Supply Chain Management practices: Competitive Advantage and Organizational Performance in Sri Lankan Construction Industry

In the construction industry supply chain management (SCM) is a vital tool in controlling business processes in a defined and a systematic way to improve quality, time management and increase profit. Effective supply chain management has become a potentially valuable method of securing and improving competitive advantage and organizational performance since competition no longer between organizations, but between global organizations and among supply chains. This paper aims to investigate the impact of supply chain management practices on competitive advantage and organizational performance in the construction industry, Sri Lanka, due to the lack of application of supply chain management practices to determine the organizational performance in the competitive environment. Further, this study focuses five SCM practices: strategic supplier partnership, customer relationship, level of information sharing, quality of information sharing, and postponement to investigate what supply chain management is, how it works in increase competitive advantage and what are its dynamics. Six hypotheses were developed based on the constructed conceptual framework derived from the supply chain management literature. The data were collected over the survey technique by randomly administering structured questionnaires from 198 respondents of construction management teams and different sub-contractors. First Multiple regression analysis was performed to explore the impact of five supply chain management practices on competitive advantage and organizational performance in the construction industry and the analysis was carried out the factor analysis to explore the significance of supply chain management dimensions. The results of the regression analysis indicated that all SCM variables have a positive impact on competitive advantages and organizational performance of the construction industry in Sri Lanka. Moreover, it suggested that the strategic supplier partnership was the most significant SCM variable which determines the competitive advantage and level of information sharing variable was the less significant variable towards competitive advantage. The results of this study provide new insights to the construction companies to better understand the significant role that SCM variables play in respect to the competitive advantages and organizational performance in Sri Lanka. The study has outlined to examine the five T.S.L.W. Gunawardana Senior Lecturer, University of Ruhuna, Sri Lanka gunawardana@badm.ruh.ac.lk D.H. Wedage M & E Engineer, International Construction Consortium (Pvt) Ltd. Sri Lanka. dhanushkahw@gmail.com Supply Chain Management practices: Competitive Advantage and Organizational Performance in Sri Lankan Construction Industry

competitive advantage and organizational performance in Sri Lankan context. Therefore, this study attempts to fill the above research gaps by studying the impact of supply chain management practices on competitive advantage and organizational performance in Sri Lankan construction industry.

Supply Chain Management Practices:
SCM practices are defined as a set of practices undertaken by an organization to promote effective supply chain management (Tan, 2001). Many studies have done about SCM practices in different aspects. Li et al., (2006) reviewed SCM practices literature and identified five distinctive elements.
They are strategic supplier partnership, customer relationship, level of information sharing, quality of information sharing and postponement. Afande et al., (2015) studied about these elements and according to him these five constructs cover upstream (strategic supplier partnership) and downstream (customer relationship) sides of supply chain, information sharing of a supply chain (level of information sharing and quality of information sharing), and internal supply chain process (postponement). Studying the literature above clarifies that there are five distinctive dimensions and partnership. Strategic partnership with suppliers increases the efficiency or productivity since they are willing to share the success of the products (Li et al., 2006). Supplier participating at the early stages in the product design process can offer more cost-effective designs, help to select best technologies and components, and help in design assessment (Tan, Lymann & Wisner, 2002). Strategically aligned organizations can work closely together and eliminate wasteful time and effort (Balsmeier & Voisin, 1996). An effective supplier partnership can be a critical component of a leading-edge supply chain (Noble, 1997).

Level of Information Sharing:
Level of information sharing has defined as the willingness to share strategic and tactical data with other members of the supply chain by Global logistic research team (Mentzer et al., 2001). Information sharing refers to the ability of enterprises to share knowledge and information with supply chain partners with an effective and efficient manner. Companies share demand related information with their upstream and downstream partners with the purpose of improving planning and coordination of logistics and production-related activities (Glenn, Chen, Fawcett & Adams 2009;Cooper et al., 1997). Together supply chain partners can understand the needs of the end customer better and hence can respond to market change quicker (Stein & Sweat, 1998). It can be considered that effective use of relevant and timely information by all functional elements within a supply chain as a key competitive and distinguishing factor (Tompkins & Ang, 1999). Many types of research in the field focuses on the effect of information sharing on supply chain members (Huang & Wang, 2017). Simplified material flow, including streamlining and making highly visible all information flow throughout the chain, is the key to an integrated and effective supply chain (Childhouse & Towill, 2003).

