynn et al. (2016) classified
the uncertainty in supply chains into micro-, meso- and macro-levels. The micro-level
uncertainty occurs in processes repeating in firms and found in environments with lower
complexity (Flynn et al., 2016). Variability of material and information flows in value and time
results in uncertainty (Sivadasan, Efstathiou, Frizelle, Shirazi, & Calinescu, 2002).

19
Micro-level uncertainty is concerned with data predicting through distribution, such as variability
of customer demand (Flynn et al., 2016). As the supply chain complexity increases, the need for
information increases (Leuschner, Rogers, & Charvet, 2013).

Table 1.SCI Classifications

SCI classification Author(s)

Internal & External Integration Li (2015). Drage et al. (2004)
Internal Integration, Supplier Boon-itt & Pangpanarat (2011), Fazli & Amin Afshar (2016),
Integration & Customer Integration Flynn et al. (2010), Flynn et al. (2016), Hasseini & Sheiki (2013),
Kim (2009), Orghazi (2009), Zhao (2015)
Internal Integration, Product Fabbe-Castes & Jahre (2008), Huo et al. (2014)
Integration, & Process Integration

The macro-level supply chain uncertainty is related with a complex and dynamic environment in
which there are ambiguous and unstructured circumstances (Flynn et al., 2016), such as facing
natural disasters or unexpected shifts in customer demand. Other examples of macro-level
uncertainty are accidents, wars and terrorist attacks (Hendijani & Saeidi Saei, 2020). Changes in
economic conditions, market turmoil, competition intensity and turmoil in industry and
technology are major sources of uncertainty in macro-level (Lu & Shang, 2017).

Boonyathan and Power (2007) argue that it is possible to mitigate uncertainty by close
coordination with both suppliers and customers (Hendijani & Saeidi Saei, 2020). On the
customer side, firm customers such as wholesalers and retailers are closer to the end customers in
the supply chain. Integration with them leads to better demand forecasting through receiving
more accurate information regarding the demand of end customers. In the face of demand
uncertainty, access to a more accurate information on demand fluctuations becomes even more
critical and helps in mitigating bullwhip effect and its harmful consequences on firm
performance. On the supply side, the early involvement of suppliers in the production of new
products is highly critical and can reduce costs associated with uncertainties in new product
development, resulting in positive impact on operational and financial performance. While the
effect of environmental uncertainty on firm performance appears to be negative, it can have
positive effects in practice. According to previous studies, environmental uncertainty can result
in higher levels of manufacturing flexibility (Patel, Terjesen, & Li, 2012), which, in turn,
improves firm performance (Ebrahimpour Azbari et al., 2018). Uncertainties in demand and
technology dimensions reinforce the positive relationship between customer participation and
process flexibility (Feng, Sun, & Zhang, 2010).

20
2.6. Demand uncertainty
Demand uncertainty (DU) is one type of micro-level uncertainty which can have a significant
impact on firm performance (Flynn et al., 2016). It refers to the extent to which the needs of
customers change over time (X. Zhao, Xie, & Zhang, 2002). DU is one of the external factors
that firms face in the supply chain (O’Leary-Kelly & Flores, 2002). Geary et al. (2002) argue
that demand uncertainty can be seen as the difference between actual market demand and
projected customer orders in an organization (Hendijani & Saeidi Saei, 2020). In fact, DU refers
to the difficulty level in predicting future demand characteristics of the firm’s customers
(Farahani, Rezapour, Drezner, & Fallah, 2014).

2.7. Supply Chain Operational Performance:

The concept of supply chain operational performance has been emerged from supply chain strategy which
derived from overall business strategy. A competitive strategy defined as "the set of customer needs that
it seeks to satisfy through its products and services" Chopra and Meindal (2007), (George, 2007). Each
organization attempt to adopt different competitive strategy that fit to its strategy, then it seeks to afford
the suitable capabilities and resources that help to achieve it. For example, one organization aims to
provide high quality products with high price, another organization aims to provide high availability of a
variety of products of reasonable quality at low price, while another organization aims to provide too
many

2.8. Organizational performance

Organizational performance refers to how well an organization achieves its market oriented goals
as well as its financial goals (Lakhal, 2009). The short-term objectives of SCM are primarily to
increase productivity and reduce inventory and cycle time, while long-term objectives are to
increase market share and profits for all members of the supply chain (Tan, 2008). Financial
metrics have served as a tool for comparing organizations and evaluating an organization’s
behavior over time (Holmberg, 2000). Any organizational initiative, including supply chain
management, should ultimately lead to enhanced organizational performance. A number of prior
studies have Measured organizational performance using both financial and market criteria,
including return on investment (ROI), market share, profit margin on sales, the growth of ROI,
the growth of sales, the growth of market share, and overall competitive position represented by
constructs like, Price/Cost. It is the ability of an organization to compete against major
competitors based on low price and quality (Li, 2006). The ability of an organization to offer
product quality and performance that creates higher value for customers’ delivery dependability.
It includes the ability of an organization to provide on time the type and volume of product
required by customer(s) (Li et al, 2006).

21
2.8.1. Relationship between SCI and organizational performance
SCI can have a positive effect on firm performance (Li, 2015; Tarifa-Fernandez & De
BurgosJiménez, 2017). According to information processing theory, SCI can improve
communication between the firm’s employees and external partners, resulting in higher quality
and more informed decision making. In addition, SCI allows firms to attain required information
related to demand, technology, and strategy in a timely manner. This can help in better aligning
and coordinating activities among supply chain partners, decreasing waste, and providing
products at a higher speed and lower cost to customers (Li, 2015). Internal integration can
improve internal processes and prevent the occurrence of non-value added and duplicated
activities within the firm. This results in the production of higher quality products at lower costs
(Flynn et al., 2010). External integration can help in acquiring information regarding supply
chain including information about suppliers’ activities and customer demand in a timely manner,
which helps in higher coordination and collaboration among supply chain members, and
avoiding inefficiencies across the whole supply chain (Swink et al., 2007).

Previous empirical studies have supported the positive effect of SCI in the form of internal and
external integration on firm’s operational and financial performance (Flynn et al., 2016; Kumar
et al., 2017; Rosenzweig et al., 2003; Vickery et al., 2003). In one study, Kumar et al. (2017)
found that SCI had a positive effect on supply chain performance, including operational
performance, production flexibility, inventory turnover, order fulfillment rate, and total logistics
costs. In another study, Othman et al. (2016) found that SCI had a positive effect on the logistics
performance. Li (2015) found that internal and product integration had a positive effect on
operational performance among organization or companies.

In another study, researchers found that SCI, including internal integration and external
integration with suppliers and customers had positive effects on financial performance. In
addition, internal integration had a positive effect on operational performance (Zailani &
Rajagopal, 2005). Beheshti et al.’s (2014) study on manufacturing companies showed that all
SCI dimensions, including internal integration and external integration with suppliers and
customers were beneficial to organizations’ financial performance. In other words, firms with
higher levels of SCI had higher levels of financial performance. Flynn et al. (2010) found a
positive relationship between external integration with customers and suppliers and operational
performance. Fazli and Amin Afshar (2016) found that SCI had a positive effect on operational
and financial performance of the organizations. Other research has shown that internal
integration improves external integration and that internal and external integration both directly
and indirectly improves firm performance (Huo & Zhao, 2012; Nazemi & Kharidar, 2012).

