UNIVERSITY OF GONDAR

COLLEGE OF BUSINESS AND ECONOMICS

SCHOOL OF MANAGEMENT AND PUBLIC
ADMINISTRATION

AN ASSESSMENT OF THE ROLE OF SUPPLY CHAIN INTEGRATION

ON ORGANIZATIONAL PERFORMANCE

(THE CASE OF SELECTED FOOD OIL FACTORIES IN AMHARA REGION)

A THESIS SUBMITTED TO SCHOOL OF MANAGEMENT AND PUBLIC

ADMINISTRATION FOR THE PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR MASTERS BUSINESS ADMINISTRATION

BY: SOFIA JEMAL

ADVISOR: ASMAMAW ARGETA (PhD)

July, 2022
Gondar, Ethiopia

A
 UNIVERSITY OF GONDAR
COLLEGE OF BUSINESS AND ECONOMICS

An Assessment of the Role of Supply Chain Integration on Organizational

Performance

(The Case of Selected Food Oil Factories in Amhara Region)

Prepared by: Sofia Jemal

Approved by: Board of Examiners and Advisor

_________________ _________________ _________________

Advisor Signature Date

_________________ _________________ _________________

Internal Examiner Signature Date

_________________ _________________ _________________

External Examiner Signature Date

_________________ _________________ _________________

Chairman of Graduate committee Signature Date

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 Declaration

I, Sofia Jemal, declare that this thesis is a result of my independent research work on the topic
entitled “The Role of Supply Chain Integration on Organizational Performance The Case of
Selected Food Oil Factories in Amhara Region.” in partial fulfillment of the requirements for the
Degree of Masters of Business Administration at University of Gondar College of Business and
Economics complies with the regulations of the University and meets the accepted standards
with respect to originality and quality. All the references are also properly recognized.

Signature: __________________
Date: __________________

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 Acknowledgements

In the beginning, I thank my God for giving me the strength to accomplish this. I would like to
express my deepest gratitude to my advisor Dr. Asmamaw Argeta for his goodwill, support and
guidance throughout the research. His continued support led me to the right way. I would also
like to thank my dear families and my friends, for their endless patience, understanding and
support throughout my graduate program and this study. I also want to thank all of the
respondents for their benevolence during my data collection times. Finally but majorly it is must
to pass my deepest appreciation to my best friend Gebru Getachew for his kindness and help
throughout this study.

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 Table of Contents
Acknowledgements ...................................................................................................................................... iii
List of Tables ............................................................................................................................................... vi
List of figures .............................................................................................................................................. vii
Abstract ........................................................................................................................................................ ix
INTRODUCTION ........................................................................................................................................ 1
1.1. Background of the Study............................................................................................................... 1
1.1. Statement of the Problem .............................................................................................................. 3
1.2. Research Question ........................................................................................................................ 5
1.3. Objective of the Study................................................................................................................... 5
1.3.1. General objective .................................................................................................................. 5
1.3.2. Specific objectives ................................................................................................................ 5
1.4. Significance of the Study .............................................................................................................. 6
1.5. Scope of the Study ........................................................................................................................ 6
1.6. Limitations of the Study................................................................................................................ 7
1.7. Key terms and terminologies ............................................................................................................ 7
1.8. Organization of the Study ............................................................................................................. 9
CHAPTER TWO ........................................................................................................................................ 10
REVIEW OF RELATED LITERATURE .................................................................................................. 10
2.1. Introduction ................................................................................................................................. 10
2.2. Conceptual Definition ................................................................................................................. 10
2.4. Theoretical Literature Review .................................................................................................... 18
2.4.1. Supply Chain Integration ........................................................................................................ 18
2.4.2. Uncertainty of SCI .................................................................................................................. 19
2.5. Demand Uncertainty of SCI........................................................................................................ 21
2.6. Supply Chain Operational Performance of Manufacturing Firms .............................................. 21
2.7. Organizational Performance ....................................................................................................... 22
2.7.1. Relationship between SCI and Organizational Performance .............................................. 22
2.8. Challenges of Supply Chain Integration ..................................................................................... 23
2.9. Empirical Literature Reviews ..................................................................................................... 24
2.10. Conceptual Framework& Design............................................................................................ 26
2.11. Research Gaps ......................................................................................................................... 28
RESEARCH METHODOLOGY................................................................................................................ 29

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 3.1. Research Design.......................................................................................................................... 29
3.1. Research Approach ..................................................................................................................... 29
3.2. Population of the Study ............................................................................................................... 29
3.3. Sampling Technique ................................................................................................................... 30
3.4. Sample Size Determination......................................................................................................... 30
3.5. Data Type and Source ................................................................................................................. 31
3.6. Data Collection Procedure .......................................................................................................... 31
3.7. Data Analysis Method................................................................................................................. 32
3.8. Reliability and Validity ............................................................................................................... 34
3.9. Ethical Consideration .................................................................................................................. 35
CHAPTER FOUR....................................................................................................................................... 36
ANALYSIS AND DISCUSSIONS ............................................................................................................ 36
4.1. Introduction ................................................................................................................................. 36
4.2. Response Rate ............................................................................................................................. 36
4.3. Data Reliability and Validity ...................................................................................................... 36
4.3.1. Demographic Information of the Respondents ................................................................... 40
4.3.2. Gender ................................................................................................................................. 40
4.3.3. Educational Background ..................................................................................................... 40
4.3.4. Position in the Organization ................................................................................................ 41
4.3.5. Experience........................................................................................................................... 41
4.4. Descriptive Analysis of Extent of Supply Chain Integration ...................................................... 42
4.5. Supply Chain Integration and Organizational Performance ....................................................... 44
4.6. Regression Analysis .................................................................................................................... 49
4.6.1. Multiple Linear Regression Assumptions ........................................................................... 49
4.6.2. The Role of Supply Chain Integration for the Organizational Performance....................... 53
CHAPTER FIVE ........................................................................................................................................ 60
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ....................................................... 60
5.1. Summary of Major Findings ........................................................................................................... 60
5.2. Conclusions ..................................................................................................................................... 62
5.3. Recommendations ........................................................................................................................... 63
5.4. Further Study Direction .................................................................................................................. 64
References ................................................................................................................................................... 65

