Download Factors Affecting Demand Management in the Supply Chain (Case

International Journal of Agriculture and Crop Sciences.
Available online at www.ijagcs.com
IJACS/2013/6-14/994-999
ISSN 2227-670X ©2013 IJACS Journal
Factors Affecting Demand Management in the
Supply Chain
(Case Study: Kermanshah Province's
manufacturing and distributing companies)
Yazdan Mansuri*1, Sayed Reza Hashemi2, Fakhroldin Maroofi3
Faculty of complementary education, Islamic Azad university Kermanshah branch
Corresponding Authors email: [email protected]
ABSTRACT: One of the major concerns for all industries in the today's competitive world especially
after taking into consideration the management of demand since entering many companies into the
competition arena in the last decade is the ability of receiving and delivering of customers’ demand
timely. Demand management is a supplement of the distributing management which its purpose is to
deliver goods to the final consumer - "client"- according to the conditions of time, quality and lowest
cost. Therefore aim of present research is study of factors affecting demand management in the
supply chain among Kermanshah province's manufacturing and distributing companies. Research
population was all of the companies (N=795), 384 of which were selected using Cochran’s formula.
The instrument for data collection was a questionnaire which its validity was confirmed by a panel of
experts. Its reliability was calculated by Cronbach's alpha coefficients. Data were analyzed by SPSS
and AMOS software. Results showed that the following factors including: segmenting, supporting of
management, forecasting, planning of operations and selling have the greatest effect on demand
management respectively. The results can provide useful and applicable suggestions for the supply
chain participants.
Keywords: supply chain, demand management, management support, sales and operations
planning.
INTRODUCTION
Today, business enterprises are forced to focus on the supply chain and investment due to the
supplying of new products in the market presently, unremitting competition in the global markets and rising the
customer expectations. In fact in the today’s world, there is no competition among companies any more, but it
is raised into its supply chain. Therefore, Supply Chain Management becomes a strategic tool for companies so
that they can remain competitively in market besides satisfaction of customers and quality management.
So in recent years, Supply Chain Management has been suggested as an infrastructural source for Ebusinesses (Behnam ajdari and ekhtyarzadh, 2010). In this regard, Supply Chain Management highlights the
integration of the supply chain activities and the associated information flows through improvement of existing
links in the chain to achieve a reliability and ongoing competitive advantage (Lavdon, 2002). Supply chain also
includes all activities associated with the flow and transformation of goods from the raw material stage
(extraction) to delivery to the final consumer (Bopp, 2011).
Therefore it can be concluded that the factors such as: increasing competition, rising customer
expectations and rapid technological changes caused the companies enable to identify customers’
expectations appropriately and respond them be more success than the other ones (wang, 2007). In fact in the
past customers rarely were able to relinquish their desired brands, but today, this subject is changed. In today’s
market companies and brands compete with each other hostility, as far as the "maintain market share" has
been very difficult and "taking more share" seems to be unimaginable (Keiningham, Vavra, Aksoy & Henri,
2005).
The intensification of the global competition in a constantly changing business environment raises the
need of appropriate reaction of industrial-manufacturing companies and emphasizes on the companies’
flexibility in an uncertain external environment. So today's organizations in line with their customers'
expectations as well as the competitive advantage need to an appropriate model like Supply Chain
Management to obtain and maintain the suitable status. In today's organizations, customers are along with the
Intl J Agri Crop Sci. Vol., 6 (14), 994-999, 2013
organizations’ members in the production of goods and service delivery, procedures of doing things and
processes, knowledge development and competitive advantage. Today based on this evidence and other facts,
it is not surprising that demand management programs and even distribution be considered as a priority.
In this regard, many companies came into competition with the Kermanshah Province's manufacturing
and distributing companies in recent years. With the advent of new technology and equipment the companies
also faced with new challenge not only to attract new customers but also to keep their loyal and current
customers. Kermanshah Province's manufacturing and distributing companies not only are looking for
customers in the province but also are looking for ones from outside the province. So we can say that the
demand management has a broad role which after examining the demands creates the strategies and delivers
goods and final services to consumers with a lower cost and better quality eventually. Unfortunately, despite
the mentioned importance of supply chain management, conducted studies generally are low in the world.
Therefore it is necessary to address the topic as a useful research.
Thus, the findings of this study will be useful to the understanding factors influencing demand in Supply
Chain Management in the Kermanshah Province's manufacturing and distributing companies. It also leads to
develop of the previous studies in order to achieve the optimal management of demand. Given the importance
of customers present study attempts to investigate concept of the "demand management in the supply chain".
In other words, aim of the study is investigation the factors lead to performance improvement of demand
management in the Kermanshah Province's manufacturing and distributing companies.
As mentioned above, conducted studies in the field of demand management in the supply chain
generally are low and many existing studies are only related to the "supply chain". Results some of them are
explained in the following.
Asadollah, et al (2004), in their study named “value chain modeling in the Iran’s Car Industry to achieve
the cost leadership strategy", showed that use of the model can lead to the improvement in the cost of
resources, maintenance costs, optimal allocation of funds, supply costs of raw materials and transportation
costs. Focus of the paper is to achieve advantage of cost leadership through focusing on the internal resources
of organization.