22
2.9. Empirical Reviews
Otchere, Annan, & Anin, (2013) concluded in their studies that supply chain integration directly
relates with business performance. Internal collaboration directly affects firm performance.
Higher levels of integration generally lead to better performance.

Kim, (2006) found that in small firms, efficient SC integration may play a more critical role for
sustainable performance improvement, while, in large firms, the close interrelationship between
the level of SCM practices and competition capability may have more significant effect on
performance improvement.

Flynn, Huo, & Zhao (2010) assessed the impact of three dimensions of supply chain integration
(supplier integration, customer integration, and internal integration) on operational and business
performance and stated that internal integration directly relates to both business and operational
performance and that customer integration directly relate to operational performance. Although
supplier integration is not relate directly to either type of performance, the integration of supplier
and customer were related to operational performance. Internal and external integration influence
each other along with performance. The effect of integration between corporate competitive
capability and SC operational capability on performance improvement becomes insignificant as
the developmental stage of SC integration increases (Otchere, Annan, & Anin, 2013).

Alireza et al. (2011) conducted study on Malaysia Electronic Industry to present a mode for
supply chain performance by employing supply chain design, supply chain information sharing,
and flexibility and d elivery components as independent variables influencing supply chain
performance. The results from this study depicted that supply chain design influences supply
chain performance through delivery and information sharing. Furthermore, information sharing
and delivery have a direct influence on supply chain performance. The findings also showed that
flexibility influences supply chain performance through delivery. Information sharing affects
supply chain performance directly and has also an indirect impact on supply chain performance
through flexibility. This study elaborates the significant effect of the design of the supply chain
on its performance while considering the impact of information sharing.

Moslem (2013), conducted research on impact of supply chain management practices on

competitive advantage in manufacturing companies of Khuzestan province (Iran) by using
strategic partnerships with supplier, customer relationship, information sharing, quality of
information sharing and internal lean practices as independent variables affecting the competitive

23
advantage. The result from this study was indicates as there is relationships between SCM
practices and competitive advantage.

Lenny et al. (2007) conducted study on the impact of supply chain management practices on
performance of SMEs in Turkey. Based on exploratory factor analysis (EFA), researchers were
grouped SCM practices in two factors: outsourcing and multi-suppliers (OMS), and strategic
collaboration and lean practices (SCLP). The results indicate that both factors of SCLP and OMS
have direct positive and significant impact on operational performance. In contrast, both SCLP
and OMS do not have a significant and direct impact on SCM-related organizational
performance. Also, as the direct relationship between the two performance-constructs was found
significant, both factors of SCM practices have an indirect and significant positive effect on
organizational performance through operational.

On the research topic Supply Chain Management measurement and its influence on Operational
Performance conducted by Priscila and Luiz (2011), SCM measurements were considered as
consists of information sharing, long term relations, cooperation and process integration as
independent variables influences operational performance in case of Brazilian companies. The
empirical results of this study provided evidence of a positive impact of SCM measurements on
operational performance.

Supply Chain Management, Product Quality and Business Performance in case of Malaysian
manufacturing companies conducted by Arawati (2011) and the study specifically investigates
relationships between SCM, product quality and business performance and these associations are
analyzed and the result demonstrates that SCM dimensions namely ‘lean production’, ‘new-
technology and innovation’, ‘strategic supplier partnership’ and ‘postponement concept’ appear
to be of primary importance and exhibit significant effects on product quality and business
performance.

Adebayo (2012) conducted study on SCM Practices in Nigeria Today: Impact on SCM
Performance. The SCM practices considered in this paper were namely strategic supplier
partnership, customer relations practices, information sharing, information quality and
postponement. This paper provides empirical justification for five key dimensions of SCM
practices identified and describes the relationship among SCM practices and SCM performance
as well as the impact of these practices on SCM performance. The study thus showed that SCM
practices definitely impacts SCM performance. Mahbubul (2013) conducted research on Effects
of Supply Chain Management Practices on Customer Satisfaction in the pharmaceutical industry
of Bangladesh: Evidence from Pharmaceutical Industry of Bangladesh. The results of the study
indicate that SCM practices as observed in the industry comprise three dimensions, namely,
collaboration and information sharing, logistics design and IT infrastructure, and organizational

24
 culture (OC). However, while the first two exert their impact on customer satisfaction, OC does
not have any influence on it.

Generally, from above literature reviews it can be easily understandable that the work on supply
chain management measurements/ practices and its influences on different perspectives of the
organization and overall supply chain partners increasing and yields good backgrounds.
However, the relationship of SCM with performance cannot be regarded as conclusive (Cousins,
et al., 2006). Despite the increase of empirical research in the last few years, important
differences in research design undermine comparability: lack of consensus about the definition
and dimensionality of the SCM construct, use of different units of analysis, and different
approaches to performance measurement.

2.10. Conceptual Framework & Design

On the basis of a brief literature review we have developed the following conceptual model to
pursue our study. The model illustrates the various relationships between studied variables which
were developed after careful study of literature.

Figure 1. Conceptual Frame work

Supply Chain Integration
Internal Integration (II)

External Integration (EI)

Supplier Integration (SI)

ROL
Organizational
Customer Integration (CI) ES Performance
Resposibility
information Integration (INFI) Reliability
Information Sharing Flexibility
Integration Of Technology Quality
Measurment Integration (MI)
Delivery

The figure determines a brief introduction of the variables of the present study. Independent
variable consists of Supply Chain Integration, which cover integration with customer, integration
with supplier, with information integration and internal and external integration with in
organization.

25
Dependent variable is organizational performance which includes responsibility, reliability,
flexibility, quality and delivery. Furthermore, the model states that there is a positive relationship
between supply chain integration and organizational performance of a firm. The model depicts
the direct role of supply chain integration on organizational performance as well as indirect
effect of supply chain management on organizational performance.

26
 CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1. Research Approach

The study followed an inferential research approach, which is part of quantitative research
approach in this study, to achieve its purpose. Therefore, this study focused on formulating
research questions and objectives of the study that have been achieved throughout the processes
of the study.

3.2. Research Design

This research is an explanatory study with survey based which focuses on expanding knowledge
on current issue through data collection and it describes the behavior of sample population. The
study has one independent variable which focuses on supply chain integration. Data will be
collected from the managers and experts of the Oil seed organizations with related task
functions. The main objective of this study is to examine the roles of supply chain integration on
organizational performance in Amhara region food oil organizations . To achieve this objective
descriptive type of research design and inferential research with a quantitative is used.