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List of Tables
Table 2-1: Estimated Production Volume of Major Oilseeds (metric tons) from 2018-2019 in Ethiopia .. 13
Table 2-2: Major oil seeds Crushed by local miller in Ethiopia ................................................................. 14
Table 2-3: Table 1.SCI Classifications ....................................................................................................... 20
Table 3-1: Distribution of Organizational performance in each company.................................................. 31
Table 3-2: Reliability test Measurement Dependent and Independent variable ........................................ 34
Table 4-1: Reliability Statistics .................................................................................................................. 36
Table 4-2: Reliability Item-Total Statistics ................................................................................................ 37
Table 4-3: Demographic Information ......................................................................................................... 40
Table 4-4: Level of Education .................................................................................................................... 40
Table 4-5: Position in the organization ....................................................................................................... 41
Table 4-6: Stayed at the Organization......................................................................................................... 42
Table 4-7: Descriptive analysis for independent variables ......................................................................... 42
Table 4-8፡ Descriptive analysis for dependent variables ............................................................................ 43

Table 4-9: Interpretations and characteristics of correlations ..................................................................... 45

Table 4-10: Correlation Matrix ................................................................................................................... 46
Table 4-11: Multicollinearity Test of Independent Variables .................................................................... 51
Table 4-12: Model Summary ...................................................................................................................... 54
Table 4-13: ANOVAa ................................................................................................................................. 55
Table 4-14: Multiple Liner Regression Coefficients .................................................................................. 56

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List of figures
Figure 0-1 Conceptual Frame work ........................................................................................................ 27
Figure 0-1: Regression standardized ....................................................................................................... 50
Figure 0-2: Homoscedasticity Multiple Regression Assumption ......................................................... 52
Figure 0-3: Normality Distribution Histogram ...................................................................................... 53

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List of Abbreviations and Acronyms
Acronym Definition

SCI Supply Chain Integration

SC Supply Chain
SI Supplier Integration
CI Customer Integration
EI External Integration
II Internal Integration
PP P-P Plot
R2 R square
SCM Supply Chain Management
DU Demand Uncertainty
MT Metric Ton
ETB Ethiopian Birr
LT Litter
TAG Triacylglyceride
RBD Refined, Bleached and Deodorize
PLC Private Limited Company
USD United State Dollar
M2 Meter Square
GSCM Green Supply Chain Management
SSCM Sustainable Supply Chain Management
VIF Variance Inflation Factory
WA Worku Aytnew Oil Factory
RBV Resource Based View
CSA Central Statistic Agency
OC Organizational Capability

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 Abstract
Supply chain integration practices are considered a powerful weapon to optimize performance of
the organization. The objective of this study was to analyze the supply chain integration role on
organizational performance of the selected food oil organization in Amhara Region. Analysis of
the supply chain integration dimensions requires determination of major components: external
integration, internal integration, supplier integration, customer integration, information
integration and measurement integration. An explanatory research design was employed with a
sample of 140 employees through census that was 100% of the response rate. A questionnaire
was used as a research tool for collecting data. Available data on these factors was gathered,
formatted, processed and thoroughly checked for continuity and consistency. The supply chain
integration and organizational performance data were filled using the Five Point Likert-Scale
while the Cronbach Alpha was used to check the data for reliability of measurement scale. The
relationship between independent variables (supply chain integration) and dependent variables
(organizational Performance) are also cross-checked from Pearson correlation matrix. To
predict organizational performance from supply chain integration dimensions, such as external
integration, internal integration, supplier integration, customer integration, information
integration and measurement integration, the multiple linear regression models were adopted.
The analysis indicated that the independent variables, supply chain integration with respect to
the six dimensions (external integration, internal integration, supplier integration, customer
integration, information integration and measurement integration) explained 29.1% variance of
performance of the organization. Out of the six independent variables, three of them (customer
integration, information integration and measurement integration) were statistical significant
with p-value of less than 0.05 whereas the remaining three (internal integration, supplier
integration and external integration) were statistical insignificant with p-value greater than .05.
The study concluded that the three independent variables (information integration, measurement
integration and customer integration) were rated low relatively to the others (external
integration, internal integration and supplier integration); this implies that these dimensions of
supply chain are not at the optimal level in the organization. It is recommended that all the six
dimensions of supply chain (external integration, internal integration, supplier integration,
customer integration, information integration and measurement integration) should have to be
integrated at the optimal level through system automation, framework agreement and
relationship management in order to be an efficient and effective organizational performance.
Keywords: supply chain, integration, external, internal, supplier, customer, information,
measurement, and performance.

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 CHAPTER ONE

INTRODUCTION
The primary purpose of this study is to provide the comprehensive, quantitative and integrative
analysis of supply chain integration role on the overall organizational performance. The study
explores the role of supply chain integration, evidence of correlation and regression Analysis
between supply chain integration and the organizational performance.

1.1. Background of the Study

Today the new source of competition lies outside the walls of organizations (Bogale A.2016),
and is determined by how effectively companies link their operations with their Supply Chain
partners such as suppliers, distributors, wholesalers, retailers and end customers. Each firm in a
Supply Chain therefore, directly or indirectly affects the performance of other Supply Chain
members, as well as the overall performance of the Supply Chain Sengupta, Heiser, and Cook
(2006).

Integration is the nature of cooperation that exists among groups to accomplish a compelling,
effective and joined framework. According to (Flynn, Huo, and Zhao (2010), supply chain
integration is characterized as how much a producer deliberately works together with its supply
chain partners and cooperatively oversees intra-and between organization processes.

Supply chain integration (SCI) has become increasingly critical for organizational success in the
long run(Huo, Qi, Wang, & Zhao, 2014). In order to survive, firms need to integrate with their
suppliers and customers and have extensive collaboration with them. SCI refers to the strategic
collaboration between manufacturers and their supply chain partners in order to leverage internal
and external resources and capabilities across the whole supply chain ((Flynn et al., 2010);
(Kumar et al., 2017); (Devaraj, Krajewski, & Wei, 2007; Mohammadi, 2014).Supply chain
integration is a system that improves all activities which carried out by organization. Supply
chain management (SCM) is a complex system which covers all supportive activities from
suppliers to after sales services. Shafqat and (Van Hoek, 1998) stated that collaboration in
supply chain plays a dominant role for improving organization’s performance and gaining

1
competitive advantage. It is for the most part recognized that SCI is basic in accomplishing
performance and competitive advantages(Khalid, 2021).