Ameli (2003), also in a study investigate operations designing of reengineering of the order
management. He achieved an optimal model for this process by studying supply chain management processes
and considering the process of "Order Management" in a manufacturing company which not only improved
efficiency of the accounting system of order but also reduced the costs. In fact, future ordering can be
estimated and the time be shorted between order and delivery by the proposed model. Many other studies also
have been done in the field of information technology and its role in supply chain management which for
example one of the results is the advent of smart system of supply chain management.
Zand Hesami et al (2008), in a study named “investigation the factors affecting agile supply chain and
design a conceptual model of agile supply chain management”, investigate the ways of new product
development and supply management and production directly and indirectly. They also investigate role of the
factor of time in production in the supply chain and difference between direct and indirect stages of products.
Their results showed that the delivery management affects agility of supply chain only indirectly. Pibernik &
Kaiser (2012), also in their study investigate factors affecting success of demand and distribution management
with the customer-oriented approach. Their results showed that type of individuals’ attitude and economic and
educational levels affect demand management. The results also indicate that there is specific effective
relationship between demand management and distribution and no difference between their performances.
To investigate factors affecting demand management in supply chain in the Kermanshah Province's
manufacturing and distributing companies we used a conceptual model (Figure 1), using overall studies in this
area.
According to the conceptual model and review of the available literature in this field, the following assumptions
are raised:
Hypothesis 1: there is direct and significant relationship between demand management and supply chain
performance.
Hypothesis 2: there is direct and significant relationship between forecasting and demand management.
Hypothesis 3: there is direct and significant relationship between segmenting and demand management.
Hypothesis 4: there is direct and significant relationship between sales and operations planning and demand
management.
Hypothesis 5: there is direct and significant relationship between management support and demand
management.
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Intl J Agri Crop Sci. Vol., 6 (14), 994-999, 2013
Forecasting
Demand
management
Supply Chain
Segmenting
Sales and
operations
planning
Management
support
Figure 1. Conceptual model of the research
MATERIALS AND METHODS
This descriptive-survey research was conducted in the Kermanshah Province. Research population
was consists of manufacturing and distributing companies (23 industrial groups and 795 companies), 384 of
which were selected by the stratified sampling method, based on the Cochran’s formula. Research tool was a
researcher-made questionnaire which includes the following seven parts: personal characteristics, demand
segmenting, demand forecasting, sales and operations planning, support of demand management, demand
management performance and supply chain performance. This questionnaire measure factors affecting
demand management in supply chain using 14 items on a five-point likert scale which ranged from
1(completely disagree) to 5 (completely agree). Validity of the questionnaire was confirmed by a panel of
experts. Its reliability was calculated by Cronbach's alpha coefficients (>0.07). Data were analyzed (descriptive
and inferential statistics) by SPSS and AMOS software.
RESULTS AND DISCUSSION
Demographic characteristics of participations
Based on the results, most of the participations (69.5%) were males and only 30.5% of whom were
women. Frequency distribution by age also showed that 46.8% (180 ones) have less than 30 years, 39.8%
have between 30-50 and 13.4% have more than 50. Based on the results, the majority of them (85.9%) have
BA degrees and only 54 (14.1%) of whom have MA and PHD degrees.
Assessing data normality
First, statistical distribution of the given variable should be considered in order to choose a correct test
to analyze hypothesizes. For this purpose to check normality of data the Kolmogrov Smirnof’s (ks) test was
used. Null hypothesis in this test is showing the normality of distribution of given variable. If the significant level
of the test was less than 0.05, therefor the null hypothesis is rejected and it is concluded that distribution of the
assumed variable is not normal. Given the significant levels (table 2), we concluded that none of variables have
normal distribution. Therefore, as the result of it, we used the Spearman correlation coefficient’s test to
investigate correlation between the independent and the dependent variables.
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Intl J Agri Crop Sci. Vol., 6 (14), 994-999, 2013
Table 1 . results of Kolmogorov Smirnoff’s test in the check of the normality of the data
Variable
demand segmenting
demand forecasting
sales and operations planning
supporting of demand management
demand management performance
supply chain performance
Number
384
384
384
384
384
384
z Value
3.015
1.485
2.414
2.007
3.203
3.338
Significant
0.010
0.007
0.000
0.003
0.000
0.012
Testing hypotheses
Hypothesis 1: there is direct and significant relationship between demand management and supply
chain performance
According to the Non-normal data, the Spearman correlation coefficient’s test was used to test the
hypothesis. As it is shown in table 2, the correlation coefficient between these two variables is 0.756 and
significant level is 0.000. It could be concluded that there is positive and significant relationship between
demand management and supply chain performance. Therefore the hypothesis is confirmed.
Hypothesis 2: there is direct and significant relationship between forecasting and demand management
According to the table 2, the correlation coefficient between these two variables is 0.699 and the
significance level is 0.000. There is positive and significant relationship between forecasting and demand
management. Therefore, the hypothesis is confirmed.
