Supply Chain Collaboration: The Relationship Between Maturity Level and Performance

SUPPLY CHAIN COLLABORATION:
THE RELATIONSHIP BETWEEN MATURITY LEVEL AND PERFORMANCE
A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy
Thi Phuong Dung Ho
Master of Engineering Management – University of Technology Sydney
School of Engineering
College of Science, Engineering and Health
RMIT University
December 2018
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DECLARATION
I certify that except where due acknowledgement has been made, the work is that of the author
alone; the work has not been submitted previously, in whole or in part, to qualify for any other
academic award; the content of the thesis is the result of work which has been carried out since
the official commencement date of the approved research program; any editorial work, paid or
unpaid, carried out by a third party is acknowledged; and, ethics procedures and guidelines
have been followed.
20 September 2018
Thi Phuong Dung Ho
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LIST OF PUBLICATIONS
The following journal paper has resulted from the studies undertaken for this degree:
 Ho, D., Kumar, A. and Shiwakoti, N., In press. A Literature review of supply chain
collaboration mechanisms and their impact on performance. Engineering Management
Journal, Accepted for publication on 11 September 2018.
 Kumar, A., Chen, B., Ho, D., 2018, "Impact of Social Media in Emergency
Management", International Journal of Management and Applied Science (IJMAS), pp.
33-40, Volume-4, Issue-4.
The following Scopus-indexed conference publications have resulted from the studies
undertaken for this degree:
 Ho, D., Kumar, A. and Shiwakoti, N., 2016, December. Maturity model for supply
chain collaboration: CMMI approach. In Industrial Engineering and Engineering
Management (IEEM), 2016 IEEE International Conference (pp. 845-849). IEEE.
 Ho, D., Kumar, A. and Shiwakoti, N., 2017, December. Supply chain collaboration: a
case study of textile and apparel industry. In Industrial Engineering and Engineering
Management (IEEM), 2016 IEEE International Conference (pp. 1367-1371). IEEE.
 Ho, D., Kumar, A. and Shiwakoti, N., 2018, July. Using system dynamics approach to
examine the impact of ERP and Lean on manufacturing performance, 2018
International Conference on Industrial Engineering and Operations Management
(pp.350-357). IEOM Society International.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to my supervisors, Dr Arun Kumar and Dr Nirajan
Shiwakoti. Words could never be enough to express my deepest thanks and appreciation to
them. I have been extremely lucky to have supervisors who not only give me tremendous
academic support, wonderful opportunities but also emotional support. It would never have
been possible for me to take this work to completion without their incredible support and
encouragement. I could not have imagined having better supervisors for my PhD study.
Especially, thanking Dr Arun so much for being not only my supervisor but also my father
figure in life.
I gratefully acknowledge the funding received towards my PhD from RMIT and greatly
appreciate the support received from all participants in this research. My thanks also go out to
the support from RMIT staff.
I am indebted to all my friends and my colleagues in Melbourne and Vietnam (I am not able to
name all here) for their spirit support and academic advice.
Special thanks go to mum and brother for their unconditional love throughout this journey and
my life in general. They are the most important people in my world. Last but not least, this
dissertation is dedicated to my late father who is always in my heart.
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ABSTRACT
Supply chain collaboration (SCC) and its relationship with performance have received an
increased attention from both researchers and industries over the past decades. SCC has
affirmed to be a competitive tool to improve the business performance for an organization itself
and entire supply chain. Therefore, firms have strived to achieve greater levels for their SCC.
Although the goals and benefits of SCC are clearly claimed, collaboration has the most
unsatisfactory track record of all supply chain management strategies with the success rate
falling short of the expectations of participants. One of the reasons for these failures is the
broad, incomplete, and unclear instructions for the implementation and further improvements
in the existing body of knowledge. As a consequence, this leads to the poor understanding of
achieving effective SCC. In addition, the literature review acknowledges the inadequacy of in-
depth qualitative-based research on the relationship between SCC and performance.
Particularly, how different SCC maturity levels lead to different performance outcomes is less
understood. Furthermore, there is a shortage of the industry-based research on SCC and
performance. Such studies are considered to be beneficial to managers to minimize the chance
of implementation failure and to make strategic decisions for the organization.
Given these limitations, this study develops a maturity model for SCC (MM-SCC) which is
considered as instructions of implementation as well as the improvement for SCC maturity in
the industry. MM-SCC serves as a benchmark for SCC practices with two functions, a
diagnostic tool, and an improvement roadmap. This model uses Capability Maturity Model
Integration (CMMI) as the reference framework. To the author’s knowledge, it is first time that
CMMI is integrated into MM-SCC and is an original contribution to address the gap on the
existing body of knowledge on SCC.
Subsequently, this model is used to explore in-depth relationship between SCC and
performance. Particularly, how different maturity levels lead to different performance
outcomes is investigated in detail. The model is validated by experts before the application in
the real environment. In this study, two textile and apparel industries in Vietnam are chosen as
the industry representatives. Case study method with embedded, multiple-case design is used
to understand the relationship of SCC with performance. Based on MM-SCC model, SCC
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practices and maturity levels are evaluated and measured at each case through managers’
evaluation and the relevant evidence provided by the managers. The effects on the performance
are quantitatively and qualitatively measured with actual data of key performance indicators
(KPIs) and subjective evaluation of managers. The study provides evidence-based findings on
the relationship between SCC and performance outcomes.
Finally, since the model serves as an improvement roadmap based on the current practices,
improvement plans are suggested for the considered case studies with an ERP-based Lean
system. For the longitudinal improvement purpose, a system dynamics (SD) simulation model
is developed and applied to foresee how the performance changes under different future
scenarios when the systems reach a higher collaboration maturity level.
The findings support the positive link between SCC maturity levels and performance. It is
found that the role of internal collaboration with information integration and operations
management in building the SCC maturity level and system’s effectiveness is critical. It also
plays the moderator role in the relationship between external collaboration and performance.
The simulation results quantitatively demonstrate how performance increases when the
organization reaches a higher level of SCC. Furthermore, it also highlights the important role
of Lean manufacturing itself to performance and the mediator role of Lean production in the
relationship between ERP and performance.
This study provides an original contribution to knowledge in the field of SCC and performance.
This is a first study of its kind to build the maturity model for SCC and examine how well the
mechanisms and maturity levels of SCC correspond with the performance, particularly in a
specific industry. The results show the applicability and usefulness of MM-SCC model. Case
study with real data along with SD provides valuable practices and knowledge to make strategic
decisions for managers in the industry. In future, there is further need to enhance the model
which considers the capability levels for each process area. In addition, the MM-SSC model
can be tested to other industries to generalize the findings on the area of SCC and performance.
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CONTENTS
CHAPTER 1 : INTRODUCTION .......................................................................................... 1
1.1. BACKGROUND............................................................................................................. 2
1.2. RESEARCH QUESTION AND OBJECTIVES ............................................................. 4
1.3. RESEARCH FRAMEWORK ......................................................................................... 5
1.4. RESEARCH SCOPE ...................................................................................................... 6
1.5. ORGANIZATION OF THESIS ...................................................................................... 7
CHAPTER 2 : LITERATURE REVIEW ........................................................................... 11
2.1. BACKGROUND OF SUPPLY CHAIN COLLABORATION .................................... 12
2.1.1. Definition ................................................................................................................ 12
2.1.2. SCC Process ........................................................................................................... 16
2.1.3. SCC Level............................................................................................................... 20
2.2. MATURITY MODEL................................................................................................... 22
2.2.1. Introduction ............................................................................................................ 22
2.2.2. CMMI Approach .................................................................................................... 26
2.2.3. Previous Studies on Maturity Models for SCC ...................................................... 28
2.3 RESEARCH GAP .......................................................................................................... 29
2.3.1. Problem Statements ................................................................................................ 29
2.3.2. Research Gaps ........................................................................................................ 34
CHAPTER 3 : RESEARCH DESIGN ................................................................................. 39
3.1. MODEL DEVELOPMENT (RESEARCH OBJECTIVE 1) ........................................ 40
3.2. MODEL CONTENT VALIDITY (RESEARCH OBJECTIVE 2) ............................... 42
3.3. MODEL APPLICATION (RESEARCH OBJECTIVES 2 and 3)................................ 45
3.4. FUTURE SCENARIO (RESEARCH OBJECTIVE 4) ................................................ 50
CHAPTER 4 : MODEL DEVELOPMENT ........................................................................ 53
4.1. MM-SCC MODEL........................................................................................................ 54
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4.1.1. Maturity Level ........................................................................................................ 54
4.1.2. Process Requirements ............................................................................................. 55
4.1.3. Sub-process Requirements ..................................................................................... 58
4.2. MATURITY LEVEL AND COLLABORATION LEVEL .......................................... 63
CHAPTER 5 : MODEL CONTENT VALIDITY ............................................................... 66
5.1. DATA COLLECTION .................................................................................................. 67
5.2. DATA ANALYSIS ....................................................................................................... 69
5.3. SUMMARY .................................................................................................................. 73
CHAPTER 6 : MODEL APPLICATION............................................................................ 75
PART 1: RESULTS ............................................................................................................. 76
6.1. CASE INFORMATION ................................................................................................ 76
6.2. FINDINGS .................................................................................................................... 78
6.2.1. Collaboration Maturity Level (Cross-case) ............................................................ 79
6.2.2. Customer Relationship (Within-case) .................................................................... 85
6.2.3. Performance ............................................................................................................ 88
PART 2: DISCUSSION ....................................................................................................... 91
6.3. CROSS – CASE ANALYSIS ....................................................................................... 91
6.3.1. Intra-organizational vs Inter-organizational Process .............................................. 92
6.3.2. Internal Collaboration and Effects on Performance ............................................... 95
6.4. WITHIN CASE ............................................................................................................. 97
6.5. CONCLUSION AND IMPLICATIONS .................................................................... 100
CHAPTER 7 : IMPROVEMENTS AND SYSTEM DYNAMICS .................................. 102
7.1. IMPROVEMENT PLANS .......................................................................................... 104
7.1.1. Continuous Improvement for Lean Manufacturing .............................................. 104
7.1.2. Continuous Improvement for ERP Implementation ............................................. 106
7.1.3. ERP-based Lean System ....................................................................................... 108
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7.2. IMPROVEMENT PLANS VERSUS SCC MATURITY LEVEL ............................. 112
7.3. MODEL DEVELOPMENT ........................................................................................ 114
7.3.1 Building Model ...................................................................................................... 114
7.3.2. Base-case Parameters ........................................................................................... 119
7.4. MODEL VALIDATION ............................................................................................. 123
7.5. FUTURE SCENARIOS .............................................................................................. 124
7.6. RESULTS AND DISCUSSION ................................................................................. 127
7.7. MANAGERIAL IMPLICATIONS ............................................................................. 130
Chapter 8: Conclusions ....................................................................................................... 131
8.1. CONCLUSION ........................................................................................................... 132
8.2. IMPLICATIONS ......................................................................................................... 135
8.3. LIMITATIONS AND FUTURE RESEARCH DIRECTIONS .................................. 136
REFERENCEs ..................................................................................................................... 139
APPENDICES ...................................................................................................................... 154
APPENDIX 1: SUPPLY CHAIN COLLABORATION LEVELS ................................... 154
APPENDIX 2: QUESTIONNAIRE ................................................................................... 157
APPENDIX 3: CVR RESULTS ........................................................................................ 169
APPENDIX 4: MM-SCC MODEL – VIETNAM TEXTILE AND APPAREL

CONTEXT ...................................................................................................................... 173
APPENDIX 5: MODEL APPLICATION SUMMARY .................................................... 180
APPENDIX 6: XYZ’S KPIS REPORT EXAMPLE – SWEATER PRODUCT ............... 188
APPENDIX 7: ABC’S REPORT EXAMPLE –T-SHIRT PRODUCT – CMT

CUSTOMER................................................................................................................... 193
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LIST OF TABLES
Table 2-1: Antecedents of SCC ............................................................................................... 17
Table 2-2: Main processes of SCC .......................................................................................... 18
Table 2-3: The sustaining and improvement processes of SCC .............................................. 19
Table 2-4: The SCC levels and characteristics ........................................................................ 21
Table 2-5: CMMI model ......................................................................................................... 27
Table 2-6: Reviewed list .......................................................................................................... 30
Table 2-7: Leading clothing exporter in the world .................................................................. 37
Table 3-1: Expert position ....................................................................................................... 43
Table 3-2: Minimum value of CVR, p = 0.05 ......................................................................... 44
Table 4-1: MM-SCC model ..................................................................................................... 57
Table 4-2: Sub-process requirements....................................................................................... 59
Table 4-3: Comparisons between maturity level and collaboration level................................ 63
Table 5-1: CVR value of maturity level definition and process requirements ........................ 70
Table 5-2: Eliminated sub-process requirement ...................................................................... 71
Table 5-3: MM-SCC for Vietnam textile and apparel industry ............................................... 73
Table 6-1: Collaboration maturity levels ................................................................................. 79
Table 6-2: ABC customer relationship level ........................................................................... 85
Table 6-3: XYZ customer relationship level ........................................................................... 87
Table 6-4: XYZ KPIs (Jan 2015 – Dec 2015) ......................................................................... 89
Table 6-5: ABC KPIs (Aug 2015 – Jul 2016).......................................................................... 89
Table 6-6: Grouping Process requirements.............................................................................. 93
Table 6-7: Customer relationship level and performance ........................................................ 98
Table 7-1: ERP-based Lean system maturity model.............................................................. 110
Table 7-2: Comparisons between MM-SCC vs ERP-Lean system ....................................... 113
Table 7-4: ABC’s KPIs of CMT and FOB ............................................................................ 120
Table 7-5: Auxiliary variables of based-case......................................................................... 122
Table 7-6: Data of the backlogs ............................................................................................. 123
Table 7-3: ERP-Lean based system and maturity model scenarios ....................................... 124
Table 7-7: Input parameters ................................................................................................... 126
Table 7-8: Backlog of levels 1 and 2 ..................................................................................... 127
Table 7-9: Backlog of levels 2 and 3 ..................................................................................... 129
Table 7-10: Backlog of levels 3 and 4,5. ............................................................................... 130
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LIST OF FIGURES
Figure 1-1: Research framework ............................................................................................... 5
Figure 1-2: Thesis structure ....................................................................................................... 8
Figure 2-1: SCC scopes ........................................................................................................... 15
Figure 2-2: The Quality Management Maturity Grid ............................................................. 23
Figure 2-3: Application domain ............................................................................................... 24
Figure 2-4: Total number of used maturity model ................................................................... 25
Figure 2-5: Supply chain management process maturity model .............................................. 28
Figure 2-6: Supply chain capability maturity model ............................................................... 29
Figure 2-7: Textiles and clothing (% of value added in manufacturing) ................................. 37
Figure 3-1: Research steps ....................................................................................................... 39
Figure 3-2: CMMI model......................................................................................................... 40
Figure 3-3: Model development procedure.............................................................................. 41
Figure 3-4: SCC maturity level and SCC level ........................................................................ 42
Figure 3-5: Model Content Validity process ........................................................................... 42
Figure 3-6: Basic types of designs for case studies ................................................................. 46
Figure 3-7: Case type ............................................................................................................... 47
Figure 3-8: Case study process ................................................................................................ 48
Figure 3-9: Main modes of production .................................................................................... 49
Figure 3-10: Improvements and System Dynamics process .................................................... 51
Figure 4-1: Maturity level and collaboration level .................................................................. 65
Figure 5-1: Distribution of expert type and year of experience ............................................... 68
Figure 5-2: Distribution of teaching field ................................................................................ 68
Figure 5-3: Distribution of company type and company scale ................................................ 69
Figure 5-4: Distribution of job title and job function .............................................................. 69
Figure 5-5: Vietnam textile and apparel chain ......................................................................... 72
Figure 6-1: Case study components ......................................................................................... 78
Figure 6-2: SCC maturity level and performance .................................................................... 91
Figure 7-1: Kaizen implementation process .......................................................................... 105
Figure 7-2: Continuous Improvement for MRP/ERP Implementation .................................. 108
Figure 7-3: ERP support for pull production: Capability maturity model ............................. 110
Figure 7-4: ERP-based lean implementation process framework.......................................... 112
Figure 7-5: ABC’s manufacturing supply chain .................................................................... 116
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Figure 7-6: ABC’s current value stream ................................................................................ 121
Figure 7-7: Simulation results of the backlog of based-case scenario ................................... 124
Figure 7-8: Backlog of levels 1 and 2 .................................................................................... 127
Figure 7-9: Backlog of levels 2 and 3 .................................................................................... 129
Figure 7-10: Backlog of levels 3 and 4,5. .............................................................................. 129
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LIST OF ABBREVIATIONS
CLD Causal Loop Diagram
CMM Capability Maturity Model
CMMI Capability Maturity Model Integration
CMT Cut Make and Trim
CVR Content Validity Ratio
EDI Electronic Data Interchange
ERP Enterprise Resource Planning
FDI Foreign Direct Investment
FOB Free On Board
GA General Assistance
GDP Gross Domestic Product
IE Industrial Engineering
IT Information Technology
KPI Key Performance Indicator
MM-SCC Maturity Model for Supply Chain Collaboration
MRP Material Requirements Planning
OBM Original Brand Manufacturing
ODM Original Design Manufacturing
OEM Original Equipment Manufacturing
QA/QC Quality Assurance/ Quality Control
SCC Supply Chain Collaboration
SD System Dynamics
SFD Stock and Flow Diagram
VITAS Vietnam Textile and Apparel Association
VSM Value Stream Mapping
WIP Work in process
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Chapter 1: Introduction
CHAPTER 1 : INTRODUCTION
This chapter begins with the research background for this study. Subsequently, the research
objectives and research questions are identified. A research methodology is briefly illustrated,
followed by a research scope. This chapter concludes by outlining the thesis structure.
1
1.1. BACKGROUND
The modern business world has recently witnessed a significant shift in the network of business
relationships, from individual businesses competing as autonomous companies to competition
between separate supply chains (Lambert and Cooper, 2000, Bruce et al., 2004, Cao and Zhang,
2013, Wu et al., 2014). Consequently, there is more pressure on all members of the supply
chain to collaborate to ensure effectiveness in matching demand with supply (Simatupang and
Sridharan, 2002, Sheu et al., 2006, Cao et al., 2010). Also, in this era of time-based competition,
survival in turbulent markets requires supply chains to be responsive to the needs of the market,
and this characteristic is affected by the level of collaboration among partners in the chain
(Agarwal et al., 2007).
Collaboration is considered to be the driving force and the ultimate core capability for an
effective chain (Min et al., 2005) by creating a seamless and synchronized supply chain to
satisfy customers (Muckstadt et al., 2001, Fawcett et al., 2008). Moreover, it has become one
of the ‘building blocks’ of the ‘house of supply chain’ (Arzu Akyuz and Erman Erkan, 2010).
For an individual member, the collaboration in a supply chain is considered as a competitive
weapon to improve business performance for the organization itself (Min et al., 2005).
Effective SCC can solve manufacturing problems which create non-value-added activities such
as costs, product quality, delivery reliability capabilities to obtain superior performance
(Rosenzweig et al., 2003, Chen et al., 2009, Gimenez and Ventura, 2003). This is solid
fundamentals leading the organization forward to successful and sustainable business
operations (Attaran and Attaran, 2007) and competitive advantage (Sheu et al., 2006, Cao and
Zhang, 2013). As such, collaboration comes into focus and becomes a major concern for
managers in industrial firms nowadays (Schuh et al., 2008).
Along with the development of SCC, there has been a growing research interest with many
empirical studies confirming the impact of SCC on performance since the early 2000s (Soosay
and Hyland, 2015, Ralston et al., 2017). The outcomes of SCC have been declared by the
majority of previous studies agreeing on the direct positive link between SCC and performance
(Bititci et al., 2015). All firms have strived to achieve a greater degree of collaboration (Cao
and Zhang, 2011).
Despite the benefits of SCC are clearly claimed and the goal of collaboration is precise;
accumulating evidence has also proved that mainstream implementation has been much less
prominent than expected (Cao and Zhang, 2013, Holweg et al., 2005). In practice, many
2
attempts fall short of the expectations of participants’ and end up in failure (Cao et al., 2010).
A survey was conducted and showed that only 35 per cent of the collaboration initiatives was
even moderately successful (Kampstra et al., 2006). “It seems that collaboration has been the
most unsatisfactory track record of all supply chain management strategies” (Cao and Zhang,
2013). Many companies are struggling in achieving a higher maturity level of collaboration
(Fawcett et al., 2008).
SCC is affirmed to remain in its infancy with many existing gaps, which can be beneficial for
the industries (Alfalla-Luque et al., 2013, Ralston et al., 2017, Soosay and Hyland, 2015). In
particular, there is a significant gap in empirical research investigating the mechanisms of SCC
(Kanda and Deshmukh, 2008, Alfalla-Luque et al., 2013) and how they affect SC performance
(Ralston et al., 2017).
Given these research limitations, a literature review on SCC in general and 43 empirical studies
specific to industry practices has been conducted to examine the opportunities and issues
related to SCC implementation and performance. This review reflects the current body of
knowledge on SCC and performance; and highlights the need for a broad perspective in the
domains of industry and country-related factors, methodology, collaboration constructs and
performance. Through this review, it was observed that the issue of industry failures deserves
more attention, including (i) the lack of instructions of necessary process requirements for the
implementation and improvement to higher levels for SCC; (ii) more in-depth investigative
research on the relation between SCC mechanisms and performance outcomes; and (iii) more
specific industry-based research. Scientific understanding of these issues will provide best
practices and knowledge to assist engineering managers towards strategic decision making to
avoid the pitfalls of implementation failure, especially on decision regarding which actions to
prioritize among different available options.
A research agenda for further work and recommendations are identified by developing a
maturity model for SCC based on the Capability Maturity Model Integration (CMMI)
approach. This approach is well-known as a process maturity framework, which can be adopted
as a tool to solve the issue of managing the maturity for SCC processes. This model will provide
greater clarity with regards to the implementation phase and improvement roadmap for SCC
practices. As such, it has a potential to provide substantial benefits to the industry. Further, an
in-depth exploration on how SCC mechanisms affect performance in specific industries is
3
necessary. This can be executed by applying the proposed model via the case study approach
for illustrative examples. The proposed maturity model is used as a benchmark for these cases
to measure the SCC maturity levels and current practices. Comparisons across cases can be
made to develop a deeper understanding of how different collaboration maturity levels impact
on performance. Simulation tools, System dynamics (SD) in particular, may support to better
capture the impacts of different collaboration levels on the performance measures in different
scenarios when organizations follow the proposed framework to enhance their collaboration
maturity level. Furthermore, since SCC needs to be adapted to particular industry, the industry-
based research is beneficial to the managers to minimize the failures. To the author’s
knowledge, there is no existing study that has examined the SCC effects on performance in
textile and apparel industry. As such, this study considers the application of the proposed model
in textile and apparel industry. The textile and garment industry is chosen due to the importance
of SCC to its survival. The model is adjusted to this industry and applied to explore more about
the current practices.
1.2. RESEARCH QUESTION AND OBJECTIVES

Based on the research problems identified above, the overall research aim is to investigate the
relationship between the SCC and performance outcomes through development and application
of a maturity model for SCC based on CMMI approach.
Consistent with the overall aim, the study has following objectives:
 Research objective 1: To develop a maturity model for SCC based on CMMI
approach;
 Research objective 2: To practically apply the proposed model to identify the current
practices and measure the current SCC maturity levels via a case study of Vietnam’s
textile and apparel industry;
 Research objective 3: To explore the relationship among SCC and performance
outcomes;
 Research objective 4: To make recommendations to improve the SCC maturity level
and foresee how the performance changes.
This study proposes the following primary research question based on the research objectives:
How SCC mechanisms and SCC maturity level affect performance outcome?
4
To answer the primary research question, the following subsidiary questions are raised:
 Research question 1: What are maturity levels of SCC and process requirements for
each maturity level?
 Research question 2: What are the specific requirements in Vietnam textile and
apparel industry context?
 Research question 3: How are the SCC practices in Vietnam textile and apparel
industry?
 Research question 4: What are the KPIs of Vietnam textile and apparel industry?
 Research question 5: How the SCC and SCC maturity level affect the performance
outcome in Vietnam textile and apparel industry?
 Research question 6: What are the improvement plans based on the current practices
to reach higher levels in Vietnam textile and apparel industry?
 Research question 7: How will the performance change if improvement plans are
implemented in Vietnam textile and apparel industry?
1.3. RESEARCH FRAMEWORK

The methodology is designed according to the research objectives. Based on the nature of this
study, this research consists of following stages:
 MM- SCC model development and validation
 MM-SCC model application to explore the phenomenon
 Future scenarios with improvements and performance analysis via SD simulation
model.
The research methodology is designed based on the research objectives. This is mixed-method
study which includes 4 phases (Figure 1-1).
Step 1: Model development

MM-SCC model Objective 1
development and validation
Step 2: Model Content Validity Objective 2
Model application to case studies Step 3: Model application

to explore the phenomenon Objective 2+3
Future improved scenarios

and SD to examine the effects Step 4: Improvements and System Dynamics Objective 4
on performance
Figure 1-1: Research framework
5
 Step 1: Model Development

To develop the MM-SCC which is considered as an implementation and improvement
framework for SCC, a review appropriate literature is used (Bickman and Rog, 2008). The
Capability Maturity Model Integration (CMMI) approach is used as a reference.
 Step 2: Model Content Validity

The content check is based on the information available in the relevant literature, and is also
checked in consultation with a panel of practitioners and academic experts with substantial
knowledge about the topic and the context. The content validity and reliability of the model in
specific context must be confirmed before being applied in real environment (Meng et al., 2011,
Cao et al., 2010, Simatupang and Sridharan, 2005a, Boughzala et al., 2014, Lockamy III and
McCormack, 2004, McCormack et al., 2008).
In this study, semi-interview method with questionnaire tool is used to ask for the experts’
agreement level on the model. The result is quantitatively analyzed through Content Validity
Ratio (CVR) to decide the appropriateness of model’s content (Lawshe, 1975).
 Step 3: Model application

The model is then applied in case studies to evaluate the current practices and measure the SCC
level. These outcomes of practices and levels are used along with performance outcomes to
evaluate and analyze the relationship between SCC and performance. The effects of SCC on
performance are quantitatively assessed through real data of KPIs and subjectively evaluated
by managers as well.
 Step 4: Improvements and Systems Dynamics

Through model application, the current practices are defined along with problems. Based on
this, improvement plans are suggested to enhance the systems to a higher level. In order to
foresee how these future scenarios impact the performance, simulation, SD in particular is used.
1.4. RESEARCH SCOPE

This study develops a maturity model for SCC which is based on the CMMI approach and
applies the proposed model to explore in-depth how SCC affects the performance.
6
First of all, this study does not cover all the aspects of the CMMI approach. Only the maturity
path is applied and the capability path for the individual SCC process is not within the scope
of this study.
Secondly, this study only focuses on the level of the dyadic buyer-supplier structure. The
horizontal supply chain relations between a manufacturer and its partners are analyzed under
the view of the manufacturer.
Thirdly, this research is undertaken under the confidentiality policies regarding financial status;
therefore, company financial data cannot be obtained. The scope of this research is constrained
to operational performance. KPIs are analyzed based on the availability of data.
Lastly, the scope also includes the use of software (Vensim® PLE, Copyright © 1988-2015,
Ventana Systems, Inc.) which is for educational purpose to build and run the SD model. The
analysis carried out is within the capability and limitations of the Vensim software.
1.5. ORGANIZATION OF THESIS

This thesis comprises eight chapters including the current chapter. The thesis structure is
illustrated in Figure 1-2. The following sections will elaborate on the contents of each chapter
in a greater detail.
7
- Research background
- Research questions and objectives
Chapter 2: Literature Review

Literature review of relevant knowledge
(SCC and Maturity model – CMMI)
Chapter 3: Research Design
Research design applied to address the research objectives
Chapter 4: Model Development

Step 1-Model development
Developing the maturity model for SC based on
the literature
Chapter 5: Model Content Validity

Quantitatively validating the model content in the specific Step 2 - Model validity
context, using semi-interview with questionnaire
Chapter 6: Model Application

- Applying the proposed model to case studies to assess/measure the current
practices/ maturity level Step 3- Model application
- Collecting real performance data as well as subjective evaluation from managers
- Analysing the relationships between SCC and performance
Chapter 7: Improvements and System Dynamics

Step 4 – Future scenario
- Suggesting improvement plans
- Simulating the future to analyse the effects of improved
scenarios on performance
Chapter 8: Conclusion
- Key findings
- Contributions
- Limitations
- Future research
Figure 1-2: Thesis structure
 Chapter 2: Literature Review

This chapter commences with a review of relevant literature on SCC and maturity model. The
knowledge of SCC is provided with the definition and more specifically, SCC process and level
are focused on. It is then followed by the introduction of the maturity model with the highlight
8
of the Capability Maturity Model Integration (CMMI) approach. It ends with the analysis of
empirical studies on SCC and performance to find the research gaps.
 Chapter 3: Research Design

This chapter provides the research design according to each research objective. This is a mixed-
method study including four steps which serves four objectives respectively. The choice of
specific methods of data collection and analysis is described in detail for each step.
 Chapter 4: Model Development

Chapter 4 is the first expansion upon the work of the preceding chapter. This is the first step of
this study with the model development based on the literature. The proposed model is
developed with the introduction of the definition of the maturity levels which are based on the
reference model CMMI and followed by mapping the process requirements to each maturity
level.
The later part of this chapter presents a justification of the correlation between the maturity and
the collaboration level. The aim of this analysis is to compare the result of SCC maturity levels
achieved from Model development to the characteristics of different SC relationship levels.
This is to prove that achieving a certain maturity level will lead to a respective relationship
level with the partner.
 Chapter 5: Model Content Validity

The aim of this chapter is to validate the proposed model by experts before it is officially
applied in real environment at a specific context. This is the second step of this thesis.
Chapter 5 starts with the results of the questionnaire design, pilot running, and general
information. The results of statistical analysis of CVR are provided in the next section. Based
on these outcomes, the current practices of the context are also demonstrated to further explain
for the results from the survey.
 Chapter 6: Model application

Chapter 6 is the application of the proposed model in the real environment with case studies.
This is to meet the third objective to explore the relationship between SCC mechanisms and
9
performance. This chapter expands upon the work of the preceding chapters and establishes
the setting that forms the basis of the analysis in the subsequent chapter.
The chapter starts with the case information which provides an overview of backgrounds for
this step. The latter part of this chapter is the first focus of this chapter which presents the
results of model application including SCC practices as well as maturity level at each case, and
performance outcomes with the results of Key performance indicators (KPIs).
The secondary focus of this chapter is the analysis and discussions of the effect of SCC on
performance. This section will be divided into cross-case and within-case part.
Finally, the conclusion along with managerial implications is provided at the end of this
chapter.
 Chapter 7: Improvements and System Dynamics

The aim of this chapter is to assess the future of the organization if it follows the model.
Based on the results of the preceding chapter, this chapter starts with the suggestions of
improvement activities to solve the current problems. A better system is built for higher
maturity levels.
To foresee how the future scenarios affect the performance, the latter parts describe the use of
SD. The simulation model is first built with the explanation for base case parameters. Different
scenarios are then developed and simulated.
These are followed by the descriptions of outcomes and analysis based on these findings. It
then ends with the conclusion and managerial implications.
 Chapter 8: Conclusion
Chapter 8 concludes this thesis with the highlights of the contributions in this area. Limitation
and constraints are also indicated. Finally, future research opportunities are suggested to
researchers.
10
CHAPTER 2 : LITERATURE REVIEW
This chapter presents a review of the literature pertinent to the aim of developing the maturity
model for SCC. The literature review has been sorted according to three distinct categories.
The first category broadly outlines the concepts of SCC and the second category highlights the
maturity model. In the first category, the focus is more on the SCC process. The latter category
illustrates the maturity model, CMMI in particular, and the existing body of knowledge on
maturity models in supply chain field. In the last section, the research gaps are analyzed based
on a review of empirical papers in this area.
11
2.1. BACKGROUND OF SUPPLY CHAIN COLLABORATION