L. Zhao, Huo, Sun, and Zhao (2013) seeks to enhance competitive performance by closely
integrating the internal functions within a company and effectively linking them with the
external operations of suppliers, customers, and other channel members. Achieving SCI is a
complex task. The benefit of such SCI can be attained through efficient linkage among various
supply chain activities, and the linkage should be subject to the effective construction and
utilization of various supply chain practices for integrated supply chain. This means that a firm
that is pursuing the effective construction of SCM practices needs to pay attention to SCI.

The larger part of past examinations has concentrated on researching the impacts of various sorts
of SCI (e.g. internal and external integration) on firm performance. Such an arrangement of SCI
is too abstract to reveal the essence of the effectiveness of various SCI practices. This
arrangement might be one of the main reasons for contradictory findings in previous SCI and
firm performance studies. For instance, environmental uncertainty had a varying effect on the
efficacy of internal and external integration. Thus, it is necessary to explore the effect of SCI on
firm performance at a more detailed level, (M. Kim & Chai, 2016).

In this study the relationship between SCI and performance has been investigated from the
perspective of organizational capability (OC). The OC perspective is related to resource-based
view (RBV), which addresses how resources and capabilities achieve competitive advantages
(Armstrong and Shimizu, 2007; Bharadwaj, 2000; Newbert, 2007; Peng et al., 2008). Thus, SCI
can be viewed as internal and external integrative capabilities that lead directly or indirectly to
company performance.

Therefore, it seems that its worth to study the role of supply chain integration processes and
activities on organizational performance, so this study will investigates the roles of supply chain
integration on organizational performance for selected food oil factories in Amhara region.

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 1.1. Statement of the Problem
According to (Li, Ragu-Nathan, Ragu-Nathan, and Rao (2006)overall supply chain integration
on organizational performance has resulted in increased attention of managers, consultants and
business owners towards proper supply chain management in business organizations
(Narasimhan, Kim, & Tan, 2008). The early attempts of empirical research in SCM have been
limited at developing instruments capable of measuring SCM practices most recently, Gibson et
al., (2006).

Günter, Snoo, Shepherd, Moscoso, and Riedel (2010)categorize SC performance measures into
five SC processes: plan, source, make, deliver and return or customer satisfaction, whether they
measure cost, time, quality, flexibility and innovativeness and whether they are quantitative or
qualitative measures. Measures can be categorized according to business processes or into
strategic, operational and tactical management levels Günter et al. (2010).

Organizations continue to struggle to understand the complex issues associated with the
coordinated planning and supply chain integration among members of their supply network
(Lori, Daniel, & Kaushik, 2011). (Robert B Carton & Hofer, 2010)examined thirty-four different
studies in the entrepreneurship literature that explicitly used firm performance as the dependent
variable. They found that thirty-five different measures of performance were used in those
studies indicating that researchers perceived many different dimensions of performance, and that
there was no agreement on what measures actually represent overall organizational performance.
The most frequently used measures of performance were growth of sales, organizational survival
to meet the goal, productivities of employees, profitability and efficiency of the business.
Multiple objective measures were much more frequently employed than were subjective or
perceptual measures of performance(Robert B Carton & Hofer, 2010).

(Lori et al., 2011) Many organizations continue to struggle to understand the complex issues
associated with the coordinated planning and supply chain integration among members of their
supply network. Footwear is an active product in international markets with a very stiff
competitive market, where shoe producers have a range of costs to manage with a pa(Günter et
al., 2010)reticular focus on raw material and production costs. Other important costs include
regulatory compliance costs, logistics costs, general overheads (such as utilities) and marketing.

3
Ethiopia is one of a comfortable environment in the world for agricultural farm oilseed product.
Ethiopia has a potential as a major oilseed export is a result of suitable climate for annual oil
seed product, cheap labor force and huge global demand for quality food oil. It has a strong
agricultural and consequently exports are dominated by agro-based sector. The maximum area
cultivated in summer season. According to the instability of oilseed market the relation of
demand and supply are vary. Depending on research gate sample 210 countries 441 thousand
MT per day oilseeds consumed. In the last 2018, According to Census conducted by the Central
Statistical Agency of Ethiopia (CSA) oilseed consumption increases from 75 to 210 million MT.
Ethiopia annual food oil consumption from 1980 to 2014 the average value was 26.1 MT per day
the minimum consumption 12 thousand MT per day and the maximum 61 thousand MT per day.

Then Successful supply chain relation requires across functional integration and market stability.
How firms have come to integrate their raw material and information flow activities through
successive process inside the organizations with their customers based on 2007 (CSA) reported.

The challenges related to supply chain integration on the organizational performance of oil
production factories is left unstudied. Accordingly, this paper is conducted with a view to
address the gap of supply chain integration on oil factory operated in Amhara regional state.
Since SCI is long process from collect the raw material until delivery to final consumer. Due to
the driving factors of SCI are flow of facilities, inventory, information, transportation, increasing
demand of customer and also fragmentation of supply chain ownership and difficulty execute
new strategies are barriers to supply chain integration on organizational performance, so this
research will try to identify the problem and give directions for the practice of supply chain
integration to selected factories in Amhara Region.

Therefore, for the effort to achieve generalization of the causal relationship between SCI and
organizational performance, this paper is to contribute to measure the role of supply chain
integration and organizational performance in the case three well known oil factories.

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 1.2. Research Question

1. What are the relationships between supply chain integration and the
organizational performance?
2. What are the roles of supply chain integration on organizational performance?
3. What are the extents of supply chain integration dimensions?
4. To what extent is companies supply chain and organizational Performance is
measured?

1.3. Objective of the Study

The study has two sets of objectives: the general and specific objectives.

1.3.1. General objective

The general objective of this study is to assess the role of Supply Chain integration on
organizational performances (the case of selected food oil factories in Amhara region).