3.3. Population of the Study

The target populations for this study are three known selected food oil factories that are top
performer food oil exporters in Amhara region which are listed down on sample size
determination. The targeted population for the study comprised 140 samples from the three oil
production factories respectively from Tsehay, the union of farmer cooperatives 40 samples,
PhiBela business group 60 and WA oil factory 40 sample for each firms. The samples of
employees who are taken works different position of the factories such Supply Chain, Operation
Director, Logistics director, Procurement Directorate, finance teams and others.

According to Bhattacherjee (2012), a population can be defined as all people or items (unit of
analysis) with the characteristics that one wishes to study. Sampling is the statistical process of

27
selecting a subset (called a “sample”) of a population of interest for purposes of making
observations and statistical inferences about that population. (Bhattacherjee, 2012).

3.4. Sampling Technique

This study used probability sampling method which includes systematic simple random to draw
the sample from the population. Purposive sampling enables to use a judgment to select cases
that will best enable you to answer your research question(s) and to meet your objectives.
(Saunders et al 2009).

The researcher is not study all employees of the Food Oil Companies due to the population are
large and lack of availability and willingness of all employees and economically unaffordable.
Therefore, for these reasons to undertake the study the researcher is taken permanently hired
clerical employees of the Companies which is management and experts staffs from selected Food
Oil Factories in Amhara Region.

3.5. Sample Size Determination

The total populations in the study area are 500 employees. It is very expensive to collect data
from all these employees, so that the researcher use Toro Yamane’s (1973) to determine the
sample size which is from the representative of total population. The sample size will determine
by the following formula take 95% confidence level assume that for this formula to determine
the sample size, at e=0.05

Distribution of Organizational performance in each company

Name of the Place of Numbers Sample Invested Refining Land

organization the of No of capital production coverag
factory Employe Employe capacity e
e e
Tsehay Gondar 100 40 70 Millioin 10,000 Ltr Oil 8734
Union Oil per day SqM
Factory
PhiBela Burie 300 60 4.5 Billion 1.5 million 300,000
Business Ltr Oil per SqM

28
 Group day
WA Oil Debre 100 40 5 billion 1.3 million 101,103
Factory Markos Ltr Oil per SqM
day
Total 500 140

3.6. Data type and source

There are two types of sources of data; primary and secondary data sources. The researcher is
collect primary data from the sample respondents via structure questionnaires. Moreover, the
researcher is use secondary data to support the study and to get the findings of other researchers
in the area (empirical study). The source of secondary date is library books, journals, newspapers
on business, and magazines on business gather by someone.

3.7. Data Collection Method & Procedure

Flynn et al.’s (2016) questionnaire has been used in many studies, which demonstrates its high
reliability and validity (Ding et al., 2017. SCI and firm performance constructs will be measured
using questions. Considering the extensive literature search and use of face-to face interviews in
the development of Huo et al.’s questionnaire, it is among the high-quality questionnaires will be
used in the study (Huo et al., 2014). Product integrity questions dealt with the collaboration with
both suppliers and customers when designing and manufacturing new products (Huo et al.,
2014). Demand uncertainty was measured by factors such as demand for products, orders
received to generate demand, and demand forecasting (Flynn et al., 2016). Operational
performance will be measured by factors such as flexibility in product diversification, delivery
speed, production capacity change and support services are compared to the main competitor.

The data was obtained through the questionnaires and first checked for completeness. Whether
the questionnaire found correctly filled and fitted for analysis, coded. All the data entered into
statistical package for social sciences, and analyzed based on descriptive and inferential
statistics. The descriptive statistics used included the frequencies, mean scores, standard
deviation, percentages and ratios. Then was presented using tables for easier interpretation. The
Reliability Analysis will be made using Cronbach's alpha (α) for the measure of internal and
scale consistency (reliability). A multiple linear regression model was done to establish the role
of the six independent supply chain integration variables on the performance of the organization.
To establish the relationship, a regression analysis was established. For each supply chain
integration variables, an overall mean was computed and matched with the mean of performance
29
of the organization. From this relationship, the model was generated to determine the
relationship using the Multiple linear regression analysis assumptions, such as the relationship
between the Y and each of Xi's is linear, those of nonexistence of multi-collinearity (the
independent variables are not related among themselves), and another assumptions include those
of homoscedasticity and normality distribution. The regression equation assumed the following
form:

Y = βо + β1 X1 + β2 X2 + β3 X3 + β4 X4 + β5 X5 + β6 X6+ €

Where: Y is organizational performance;

βi (i = 0 – 6) is the regression coefficient;

X1 – External Integration
X2 – Internal Integration
X3 – Suppliers Integration
X4 – Customers Integration
X5 – Information Integration
X6 – Measurement Integration
€ – Error Term or Unexplained variables not explained by the model
The F- test was conducted to determine the significance of the regression while the coefficient of
determination, R2, used to determine how much variation in Y is explained by X. This was done
at 95% confidence level, and correlation analysis carried out to find the degree and direction of
the relationship between dependent variables and the independent variables.

3.8. Data Analysis Method

Once the data is collected the next steps was tool used the data is analyzed by Statistical
Package for Social Science (SPSS) software for version 20 was employed to analyze and present
the data through the statistical tools used for this study, namely descriptive analysis, correlation
and multiple regression analysis.

Descriptive analysis

30
The descriptive statistical results were presented by tables, and percentages to give a condensed
picture of the data. This was achieved through summary statistics, which computed for each
variable in this study.

Pearson Correlation analysis

In this study Pearson’s correlation coefficient was used to determine the relationships between
supply chain integration and organizational performance.

Multiple Regression Analysis

Multiple regression analysis was used to investigate the role of supply chain integration on
organizational performance.
Regression functions
The equation of multiple regressions on this study is generally built around two sets of variable,
namely dependent variables (organizational performance) and independent variables (supply
chain integration). The basic objective of using regression equation on this study is to make the
researcher more effective at describing, understanding, predicting, and controlling the stated
variables.

Independent variables: supply chain integration

Dependent variables: organizational performance

3.9. Ethical Consideration

For the data collection processes, an appropriate ethical clearance was obtained from Gondar
University. Confidentiality of the information also ensured for the respondents by not recording
any identifying things like that of the respondents name and etc. While conducting the study,
respondents were informed that the research and collected information using instruments would
have been used for the academic purpose only. Additionally, respondents were confirmed that
the data collection process carried out whenever they are a willing to cooperate from their side.
Moreover, they were promised that the copy of the research would have been given them as soon
as the thesis finished before it is published.

31
 CHAPTER FOUR

4. RESULTS AND DISCUSSIONS

4.1. Introduction

This chapter is present and discussion of the final results and the process through which the
results were obtained. In addition to this, background information of respondents will be
presented. Finally, the statistical methods of analysis were discussed, which included a
descriptive analysis, a correlation analysis, and a multiple regression analysis through SPSS.

4.2. Response Rate

Out of a total of 140 questionnaires that were distributed, 140 are returned. The returned questionnaires
signify a response rate of 100% and this response rate would be adequate and enough to draw analysis.

