The Relationship Between Supply Chain Strategy and Supply Chain Performance : An Empirical Investigation Using Structural Equation Modeling

Supply Chain Management (SCM) practices play a vital role in enhancing the overall performance of any organization. The firms try to achieve strategic competitiveness through implementation of appropriate SCM practices, thereby taking their performance to the next level. SCM has now turned out to be one of the fastest growing and key areas in management, as a result of which it has successfully grabbed the attention of top management in respective organizations. This paper examines the relationship between Supply Chain Strategy (SCS) and Supply Chain Performance (SCP) for automobile industry in India, especially Small and Medium Enterprises (SMEs). The association is examined through statistical methods such as Pearson correlation coefficient and Structural Equation Modeling (SEM). The results reveal that SCS has a significant correlation with SCP. Especially SCS parameters such as Innovative Strategy (INS), Customer-Oriented Strategy (COS) and Agile Supply Chain Strategy (ASCS) have a high correlation with SCP [i.e., Cost Performance (CP), Logistic Performance (LP) and Quality Performance (QP)]. The SEM results also show that SCS parameters appear to be of primary importance and exhibit the importance of SCP. The result underlines the importance of SCP to the automotive industry in India