1.3.2. Specific objectives

1. To determine the relationships between supply chain integration and the organizational
performance.
2. To study the current supply chain integration practice of oilseed products and
manufacturing industries on organizational performance in selected Amhara region.
3. To assess roles of supply chain integration on organizational performance related to
overall integrations.
4. To analyze selected seed oil factories supply chain integration and organizational
performance.

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 1.4. Significance of the Study

The present study has the following there benefits:

First, the study helps the management of selected food oil factories, specifically department
heads at supply chain management of the organization, in the process of decision making and to
follow appropriate integration in order to enhance proper supply chain integration of channel
members and supply partners; this will increase the chain system efficiency as well as
effectiveness that have had a drawback in performance achievement and also simplify the
process of planning and production schedule to distribute the product.

Second, the study also benefit for other similar studies both academicians and other practitioners
as a documented in the future. In addition, the final findings of the research paper contribute a lot
for food oil companies on how to implement better supply chain integration that meet their
customer satisfaction and more to be productive.

Third the study serves as source of reference for further studies in the area of supply chain
integration and management of seed oil exporter factories. Hopefully, it inspire other students to
further deepen their research knowledge while opening the doors to investigate or reference who
wants to study further in this.

1.5. Scope of the Study

This study intends to identify the role of supply chain integration on organizational performance.
For this objective the research used role of supply chain integration on organizational
performance selected of food oil factories in Amhara region which located in Bure, Gondar and
Debremarkos; using specific research methodology –explanatory design of quantitative
approach; in specific time that is during the year of 2021/2022.Methodologically data was
collected from selected samples of three food oil factories employees. This study was delimited
to only supply chain management department and organizational performance. The supply chain
integration that was included in the study variables of independent variables (customer
integration, information integration, measurement integration, supplier integration, internal and
external integration) and also dependent variable are organizational performance are practices. In

6
addition to this the study shows the right way of distributing seed oil product of supply chain
integration from food oil companies to the right wholesaler and retails.

1.6. Limitations of the Study

The research data was collected in different areas of Amhara region so the data collection was
difficult in a short period of timeand resource constraints have also limited the researcher’s
investigation study subject along geographical scope. The target population willingness is a big
challenge to pursue to fill the questions and also the expected staff member of the factories was
not available at the right time for the interview and data collection.

1.7. Key terms and terminologies

Supply Chain:

Supply chain refers to those activities associated with the transformation and flow of goods and
services, including their attendant information flows, from sources of raw materials to end users
(Ronald et al 2000 pp 9).

Integration:

Integration is a process of redefining and connecting parts of a whole in order to form a new one.
In traditional supply chain integration, the definitions of parts are usually limited by the
boundary of the enterprises: the integration emphasizes connecting each enterprise with logistics
and information communications (Springer Boston, pp 887-891).

Supply Chain Integration:

Due to the intense of global competition, the organizations create cooperative and mutually
beneficial relationship among supply chain partners(Wisner & Tan, 2000). (Frohlich &
Westbrook, 2001)pointed out that organizations or companies need to implement supply chain
integration to meet the new challenges of the global competitive environment. Many studies
propose different supply chain definitions. (Hamid, Ibrahim, & Abdelkareem, 2020),defined
integration of supply chain as a process of collaboration in which companies work together in a
cooperative manner to arrive at mutually acceptable outcomes. (X. Zhao, Huo, Flynn, & Yeung,

7
2008)described supply chain integration as “the degree to which an organization strategically
collaborates with its supply chain partners and manages intra- and inter-organization processes to
achieve effective and efficient flows of products, services, information, money and decisions,
with the objective of providing maximum value to its customers”.

Organizational performance:

The concept of organizational performance is the comparison of an organization's goals and

objectives with its actual performance in three distinct areas: financial performance, market
performance, and shareholder value. Financial performance refers to an organization's results
with regard to return on investment and return on assets. The market performance refers to a
company's ability to make and distribute their outputs in the most cost effective way and to set a
price that returns a reasonable amount to suppliers. In addition, market performance refers to the
ability of a company to meet the demands and expectations of consumers regarding the good or
service produced. Some organizations also measure market performance with regard to how
great a share of the market they possess relative to their competitors, and some measure their
ability to achieve social responsibility (or stewardship of the environment and responsibility to
the community). Finally, shareholder value refers to the value what a person holding shares in
the firm possesses. These three measures determine whether an organization is meeting its goals
(Jameadows 2017).

Supply chain management (SCM):

SCM evolved around the two basic dimensions; GSCM, SSCM. Green Supply Chain
Management (GSCM) concerned with a firm works with their suppliers to improve the
environmental performance of products and manufacturing processes (Simpson and Power,
2005; Zhu et al., 2005). It requires a paradigm shift from the conventional association of success
around financial parameters, and a holistic environment concern (Varma et al., 2006). Green
supply chain management (GSCM) integrates environmental issues into SCM processes by
identifying costs, benefits and risks, along with opportunities (Zhu et al., 2008) to manage and
reduce waste with the ultimate aim of waste elimination (Handfield et al., 2005). It also has the
potential to reduce the direct and indirect environmental impacts of an organization’s final
product (Darnallet al.2008). Sustainable supply chain management (SSCM) incorporates both

8
social and environmental sustainability into supply chain practice and management which is the
newest field in context of SCM.

1.8. Organization of the Study

This study is organized in to five chapters. Chapter one contains background of the study,
background of the study, statement of the problem, research objectives, significance of the study,
scope of the study definition and terminology and limitation of the study. Chapter two provides
literature review which is theoretical literature review and empirical literature review informing
the reader of what is already known in this area of study. Chapter three discusses the
methodology employed in the study, data source and method, procedure of data collection and
data analysis. Chapter four includes important analysis such as descriptive, correlation and
regression analysis. The last chapter deals with conclusion and recommendation of the result and
suggestion for future the study.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1. Introduction

This chapter focuses on the literature review as conducted by the researcher. It includes a review
of the various studies that have been conducted by other researchers relating to the need for
integration of SC partners and the performance of organizations. Among the areas reviewed
include: supply chain integration and organizational performance, the drivers of supply chain
integration, the benefits of supply chain integration. The chapter also provides the research gaps
identified and a comprehensive conceptual framework

2.2. Conceptual Definition

Supply chain integration: the degree to which an organization strategically collaborates with its
supply chain partners and collaboratively manages intra-and inter organization processes(Flynn
et al., 2010).