Quality of Information Sharing:
Quality of Information sharing has defined as the accuracy, timeliness, adequacy and credibility of information sharing (Moberg, Cutler, Gross & Speh, 2002;Monczka, Peterson, Handfield & Ragatz, 1998). Besides the level of information sharing the quality of information sharing is also very important.
The high level of information with low quality shared among partners in the supply chain will limit the positive effect of general information sharing action. Marinagi, Trivellas and Reklitis (2015) implied that information sharing among partners along the supply chain facilitates higher overall performance as a result of enforced SCM practices elevating information reliability and quality. Efficiently and friendly information technology applications will improve information sharing as described (Yang & Maxwell, 2011). However main barriers and difficulties to discourage quality of information sharing is the cost and complexity of technological solutions (Brau, Fawcett & Morgan, 2007).

Customer Relationship:
Customer relationship is defined as the entire array of practices that are employed for the purpose of managing customer complaints, building a long-term relationship with the customer, and improving customer satisfaction (et al., 2006). Improving customer relationship can enhance the benefits by reducing coordination frictions and helping sellers learn about related buyers' utility (Shi, 2016).
Having understood the importance of the customer relationship towards the long-term survival organizations are moving towards the customized products and personalized services (Moberg et al., 2002). Success in market place demands going beyond satisfactory exchanges with customers, therefore firms should build a close relationship with their customers.

Postponement:
Postponement is defined as the practice of moving forward one or more operations or activities (making, sourcing and delivering) to a much later point in the supply chain (Beamon, 1998;Van Hoek, 1998).
Two primary steps of developing a postponement strategy are determining how many steps to postpone and determining which steps to be postponed (Beamon, 1998). Postponement allows an organization to be flexible in developing different versions of the product to meet the changing customer needs and to differentiate a product or to modify a demand function (Waller, Dabholkar & Gentry, 2000). Keeping materials undifferentiated for as long as possible will increase an organization's flexibility in responding to changes in customer demand. Besides, an organization can reduce supply chain cost by keeping undifferentiated inventories (Lee & Billington, 1995; Van Hoek, Voss & Commandeur, 1999).

Competitive Advantage:
Competitive advantage (CA) has defined as the extent in which an organization can create a defensible position over its competitors (Mcginnis & Vallopra, 1999;Porter, 1985) and includes a feature that allows an organization to distinguish itself from its competitors (Li, Ragu-Nathan, Ragu-Nathan & Rao, 2006). CA is related to the unique resources and competencies. Where other competitors do not have, which leads to better performance over the competitors (Sadri & Lees, 2001). CA is based on the (Kessler & Chakrabarthi, 1996). According to Li et al., (2006) competitive advantage is based on the following capabilities; competitive pricing, premium pricing, value to customer, quality, dependable delivery and product innovation.

Organizational Performance:
Organizational performance refers to how well an organization achieves its market-oriented goals as well as its financial goals (Yamin & Gunasekruan 1999). Organizational performance is difficult to measure and there is no universally accepted definition. Many prior studies have measured organizational performance using both financial and market criteria, including return on investment (ROI), Market share in the industry. Profit margins on sales, the growth of ROI, the growth of sales, the growth of market share and overall competitive position in the industry (Vickery, Calantone & Droge, 1999). The short-term objectives 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, Kannan & Handfield, 1998). Any organizations initiative is to use SCM practices and other management techniques to improve organizations performance. As per the above literature, we will use Market share in the industry, Return on Investment, Profit Margins, Growth of Sales and Competitive position in the industry dimensions will consider measuring the organizational performance.

CONCEPTUAL FRAMEWORK AND HYPOTHESES:
In this section, the approach is taken to develop an initial research model and the hypotheses deduced from the research question and research is described. Much care has been exercised in order to satisfy the criterion of replicability (Kerlinger, 1986). The result is a fairly detailed measurement and data collection sections making it possible for others to reproduce the research, to reanalyze the data, and to judge the adequacy of the methods and the data collection. When developing the conceptual framework of the present study, based on the previous literature, measure the positive or negative impact on the dependent variable (i.e., organizational performance) by the independent variable (i.e., supply chain management practices).and the mediating variable (i.e., competitive advantage). As mentioned, observational data collected prior to this study were important as they led to a research idea and hence