Hypothesis 3: there is direct and significant relationship between segmenting and demand
management
According to the table 2, correlation coefficient between these two variables is 0.711. This relationship
is significant at the level 0.01. Thus it can be said that there is positive and significant relationship between
segmenting and demand management. Therefore, the hypothesis is confirmed.
Hypothesis 4: there is direct and significant relationship between sales and operations planning and
demand management.
Correlation coefficient between these two variables is 0.614 which is indicating that correlation is
significant at the level 0.01. It can be said that there is positive and significant relationship between sales and
operations planning and demand management. Therefore, the hypothesis is confirmed.
Hypothesis 5: there is direct and significant relationship between management support and demand
management
According to the table 2, the correlation coefficient between these two variables is 0.701 and
significance level is 0.000. It can be said that there is positive and significant relationship between management
support and demand management. Therefore, the hypothesis is confirmed.
Table 2. Test of research hypotheses
Variables
supply chain performance
forecasting
segmenting
sales and executive operations planning
management support
correlation coefficient
0.756
0.699
0.711
0.614
0.701
significant
0.000
0.000
0.000
0.000
0.000
RESULTS OF THE PATH ANALYSIS
2
2
Maximum likelihood procedure was used to estimate the model. Indicators of chi-square (χ ), X .df
ratio, comparative fit index (CFI), normalized fit index (NFI), root mean square error of approximation (RMSEA)
and standard root mean square residual (SRMR) were used to evaluate goodness-of-fit.
If the values of CFI & NFI, be greater than 0.90, and RMSEA & SRMR, be less than 0.05, therefore
they are indicating optimal fit of the model and the value less than 0.08 implies the optimal fit. As it is shown in
table 4, indicators of CFI & NFI, are 0.99 and 0.97 respectively. Both are closed to the threshold point of
optimal fit. Indicators of RMSEA & SRMR are 0.01, 0.01 respectively. Both are indicating the goodness of fit of
the model.
Table 4 . Fitness indicators of the model
Goodness of fit index
X2.df
CFI
NFI
RMSEA
SRMR
GFI
AGFI
Value
3.2896
0.99
0.97
0.01
0.01
0.833
0.833
Standard values
0.90<
0.90<
0.08>
0.01>
0.90<
0.90<
0.90<
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Intl J Agri Crop Sci. Vol., 6 (14), 994-999, 2013
Segmenting
5.95
+89/0
Supply chain
0+/9
Demand
management
Management
support
5/54
4/63
+773/0
Sales & executive
operations
planning
Forecasting
Error
4/1
8/12
3/21
Figure 2. Path analysis
Table 5 . Path coefficients in the structural model
path
segmenting , demand management, supply chain
supply chain, demand management, forecasting
supply chain, demand management, Sales & executive operations
planning
supply chain, management support
Path
coefficient
+0.89
+0.773
+0.96
+0.9
Significant
Result
0.05>P
0.05>P
0.05>P
accepted
accepted
0.05>P
accepted
accepted
CONCLUSIONS AND SUGGESTIONS
The results showed that there is significant relationship between demand management and
performance of supply chain management. Thus, based on this, it was achieved to examine factors affecting
performance of demand management such as forecasting, segmenting, sales and operations planning and
management support by researcher. There is also significant positive relationship between forecasting and
performance of demand management. In fact, results of the study showed that despite the point of view of
some scholars who believe in the direct relationship, there is indirect relationship between forecasting variable
and supply chain through performance of variable of demand management.
The results also showed that there is positive relationship between segmenting factor and performance
of demand management and this factor has the greatest impact on performance of demand management
among the various investigated factors. One of the other results of this study is direct and significant
relationship between sales and operations planning and demand management. However it should be noted that
this factor has the lowest impact on the demand management among the investigated factors. Management
support also is another factor that has direct and significant relationship with demand management. Although
factor of management support has been studied in many researches and program planning, it has had low
status among supply chain’s studies.
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Intl J Agri Crop Sci. Vol., 6 (14), 994-999, 2013
Suggestions
The results can provide useful and applicable suggestions for the supply chain participants. Some of
the most important suggestions are:
It is suggested that if there demand is on different levels of supply chain, its management be divided
into upstream and downstream ones in order to prevent from imposed overload on demand management.
Companies can design product packages with regard to the income or other characteristics of clients.
Of course it requires careful analysis of information obtained from the customer’s database
Companies should have comprehensive understanding of demographic groups.
Customers who have long-term relationship with companies should be identified. Because it is easy to
understand about needs and desires of older clients.
Appropriate forecasting of sales will be possible with study of the annual sales of companies and also
seasonal sales and even the days like annual celebrations.
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that really work, New Jersey: John Wiley & Sons.
Ozhdari B, Ekhtyarzadeh A.2011. From Concept to Application. First Publication: Tehran
Wang GG, Rothwell WJ, Sun JY.2007. Management development in China: A policy analysis. International Journal of Training and
Development, 13(4), 205-220.
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