4.3. Data Reliability and Validity

Selecting scales to include in the study is important to find scales that are reliable. There are a number of
different aspects to reliability. One of the main issues concerns the scale’s internal consistency. This
refers to the degree to which the items that make up the scale ‘hang together’. One of the most commonly
used indicators of internal consistency is Cronbach’s alpha coefficient. Ideally, the Cronbach alpha
coefficient of a scale should be above .7.

Table 4.1 Reliability Statistics

Reliability Statistics
Cronbach's Cronbach's N of Items
Alpha Alpha Based on
Standardized
Items

.959 .959 29

Each 29 items are included in the above reliability statistics; these were the questionnaire from 1
to 29. The list of items included in the reliability statistics test are listed down in the below item
total statistics table 4.2.

32
 Table 4.2 Reliability Item-Total Statistics

Scale Scale Corrected Cronbach'

Mean if Variance if Item-Total s Alpha if
Items List
Item Item Correlatio Item
Deleted Deleted n Deleted
Sourcing and tendering decisions 89.94 393.695 .463 .959
are easily made due to SC
Integration and information
sharing
There are external SC integration 90.10 399.817 .342 .960
that fastens flows such as,
physical and funds
Distribution and delivery is made 89.91 390.899 .559 .959
at the right time and place due to
SC integration, information
sharing and coordination.
There are integration of 89.76 386.584 .606 .958
objectives, planning, and
resources with external
organizations.
Monitoring stock movement 89.90 388.235 .623 .958
has been made easier as a
result of the collaboration
between procurement, logistics
and warehouse/ inventory
management
There are internal integration 90.01 386.698 .648 .958
of functions and activities
With an integrated SC 90.02 390.280 .559 .959
technologies and systems
established, inter and intra
organizations’
communications are
optimized.

33
Due to information and 89.78 386.864 .666 .958
technology integration, there
are accesses of tracking
performances of SC partners.
A database of suppliers is 89.73 393.652 .526 .959
easily maintained as a result of
SC Integration.
With an integrated suppliers 89.79 388.242 .601 .958
supply chain, logistics services
are improved
SC Integration has provided 89.57 381.858 .712 .957
the organization the ability to
quickly and easily relate with
suppliers.
Supply chain integration is led 89.71 384.536 .760 .957
to a better supplier relationship
management.
Orders are easily processed as 89.64 381.828 .698 .957
a result of supplier integration.
SC Integration has assisted in 89.82 389.227 .679 .958
improving the quality of
goods, works and services
offered to the beneficiary
The speed of service delivery 89.99 378.870 .727 .957
has been enhanced due to the
supply chain integration
process
Customer integration has 90.04 383.517 .703 .957
enabled to deliver services
easily and quickly.
The speedy customer 89.97 385.409 .649 .958
collaboration has been
maintained as a result of SCI.
Due to information and 89.98 386.928 .689 .958
technology integration, there
are accesses of tracking
performances of SC partners.
With an integrated information 89.99 384.503 .690 .958

34
and measurement SC, supply
chain analysis has been done.
With an integrated suppliers 89.97 382.805 .669 .958
supply chain, logistics services
are improved.
There are external SC 89.94 381.615 .751 .957
integration that fastens flows
such as, physical and funds.
With an integrated SC 89.96 381.920 .762 .957
technologies and systems
established, inter and intra
organizations’
communications are
optimized.
Distribution and delivery is 89.88 379.316 .730 .957
made at the right time and
place due to SC integration,
information sharing and
coordination.
With an integrated SC 90.00 381.597 .717 .957
technologies and systems
established, inter and intra
organizations’
communications are
optimized.
The efficiency of the business 89.93 383.060 .729 .957
and process.
Employee productivity 89.89 388.053 .626 .958
Effectively organizations meet 90.02 382.611 .722 .957
their objective
The growth of sales 90.26 384.897 .695 .958
The alignment among business 89.89 382.542 .682 .958
functions, as well as those
function’ alignment with the
organization’s strategy

35
The reliability test result (.959) proved that there were internal consistencies in those data
constructed in questionnaire. There are four other columns of output. The two first after the item
names show the change to the overall mean and variance if that particular item is omitted from
the scale. However, the last two columns provide useful information and should now be
inspected. The Corrected Item-Total Correlation column shows the degree to which each item
correlates with the total score for the scale. Low correlations suggest the item is measuring
something different to the scale as a whole. All the correlations are high and positive in this
study. The right-hand column (Alpha if Item deleted) shows the alpha value of the scale with that
item omitted. What is looking for are the items, which if removed, would increase alpha
(increase the internal consistency of the scale). The reliability of the scale used in the study
(0.960), could be improved by deleting only the 2nd question: Q2 alpha ⇒ .960. If any other
items were to be deleted, the reliability of the questionnaire would actually go down. In this
particular case it is not worth deleting the question. The difference is so slight that it could be
just due to chance. Note that if you omitted this one item then all values would change because
the overall scores obtained would change due to this omission. Validity of research tool has three
Components, such as construct validity, content validity and internal validity. Of all three types
of validity, this study tests construct validity which deals with the consistency of the questions
with the responses intended. This validity is assured by structuring the questionnaire according to
the specific objectives. The critical requirement to achieve validity is to measure the constructed
data to ensure free from measurement error (Mat Roni, 2014). Therefore, the constructed data in
the questionnaire were valid that proved by the above reliability test result with insignificant
(less than .3) measurement error.

4.4. Demographic Information of the Respondents

4.4.1. Gender

The Gender disaggregation of out of the 140 respondents of the study, 60 percent of the
participants of the survey result is male while female respondents are account for 40 percent of
the study.

Table 4.3 Demographic Information

Gender
Frequenc Percent Valid Cumulative
y Percent Percent
MALE 84 60.0 60.0 60.0
Valid FEMALE 56 40.0 40.0 100.0
Total 140 100.0 100.0

36
4.4.2. Educational Background
The respondents that are participated in this study have diverse educational background as it can
be seen in the below Table 4.2. Most of them, 72.9%, were a graduate of first degree and second
degree. Those who have first degree are accounted for 59.3% of the total. There is no PhD
holders are from the respondents under study whereas diploma is the remained 20% of the
responses.
LEVEL OF EDUCATION
Frequency Percent Valid Cumulative
Percent Percent
Certificate 10 7.1 7.1 7.1
Diploma 28 20.0 20.0 27.1
Valid Degree 83 59.3 59.3 86.4
Masters 19 13.6 13.6 100.0
Total 140 100.0 100.0

4.4.3. Position in the Organization

The respondents were asked to indicate the positions they held, and there are also different
compositions of the position. They were provided with options to choose from; the findings in
the table above indicated that work in supply chain, operation director, logistic director,
procurement director, finance teams and others for a total 100% of the respondents. This
confirms that the respondents of this study were knowledgeable professionals who are well
familiar with supply chain integration and organizational performance issues.

What is your position in this organization?