2.1.1. Definition
History:
The word “Collaboration” originates from the Latin composition of the words “col” and
“laborare” meaning “to work together” (Anandarajan, 2010, Boughzala and De Vreede, 2012)
and is defined by Webster dictionary as “to work jointly with others or together especially in
an intellectual endeavor” (Anandarajan, 2010). From an academic perspective, “collaboration”
is defined as "a process of joint decision making among key stakeholders of a problem domain
about the future of that domain" (Gary et al., 2008).
Collaboration has been strongly promoted in the context of supply chain management by
scholars and practitioners since the 1990s (Cao et al., 2010). In the 1970s and 1980s, firms
considered their customer and supplier as enemies and they seized as much as possible to
increase the profit margin (Skjoett‐Larsen et al., 2003). The case where one wins, the other
loses is known as the arm-length relationship and sub-optimization occurs when each partner
in the chain tries to optimize its goals rather than integrate with others. As such, collaboration
is needed to provide the benefit to the whole chain (Kampstra et al., 2006). In the 1980s and
1990s, Wal-Mart began its own supply chain initiative with upstream suppliers by sharing
information of its consumer information products (Mason-Jones and Towill, 1997, Lummus
and Vokurka, 1999). One of its main suppliers is Procter & Gamble. In this case, Procter &
Gamble was able to access the point of sale of Wal-Mart and manage Wal-Mart’s warehouse
inventory to meet the contracted consumer service level (Lummus and Vokurka, 1999). This
approach benefited both companies individually and led to a strong competitive advantage
(Mason-Jones and Towill, 1997). The development and success of Wal-Mart and Proctor &
Gamble inspired the whole world to join in trading relations that consider exchanging
information as the key component to reducing cost, improving sales and improving forecast
accuracy (Skjoett‐Larsen et al., 2003, Ramanathan and Gunasekaran, 2014). Therefore, SCC
has become one of the common norms for many companies around the world (Ramanathan
and Gunasekaran, 2014). The concept of supply chain management and collaboration were
introduced from that successful case study. SCC nowadays is best known under the main
vehicle as Collaborative Planning, Forecasting, and Replenishment (CPFR) which is
considered as the latest stage in the evolution of SCC (Barratt, 2004, Attaran and Attaran, 2007,
Bailey and Francis, 2008).
12
Collaborative supply chain management has proved itself as the most promising practice for
building an efficient supply chain (Attaran and Attaran, 2007). Theoretical perspectives and
empirical evidence has examined its benefits in term of reducing a large cost by creating an
open exchange of information (Skjoett‐Larsen et al., 2003). And the most important thing is
bringing a win-win-win solution for all the partners concerned (Bititci et al., 2004). It can
“deliver some powerful advantages to participating organizations” and “leading to enhanced
profit performance and realization of competitive advantage over time” (Sheu et al., 2006).
Collaborative advantages as consequences of SCC includes five sub-components: process
efficiency, offering flexibility, business synergy, quality, and innovation (Cao and Zhang,
2013).
Definition:
Literally, the term “collaboration” in supply chain is often used when more than two
autonomous companies in a supply chain work together across organizational boundaries to
achieve mutual advantages; and all the partners agree on mutuality of benefit, rewards and
sharing information as the foundation as well as jointly making decisions and solving problems
(Barratt, 2004, Soosay and Hyland, 2015, Cao and Zhang, 2011)). The conceptual model of
SCC can be basically grouped into two parts: process focus and relationship focus (Matopoulos
et al., 2007, Cao and Zhang, 2011). The process component is concerned with the design and
government activities within the supply chain consisting of three elements: selecting the
appropriate technique and technology to facilitate information sharing, selecting the
appropriate partner and selecting activities and levels to collaborate (Matopoulos et al., 2007).
The relationship component deals with the maintenance of supply chain relationships, which
include mutuality of benefits, risk and rewards sharing, as well as power and dependence
management (Matopoulos et al., 2007, Cao and Zhang, 2011).
As a result, scholars define SCC as the inter-organizational processes among and between
members of the supply chain (Muckstadt et al., 2001, Matopoulos et al., 2007, Fawcett et al.,
2008, Cao et al., 2010, Cao and Zhang, 2011, Soosay and Hyland, 2015) aiming at creating a
seamless and synchronized supply chain which leads to increased responsiveness and
performance to satisfy the customer (Muckstadt et al., 2001, Fawcett et al., 2008). These
activities are based on mutual goals, mutual trust, shared risk and shared reward (Matopoulos
13
et al., 2007, Cao et al., 2010, Cao and Zhang, 2011, Cao and Zhang, 2013, Soosay and Hyland,
2015).
However, definitions for “collaboration” developed by researchers often loosely express the
context of their research (Soosay and Hyland, 2015). The word “collaboration” is
complemented by other terms such as “integration” (Stank et al., 2001, Min et al., 2005),
“cooperation” (Simatupang and Sridharan, 2002) or “coordination” (Xu et al., 2001). These
terms are interchangeable and used together such as “supply chain strategy require integration,
cooperation and collaboration” (Soosay et al., 2008) depending on either the context of the
application or disciplines (Kanda and Deshmukh, 2008). However, it is clear to see that these
terms all describe integrative efforts among partners to improve the overall efficiency of the
supply chain (Prajogo and Olhager, 2012, Stank et al., 2001, Min et al., 2005, Simatupang and
Sridharan, 2002, Xu et al., 2001, Soosay et al., 2008). They are all used based on the main goal
to achieve effective and efficient flows of products and services, information, money and
decisions, to provide maximum value to the customer (Flynn et al., 2010). For instance, in the
studies of supply chain coordination, the term “collaboration” is used to describe the
coordination phenomenon and to build the coordination model (Jaber and Zolfaghari, 2008,
Fugate et al., 2006) and these studies define coordination and collaboration with incentive
schemes and centralized decision-making processes to eliminate system sub-optimization to be
compatible with system-wide objectives.
In this study, the researchers consider these terms under the spectrum of inter-organizational
processes among and between members of a supply chain based on mutual goals, mutual trust,
shared risk and shared reward.
SCC types:
The collaboration of one company with a partner may vary depending upon the company’s
role in the supply chain (Horvath, 2001). According to Barratt (2004), these can be classified
into vertical and horizontal types as forms of SCC strategies (Figure 2-1). Simatupang &
Sridharan (2002) define an additional form of collaboration, lateral, which denotes those
activities that combine and share the capabilities of the other two types.
14
Figure 2-1: SCC scopes. Source: Barratt (2004)
Vertical form includes collaboration with suppliers, customers and internally across functions
(Barratt, 2004, Simatupang and Sridharan, 2002). These kinds of collaborative relationship are
also described as manufacturer-supplier collaboration, manufacturer-customer collaboration
and third/fourth party logistics provider collaboration (Horvath, 2001). Horizontal form, on the
other hand, includes the relationship with competitors, non-competitors and internally across
functions (Barratt, 2004, Simatupang and Sridharan, 2002). These are unrelated or competing
organizations at the same level of the supply chain and can produce similar products or different
components of one product. They share resources such as warehouse space and manufacturing
capacity (Simatupang and Sridharan, 2002). The vertical form usually involves economic
exchanges and horizontal relationships are mainly built on information and social exchanges
(Bengtsson and Kock, 1999).
The collaboration relationship can also be divided into internal collaboration as collaboration
across functions in one organization, and external collaboration as collaboration between
partners (Barratt, 2004). Internal form involves activities within a manufacturer in order to
fulfil its customers’ requirements. This reflects the consistency among structural characteristics
within an organization (Flynn et al., 2010) and usually considered under two dimensions-the
integration of physical and information flows (Tsanos et al., 2014). External one is the degree
to which a manufacturer co-work with its external partners (Flynn et al., 2010) with the degree
of involvement, influence in the company’s decision and level of strategic partnership with
suppliers or follow-up with customers for feedback (Zailani and Rajagopal, 2005). Barratt
(2004) suggests external activities with customer relationship management (CRM),
15
collaborative demand planning, demand replenishment, and shared distribution for

downstream chain. Likewise, supplier relationship management, supplier planning and
production scheduling; collaborative design; and collaborative transportation have been
suggested for upstream chain.
Research shows that SCC must involve both vertical and horizontal (Beamon, 2008, Doukidis
et al., 2007) as well as both internal and external forms to achieve an effective supply chain
(Sanders and Premus, 2005, Stank et al., 2001). However, the literature indicates that most of
the research on collaboration has been “vertical” in nature and there is relatively little evidence
on horizontal collaboration (Naim et al., 2006, Cheng et al., 2010, de Leeuw and Fransoo,
2009). And the majority of scholars tend to only pursue external collaboration and often pay
less attention to internal collaboration (Fawcett and Magnan, 2002, Barratt, 2004).
2.1.2. SCC Process

As mentioned in the Definition section above, SCC is a set of the partnership business
processes. These processes are described as seven key interconnecting components (Min et al.,
2005, Lee et al., 2010). And to create the ability and capability for these processes, the
prerequisite processes as antecedents are needed (Min et al., 2005, Ho et al., 2002, Lee et al.,
2010). Furthermore, the success of collaborative efforts requires organizations to make SCC as
a never-ending progress (Lee et al., 2010, Min et al., 2005). As such, sustaining and
improvement processes are needed (Fawcett et al., 2008).
As a result, the SCC processes can be grouped into three categories: Antecedent – Key activities
– Sustaining and improvement processes. These processes are illustrated in Table 2-1 through
2-3.
16
Table 2-1: Antecedents of SCC

Process Definition
Collaboration initiatives must be translated into managerial commitment (Min et al., 2005, Fawcett et al., 2008, Lee et al.,
Managerial 2010, Wu et al., 2014, Morgan and Hunt, 1994, de Leeuw and Fransoo, 2009). The clear strategic intent will be the basis for
commitment and the collaborative relationships that lead to successful collaborative arrangements and the greatest cross-firm improvements
Strategic intent (Min et al., 2005). This commitment must be from the top, be visibly widespread to people throughout the organization (Fawcett
et al., 2008).
SCC requires firms to work closely with a limited partner so choosing the right partners is critical for one firm (Min et al.,
2005). Therefore, supply chain process need to be well-defined to well understand strengths and weaknesses to identify
counterproductive behaviors to build widespread commitment (Fawcett et al., 2008). These can be achieved by a process
Internal alignment
mapping tool which helps the firm to determine what to do internally and externally with the partner as well as provides
organizations a roadmap for change (Min et al., 2005). Internal alignment helps to streamline internal operations and create a
seamless process to deliver value to customer.
Resource investments, including financial and non-financial must support to create sustainable collaborations (Tsai et al., 2013,
Esper et al., 2010, Min et al., 2005, Fawcett et al., 2008). These resources include Time, Personnel, Employee training, Physical
Resource
resources and Information technology (Min et al., 2005). Especially, the employee training includes investing in training and
investment and
team building. It is a sign of the commitment and to create a safe collaboration zone of developing managers and people who
development
know how to collaborate, overcome the resisting forces and aware of opportunities to establish a collaboration culture (Fawcett
et al., 2008).
Relationship and Trust is one foundation of collaboration (de Leeuw and Fransoo, 2009, Matopoulos et al., 2007, Barratt, 2004, Skjoett‐Larsen
trust building et al., 2003, Cao et al., 2010, Cao and Zhang, 2013). The relationship development must be ongoing, long-term interactions
17
(Min et al., 2005). So, transforming traditional relationships, activities must be conducted to build mutual trust through the
commitment, advisory boards and relationship development program establishing (Fawcett et al., 2008).
“Free flow of information” and a “heightened communication” between collaborative partners must be created (Min et al.,
2005). These will be achieved by establishing technology systems for sharing information and a culture of willingness
Free Information
(frequently, honestly, and openly shared) so that information is shared in real time, accurately and relevantly (Fawcett et al.,
Flow and System
2008). Information sharing is a “two‐way street in a variety forms such as point‐of‐sale (POS) data, promotion plans,
Integration
insights into inventory levels, etc. Heightened communication is more on how collaborative partners interact at the senior
management level involving more frequent meetings on a regular basis and other forms of interactions (Min et al., 2005).
Explicit rules and procedures will guide the decision-making and this is necessary for successful execution. The areas of
formalization are suggested: “Performance metrics; Goals and objectives; Roles, Responsibilities, and reporting mechanisms;
Formalization
Collaborative planning and scheduling; Collaborative technology and Type of shared information” (Min et al., 2005, Fawcett
et al., 2008).
Managing and eliminating unnecessary complexity through rationalization is a tool to “dedicate scarce resources to
Rationalization
relationships”, to “promote cultural transformation” and “improved collaboration” (Fawcett et al., 2008).
Table 2-2: Main processes of SCC

Process Definition Reference
Information sharing deals with exchanging “relevant, accurate, complete (Min et al., 2005, Simatupang and Sridharan, 2005a,
Information and confidential information” in a timely manner among supply chain Cao et al., 2010, Cao and Zhang, 2011, Skjoett‐
Sharing partners. This is the essential ingredient of collaboration activities. Larsen et al., 2003, Barratt, 2004, Simatupang and
Sridharan, 2005b)
18
Goal congruence refers to supply chain partners aware of accomplishing (Cao and Zhang, 2011, Skjoett‐Larsen et al., 2003)
Goal congruence
of the supply chain objectives also satisfies their own objectives.
Decision synchronization refers to jointly decision-making processes and (Simatupang and Sridharan, 2005b, Cao et al., 2010,
Decision
jointly problem solving in planning and execution levels for optimizing Simatupang and Sridharan, 2005a, Cao and Zhang,
synchronization
the supply chain benefit. 2013, Min et al., 2005)
Incentive This refers to the process of risks, costs and benefits sharing among chain (Simatupang and Sridharan, 2005a, Cao and Zhang,
alignment members. 2011, Cao and Zhang, 2013)
This is the process of making mutual asset investments and leveraging (Min et al., 2005, Cao and Zhang, 2011, Cao and
Resource sharing
resource and capability amongst supply chain partners. Zhang, 2013)
Collaborative The process of transmitting contact and message among partners (Cao et al., 2010, Cao and Zhang, 2011, Cao and
communication frequently, directionally with mode and influence strategy. Zhang, 2013)
This refers to developing a better understanding of working together to (Cao et al., 2010, Cao and Zhang, 2011, Cao and
Joint knowledge
respond to competitive market. Zhang, 2013, Ramanathan and Gunasekaran, 2014,
creation
Cao and Zhang, 2010)
Table 2-3: The sustaining and improvement processes of SCC

Process Reference
Measurement systems provide organizations the performance gaps to be addressed. The current state with resistance will be
Performance
identified, and key performance indicators will provide specific targets for organizations to achieve (Fawcett et al., 2008, Min
measurement
et al., 2005).
Continuous An appropriate collaborative supply chain and improvement initiatives need to be implemented to constantly upgrade the
improvement culture of collaboration of the organization (Fawcett et al., 2008, Kampstra et al., 2006, Hoyt and Huq, 2000).
19
While continuous improvement is critical to the success of SCC initiatives (Fawcett et al., 2008,
Hoyt and Huq, 2000, Kampstra et al., 2006), there is a shortage of these activities in the
implementation phase (Hoyt and Huq, 2000).
2.1.3. SCC Level

Collaboration levels are considered to constitute a spectrum of relationship types that are
established and managed differently from partner to partner in a supply chain (Muckstadt et
al., 2001, Kampstra et al., 2006). Studies show that collaboration levels play an important role
in achieving different impacts on performance because there is a strong correlation between
levels of collaboration and performance outcomes (Simatupang and Sridharan, 2005a, Min et
al., 2005, Bititci et al., 2015). As such, all firms have strived to achieve a greater collaboration
level (Cao and Zhang, 2011).
In supply chain, these different levels of collaborative relationship are described as movement
paths, such as:
 Arm’s length – Partnerships – Joint ventures – Vertical integration (Lambert et al.,
1996),
 Open market negotiations – Cooperation – Coordination – Collaboration (Spekman et
al., 1998);
 Communicator – Coordinators – Co-operators – Collaborators (Muckstadt et al.,
2001);
 Communication – Coordination – Intensive collaboration – Partnerships (Kampstra et
al., 2006);
 Basic, developed and advanced (Skjoett‐Larsen et al., 2003).
More details for the definition of these levels can be found in Appendix 1.
However, in the literature, there is no consistency among scholars in using the term of
collaboration, coordination, integration, or cooperation. The collaboration levels are also
defined differently from study to study and none is found to follow defined collaboration levels.
Rather, each established its own collaboration scale. For example, Kumar and Nath Banerjee
(2014) conduct surveys to measure the current collaboration levels of organizations based on
the collaboration index, using a scale from 1-100 and arranging collaborative activities in terms
20
of their importance. Simatupang and Sridharan (2005), on the other hand, propose a five-point
format from 1 to 5 to test and evaluate the current collaboration index and show that the
collaboration index is positively associated with operational performance. Sheu et al.’s study
assesses supplier-retailer relationships according to three collaboration levels – low, medium
and high. As such, there is a need of a benchmark of SCC level for the industry. In addition,
detailed instructions for supply chain partners regarding the actions required to reach each level
were found to still be too broad (Cassivi, 2006). As Simatupang and Sridharan (2005) argue,
SCC still requires a scientific means for achieving various levels of collaboration amongst
participating members. This may be the cause of many companies’ struggles in achieving a
higher level of collaboration (Fawcett et al., 2008).
Given these limitations, in this research, a systematic framework of collaboration level is

developed, adopting the “ladder of collaboration” framework for supply chain. This selection
is regarding to the aim of this research which explores how the growth of SCC level affect the
performance; and “ladder of collaboration” symbolically considered as the step-wise
improvement of supply chain performance. The characteristics of each collaborative
relationship level are synthesized based on the literature. Starting with the lowest level Arm-
length, the collaboration level moves to Communication, Coordination, Intensive collaboration
and reaches the highest form of Partnership (Kampstra et al., 2006). The characteristics of each
level are described in Table 2-4.
Table 2-4: The SCC levels and characteristics
Level Characteristics
At this level, firms do purely transaction and there is no degree of

collaboration. It is a zero-sum case: if one wins, the other loses (Kampstra et
Arm’s length
al., 2006). Firms consider their customers and suppliers as enemies and seize
relationship
as much as possible to increase the profit margin (Skjoett‐Larsen et al.,
2003).
This level is the starting point of collaborative initiatives and the most basic
of relationships. In this level, firm receives the customers’ order, tries
Communication
responding in the lead-time requested by the customer and do the best to
forecast the customers’ needs (Muckstadt et al., 2001). Some basic
21
collaboration processes are performed to collaborate with customers or

suppliers; however, the partners may neither co-ordinate nor synchronize the
process. Therefore, there is a limited integration with trading partners
(Skjoett‐Larsen et al., 2003).
This form focuses on the coordination of intra- and inter-entity processes

(Kampstra et al., 2006). Frequent exchange of information about detailed
operational data and generation of trust in the relationships are established
between partners in the supply chain; and collaboration tends to spread to
Coordination other areas of the enterprise (Skjoett‐Larsen et al., 2003). Flows and certain
routine decision-making processes are synchronized between the parties to
improve speed and accuracy (Kampstra et al., 2006). Therefore, this level of
sharing permits a higher degree of forecasting accuracy throughout a supply
chain (Muckstadt et al., 2001).
All the collaboration members are highly involved to improve the strategic
Intensive management decision-making and enhance innovation in the chain
collaboration (Kampstra et al., 2006). At frequent meetings, all relevant business processes
are coordinated on the basis of a joint objective (Skjoett‐Larsen et al., 2003).
Joint decision making is processed from strategic to tactical plans to create

and execute collaboratively by supply chain partners to achieve the
maximum system effectiveness (Muckstadt et al., 2001). Improving
knowledge sharing, extended financial linkages, such as sharing of
Partnership
investments and profits among members and a reduction in R&D time is the
aim of this classification (Kampstra et al., 2006). Improvement processes to
develop qualifications are performed which lead to a more agile and
changeable supply chain (Skjoett‐Larsen et al., 2003).
2.2. MATURITY MODEL

2.2.1. Introduction
The role of process is mentioned as the heart of each organization (Looy et al., 2014) and is the
key factor in delivering value to customers (Lockamy III and McCormack, 2004). Therefore,
improving the business process is essential to any enterprise to increase the overall
22
performance. There is an increasing trend for the organizations to focus on their business
processes to excel (Looy et al., 2014). An organization needs a measure to indicate how
excellent business processes can perform and this is called “maturity”.
The word “maturity” is based on the concept of quality developed by Crosby with the earliest
model of Quality Management Maturity Grid to evaluate the status and evolution of a firm’s
approach to quality management (Boughzala et al., 2014) (Figure 2-2). Maturity models
basically represent how organizational capabilities evolve in a stage-by-stage manner along a
maturation path (Kazanjian and Drazin, 1989). It is defined as a matrix of practices to measure
the state of perfection of an organization based on a set of levels or stages (Boughzala et al.,
2014, Wendler, 2012) and is considered as a development path or an improvement tool for
organizations (Looy et al., 2014).
Figure 2-2: The Quality Management Maturity Grid (Crosby, 1979b)
Maturity models have been adopted in many management research fields, including process
management and performance management (Bititci et al., 2015) with a variety of application
domains, including supply chain management and collaboration process (Wendler, 2012).
However, most of the models are heavily dominated by software development/engineering
(Bititci et al., 2015, Wendler, 2012) (Figure 2-3).
23
Figure 2-3: Application domain. Source: (Wendler, 2012)
Different maturity models have been developed for different goals and objectives based on
specific characteristics, factors and ways that consider for reaching the purpose (Pöppelbuß
and Röglinger, 2011) (Figure 2-4). There is no standard related to the maturity models
(Khoshgoftar and Osman, 2009). However, representing theories of stage-based evolution,
these models share the common property of generic description of a number of levels,
characteristics of each level and dimensions or 'process areas' with activities at each level
(Fraser et al., 2002).
.
24
160 143
140
120
100
73
80
60
40
20 8 4 5 1 3 1
0
Figure 2-4: Total number of used maturity model. Source: (Wendler, 2012)
While the Crosby’s Maturity Grid is considered as the original maturity model version, it seems
as if maturity grids have been in the shadow of the more widely known Capability Maturity
Model (CMM)/ Capability Maturity Model Integration (CMMI) and authors did not name the
grid at all (Wendler, 2012, Maier et al., 2012). Maturity model is simply referred to CMM(I)
by many investigators (Looy et al., 2014) since it is mostly used within the area of model
application (Bititci et al., 2015, Wendler, 2012) (Figure 2-4). CMM(I) is mentioned to have a
great influence on other newly developed maturity model by adapting the structure and/or
transferred the content of CMMI to the new domain.
Developing and using a maturity model is usually based on the potential performance
perspective (McBride, 2010). This perspective focuses on the potential improvements which
occur by moving along to a higher maturity level and the user may decide if it is desirable to
proceed to the next stage (Crosby, 1979a). Although evidence on improved maturity and
increased business performance is mentioned to be in its infancy, none of previous studies
indicates a negative link between maturity level and performance (Tarhan et al., 2016). The
maturity model is considered to provide references for managers to insure successful
competitive performance for the organization (Feng, 2006). In supply chain field, a strong and
positive correlation between maturity and performance is proven (Lockamy III and
McCormack, 2004, McCormack et al., 2008). The application of maturity models creates useful
benefits for organizations (Wendler, 2012).
25
2.2.2. CMMI Approach

Given the importance of process management in an organization, in the 1990s, the Software
Engineering Institute (SEI), the US Department of Defense, developed a process maturity
framework which includes a set of key software process improvement called CMM (Ngai,
Chau et al. 2013). This model is a process maturity framework containing the essential
elements of effective processes and providing a path for organizations to a more disciplined
development process (Ngai et al., 2013, Jiang et al., 2004). Later on, other programs of process
improvement in quality and productivity used the CMM as a reference framework (Ngai et al.,
2013). However, while organizations want to focus on the improvement efforts across the
disciplines, CMMs have been developed for many disciplines so the use of multiple models
has been problematic for the organizations. CMMI is an extension of CMM to solve the
problem of using multiple CMMs. CMMI has broaden to other aspects such as areas of product
and service development, and product and service acquisition and service establishment,
management, and delivery (Ngai et al., 2013, Team, 2002). CMM/CMMI is a maturity model
that is recognized as an important improvement tool for organizations (Van Looy et al., 2013).
According to technical report of CMMI – Acquisition Version 1.3 (CMMI-ACQ, V1.3) in

November 2010, the process management in one organization experiences five maturity levels
– Initial, Managed, Defined, Quantitatively managed and Optimizing. To reach a particular
level, an organization must satisfy all of the goals of the process area or set of process areas
that are targeted for that level. CMMI includes 24 processes which are shown in Table 2-5.
In the report of Performance Results of CMMI® -Based Process Improvement in 2006 by SEI,
quantitative evidence from 35 organizations, which apply CMMI model practices to different
engineering disciplines, shows that most of the organizations were at low maturity levels and
have achieved notable improvements.
26
Table 2-5: CMMI model (Team, 2010)

Maturity level Characteristics Process requirement
- Processes are usually ad-hoc and chaotic.
- Organization usually does not provide a stable environment.
Initial N/A
- Success depends on the competence and heroics of people, not on the use of proven processes,
not able to repeat successes.
- Requirements Management
- Project Planning
- The projects of the organization have ensured that requirements are managed and processes - Project Monitoring and Control
Managed are planned, performed, measured, and controlled according to their documented plans. - Supplier Agreement Management
- Commitments are established among stakeholders and are revised. - Measurement and Analysis
- Process and Product Quality Assurance
- Configuration Management
- Requirements Development
- Technical Solution
- Product Integration
- Verification
- Validation
- Processes are well characterized and understood, and are described in standards, procedures,
- Organizational Process Focus
tools, and methods.
Defined - Organizational Process Definition
- The organization’s management establishes process objectives based on the organization’s set
- Organizational Training
of standard processes and ensures that these objectives are appropriately addressed.
- Integrated Project Management for IPPD
- Risk Management
- Integrated Teaming
- Decision Analysis and Resolution
- Organizational Environment for Integration
- Processes are controlled using statistical and quantitative techniques.
Quantitatively - Organizational Process Performance
- Special causes of process variation are identified and, where appropriate, the sources of special
managed - Quantitative Project Management
causes are corrected to prevent future occurrences.
- Processes are continually improved based on a quantitative understanding of the common
causes of variation inherent in processes.
- Organizational Innovation and Deployment
Optimizing - Measurable improvement for organization’s processes is identified, evaluated, and deployed.
- Causal Analysis and Resolution
- Continually improving process performance through both incremental and innovative
technological improvements.
27
2.2.3. Previous Studies on Maturity Models for SCC

A recent review indicates that maturity models are adopted in a variety of application domains,
including supply chain management and collaboration process (Wendler, 2012). However,
most of the maturity models are heavily dominated by software development/engineering
(41.4% of articles) (Bititci et al., 2015, Wendler, 2012).
The field of maturity models for effective use in the supply chain context is still in search
(Akyuz and Erkan, 2010, Boughzala and De Vreede, 2012). Wendler (2012) and Van Looy et
al. (2013) in their review found only five and nine publications; however, among them, only
two models were actually developed as a process management framework with the
characteristics of maturity level and process requirements to meet each level.
Firstly, Lockamy III and McCormack (2004) develop the SCM process maturity model which
defines five stages of maturity for SCM process (Ad hoc, Defined, Linked, Integrated and
Extended). Each level contains characteristics associated with the SCM process maturity. The
supply chain operations reference (SCOR) framework is used to conceptualize the process
maturity (Figure 2-4). In 2008, McCormack, Ladeira et al. developed the Maturity model with
the maturity variables/ components to quantify the supply chain maturity.
Figure 2-5: Supply chain management process maturity model. Source: (Lockamy III and
McCormack, 2004)
28
Secondly, another supply chain capability maturity under a different view was developed by
(Garcia Reyes and Giachetti, 2010). The model illustrates five maturity levels across multiple
competency areas-the supply chain views, the abstraction levels, and the lifecycle maturity-
with the components (Figure 2-5). It also provides key improvement factors and appropriate
tools for a firm to move up to the next higher maturity level.
Figure 2-6: Supply chain capability maturity model. Source: (Garcia Reyes and Giachetti,
2010)
Similarly, maturity models for collaboration process received a very little attention from
scholars with only three papers (Wendler, 2012) or 6 papers (Van Looy et al., 2013) which are
in different areas such as project management or teamwork.
2.3 RESEARCH GAP

2.3.1. Problem Statements
Given the research motivation, a literature review is commenced with a broad scale of major
articles that are located at the intersection of empirical studies of SCC and performance from
2000 to 2017. These articles were sourced from the Science Direct and Web of Science digital
libraries. Articles were gathered based on searching titles, abstracts and keywords from peer-
reviewed journals with a high impact factor. For the sake of rigorousness, dissertations,
textbooks and conference papers were excluded. The scope of this review is tied to SCC
mechanisms as shown in Table 2-6.
29
Table 2-6: Reviewed list

Methodology SCC construct Supply chain
adopted Type Component Implementation performance
Environmental
Relationship
Framework/
Operational
Simulation/
Case study/
ID Reference
Horizontal
Modelling
Article title
Interview
Guidance
Financial
External
Internal
Vertical
Process
Survey
Level
Supply chain collaboration and logistical service
[1] (Stank et al., 2001)       
performance.
(Crespo Marquez et al., Operational and financial effectiveness of e-collaboration
[2]       
2004) tools in supply chain integration.
Improving supply-chain collaboration by linking intelligent
[3] (Caridi et al., 2005)        
agents to CPFR.
Exploring the performance effects of key-supplier
[4] (Kopfer et al., 2005) collaboration: an empirical investigation into Swiss buyer-      
supplier relationships.
[5] (Min et al., 2005) Supply chain collaboration: what's happening?         
(Sanders and Premus, Modelling the relationship between firm IT capability,
[6]       
2005) collaboration and performance.
(Simatupang and The collaboration index: A measure for supply chain
[7]       
Sridharan, 2005a) collaboration.
(Angerhofer and A model and a performance measurement system for
[8]       
Angelides, 2006) collaborative supply chains.
(Vereecke and Muylle, Performance improvement through supply chain
[9]     
2006) collaboration in Europe.
Determinants of supplier-retailer collaboration: evidence
[10] (Sheu et al., 2006)       
from an international study.
Collaborative supply chain management: The most
(Attaran and Attaran,
[11] promising practice for building efficient and sustainable     
2007)
supply chains.
An empirical study of the impact of e-business technologies
[12] (Sanders, 2007)      
on organizational collaboration and performance.
(Simatupang and
[13] Design for supply chain collaboration.       
Sridharan, 2008)
30
Supply chain collaboration: capabilities for continuous

(Soosay et al., 2008)      
[14] innovation.
Collaborative forecasting and planning in supply chains:
[15] (Nakano, 2009)      
The impact on performance in Japanese manufacturers.
A contingent view of e-collaboration and performance in
[16] (Rosenzweig, 2009)      
manufacturing.
Evaluating antecedents and consequences of supply chain
[17] (Lee et al., 2010)       
activities: an integrative perspective.
(Olorunniwo and Li, Information sharing and collaboration practices in reverse
[18]       
2010) logistics.
(Wiengarten et al., Collaborative supply chain practices and performance:
[19]      
2010) exploring the key role of information quality.
Supply chain collaboration: Impact on collaborative
[20] (Cao and Zhang, 2011)       
advantage and firm performance.
Suppliers' affective trust and trust in competency in buyers:
[21] (Ha et al., 2011)     
Its effect on collaboration and logistics efficiency.
Investigating the impact of e-business applications on
(Wiengarten et al.,
[22] supply chain collaboration in the German automotive      
2013)
industry.
The study of relationships between the collaboration for
[23] (Liao and Kuo, 2014) supply chain, supply chain capabilities and firm      
performance: A case of the Taiwan‫ ׳‬s TFT-LCD industry.
(Kumar and Nath Supply chain collaboration index: an instrument to measure
[24]       
Banerjee, 2014) the depth of collaboration.
Information sharing and collaborative behaviors in enabling
(Wu et al., 2014)       
[25] supply chain performance: A social exchange perspective.
(Ramanathan and Supply chain collaboration: Impact of success in long-term
[26]     
Gunasekaran, 2014) partnerships.
(Scholten and Schilder,
[27] The role of collaboration in supply chain resilience.     
2015)
Supply chain collaboration: conceptualization and
[28] (Cao et al., 2010)     
instrument development.
An analysis of supply chain collaborations and their effect
[29] (Zacharia et al., 2009)        
on performance outcomes.
(Pradabwong et al., Business process management and supply chain
[30]        
2017) collaboration: effects on performance and competitiveness.
Assessing the contingent effects of collaboration on agility
[31] (Narayanan et al., 2015)      
performance in buyer-supplier relationships.
31
A nuanced view on supply chain integration: a coordinative