Supply Chain:(Africa, Capati, Usman, & Juliano)(2013) stated that a supply chain is the
network of all the individuals, organizations, resources, activities and technology involved in the
creation and sale of a product, from the delivery of source materials from the supplier to the
manufacturer, through to its eventual delivery to the end user(FARHAN, 2021).

Supplier partnership: a commitment over an extended time to work together to the mutual
benefit of parties, sharing relevant information and the risks and rewards of the relationship (H.
Deshpande, 2017).

Firm performance: The concept of organizational performance is the comparison of an

organization's goals and objectives with its actual performance in three distinct areas: financial
performance, market performance, and shareholder value. Financial performance refers to an
organization's results with regard to return on investment and return on assets. The market
performance refers to a company's ability to make and distribute their outputs in the most cost

10
effective way and to set a price that returns a reasonable amount to suppliers and shareholder
value refers to the value what a person holding shares in the firm possesses, (Jameadows2017).

Internal integration: Internal integration is defined as the strategically aligned and coordinated
internal processes and functions for the purpose of achieving maximum performance of an
organization (Kumar et al., 2017).

External Integration: The ability of two or more companies to develop shared connections that
serve to guide their interactions when working together (i.e., external relationship management)
(Close, 2011).

Information integration: Information integration refers to the coordination of information

transfer, collaborative communication and supporting technology among firms in the supply
chain (Kumar et al., 2017).

Supplier integration: Supplier integration is the back down to the suppliers with product
development, flexibility of order of fulfillment, supply of high quality products, process and
specification change information, technology exchange and design support (Baharanchi, 2011).

Customer integration: The integration of customers in the supply chain is the opportunity of
having an overview of the requirements and customer’s specific needs as the advantage of
serving them better (Lotfi, Mukhtar, Sahran, & Zadeh, 2013).

Measurement Integration: It is the performance assessment of the supply chain as a whole that
also holds each individual firm or business unit accountable for meeting its own goals
(Scheinbaum, 2011).

2.3. Background of the Oil Factories

Ethiopia’s Edible Oil

Agriculture is the backbone of the Ethiopia national economy. It is a means of subsistence for
more than 85% of the country’s rural population, contributes more than 50% of the national
growth domestic program, brings in 90% of its export earnings and provides employment for
88% of the labor force. Ethiopia’s export relies heavily on selected agricultural commodities

11
originating mainly from smallholder peasant farming, such as, coffee, hides and skins oilseeds
are the most important export items in the order of priority. Oilseeds contribute about 8.8% of
the total export in 2002 with a grow share in export earns, in 2020 the export earn increase to
20% next to coffee. Oilseeds are not only an export item but oilseeds are a mainstay of the rural
and national economy of Ethiopia. After coffee, oilseeds are the second largest export earns for
the country and already more than 3 million farms are involved in its production.

There is also large demand for it in the domestic economy since it is used to produce edible oil.
The distribution of oilseed product from small farmer to large supply retailer manufacturing
industry passes different obstacles. The driving factors of supply chain are transportation;
facilities, inventory and information are decline by supply chain obstacles like increasing variety
of products; decreasing product lifecycles; increase demand customers; fragmentation of supply
chain ownership; globalization; and difficulty execute new strategies. Supply chain integration of
oil seed products and manufacturing industries Smallholders play a critical role in the global of
oilseed supply chain, both in terms of area under cultivation and in the volume of part produced.
However, challenge affect integration of smallholders into sustainable supply chain and initiative
focused supply chain. Small growers often lack the resources and capacity to pursue retailer.

The country has favorable agro climatic conditions for cultivation of oil seeds and is one of the
centers of origins in the world for several oil crop plants like rape seed, Niger/noug seed, and
castor beans. Other oilseeds like linseed, soybeans, groundnuts and sunflower seeds are produced
in different parts of the country. Production and export of sesame seed has increased
dramatically in the last ten years and thus Ethiopia the most common edible oils in Ethiopia are
of two types. These are the imported and the one locally produced. The common edible oils
currently in Ethiopian markets are vegetable oils such as palm oil, sesame seed oil, soya bean oil,
sunflower seed oil and groundnut seed oil.; the nature of the sub-sector is labor intensive; the
prevailing business environment conducive; and the substantial local demand provides sufficient
room for crushers to work at full capacity. Issues and priorities of immediate and particular
concern to the sector include production, processing and marketing aspects. Oil seeds are the
third most important commodity in terms of production and export in Ethiopia. According to the
Central Statistical Agency of Ethiopia (2008/2009), oil crops were cultivated in about 0.86
million hectares, involving close to four million small holder farmers in the main production

12
areas. The main oilseed crops include sesame, Niger seed and linseed. Though this production
contributes to household income, it is constrained due to too small-scale and fragmented land
holdings. Eighty-six percent of the sizes of holdings under oil seeds production fall in the range
of less than five hectares, holdings of greater than five and less than ten hectares’ account for
twelve per cent and those greater than ten hectares’ account for less than two per cent of the total
estimated area under oilseeds. A low use of agro-inputs and poor farm management, and a lack
of market-oriented production such as contract farming, warehouse receipt system together with
the high cost and limited availability of inputs (improved seeds, fertilizer and chemicals) add to
overall low productivity.

Processing most domestic oil processing is undertaken by an estimated 850 small-scale and
micro oil processing plants, accounting for ninety-five per cent of the manufacturing base of the
edible oil industry. Capacity utilization in the industrial branch is seriously constrained both by
the quantity and quality of oilseeds available. Many of these small and medium enterprises use
obsolete equipment and technology. Working conditions and the level of sanitary and hygienic
standards is far below acceptable levels. Edible oil refining capacities are limited to some
twenty-six medium and large industries, utilizing about thirty per cent of capacity. Considering
import–intensity (a technical coefficient that measures the share or magnitude of imported
intermediate goods to produce a unit of final demand) the edible oil industry, at less than two per
cent, provides an opportunity/potential to be competitive both domestically and internationally
given the domestic base of the raw material, oilseeds, and integration with the local economy.