Frequency Percent Valid Cumulative
Percent Percent
Valid Supply Chain 10 7.1 7.1 7.1
Operation Director 18 12.9 12.9 20.0
Logistics Director 22 15.7 15.7 35.7
Procurement
12 8.6 8.6 44.3
Director
Finance Team 9 6.4 6.4 50.7

37
 Other 69 49.3 49.3 100.0
Total 140 100.0 100.0

4.4.4. Experience
The research also sought to establish the duration that the respondents have had by the time of
the study. The results illustrated in the table 4.2 confirm that 3.6% of them have been in
operation for more than 10 years whereas 22.10% is from 6-10 years. 42.9% of the respondent
has been working 2-5 years whereas the rest 31.40% is from around 2 years. As indication that
74.60% employees have had more than two and over 10 years of experience. Hence, they would
have been an experienced worker to measure the relationship that exists between supply chain
integration and organizational performance in their firm.
How long have you stayed at this organization?
Frequency Percent Valid Cumulative
Percent Percent
<2 Years 44 31.4 31.4 31.4
2-5 Years 60 42.9 42.9 74.3
6-10 31 22.1 22.1 96.4
Valid
Over 10
5 3.6 3.6 100.0
Years
Total 140 100.0 100.0

4.5. Descriptive Analysis of Extent of Supply Chain Integration

The first objective of this study is to examine the extent of supply chain integration in the
organizational performance. The participants were asked to respond on the extent of supply chain
integration in their organization, and rated their responses on a five point Likert- type scale
where: 5-to a very large extent, 4-to a large extent, 3-to a moderate extent, 2-to a small extent,
and 1- to not occur. The findings were presented in the subsequent sub themes. In the process of
examining of the data, standard deviation was used. Small standard deviations (relative to the
value of the mean itself) indicate that data are not close to the mean whereas a large standard
deviation (relative to the mean) indicates that the data points are distant from the mean. The
mean is a poor fit of the data. Standard deviation is a measure of how well the mean represents
the data (Field, 2009).

38
 Table 4.4 Supply chain integration extent, and organizational performance

Descriptive Statistics
N Mean Std.
Deviation
External Integration 140 3.1911 .74344

Internal Integration 140 3.1946 .78375

Supply Integration 140 3.4329 .80022

Customer Integration 140 3.1661 .85800

Information Integration 140 3.1536 .84638

Measurement Integration 140 3.1738 .97406

Valid N (listwise) 140

Source: Survey Data, 2018

According to the survey result, the mean of all the independent variables (External Integration,
Internal Integration, Suppliers Integration, Customers Integration, Information Integration, and
Measurement Integration) are fall in the high extent from 3.1536 to 3.4329 for information
integration and supply integration respectively. The standard deviations of these variables have
also low variance from .74344 to .97406; external integration with the lowest deviation, .97406
whereas measurement integration is the highest deviation occurred in this result of analysis.
Hence, this finding implies that there are high integrations of supply chain in the organization
with three independent variables (Internal Integration, Suppliers Integration and Customers
Integration) which were relatively low when compared to the remaining independent variables.
The finding of this survey result of extent of supply chain integration in the organization is
substantially consistent with the results of the Uwamahoro, 2018 that all the independent
variables are with high mean values. This implied us that as there are indirect proportionality
between mean values and significance level, since independent variables with high mean are
produce insignificant level.

39
4.6. Supply Chain Integration and Organizational Performance

The second objective of the study is to determine the relationship between supply chain
integration and organizational performance. Correlation analysis is used to describe the strength
and direction of the linear relationship between two variables. The correlation is used for the
purpose of a relationship allows predictions to be made of one behavior from another; to
demonstrate a test scale validity by showing a significant relationship between it and another
accepted scale for a related construct; to show reliability consistency of measurement on two
occasions, to show internal consistency of scale items, and for theory verification use to support
hypotheses that predict the relationships between variables. Pearson's Product-Moment
Correlation is the best known correlation and the most used for interval data (Beech, 2006).

Table 4.5 Interpretations and characteristics of correlations

Size Of Interpretation
Correlation
1 Perfect Positive/Negative Correlation
±.90 to ±99 Very High Positive/Negative Correlation
±.70 to ±.90 High Positive/Negative Correlation
± .50 to ±.70 Moderate Positive/Negative Correlation
± .10 to ± .30 Very low Positive/Negative correlation
± .0 to ± .10 Markedly low and Negligible Positive/Negative Correlation

Source:

The findings of the correlation matrix analysis between each indicators of supply chain
integration (i.e., External Integration, Internal Integration, Supplier Integration, Customer
Integration, Information Integration, and Measurement Integration) and organizational
performance are shown in the table 4.6 below.

Table 4.6 Correlation Matrix

Correlations
External Internal Supply Custom Informat Measurem Organizati
Integrati Integrati Integrati er ion ent onal
on on on Integrati Integrati Integratio Performan
on on n ce

40
 Pearson
Correlat 1 .590** .583** .562** .545** .500** .497**
External ion
Integration Sig. (2-
.000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
Correlat .590** 1 .681** .640** .724** .645** .617**
Internal ion
Integration Sig. (2-
.000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
Correlat .583** .681** 1 .716** .735** .669** .689**
Supply ion
Integration Sig. (2-
.000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
Correlat .562** .640** .716** 1 .709** .698** .742**
Customer ion
Integration Sig. (2-
.000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
Correlat .545** .724** .735** .709** 1 .726** .754**
Informatio
ion
n
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
Correlat .500** .645** .669** .698** .726** 1 .768**
Measurem
ion
ent
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140

41
 Pearson
Organizati Correlat .497** .617** .689** .742** .754** .768** 1
onal ion
Performan Sig. (2-
.000 .000 .000 .000 .000 .000
ce tailed)
N 140 140 140 140 140 140 140

**. Correlation is significant at the 0.01 level (2-tailed).

Source: Survey Data, 2018

As it can be seen from the findings of study, the Pearson correlation test conducted for external
integration and internal integration, and organizational performance indicates that there is
positive and high correlation between external integration and internal integration, information
integration, and organizational performance with correlation coefficient of .497, .613 and .754,
and significance value less than .000, .000 and .000 respectively. Adversely, there is relationship
between supplier integration and organizational performance with .689 coefficients of correlation
and significance value of .000; a positive correlation of .742 and insignificance of .000 are
happened between customer integration and organizational performance. The relationship
between measurement integration and organizational performance was investigated using
Pearson product-moment correlation coefficient. Preliminary analyses were performed to ensure
no violation of the assumptions of normality, linearity and homoscedasticity. There was a
moderate, and positive correlation between the two variables [r=.768, n=140, p<.0001], with
high levels of measurement integration associated with lower levels of organizational
performance. It can be concluded that the Supply chain integration and organizational
performance has a high and moderate, and positive relation based on Pearson correlation
coefficient.