(Frank and Annachiara,
[32] and collaborative approach to operational and sustainability      
2015)
performance improvement.
Horizontal logistics collaboration for enhanced supply
[33] (Vasco et al., 2015)        
chain performance: an international retail perspective.
‘Too Little’ or ‘Too Late’: The timing of supply chain
[34] (Xu et al., 2015)      
demand collaboration.
A structure-conduct-performance perspective of how
[35] (Ralston et al., 2015)       
strategic supply chain integration affects firm performance.
Joint supply chain risk management: An agency and
[36] (Li et al., 2015)      
collaboration perspective
From sustainability commitment to performance: The role
[37] (Luzzini et al., 2015) of intra- and inter-firm collaborative capabilities in the       
upstream supply chain.
The effects of firm capabilities on external collaboration
[38] (Wang et al., 2015) and performance: The moderating role of market       
turbulence.
(Choi and Hwang, The impact of green supply chain management practices on
[39]       
2015) firm performance: the role of collaborative capability.
(Tsanos and Zografos, The effects of behavioral supply chain relationship
[40]      
2016) antecedents on integration and performance.
Financing buyer-supplier dyads: an empirical analysis on
[41] (Wandfluh et al., 2016)      
financial collaboration in the supply chain.
The mediating role of supply chain collaboration on the
[42] (Asif, 2017) relationship between technology, trust and operational      
performance: An empirical investigation.
The influence of supply chain integration on operational
[43] (Fai and Van, 2017) performance: A comparison between product and service       
supply chains.
Total 33 6 4 2 42 12 43 23 42 2 7 38 22 4
32
The review has revealed three biggest reasons which cause the SCC failures and affect the
performance, as the follows.
The lack of SCC implementation and improvement guidance

It is apparent from the review that only two studies have been identified that give instructions
on SCC implementation. However, the papers in question do not adequately review for clear
instructions or further improvements and not develop activities of effective diagnosis. Each
publication is still in its infancy. As revealed in literature, industry has a poor understanding of
the necessary elements and methods required to achieve effective SCC (Sheu et al., 2006,
Holweg et al., 2005, Kampstra et al., 2006, Cassivi et al., 2010). The area of implementation
instruction or guidance is still under-researched.
Another point to mention is that there are no studies that define the necessary requirements or
demonstrate how to improve the current collaboration level to a higher one. Although the
definition of collaboration levels is covered with the definition of each level in the literature,
none defined collaboration levels. Rather, each established its own collaboration scale. This
reconfirms the result of other studies, which found that detailed instructions for supply chain
partners regarding the actions required to reach each level were found to be too broad (Cassivi,
2006) (Cassivi, 2006; T. M. Simatupang & R. Sridharan, 2005). SCC still requires a scientific
means to achieve various levels of collaboration amongst participating members (Simatupang
and Sridharan, 2005a).
Obviously, the area of SCC instruction and guidance is still under-researched and this review
highlights the needs guidance for SCC implementation and improvement.
Lack of empirical -based research

A common drawback with these articles is that although SCC and performance have a strong
correlation, how this relationship is happening is still in its infancy with a lack of empirical
research performing an in-depth investigation. Scholars overwhelmingly employ the
quantitative method. Among three types of research methods reviewed, the dominant technique
is quantitative (questionnaire-based surveys and developing mathematical or simulation
models). Qualitative or empirical research using case study methodology to examine the
phenomenon in depth only occupies a small percentage. This imbalance with the majority of
33
papers mainly based on a quantitative basis to test the hypothesis is also highlighted in the
literature (Fabbe-Costes & Jahre 2008).
As such, there is a need for empirical based research to increase our understanding of the
relationship between SCC and performance. This is consistent with the literature that there is
still a significant gap in empirical research investigating the mechanisms of SCC and their
effects on performance (Kanda and Deshmukh, 2008, Alfalla-Luque et al., 2013) and how
higher levels of maturity lead to higher levels of performance still needs further attention
(Bititci et al., 2015, Boughzala and De Vreede, 2012).
Lack of industry-based research

Adding to these above limitations is that most of the studies have a mixed-industry empirical
base. Industry characteristic is affirmed to play an important role in achieving SC practices
(Mackelprang et al., 2014) and as a control variable which is correlated with SC performance
(Wu et al., 2014). Due to the unique characteristics of single-industries, more insights into the
best practices of industry-specific bias would be very beneficial to minimize the chance of
failed implementation of SCC (Cao and Zhang, 2011). Hence, research at the same context or
set of circumstances will offer managerial guidance for industry (Mackelprang et al., 2014).
Therefore, there is a dearth of empirical research on the analysis of specific industries and how
collaboration is adapted to particular needs (Cao and Zhang, 2011). This is also consistent with
the findings in the literature (Fabbe-Costes and Jahre, 2008, Cao and Zhang, 2011).
2.3.2. Research Gaps

All of these aforementioned problems open the opportunities to fulfill the gaps in knowledge
for this research. These are mentioned as follows.
Maturity model for SCC (The lack of SCC implementation and improvement guidance):
As mentioned in the 1st problem, many authors point to the incomplete development of
requirements and processes for the SCC implementation and improvement, this will be a
solution for the industry to diagnose its current capability and to make improvements. It is
known that the framework which is considered as development path/ an improvement tool for
organizations is known as maturity model (Looy et al., 2014). Maturity model is simply
referred to Capability Maturity Model (CMM)/ Capability Maturity Model Integration (CMMI)
34
by many investigators (Boughzala et al., 2014, Wendler, 2012) (which is a process management
framework with the essential elements of effective processes and provides a path for
organizations to a more disciplined development process).
SCC is a set of the partnership business processes; as such, the management of SCC initiatives
is basically managing business processes. In the SCC field, only one publication was found
mentioning the maturity model; however, the research used the index to measure the extent of
collaboration (Simatupang and Sridharan, 2005a) rather than developed a maturity model as a
process management framework for SCC. Even in non-academic fields, the review also showed
that no maturity model has been developed for SCC process (Van Looy et al., 2013). The
maturity model for SCC process is still a new area. Especially, none of the earlier research
specially addressed a maturity model for SCC (MM-SCC), focusing on the CMMI approach
(Ho et al., 2016).
As such, MM-SCC is a gap in the current body knowledge. This framework is the basis to
evaluate and measure the level at a company and this is a rigorous benchmark rating method
to compare the organization's capability to others’ and itself over time.
Case studies on the relationship between SCC and performance (Lack of qualitative-based
research):
As to the call for further qualitative-based empirical research to increase the understanding of
the phenomenon of SCC and performance, it is mentioned that case study is the only option
(Pagell, 2004, Fabbe-Costes and Jahre, 2008) with the following reasons:
With the exploratory nature and the distinct lack of previous research, the use of a case study
is considered to be one of the most powerful strategies for inductive research (Yin, 2013, Voss
et al., 2002, Eisenhardt and Graebner, 2007, Bititci et al., 2015). In addition, since problems
existing in the supply chain field are real-world and structural, case study methodology is a
valuable approach for investigations (Bailey and Francis, 2008). Fawcett et al (2008) also
indicates that this method has begun to attract more interest from researchers exploring the
SCC problems.
Furthermore, there is also a limitation in the literature to longitudinally explore the relationship
between collaboration and performance (Kim, 2013) and a case study is mentioned to allow
35
studying same organization at different points in time to see how certain conditions change
over time (Yin, 2013). However, in this study, due to the time limitation, the researchers are
not able to conduct a longitudinal study for the case study to see the system at different times
(before and after model application). To serve this purpose, simulation approach will be used
to foresee the future scenarios.
In summary, to explore the relationship between SCC and performance at case studies, in this
study, the MM-SCC proposed model is applied to explore the phenomenon in-depth. Since the
model is considered as a benchmark for the industry, under the same system of measurement,
SCC practices and their effects on performance can be consistently analyzed and measured
among organizations. MM-SCC model is first built and applied, as such case study is the best
option for further studies (Yin, 2013). Moreover, with the purpose of a road-map for
organizations to enhance the collaboration levels, a case study with the support of simulation
approach is used.
Textile and apparel industry-based research (Lack of industry-based research):

This study will focus on specific research which is beneficial for the managers. Among industry
types, the textile-apparel industry is recognized as one of the longest, most fragmented and
inflexible supply chains in the world (Jakhar, 2015, Şen, 2008). With characteristics of short
product life cycle, high demand uncertainty and high volatility (Jin, 2006, Jakhar, 2015, Şen,
2008), it is necessary for textile-apparel industry to have a responsive and efficient supply chain
(Şen, 2008, Mehrjoo and Pasek, 2016). This responsiveness and efficiency characteristic are
affirmed to be affected by the effectiveness in communicating (Jin, 2006) and by the level of
collaboration among partners in the chain (Agarwal et al., 2007). Therefore, in this industry,
the SCC plays a very important part to the success of the chain.
In addition, from the literature review of 43 papers, there is only one publication that conducted
the research at Textile industry with wholesalers/distributor and retailers/private customers of
one Textile Company. It is the work of Ramanathan & Gunasekaran (2014). However, this is
a quantitative-based research with the questionnaire survey method to test the hypothesis. As
such, an in-depth research for this industry is still in need.
According to World Trade Organization (WTO), five out of six leading clothing exporters in
the world between 2012 and 2016 were from Asia Pacific region (China, Bangladesh, Hong
36
Kong, Vietnam and India) (Table 2-7). Asia is predicted as the winners in the textile and apparel
industry with the rise of China and increased market share for South Asia and also in the future
(Gereffi and Frederick, 2010, Gereffi and Memedovic, 2003).
Table 2-7: Leading clothing exporter in the world. Source: WTO

Ranking
Country
2012 2013 2014 2015 2016
China 1 1 1 1 1
European Union 2 2 2 2 2
Bangladesh 4 3 3 3 3
Hong Kong, China 3 4 4 5 6
Viet Nam 5 5 5 4 4
India 6 6 6 6 5
Among these five leading countries, Vietnam is recognized as one of the countries with lowest
added value in the apparel value chain (Gereffi and Memedovic, 2003). Moreover, Vietnamese
chain has witnessed a decreasing trend in value added in manufacturing during recent years
(WorldBank, 2016) (Figure 2-6), with high unit cost (Lopez-Acevedo and Robertson, 2016).
% value-added in manufacturing
25
20
Percentage
15
10
5
0 Year
1995 2000 2005 2010 2015
Figure 2-7: Textiles and clothing (% of value added in manufacturing). Source: (WorldBank,
2016)
Garment and textile sector is one of leading exporting industries of Vietnam, contributing 8%
of GDP (MoIT, 2013). It has an export turnover of over US$27.5 billion in 2015, $31billion in
2016 and is predicted to reach US$50 billion by 2020 (News, 2018). This industry has sustained
a stable export value growth of 15% in 2010-2015 and export potential will annually grow by
37
15 percent in 2016-2020 (VNA, 2018). This sector has created jobs for more than 2.5 million
workers, accounting for about 25% of labors in the industrial sector in Vietnam (Vu, 2014).
Study for Vietnam textile and garment context will play an important role in providing insights
of the effects of SCC on the performance for managers. From this, improvements can be made
to solve the current problems. Since the textiles and clothing industry is mentioned to be a
major part of manufacturing and trade as well as the gate of choice to step into industrialization
in most developing countries (Kim et al., 2006), the implications of this research can be
common factors for the development of the textile and apparel sector in scores of these
countries.
38
CHAPTER 3 : RESEARCH DESIGN
The chapter presents the strategy to address the research problems with the constitution of the
research methods for data collection and analysis. The subsequent chapters are the results
expanding upon this research design. This is a mixed-method study including four phases
related to four research objectives (Model development – Model content validity – Model
application – Improvements and System Dynamics) (Figure 3-1). This research has obtained
the Ethics approval from College Human Ethics Advisory Network (CHEAN), College of
Science, Engineering and Health, RMIT University (ID: SEHAPP 61-16) to conduct the survey
at two textile apparel companies in Vietnam.
Literature review
Model development Research objective 1
MM-SCC model
Model content validity Research objective 2

(semi- interview with questionnaire)
Modified model for

selected context
Model application Research objective 2-3

(case study)
 SCC practices/ problems

 SCC maturity level
 Relationship between SCC and performance
Improvements and
Research objective 4
System Dynamics
 Improvement suggestion
 Simulation model
 Effects of SCC on performance
Figure 3-1: Research steps
39
3.1. MODEL DEVELOPMENT (RESEARCH OBJECTIVE 1)

The aim of this chapter is to achieve the first research objective which is theoretically
developing a maturity model for SCC based on CMMI approach. The proposed model is
developed based on the literature review. A summary for staged CMMI model is displayed in
Figure 3-2.
Maturity level Process requirement
Continous
Continous improvement
improvement Process
5 Optimizing
requirements
Quantitatively
Quantitatively measured
measured and
and
Quantitatively Process
controlled process
controlled process 4
managed requirements
Standardized
Standardized process
process Process
Proactive
Proactive process
process 3 Defined
requirements
Defined
Defined and
and repeated
repeated process
process Process
Reactive 2 Managed
Reactive process
process requirements
Ad-hoc and chaotic 1 Initial N/A

process
Figure 3-2: CMMI model
Please note that: CMMI model supports two improvement paths using capability and maturity
levels (Team, 2010). Capability levels apply to the process improvement achievement in
individual process areas, while the maturity levels are designed for the organization’s
incremental improvements through a set of related processes. In this study, only the maturity
levels are adopted to develop the proposed model (the capability levels for individual process
are not in the scope of this study).
Based on the CMMI approach, the proposed MM-SCC model will include 2 parts:
 Part 1: SCC process maturity level. Five maturity levels of CMMI model along with
their characteristics are adopted for the MM-SCC model. These levels are described
in the preceding chapter two in Table 2.5 (section 2.2.2).
 Part 2: SCC process requirements for each maturity level. SCC processes are
described in the Tables 2.1 through 2.3 (section 2.1.2). Process requirements are
mapped to each maturity level based on the characteristics of that level.
40
The procedure of model development is illustrated in Figure 3-3.
CMMI model - Maturity level

SCC maturity level
(Section 2.2.2/ Table 2.5)
- Level 1: Initial
- Level 2: Managed
- Level 3: Defined Process requirements
- Level 4: Quantitatively managed mapping to each level
- Level 5: Optimising
SCC process literature review

SCC process requirements
(Section 2.1.2/ Table 2.1, 2.2, 2.3)
- Antecedents
- Key activities
- Sustaining and improvement activities
Figure 3-3: Model development procedure
While the maturity model is considered as a process management framework, it is cited that
organizations following the maturity levels for their supply chain process will change the levels
of supply chain relationship stage by stage from the very traditional to the highly collaborative
end (Meng et al., 2011). As such, the connection between five maturity levels and five SCC
levels (Table 2.4, section 2.1.3) will be analyzed to whether following the maturity path leads
to respective relationship path (Figure 3-4).
Maturity levels Collaboration levels
5. Optimizing 5. Partnership
4. Quantitatively 4. Intensive
managed collaboration
3. Defined 3. Coordination
2. Managed 2. Communication
1. Arm’s length
1. Initial
relationship
41
Figure 3-4: SCC maturity level and SCC level

3.2. MODEL CONTENT VALIDITY (RESEARCH OBJECTIVE 2)
The proposed model is developed from an appropriate literature review (Bickman and Rog,
2008). The content validity check is based not only on the information available in the relevant
literature, but is also checked in consultation with a panel of practitioners and academic experts
with substantial knowledge about the topic and the context (Simatupang and Sridharan, 2005a,
Cao et al., 2010, Ngai et al., 2004, Chen and Paulraj, 2004). This is to confirm the content of
the model before its application (Meng et al., 2011, Cao et al., 2010, Simatupang and Sridharan,
2005a, Boughzala et al., 2014, Lockamy III and McCormack, 2004, McCormack et al., 2008).
This study will apply the quantitative approach with the content validity ratio (CVR) to validate
the content (Lawshe, 1975). This approach obtains the knowledge of panelists through a
questionnaire with scale of agreement for each item. Subsequently, CVR will be statistically
analyzed to validate content. The next figure will illustrate the sub-processes of this step with
required information.
Vietnam Textile and Apparel Association &

University/ Institute
Experts’ contact
MM-SCC model Questionnaire Pilot Semi – interview using

questionnaire
Content validity ratio Facts/expert experience

(CVR) (Vietnam textile & garment context)
Final MM-SCC model
Figure 3-5: Model Content Validity process
Questionnaire design:
The questionnaire is designed with two parts:
 General information of the participant, and
 Opinion on the MM-SCC model: for each item in the model (maturity level and its
process requirement), there is a close along with open question to ask for the experts’
42
opinion. For close questions, five-point Likert scale requesting respondents to indicate
the extent to which they agree or disagree with the definition of maturity level and
statement of process requirements is used: 1 strongly disagree, 2 disagree, 3 neutral,
4 agree, and 5 strongly agree. For open questions, the experts are asked to give more
opinion if they wish. In this way, the semi-interview will make quantitative and
qualitative judgments from experts on instrument items.
Expert selection:
Experts are practitioners and academics with substantial knowledge about the topic and the
context (Simatupang and Sridharan, 2005a, Cao et al., 2010, Ngai et al., 2004, Chen and
Paulraj, 2004). In the supply chain field, title of experts who participated in the survey relating
to SCC aspect is shown in Table 3-1.
Table 3-1: Expert position

Experts Positions
Executive positions:
- CEO/President/ Vice president/ Director (Min et al., 2005, Cao and Zhang,
2011, Fawcett et al., 2011a).
Manager/ executive/ senior staff in:
- Supply chain/ logistics (Simatupang and Sridharan, 2005a, Min et al., 2005,
Fawcett et al., 2008, McCormack et al., 2008, Chan et al., 2012, Chong et al.,
Practitioners
2009);
- Sales (Simatupang and Sridharan, 2005a, McCormack et al., 2008);
- Purchasing (Simatupang and Sridharan, 2005a, Fawcett et al., 2008,
McCormack et al., 2008);
- IT (Chan et al., 2012);
- Manufacturing/ production (McCormack et al., 2008, Chan et al., 2012).
Academics - Professor/ Lecturer (Cao et al., 2010).
The data from “General statistics office of Vietnam” shows that Vietnam has more than 5000
enterprises in textile and apparel sector (www.gso.gov.vn); however, only a small number of
them (126 recorded, in which 9 is not from manufacturing) joined the Vietnam textile and
apparel association (VITAS) (http://www.vietnamtextile.org.vn). Company contacts are
43
obtained from database of VITAS and the respondents from these manufacturers are contacted
through telephone and email to request for participating in the interview. Furthermore, lecturers
from 7 programs of Supply Chain & Logistics program or Textile & Garment at universities
and institutes are also contacted.
Analysis:
The questionnaire has two types of data:
 For open-question, opinions will be justified for an enhanced model by rewriting
ambiguous and poorly worded items or instructions.
 For closed-questions, agreement level will be statistically analyzed to confirm the
validity of measurement. Content validity ratio (CVR) is used as a content validity
index in rejection or retention of specific items (Lawshe, 1975). In this way, panel
member is asked to rate instrument items in terms of clarity and its relevancy to the
construct underlying study. To obtain content validity index for each item, CVR is
calculated from the percentage saying “agree and strongly agree”.
𝑛𝑒−𝑁/2
CVR = 𝑁/2
(ne = number of experts indicating agree and strongly agree, N = total number of experts).
The interpretation of CVR is based on the minimum value for each group of panelist (Table
3.2). CVR expresses the proportion of agreement on the relevancy of each item and judgment
on each item is made as follows: if the CVR is greater than the minimum value, the item will
be appropriate; otherwise, it is eliminated.
Table 3-2: Minimum value of CVR, p = 0.05 (Lawshe, 1975)

No of panelists Min value No of panelists Min value
5 0.99 13 0.54
6 0.99 14 0.51
7 0.99 15 0.49
8 0.75 20 0.42
9 0.78 25 0.37
10 0.62 30 0.33
11 0.59 35 0.31
44
12 0.56 40 0.29
In addition, during the semi-interview, facts of the Vietnam textile and apparel industry are
also acknowledged as specific/unique characteristics of the context. These will be evidence
supporting the CVR analysis.
Sample size:
Determining the number of experts is mentioned to be partly arbitrary (Zamanzadeh et al.,
2015). A review of the content validity by interview method in supply chain field shows the
inconsistency result with 5 experts (Punniyamoorthy et al., 2013), 6 experts (Vachon and
Klassen, 2008), 14 experts (Garcia Reyes and Giachetti, 2010) or 23 experts (Niazi et al., 2005).
According to Table 9, the number of panelists must be greater than 5 to have sufficient control
over chance agreement. The maximum number of judges has not been determined yet
(Zamanzadeh et al., 2015). Therefore, 5 is the minimum required-number for this step.
3.3. MODEL APPLICATION (RESEARCH OBJECTIVES 2 and 3)

The model is applied in the real environment via case studies to explore the current SCC
practices as well as measure the maturity level of SCC; and to investigate the relationship
between maturity level and performance.
Case selection:
This study only focuses on dyadic supply chain which consists of two business entities – buyer
and supplier. Since textile and apparel industry is a customer-driven commodity chain; this
industry is dominated by the fast moving of consumer needs (Bruce et al., 2004) and the agility
to the demand of the customers plays a critical part of apparel manufacturers’ success (Jin,
2006). As such, in this study, case studies are conducted at the downstream relationship
between manufacturer and customers to measure and assess the current collaboration practices.
There are 4 basic types of case study: Holistic-single case; Embedded-single case; Holistic-
multiple case; and Embedded-multiple case (Figure 3-6).
45
Figure 3-6: Basic types of designs for case studies. Source: (Yin, 2013)
In this study, the embedded, multiple-case (multiple contexts, multiple units of analysis) type
is chosen to conduct the research with the following reasons:
 Firstly, to explore the SCC practices and measure the current maturity level, the
propose model is applied at different systems (multiple contexts). Since this is first
application of the model, the selection of multiple cases will assure the robustness of
the model by replicating the finding. In addition, due to the benchmark function of the
model, multiple-case design can provide the comparisons of how SCC affects
performance among the contexts.
 Secondly, since relationships in a supply chain is mentioned to be varying from tier to
tier (Meng et al., 2011); as such, in one organization under the same maturity level,
the relationship with different partners may vary from partner to partner. Multiple unit
of analysis in one context is chosen to explore the phenomenon in-depth.
The embedded, multiple-case design will offer a good mixture of scenarios for this study. A
cross-case analysis among different contexts and within-case analysis among different
relationships of the same company will provide a good understanding for the phenomenon.
46
It is to be noted that the MM-SCC is applied to multiple systems to measure the maturity level
of process management at an organizational level. The analysis of individual partner within
each context considers the collaborative relationship mainly based on its unique characteristic
of the relationship.
Two manufacturers varying in scale and culture are chosen as two contexts. Since the function
of the model is to diagnose the current practices and problems to make the improvements, the
application of the model requires an in-depth research with many activities involving different
functions, departments and respondents. Furthermore, multiple sources of evidence need to be
collected to ensure both the reliability and construct validity for the evaluation. As such, it is
not a small case study at each case. The selection of two systems is suitable for the research
purpose by covering the multiple –case design and providing sufficient resources for in-depth
research at each case.
The case selection is illustrated in Figure 3-7.
Customer 1
Customer 1
Garment Cross case Garment

Within case company company
A
B
Customer 2 Customer 3 Customer 2 Customer 3
Figure 3-7: Case type
Case design:
The research process of this step is illustrated as the Figure 3-8.
47
Maturity model – cross case

Improvement plans
MM-SCC (Next chapter)
No
Analyse the relationship
Evaluate each Yes
Yes/No Collect evidence Decide maturity level between SCC and performance
process requirement
(cross-case)
 Quality level
 On-time delivery KPIs analysis
 Utilization
Subjective evaluation of
the effects on performance
 Involvement Analyse the relationships between

Customer classification  Influence Evaluate external relationships
collaboration level and performance
 Feedback response within the organization (within-case)
Within case
Figure 3-8: Case study process
For the first purpose of evaluating the current practices and measuring levels through applying
the model, the managers will decide whether the organization performs and meets each process
requirement or not.
 If the answer was “yes”, evidence has to be provided to support the affirmative answer.
Data collection for this study utilized multiple sources of evidence, including on-site
interviews, observations and documentary to ensure both the reliability and construct
validity for the study (Voss et al., 2002, Yin, 2013).
 If one answer was negative, it meant this maturity level was not met (Garcia Reyes
and Giachetti, 2010). The enterprise will receive the classification of the last maturity
level completed. From this maturity classification, the enterprise will establish
improvement plan to achieve the target. This classification allows the enterprise to
define an improvement roadmap.
Under the same condition of one system, the degree to which a manufacturer co-works with its
external partners (customers) in each case is also evaluated by managers. The degree of
involvement, influence in the company’s decision and response to customers feedback (Zailani
and Rajagopal, 2005) are used to measure the external relationship level in this study.
For the second purpose to explore the effects of SCC on performance, quantitative data with
key performance indicators (KPIs) are used to compare between two systems and among
48
different customers in the same system; while qualitative data with subjective evaluations from
managers is to reconfirm and explain more for the effects.
KPIs selection:
It is mentioned that since the business goals change among industries, firms establish different
KPIs in their measurement system (Chou, 2015). For manufacturing supply chains which are
customer-driven, quality and time are the two critical areas of performance (Elrod et al., 2013).
In addition, the literature also indicates that quality and delivery schedule are common concerns
for both customers and manufacturers (Bruce et al., 2004). In the textile and apparel industry,
due to response characteristics (Gary Teng and Jaramillo, 2006, Mehrjoo and Pasek, 2016),
delivery delay is mentioned to receive even more attention (Mehrjoo and Pasek, 2016).
Similarly, Vietnam textile and apparel industry mainly performs CMT (Cut-Make-Trim) and
FOB (Free On Board) method which means that Vietnam's enterprises only perform
outsourcing contracts (Itpc, 2015) (Figure 3-9). Therefore, upgrading quality and on-time
delivery become more transparent in cultivating importers’ confidence in Vietnamese products
(Itpc, 2015). Additionally, because CMT/FOB is the simplest production practice – only
requiring manufacturing capacity and a little designing capacity for making counter-samples –
Vietnamese manufacturers target their efforts at strengthening their operational capacity (Itpc,
2015). Therefore, capacity utilization (the ratio of the actual output over the target output) is
also considered in this study.
Textile Weaving/ Dying/

Spinning Fabric
Knitting Finishing
Apparel Raw material Cutting/ Marketing/

Brand Design
sourcing Sewing Distributing
CMT
OEM/FOB
ODM
OBM
Figure 3-9: Main modes of production. Source: (Vu, 2014)
49
Overall, the data related to quality level, on-time delivery and capacity utilization are collected
to assess the efficiency of the system. In addition, managers will be asked to assess the effects
of SCC on these KPIs.
For effective performance measurement and improvement, the measurement system should
reflect a balance between financial and non-financial measures (Flynn et al., 2010).
Furthermore, environmental sustainability has become an important objective of an effective
supply chain; hence, the performance system should begin to include an assessment of
environmental performance along with financial and nonfinancial performances (Wisner et al.,
2014). However, because of confidentiality policies regarding financial status, and the new
concept of environmental performance in Vietnam context, the scope of this research is
constrained to operational performance, thus limiting this study.
3.4. FUTURE SCENARIO (RESEARCH OBJECTIVE 4)

To serve the function as the benchmark rating method to compare the organization's capability
to itself over time, the maturity model is a diagnostic tool to improve the current practices.
At each case, by answering whether it meets the process requirement or not , the
organization will be able to identify its problems. From that, solutions or improvements
are suggested to tackle these issues. When these problems are solved, the system can
change its status for the process requirements and this will lead the system’s maturity level
to the next higher one.
However, as is mentioned above, due to time limitation, these improvement activities

cannot practically be applied and not in scope of this research. As such, the future state
will be foreseen using simulation approach and the effects of these future scenarios will be
examined on the performance.
Supply chain system is an open and complex system with many relevant factors, systematic
non-linear or lasting change with time. Especially, the garment supply chain involves the major
stages with characteristics of short product life cycle, high demand uncertainty and high
volatility (Jin, 2006, Jakhar, 2015, Şen, 2008); as such the dynamics of the apparel industry are
high and changing dramatically. Due to uncertainty and complexity of supply chain that stem
from its nature, system dynamics offers a key approach for above-mentioned problems and
50
provides a better insight compared to the other simulation approach (Eldabi and Keramati,
2011).
SD is a discipline of industrial dynamics (Towill, 1996). It is a methodology and computer

simulation modelling technique used to analyze and solve complex problems with a focus on
policy analysis and design through understanding the dynamic behavior of systems (Poles,
2013). SD is originally developed by Professor Jay Forrester, Massachusetts Institute of
Technology in the 1950s (Poles, 2013). It is the second most widely used technique
(Pannirselvam et al., 1999) and is considered to be a useful structural theory for operations
management (Corinna Cagliano et al., 2011).
It is mentioned that in the field of collaboration with complex relational and social aspects,
the case study approach with the support of SD is the best option to fulfil this need (Bailey and
Francis, 2008). SD can assist to view different scenarios and consider a number of performance
measures (Campuzano and Mula, 2011, Ellram et al., 2007, Kanda and Deshmukh, 2008).
Figure 3-10 describes the procedure of this chapter.