Ethiopia has a large number of local small scale processors. The annual domestic production
ranges from 5000 to 8000 tons for the medium and large scale enterprise. This production is
estimated to be less than half of the full capacity. So the country imports various oils such as
palm oil, soya seed.

Table 2-1:Estimated Production Volume of Major Oilseeds (metric tons) from 2018-2019 in Ethiopia

Crop 2018/2019 2019/2010 Value change Volume change

Sesame 300,000 340,000 40,000 13%
Niger seed 300,000 305,000 5000 2%
Soybean 190,000 200,000 10,000 5%
Total 790,000 845,000 55,000 7%

13
Table 2-2: Major oil seeds Crushed by local miller in Ethiopia

Crop Crushed by local miller (Percentage)

Noug 85%
Groundnut 35%
Sunflower 32%
Linseed 25%
Rapeseed 10%

Background of selected oil factories in Amhara region

1. Tsehay, the union of farmer cooperatives

In the north of Ethiopia, it has been working together with Agriterra since 2012. A lot has
changed since then and there has been progress in different areas (internal capitalization,
investments, skills and knowledge, market linkage).Tsehay Farmers Cooperative Union
Limited was founded in the year 2000 and has now grown into a union of 142
cooperatives, working in 10 woredas. The union consists of more than 120,000 small
holder farmers, of which about 94,000 are male and 26,000 females. Tsehay union,
buying mainly sesame, chickpeas, soybeans, green mug teff and spices from its members
and selling various inputs (fertilizer, improved seeds), consumable products, insecticides
and pesticides to its members at a discount. The Tsehay Farmers’ Cooperative Union, an
Ethiopian farmers’ based union, has invested US$2.46 million (70 million birr) in setting
up a new edible oil processing plant in Amhara Regional State. The processing plant has
a daily production capacity of refining 10,000lt of reports Addis Fortune. The oil factory
uses different oil seed for processing plant to produce oil, which uses such as: -
1. Sesame seeds
2. Niger seed
3. Sunflower and Peanuts

Business unit of Tsehay Union

Supply chain tracking

Fumigation
Re-bagging

14
 Transport and Delivery
Export rice and vegetables

2. PhiBela Edible Oil Factory

This edible oil factory has Refined, Bleached and Deodorized (RBD) Palm Fractionation
Plant and Refined, Bleached and Deodorized (RBD) Soybean and Sunflower Refinery
Plant. The sources of edible oil refinery are RBD palm oil, water degummed crude
soybean, and crude sunflower oils. The Crude oils are refined to remove free fatty acids
and other non-TAG (triacylglyceride) components which contribute to undesirable flavor,
odor and appearance. The crude soybean and crude sunflower oils are refined using
chemical refining process which involves degumming for the removal of phospholipids,
neutralization for the removal of FFA, and bleaching for decolourization and
deodorization. Because the hydrated content of imported soybean oil would be
degummed, only the remaining non-hydra table gums will be removed using phosphoric
or citric acid in PhiBela refinery plant. The RBD Soybean and Sunflower Refinery Plant
equipped with more than 600 tons/day capacity of the deodorized plant has the capacity
to produce high quality RBD Soybean and Sunflower edible oil from crude soybean and
sunflower oil. The complex covers 30 hectares of land leased from Amhara Regional
Government at the industrial town of Bure. When this huge complex becomes
operational, it will cover up to 50% of the edible oil demand of the country.

The following factories will operate in the same compound:

A big refinery with a refining capacity of 1400 tons per day.

Sesame oilseeds processing plant (to add value on the row sesame by hulling and
roasting).
Liquid soaps, solid soups and detergents manufacturing factory.

The oil factory uses different oil seed for processing plant to produce oil, which uses such
as:

15
 Soybean
Sunflower
Palm oil

Business units of PhiBela Company:

Export of agricultural commodities

Import
Transport
Hotel
Construction

3. WA Oil Factory
WA oil managed to import and distributes ETB 5 billion (USD 200 million) worth of
palm oil through its trading business. WA’s founder vision and hard work in palm oil
import and trading paid off and motivated him to invest in edible oil factory project under
the name of WA Oil Factory and Distribution PLC. Founded by two Ethiopian Diaspora
members in Germany in 2017, Sela Goja Oil Filtration Factory was established with the
vision to provide Ethiopia with healthy and nutritious 10,000 liters of edible oil per day.
Workeu Aytenew bought 50% share on it to ensure the business run with liquid working
capital. WA oil managed to import and distributes ETB 5 billion (USD 200 million)
worth of palm oil through its trading business. WA’s founder vision and hard work in
palm oil import and trading paid off and motivated him to invest in edible oil factory
project under the name of WA Oil Factory and Distribution PLC.WA Oil Factory project
was kicked off 4 years ago at Debremarkos in Amhara Regional State, Gojjam Zone on a
leased land size of 101,103m2 and its corporate office is headquartered at Addis Ababa,
Bole Sub City.

The oil factory uses different oil seed to produce the refining oil such as mentioned
below:

Groundnut
Nigger Seed

16
 Sesame Seed
Soybean
Sunflower
Palm

Business unit of WA Oil factory

Export of agricultural commodities

Trading
Transport
Real state
Bottling water
Petroleum

All the listed selected oil factories have other business organization in addition to the production
of oil such as transportation, real state, hotel.

Challenges faced by edible oil processing factories in Ethiopia

Reports of oil factories challenges to their operations. These are shown below in the top four
challenges faced by over half of factories include:

1. Procurement, including raw materials equipment, spare parts and packaging

materials
2. Utilities and infrastructure, including consistent electric and water supply and
availability of roads for shipping and distribution;
3. Competition, mainly from palm oil, which is government subsidized and from
illegal imports.
4. Availability of working capital and foreign currency to purchase input and invest
in factory improvement.

17
Fewer than half of factories also reported the following challenges:

1. Lack of physical factory space as many of the factories was operating out of
rented houses and could not expand their operations;
2. Unfair taxation practices, where some types of oil must pay VAT and others
don’t; lack of government support to the oil industry;
3. Lack of appropriately trained and capacitated staff;
4. Lack of consumer demand for products; and
5. Lack of warehousing and laboratory space.

