The Impact of Supply Chain Management Practices on Competitive Advantage and Organizational Performance

Competition is no longer between organizations, but among supply chains. Effective Supply Chain Management (SCM) has become a potentially valuable way of securing competitive advantage and improving organizational performance. This research conceptualizes, develops, and validates six dimensions of SCM practices (strategic supplier partnership, customer relationship, information sharing, information quality, lean system, and postponement) and provides a framework to understand the relationships between SCM practices, competitive advantage, and organizational performance. Data were collected from 196 organizations of various industry, size, and location to develop an instrument to measure SCM practice and test the relationships in the framework. Relationships were tested by structural equation modeling using LISREL. The results indicate that higher levels of SCM practices directly lead to enhanced competitive advantage and improved organizational performance. Also, competitive advantage has a direct, positive impact on organizational performance.