4.7. Regression Analysis

4.7.1. Multiple Linear Regression Assumptions
1. Linearity Assumption

Linearity assumption states that the residuals should be linear relationship with the predicted
dependent variables scores. Linear relationship between independent variables and dependent
variables. This set of assumption can be examined to a fairly satisfactory extent simply by
plotting scatterplots of the relationship between each explanatory variable and the outcome
variable. It is important to check that each scatterplot is exhibiting a linear relationship between
variables (perhaps adding a regression line to help you with this). Alternatively, you can just
check the scatterplot of the actual outcome variable against the predicted outcome. The term

42
residual considered is the difference between outliers and influential cases a bit further (J, 2010).
The simple outlier influences the line to a far lesser degree but will have a very large residual
(distance to the regression line). The influential case outlier dramatically alters the regression
line but might be harder to spot as the residual is small - smaller than most of the other more
representative points in fact. To examine the scatter plot, you can also use influence statistics
(such as the Cook's distance statistic) to identify points that may unduly influence the model
(Wang, Rosner and Goodman, 2016). If it is looked at the scatter plots below, the plot of the
below graph indicates that the residuals are normally distributed. Non-normal if points
substantially deviate from the diagonal line.

Source: Survey Data, 2018

2. Multicollinearity

A more precise approach to check whether or not a given explanatory variable has a strong
relationship with the other explanatory variables (an issue of multicollinearity exist in the
model), Tolerance and VIF (variance inflation factor) is the good indicators. For example,
Tolerance less than .1 (10%) hint at multicollinearity, and VIF (variance inflation factor) > 10
also implies multicollinearity. So that VIF must be between 1-10, otherwise VIF 10 indicates
multicollinearity existence (Ge, 2013). The table 4.8 correlation coefficient below describes that
43
both the tolerance and variance inflation factor (VIF) are greater than 10%, and below 10
respectively.

Table 4.7 Multicollinearity Test of Independent Variables

Coefficientsa
Model Unstandardized Standardized t Sig. 95.0% Collinearity
Coefficients Coefficients Confidence Statistics
Interval for B
B Std. Beta Lower Upper Tolerance VIF
Error Bound Bound
(Constant) .275 .199 1.381 .170 -.119 .668
External
-.011 .071 -.010 -.158 .874 -.151 .128 .572 1.748
Integration
Internal
-.036 .081 -.034 -.447 .656 -.197 .125 .387 2.585
Integration
Supply
.097 .084 .092 1.152 .252 -.070 .264 .345 2.899
1 Integration
Customer
.262 .077 .264 3.421 .001 .110 .413 .365 2.737
Integration
Information
.278 .085 .277 3.279 .001 .110 .446 .306 3.272
Integration
Measurment
.303 .065 .347 4.622 .000 .173 .432 .387 2.584
Integration
a. Dependent Variable: Organizational Performance

3. Homoscedasticity
Homoscedasticity assumption elaborates that the variance of the residuals about the predicted
dependent variables scores should be the same for all predicted scores. Error variance is assumed
to be the same across all values of other variable. As it can be seen from graph, the dots which
are scattered evenly is the indication of a homogeneity assumption (Mat Roni, 2014). It could be

44
checked that residuals do not vary systematically with the predicted values by plotting the
residuals against the values predicted by the regression model, and looking for any evidence that
residuals vary in a clear pattern. Look at the following figure, the data points appeared fairly
randomly distributed with a fairly even spread of residuals at all predicted values.

Figure 4.2 Homoscedasticity Multiple Regression Assumption

Source: Survey Data, 2018

This scatter plot is a result of what a scatter plot might look like if the assumption of
homoscedasticity is met. The data points seem to funnel towards both the negative of the x-axis,
and also toward the positive of x-axis indicating that there is equal variability in the residuals at
higher predicted values and at lower predicted values. This suggests that our model is equal
accurate in estimating both lower values and higher values.
4. Normally distributed residuals

45
 A histogram of the residuals (errors) in a model can be used to check that the residuals are
normally distributed about the predicted dependent variables scores. However, it is often good to
tell if the distribution is normal from just a histogram, and additionally, a P-P plot should be used
as shown below figure. As it could have been seen from the below figure, the expected and
observed cumulative probabilities are matched perfectly. This suggests that the residuals are
seamlessly normally distributed. So in this survey result, the assumption of normality is not
violated.

Figure 4.3 Normality Distribution Histogram

Source: Survey Data, 2018

4.7.2. The Role of Supply Chain Integration for the Organizational Performance
The third objective of this study is to examine the role effect of supply chain integration on the
performance of organization, since correlation cannot determine existence of cause and effect
due to there may be a number of other unmeasured variables which could be interrelated and
responsible for the relationship found. Multiple regression is not just one technique, but a family
of techniques that can be used to explore the effect between one continuous dependent variable
and a number of independent variables or predictors (usually continuous) (Beech, 2006). A

46
multiple regression analysis was conducted to predict the relationship between the supply chain
integration (external integration, internal integration, supplier integration, customer integration,
information integration, and measurement integration) and organizational performance using
regression analysis. The Model Summary table shows how much variance is explained by each
model. Whether the independent variables are a significant predictor of dependent variable will
be indicated by the value in the Sig. F Change for this model. Note that the value for the next
model reflects all independent variables entered.
R is the population correlation coefficient, and it takes on values between -1 and +1; 0 indicates
no linear association; 1 indicates a perfect positive linear relationship; -1 indicates a perfect
negative linear relationship (Ge, 2013).
Table 4.8 Model Summaryb

Model Summaryb
Mode R R Adjusted Std. Error Change Statistics
l Square R Square of the R Square F df1 df2 Sig. F
Estimate Change Change Change
a
1 .842 .710 .696 .46781 .710 54.147 6 133 .000
a. Predictors: (Constant), Measurement Integration, External Integration, Internal Integration,
Customer Integration, Supply Integration, Information Integration
b. Dependent Variable: Organizational Performance

R is the square root of R-Squared and is the correlation between the observed and predicted
values of dependent variable.
The finding of the analysis implies that there are an association of 84.2% between observed and
predicted organizational performance. Therefore; from this result, it can be interpreted as there is
a strong correlation between observed organizational performance and predicted performance of
the organization. R2 is called the coefficient of determination, it is the proportion of the variance
in the dependent variable (organizational performance) explained by variations in the
independent variables, it shows the level of variance explained by the model; which indicates
how the organizational performance varies with variation in supply chain integration practices,
Measurement Integration, External Integration, Customers Integration, Suppliers Integration,
Internal Integration, and Information Integration. The finding shows that, the independent
variables (Measurement Integration, External Integration, Customers Integration, Suppliers
Integration, Internal Integration, and Information Integration) that were studied, explain only
71.1% the performance of the organization, in case of selected Oil seed factory in Amhara region
as represented by the R2. Therefore, this means that another supply chain integration factors not
studied in this research contribute 29.1% of the organizational performance. Therefore, further

47
research should be conducted to investigate the others supply chain integration dimensions that
have a role for the performance of the organization.