2.4. Theoretical Literature Review

The theories of supply chain management, organizational performance and perspectives of

supply chain integration have been reviewed in the following sub-topics of this section.

2.4.1. Supply Chain Integration

A supply chain includes all parties involved in realizing customer demand. In addition to the
manufacturer and suppliers, supply chain includes distributers, wholesalers, retailers, and the end
customers. Inside the organization, SC includes the functions related to receiving and fulfilling
customer order. Some of these functions are operations, new product development, marketing,
finance, distribution, and customer service (Lotfi et al., 2013). SCI refers to the level of strategic
collaboration and management of inter- and intra-organizational processes in the supply chain
(Flynn et al., 2010). Most previous studies have considered SCI as an approach to integrate
information among suppliers, manufacturers, distributors, and customers (Page 11, 2004). While
some definitions of SCI emphasize material flows and components, others focus on information,
resources, and cash flows (Flynn et al., 2010).

In general, SCI is divided into internal and external integration (Sagawa & Nagano, 2015).
Internal integration refers to the level at which the manufacturer organizes its internal activities,
processes, and strategies to meet the needs of its customers. It involves collaboration and
coordination across organizational functions through information sharing in order to better
understand and address the needs of its customers (Flynn, Koufteros, & Lu, 2016). External

18
integration refers to collaboration and coordination between the firm and its external supply
chain partners(L. Zhao et al., 2013). Previous studies have taken different approaches to
categorizing external integration. One approach divides external integration into supplier and
customer integration, which refers to coordinated and cohesive links between a firm and its
suppliers or customers e.g. (Hendijani & Saeidi Saei, 2020);(Flynn et al., 2010);
Hosseini&Sheikhi, 2013; Kim, 2009; Oghazi, 2009).

Another approach categorizes external SCI into product and process dimensions(Fabbe‐Costes
& Jahre, 2008); Huo et al., 2014). Product integration refers to the participation of suppliers and
customers in the development of new products (Wagner & Bode, 2008)). It aims to support the
product development activities through close interaction between the firm and its key suppliers
and customers. Process integration refers to the cooperative and coordinated design and
implementation of supply chain processes with suppliers and customers. The aim is to eliminate
non-value added activities and improve the speed and flow of information, material, and cash
flow across the supply chain (Huo et al., 2014; Kim et al., 2012;(Wagner & Bode, 2008).

This classification has several advantages. First, it helps us to address the role of SCI on firm
performance from an angel that has been less studied before. Previous studies have mainly
focused on integration with suppliers and customers as the dimensions of external integration.
The use of product and process integration in this study allows us to have a unified approach
towards integration with the main partners in supply chain (i.e., suppliers and customers) and
examine the effect of external integration across the whole supply chain instead of examining the
separate effects of integration with suppliers and customers. Furthermore, combining the
relationship with suppliers and customers assists in developing integrated strategies across the
whole supply chain. This enables firms to use their limited resources more effectively and
improve their performance(Tarn, Yen, & Beaumont, 2002).

2.4.2. Uncertainty of SCI

Uncertainty is the changes in environmental status and the inability to predict the effects of such
changes and their expected consequences on firms (Milliken, 1987). Flynn et al. (2016) classified
the uncertainty in supply chains into micro-levels and macro-levels. The micro-level uncertainty
occurs in processes repeating in firms and found in environments with lower complexity (Flynn

19
et al., 2016). Variability of material and information flows in value and time results in
uncertainty (Sivadasan, Efstathiou, Frizelle, Shirazi, & Calinescu, 2002).

Micro-level uncertainty is concerned with data predicting through distribution, such as variability
of customer demand(Flynn et al., 2016). As the supply chain complexity increases, the need for
information increases (Leuschner, Rogers, & Charvet, 2013).

Table 2-3: Table 1.SCI Classifications

SCI classification Author(s)

Internal & External Integration Li (2015). Drage et al. (2004)
Internal Integration, Supplier Integration Boon-itt&Pangpanarat (2011), Fazli& Amin Afshar (2016), Flynn
& Customer Integration et al. (2010), Flynn et al. (2016), Hasseini&Sheiki (2013), Kim
(2009), Orghazi (2009), Zhao (2015)
Internal Integration, Product Fabbe-Castes &Jahre (2008), Huo et al. (2014)
Integration, & Process Integration
Source: (Stevenson & Spring, 2007)

The macro-level supply chain uncertainty is related with a complex and dynamic environment in
which there are ambiguous and unstructured circumstances(Flynn et al., 2016), such as facing
natural disasters or unexpected shifts in customer demand. Other examples of macro-level
uncertainty are accidents, wars and terrorist attacks (Hendijani & Saeidi Saei, 2020). Changes in
economic conditions, market turmoil, competition intensity and turmoil in industry and
technology are major sources of uncertainty in macro-level(Lu & Shang, 2017).

(Hendijani & Saeidi Saei, 2020)argue that it is possible to mitigate uncertainty by close
coordination with both suppliers and customers. (Hendijani & Saeidi Saei, 2020)On the customer
side, firm customers such as wholesalers and retailers are closer to the end customers in the
supply chain. Integration with them leads to better demand forecasting through receiving more
accurate information regarding the demand of end customers. In the face of demand uncertainty,
access to more accurate information on demand fluctuations becomes even more critical and
helps in mitigating bullwhip effect and its harmful consequences on firm performance. On the
supply side, the early involvement of suppliers in the production of new products is highly
critical and can reduce costs associated with uncertainties in new product development, resulting

20
in positive impact on operational and financial performance. While the effect of environmental
uncertainty on firm performance appears to be negative, it can have positive effects in practice.
According to previous studies, environmental uncertainty can result in higher levels of
manufacturing flexibility (Patel, Terjesen, & Li, 2012), which, in turn, improves firm
performance. Uncertainties in demand and technology dimensions reinforce the positive
relationship between customer participation and process flexibility (Feng, Sun, & Zhang, 2010).

2.5. Demand Uncertainty of SCI

Demand uncertainty (DU) is one type of micro-level uncertainty which can have a significant
impact on firm performance (Flynn et al., 2016). It refers to the extent to which the needs of
customers change over time (X. Zhao, Xie, & Zhang, 2002). DU is one of the external factors
that firms face in the supply chain (O’Leary-Kelly & Flores, 2002). Argue that demand
uncertainty can be seen as the difference between actual market demand and projected customer
orders in an organization (Hendijani & Saeidi Saei, 2020). In fact, DU refers to the difficulty
level in predicting future demand characteristics of the firm’s customers (Farahani, Rezapour,
Drezner, & Fallah, 2014).