Competitive Advantage and Organizational Performance:
Having a CA for an organization can have one or more of the capabilities such as lower prices, higher quality, higher dependability and shorter delivery time when it is compared with its competitors. These capabilities will in turn enhance the organizations' overall performance (Mentzer, Min & Zacharia, 2000). CA can lead to high levels of economic performance, customer satisfaction and loyalty. Brands with higher consumer loyalty face less competitive switching in their target segments thereby increasing sales and profitability (Moran, 1981). An organization that supplies high-quality products can charge a premium or higher price for their quality. That causes the organization to increase its profitability and the return on investment. An organization having a short time to market supply and with rapid product innovation can lead the market with a higher market share and sales volume. As per the above following the hypothesis can be created

The Sample, Study Variables, Questionnaire Design and Data Collection:
The sampling frame was designed on the register list of Construction Industry Development Authority (CIDA). The members' list offered useful information such as the name and addresses of construction companies' location, and telephone and fax numbers, while simple random sampling method was applied in order to select the respondents from the population. The research conducts on 95% confidence. In conformity with this precedent, the level of analysis of the present study is the supply chains in constructions industry, while the unit of analysis is a staff who is responsible for the construction sites performance and mostly involved in the construction supply chain. This study, therefore, uses PLS to process the data because of sample size is somewhat sufficient.
Demographic data analysis has done through the SSPS and 130 respondents were executives or above grades and that was 65.7%, 68 were non-executive grades that was 34.3%. The experience of the respondents was as follows, 134 respondents have 5 years or less than 5 years' experience in the construction organization that was 67.68%, 64 respondents have more than 5 years' experience that was 33 under market share, return on investment, profit margin, competitive position and growth of sales. Using these dimensions five items that measure organizational performance was developed by Zhang (2001) and constructs from Vickery, Calantone and Droge, (1999). The questions were developed by using a five-point scale ranging from "1= strongly disagree" to "5= strongly agree".

DATA ANALYSIS AND RESULTS:
The discriminant validity of the latent variables was tested using Fornell & Larcker (1981) approach.  Table 1 show the square of correlations (R 2 ) between constructs. No nondiagonal entry exceeds the AVE of the specific construct. There are two statistical methodologies for estimating SEM with latent variables, the covariance-based (CBSEM) approach and the variance-based partial least squares path modelling (PLS). CBSEM is the method of choice for theory testing, while PLS is appropriate for prediction-oriented applications (Wold 1982  dependent and independent variables in regression analysis (Segars & Grover, 1993) but also provides a comprehensive means to assess and modify theoretical models (Karahanna & Straub, 1999).   The results reveal that SCM practices have a positive and statistically significant relationship with CA. Each construct in the measurement model was measured using multiple items. Each manifest variable in a certain measurement model is assumed to be generated as a linear function of its latent variables and the residual. Table 4   Construction firms should give priority to complete construction projects within proper time limits which will improve the performance of the sites based on the results of the study. Targets and penalties should be introduced to employees to complete their products within the shortest time possible to introduce to the markets to get a better performance within the organization.

Regression Analysis:
Based on the results policymakers can improve the strategic supplier partnership by introducing new regulations and guidelines to the supplier side as well. Also, they can improve innovations by providing guidelines for the compulsory requirements of research and development facilities in each organization.
Policymakers also need to address project completions and product completions time within given targets or less time by adding more restrictions for delays. They also can encourage more studies towards SCM practices, CA and Org. performance to gain more knowledge of the impact in the construction industry. Therefore, the application of new policies and new guidelines based on this study finding will help to improve performance in the construction firms and local firms will able to compete with multinational organizations by improving these factors.

FUTURE RESEARCH DIRECTIONS
The findings of the study and application are limited to the construction industry organizations in Sri Lanka. They may not be applying to construction organizations operating outside the country.
Therefore, it is important to note that they can only be used for competitive purposes and not any direct application in another country. To overcome this limitation future studies, need to be conducted involving construction firms outside the country. Some multinational construction firms are operating in Sri Lanka. Another major limitation of the study was this study carried out using twelve construction sector organizations. But as per the CIDA records, there are more than two thousand registered construction companies in Sri Lanka. If the samples and population could have expanded more than this, more vigorous results could have been obtained, which could have generalized in a much broader manner. Therefore, future studies should be done involving more construction companies registered in the CIDA to overcome this limitation. In this study researcher used only five dimensions in each SCM Practices, CA & Org. Performance variables. As per the literature, there are more dimensions to measure each of these variables which haven't used in this study. Therefore, there is a limitation on the dimensions of study variables. Future research can expand on the domain of SCM practices by