Case-study findings
Improvement plans
Future scenario
Model development
NO
Validating
YES
Future parameter
(Improvements)
Modelling
Conclusion
Figure 3-10: Improvements and System Dynamics process
51
This method combines both qualitative and quantitative aspects of system inquiry through
Causal Loop Diagrams (CLD) and Stock and Flow Diagrams (SFD) respectively (Mandal et
al., 2002, Coyle, 1996). While CLD is used as a tool for representation of the feedback
structure of systems and the causal relationships among system variables which provide
information on the likely behavior of a system (Sterman, 2000, Coyle, 1977), the quantitative
aspect is obtained using variables in mathematical equations in the SFD which provide the
relationships among the system variables (Coyle, 1996, Mandal et al., 2002). These equations
are used for developing computer simulation equations (Mandal et al., 2002).
In this study, after the improvement plans are suggested, the manufacturing supply chain
model is developed to simulate the effects of different maturity levels of SCC on performance.
SFD is built to capture the model structure and the interrelationships among the variables. The
associated differential equations are defined to connect variables. Vensim® PLE software
(Copyright © 1988-2015, Ventana Systems, Inc.) is used in this study.
The value of auxiliary input variables is collected as actual data from the case study.
Improvement activities and different policies of future scenarios work on improving or
changing the value of auxiliary input variables. These will lead to the changes of output as
performance.
52
CHAPTER 4 : MODEL DEVELOPMENT
This chapter develops MM- SCC model which is mentioned in Section 3.1. The first part of
this chapter illustrates five maturity levels and SCC process requirements which are mapped to
each maturity level based on the characteristics of that level. The secondary focus is the
correlation between maturity level and relationship level.
53
4.1. MM-SCC MODEL
4.1.1. Maturity Level
According to CMMI, the process management in an organization will follow a five-level
evolutionary path to be more mature as mentioned in chapter two (Table 2.5, section 2.2.2).
These five levels are rewritten for SCC process as follows:
Level 1: Initial
At level 1, collaborative supply chain processes are usually ad hoc and chaotic. The
organization usually does not provide a stable environment for processes to perform. Success
in collaboration process may happen, but it is still dependent on individual initiative and skills,
not on the use of proven processes, and organizations are not able to repeat their past successes.
Level 2: Managed
At level 2, SCC in organizations starts to be modified towards basic activities. Collaboration
processes are planned with requirements and involved activities. Commitments are established
among relevant stakeholders. Collaboration processes are performed and controlled to meet
requirements according to documented plans but mostly reactive and repeatable.
Level 3: Defined
SCC processes are well characterized, understood and described through a greater attention to
documentation, standardization, procedures, tools, and methods. Standard collaboration
processes are managed proactively and consistently spread to different areas of the organization.
Process objectives are established and ensured to appropriately address.
Level 4: Quantitatively managed

Collaboration processes are quantitatively managed in accordance with agreed-upon metrics.
Detailed measures of supply chain performance are collected and statistically analyzed. Special
causes of collaboration process variation are identified and corrected to prevent future
occurrences. Collaboration process happens at a strategic level where integrated and
coordinated strategies aim at achieving the overall supply chain performance between multiple
parties.
Level 5: Optimizing
54
Common causes of process variation are addressed, identified, evaluated, and deployed.
Collaboration process performance is continually improved through both incremental and
innovative technological improvement towards the common objectives of supply chain. The
interaction is truly through all chain organizations and collaboration happens to achieve the
maximum supply chain effectiveness.
4.1.2. Process Requirements

There are five categories of SCC process management and every process will fall into one of
these. The SCC requirements are mapped to each level based on the characteristics of that level.
SCC process requirements are illustrated in Tables 2.1 through 2.3.
Level 1: Initial
Every organization starts at maturity level 1. According to CMMI approach, there is no process
requirement at this level. Maturity level 1 organizations often produce products and services
that work; however, most of the time they exceed the budget, underestimate the effort,
disregard their processes in a difficult time and will not repeat their successes. In the case of
level 1, the first step to improvement is to document important information and procedures.
Level 2: Managed
At level 2, process is defined to be planned, measured, performed, and controlled with
requirements, plans, commitments, output measurements and so on. As such, to meet this level
requires organizations to build antecedents or prerequisite processes for SCC practices. The
first step of SCC implementation progress is mapped to this level, including these following
process requirements:
 Managerial commitment and Strategic intent,
 Internal alignment,
 Resource investment and development,
 Relationship building,
 Information Flow and System Integration,
 Formalization, and
 Rationalization.
Level 3: Defined
55
At level 3, SCC activities are implemented consistently and standardly across the organization
with well-characterized standards, procedures, tools, and methods. On the other hand, at this
level, SCC practices are performed proactively with its main activities. As such, main processes
of SCC at the SCC implementation progress will be allocated to this level, including:
 Information sharing,
 Goal congruence,
 Decision synchronization,
 Incentive alignment,
 Resource sharing,
 Collaborative communication, and
 Joint knowledge creation.
Level 4: Quantitatively managed

At level 4, quantitative objective needs to be established to manage process and performance.
Quantitative data will be collected and statistically analyzed toward objectives. As a result,
activities relating to performance measurement and management will be mapped for level 4. It
is:
 Performance measurement
Level 5: Optimizing
Achieving the highest level of collaboration maturity requires organizations to improve the
performance continuously. The continuous improvement can be made to constantly upgrade
the culture of collaboration. Therefore, the process at the last step is:
 Continuous improvement
In summary, the proposed model is shown in Table 4-1.
56
Table 4-1: MM-SCC model
Maturity level Characteristics Collaboration process requirement Collaboration level
- Ad hoc and chaotic
1. Initial N/A Arm’s length
- Individual success
1. Managerial commitment and Strategic intent
2. Internal alignment
- Basic activities
3. Resource investment and development
- Processes are planned with the
2. Managed 4. Relationship and trust building Communication
requirements and involved activities
5. Information Flow and System Integration
- Mostly reactive and repeatable
6. Formalization
7. Rationalization
1. Information sharing
2. Goal congruence
- Processes are well characterized and
3. Decision synchronization
standardized
3. Defined 4. Incentive alignment Coordination
- Proactively and consistently
5. Resource sharing
6. Collaborative communication
7. Joint knowledge creation
4. Quantitatively managed - Quantitatively managed 1. Performance measurement Intensive collaboration
5. Optimising - Continually improved 1. Continuous improvement Partnership
57
4.1.3. Sub-process Requirements
Each process involves the activities (sub-process). These sub-processes will give a detailed
instruction for implementing the main processes.
Level 2: Sub-processes are adopted mainly from activities of “unfreeze” and “transform” stage
to support greater SCC for a company (Fawcett et al., 2008) and antecedents of collaboration
(Min et al., 2005).
Level 3: Sub-processes are adopted from activities of the model “Roles of Inter-organizational
Systems, Trust, and Collaborative Culture” (Cao and Zhang, 2013).
Level 4: Sub-processes are adopted from activities of Performance Measurement (Fawcett et

al., 2008).
Level 5: Although the importance of continuous collaborative improvement are recognized by

academics and managers; unfortunately, none of the practices for continuous improvement
activities was identified (Fawcett et al., 2008). Therefore, sub-processes for level 5 follow the
suggestion of Fawcett.
These are described in Table 4-2.
58
Table 4-2: Sub-process requirements
Level Process Sub-process
Managerial - Establish clear strategic intent (Min et al., 2005);
commitment - Obtain commitment from chief executive and support from senior functional management (Fawcett et al., 2008);
and strategic - Make the recognition of the need for collaboration widespread and visible through the organization (Fawcett et al.,
intent 2008);
- Develop a supply chain mapping and role definition (Fawcett et al., 2008, Min et al., 2005);
Internal
- Streamline operations (Min et al., 2005);
alignment
- Select supply chain partners (Min et al., 2005);
- Invest financial and non-financial resources including time, money, training, technology up-dates, top management’s
Resource
commitment and other resources (Min et al., 2005).
investment and
2 - Develop sharing learning mechanisms throughout the organization and the supply chain (Fawcett et al., 2008);
development
- Establish project teams, cross-functional management, and develop cross-experienced managers (Fawcett et al., 2008).
Source: (Fawcett et al., 2008):
Relationship - Establish a high level of trust within the organization as well as with supply chain partners;
and trust - Find qualified product suppliers and service providers that are committed to continuous improvement;
building - Define the appropriate type of relationship to establish with specific supply chain members;
- Establish a supplier development program via process improvement and product development.
Information
- Established information systems capable of sharing real time accurate & relevant information (connectivity);
Flow and
- Inculcate a willingness to share information across functions and between organizations;
59
System - Establish a revenue-tracking system;
Integration - Improve forecast accuracy throughout the entire supply chain.
- Co-developing performance metrics (e.g. key performance index, scorecard, and the resulting incentive);
- Prior agreements on collaboration goals or objectives;
- Determining roles and responsibilities of each partner as well as reporting.
Formalization - Mechanisms in the relationship;
- Laying out collaborative implementation plans;
- Standardizing information technology;
- Aligning collaboration schedules; and
- Specifying information to be shared.
- Identify and take advantage of commonalities and collaborative improvement opportunities
Rationalization
- Simplify the network—supply base, customer base, and service provider reduction
- Eliminate unnecessary or slow moving SKUs
Source: (Cao and Zhang, 2013)
- Exchange relevant information;
3 Information - Exchange timely information;
sharing - Exchange accurate information;
- Exchange complete information;
- Exchange confidential information.
60
- Jointly plan on promotional events;
Decision - Jointly develop demand forecasts;
synchronization - Jointly manage inventory;
- Jointly plan on product assortment;
- Jointly work out solutions.
Incentive - Share costs (e.g. loss on order changes);
alignment - Share benefits (e.g. saving on reduced inventory costs);
- Share any risks that can occur in the supply chain;
- Be commensurate with investment and risk.
- Have agreement on the goals of the supply chain;
Goal
- Have agreement on the importance of collaboration across the supply chain;
congruence
- Have agreement on the importance of improvements that benefit the supply chain as a whole;
- Have agreement on achieving goals through working towards the goals of the supply chain;
- Jointly layout collaboration implementation plans to achieve the goals of the supply chain.
Resource
- Use cross-organizational teams frequently for process design and improvement;
sharing
- Dedicate personnel to manage the collaborative processes;
- Share technical supports;
61
- Share equipment (e.g. computers, networks, machines);
- Pool financial and non-financial resources (e.g. time, money, training).
- Have frequent contacts on a regular basis;
Collaborative
- Have open and two-way communication;
communication
- Have informal communication;
- Have many different channels to communicate;
- Influence each other’s decisions through discussion rather than request.
- Jointly search and acquire new and relevant knowledge;
Joint knowledge
- Jointly assimilate and apply relevant knowledge;
creation
- Jointly identify customer needs;
- Jointly discover new or emerging markets;
- Jointly learn the intentions and capabilities of our competitors.
Source: (Fawcett et al., 2008)
Performance
- Establish a routine process involving: daily capacity planning meetings; monthly KPI status review; quarterly executive
4 measurement
business reviews; and continual up-dating of key metrics/goals;
- Design a proactive supplier scorecard-based rating system to drive continuous improvement.
Source: (Fawcett et al., 2008)
Continuous
5 - Organizational collaborative improvement initiatives
improvement
- Benchmark
62
4.2. MATURITY LEVEL AND COLLABORATION LEVEL
As mentioned in section 3.1 of the preceding chapter, the relationship between two variables –
process management maturity level and collaboration level is analyzed in this section to explore
the improvement path more. The definition of collaboration levels was provided in Table 2-4
(section 2.1.3) and the definition of maturity levels has been provided in the above section
(section 4.1.1).
This comparison is described in Table 4-3.
Table 4-3: Comparisons between maturity level and collaboration level

Collaboration
Maturity level Characteristics Characteristics
level
- Ad-hoc
Initial Arm’s length - No collaboration
- Starting point of
- Basic activities;
collaborative initiatives
- Planned processes and
and basic relationship;
established
- Some basic
Managed commitments; Communication
collaboration
- Mostly reactive
processes;
performed and
- Limited integration
controlled.
with trading partners.
- Frequent exchange of
- Standardized process;
information;
- Proactively and
- Synchronized flows
Defined consistently managed Coordination
and certain routine
processes across the
decision-making
organization.
processes.
- Strategic level - Strategic management
management; decision-making;
Quantitatively Intensive
- Quantitative management - Co-ordinated process
managed collaboration
to the overall based on joint
performance. objective.
63
- Continuous - Continuous
improvement; improvement;
Optimizing Partnership
- Maximum system - Maximum system
effectiveness goal. effectiveness goal.
It can be observed that while levels two and three mainly focus on the way to perform the
process and enhance the process individually; levels four and five offer a more strategic focus
and the quality and process performance objectives are aligned with business objectives. The
similarity can also be found for individual level as follows:
 Initial – Arm’s length level: collaboration process is not defined yet so there is no
collaboration at all.
 Managed – Communication level: SCC starts to perform basic activities limitedly and
reactively.
 Defined – Coordination level: SCC activities are executed proactively and frequently
as they are defined and characterized.
 Quantitatively managed – Intensive collaboration level: SCC activities are managed
at strategic level based on the overall objectives.
 Optimizing – Partnership level: continuous improvement activities are carried out to
optimize the system.
Thus, it is clear that performing SCC process following the maturity roadmap will lead to
higher collaboration level respectively (Figure 4-1).
64
Maturity level Collaboration level
1. Initial 1. Arm's length
2. Managed 2. Communication
3. Defined 3. Coordination
4. Quantitatively managed 4. Intensive collaboration
5. Optimizing 5. Partnership
Figure 4-1: Maturity level and collaboration level
65
CHAPTER 5 : MODEL CONTENT VALIDITY
This chapter provides the results of validation of MM-SCC model content with experts in
Vietnam textile and apparel industry. This chapter begins by providing the information from
data collection process and followed by data analysis. The chapter concludes with the final
model for the selected context.
66
5.1. DATA COLLECTION

As mentioned in Figure 3.5 (section 3.2), this research begins with designing the questionnaire
and conducting the pilot before generalizing the survey.
Questionnaire design and pilot test:

Based on the MM-SCC, the development of version 1 of the questionnaire is made in both
English and Vietnamese. The pilot is done on this version to identify format, ambiguous items,
the quality of worded questions and instructions for the model. Pretesting and piloting is
conducted with 4 experts (2 academics and 2 practitioners). Following piloting, the final
version of the questionnaire is prepared to go on to be tested for the content validity in a large-
scale survey.
The final questionnaire is described in Appendix 2.
Semi-interviewing process:
The respondents from 66 manufacturers and 13 programs were contacted via telephone and
email to request for participating in the interview. A description of the research objective and
a cover letter requesting for the participation in the research were sent to the respondents. There
were 25 experts agreeing to participate in the research; however, the interviews were only able
to be conducted with only 20 experts in 2 months (June 2016 – August 2016). The average
interview duration was one and half hours; however, the pace of the interview was determined
by the researcher and interviewee to allow the interviewee to express his/her opinion
effectively. The interviewees arranged the time and location of the interviews, and most took
place in the interviewee’s offices or public places. The personal information of these experts is
confidential. The summary for general information is given in Figure 5.1 through 5.4.
There were 20 experts from industry and from the academic field agreeing to participate in the
research. Although there were more practitioners from manufacturing than academics from
universities and institutes, the number of academic and practitioner respondents were equal.
The reason is that the researcher is working as an academic in an educational organization, as
such, the network for the academics is stronger than industry. This leads to the equality in the
numbers of academic and practitioners.
67
While most of the industrial practitioners were managers and senior staff with an average of 5
years’ experience, the academic experts had more than 5 years of experience (Figure 5-1).
Figure 5-1: Distribution of expert type and year of experience
Teaching Supply Chain and Logistics program or Textile and Garment is more focused on
Management, Logistics, and Operations (Figure 5-2).
6 Teaching field
5
3
1
0 0 0
Marketing
Management
practices
Logistics
Relationships
al behaviours
/ partnerships
Organization
Other
Best
Figure 5-2: Distribution of teaching field
The Foreign Direct Investment (FDI) type and the large-sized enterprise (with more than 300
employees) constitute the majority of the company type and company scale. It is
understandable that since FDI and large-sized enterprises are usually well-structured systems
with many internships as well as research support programs, these organizations are able to get
involved in the research (Figure 5-3).
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Figure 5-3: Distribution of company type and company scale
The job title and job function of participants vary from field to field relating to SCC and
consistent with the research design as mentioned in Table 3.1 – section 3.2 (Figure 5-4). The
senior staff and manager occupy most of job title and these respondents are working at different
fields relating to SCC.
Figure 5-4: Distribution of job title and job function
5.2. DATA ANALYSIS

The summary of the answers for each maturity level, process requirement, and sub-process
requirement is shown in Appendix 3. Data of agreement level are statistically analyzed to
confirm the validity of measurement using the content validity ratio (CVR) as discussed earlier
in (Section 3.2).
CVR is a direct linear transformation from the percentage saying “agree and strongly agree”:
𝑛𝑒−𝑁/2
CVR = ,
𝑁/2
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ne = number of experts indicating agree and strongly agree, N = total number of experts.
Table 5-1 illustrates the result of CVR analysis for maturity level definition and process
requirements for each level. More details are provided in Appendix 3 with the result for each
factor. In this study, since there are 20 participants, the minimum value of CVR of each
component is 0.42. The result shows that all the experts agreed with the level definitions and
process requirements of each level (CVR value greater than 0.42).
However, there are 7 sub-processes with the CVR below 0.42, which are not suitable for
considering the relationship between manufacturers and customers in the Vietnam textile and
apparel industry context (Table 5-2).
Table 5-1: CVR value of maturity level definition and process requirements
Level CV Process requirement CVR
R
1 0.5 N/A N/A
2.1. Managerial commitment and Strategic intent 0.60
2.2. Internal alignment 0.80
2.3. Resource investment and development 0.50
2 0.5 2.4. Relationship and trust building 0.70
2.5. Information Flow and System Integration 0.70
2.6. Formalization 0.70
2.7. Rationalization 0.50
3.1. Information sharing 1.00
3.2. Goal congruence 0.80
3.3. Decision synchronization 0.90
3 1 3.4. Incentive alignment 1.00
3.5. Resource sharing 0.60
3.6. Collaborative communication 0.90
3.7. Joint knowledge creation 0.50
4 0.9 4.1. Performance measurement 1.00
5 0.9 5.1. Continuous improvement 1.00
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Table 5-2: Eliminated sub-process requirement

Name CVR Level – Process requirement
2.4.5. Establish a supplier development Level 2
program via process improvement and product 0.2 2.4. Relationship and trust
development building
Level 2
2.5.4. Improve forecast accuracy throughout
0 2.5. Information Flow and
the entire supply chain
System Integration
3.2.4. Jointly plan on promotional events 0 Level 3
3.2.5. Jointly develop demand forecasts 0 3.2. Goal congruence
3.7.3 Jointly identify customer needs 0
3.7.4. Jointly discover new or emerging
0 Level 3
markets
3.7. Joint knowledge creation
3.7.5. Jointly learn the intentions and
0
capabilities of our competitors
These eliminations are due to the unique characteristics of the context. The explanations are
given during the interviews and have been shown in the literature and national reports.
Currently, Vietnam does not have many products under its own brand to reach out to retailers
in the world. Export activities depend heavily on foreign traders, in other words, brand-name
companies or retailers must contact traders in Hong Kong, Taiwan or South Korea to develop
their supply network in Vietnam (Figure 5-5).
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Raw material resource

Machines, Information
Fibers
ancillary,
dying Cost and product
chemicals…
Raw material
transportation
Logistics,
Packaging Customs Retailer
Imported Transportation
materials Logistics,
Spinning, Customs Trading
weaving, Sub-contractor company
dying… Production
Buying Agent Brand-name
company
Sale planning
Domestic company Buying Office International customer
Figure 5-5: Vietnam textile and apparel chain. Source: (VITAS, 2010)
This industry is dominated by Cut Make and Trim (CMT) production modality manufacturer
with more than 70% of total manufacturers (VITAS, 2015, VietTrade, 2015). The other types
including Original Equipment Manufacturing/ Free On Board (OEM/FOB), Original Design
Manufacturing (ODM) and Original Brand manufacturing (OBM) are making account of 20%,
9% and 1% respectively (VITAS, 2015). As the nature of CMT and FOB method, Vietnam's
apparel enterprises only perform outsourcing contracts. These customers provide Vietnamese
firms with all inputs for design, materials, and transportation arrangements.
As a result, Vietnam's apparel enterprises simply perform the manufacturing and assembling
function. There is no connection with customer who has the direct connection with end-users.
Therefore, customer related activities such as marketing, product development or demand/
forecast are not conducted in manufacturing enterprises.
Furthermore, as Vietnam’s manufacturer cannot ensure the use of the right fabric, consistent
quality and timely delivery, multinational retailers or foreign customers appoint fabric
suppliers (Itpc, 2015). This makes the supplier development programs not strategic.
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As such, customer-related activities such as customer or market forecast, and supplier

development -related program are not well developed or happen in Vietnam context.
5.3. SUMMARY
The model content validity step with experts has confirmed the model in Vietnam textile and
apparel context. Seven sub-processes are considered to be not suitable and eliminated. The
final version is designed to apply in the industry, in particular Vietnamese textile and apparel
industry.
In the industrial version, the managers will decide whether their companies meet the process
requirements or not and evidence must be provided for the answer (Table 5.3). More details
for the model with sub-process requirements are provided in Appendix 4.
Table 5-3: MM-SCC for Vietnam textile and apparel industry

Level Characteristics Process requirements Yes/No Evidence
- Ad hoc and chaotic
Initial N/A
Managerial support
Internal alignment
- Basic activities
Resource investment and
- Processes are planned
development
with the requirements
Relationship and trust
Managed and involved activities
building
- Mostly reactive and
Information Flow and
repeatable
System Integration
Formalization
Rationalization
- Processes are well Information sharing
characterized and Decision synchronization
Defined standardized Incentive alignment
- Proactively and Goal congruence
consistently Resource sharing
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Collaborative
communication
Joint knowledge creation
Quantitatively - Quantitatively Performance
managed managed measurement
Optimizing - Continually improved Continuous improvement
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CHAPTER 6 : MODEL APPLICATION
This chapter presents the findings from the application of MM-SCC model to explore the
relationship between SCC and performance in-depth. It is the expansion of the work of research
design at Section 3.3. As is shown in Figure 3.8, this chapter is organized into two parts: results
and analysis.
 Part 1 begins with general information of two case studies, and then illustrates the
current practices as well as the maturity level based on the model, the evaluation of
collaboration levels among different partners within each case; and the description of
KPIs.
 The second part is the analysis of relationship between SCC and performance for both
cross- case and within- case type. Implications for managers are also given at the end
of this chapter.
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PART 1: RESULTS
6.1. CASE INFORMATION

As mentioned in the research design – section 3.8, two garment companies are chosen to
conduct the research with their customers. Real names and identities are hidden for privacy
purpose. Data were collected during the period of three months (October 2016 – December
2016).
ABC Company:
Type: ABC is a Vietnamese Joint Stock Company that has been in business for over 40 years.
It is one of the leading firms in the Vietnamese textile and garment industry, with an export
sale of US$651 million in 2015.
Product: ABC is the manufacturer of suits, shirts, trousers and so on for more than 50
international brands and partners globally, such as the U.S., EU, and Japan. Additionally, ABC
manufactures and retails its apparel products (suits and shirts) under its own house brand’s
designs.
Customers:
 ABC main customers are international under the CMT production modality. Company
is provided with materials from the customers. Layers of fabric are then cut at once
through a laser beam directed by a computer (CUT). These cut parts are bundled and
then sewn in order to make a garment (MAKE). Finally, they are checked as the
garment for quality before they are shipped out (TRIM).
 In 2011, ABC proceeded with the construction of FOB Division, which offers
customers material or outsources material from their nominated suppliers.
 Realizing that Vietnamese garment companies had ignored and thereby missed local
opportunities for many years, in 2008 ABC started to focus on the domestic market.
ABC expanded fundamental tasks, such as market research and product design,
introduced new brands, and extended its distribution system throughout the entire
country (OBM type). ABC has a nationwide retail network and devoted sales staff
trained to best serve Vietnamese consumers.
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Capacity: ABC operates nearly 40 member units (25 woven manufacturing facilities, 4 knit
manufacturing and other member factories and subsidiary factories) with 25,000 employees in
various fields and locations all over the country. These can produce approximately 3 million
pieces of woven wearing apparel and 1.5 million pieces of knitwear monthly.
Scope: This research is conducted at one member factory with four production units. These
units manufacture the sector of suits, vests, coats, trousers, skirts and shorts for international
customers; and shirts for both domestic and international customers. The production unit of
shirts and vests is chosen with the following reasons:
 Shirts and vests are considered two main product types of the factory. Their
production unit is the biggest one among four units with monthly capacity of more
than 200,000 pieces.
 In addition, these products have different types of customers; in particular shirts are
manufactured for CMT international customer and OBM domestic customer, while
vests are manufactured for international CMT and FOB customer. This selection is
regarding the research design of within-case analysis which considers the effects of
SCC under different customer types.
XYZ Company:
Type: XYZ is a Limited Liability Company with 100% of capital from a Hong Kong group of
companies. XYZ has been in business for 10 years in Vietnam and has always been one of the
ten largest export garment businesses in the country. XYZ has reached revenue of US$720
million yearly.
Product: Its products include sweaters and T-shirts for famous international brands. XYZ
follows the FOB production modality and has recently invested in the latest technology and
machines for the printing and embroidery phases.
Customers: Currently, XYZ manufactures for eight main international bands from two
countries, the US and Japan. These two types of customers have very specific and different
requirements for their products.
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Capacity: XYZ has 2 factories, one manufactures sweaters with 10.000 employees and one
manufactures T-shirts with 5.000 employees. These can produce 170 million pieces per year.
Scope: This study considers both product types.
Case study components are illustrated in Figure 6-1.
Company 1: ABC
CMT OBM
Company 2: XYZ
Int. customer Dom. customer
Within case Cross US customer Japan customer
case (T-shirt & (T-shirt &
FOB sweater) sweater)
Int. customer Within case
Figure 6-1: Case study components
Data analyses are performed at two levels: within-case analysis and cross-case analysis.
 Cross-case analysis involves the measurement of SCC maturity level gauged by the
process requirements based on the MM- SCC. This provides the insights of each
company which has the unique patterns affecting the manufacturer – customer
collaboration and performance.
 Within case analysis is then performed to search for within case patterns regarding the
description of the answers to explore how different relationships with different
customers under the same environment and conditions affect the performance.
While the company-case base provides the insights of how different cases lead to different
collaboration levels and performance, the within-case sharpens the research constructs by only
focusing on the data analysis of the customer relationship side.
6.2. FINDINGS
Prior to each interview, the respondents are informed regarding the purpose of the study and
the model is explained. Because there is no rank or title of supply chain manager at both
companies, the research are conducted at different departments of the company. Executives,
general assistance (GA), managers or senior staffs of departments of sales, information
78
technology (IT)/ ERP, production, logistics, inventory, lean/ industrial engineering (IE) are
interviewed. The respondents answer for the relevant fields. If the answer is different for the
same process requirement, the disagreements are handled by another follow-up interview with
more explanation and more documentary evidence provided.
6.2.1. Collaboration Maturity Level (Cross-case)

The first activity of this step is to explore the current practices and measure the SCC maturity
level with customers. Based on the model, the interview with the managers is conducted to
acknowledge the evaluation for each process requirement.
The summary of model application is presented in Appendix 5. This appendix provides the
information of the interviewee, his/ her answer and the reason with evidence for that answer.
Note: these evidences may show the company’s name and may be confidential with the name
of suppliers and customers; therefore, this study does not include them in this thesis. Only
evidence names are provided.
Table 6-1 summarizes the results for each process requirement. Each case performs a specific
collaboration maturity level gauged by the MM-SCC model. The maturity level is determined
that if the company cannot meet all the process requirements of a particular level, it cannot be
on that level (Garcia Reyes & Giachetti, 2010).
Table 6-1: Collaboration maturity levels

Process requirements/ Company ABC XYZ
Level 1 - -
1. Managerial commitment and Strategic intent Yes Yes
2. Internal alignment No Yes
3. Resource investment and development Yes Yes
Level 2 4. Relationship and trust building No Yes
5. Information Flow and System Integration No Yes
6. Formalization No Yes
7. Rationalization Yes Yes
1. Information sharing No Yes
Level 3
2. Goal congruence Yes Yes
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3. Decision synchronization Yes Yes

4. Incentive alignment Yes Yes
5. Resource sharing Yes Yes
6. Collaborative communication No Yes
7. Joint knowledge creation Yes Yes
Level 4 1. Performance measurement No Yes
Level 5 1. Continuous improvement No No
SCC maturity level Level 1 Level 4
As such, ABC Company is on level 1 in the scale since it cannot meet all the process
requirements of level 2 (there is “NO” answer at level 2). On the other hand, XYZ Company
has performed and met all the process requirements of up to level 4; therefore, it has reached
to the level 4 of the model.
The following section explains the findings for each maturity level.
Level 2 – Antecedents:
At this level, the company performs prerequisite activities to create the ability and capability
to collaborate.
 Clear missions and vision have been established at both companies. These clearly
indicate the commitments and supports from executives and managers to meet
customers’ expectations. These are widespread and visible to the whole organization
on the website and visual management tools.
 Financial and non-financial investments are made to develop human resource as well
as facilities; equipment to create an effective and efficient system. There are many
human resource training programs for different levels of staff such as Trainee program
and so on to create skilled workforce, experienced managers, and qualified controllers.
Latest technological equipment is invested to satisfy the standards required and the
market demand. Moreover, Enterprise Resource Planning (ERP) system have been
established recently to support the decision making process for the manufacturing
system.
 For Rationalization requirement, by clearly defining the role in the chain, the
appropriate type of production which is “make-to-order” with no-finished good
80
inventory have been clearly defined by both companies. The company’s chain is
simplified based on the customer with assigned suppliers and service providers.
However, there are process requirements that received different answers – yes from XYZ and
‘No” from ABC. They are Internal alignment, Relationship and trust building; Information
Flow and System Integration; and Formalization.
 The biggest difference between two companies is the Information Flow and System
Integration with the application of ERP (Enterprise Resource Planning) system. In
ABC Company, the ERP department has been established for three years. Instead of
purchasing ERP modules from a vendor, ABC has developed its own basic modules
for the ERP system, such as Purchase, Human Resource, Inventory, Sales and
Marketing, and Production. Modules for Finance and Accounting and Customer
Relationship Management (CRM) have not been developed yet. Although they have
electronic systems in place for some functions, each module works separately and
performs its own data-processing function, and therefore they do not constitute an
ERP integrated platform. As a result, ABC still uses traditional methods to perform
these tasks. Paper documentation is used to complete processes and reporting. This
incomplete reporting does not occur in real time, increasing the chances of
contradictory data that causes redundancy. XYZ Company, on the other hand, has
developed a world--class SAP ERP application to access high quality data and boost
productivity, efficiency, and profitability. Modern techniques with RFID on
production shop-floor to plan, track, monitor, and manage order status, quality, and
progress in real time. Since Electronic Data Interchange (EDI) (computer-to-
computer exchange in a standard electronic format) with customers has shown its
significant link with inter-organizational relations (Chae et al., 2005), XYZ has
connected its ERP system with customers. This system allows XYZ to track the
trading process and save costs.
 The second biggest difference is the Internal alignment. This requirement is explored
under the spectrum of managerial approach using Lean Manufacturing. XYZ has an
awareness of operations management; therefore, the Industrial Engineering
department has been established from the company’s beginning. Industrial engineers
engage in different functions of the company, controlling costs and maximizing
efficiencies for the whole system. Lean manufacturing has successfully been applied
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in XYZ Company using many tools, such as 5S, Kaizen, Kanban or Continuous Flow.1
ABC, on the other hand, established in 2013 to implement Lean manufacturing in
order to reduce waste; however, it only performed at the very three first steps of the
5S tool.2 The resultant inefficiency is apparent from on-site observations at ABC
Company, with a high rate of work-in-process (WIP), defects, or stoppages. This
factor prevents ABC from meeting the process of Internal Alignment.
 Another noticeable point in the antecedents is the Formalization. XYZ has clear rules
for information sharing with a responsible person or department; type of information
shared and so on. These rules are documented. Therefore, the sharing of information
culture is also established because the staffs are aware of their roles as well as their
responsibilities. Especially, confidential information such as information of special
design or technique is also shared based on commitments and trust. ABC Company
has not built these rules yet, so a willingness to share information is still limited
because the staffs do not know what to do and they are afraid of the responsibility.
 Moreover, while ABC and XYZ are leading manufacturers in the textile and garment
industry in Vietnam, with many well-known brand customers, ABC Company
answers “No” to the requirement of Relationship and Trust Building. According to the
interviews, ABC Company is losing many customers recently and struggling to find
new customers every year. High trust level with customers has not been established
yet due to the inefficiency of the system. The current long-term relationships are
basically based on personal connection between executive boards with customers.
Customers involve a lot in the manufacturing process to support the company. On the
other hand, XYZ has achieved factory self-inspection and meet the customers’
requirements.
Level 3 – Key activities:
1 Lean methods and tools have helped manufacturing organizations to improve their operational performance
BELEKOUKIAS, I., GARZA-REYES, J. A. & KUMAR, V. 2014. The impact of lean methods and tools on the operational
performance of manufacturing organisations. International Journal of Production Research, 52, 5346-5366..
2
5S stands for the Japanese words seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke
(sustain). 5S is one of the methods used to reduce waste and optimize productivity and quality through using visual
management and maintaining standards and discipline BAYO‐MORIONES, A., BELLO‐PINTADO, A. & CERIO, J. M. D.
D. 2010. 5S use in manufacturing plants: contextual factors and impact on operating performance. International Journal of
Quality & Reliability Management, 27, 217-230..
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At this level, SCC collaboration processes are executed with customers through agreements
and business contracts. There are collaborative activities received yes from both company such
as Decision synchronization, Incentive alignment, Goal congruence, Resource Sharing and
Joint knowledge creation.
 As regards Goal congruence, ABC and XYZ are members of the Vietnam Textile and
Apparel Association (VITAS) and responsible for the integration and growth of the
Vietnam’s textile and apparel sector. Both companies have agreements on
collaboration among partners which are ruled by meeting the customers’ satisfaction.
 Processes of Decision synchronization and Incentive alignment are presented through
jointly working out on solutions on delivery date, on late delivery (such as expanding
the due date or sharing cost for airship) or for sampling development and so on.
 Resource sharing is made between company and customers including technical
supports, jointly searching and acquiring new techniques for product design and
production or jointly managing the production process. Customers send their
representatives to the manufacturers during production time to support and timely
solve the problems.
However, the differences can be seen at Information sharing and Collaborative communication.
 In ABC Company, due to the lack of information integration as mentioned in the
antecedent section, key activity of Information sharing cannot be performed
effectively. ABC is not able to exchange information timely and accurately within the
organization as well as with partners. Some examples for these are illustrated by the
managers as follows:
“Sales department is not updated with the current production capacity status; so when
we negotiate the due date for an order, we make decision based on the planning
documents. This can cause the wrong date and lead to the late delivery.” – ABC Sales
manager.
“The rescheduling manufacturing is not made timely because the actual vs planned
quantity is recorded at the end of day and sorted out the following day. Inventory
system is not able to link with production system; hence, the materials are sometimes
supplied to the plant and cause a lot of work-in-process (WIP).”- ABC Production
manager.
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 For Collaborative communication, without developing an integrated system and

sharing culture, ABC is not able to update the system status and the information is not
ready to share with its customers. XYZ, on the other hand, with a good background of
information system capability and an open culture of sharing can openly provide
customers with order status.
Level 4 – Quantitative management:

As regards to quantitative management, measuring performance is critical to identify problems
for any system (Gunasekaran et al., 2004). Through KPIs, firms are able to track, control, and
manage the variation in their capabilities and this system helps managers make decisions
(Chou, 2015). However, this practice is differently operated at two systems.
 For establishing a routine process for KPIs review, performance measurement has not
yet been established at ABC. At the moment, raw data have been recorded in the
electronic system; however, they have not been analyzed for management purpose
yet. On the other hand, XYZ has built a very good KPI system, which is customers’
requirement for auditing for each department. Data are processed daily and meetings
are held weekly to continuously up-date key metrics/goals.
 For designing a supplier scorecard- base system, according to the interview, there is
no criteria system for choosing or evaluating the suppliers at ABC Company, while
XYZ has developed a scorecard system for rating the supplier. Choosing suppliers at
ABC is explained as follows:
“We look for new suppliers from online websites and then we contact them. A supplier
is chosen if it accepts the instalment method” – ABC Sale manager.
Level 5 – Continuous improvement:

Continuously improving collaboration capability has not been recorded in practice (Fawcett et
al., 2008) and level 5 is considered as an ideal level for the industry. Neither have both
companies.
 Although XYZ has executed continuous improvement for the manufacturing system
based on the KPIs system, collaborative improvement initiatives such as reduction of
R&D or financial linkage have not been conducted yet.
 The benchmark system for SCC has not built in the literature as well as in the practice.
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6.2.2. Customer Relationship (Within-case)

For the within-case analysis, the relationship with customers at each company is considered
under these dimensions – customer involvement, customer’s influence and follow-up with
feedback (Zailani and Rajagopal, 2005). These dimensions are subjectively evaluated by
managers through the characteristics of each customer type.
ABC Company:
Three different types of customer at ABC Company are CMT, FOB, and OBM. The
comparisons among three types of customers are summarized in Table 6-2. It can be observed
that the level of collaboration of ABC’s customers is from low to medium to high for OBM,
CMT and FOB customers respectively. The reasons are described in the following paragraphs.
.
Table 6-2: ABC customer relationship level

Customer type OBM CMT FOB
Customer influence Low Medium High
Customer involvement Low Medium High
Customer feedback response Low Medium High
Customer relationship level Low Medium High
OBM Customer:
OBM customers are domestic end-users. Products for OBM customers are shirts which are
designed, manufactured, and retailed in Vietnam under its own house brands. These brands are
created based on the design and technology from international brands. Each brand has its own
distinct theme and the collections are uniquely styled targeting different consumer groups.
ABC has over 200 retail outlets and agents nationwide to distribute its products to customers.
Due to these characteristics, the degree of OBM customer’s influence and involvement on the
company are low. OBM customers do not involve in the manufacturing process. Moreover,
activities for customers’ feedback have not been set for product and service design and
improvement.
According to the interview, since there is no customer demand forecast for these products, there
is a massive inventory at distribution centers every year.
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CMT Customer:
CMT Customers are international customers. The characteristic of these customers is that they
provide fabrics, accessories, and packing elements. These materials are then done – cut make
and trim – by manufacturers. Due to these characteristics, the only requirement is meeting
technical measurements. As such, the customer only involves the manufacturing process with
the quality control/ quality assurance (QC/QA). The customers send (QC/QA) representatives
to the company to monitor and support the quality control process.
CMT customers have had a very long time relationship with the company based on the personal
connection between two executives. As such, the collaborative activities have not been clearly
set in the contracts. Manufacturing activities are basically to meet the requirement of quality
and delivery date. Jointly solving problems is basically about the quality problems and
solutions are determined by these representatives. For the other problems, these representatives
report to their managers and problems are solved based on negotiation by managers.
Due to these above characteristics, it can be seen that the level of customer involvement,
influence on the manufacturing system is higher than OBM customer. Besides, since CMT is
still the main production modality of the manufacturer, the role of these customers is important
to the survival of company. Therefore, the company must have a better response level to
customer’s feedback to meet the customers’ requirements.
FOB Customer:
FOB customers are new, big, and famous brands in the world. The characteristics of these
customers are that their products are up-to-date and following fashion trends. Hence, the
product type is varied from order to order and the quantity of each order is not big. The product
life-cycle is usually short and the customers tend to let the company source the fabrics and
trims or buy from their nominated suppliers. The ratio of FOB orders accounted for 50% of
total exports value of ABC, the influence of FOB customers on the company is very high. Due
to the significance of FOB customers, ABC has established the FOB Department with its own
staff to communicate with customers and factories. Therefore, this enables the company to
respond as well as supply customers quickly and efficiently.
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FOB customers have a very high standard for their products and they require the manufacturing
system to meet their requirements. As such, these customers have customer audits besides
quality audit and technician support to support the factory. In addition, the contracts are made
with more collaborative activities such as sharing cost and benefits for currency exchange
fluctuation, clearly defining for late shipping cost.
It can be clearly seen that FOB customers have a higher level of relationship with the
manufacturer in all terms of influence and involvement. The feedback response level is also
high to assure the manufacturing progress.
XYZ Company:
Currently, XYZ has about 8 main base international customers which are classified into two
groups: US and Japan. The comparisons among two customers are summarized in Table 6-3.
It can be seen that the level of customer integration is medium and high for US and Japanese
customers respectively.
Table 6-3: XYZ customer relationship level

Customer type US Japan
Customer’s influence Medium High
Customer involvement Medium High
Customer feedback response Medium High
Customer relationship level Medium High
The reasons are explained as follows.
Japanese Customer:
Having very frequent and large size order; they play a very important role to the manufacturer.
Japanese customers prefer famous brand names with very high standard of the quality for the
products.
The philosophy of Japan is “perfect”, Japanese customers do not accept late shipment or faulty
product. As such, to meet all the requirements, company must build a very high effective and
87
efficient “Japanese standard” production system. Everything must be done right the first time
and at a high level of quick response.
As a reward, Japanese customers have long-term commitments with the company which
indicate the mutual benefits and cost sharing. The relationship with Japanese customers is
considered as a win-win and long-term relationship.
US Customer:
While Japanese customers prefer quality, US customers focus on the fashion and trend;
therefore, US product types varied from order to order. US customers just order small quantity
irregularly. As such, they tend to not having long-term commitments with the manufacturer.
US philosophy is “acceptable”. Due to the characteristics of highly perishable and uncertain

demand, US customers do not require high quality for their products as well as production
system. Therefore, their involvement with the company is not much to support the
manufacturer and the response to US customers’ feedback is mostly based on negotiation.
6.2.3. Performance
The effects of SCC on performance are evaluated quantitatively through KPIs and qualitatively
through subjective assessment from managers. In this part, the KPIs analysis is presented. The
subjective evaluations are illustrated in the next section.
The KPIs of quality level, on-time-delivery, and utilization of one year are collected.
 Quality level is measured by the number of accepted products over the number of
inspected products. (Note: this is for the final product.)
 The indicator of On-time delivery (OTD) calculates the number of orders delivered on
time over total orders shipped. An order is delivered on time when the actual shipment
date meets its desired shipment date. The shipment date depends on the completion
date. (Note: The nature of CMT and FOB modality is that the customers are in charge
of the transportation costs (the freight). The manufacturers need to complete the orders
to meet the shipment date; otherwise, they must arrange the airship method to meet the
delivery date.)
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 The indicator of Capacity utilization uses the formula for capacity-utilization rate of
actual output divided by the planned output. This level gives insight into the overall
slack that is in a firm at a given point in time.
For XYZ Company, since it has built a very effective performance measurement system,
monthly 2015 KPIs reports of Production Department (Quality level and Utilization) and Sales
Department (On time delivery) are used. Table 6-4 is the results of the analysis. Appendix 6
provides an example of XYZ’s KPIs report.
Table 6-4: XYZ KPIs (Jan 2015 – Dec 2015)

Customer US Japan US Japan
Average
Product T-shirt Sweater
Quality level % 98.2 99.81 97.95 97.56 98.38
On time delivery % 99.40 99.5 96 98 98.23
Utilization % 103.52 103.75 99.20 108.62 103.77
Note: 1. 2015 marks the changes in the Japanese production system of sweater product
(reorganizing with new staff). This leads to the lower quality level than usual.
2. The Utilization is greater than 1, which says the system manufactures more products
than the plan. Since the material is supplied with the tolerance of +10% (to replace
defects) for each order, the company makes use of it. This leads to the overproduction
and these extra products are negotiated with the customer for a special price.
For ABC Company, since the performance measurement has not been established yet and only
raw data are recorded daily, relevant data are collected and analyzed for the KPIs. The report
of number of defects, the target quantity, and actual quantity are used to analyze the quality
level and utilization. On-time delivery is tracked based on the completed date and the shipment
date. Raw data is tracked back for one year from Aug 2015 to July 2016. Table 6-5 is the result
of the analysis. Appendix 7 provides an example of ABC raw data report. (Note: data is
recorded for each day and in Vietnamese language.)
Table 6-5: ABC KPIs (Aug 2015 – Jul 2016)

Customer CMT FOB OBM
Average
Product Vest Shirt Vest Shirt
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Quality level % 94.18 78.62 88.32 83.58 86.18

On time delivery % 78 74 70 85 76.75
Utilization % 83.4 82.23 83.4 82.23 82.82
Note: Raw data to analyze the utilization has not been recorded for each customer (only for
each product category). Therefore, there is an assumption that under the same product
type, the utilizations of different customer types are the same.
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PART 2: DISCUSSION
6.3. CROSS – CASE ANALYSIS

Cross-case analysis discusses the relationship between SCC and performance. SCC maturity
level and operational KPIs at each company are presented in Sections 6.2.1 and 6.2.3. The
summary is illustrated in Figure 6-2.
103.77
Utilisation % 82.82
XYZ - Level 4
98.23
On time delivery % 76.75 ABC - Level 1
98.38
Quality level % 86.18
0 50 100 150
Figure 6-2: SCC maturity level and performance
ABC Company is still in the early stage of SCC (level 1). At this level, collaborative process
is performed in an ad-hoc and chaotic manner. As is described before, antecedents to create the
capability for these processes are not properly developed, including Internal Alignment,
Relationship and Trust Building, Information Flow and System Integration; and Formalization.
Although collaborative activities still work, they frequently exceed the schedule documented
in the plan with high level of late delivery or waste in the system. Success does depend on the
individual competence and heroics in the organization such as executives’ connection or
negotiation skill of individual manager. And it is unable to repeat the success which is proven
through customer loss. XYZ, on the other hand, is at level 4 of the collaboration maturity. At
this level, XYZ is built on an established level 3 foundation where the "best practices" of
collaboration are shared and managed across the organization. The collaborative activities are
tailored from a set of standard processes to suit any customer order project. Adding to this,
level 4 places these key practices under statistical control of the process capability based on
historic data. KPIs system is built for all the departments and goals are set based on
measurement and analysis foundation. This allows the XYZ to identify deviations and generate
royals to the final result.
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Respectively, all the KPIs of XYZ are greater than ABC’s. To be more specific, the quality
level of ABC is lying within two-sigma with 86.18% compared to XYZ’s quality level, which
lies within three-sigma with 98.38%. The poor quality cost will definitely affect the company’s
financial status. The on-time-delivery percentage is certainly an important metric for
customers; ABC Company’s late delivery percentage is high with 23.25% compared to only
1.77% for XYZ Company. This will cause a big loss of airship cost for the ABC Company.
This will also result in ABC jeopardizing their long-term relationship with customers. Further,
the utilization of ABC is much lower than 1 or 100% on the percentage scale, while XYZ’s is
always greater than 1. This proves that ABC Company’s resource utilization is inefficient.
The results of the comparison between ABC and XYZ Company are consistent with the
literature that a lower level of collaboration maturity level results in a lower performance level
in their relationships. As per the literature review, there is a strong link between SCC level and
performance (Bititci et al., 2015); as such, all firms have strived to achieve a greater degree of
collaboration (Cao and Zhang, 2011). This study is able to build on the previous literature by
using these two case studies with real data to examine this link.
The following sections will give more details on this relationship.
6.3.1. Intra-organizational vs Inter-organizational Process

Obviously, customers’ satisfaction is vital to the survival of an organization and the core
strategy of any organization. Customers can be categorized as internal and external. External
customers are more likely to be clients who are outside of the company and actually buy the
company’s products or services. Internal customers are people in the organization who provide
products or services which in turn create a deliverable for the external customer. Since external
customers create revenue for the organization and customer defection means losing a business,
great external customer service is necessary to create customer satisfaction. Therefore, the
natural tendency is to focus on external customers, consequently placing less importance on
internal customers. However, it is known that health begins from the inside out. Excellent
external customer service depends upon healthy internal customer service practices. Internal
customers are the ones who prevent potentially negative experiences and deliver better service
to the external customers. Developing an effective internal customer service creates a good
health to run operations serving external customers for the organization.
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SCC practices for each process requirement are provided in Section 6.2.1. As it can be seen,
there are process requirements receiving answer “yes” from both companies, and the others
receiving different answers (“yes” from XYZ and “no” from ABC) between two companies.
These are summarized in Table 6-6. (Note: level 5 is not reached by both companies and no
practice has been recorded yet in the industry. This discussion does not include this level and
leaves it as an ideal level for further research.)
Table 6-6: Grouping Process requirements

Group Process requirements/ Company ABC XYZ
Managerial commitment and strategic intent
Level 2 Resource investment and development
Rationalization
Goal congruence
Group 1 Yes
Decision synchronization
Level 3 Incentive alignment
Resource sharing
Joint knowledge creation
Internal alignment
Relationship and trust building
Level 2
Information flow and system integration
Group 2 Formalization No Yes
Information sharing
Level 3
Collaborative communication
Level 4 Performance measurement
It can be seen from Table 6.6 that process requirements at first group are more external
customer oriented with activities directly joining with external customers (namely inter-
organizational process), while second group contains internal operational activities which are
more internal customer oriented process with (namely intra-organizational factors).
Group 1- inter-organizational process:

Inter-organizational process is the direct activity with external customers which has been built
at two companies such as having agreements on SCC goals (Goal congruence), jointly solving
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problems (Decision synchronization), mutually sharing benefits and costs (Incentive

alignment), cooperating resources (Sharing resource) and sharing knowledge (joint knowledge
creation). These are developed based on the prerequisites which are external customer focused
activities, including commitments and strategies based on the value of customer to the firm
(Managerial commitment and strategic intent), investments on resource which includes sharing
mechanisms throughout supply chain (Resource investment and development) and make-to-
order production modality which is customer based (Rationalization).
It is understandable that the company cannot exist without external customers. How customers
are treated plays an important role in staying and continuing the business with the company.
As such, organizations go all out to support their external customers and external customer
service to the customer must be properly built. ABC and XYZ are not an exception. Both
companies understand the value of good customer service to please the external customers.
Group 2- intra-organizational process:

The differences in the collaboration maturity between two companies are caused by group 2
which contain intra-organizational processes with internal customer satisfaction. At ABC,
inevitably, internal customers, who are staff, are not satisfied with the internal system. ABC
Company does not meet the intra-organizational process requirements at level 2 that are
antecedents, as such, the process requirements at levels 3 and 4 cannot be performed either.
Whereas, XYZ Company pays more focus on internal customer satisfaction with a healthier
and more satisfying operational system and work environment.
The differences can be seen and are the key activities of collaboration – Information sharing
along with Collaborative communication. At ABC Company, these processes cannot be
executed properly since the antecedent of Information flow and System integration has not
been well established to create the capability for the operation in the system. In addition, ABC
cannot create an information sharing culture due to the lack of the Formalization and
standardization for information management system. Along with the miss of these process
requirements in SCC practices, at level 2, the manufacturing system at ABC Company does
not work efficiently and effectively. This affects the Relationship and trust building with
external customers. Moreover, while XYZ Company manages its system based on KPIs system
and makes improvements based on quantitative measurement, ABC Company has not
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established the Formalization for KPIs, as such Performance measurement cannot be

performed yet.
Internal collaboration within an organization is usually considered under two dimensions – the
integration of physical and information flows which is labelled as “information integration”
and “coordination of operational decisions” (Tsanos et al., 2014). Consistently with this
classification, the observed differences between the two companies are caused by information
integration (Information Flow and System Integration, Formalization, Information sharing and
Collaborative communication) and operations management (Internal alignment, Relationship
and trust building, Formalization and Performance measurement).
In summary, the reason behind the observed differences between the two companies is their
internal capability, including information integration and operations management capability.
The next section will provide more information about the effects of these factors on the
performances.
6.3.2. Internal Collaboration and Effects on Performance

Literature has also shown that information integration (Sanders and Premus, 2005, Bharadwaj,
2000, Kearns and Lederer, 2003) and operations management (Zhu and Sarkis, 2004, Samson
and Terziovski, 1999, Brown et al., 2013, Bromiley and Rau, 2016) have a direct and positive
impact on performance. This is consistent with findings in this study.
As regards to information system, the integration is mentioned to be fostered by ERP systems

(Germain and Iyer, 2006); as a result, two companies are transitioning to cloud ERP systems.
However, the big difference in the ERP system between two companies can be seen there. At
ABC, all modules do not create an ERP integrated platform. The ineffective ERP system causes
the delay in the information sharing and increases the chances of contradictory data that causes
redundancy. This phenomenon is common for the low-level cross-functional integration that
different departments have worked independently (Chen et al., 2009). The effect of the IT
capability on performance is explained by a manager at ABC:
“Our sale department is not updated with the current production capacity status; so
when we negotiate the due date for an order with the customers, the decision is made
based on the production planning. At the beginning, this causes us the wrong planned
delivery date.” – ABC Sales manager.
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“The rescheduling of manufacturing is not timely made because the actual vs planned
quantity is recorded at the end of day and sorted out the following day. The inventory
system is not able to link with production system; hence, the materials are sometimes
unnecessarily supplied to the plant and cause a lot of work-in-process (WIP).”- ABC
Production manager.
XYZ, by creating the ability and capability for organization to share information, has
exchanged relevant, timely, accurate, and complete information within the company and the
operations are very smooth and problems are solved very quickly.
Besides, although IT enables connectivity, information-sharing culture magnify the value of IT

linkages (Fawcett et al., 2011b). The information-sharing culture at XYZ is well performed
due to the clear formalization of information to be shared as well as the staff responsibilities in
information system management.
“If we need data for requesting analysis, we do not know which department is in charge
of it and where to ask for. Therefore, without a clear specification of information to be
shared, it takes time and efforts have complete and accurate information.” – ABC Lean
manager.
Turning to operations management, it is the application of management science with various

scientific methods to an organization, such as Industrial Engineering, Decision Analysis, and
Optimization and so on. Currently, Lean manufacturing is considered as a managerial approach
in order to reduce waste (Berger, 1997); therefore, both companies have applied Lean tools to
improve their systems. However, substantial differences can be seen between two companies
(Section 6.2.1). ABC has not efficiently used management science or various scientific
methods to improve its performance. Inadequate management practice is common in
Vietnamese companies, causing their productivity to primarily be low by international
standards (Itpc, 2015). The consequences of the ineffective system are subjectively stated by
managers:
“We have many wastes in production system such as high (WIP), high quality defects.
The manufacturing system has many problems with very low quality level, on-time-
delivery, and effectiveness compared to other companies in the industry.” – ABC
Production manager.
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“Because of the nature of CMT production, customers tend to choose lower cost
manufacturers; therefore, the relationships are not long-term. We are struggling to find
new customers through vendors and most of the current long-term customers are based
on private relationship of CEO. One of the reasons is the high cost and the shortage of
an effective operations system.” – ABC Sale manager.
XYZ, on the other hand, creates the highest level of efficiency possible by quantitatively and
scientifically managing practices. The manufacturing process and work method are designed,
customized and innovated to enhance production efficiency, reduce raw material consumption
and waste discharges, and to optimize the production process and costs.
“Raw data is recorded, but have not been used for any analysis to evaluate the
performance. Improvement activities cannot be conducted because we are trying to
standardize the system.” – ABC Lean manager.
“We establish goals for productivity, measure through KPI and manage the system
quantitatively. Continuous improvement Kaizen is constantly performed.”– XYZ IE
manager.
There is a noticeable difference in the effectiveness of internal integration between two

companies. The findings from cross-case have shown that Information integration and
operations management are key factors to build an effective system which result the high
performance outcomes. The lack of information integration and operations management in
term of scientific management limits the organization’s ability to implement collaborative
initiatives with customers, which leads to a failure to meet specific maturity levels, and in turn
affects performance achievement. In addition, this inefficiency also results in low performance
measures.
6.4. WITHIN CASE

The cross-case analysis has discovered the role of internal collaboration to SCC maturity level
with customer and performance. This raises a question of whether external relationship actually
affects the performance. To eliminate the control of internal variable, the association between
external customer collaboration and performance is considered with the same background of
technology, human resource, and management and so on. The summary of collaboration level
and performance for within case is presented in Table 6-7.
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Table 6-7: Customer relationship level and performance

Company XYZ ABC
Customer US Japan US Japan CMT FOB OBM CMT
Customer
Mediu
relationship Medium High Medium High Medium High Low
m
level
Product T-shirt Sweater Vest Shirt
88.3 83.5
Quality level % 98.2 99.81 97.95 97.56 94.18 78.62
2 8
On time delivery
99.4 99.5 96 98 78 70 85 74
%
103.7 108.6
Utilization % 103.52 99.2 83.4 82.23
5 2
In ABC Company, under the same product category – either vest or shirt, it can be seen that
a higher level of customer collaboration leads to a negative effect on performances in both
terms of quality level and on time delivery. For example, in the category of vest product, quality
level and on-time-delivery of CMT Customer are 94.18% and 78% respectively, higher than
88.32% and 70% of FOB Customer even FOB Customer has a better relationship with the
manufacturer. The phenomenon is similar under the shirt category between OBM and CMT.
Here, two variables of customer integration and performance have a negative association.
In contrast to previous case, in XYZ Company, the customer with higher collaboration level
can create higher effectiveness for the operational system as demonstrated through the
performance indicators in all aspects. For example, in T-shirt category, Japanese customer with
a higher relationship level can create a higher level of quality, on time delivery and efficiency
for the manufacturer with 99.81%, 99.5% and 103.75% compared to 98.2%, 99.4% and
103.52% respectively from US customers.
Apparently, it is the inconsistency in the relationship between external relationship level and
performance. So, whether external relationship level is effective in enhancing firm performance
or not, research shows that while most of the authors agree that internal integration is positively
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associated with operational and business performance of the manufacturer in a direct or indirect
way, external relationship have been claimed to probably have the reverse impacts or no direct
association with performance (Flynn et al., 2010, Mackelprang et al., 2014, Kim, 2013). There
are several literatures with conflict perspectives and contrast findings (Kim, 2013,
Mackelprang et al., 2014). And these findings are concluded majoring from hypothesis testing
deductive with the lack of research discussing concepts and their relationships on a qualitative
basis (Fabbe-Costes and Jahre, 2008). Additionally, it is pointed out that there is still a lack of
research exploring how internal and external relationship interact (Flynn et al., 2010, Droge et
al., 2004). The link between them results being somewhat divergent (Fabbe-Costes and Jahre,
2008). As such, in this study, the interviews with managers are conducted to explore more
about this phenomenon. The reason of this inconsistency is provided by managers.
In ABC system, the adverse effect of external integration on performance is caused by the lack
of internal capability. When the requirements are high, the company is not capable of handling
those requirements and so it fails to meet the requirements.
“The more involvement the customers have, the more defective items are identified. We
are not capable enough to meet it at the first time. We must rework and solve and this
leads to the low quality level and low on time delivery percentage.” – ABC Lean
manager.
Meanwhile, XYZ Company is at a high level of internal collaboration; it is able to meet the
customers’ requirements. The effective integration will enhance the stability and robustness for
the system and link to performance. So the more integrated the company is with the customer,
the higher the performance is.
“Japanese customer has a very long-term relationship with us through long-term
contracts so we can build a standard and stable production system. While the US
customers do not have regular orders and the product type is very different so we must
re-setup the system for different orders. This leads to the lower efficiency and
effectiveness”. – XYZ Production manager.
As a result, the lack of internal capability is the reason of this conflict. These observations
demonstrate the moderating role of internal integration in the relationship between external
integration and the performance. If a system is well-integrated, the higher level of integration
with customer will lead to higher performance. It is clearly seen from within-case of ABC
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Company, due to the lack of internal integration, even the higher level of external integration
cannot bring higher performance for the company. XYZ Company has built an effective
system; hence, it is able to pursue successful external collaboration with customers.
In the literature, internal integration is also mentioned to positively generate external

integration (Gimenez and Ventura, 2005) or critical enablers/ vital link facilitating the
relationship between customer integration and supplier integration (Rosenzweig et al., 2003,
Flynn et al., 2010). Serving as a foundation of the external integration (Stevens, 1989, Fliedner,
2003, Kim, 2013, Zhao et al., 2011), internal integration also has a moderating effect on the
relationship of external integration and performance (Gimenez and Ventura, 2005, Rosenzweig
et al., 2003, Flynn et al., 2010, Kim, 2013, Mackelprang et al., 2014)
6.5. CONCLUSION AND IMPLICATIONS

The results of this study have indicated the strong link between SCC maturity level and
performance. The positive outcomes of SCC have been also observed, with the majority of
previous studies agreeing on the direct positive link with performance (Chen et al., 2009). The
case study method has also provided insights of the role of internal collaboration with
information integration and operations management to the collaboration maturity level,
external relationship and performance.
The lack of intra-organizational integration is the cause preventing manufacturers to achieve

the benefits of external integration and from fully impacting performance (Flynn et al., 2010,
Germain and Iyer, 2006, Williams et al., 2013, Koufteros et al., 2005, Cagliano et al., 2006).
ABC Company does not fully have an effective internal integration with information
integration and operations management capability; it cannot meet the requirement for high
collaboration maturity levels. This inefficiency results in low performance measures and
affects the relationship. XYZ Company, on the other hand, has built an effective system; hence,
it has a very high performance and is able to pursue successful external collaboration with
customers.
As such, internal collaboration is the prerequisite for outside collaboration among trading
partners in other findings (Stevens, 1989, Fliedner, 2003). In other words, internal failure is a
major barrier to SCC (Glenn Richey Jr et al., 2009). Furthermore, Internal integration is
confirmed to positively generate external integration (Gimenez and Ventura, 2005) or critical
enablers/ vital link facilitating the relationship between customer integration and supplier
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integration (Rosenzweig et al., 2003, Flynn et al., 2010). It has a moderating effect on the
relationship of external integration and performance (Gimenez and Ventura, 2005, Rosenzweig
et al., 2003, Flynn et al., 2010, Kim, 2013, Mackelprang et al., 2014).
Although capabilities of both internal and external integration are mentioned to be crucial to
achieve better performance (Huo, 2012), the majority of scholars tend to only pursue external
collaboration and often pay less attention at internal collaboration (Fawcett and Magnan, 2002,
Barratt, 2004, Flynn et al., 2010)
The key for managers is to understand that organizations should begin SCC with internal
collaboration to build the foundation for external collaboration (Flynn et al., 2010, Williams et
al., 2013, Huo, 2012). Firms should move effort toward increasing levels of communication
and cross-functional activities and then build external integration capabilities (Williams et al.,
2013, Won Lee et al., 2007). It is also mentioned that a firm with customer-driven business
should undertake work of integrating the firm internally to reap the fullest rewards (Germain
and Iyer, 2006). Irrespective of how much effort a firm spends to find new customer or maintain
a relationship, the research indicates that failure in internal integration is sufficient enough to
cause the failures in SCC.
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CHAPTER 7 : IMPROVEMENTS AND SYSTEM DYNAMICS
This chapter expands on the work of the preceding chapter and research design at Section 3.4.
Serving as a diagnostic tool, MM-SCC model identifies the problems and suggests the
improvement roadmap for the organization. Based on the findings of current SCC practices at
case studies, this chapter starts with improvement suggestions to solve problems to enhance
the maturity level to a higher level. Subsequently, aligning with the research objective to
foresee how a higher level affects the performance, SD method is used to simulate the future
scenarios and to see how the performance changes.
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As mentioned in Table 6.6, ABC cannot meet the requirements of information integration
(which are represented at Information flow and system integration, Information sharing,
Collaborative communication, and Formalization) and operations management (which are
represented at Internal alignment, Formalization, and Performance measurement). These
problems are rooted with the inefficiency in ERP system and managerial approach. Currently,
it is at level 1 with the lack of information integration and operations management and these
caused SCC failures and affected the firm’s performance in terms of quality, delivery on time
and efficiency. XYZ Company is at level 4 with the missing continuous improvements for level
5.
Solving the process requirements which were received “No” answer can lead the company to
a higher maturity level. For the future scenario, the next level for ABC is level 2 and for XYZ
is level 5. However, level 5 is considered as an ideal level for the industry and continuously
improving collaboration capability has not been recorded in practice (Fawcett et al., 2008).
Therefore, in this study, the researchers more focus on giving the suggestion for ABC
Company. If ABC can improve these practices and problems, ABC will reach a higher maturity
level since all the requirements at each level are met.
Since the problems are information integration and operations management, improvement
plans are raised as follows.
 For operations management, one of the philosophies of managerial approaches that
helps organizations to cope with the new competitive environment is Lean
manufacturing or Lean production (Shtub and Karni, 2010). This approach has also
received attention from managers searching for operational excellence during the last
decade (Berger, 1997) and is acknowledged as a “standard manufacturing mode of the
21st century” (Shah and Ward, 2007).
 Along with the development of Lean production, information technology (IT)
systems, particularly Enterprise Resource Planning (ERP) systems, have also been
affirmed as an effective tool for companies seeking efficiency through organizational
integration to improve their performance (Powell et al., 2013b, Laukkanen et al.,
2007). ERP is to provide the information and decision support to the management are
also developed (Shtub and Karni, 2010).
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Based on the fact that ABC Company has developed ERP and Lean Manufacturing activities,
improvement scenarios for ABC Company are suggested with improvement activities for
current ERP and Lean Manufacturing which identify problems and propose solutions with a
small scale tuning of a system rather than developing a new approach.
This improvement approach is called continuous improvement or Kaizen. Improvement can be

classified into small change (Kaizen) or innovative step change (process re-engineering)
(Bond, 1999, Masaaki, 1986). While innovation is usually implemented by Western
companies, Kaizen is focusing on incremental change with small and continuous improvement
which was introduced in Japan (Prajogo and Sohal, 2001).
7.1. IMPROVEMENT PLANS