Table 4.9 Regression Coefficient

Coefficientsa
Model Unstandardized Standardized t Sig. 95.0% Confidence Collinearity
Coefficients Coefficients Interval for B Statistics
B Std. Error Beta Lower Upper Tolerance VIF
Bound Bound
(Constant) .275 .199 1.381 .170 -.119 .668
External
-.011 .071 -.010 -.158 .874 -.151 .128 .572 1.748
Integration
Internal
-.036 .081 -.034 -.447 .656 -.197 .125 .387 2.585
Integration
1 Supply Integration .097 .084 .092 1.152 .252 -.070 .264 .345 2.899
Customer
.262 .077 .264 3.421 .001 .110 .413 .365 2.737
Integration
Information
.278 .085 .277 3.279 .001 .110 .446 .306 3.272
Integration
Measurement
.303 .065 .347 4.622 .000 .173 .432 .387 2.584
Integration
a. Dependent Variable: Organizational Performance

The regression coefficient is the independent variable associated with it is contributing

significance to the variance accounted for in the dependent variable. From the findings in the
above table 4.13, the regression equation is: -
Y = 0.275 -0.011X1 -0.036X2 + 0.097X3 - 0.262X4 +0.278X5+0.303X6 + €
Where Y is Organizational Performance
X1= External Integration,
X2= Internal Integration,
X3= Supplier Integration,
X4= Customer Integration,
X5= Information Integration
X6= Measurement Integration

48
€= Error term

From the above regression model, the significance value of three independent variables
(customer integration, information integration and measurement integration) is less than 0.05
which show that the model is statistically significance to predict the analysis of supply chain
integration role on organizational performances, whereas the significance value of three
independent variables (external integration, internal integration and supply integration) is greater
than 0.05 which show that the model is statistically insignificance to predict the analysis of
supply chain integration role on organizational performance. This implies that the independent
variable such as, customer integration, information integration, and measurement integration
have the greater influence on the performance of the firm. On the other hand, external
integration, internal integration, and supply integration have no impact for the performance.
According to the finding, the multiple linear regression equation established that all independent
variables taking to be zero (when Measurement Integration, External Integration, Customers
Integration, Suppliers Integration, Internal Integration, and Information Integration are held at
Zero), it was found that organizational performance would be increase by 0.275 constant.
Decrease in external integration, would lead to a decrease in organizational performance by a
factor of -0.011 while internal integration would lead to a decrease in firm performance by a
factor of -0.036. The study also found that effective supplier integration increased performance
of the firm by a factor of 0.097; a unit increase in customer integration and Information
Integration will decrease performance of an organization to a 0.262 and 0.278 respectively while
a unit increase in measurement integration will lead to a 0.303 increase in performance of the
firm. This clearly indicates that there existed a positive relationship between supply chain
integration practices and organizational performance. These findings support other literature that
argues the supply chain management integration have a role on the performances of the
organization. When the results of this study compared with those of previous research on supply
chain integration, the supplier integration, customer integration and internal integration findings
that indicate as there are no significant impact in improving a firm’s performance is consistent
with the findings of Uwamahoro, 2018, Devaraj, S., L. Krajewski and J.C. Wei (2007), and
Chirchir and Richu, 2013 respectively. The measurement integration result has significant result
for the performance of the organization; this finding is aligned with the study made by
Klemencic, 2006. Information integration is very significant for performance of the organization
is contingent with the finding of the Wong, Lai and Cheng, 2016. External integration with intra
organization has produced the significant result which is consistent with the finding of the
previous study (Barroso, Gouveia and José, 2016).

49
 CHAPTER FIVE
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1. Summary of Major Findings

From the findings of the study’s objectives of this investigation, the results found were
summarized by the researcher in the following paragraphs. The analysis made on the extent of
dimensions of supply chain integration practices were revealed that the result of information
integration (3.15), external integration (3.191), measurement integration (3.17), supplier
integration (3.43), internal integration (3.194) and customer integration (3.16) ranked from one
to six respectively. The result of the analysis implies the high extent of supply chain integration
practices by the organization since all of the dimensions have been fall in the great rate as per the
survey scale instrument. The result of the second objective of the study to examine the
correlation between supply chain integration and organizational performance has experienced
that the relationships of the dependent variable (organizational performance) are high with
internal integration (.617) information integration (.754), customer integration (.742), supplier
integration (.689), measurement integration (.768) and moderate correlation with external
integration (.497); Accordingly, the findings of the result were implying that customer
integration, measurement integration and information integration slightly vary together with
organizational performance; external integration and organizational performance are
substantially change together; but supplier integration is not completely change with
organizational performance whereas internal integration adversely change with the change in
organizational performance. The significance value of customer integration, information
integration and measurement integration are less than the statistical level (i.e., .05), so these
variables were statistically significant. The significance value of supplier integration, internal
integration and external integration are greater than the statistical level (i.e., .05), so these
variables were statistically insignificant. The result implies that the degree of customer
integration, information integration and measurement integration changing together with
organizational performance had relevant effects; adversely, the degree of supplier integration,
external integration and internal integration varying together with performance of the
organization were not relevant. The coefficient of determination (R 2) of the model has produced
that supply chain integration explained 71% variance of performance of the organization;
indicating that 63.6% of the organizational performance could be explained by another factors
which are not considered by the study. The regression coefficient (ß) of the model were also
-.011, -.036, .097, -.094, .262 and .303 for external integration, internal integration, supplier
integration, customer integration, information integration and measurement integration
respectively. Given that the statistical values of customer integration (.000), information
integration (.000) and measurement integration (.000) were significant. Thus, they have the

50
power to impact the performance of the organization. Generally, the model was statistically fit in
predicting organizational performance since its statistical value (P<.0005) less than statistical
level (ά .05).

5.2. Conclusions

There is high extent of practices of supply chain integration by the organization since all of the
dimensions have been fall in the great rate as per the survey scale instrument. The external
integration, internal integration and information integration slightly vary together with
organizational performance; measurement integration and organizational performance are
substantially change together; but supplier integration is not completely change with
organizational performance whereas customer integration adversely change with the change in
organizational performance. Customer integration, information integration and measurement
integration were statistically significant. The supplier integration, external integration and
internal integration were statistically insignificant. Hence, that the degree of customer
integration, information integration and measurement integration changing together with
organizational performance had relevant effects; adversely, the degree of supplier integration,
external integration and internal integration varying together with performance of the
organization were not relevant. The supply chain integration explained 29.1% variance of
performance of the organization; 71.1% of the organizational performance could be explained by
another factor which is not considered by the study. customer integration and measurement
integration dimensions have a direct as well as positively influenced the performance of the
organization, provided that developed relationships between customers, and supply chain
partners performance assessment which holds each individual firms or units accountable for
meeting its deadline lead to high performance of the organization; information integration that
coordinated information transfer, collaborated communication and supported technology has an
indirect potential to improve organizational performance. The overall assessment results of the
structural model revealed that the model had satisfactory statistical power in predicting the
research model. Generally, the study showed that the superior organizational performance can be
attained through supply chain integration impact.

5.3. Recommendations

Grounded the study’s summary of major findings and conclusions careworn, the here under
listed recommendations are projected as a way forward from findings of the study.