7.1.1. Continuous Improvement for Lean Manufacturing
Lean manufacturing, well-known as the Toyota Production System (TPS), was originated in
Japan, particularly Toyota, after the Second World War (Pavnaskar et al., 2003). This term was
popularized in the book The Machine that Changed the World, which describes the profound
revolution of Toyota against the Western mass production system (Taj, 2008, Holweg, 2007).
This manufacturing philosophy has the critical starting point of “value” and the process targets
at removing waste and inconsistency in all aspects of operations (Womack and Jones, 1997,
Jasti and Kodali, 2015). Lean manufacturing gets tangible as well as intangible benefits to the
respective organizations (Jasti and Kodali, 2015) and these benefits are evident in factories
across the world (Pavnaskar et al., 2003).
The TPS or Lean house is based on three underlying elements: philosophical underpinnings,
managerial culture, and technical tools (Samuel et al., 2015). It has two pillars of Just-in-time
(JIT) and Jidoka under the spectrum of social aspect (Jasti and Kodali, 2015, Lander and Liker,
2007, Pavnaskar et al., 2003). These are related to a cost reduction initiative and a
philosophical approach focused on customer satisfaction (Pettersen, 2009). Lean
manufacturing uses tools which exist with multiple names and may be developed for different
purposes (Pavnaskar et al., 2003). For instance, 21 Lean practices are recorded by Shah & Ward
(2003); while Jasti & Kodali (2015) acknowledge 25 Lean tools in their research.
To make improvements for Lean system, the small change for improvement activities is known
as Kaizen (Bond, 1999, Masaaki, 1986). Kaizen, a compound word involving Kai (change) and
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Zen (for the better), is a Japanese term as the “principle of improvement” which is widely
known as “continuous improvement” in Western writing (Bhuiyan and Baghel, 2005, Bessant
and Francis, 1999). The first well‐known and most frequently cited proponent is KAIZEN
‐ The Key to Japan’s Competitive Success (1986) by Imai (Berger, 1997). It was first
applied in Toyota to improve efficiency, productivity and competitiveness and since then, has
become a part of the Japanese manufacturing system and has contributed enormously to the
manufacturing success (Singh and Singh, 2009). Kaizen is one of the well-known continuous
quality improvement strategies (Masaaki, 1986) and one of the underlying principles of lean
production and total quality management (TQM) (Paul Brunet and New, 2003, Berger, 1997,
Suárez-Barraza et al., 2011). Kaizen benefits have been indicated by many scholars, such as
waste reduction, employee skills improvement, increased productivity and improved quality,
space utilization improvement, and increased and improved communication among
administrative departments (García-Alcaraz et al., 2017).
The Kaizen step is the method following Plan – DO – Check – Act (PDCA) approach in some
basic fashion and similar to problem solving and the scientific method (Kato and Smalley,
2010, Suárez-Barraza et al., 2011). Kaizen implementation process is adopted from six-
step Kaizen improvement (Kato and Smalley, 2010) (Figure 7-1).
Figure 7-1: Kaizen implementation process. Source: (Kato and Smalley, 2010)
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This process should be applied to create small improvements for the system which can provide
substantial effects, including:
Step 1: Discover improvement potential

- To raise the awareness of the participant with regard to the nature of Kaizen and the
tremendous opportunity for potential improvement.
- Basic methods for uncovering waste and identifying improvement opportunities are
waste identification, 5S concepts, production analysis boards, and other techniques.
Step 2: Analyze current methods
- Analytic tools are useful in breaking down operations into smaller pieces for study and
improvement: process flowcharts, time study, motion analysis, and work element
analysis.
Step 3: Generate original ideas
- This next step involves creative thinking to generate new and better solutions from
synthesizing and analyzing information.
- Teams working together can often achieve more than initially believed possible. There
is some use for the checklists, guidelines and practice the art of brainstorming provided.
Step 4: Develop an implementation plan
- This step covers the bare essentials of making a Kaizen plan. Who will do what,
where, how, when, and why are fundamental questions that have to be answered
whether the plans are thought through or written down on paper.
Step 5: Implement the plan
- Practical use is offered with the realm of communication and instruction.
Step 6: Evaluate the new method
- Verifying whether improvements have actually occurred and then standardizing the
practices that have been improved.
- Kaizen without measurement and comparison is simply not Kaizen. Standardize what
works and, more importantly, revisit anything that did not work and try again.
7.1.2. Continuous Improvement for ERP Implementation

Along with the development of Lean production, ERP systems have also been affirmed as
playing a vital role in globalizing the operations and shortening the life cycle of a product (Liu,
2011). An ERP system is an integrated information technology which facilitates the flow of
data and information inside and among organizations (Li et al., 2008, Lee et al., 2003). This
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system allows the system to communicate through using a common database available in real-
time (Duplaga and Astani, 2003) and supports decision making to management (Shtub and
Karni, 2010).
According to Jacobs and Weston (2007), the need for data integration for ERP occurred in the
early 1990s. ERP has its predecessors MRP and MRP II (Jacobs, 2007). Material Requirements
Planning (MRP), which plans items, components and raw materials and procurement from a
“direct” demand was established in the late 1960s (Al-Mashari et al., 2003).This software was
a method for planning and scheduling materials for complex manufactured products (Jacobs,
2007). Since 1975, the term “Manufacturing Resource Planning” rather than Material
Requirements Planning has been used and in the 1980s, the MRP system was extended to
MRPII with newer systems’ capabilities (Hwa Chung and Snyder, 2000, Al-Mashari et al.,
2003). But MRPII still had shortcomings regarding providing functionality and integration of
the contemporary manufacturing reality (Hwa Chung and Snyder, 2000). Consequently, the
ERP system was first introduced in the late 1980s and in the beginning of the 1990s (Rashid et
al., 2002). The ERP system is basically an integrated software package with a set of standard
functional modules, including Financial, Controlling, Material Management, Human Resource
Management, Sales and Distribution and Production Planning (Botta-Genoulaz and Millet,
2006). ERP is developed or integrated by vendors such as SAP, Oracle, JD Edwards, People
Soft, and BAAN and so on (Botta-Genoulaz and Millet, 2006). However, most firms buy and
install their own modified ERP applications or customize them to fit their organization’s
practices (Lee et al., 2003).
ERP systems are designed to remove waste from the information generation process which is
based on a just-in-time basis for managers to make decisions (Green Jr et al., 2007). Most
common motivations of ERP include Operating cost reductions, Increased customer
responsiveness and Improved strategic decision making (Ross and Vitale, 2000). ERP has been
seen as an effective tool for companies seeking efficiency to improve their performance
(Powell et al., 2013b, Laukkanen et al., 2007).
The implementation of ERP is mentioned rarely a static ending point (McGinnis and Huang,
2007). The implementation phase is developed based on Deming’s Plan-Do-Check-Act
(PDCA). Continuous improvement activities are necessary to lengthen the life of the system.
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The improvement activities should be based on the implementation results, brainstorming for
improvement, cause and effect analysis, and verification and re-measurement (Figure 7-2).
Figure 7-2: Continuous Improvement for MRP/ERP Implementation. Source: (Ip et al., 2002)
Process integration is one of the important assumptions of any ERP (Ross and Vitale, 2000);
however, ABC has not reached to this state yet. The tools of continuous improvement are cause
and effect diagrams, Pareto chart, histogram, scatter diagrams, run chart and control chart to
describe key causes, understanding processes and measuring and tracking performance over
time.
7.1.3. ERP-based Lean System

While ERP and Lean are suggested to be built for ABC, it is said that there is an inherent
conflict between Lean principles and IT (ERP in particular) (Bruun and Mefford, 2004). This
section will discuss this view and further solution for this problem.
In the literature, research argues that ERP is a hindrance to Lean manufacturing and criticizes
ERP for encouraging inventories and inefficiency; hence, it is classified as a contributor to
wastes in Lean literature (Powell et al., 2013b, Powell et al., 2013a, Halgeri et al., 2010). While
Lean develops a pull system where production activities are only performed when demand
exists, the ERP system works based on “push” principle, where products are produced ahead
to meet expected demand (Halgeri et al., 2010, Bruun and Mefford, 2004, Riezebos et al.,
2009). Due to the differences in these two approaches to production, in some cases, ERP and
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Lean are considered to be unable to mix well (Steger-Jensen and Hvolby, 2008). There has
been much debate about its usefulness and its effects on performance among scholars (Roh and
Hong, 2015).
However, on the other hand, researchers claim that the fundamental of ERP systems is their
capabilities to “process transactions efficiently and to provide organized record keeping
structures for such transactions” and “does not in fact come from their inherent “planning”
capabilities” (Jacobs and Bendoly, 2003). Failures of ERP-based Lean systems are reported
because of the inefficiency in analyzing data to control and improve processes, as well as the
gap between the actual business processes and the ERP system functions (Powell et al., 2013b)
There are numerous cases where Lean practices have been successfully implemented thanks to
the ERP system (Powell et al., 2013b). ERP has been said to effectively store historical data
and provide additional transactional foundations that can be further analyzed to improve Lean
practices (Halgeri et al., 2010). ERP is claimed to successfully support Lean production,
particularly in the case of industries with highly uncertain and largely different demand for low
volume products (Powell et al., 2013b). Therefore, companies have built effective
manufacturing systems using Lean production practices facilitated by ERP to improve
operational efficiency and reduce waste in manufacturing (Powell et al., 2013b, Lenny Koh
and Simpson, 2005, Powell et al., 2013a).
As such, a new paradigm of ERP-enabled lean has been developed as a contemporary ERP
system. ERP is designed to support lean and traditional manufacturing practices. The ERP
system is considered as one of the tools in the lean toolbox (Powell et al., 2013b). Their studies
have first developed a framework of a ERP system supporting a pull system which provides a
roadmap for developing the full integration of pull prediction within an ERP system
infrastructure and presents a path for maturity levels used by ERP to support pull production
(Figure 7-3).
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Figure 7-3: ERP support for pull production: Capability maturity model. Source: (Powell et
al., 2013b)
Table 7-1 summarizes the ERP support for the pull production capability maturity model.
Table 7-1: ERP-based Lean system maturity model. Source: (Powell et al., 2013b)
- Ad-hoc approach to production planning and control.
1. Initial - Lean and ERP: function in an ad-hoc manner, no feedback and no support
- No goals defined
- A systematic approach to planning and controlling production, either Lean
2. Planned
production principles (pull production) or the ERP system
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- Push and pull practices are decoupled.

- The push planning of the ERP system and pull system on the shop floor
- Feedback loops between the pull system and the ERP system
3.
- Shop floor are systematically tracked and monitored in the ERP system
Validated
with intelligent planning and decision support functions.
- The ERP system actively supports the operation of the pull system in
order to improve performance.
4. - Actively support customer relationship management and visual
Controlled management
- A more systematic focus on the decision support functionality of the ERP
system
- The ERP system continuously improves the pull system by optimizing the
5. pull system parameters and characteristics
Optimizing - Optimizing supply chain performance
- Using real-time performance measurement information
The ERP and Lean system at ABC Company have been performed in an ad-hoc manner. ABC
has developed its own basic modules of the ERP system (Purchase, Human Resource,
Inventory, Sales and Marketing, and Production) and the modules of Finance and Accounting
and Customer Relationship Management (CRM) have not been developed yet. Although they
have electronic systems in place for some functions, each module works separately, performing
its own data-processing function and there is no ERP integrated platform. The Lean
manufacturing has been only performed at the very three first steps of the 5S tool. The
inefficiency is easily seen in on-site observation at ABC Company, where there is a high rate
of work-in-process (WIP), defects, or stoppages. Following the ERP support for pull
production capability maturity model, the Lean and ERP system itself are performing functions
in an ad-hoc manner. It is evident that the pull system does not provide feedback to the ERP
system and the ERP system does not support the pull system. Therefore, the maturity level for
the ERP-based Lean system is at a very initial stage (level 1). Continuous improvements are
suggested to apply to the current system and at the end, an ERP-enabled lean system is built.
An implementation process for an ERP-based Lean system can be divided into three major
phases, which span from 12 to 36 months to develop basic Lean and ERP (level 2), another 12
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to 24 months to build advanced ERP-enabled Lean Production (level 3-4), and a continuous
improvement phase (Powell et al., 2013a). The framework for implementation process is
described in Figure 7-4.
Figure 7-4: ERP-based lean implementation process framework. Source: (Powell et al.,
2013a)
7.2. ERP-BASED LEAN LEVEL VERSUS SCC MATURITY LEVEL

As mentioned above, building an ERP-based Lean system can help ABC Company to solve
the problem of information integration and operations management. As such, related process
requirements can be met and higher collaboration maturity will be reached.
As regard to the aim of this study to see the relationship between SCC maturity level and
performance, questions are raised: what are the characteristics of ERP-based Lean system at
each SCC maturity level? whether following the ERP-based Lean system maturity model leads
to SCC maturity level respectively? As such, there is a need to consider the characteristics of
ERP and Lean system at each SCC maturity level. The ERP-enabled Lean system is still new
and requires further future research for this application (Powell et al., 2013a). The relationship
between ERP-based Lean system and SCC maturity model has not been examined yet in the
literature.
This study will examine the relationship between these two variables based on the
characteristics of information integration and operations management at each level for each
model. A comparison is made in Table 7-2.
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Table 7-2: Comparisons between MM-SCC vs ERP-Lean system

Level MM-SCC ERP-lean system
1 - Process in ad hoc & chaotic manner - Function in ad-hoc & chaotic manner
- Process is prepared/ planned; and
performed mostly reactively,
- Lean and ERP are built but
repeatably
2 decoupled.
- Antecedents of Information
- No integration
Integration and Internal alignment are
built.
- Process is standardized and performed - Feedback between pull system and
3
proactively and consistently ERP system
- Process is quantitatively, statistically - ERP system actively supports the
4
managed operation of the pull system to
- Performance measurement improve performance
- Process performance: continually - The ERP system continuously
5
improved improves the pull system
The similarity in the characteristics of IT capability and operations management is found

between MM-SCC and ERP-Lean system.
 At level 1, information flow, system integration and operations management have not
yet been built with ad hoc and chaotic activities.
 At level 2, activities of Information Flow & System Integration, and Internal
alignment are placed with requirements and infrastructures. However, these activities
are still reactive and separate without the integration and smooth. At level 2, either
ERP or Lean is used and these practices are still decoupled.
 At level 3, collaboration activities are pro-active and consistent since information is
integrated and shared. This is performed by the feedback between the manufacturing
system and IT system. Level 3 witnesses the ERP-based Lean system with feedback
loops.
 Levels 4 and 5 mark the activities of quantitative performance measurement and
continuous improvement for the system. Performance is quantitatively and
continuously improved by enhancing ERP supporting functions for Lean system at
levels 4 and 5.
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This comparison can show the link between two models. As such, following ERP-based Lean
system can lead to the system to a corresponding maturity level of operations management and
information integration at each SCC maturity level. At the end, the system can enhance its SCC
maturity level with partners and the positive link between SCC maturity level and performance
is proven in chapter 6.
The next section will describe the new ERP-based system effects on the performance.
7.3. MODEL DEVELOPMENT

In order to perform the improvement function of the MM-SCC model, future scenarios will be
tested to foresee how the system changes. To simulate the effect of different future scenarios
of ERP-Lean based system (namely maturity level 2, 3, 4 and 5) on performance, a system
dynamics model of the manufacturing supply chain is developed for ABC system.
7.3.1 Building Model

At ABC Company, since most of the products are operated under Cut – Make – Trim (CMT)
production modality and the ratio of FOB orders accounts for 50% of ABC’s total exports
value, in this study, the model focuses more on CMT and FOB modes to build the model with
the Make-to-order mode.
A make-to-order manufacturing system with backlog is developed to observe how the ERP-
based Lean system affects the performance of the company. The typical model of a make-to-
order manufacturing system with basic functions of material management, manufacturing and
customer fulfilment is referred to Sterman’s model. This model offers the general modules of
product and the researchers modify the simulation model for the case study following the
current practices of the research case. The SFD capturing the model structure and the
interrelationships among the variables is presented in Figure 7-4. The model and associated
differential equations are developed using Vensim® PLE, Copyright © 1988-2015, Ventana
Systems, Inc.
In system dynamics model, stock variables are illustrated by rectangles; they present
accumulations and define the state of the system. Flow rates are pipes with valves that lead into
or out of stocks. While double lines are used for the physical flow, single lines with arrows
114
present the flow of information, which is for developing mathematical formulations. The
arrows also present the relationship between the two variables, with the sign “+” indicating the
same direction change and the sign “-” indicating the opposite direction change between them.
Auxiliary variables in upper case letters represent constant input, while those in lower case
letters are converters.
Causal loop diagrams describe the relationships among individual variables that link and form
closed loops. There are two types of loops, namely reinforcing and balancing, or positive and
negative, respectively. The reinforcing loops portray a scenario of growth and decay from a
result of action. Balancing loops, on the other hand, resist further increases in a given direction.
The overall polarity of a feedback loop is indicated by a symbol in its center. An “R” sign
indicates a positive loop; a large “B” sign indicates a negative loop.
As shown in Figure 7-4, the model presents the manufacturing supply chain process in three
modules: order fulfilment, material management, and manufacturing which are corresponding
with three balance loops – backlog control, material control and WIP control.
115
REJECTION
FRACTION
DELAY
FRACTION
<Desired WIP> +
<Desired material
inventory> Rejection rate
+
Initial WIP
Initial material
inventory WIP +
Gross production -Net production
Material - Gross production rate
Material delivery rate inventory Material usage rate start rate + rate
-
+ +
+
- <TARGET <CUSTOMER
DELIVERY DELAY> ORDER RATE>
Adjustment for PROCESSING
- +
B Feasible Production TIME
WIP +
Adjustment for start rate -
Material control
material inventory - Initial backlog
+ +
- B
+ Backlog
WIP control Order rate
Desired WIP Order fulfilment rate
+ +
Desired material MATERIAL
+ USAGE PER UNIT B
MATERIAL inventory CUSTOMER
Desired material ADJUSTMENT TIME + ORDER RATE
+ Backlog control
delivery rate WIP ADJUSTMENT
+
TIME
MATERIAL SAFETY
COVERAGE +
+
Adjustment for
+ +
+ Desired gross backlog
Desired gross + production rate
Desired material + -
usage rate production start rate
Material management
TARGET
Manufacturing DELIVERY DELAY
Figure 7-5: ABC’s manufacturing supply chain

116
Frequently used in manufacturing industries, unfinished work, either incomplete or in the

process of completion to customer orders is referred as backlog. In a production system, to
monitor the output performance, backlog is mentioned as the most important control variable
(Wiendahl and Breithaupt, 1999). Especially, ABC mainly performs outsourcing contracts and
make to orders. The nature of ABC’s production modality is Cut – Make – Trim (CMT) and
Free on Board (FOB) which the customers are in charge of the transportation costs (the freight).
If the manufacturer cannot meet the shipment date, it must arrange the airship method to meet
the delivery date. Since the airship is not cost-effective, delivery-on-time is vitally important
to the company. As such, we use backlog as performance measure in our simulation.
This model presents the basic functions of a manufacturing system with the output of backlog
indicator. This study uses this model to consider how the output changes when the
manufacturing system applies ERP-based Lean system. It is assumed that there is no
breakthrough in the functions of the model rather than changes in parameters of the system.
Improvement activities and different policies work on improving or changing the value of
auxiliary input variables. Improvement activities and different policies work on improving or
changing the value of auxiliary input variables.
The model is developed in stages with a number of assumptions made through the analysis to
simplify the system into a model. The following sections provide more description of the
model.
Order Fulfillment module

The model begins with Customer Order Rate, which is the aim of the organization and
generates the input for manufacturing part. The firm produces to meet the customer order. The
module of Order fulfillment is defined by the Backlog indicator. These parameters are defined
according to equations:
Order fulfillment rate = Net production rate

Order rate = CUSTOMER ORDER RATE
Backlog = INTEG (INTEGER(Order rate-Order fulfillment rate), Initial
backlog)Adjustment for backlog = Backlog/TARGET DELIVERY DELAY
Manufacturing module
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The Manufacturing module starts with the Desired Gross Production Rate, which is planned
from the Customer Order Rate. The process of manufacturing is monitored by the WIP and
Adjustment for WIP variables, which are the supply lines of pending production. Noting that
Sterman’s model does not include scrap rates, this study considers Rejection Rate in the
simulation model because this variable contributes partly to the cause of Backlog. This variable
divides the production rate into Gross Production Rate and Net Production Rate. Another
characteristic of this system is the Make to Order (MTO) manufacturing process, which
produces according to a specific customer order and holds no finished goods inventories. This
study does not consider the Inventory module; finished products from Net Production Rate will
be shipped to buyers as the Order Fulfillment Rate.
The equations for these variables are:

Desired gross production rate = MAX(0,CUSTOMER ORDER RATE + Adjustment for
backlog)
Desired gross production start rate = Desired gross production rate + Adjustment for
WIP
Adjustment for WIP = (Desired WIP-WIP)/WIP ADJUSTMENT TIME
Desired WIP = PROCESSING TIME*Desired gross production rate
Feasible Production start rate = Material usage rate/MATERIAL USAGE PER UNIT
Gross production rate = DELAY3(Gross production start rate, PROCESSING TIME )
Gross production start rate = Feasible Production start rate
Net production rate = Gross production rate-Rejection rate
Rejection rate = REJECTION FRACTION*Gross production rate
WIP = INTEG (INTEGER(Gross production start rate-Gross production rate), Initial
WIP)
Material Management module

Production can only begin if there is sufficient stock of materials. The Material Inventory is
generated from the Desired Gross Production Start Rate of the Manufacturing module.
Material Usage Per Unit will determine the Desired Material Usage Rate, which creates the
rate for material delivery. Material is then ordered and delivered to Material Inventory. Gross
Production Start Rate is equal to Feasible Production Start Rate, which is affected by the
readiness of the materials. Therefore, a variable called Delay Fraction is added to the model.
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This variable describes the current situation of the delay in Material Usage Rate because of the
setup time and the inefficiency of material planning.
The equations are:

Adjustment for material inventory = (Desired material inventory-Material
inventory)/MATERIAL ADJUSTMENT
Desired material delivery rate = MAX(0,Adjustment for material inventory +Desired
material usage rate)
Desired material inventory = Desired material usage rate*MATERIAL SAFETY
COVERAGE
Desired material usage rate = Desired gross production start rate*MATERIAL USAGE
PER UNIT
Material delivery rate = Desired material delivery rate
Material inventory = INTEG (INTEGER(Material delivery rate-Material usage rate),
Initial material inventory)
Material usage rate = Desired material usage rate*DELAY FRACTION
For the purpose of model testing, the model should be initialized in a balanced equilibrium.
This facilitates the testing process since the system remains in equilibrium until disturbed by
test inputs chosen to impose. If the model is not begun in equilibrium, its behavior will
confound the response to any test input with the transient behavior induced by the initial
disequilibrium (Sterman, 2000).
Equilibrium is the state of all stocks in the system unchanging, it implies that all stocks are
equal to their desired value. In this study, the initial condition for a balanced equilibrium is
achieved as:
Initial material inventory = Desired material inventory
Initial WIP = Desired WIP
Initial backlog = CUSTOMER ORDER RATE*TARGET DELIVERY DELAY
7.3.2. Base-case Parameters

The KPIs of ABC Company are recorded as in Table 7-4.
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Table 7-3: ABC’s KPIs of CMT and FOB

CMT FOB
Customer
Vest Shirt Vest Average
Reject percentage 5.82% 21.38% 11.68% 12.96%
On-time delivery 78% 74% 72% 75%
Utilization 83.40% 82.23% 83.40% 83.01%
The auxiliary variables of the model include:

 Customer Order Rate,
 Processing Time,
 Target Delivery Delay,
 Rejection Fraction,
 Material Safety Coverage,
 Material Usage per Unit,
 Material Adjustment Time,
 WIP Adjustment Time, and
 Delay Fraction.
For auxiliary variables, only values for Customer Order Rate and Rejection Fraction are found
from historical documents. Values for other variables, namely Delay Fraction, Material Usage
Per Unit, Material Adjustment Time, Material Safety Coverage, Processing Time, WIP
Adjustment Time and Target Delivery Delay are collected by managers and through
observations.
 For the first parameter – Customer Order Rate, since the quantity of orders is varied
from case to case, depending on production modality and type of products; to simplify
the reality and to make model feasible, the average number of quantity is used. During
the duration of one year, 567 orders with 1,863,636 units are recorded. With a total
number of working days being 269 days, the Customer Order Rate is 6928 units per
day (rounded to 7000).
 The Rejection Fraction is 12.96%, as shown in Table 7.5.
For the other parameters, value stream mapping (VSM) is used to analyze the current state.
VSM is a flowchart method of the process steps and information that are required from origin
120
to delivery to the customer. VSM illustrates added-value process steps of a product for which
a customer is willing to pay. Figure 7-5 illustrates the current stream of the organization. The
managers advise all the parameters.
Production Control 7000 units/ day
Planning Department Customer

Supplier
Weekly Daily
order order
Weekly ship Weekly schedule

schedule ` Daily ship
schedule
3 -7 days
Cutting Making KCS Ironing KCS Packing

WIP WIP WIP WIP WIP WIP
Warehouse Warehouse
5-7 days 2601 mins 55.2 mins 54 mins 55 mins 55.2 mins 1-2 days
1.8 mins 1.8 mins
509 mins 78 mins 1.7 mins 1.5 mins
Figure 7-6: ABC’s current value stream
 In the simulation model, the Processing Time is defined as the delay between
production start time and completion. This is the production time, which, in the map, is
measured from Cutting stage to Packing stage, with a total time of 3414.2 minutes (7.11
days).
 Target Delivery Delay is the time between placement of an order and receipt of an
order. The map shows that total time for an order is from 16.11 to 23.11 days (19.61
days as an average).
 Material Safety Coverage is set up with 7 days, in case the materials need to be
reordered, since it takes 3 to 7 days for material to be delivered.
 The Material Usage per Unit is currently set at 1.2 (which means the materials are
bought with 20% extra cushion for the actual need of the order) due to the high defect
level (12.96%).
The model also resorts to adjustment time for material and WIP to regulate them to the desired
level.
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 Material Adjustment Time is determined by the amount of time the company takes the
action, added to the amount of time for the supplier to supply. The average total time
for adjusting the material is 7 days with 2 days to recognize and take the action.
 WIP is recorded at the end of day and an adjustment solution (adding shifts or re-
planning) is made the day after. According to managers, it usually takes 2 days to
notice and make a decision on such problems and 2 additional days to solve them. The
total time for WIP Adjustment Time is 4 days.
Another variable that is added to the model and is considered a significant problem of the
Company is Delay Fraction. The map shows that the waiting time for ’making to start’ is 2,601
minutes. With the variety of materials involved – such as Fabric, Fusible interlining, Sewing
thread (Matching colors), Label (main label, size label, care label), Button, Motif and so on –
a long set up time is required for the readiness of all the necessary materials. Therefore, it
creates the variable of Feasible Production Start Rate, which makes Gross Production Start
Rate different from Desired Gross Production Rate. Managers subjectively evaluate this
fraction with the following explanation: “We have not considered the Delay Fraction in our
system. But we think the delay of material usage contributes 25% of reasons of the ineffective
utilization.” According to Table 7.4, the current utilization is 82.82%; hence, this delay
contributes 4.3% to the unfilled output. Therefore, the initial Delay Fraction is 95.7% of the
Desired Material Usage Rate.
Table 7-5 summarizes the values of auxiliary variables.
Table 7-4: Auxiliary variables of based-case

Variable Value Unit
Customer Order Rate 6928 (rounded as 7000) Units/ Day
Processing Time 7.11 Days
Target Delivery Delay 19.61 Days
Rejection Fraction 12.96 %
Material Safety Coverage 7 Days
Material Usage per Unit 1.2
Material Adjustment Time 7 (2 days of transaction time) Days
WIP Adjustment Time 4 (2 days of transaction time) Days
Delay Fraction 95.7 %
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7.4. MODEL VALIDATION

The validation of the model is important for testing the flaws, as well as the structure, of the
developed model to the real-world system. Since the simulation model is developed based on
Sterman’s model, the structure-oriented behavior validation for potential structural flaws has
been clarified. However, further research is needed to quantify the procedure with statistical
significance testing which is appropriate in testing the behavior prediction accuracy of the
model (Barlas, 1996).
The “Comparing the means” test is applied to compare the means of the simulated and observed
behavior patterns (Barlas, 1989). Percent error in the means is as |S-A|/A (S is simulated, and
A is the actual value). It is assumed that both S, and A are, in general, highly auto-correlated
data sets and as such this “Comparing the means” test can replace a standard t-test.
With the desired output of backlog, real data for this parameter is collected and compared with
the simulation scenario. These data are presented in Table 7-6.
As can be seen from Table 7.6, the total late days are 1,425 working days (which is equivalent
to 1,934 calendar days) for all the orders. This means that, with a Customer Order Rate of 7,000
units per day, the backlog is (7000*1425)/269 = 37,082 units per day. Please note that the total
working days of the company are 269 days.
Table 7-5: Data of the backlogs

8/ 9/ 10/ 11/ 12/ 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8/
Time Total
2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2016 2016 2016
Number of
55 73 52 57 30 41 20 39 22 44 36 37 61 567
orders
Number of late 14
15 8 21 14 3 6 0 16 10 9 5 17 17
orders 1
Total of late 19
299 62 236 272 32 187 0 162 202 128 103 119 132
days 34
The result of the backlog from the simulation run decreases from 135858 to the steady state of
30,698 with an average of 38,064 units (Figure 7-6).
123
150000
Units
100000
50000
0
161
11
21
31
41
51
61
71
81
91
101
111
121
131
141
151
171
181
191
201
211
221
231
241
251
261
1
Days
Figure 7-7: Simulation results of the backlog of based-case scenario
In this study, with the simulation result of 38,064 units and the real data of 37,082 units, the
mean difference is 2.6%. It is mentioned by Barlas (1989) in his study of validation tests of
system dynamics that “when the model has no systematic error, error of mean very rarely goes
beyond 5%”. This means that the model structure yields meaningful behavior under the
parameter values. For this reason, the developed model accurately corresponds to the real-
world system.
7.5. FUTURE SCENARIOS

ea the maturity scenarios are as follows (Table 7-3).
Table 7-6: ERP-Lean based system and maturity model scenarios

Maturity level Characteristics of ERP-Lean based system
Level 1 Ad-hoc manner
Level 2: Decoupled Lean only and ERP only
Level 3: Integrated Lean + ERP combination
Level 4 + 5 Improvement
The aim of this research is to see how ERP, Lean and ERP-Lean system affect the Backlog
indicator. The application of Lean and ERP activities will change the values of input parameters
and this leads to the variation of Backlog. As analyzed before, the current maturity level for
ABC’s ERP-based Lean system is at a very initial stage (level 1) with ad-hoc functions and no
support between them. According to the model, at level 2, either ERP or Lean is used and these
practices are still decoupled. Level 3 witnesses the ERP-based Lean system with feedback
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loops. Performance is quantitatively and continuously improved by enhancing ERP supporting

functions for Lean system at levels 4 and 5.
The input of different maturity levels of ERP-based Lean system can be presented by auxiliary
variables of the model. Auxiliary variables of based-case are presented in table 3. These
changes for each level are described as follows.
Level 2- Decoupled:
The effects of Lean principles on manufacturing parameters in the textile industry are found in
the literature review to have following benefits (Hodge et al., 2011):
 30% improvement in productivity (16% after one month),
 50% decrease in inventory,
 50% – 80% improvement in quality (65% as average),
 50% improvement in lead time, and
 50% improvement in unnecessary set-up time,
ERP systems basically provide an information backbone to support the organization to control
the material and information flows (Powell et al., 2013b) and it is mentioned not to have direct
impact on improved firm performance (Ward and Zhou, 2006). Therefore, in this study, we
assume that material-related activities (Processing Time, Target Delivery Delay, Rejection
Fraction, Material Safety Coverage, Delay Fraction and Material Usage per Unit ) improved
only by Lean production, while transaction time-related activities (Material Adjustment Time
and WIP Adjustment Time) can be adjusted by the ERP system. The quantitative effect of ERP
on transaction time has not been addressed so far in the literature, so it is assumed that there
are 25% and 50% improvement for transaction time respectively.
Level 3-4-5 – Feedback and improvement:

When ERP is integrated with Lean, it is mentioned to change the performance dramatically
(Ward and Zhou, 2006). However, the ERP-based Lean system is still new (Powell et al.,
2013a) and the quantitative research on performance is still lacking. Only one research is found
on the impact of both IT integration and Lean practices on lead-time performance. In this
research, only 6.2% of enterprises are successful with this combination (1.2% increased more
than 20% and 5% increased 1 to 20% of the lead-time) (Ward and Zhou, 2006).
125
As such, the parameters at levels 3, 4, and 5 (in which ERP-based Lean system is built properly)
are assumed. It is assumed that in a successful case when ERP is designed to support Lean
practices, all the parameters are improved at a level of 20% for material-related activities at
level 3 (compared to Lean case). Levels 4 and 5 are built based on 10% improvement of level
3. Note: the transaction time is the same as the only ERP case.
Input values are indicated in Table 7-7.
Table 7-7: Input parameters

Level 3 Level 4 + 5
Level 2
ERP-based Lean
(Decoupled)
system
Variable Level 1
20%
10%
Only Lean Only ERP improve
improved
d
Processing Time 4.98
7.11 7.11 3.98 3.59
(Days) (30% improved)
Target Delivery 9.81
19.61 19.61 7.85 7.06
Delay (Days) (50% improved)
Rejection Fraction 4.54
12.96 12.96 3.63 3.27
(%) (65% improved)
Material Safety 3.5
7 7 2.8 2.52
Coverage (Days) (50% improved)
Delay Fraction 97.85
95.7 95.7 98.28 98.45
(%) (50% improved)
Material Usage 1.1
1.2 1.2 1.08 1.07
per Unit (50% improved)
5 + 1.5 = 6.5
(25% improved
7 of transaction 6.5 6.5
Material
(2 for time)
Adjustment Time 7
transaction 5+1=6
(Days)
time) (50% improved 6 6
of transaction
time)
2 + 1.5 = 3.5
4 3.5 3.5
(25% improved
WIP Adjustment (2 for
4 of transaction
Time (Days) transaction
time)
time) 3 3
2+1=3
126
(50% improved
of transaction
time)
7.6. RESULTS AND DISCUSSION
The simulation time is set for one year (269 working days).
The simulation results of backlog at levels 1 and 2 (separately ERP and Lean) are presented in
Figure 7.7. A numerical comparison of the backlog at different levels is presented in Table 7-
8.
Backlog
160000
140000
120000
100000 Level 2 - ERP 50%
Unit
80000 Level 2 - ERP 25%

60000 Level 2 - Lean
40000 Current state
20000
0
39
13
26
52
65
78
91
182
104
117
130
143
156
169
195
208
221
234
247
260
Figure 7-8: Backlog of levels 1 and 2
Table 7-8: Backlog of levels 1 and 2

Level Steady value % improved
Level 1 – Base case 30698 -
Level 2 – ERP 25% 30846 <0
Level 2 – ERP 50% 31009 <0
Level 2 – Lean 5643 81.6%
It is clear from the simulation that the backlog can be improved up to 81.6% when Lean
manufacturing is properly applied. The manufacturing system reaches the steady state after
around 20 days while it takes 60 days in the current state. However, in the ERP case, the
backlog and steady state are not improved compared to the current state.
127
The role of Lean in dramatically reducing backlog variation has been confirmed in this study
as ultimately customer satisfaction and cost are also improved. Through applying Lean, waste
and variation of inventory, work-in-progress, defects or delays in manufacturing process are
removed and Lean has created a smooth a production flow of work. As such, it increases in
throughput and decreases the backlog. However, this finding shows that the application of ERP
system does not cause positive effects for the system. In the literature, the causal link between
ERP system implementation and firm performance is somewhat inconclusive (Roh and Hong,
2015) and there has been much debate about the investment in a costly and time consuming
technology (Roh and Hong, 2015). The evidence from simulation result lends the support to
this view.
Historically, the simultaneous implementation of these two systems has been called a paradox
since they have been seen as opposites. However, modern ERP solution has stopped this debate.
Researchers claim that the fundamental of ERP systems is their capabilities to “process
transactions efficiently and to provide organized record keeping structures for such
transactions” and “does not in fact come from their inherent “planning” capabilities” (Jacobs
and Bendoly, 2003). Failures of ERP systems are reported because of the inefficiency in
analyzing data to control and improve processes, as well as the gap between the actual business
processes and the ERP system functions (Powell et al., 2013b). Latest generation of ERP
systems are designed to offer support and fully embrace the lean philosophy.
Levels 3, 4, and 5 (ERP-based Lean system) are when ERP vendors develop methods to
integrate Lean features into the software by considering the scenario of an ERP system
supporting Lean production. The backlogs for these levels are compared with the Lean
scenario. Details are provided in Figure 7-8 and Table 7-9.
128
Backlog
80000
70000
60000 Level 2 - Lean
Unit 50000
40000 Level 3 - Lean and
30000 ERP (50%)
20000 Level 3 - Lean and
10000 ERP (25%)
0
21
41
61
81
1
161
181
101
121
141
201
221
241
261
Figure 7-9: Backlog of levels 2 and 3
Table 7-9: Backlog of levels 2 and 3

Level Steady value % improved
Level 2 – Lean 5643 -
3565 (25%) 36.8%
Level 3 – ERP-based Lean system 3602 (50%) 36.2%
From level 3, when the feedback loop between ERP and Lean happens, the improvements can
be easily seen comparing with the case of only Lean. The usage of specific ERP modules for
Lean principles is mentioned to be able to contribute to the Lean effects (Iris and Cebeci, 2014)
and the results from the simulation also support this contention.
Levels 4 and 5 make the improvements based on the level 3. These are illustrated in Figure 7-
9 and Table 7-10.
Backlog
60000
50000
40000 Level 4+5 -25%
Unit
30000 Level 4+5 -50%

20000 Level 3 - 50%
10000
Level 3 - 25%
0
106
121
136
151
166
181
196
211
226
241
256
16
31
46
61
76
91
1
Figure 7-10: Backlog of levels 3 and 4,5.
129
Table 7-10: Backlog of levels 3 and 4,5.

Level 3 Level 4+5 % improved
3565 (25%) 2860 (25%) 19.78%
3602 (50%) 2896 (50%) 19.6%
The output of the manufacturing system increases around 20% when the input is improved 10%
for all of levels 4 and 5.
7.7. MANAGERIAL IMPLICATIONS

This is the very first application of measuring the maturity of an ERP-based Lean system. The
results demonstrate a contradiction between the ERP and Lean approach, as well as how
effective it is when they are combined properly. It also fills the gap of quantitative-based
research measuring the effects with real data and with system dynamics approach.
The results confirmed how the performance improves when the organization reaches a higher
level of SCC maturity through the improvement of ERP and Lean system. While the benefits of
implementing lean manufacturing is shown through improving more than 80% of the backlog
for the company, the ERP system does not have a significant direct effect on the performance.
However, when ERP is properly designed to support Lean practices, the findings has shown its
enormous effectiveness. The study also highlights the role of Lean manufacturing itself and
how it mediates the influence of ERP on performance based on quantitative evidence.
Therefore, designing an ERP-based Lean system is necessary for companies. To build ERP-
based Lean system, firms need to build effective Lean practices before they can gain the
benefits from the ERP system to successfully develop an ERP-based Lean system. ABC
Company developed ERP system before establishing Lean practices so the benefits of ERP to
Lean system cannot be found.
130
Chapter 8: Conclusions
CHAPTER 8: CONCLUSIONS
This chapter presents the main findings and contributions of this research in relation to key aim
and research objectives in the research field of SCC and performance. The subsequent sections
highlight the limitations and provide suggestions for future research.
131
8.1. CONCLUSION
All the objectives and questions stated in chapter one have been achieved and answered. The
contributions and findings of this research can be summarized as follows:
Research Objective 1 (To develop a maturity model for SCC based on CMMI approach) &
Research Question 1 (What are maturity levels of SCC and what are the process requirements
for each maturity level)
Through a systematic and structured review, it is found that there is a great need for a maturity
model as an improvement tool for SCC based on the CMM/ CMMI approach. This model has
a potential to provide substantial benefits to the industry. This study has achieved the first
objective by developing the MM-SCC model based on the CMMI approach.
To build this model, the research question of maturity levels and process requirements of SCC
is answered, as follows:
 SCC process management experiences 5 maturity levels based on CMMI model,
including Initial, Managed, Defined, Quantitatively managed and Optimizing.
 To meet each level, the organization must meet a group of process requirements. A
systematic review of SCC process requirements has classified SCC implementation
into antecedents, key activities, and sustaining and improvement activities. Process
requirements along with sub-process requirements of each group are provided.
 Process requirements are allocated to each maturity level based on the characteristics
of that level.
This study is a novel contribution that fills the gap of maturity models for effective use in the
supply chain context (Akyuz and Erkan, 2010, Boughzala and De Vreede, 2012), particularly
in SCC. This model is not only first built in the literature which contributes to the theoretical
gap in the existing body of knowledge, but is also beneficial to the industry. The industry can
use it as a guideline or a diagnostic tool to compare the organization's capability to others’ and
itself over time. Through the model, the enterprises can have a look at current practices of what
have been done and what are missing. From this, the problems are identified; as such
improvement activities can be acknowledged.
132
Research Objective 2 (To practically apply the proposed model to identify the current practices
and measure the current SCC maturity levels via a case study of Vietnam’s textile and apparel
industry) & Research Question 2 (What are the specific requirements in Vietnam textile and
apparel industry context?) & Research Question 3 (What are the current practices and
maturity levels of SCC in Vietnam textile and apparel industry?)
To meet the research objective, the model is firstly validated by semi-interviews with experts
to answer the research question 2 of specific requirements for this context. Then, the model is
applied in two apparel companies to explore the current practices and measure the current
maturity level of SCC which is to answer the research question 3.
 Firstly, MM-SCC model content is validated by the experts before it is officially

applied in the real environment. This is important as the unique characteristics of each
industry type require the adjustment to adapt to particular needs. Semi-structured
interview using questionnaire is used to ask for the experts’ opinion. The data are
analyzed using a quantitative method with CVR index to validate each item in the
model. The results show seven unsuitable sub-process requirements in the Vietnam
textile and apparel industry.
 Secondly, two leading manufacturers in textile and apparel industry in Vietnam are
chosen to apply the model. Based on the model, the current practices of SCC with
customers are identified and SCC maturity levels are measured. This is done through
interviews with managers along with evidence from the observations and
documentaries.
The results show that the first organization is at very early stage while the second is at a mature
level. The difference can be systematically observed through comparing the each process
requirements between two systems. By applying the model, the managers can acknowledge the
significance of information integration and operations management capability in order to
achieve a higher level of collaboration maturity. This knowledge will enable managers to make
strategic decisions to produce a better SCC for their organization.
This is the first application and validation of the MM-SCC model based on the data from the
Vietnam textile and garment industry. The application shows the applicability and usefulness
of MM-SCC model. Through the model, the enterprises have an overview of current practices
133
and will be able to acknowledge what are missing and define improvement activities required
for developing to a higher level.
Research Objective 3 (To explore the relationship among SCC and performance outcomes) &
Research Question 4 (What are the KPIs of Vietnam textile and apparel industry?) & Research
Question 5 (To what extent the SCC and SCC maturity level affects the performance outcome
in Vietnam textile and apparel industry?)
This study contributes to the lack of empirical researches investigating the mechanisms of SCC
and their effects on performance (Kanda and Deshmukh, 2008, Alfalla-Luque et al., 2013),
especially qualitative-based research such as in-depth case studies to enhance the
understanding for this phenomenon in the real world (Fabbe-Costes & Jahre 2008). The effects
of SCC on performance have been observed and comprehended. This also fills the gap of real
data of the performance outcomes in examining the effects of SCC.
The third objective of examining the relationship between SCC and performance are achieved.
The embedded, multiple-case design is used at these two manufacturers. Multiple contexts with
sub-units of analysis of different types of customers are analyzed under cross-case and within-
case type. Main KPIs of Quality level, On time delivery and Utilization are defined (research
question 4). The effects are examined by comparing quantitative data of KPIs and by qualitative
evaluation of managers (research question 5).
 The results of cross-case analysis with the application of MM-SCC model to measure
the SCC maturity level show the positive correlation between SCC maturity level and
performance. It indicates the significance of internal collaboration with information
integration and operations management capability in achieving SCC practices and
superior performance.
 The results of within-case analysis, on the other hand, show the contrast on the effect
of collaboration on performance. This indicates the moderator role of internal
integration in the relationship between external collaboration and performance. It was
observed that the lack of internal integration may prevent external integration to
achieve positive association with performance.
134
The study provides evidence based insights on the role of internal collaboration with
information integration and operations management in building the SCC’s effectiveness and in
achieving superior performance. This type of SCC also plays as the moderator variable in the
relationship between customer and performance. These findings are valuable resources for
managers and have implications towards making strategic decisions for the enhancement of
performance.
Research Objective 4 (To make recommendations to improve the SCC maturity level and
foresee how the performance changes) & Research Question 6 (What are the improvement
plans based on the current practices to reach higher levels in Vietnam textile and apparel
industry?) & Research Question 7 (How will the performance change if improvement plans
are implemented in Vietnam textile and apparel industry?)
As the problems are identified, improvement activities can be acknowledged. Internal

integration with information integration and operations management is the root cause of SCC
failures. Research question 6 has been answered. Based on the current practices, the continuous
improvements are suggested for the current ERP system and Lean manufacturing rather than
the innovation. An ERP-based Lean system is the aim of these improvements (research
question 6).
To answer research question 7, SD method is used to foresee how the performance changes
when the organization follows these improvements to reach higher levels. A model of
manufacturing supply chain with make-to-order method is built with parameters of real data.
The results demonstrate a contradiction between the ERP and Lean approach when they work
separately, and how effective it is when they are combined properly.
This study is the very first application of measuring the maturity of an ERP-based Lean system
and the effects on the performance. Previously, this had not been examined quantitatively. The
results also highlight the role of Lean manufacturing itself and how it mediates the influence
of ERP on performance.
8.2. IMPLICATIONS
This research not only fulfils the identified need of the impact of SCC on performance in the
literature but also provides the valuable knowledge to engineering managers working on the
135
SCC. Although benefits of SCC are clearly claimed and the goal of collaboration is precise,
the review demonstrates that the success in mainstream implementation has been less than
expected. Thus, this study is a valuable resource for engineering managers to assist them
towards strategic decision making to avoid the pitfalls of implementation failure with the
following benefits:
 Firstly, the MM-SCC model provides a clear picture of SCC mechanisms at a system
level perspective. The synthesis of all SCC implementation processes with SCC
components will give the managers an insight on critical factors or primary drivers of
SCC implementation success. Managers can use this as a benchmark to diagnose their
current practices to determine the components that are missing in their current
practices. As a result, they have the resources to decide on actions to address the
missing components.
 Secondly, the case studies have shown the significance of internal collaboration in the
success of SCC initiatives. Capabilities of both internal and external collaboration are
mentioned to be crucial to achieve better performance. However, this is a common
problem in the industry as is stated in the literature that many companies tend to only
pursue external collaboration and often pay less attention to internal capability.
Further, there is the evidence of the lack of focus on internal collaboration at the
industry. Therefore, this study can raise awareness among engineering managers
about their systems’ failure. The key for managers is to understand that organizations
should begin SCC with internal integration to build the foundation for customer and
supplier integration.
 Thirdly, this research offers insights for the managerial implications of the role of the
ERP system in Lean manufacturing. It is apparent that an effective ERP-based Lean
system has a positive impact on system performance; therefore, designing an ERP-
based Lean system is necessary for companies. To build ERP-based Lean system,
firms need to build effective Lean practices before they can gain the benefits from the
ERP system to successfully develop an ERP-based Lean system.
8.3. LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

This section critiques the research conducted in this thesis and notes the following associated
limitations. Consequently, the outcomes generated by this thesis provide a solid background
for future research.
136
 Limitation and Direction #1:

Chapter 3 has developed the MM-SCC model based on the CMMI approach. However, while
the CMMI model supports two improvement paths using capability levels (for an individual
process area) and maturity levels (for a set of related processes), the MM-SCC was only built
to support the organization with the maturity levels. This study did not consider the capability
level of each individual process, but rather focused on meeting a group of process requirements
for SCC.
MM-SCC model is still in its initial stage of development and there is further need to consider
capability levels which consists of related specific and generic practices associated with that
process area.

This study is the first application of MM-SCC in real environment at single industry with two
case studies. Further research at other industries with more case studies can be done to further
validate and generalize the model.
Since the MM-SCC model is developed based on the findings from an

extensive literature review on the topic of SCC; the developed model should be applicable to
other industries. However, as each industry has its own unique characteristics, the content
validity is necessary before the model is applied in a specific context. This step will ascertain
whether there are other factors that are crucial in the selection or application of the model.

While SCC has the effects on operational, financial and environmental performance; only
operational performance has been considered in this study. Due to the confidentiality policies
regarding financial status, company’s financial data cannot be obtained.
For effective performance measurement and improvement, the measurement system should
reflect a balance between financial and non-financial measures. The environmental
sustainability and social performance has become an important objective of an effective supply
chain. Future study can extend the application to other aspects of the performance system. The
137
performance system should begin to include an assessment of environmental performance and

social performance along with financial and nonfinancial performances.

The maturity model serves as an improvement roadmap for an organization; however, this
study is not able to examine the effects of improvements using a longitudinal data. As such,
longitudinal case studies considering how conditions change at different points in time after
applying improvement activities with real data will contribute significantly to the existing body
of knowledge.

This study only focuses on the level of the dyadic buyer-supplier structure. Data collection is
only conducted at the manufacturers’ sites but not customers’. The interviews were conducted
with managers at manufacturers’ site with the record of its business with customers to verify
the managers' subjective evaluations for various variable measures.
A broader scale research on the whole chain and under different views of involved partners
regarding the practices of SCC and effects on performance will create valuable insights.

In the simulation model, the value of input parameters of the simulation model is assumed to
be deterministic. The factors of trend, seasonal or cyclical of data have not been considered.
Some parameters are subjectively measured by managers without the recorded data. As such,
a model that considers uncertainty parameters will add significant value to the literature.
138
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153
APPENDICES
APPENDIX 1: SUPPLY CHAIN COLLABORATION LEVELS

According to Lambert et. at (1996), relationship in supply chain ranges from arm’s length to
vertical integration (Figure 1). The partnerships will include three types: Type 1 involving
limited coordinating and planning activities which are short-term and in one function or
division within an organization; type 2 involving integration activities which are long-term and
in multi-functional area within an organization; and type 3 with high level of operational
integration where an organization considers partners as itself.
Partnerships
Arm’s Type 1 Type 2 Type 3 Joint Vertical

length ventures integration
Figure 1: Types of relationships. Source: (Lambert et al., 1996)
The transition in supply chain relationship is also described in the movement path for one
supplier to become a supply partner, which is from open market negotiations to collaboration
(Spekman et al., 1998) (Figure 2).
Open Market Cooperation Coordination Collaboration

Negotiations
• Prcie-based • Fewer • Informtation • Supply chain
discusions supplies linkages integaration
• Adversarial • Longer-term • WIP likages • Joint planning
relationships contracts • EDI exchange • Technology
sharing
Figure 2: Supply chain relationship key transition. Source: (Spekman et al., 1998)
The guidelines for collaborative supply chain system design and operation grouped
collaboration level into four types; basing on the level of information systems integration, level
of business process integration and level of decision systems integration (Muckstadt et al.,
2001):
1. Communicator type: Customers transmit orders to the firm and the firm is expected to
respond to these orders in the lead-time requested by the customer.
154
2. Coordinators: Firms effectively communicate and customers must also communicate
plans that are out of the ordinary. This level requires both a suitable information
infrastructure and supporting business processes.
3. Co-operators: Firms evolve to share and capture more detailed operational data about
inventory levels, stocking policies, and the customer’s customer demand. This level of
sharing permits a higher degree of forecasting accuracy throughout a supply chain in
terms of the size and timing of customer orders.
4. Collaborators: Firms carefully plan how capacity should be created throughout the
system. Joint decision making in processing and strategic and tactical plans must be
created collaboratively by supply chain partners and executed collaboratively to achieve
the maximum system effectiveness.
Similarly, a growth path called the “ladder of collaboration” for supply chain and suggested to
show how SCC happens was built (Kampstra et al., 2006). This is the step-wise improvement
of supply chain performance. SCC will go through four levels, starting at the lowest level which
is Arm-length:
1. Level 1 is Communication: It is assumed not to have collaboration at this level.
2. Level 2 is Coordination: This level focuses on the coordination of intra- and inter-
entity processes.
3. Level 3 is Intensive collaboration: Collaboration at this level increases the involvement
of the collaboration members to improve the strategic management decision-making and
enhance innovation in the chain.
4. Level 4 is Partnerships: Involving extended financial linkages, such as sharing of
investments and profits are collaboration.
Specifically, in the research of collaboration types applied as CPFR, Skjoett‐Larsen et al.

(2003) suggested that collaboration has three levels in the terms of basic, developed and
advanced depending on the integration and extent of the collaboration (Figure 3).
155
Scope of
collaboration Advanced CFPR
Synchronizing the dialogue between the partners which
is further than mere information exchange. Collaboration
processes are coordinated in forecasting, planning and
replenishment on the basis of a joint objective.
Qualifications for process improvement are also
developed to continue the development of competencies.
Developing CFPR
Firms start to co-ordinate and share
information by establishing agreements.
Collaboration happens in several areas.
The partners in the supply chain have
frequent exchange of information and
generation of trust in the relationships.
Basic CPFR
Firms only choose some basic collaboration
processes to collaborate with customers or
suppliers; however, the partners may neither co-
ordinate nor synchronize the process; therefore Depth of
there is a limited integration with partners. collaboration
Figure 3: Levels of CPFR. Source: (Skjoett‐Larsen et al., 2003)
Bititci et al. (2004) on the other hand, defined level of collaboration in supply chain following
the maturity model, including the following:
1. Ad hoc level where collaboration does not go beyond the traditional customer supplier
relationship;
2. Defined and Linked level where collaboration focuses on operational issues and
limited to collaborative planning, forecasting and replenishment of materials and
capacities;
3. Integrated and extended level where Collaboration at a strategic level, where integrated
and coordinated strategies lead to strategic synergy, i.e. extended and virtual enterprises
(Bititci et al., 2004).
156
APPENDIX 2: QUESTIONNAIRE
SECTION 1: GENERAL INFORMATION
Please give us the following information about yourself and your organization for statistical
purposes. If you work at industry, please answer part A; and if you work at academic
organization, please answer part B.
Part A: For industrial experts
Company information
1. Your company type
a. State-owned company c. Joint-venture company e. Foreign direct investment (FDI)
b. Joint stock company d. Limited liability company f. Other (please specify): …………….
2. Number of employees in your company
a. 1 -10 b. 11-200 c. 201-300 d. Over 300
Personal information
1. Your present job title
a. CEO/ president c. Director e. Senior staff
b. Vice President d. Manager f. Others (please specify): ………….............
2. Your job function
a. Corporate Executive d. Distribution/Warehouse g. Sales
b. Purchasing/Procurement e. Transportation/Logistics h. IT
c. Manufacturing/Operations f. Supply Chain i. Others (please specify): …………..
3. The years you have stayed at this organization
a. < 1 year b. 1- <5 years c. 5- <10 years d. >10 years
Part B: For academics

1. The years you have stayed in teaching
a. Under 1 years b. 1-<5 years c. 5-10 years d. Over 10 years
2. Which part of supply chain body you are teaching (mark all that applies)
a. Management c. Relationships/ partnerships e. Marketing
b. Logistics d. Best practices f. Organizational behaviors
g. Other (please specify): …………………..
157
For the definition of each maturity level which has a respective collaboration level. Please
provide your agreement level on these definitions using provided scale.
1 Strongly disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly agree
To each level, there are the process requirements to meet this level. For each process, sub-
process is also defined to perform that process. Please provide your feedback on the necessity
of these processes to meet each level using provided scale.
Definitely Definitely
1 2 Unnecessary 3 Neutral 4 Necessary 5
unnecessary necessary
Level 1
There is no process requirement for this level
Level definition
Scale of
Level type Level name Definition
agreement
Collaborative supply chain processes
are usually ad hoc and chaotic. The
organization usually does not provide a
stable environment for processes to
perform. Success in collaboration
Maturity level Initial process may happen, but it is still
dependent on individual initiative and
skills, not on the use of proven process, 1 2 3 4 5
and organizations are not able to repeat
their past successes.
At this level, firms do purely transaction
Arm’s and there is no degree of collaboration.
Collaboration
length Firms consider their customers and
level
relationship suppliers as enemies and seize as much
as possible to increase the profit margin.
Provide any comment or suggestion to improve this definition:
158
Level 2
Level definition
Scale of
agreement
Supply chain collaboration in
organizations start to be modified
towards basic activities.
Collaboration processes are planned
with requirements and involved
activities. Commitments are
Maturity level Managed
established among relevant
stakeholders. Collaboration
processes are performed and
controlled to meet requirements
according to documented plans but
mostly reactive and repeatable.
This level is the starting point of
collaborative initiatives and the most 1 2 3 4 5
basic of relationships. In this level,
firm receives the customers’ order,
tries responding in the lead-time
requested by the customer and do the
best to forecast the customers’
Collaboration
Communication needs. Some basic collaboration
level
processes are performed to
collaborate with customers or
suppliers; however, the partners may
neither co-ordinate nor synchronize
the process; therefore, there is a
limited integration with trading
partners.
159
Process requirements
Scale of
Process requirements for level 2
necessity
2.1 Managerial support 1 2 3 4 5
2.1.1 Establish clear strategic intent 1 2 3 4 5
Obtain commitment from chief executive and support from senior
2.1.2 1 2 3 4 5
functional management
Make the recognition of need for collaboration widespread and
2.1.3 1 2 3 4 5
visible through the organization
Provide any comment or suggestion (explanation for special scale, or additional sub-
process) for this requirement:
2.2 Internal alignment 1 2 3 4 5

2.2.1 Develop a supply chain mapping and role definition 1 2 3 4 5
2.2.2 Streamline operations 1 2 3 4 5
2.2.3 Select supply chain partners based on criteria 1 2 3 4 5
2.3 Resource investment and development 1 2 3 4 5

Invest financial and non-financial resources including time,
2.3.1 money, training, technology up-dates, top management’s 1 2 3 4 5
commitment and other resources
Develop sharing learning mechanisms throughout the organization 1 2 3 4 5
2.3.2
and supply chain
Establish project teams, cross-functional management, and
2.3.3 1 2 3 4 5
develop cross-experienced managers
2.4 Relationship and trust building 1 2 3 4 5
160
2.4.1 Establish a high level of trust within the organization 1 2 3 4 5
2.4.2 Establish a high level of trust with supply chain partners 1 2 3 4 5
Find qualified product suppliers and service providers that are
2.4.3 1 2 3 4 5
committed to continuous improvement
Define the appropriate type of relationship to establish with
2.4.4 1 2 3 4 5
specific supply chain members
Establish a supplier development program via process
2.4.5 1 2 3 4 5
improvement and product development
2.5 Information Flow and System Integration 1 2 3 4 5

Establish information systems capable of sharing real time
2.5.1 1 2 3 4 5
accurate & relevant information (connectivity)
Inculcate a willingness to share information across functions and
2.5.2 1 2 3 4 5
between organizations
2.5.3 Establish a revenue-tracking system 1 2 3 4 5
2.5.4 Improve forecast accuracy throughout the entire supply chain 1 2 3 4 5
2.6 Formalization 1 2 3 4 5
Co-develop performance metrics – key performance index,
2.6.1 scorecard, product/ service deliverables – and the resulting 1 2 3 4 5
incentive
2.6.2 Prior agreements on collaboration goals or objectives 1 2 3 4 5
Determine roles and responsibilities of each partner as well as 1 2 3 4 5
2.6.3
reporting
2.6.4 Mechanisms in the relationship 1 2 3 4 5
2.6.5 Lay out collaborative implementation plans 1 2 3 4 5
2.6.6 Align collaboration schedules 1 2 3 4 5
2.6.7 Specify information to be shared 1 2 3 4 5
2.6.8 Standardize information technology 1 2 3 4 5
161
2.7 Rationalization 1 2 3 4 5
Simplify the network—supply base, customer base, and service 1 2 3 4 5
2.7.1
provider reduction
2.7.2 Eliminate unnecessary or slow moving SKUs (stock keeping unit) 1 2 3 4 5
Level 3
Level definition
Scale of
agreement
Supply chain collaboration processes
are well characterized, understood and
described through a greater attention to
documentation, standardization,
procedures, tools, and methods.
Defined Standard collaboration processes are
Maturity level
managed proactively and consistently
spread to different areas of the
organization. Process objectives are
1 2 3 4 5
established and ensured to appropriately
address.
This form focuses on the coordination
of intra- and inter-entity processes.
Frequent exchange of information about
Collaboration
Coordination detailed operational data and generation
level
of trust in the relationships are
established between partners in supply
chain and collaboration tends to spread
162
to other areas of the enterprise. Flows
and certain routine decision-making
processes are synchronized between the
parties to improve speed and accuracy;
therefore, this level of sharing permits a
higher degree of forecasting accuracy
throughout a supply chain.
Scale of
Process requirement for level 3
necessity
3.1 Information sharing 1 2 3 4 5
3.1.1 Exchange relevant information 1 2 3 4 5
3.1.2 Exchange timely information 1 2 3 4 5
3.1.3 Exchange accurate information 1 2 3 4 5
3.1.4 Exchange complete information 1 2 3 4 5
3.1.5 Exchange confidential information 1 2 3 4 5
3.2 Decision synchronization 1 2 3 4 5

3.2.1 Jointly manage inventory 1 2 3 4 5
3.2.2 Jointly plan on product assortment 1 2 3 4 5
3.2.3 Jointly work out solutions. 1 2 3 4 5
3.2.4 Jointly plan on promotional events 1 2 3 4 5
3.2.5 Jointly develop demand forecasts 1 2 3 4 5
3.3 Incentive alignment 1 2 3 4 5

3.3.1 Share costs (e.g. loss on order changes) 1 2 3 4 5
163
3.3.2 Share benefits (e.g. saving on reduced inventory costs) 1 2 3 4 5
3.3.3 Share any risks that can occur in the supply chain 1 2 3 4 5
3.3.4 Be commensurate with our investment and risk 1 2 3 4 5
3.4 Goal congruence 1 2 3 4 5

3.4.1 Have agreement on the goals of the supply chain 1 2 3 4 5
Have agreement on the importance of collaboration across the 1 2 3 4 5
3.4.2
supply chain
Have agreement on the importance of improvements that benefit the
3.4.3 1 2 3 4 5
supply chain as a whole
Have agreement on achieving goals through working towards the
3.4.4 1 2 3 4 5
goals of the supply chain
Jointly layout collaboration implementation plans to achieve the
3.4.5 1 2 3 4 5
goals of the supply chain.
3.5 Resource sharing 1 2 3 4 5

Use cross-organizational teams frequently for process design and 1 2 3 4 5
3.5.1
improvement
3.5.2 Dedicate personnel to manage the collaborative processes 1 2 3 4 5
3.5.3 Share technical supports 1 2 3 4 5
3.5.4 Share equipment (e.g. computers, networks, machines) 1 2 3 4 5
Pool financial and non-financial resources (e.g. time, money, 1 2 3 4 5
3.5.5
training…)
3.6 Collaborative communication 1 2 3 4 5

3.6.1 Have frequent contacts on a regular basis 1 2 3 4 5
3.6.2 Have open and two-way communication 1 2 3 4 5
164
3.6.3 Have informal communication 1 2 3 4 5
3.6.4 Have many different channels to communicate 1 2 3 4 5
Influence each other’s decisions through discussion rather than 1 2 3 4 5
3.6.5
request
3.7 Joint knowledge creation 1 2 3 4 5

3.7.1 Jointly search and acquire new and relevant knowledge 1 2 3 4 5
3.7.2 Jointly assimilate and apply relevant knowledge 1 2 3 4 5
3.7.3 Jointly identify customer needs 1 2 3 4 5
3.7.4 Jointly discover new or emerging markets 1 2 3 4 5
3.7.5 Jointly learn the intentions and capabilities of our competitors 1 2 3 4 5
Level 4
Level definition
Scale of
agreement
Collaboration processes are
quantitatively managed in accordance
with agreed-upon metrics. Detailed
measures of supply chain
performance are collected and
Quantitatively statistically analyzed. Special causes
Maturity level 1 2 3 4 5
managed of collaboration process variation are
identified and corrected to prevent
future occurrences. Collaboration
process happens at a strategic level
where integrated and coordinated
strategies aim at achieving the overall
165
supply chain performance between
multiple parties.
All the collaboration members are

highly involved to improve the
strategic management decision-
Collaboration Intensive making and enhance innovation in the
level collaboration chain. At frequent meetings, all
relevant business processes are
coordinated on the basis of a joint
objective.
Scale of
necessity
4.1 Performance measurement 1 2 3 4 5
Establish a routine process involving: daily capacity planning
4.1.1 meetings; monthly KPI status review; quarterly executive 1 2 3 4 5
business reviews; and continual up-dating of key metrics/goals
Design a proactive supplier scorecard-based rating system to
4.1.2 1 2 3 4 5
drive continuous improvement
Level 5
Level definition
Scale of
agreement
166
Common causes of process variation are
addressed, identified, evaluated, and
deployed. Collaboration process
performance is continually improved
through both incremental and innovative
Maturity level Optimizing technological improvement towards the
common objectives of supply chain. The
interaction is truly through all chain
organizations and collaboration happens
to achieve the maximum supply chain
effectiveness.
Joint decision making are processing
1 2 3 4 5
from strategic to tactical plans to create
and execute collaboratively by supply
chain partners to achieve the maximum
system effectiveness. Improving
knowledge sharing, extended financial
Collaboration Partnership linkages, such as sharing of investments
level and profits between members and a
reduction in R&D time is the aim of this
classification. Improvement processes to
develop qualifications are performed
which lead to a more agile and
changeable supply chain.
Process requirements of level 5

Scale of
necessity
5.1 Continuous improvement 1 2 3 4 5
Organizational collaborative improvement initiatives (reduction of 1 2 3 4 5
5.1.1
R&D time, knowledge sharing, financial linkage…)
167
5.1.2 Benchmark 1 2 3 4 5
168
APPENDIX 3: CVR RESULTS
Number of the answers for Number of the
Level/
each agreement level answers for 4
Process requirement/
1 2 3 4 5 and 5 agreement
Sub-process requirement CVR
level
Level 1 0 1 4 11 4 15 0.5
Level 2 0 2 3 10 5 15 0.5
2.1 0 1 3 8 8 16 0.6
2.1.1 0 1 3 7 9 16 0.6
2.1.2 0 0 4 11 5 16 0.6
2.1.3 0 0 5 8 7 15 0.5
2.2 0 0 2 10 8 18 0.8
2.2.1 0 0 2 8 10 18 0.8
2.2.2 0 1 3 11 5 16 0.6
2.2.3 0 0 3 17 0 17 0.7
2.3 0 0 5 11 4 15 0.5
2.3.1 0 0 4 14 2 16 0.6
2.3.2 0 0 5 10 5 15 0.5
2.3.3 0 1 4 10 5 15 0.5
2.4 0 1 2 11 6 17 0.7
2.4.1 0 1 1 13 5 18 0.8
2.4.2 0 0 4 11 5 16 0.6
2.4.3 0 0 5 9 6 15 0.5
2.4.4 0 2 3 8 7 15 0.5
2.4.5 0 2 6 8 4 12 0.2
2.5 0 1 2 8 9 17 0.7
2.5.1 0 3 2 5 10 15 0.5
2.5.2 0 1 4 11 4 15 0.5
2.5.3 0 2 3 11 4 15 0.5
2.5.4 0 4 9 4 3 7 0
2.6 0 1 2 13 4 17 0.7
2.6.1 0 2 2 9 7 16 0.6
169
2.6.2 0 1 3 10 6 16 0.6
2.6.3 0 1 4 10 5 15 0.5
2.6.4 0 0 5 7 8 15 0.5
2.6.5 0 0 3 11 6 17 0.7
2.6.6 0 2 3 12 3 15 0.5
2.6.7 0 0 2 11 7 18 0.8
2.6.8 0 0 4 10 6 16 0.6
2.7 0 1 4 11 4 15 0.5
2.7.1 1 0 4 9 6 15 0.5
2.7.2 0 0 5 10 5 15 0.5
Level 3 0 0 0 12 8 20 1
3.1 0 0 0 9 11 20 1
3.1.1 0 0 2 6 12 18 0.8
3.1.2 0 0 0 10 10 20 1
3.1.3 0 0 0 7 13 20 1
3.1.4 0 0 0 9 11 20 1
3.1.5 0 0 5 8 7 15 0.5
3.2 0 0 2 12 6 18 0.8
3.2.1 0 0 5 8 7 15 0.5
3.2.2 1 0 3 11 5 16 0.6
3.2.3 1 0 1 9 9 18 0.8
3.2.4 3 5 10 2 0 2 0
3.2.5 0 0 4 10 6 16 0
3.3 0 0 1 9 10 19 0.9
3.3.1 0 0 3 8 9 17 0.7
3.3.2 0 0 2 9 9 18 0.8
3.3.3 0 0 1 11 8 19 0.9
3.3.4 1 0 2 11 6 17 0.7
3.4 0 0 0 14 6 20 1
3.4.1 0 0 1 11 8 19 0.9
3.4.2 0 0 0 12 8 20 1
3.4.3 0 1 1 12 6 18 0.8
170
3.4.4 0 0 0 14 6 20 1
3.4.5 0 0 2 12 6 18 0.8
3.5 0 0 4 12 4 16 0.6
3.5.1 1 1 3 10 5 15 0.5
3.5.2 0 1 1 12 6 18 0.8
3.5.3 0 1 1 12 6 18 0.8
3.5.4 0 1 4 10 5 15 0.5
3.5.5 0 2 3 12 3 15 0.5
3.6 0 0 1 14 5 19 0.9
3.6.1 0 0 2 10 8 18 0.8
3.6.2 0 0 1 9 10 19 0.9
3.6.3 0 0 5 11 4 15 0.5
3.6.4 0 0 2 12 6 18 0.8
3.6.5 0 0 3 12 5 17 0.7
3.7 0 2 3 8 7 15 0.5
3.7.1 0 1 4 9 6 15 0.5
3.7.2 0 2 3 7 8 15 0.5
3.7.3 0 5 8 7 0 7 0
3.7.4 0 1 10 8 1 9 0
3.7.5 0 3 13 3 1 4 0
Level 4 0 0 1 7 12 19 0.9
4.1 0 0 0 7 13 20 1
4.1.1 0 0 1 7 12 19 0.9
4.1.2 0 0 0 5 15 20 1
Level 5 0 0 1 7 12 19 0.9
5.1 0 0 0 7 13 20 1
5.1.1 0 0 0 7 13 20 1
5.1.2 0 0 0 8 12 20 1
171
172
APPENDIX 4: MM-SCC MODEL – VIETNAM TEXTILE AND APPAREL
CONTEXT
Level 1: Initial – Arm’s length relationship

Collaborative supply chain processes are usually ad hoc and chaotic. The
organization usually does not provide a stable environment for processes
Maturity level to perform. Success in collaboration process may happen, but it is still
dependent on individual initiative and skills, not on the use of proven
process, and organizations are not able to repeat their past successes.
At this level, firms do purely transaction and there is no degree of
Collaboration
collaboration. Firms consider their customers and suppliers as enemies
level
and seize as much as possible to increase the profit margin.
Level 2: Managed – Communication

Level type Definition
Supply chain collaboration in organizations start to be modified towards
basic activities. Collaboration processes are planned with requirements
and involved activities. Commitments are established among relevant
Maturity level
stakeholders. Collaboration processes are performed and controlled to
meet requirements according to documented plans but mostly reactive and
repeatable.
This level is the starting point of collaborative initiatives and the most
basic of relationships. In this level, firm receives the customers’ order,
tries responding in the lead-time requested by the customer and do the best
Collaboration to forecast the customers’ needs. Some basic collaboration processes are
level performed to collaborate with customers or suppliers; however, the
partners may neither co-ordinate nor synchronize the process; therefore,
there is a limited integration with trading partners.
Process requirements:
ID Process requirements for level 2 Yes/No Evidence
2.1 Managerial support
173
2.1.1 Establish clear strategic intent
Obtain commitment from chief executive and support from
2.1.2
senior functional management
Make the recognition of need for collaboration widespread
2.1.3
and visible through the organization
2.2 Internal alignment
2.2.1 Develop a supply chain mapping and role definition
2.2.2 Streamline operations
2.2.3 Select supply chain partners based on criteria
2.3 Resource investment and development
Invest financial and non-financial resources including time,
2.3.1 money, training, technology up-dates, top management’s
commitment and other resources
Develop sharing learning mechanisms throughout the
2.3.2
organization and supply chain
Establish project teams, cross-functional management, and
2.3.3
develop cross-experienced managers
2.4 Relationship and trust building
2.4.1 Establish a high level of trust within the organization
2.4.2 Establish a high level of trust with supply chain partners
Find qualified product suppliers and service providers that
2.4.3
are committed to continuous improvement
Define the appropriate type of relationship to establish with
2.4.4
specific supply chain members
2.5 Information Flow and System Integration
Establish information systems capable of sharing real time
2.5.1
accurate & relevant information (connectivity)
Inculcate a willingness to share information across functions
2.5.2
and between organizations
2.5.3 Establish a revenue-tracking system
2.6 Formalization
174
Co-develop performance metrics – key performance index,
2.6.1 scorecard, product/ service deliverables – and the resulting
incentive
2.6.2 Prior agreements on collaboration goals or objectives
Determine roles and responsibilities of each partner as well
2.6.3
as reporting
2.6.4 Mechanisms in the relationship
2.6.5 Lay out collaborative implementation plans
2.6.6 Align collaboration schedules
2.6.7 Specify information to be shared
2.6.8 Standardize information technology
2.7 Rationalization
Simplify the network—supply base, customer base, and
2.7.1
service provider reduction
Eliminate unnecessary or slow moving SKUs (stock keeping
2.7.2
unit)
Level 3: Defined – Coordination

Supply chain collaboration processes are well characterized, understood
and described through a greater attention to documentation,
standardization, procedures, tools, and methods. Standard collaboration
Maturity level
processes are managed proactively and consistently spread to different
areas of the organization. Process objectives are established and ensured to
appropriately address.
This form focuses on the coordination of intra- and inter-entity processes.
Frequent exchange of information about detailed operational data and
generation of trust in the relationships are established between partners in
Collaboration supply chain and collaboration tends to spread to other areas of the
level enterprise. Flows and certain routine decision-making processes are
synchronized between the parties to improve speed and accuracy; therefore,
this level of sharing permits a higher degree of forecasting accuracy
throughout a supply chain.
175
ID Process requirement for level 3 Yes/No Evidence
3.1 Information sharing
3.1.1 Exchange relevant information
3.1.2 Exchange timely information
3.1.3 Exchange accurate information
3.1.4 Exchange complete information
3.1.5 Exchange confidential information
3.2 Decision synchronization
3.2.1 Jointly manage inventory
3.2.2 Jointly plan on product assortment
3.2.3 Jointly work out solutions.
3.3 Incentive alignment
3.3.1 Share costs (e.g. loss on order changes)
3.3.2 Share benefits (e.g. saving on reduced inventory costs)
3.3.3 Share any risks that can occur in the supply chain
3.3.4 Be commensurate with our investment and risk
3.4 Goal congruence
3.4.1 Have agreement on the goals of the supply chain
Have agreement on the importance of collaboration across the
3.4.2
supply chain
Have agreement on the importance of improvements that
3.4.3
benefit the supply chain as a whole
Have agreement on achieving goals through working towards
3.4.4
the goals of the supply chain
Jointly layout collaboration implementation plans to achieve
3.4.5
the goals of the supply chain.
3.5 Resource sharing
Use cross-organizational teams frequently for process design
3.5.1
and improvement
3.5.2 Dedicate personnel to manage the collaborative processes
176
3.5.3 Share technical supports
3.5.4 Share equipment (e.g. computers, networks, machines)
Pool financial and non-financial resources (e.g. time, money,
3.5.5
training…)
3.6 Collaborative communication
3.6.1 Have frequent contacts on a regular basis
3.6.2 Have open and two-way communication
3.6.3 Have informal communication
3.6.4 Have many different channels to communicate
Influence each other’s decisions through discussion rather than
3.6.5
request
3.7 Joint knowledge creation
3.7.1 Jointly search and acquire new and relevant knowledge
3.7.2 Jointly assimilate and apply relevant knowledge
Level 4: Quantitatively managed – Intensive collaboration

Collaboration processes are quantitatively managed in accordance
Maturity level with agreed-upon metrics. Detailed measures of supply chain
performance are collected and statistically analyzed. Special causes of
collaboration process variation are identified and corrected to prevent
future occurrences. Collaboration process happens at a strategic level
where integrated and coordinated strategies aim at achieving the
overall supply chain performance between multiple parties.
All the collaboration members are highly involved to improve the
Collaboration level strategic management decision-making and enhance innovation in the
chain. At frequent meetings, all relevant business processes are
coordinated on the basis of a joint objective.
4.1 Performance measurement
177
Establish a routine process involving: daily capacity
planning meetings; monthly KPI status review; quarterly
4.1.1
executive business reviews; and continual up-dating of key
metrics/goals
Design a proactive supplier scorecard-based rating system
4.1.2
to drive continuous improvement
Level 5: Optimizing – Partnership

Common causes of process variation are addressed, identified,
evaluated, and deployed. Collaboration process performance is
Maturity level continually improved through both incremental and innovative
technological improvement towards the common objectives of supply
chain. The interaction is truly through all chain organizations and
collaboration happens to achieve the maximum supply chain
effectiveness.
Joint decision making are processing from strategic to tactical plans to
create and execute collaboratively by supply chain partners to achieve
Collaboration the maximum system effectiveness. Improving knowledge sharing,
level extended financial linkages, such as sharing of investments and profits
between members and a reduction in R&D time is the aim of this
classification. Improvement processes to develop qualifications are
performed which lead to a more agile and changeable supply chain.
5.1 Continuous improvement
Organizational collaborative improvement initiatives
5.1.1 (reduction of R&D time, knowledge sharing, financial
linkage…)
5.1.2 Benchmark
178
179
APPENDIX 5: MODEL APPLICATION SUMMARY
ABC XYZ
Intervie
Process Interv
wee/
requirements Ans Evidence iewee/ Ans Evidence
wer Depar wer
Depart
tment
ment
- GA Yes 2.1.1. Clearly stated in - GA Yes 2.1.1. Clearly stated in
vision and mission as vision and mission as a
a business strategy business strategy
2.1.2. Commitment 2.1.2. Commitment
and support from and support from
2.1.
chief executive and chief executive and
Manageri
senior manager as an senior manager as an
al
active role to drive active role to drive
commitm
development and development and
ent and
execution for execution for
Strategic
collaboration collaboration
intent
initiatives initiatives
Lev
2.1.3. Published on 2.1.3. Published on
el 2
website, poster and in website, poster and in
presentation or presentation or
workshop workshop
- Produc No 2.2.1. Report/ - Produ Yes 2.2.1. Report/
tion presentation of ction presentation of
- Lean company’s role in - IE company’s role in
2.2. - Sales supply chain supply chain
Internal 2.2.2. Operations is 2.2.2. Operations
alignment not streamline with system meets
many WIPs, defects international standards
and interruption 2.2.3. Criteria to
choose partners:
180
(observations and documented
examples) requirements based on
2.2.3. Criteria to strategy and capacity
choose partners is not
set
- HR Yes 2.3.1.Clearly stated in - GA Yes 2.3.1.Clearly stated in
- Lean mission and vision - IE mission and vision and
2.3. - ERP and reports of the reports of the
Resource investment investment
investmen 2.3.2. Meeting, 2.3.2. Meeting,
t and workshop, conference workshop, conference
developm 2.3.3. Training 2.3.3. Training
ent program: trainee program: trainee
program, management program, management
training program training program
- Sale No 2.4.1. Do not have - Sale Yes 2.4.1. Open and trust
- Lean high level of trust in - IE culture
the organization due
to the effects of state- 2.4.2. Trust with
owned managerial partners is built based
approach before the on competence,
2.4. renovation policy openness in sharing/
Relations 2.4.2. Have not got dealing with the
hip and high level of trust with partnership, and self-
trust partners, customers inspection programs
building must get involved in 2.4.3. Supplier
the manufacturing assessment based on
process to support and documents and audit
audit 2.4.4. Clearly stated in
2.4.3. No supplier the meeting, strategy
assessment/ choose documents and
online contracts
181
2.4.4. Not really,
mainly based on
relationship of
executive board with
the partners
- ERP No 2.5.1. ERP system is - IT Yes 2.5.1 Fully ERP
- Lean not fully developed system, own
and connected, paper warehouse software,
2.5.
work, no EDI own online OSAS
Informati
2.5.2. Have not built system, EDI
on Flow
the sharing and open 2.5.2. Open and
and
culture to information sharing culture based
System
2.5.3. No revenue on company policy and
Integratio
tracking system rules
n
2.5.3. Revenue
tracking system
integrated with ERP
- Lean No 2.6.1. Partners based - IE Yes 2.6.1. Audit/reports
on executive board’s - GA based on performance
relationship, no audit, metric, clearly stating
no mutual benefit/ mutual benefit/
incentive. incentive
2.6.7. No rules of 2.6.7. Information
information sharing sharing rules are well
2.6.
2.6.8. IT system has defined and publicly
Formaliza
not been standardized 2.6.8. IT system is
tion
yet within the standardized within the
organization and with organization and
partners sharing with partners
2.6.2 +2.6.3 + 2.6.4 + via EDI
2.6.5. Collaboration/ 2.6.2 +2.6.3 + 2.6.4 +
relationship is defined 2.6.5. Collaboration/
in contract with roles/ relationship is defined
182
responsibilities/plans/ in contract with roles/
schedules responsibilities/plans/
schedules
2.7. - Lean Yes 2.7.1. Customer base - GA Yes 2.7.1. Customer base
Rationaliz - Wareh network - Ware network
ation ouse 2.7.2. Make to order house 2.7.2. Make to order
- ERP No 3.1.1 + 3.1.3 + 3.1.4. - IT Yes 3.1.1 + 3.1.3 + 3.1.4.
No relevant/accurate/ Relevant/accurate/
complete information complete information
is shared, data is not is shared based on the
stored consistently performance
and accurately, do not measurement system
3.1. know where 3.1.2. and ERP system
Informati Cannot exchange 3.1.2. Information is
on timely information, updated every second
sharing updated on paper and on OSAS system that
shared at the end of links to ERP
day 3.1.5. Confidential
Le
3.1.5. There is no information is shared
vel
policy for confidential for relevant
3
information. departments based on
policy/ rule
- Lean Yes 3.2.1. Harship - IE Yes 3.2.1. Customer can
- Wareh solution for inventory - Sale track the production
ouse - Ware progress/ inventory.
3.2.
3.2.2. Product house Harship solution for
Decision
assortment: inventory
synchroni
production modality 3.2.2. Product
zation
(CMT, FOB, OBM), assortment:
product types (shirt, production lines for
vest…)
183
3.2.3. Solution for sweater and T-shirt
problems: negotiating and for US and Japan
or based on the 3.2.3. . Solution for
contract problems: negotiating
or based on the
contract
- Sale Yes 3.3.1 + 3.3.2 + 3.3.3. - Sale Yes 3.3.1 + 3.3.2 + 3.3.3.
Sharing cost/ benefits/ - Produ Sharing cost/ benefits/
risk through ction risk through
negotiating or based negotiating or based
on the contract such as on the contract such as
3.3.
hardship sharing or hardship sharing or
Incentive
air-shipment sharing air-shipment sharing
alignment
3.3.4. Customers with 3.3.4. Customers with
big and frequent big and frequent
orders (long-term orders (long-term
investment) receive investment) receive
the higher priority the higher priority
- Vice Yes 3.4.1 + 3.4.2 + 3.4.3 + - GA Yes 3.4.1 + 3.4.2 + 3.4.3 +
directo 3.4.4 + 3.4.5. Goals as - Sale 3.4.4 + 3.4.5. Goals as
r well as mutual well as mutual benefits
- Sale benefits for the chain for the chain are
are indicated in order indicated in order
3.4. Goal contract or long-term contract or long-term
congruen agreements with agreements with
ce partners. A member of partners. A member of
Vietnam textile and Vietnam textile and
apparel chain under apparel chain under
the control of Vietnam the control of Vietnam
Textile & Apparel Textile & Apparel
Association Association
184
- Lean Yes 3.5.1 + 3.5.2 + 3.5.3. - IE Yes 3.5.1 + 3.5.2 +3.5.3.
Working with Working with
customer for product customer for product
design/ sample, design/ sample,
customer customer
representatives representatives
monitor/ support the monitor/ support the
manufacturing manufacturing
process. Lean process. IE department
3.5. department manages manages the
Resource the collaborative collaborative process
sharing process 3.5.4. Sharing
3.5.4. Sharing equipment/ supporting
equipment/ the monitoring process
supporting the for customer
monitoring process 3.5.5. Investment s for
for customer development/
3.5.5. Investment s for innovation/
development/ improvement
innovation/
improvement
- Lean No 3.6.1. Mostly no - IE Yes 3.6.1. Customers can
- ERP contact after the check the progress and
contract, contact when information is updated
having problems, to the system
3.6.
customer 3.6.2. Open culture to
Collabora
representative share the information
tive
monitors the process to partners and
communi
3.6.2. Information is information is updated
cation
not accurate or ready and ready to share.
for the information 3.6.3. Informal
due to the lack of communication: word-
update and the of-mouth contact to
185
inefficiency of the solve problems from
system customer
3.6.3. Informal representative at the
communication: organization in urgent
word-of-mouth case
contact to solve 3.6.4. Different
problems from channels to
customer communicate: phone,
representative at the email, EDI system
organization in urgent - 3.6.5. Solution based
case on contract/
3.6.4. Different negotiation to build
channels to long-term relationship
communicate: phone
and email
3.6.5. Solution based
on contract/
negotiation to build
long-term relationship
- IE Yes 3.7.1 + 3.7.2. Jointly - Train Yes 3.7.1 + 3.7.2. Jointly
search and apply new ing search and apply new
3.7. Joint techniques/ methods depar techniques/ methods
knowledg for new design tment for new design
e creation through workshop/ - IE through workshop/
consultant with consultant with
customer customer
- Lean No 4.1.1. KPIs system has - IE Yes 4.1.1. KPIs system is
Performa not been developed built for each
Le nce 4.1.2. Scorecard- department, reports/
vel measurem based rating system reviews are made,
4 ent for supplier has not quantitative target is
been developed yet set
186
4.1.2. Scorecard for
supplier
- Lean No 5.1.1 + 5.1.2. - IE No 5.1.1 + 5.1.2.
Continuous Continuous
Continuo improvement is not improvement is made
Le us made for only for production
vel improvem collaboration. There is and other activities,
5 ent no benchmark to not for collaboration.
measure. There is no benchmark
to measure.
187
APPENDIX 6: XYZ’S KPIS REPORT EXAMPLE – SWEATER PRODUCT
ON TIME DELIVERY
JAPAN (Replaced)
NUMBER OF ORDER 8 17 0 7 9 23 26 12 17 19 17 6
SHIPPED
CSVL NUMBER OF
8 16 0 5 9 23 26 12 17 19 17 6
ORDER OTD
CSVL ON TIME
100% 94% 71% 100% 100% 100% 100% 100% 100% 100% 100%
DELIVERY (%)
YTD OTD(%) 100% 96% 96% 91% 93% 95% 97% 97% 97% 98% 98% 98%
1,576,64 1,206,65 166,26 383,19 10,330,68 1,337,81 2,263,81 5,840,91 3,306,87
TTL TURN OVER (USD) 5,170,753 397,500
4 8 4 8 5 9 8 5 2
TTL AIR / CLAIM COST
0 700 2125 0 0 0 0 0 0 0 0
(USD)
% AIR/CLAIM COST 0% 0.06% 1.28% 0.00% 0 0.00% 0% 0.00% 0.00% 0.00% 0
US (Replaced) NUMBER
74 41 27 24 40 118 245 203 182 222 52 37
OF ORDER SHIPPED
REGENT NUMBER OF
72 31 16 17 33 118 241 199 178 215 52 37
ORDER OTD
188
REGENT ON TIME
97% 76% 59% 71% 83% 100% 98% 98% 97.8% 96.8% 100.0% 100.0%
DELIVERY (%)
YTD OTD(%) 97% 90% 84% 82% 82% 89% 93% 94% 95% 95% 95% 96%
3,554,46 327,44 341,33 857,32 6,073,96 6,102,36 3,458,99
TTL TURN OVER (USD) 945,098 1,255,980 2,565,894 665,998 962,465
2 4 8 3 5 6 5
TTL AIR / CLAIM COST
9,100 71,962 59,084 7,557 15,220 0 1,492 63,427 18,540 49,378 0 0
(USD)
% AIR/CLAIM COST 0.3% 7.6% 18.0% 2.2% 1.78% 0.00% 0.06% 1.04% 0.30% 1.43% 0.00% 0.00%
QUALITY LEVEL
ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
BUDGET
2.0% 2.0% 2.0% 2.0% 2.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
(JP)
BUDGET
1.5% 1.5% 1.5% 1.5% 1.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
(US)
ACTUAL 2.37
2.67% 2.85% 2.68% 2.72% 2.75% 2.79% 2.77% 2.47% 1.61% 1.76% 1.82%
(JP) %
ACTUAL 1.75
1.54% 1.73% 1.8% 2.4% 2.3% 1.85% 2.30% 2.41% 2.00% 2.53% 1.94%
(US) %
2.44
YTD (JP) 2.67% 2.76% 2.73% 2.73% 2.73% 2.75% 2.75% 2.71% 2.59% 2.51% 2.44%
%
189
2.05
YTD (US) 1.54% 1.64% 1.69% 1.87% 1.96% 1.94% 1.99% 2.05% 2.04% 2.09% 2.08%
%
3.5%
3.0%
2.5%
BUDGET (JP)
2.0%
`BUDGET (US)
1.5% ACTUAL (JP)
ACTUAL (US)
1.0%
0.5%
0.0%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTHLY EFF%
ITEM JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
TTL BUDGET
61% 52% 57% 61% 63% 67% 64% 63% 65% 66% 67% 68%
EFF
TTL ACTUAL
57% 60% 61% 59% 52% 58% 66% 69% 80% 74% 75% 80%
EFF
190
AVERAGE 57% 59% 60% 59% 58% 58% 59% 61% 64% 67% 70% 74%
JP BUDGET EFF 62% 52% 59% 64% 67% 70% 70% 70% 71% 71% 71% 71%
US BUDGET EFF 60% 53% 54% 57% 60% 64% 58% 57% 60% 62% 64% 66%
JP ACTUAL EFF 61% 65% 71% 65% 57% 67% 75% 77% 92% 82% 80% 74%
US ACTUAL
50% 50% 45% 50% 46% 52% 61% 66% 72% 65% 68% 87%
EFF
Average JP 61% 63% 66% 66% 64% 64% 66% 67% 70% 71% 72% 72%
Average US 50% 50% 48% 49% 48% 49% 51% 53% 55% 56% 57% 59%
VAR JP -1% 13% 12% 1% -10% -3% 5% 7% 21% 11% 9% 3%
VAR US -10% -3% -9% -7% -14% -12% 3% 9% 12% 3% 4% 21%
98.39 85.07 95.71
UTILIZATION JP 125.00% 120.34% 101.56% 107.14% 110.00% 129.58% 115.49% 112.68% 104.23%
% % %
UTILIZATION 83.33 76.67 81.25
94.34% 83.33% 87.72% 105.17% 115.79% 120.00% 104.84% 106.25% 131.82%
US % % %
191
192
APPENDIX 7: ABC’S REPORT EXAMPLE –T-SHIRT PRODUCT – CMT CUSTOMER
Quality control report: number of defects and number of inspected products from 1/10/2015-6/11/2015
193
Capacity report: number of actual output/quantity and target output/quantity from 1/08/2015-30/08/2015
194
Planning report (Production starting date and Completion date)
195

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SUPPLY CHAIN COLLABORATION:

THE RELATIONSHIP BETWEEN MATURITY LEVEL AND PERFORMANCE

Thi Phuong Dung Ho

Master of Engineering Management – University of Technology Sydney

College of Science, Engineering and Health

Thi Phuong Dung Ho

CHAPTER 1 : INTRODUCTION .......................................................................................... 1

1.2. RESEARCH QUESTION AND OBJECTIVES ............................................................. 4

1.3. RESEARCH FRAMEWORK ......................................................................................... 5

1.4. RESEARCH SCOPE ...................................................................................................... 6

1.5. ORGANIZATION OF THESIS ...................................................................................... 7

CHAPTER 2 : LITERATURE REVIEW ........................................................................... 11

2.1. BACKGROUND OF SUPPLY CHAIN COLLABORATION .................................... 12

2.1.1. Definition ................................................................................................................ 12

2.1.2. SCC Process ........................................................................................................... 16

2.1.3. SCC Level............................................................................................................... 20

2.2. MATURITY MODEL................................................................................................... 22

2.2.1. Introduction ............................................................................................................ 22

2.2.2. CMMI Approach .................................................................................................... 26

2.2.3. Previous Studies on Maturity Models for SCC ...................................................... 28

2.3 RESEARCH GAP .......................................................................................................... 29

2.3.1. Problem Statements ................................................................................................ 29

2.3.2. Research Gaps ........................................................................................................ 34

CHAPTER 3 : RESEARCH DESIGN ................................................................................. 39

3.1. MODEL DEVELOPMENT (RESEARCH OBJECTIVE 1) ........................................ 40

3.2. MODEL CONTENT VALIDITY (RESEARCH OBJECTIVE 2) ............................... 42

3.3. MODEL APPLICATION (RESEARCH OBJECTIVES 2 and 3)................................ 45

3.4. FUTURE SCENARIO (RESEARCH OBJECTIVE 4) ................................................ 50

CHAPTER 4 : MODEL DEVELOPMENT ........................................................................ 53

4.1. MM-SCC MODEL........................................................................................................ 54

4.1.2. Process Requirements ............................................................................................. 55

4.1.3. Sub-process Requirements ..................................................................................... 58

4.2. MATURITY LEVEL AND COLLABORATION LEVEL .......................................... 63

CHAPTER 5 : MODEL CONTENT VALIDITY ............................................................... 66

5.1. DATA COLLECTION .................................................................................................. 67

5.2. DATA ANALYSIS ....................................................................................................... 69

5.3. SUMMARY .................................................................................................................. 73

CHAPTER 6 : MODEL APPLICATION............................................................................ 75

PART 1: RESULTS ............................................................................................................. 76

6.1. CASE INFORMATION ................................................................................................ 76

6.2. FINDINGS .................................................................................................................... 78

6.2.1. Collaboration Maturity Level (Cross-case) ............................................................ 79

6.2.2. Customer Relationship (Within-case) .................................................................... 85

6.2.3. Performance ............................................................................................................ 88

PART 2: DISCUSSION ....................................................................................................... 91

6.3. CROSS – CASE ANALYSIS ....................................................................................... 91

6.3.1. Intra-organizational vs Inter-organizational Process .............................................. 92

6.3.2. Internal Collaboration and Effects on Performance ............................................... 95

6.4. WITHIN CASE ............................................................................................................. 97

6.5. CONCLUSION AND IMPLICATIONS .................................................................... 100

CHAPTER 7 : IMPROVEMENTS AND SYSTEM DYNAMICS .................................. 102

7.1. IMPROVEMENT PLANS .......................................................................................... 104

7.1.1. Continuous Improvement for Lean Manufacturing .............................................. 104

7.1.2. Continuous Improvement for ERP Implementation ............................................. 106

7.1.3. ERP-based Lean System ....................................................................................... 108

7.3. MODEL DEVELOPMENT ........................................................................................ 114

7.3.1 Building Model ...................................................................................................... 114

7.3.2. Base-case Parameters ........................................................................................... 119

7.4. MODEL VALIDATION ............................................................................................. 123