51
  Continuous improvement of supply chain integration practices should be undertaken in
the organization, so that optimal performance would be achieved with all partners in the
chain.
 The degree of variance amongst supply chain integration dimensions and organizational
performance should be increased through systems automation, framework agreement, and
relationship management and performance assessment.
 Another factor of supply chain integration that have not seen in this study, but might have
explained organizational performance should be considered and retreated in order to
minimize the effects of unpracticed supply chain integration.
 All the dimensions of supply chain integration should be created as well as practiced by
the organization to attain superior performance.

5.4. Suggestion for Further Study

The present study’s geographical scope was limited to the region, Amhara; so that the future
studies should have to consider expanding this scope to cover the whole regions. Moreover, the
study was also limited to the selected food oil factories in one region only, future studies should
have to incorporate partner organizations, such as supplier, customer, and intra-organizations.
Finally, I would like to suggest that the future studies have to focus on the three variables
(internal integration, supplier integration and external integration) that were insignificant by this
study.

52
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and firm performance: An empirical study of Swedish manufacturing firms. Competitiveness
Review, 24(1), 20–31. https:// doi.org/10.1108/CR-06-2013-0060

Bernstein, F., & Federgruen, A. (2005). Decentralized supply chains with competing retailers
under demand uncertainty. Management Science, 51(1), 18–29.
https://doi.org/10.1287/mnsc.1040.0218

Boon-itt, S., & Pongpanarat, C. (2011). Measuring service supply chain management processes:
The application of the Q-sort technique. International Journal of Innovation, Management and
Technology, 2(3), 217–221. DOI: 10.7763/IJIMT.2011.V2.134

Cai, J., Xiangdong L., & Zhihui X. (2008). Improving supply chain performance Management: A
systematic approach to analyzing iterative KPI accomplishment. Journal of Business Venturing.

Campbell, J. and Sankaranl, J. (2005). An inductive framework for enhancing supply chain
integration. International Journal of Production Research, Vol. 43 No. 16, pp. 3321-51.

Carr, A.S. and Kaynak, H. (2007). Communication methods, information sharing, supplier
development and performance. International Journal of Operations & Production Management,
Vol. 27 No. 4, pp. 346-70.

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Carter, C. R. & Rogers. D.S., (2008). A framework of sustainable supply chain management:
Moving toward new theory. International Journal of Physical Distribution and Logistics
Management, 38(5), 360-387

Chen, H., & Landry, T. D. (2017). Supply Chain Process Integration: A Theoretical Framework,
(September 2009), 26–46. https://doi.org/10.1002/j.2158- 1592.2009.tb00110.x

Childhouse, D. R. & Towill, D. (2003). Simplified material flow holds the key to supply chain
integration, 31 (1) (2003) 17–27.

Chin, T. A., Hamid, A. B. A., Rasli, A., & Tat, H. H. (2014). A Literature Analysis on the
Relationship between External Integration, Environmental Uncertainty and Firm Performance in
Malaysian SMEs. Procedia - Social and Behavioral Sciences, 130, 75– 84.
https://doi.org/10.1016/j.sbspro.2014.04.010

Company information’s fromWaoilfactor.com/about-us

Company information’s fromgoogle.com/amp/s/www.foodbusiness.com

Company information’s from Addis fortune; the largest English weekly in Ethiopia

Company information’s frombelaynehkinde.com/index.php

Company information’s from www.business.linkupaddis.com/fibela

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 QUESTIONNAIRE

UNIVERSITY OF GONDAR COLLEGE OF BUSINESS

AND ECONOMICS DEPARTMENT OF MANAGEMENT

POST GRADUATE PROGRAM (MBA)

Greetings, am a researcher from University of Gondar, This questionnaire is developed for an

academic effort planned for the collection of data to conduct a thesis paper on the title “The Role
of Supply chain Integration on organizational performance on selected Food oil factories in
Amhra region” in order to fulfill the University’s requirement set for awarding of a Master of
Business Administration. The information obtained from this questionnaire will be kept
confidential for academic purpose only. Hence, I am kindly asking respondents to give your
candid information.

General instruction

 It is not necessary to write your name

 Try to address the entire question given below

 Use (√) mark for your choice in the given box

Thank you for your cooperation! Tel:- 0924908725 Email: - [email protected]

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Instruction: Please Mark X where necessary.

I. Section A: Demographic Information (Make “X” Symbol for Your Answers)

1. Sex: Male Female
2. Age:  25 – 35  Between 35 – 45  Between 45 – 55  Above 55
3. Level of Education: Certificate Diploma Degree Masters PhD
4. How long have you stayed at this organization?
A. <2years
B. 2-5 years
C. 6-10 years
D. Over 10 years
II. Section B: Extent of SC Integration please indicates the extent to which the
following statements concerning the level of SC Integration within your
organization occur.
1. What is your position in this organization?
a. Supply Chain
b. Operation Director:
c. Logistics director
d. Procurement Directorate
e. Finance Team
f. Other

Use the scale of:

1) DOES NOT OCCUR 2) SMALL EXTENT 3) MEDIUM EXTENT

4) LARGE EXTENT 5) VERY LARGE EXTENT

Statement 1 2 3 4 5
Extent of Supply chain integration
External integration
Sourcing and tendering decisions are easily made due to SC Integration
and information sharing
There are external SC integration that fastens flows such as, physical
and funds
Distribution and delivery is made at the right time and place due to SC
integration, information sharing and coordination.

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There are integration of objectives, planning, and resources with
external organizations.
Internal integration
Monitoring stock movement has been made easier as a result of the
collaboration between procurement, logistics and warehouse/ inventory
management
There are internal integration of functions and activities
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.
Due to information and technology integration, there are accesses of
tracking performances of SC partners.
Supplier Integration
A database of suppliers is easily maintained as a result of SC
Integration.
With an integrated suppliers supply chain, logistics services are
improved
SC Integration has provided the organization the ability to quickly and
easily relate with suppliers.
Supply chain integration is led to a better supplier relationship
management.
Orders are easily processed as a result of supplier integration.
Customer Integration
SC Integration has assisted in improving the quality of goods, works
and services offered to the beneficiary
The speed of service delivery has been enhanced due to the supply
chain integration process
Customer integration has enabled to deliver services easily and quickly.
The speedy customer collaboration has been maintained as a result of
SCI.
Information Integration
Due to information and technology integration, there are accesses of
tracking performances of SC partners.
With an integrated information and measurement SC, supply chain
analysis has been done.
With an integrated suppliers supply chain, logistics services are
improved.
There are external SC integration that fastens flows such as, physical

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 and funds.
Measurement Integration
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.
Distribution and delivery is made at the right time and place due to SC
integration, information sharing and coordination.
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.

2. Section C: Organizational performance.

Please indicate the extent to which the following statement concerning the relationship that
exists between your SCI and the performance of your organization occurs.

Use the scale of:

1) VERY LOW EXTENT 2) LOW EXTENT 3) MODERATE EXTENT

4) GREAT EXTENT 5) VERY GREAT EXTENT.

Statement 1 2 3 4 5
Organizational performance
The efficiency of the business and process.
Employee productivity
Effectively organizations meet their objective
The growth of sales
The alignment among business functions, as well as those function’
alignment with the organization’s strategy

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