2.6. Supply Chain Operational Performance of Manufacturing Firms

The concept of supply chain operational performance has been emerged from supply chain
strategy which derived from overall business strategy. A competitive strategy defined as "the set
of customer needs that it seeks to satisfy through its products and services"(Chopra and Meindal
2007), (George, 2007). Each organization attempt to adopt different competitive strategy that fit
to its strategy, then it seeks to afford the suitable capabilities and resources that help to achieve
it. For example, one organization aims to provide high quality products with high price, another
organization aims to provide high availability of a variety of products of reasonable quality at
low price, while another organization aims to provide too many(George, 2007).

21
 2.7. Organizational Performance

Organizational performance refers to how well an organization achieves its market oriented goals
as well as its financial goals (Lakhal, 2009). The short-term objectives of SCM are primarily to
increase productivity and reduce inventory and cycle time, while long-term objectives are to
increase market share and profits for all members of the supply chain (Narasimhan et al., 2008).
Financial metrics have served as a tool for comparing organizations and evaluating an
organization’s behavior over time(Holmberg, 2000). Any organizational initiative, including
supply chain management, should ultimately lead to enhanced organizational performance. A
number of prior studies have measured organizational performance using both financial and
market criteria, including return on investment (ROI), market share, profit margin on sales, the
growth of ROI, the growth of sales, the growth of market share, and overall competitive position
represented by constructs like, Price/Cost. It is the ability of an organization to compete against
major competitors based on low price and quality(Li et al., 2006). Others also measurement for
organizational performance by using customer measurement includes customer satisfaction,
delivery and after sales service(Murali, Pugazhendhi, & Muralidharan, 2016). Internal business
operation is one of organizational performance measurement includes the efficiency of the
organization meet the objectives (Miller C.2010). In addition to this organizational performance
can be measured by using learning and growth which is related to employee’s productivity for
innovation and understanding new way of performing operation (Short J.C and Palmer T.2003).

2.7.1. Relationship between SCI and Organizational Performance

SCI can have a positive effect on firm performance (Tarifa-Fernandez & De Burgos-Jiménez,
2017). According to information processing theory, SCI can improve communication between
the firm’s employees and external partners, resulting in higher quality and more informed
decision making. In addition, SCI allows firms to attain required information related to demand,
technology, and strategy in a timely manner. This can help in better aligning and coordinating
activities among supply chain partners, decreasing waste, and providing products at a higher
speed and lower cost to customers (Kou & Lee, 2015). Internal integration can improve internal
processes and prevent the occurrence of non-value added and duplicated activities within the
firm. This results in the production of higher quality products at lower costs (Flynn et al., 2010).

22
External integration can help in acquiring information regarding supply chain including
information about suppliers’ activities and customer demand in a timely manner, which helps in
higher coordination and collaboration among supply chain members, and avoiding inefficiencies
across the whole supply chain (Swink, Narasimhan, & Wang, 2007).

Previous empirical studies have supported the positive effect of SCI in the form of internal and
external integration on firm’s operational and financial performance(Flynn et al., 2016). In one
study,(Kumar et al., 2017) found that SCI had a positive effect on supply chain performance,
including operational performance, production flexibility, inventory turnover, order fulfillment
rate, and total logistics costs. In another study, (Othman et al. 2016) found that SCI had a
positive effect on the logistics performance. (Cao, Huo, Li, & Zhao, 2015) found that internal
and product integration had a positive effect on operational performance among organization or
companies.

In another study, researchers found that SCI, including internal integration and external
integration with suppliers and customers had positive effects on financial performance. In
addition, internal integration had a positive effect on operational performance (Hendijani &
Saeidi Saei, 2020)study on manufacturing companies showed that all SCI dimensions, including
internal integration and external integration with suppliers and customers were beneficial to
organizations’ financial and organizational performance. In other words, firms with higher levels
of SCI had higher levels of financial performance.(Flynn et al., 2010) found a positive
relationship between external integration with customers and suppliers and operational
performance. (Fazli & Amin Afshar, 2016) found that SCI had a positive effect on operational
and financial performance of the organizations. Other research has shown that internal
integration improves external integration and that internal and external integration both directly
and indirectly improves organizational performance (Hendijani & Saeidi Saei, 2020).

2.8. Challenges of Supply Chain Integration

According to (Joakim, 2012), factories that make it difficult to determine and allocate resources
to customer systems in supply chain integration, factors like transport, quality and the amount of
product delivery. The challenges of supply chain integration are caused due to different factors
which are the main challenges supply chain integration are:

23
Lack of formal product transport procedures, Lack of performance measurement for product
quality process efficiency, Large variations in demand, supply, quality and quantity of product
relation, Delay time oilseed product transport this reduce their market value, risk of product
balance into market wants and Lack of local market competence in inspection, evaluation and
new technology introduction.

2.9. Empirical Literature Reviews

(S. W. Kim, 2006) found that in small firms, efficient SC integration may play a more critical
role for sustainable performance improvement, while, in large firms, the close interrelationship
between the level of SCM practices and competition capability may have more significant effect
on performance improvement.

(Cousins, Lawson, & Squire, 2006) Generally, from above literature reviews it can be easily
understandable that the work on supply chain management measurements/ practices and its
influences on different perspectives of the organization and overall supply chain partners
increasing and yields good backgrounds. However, the relationship of SCM with performance
cannot be regarded as conclusive despite the increase of empirical research in the last few years,
important differences in research design undermine comparability: lack of consensus about the
definition and dimensionality of the SCM construct, use of different units of analysis, and
different approaches to performance measurement.

Koh, Demirbag, Bayraktar, Tatoglu, and Zaim (2007)conducted study on the impact of supply
chain management practices on performance of SMEs in Turkey. Based on exploratory factor
analysis (EFA), researchers were grouped SCM practices in two factors: outsourcing and multi-
suppliers (OMS), and strategic collaboration and lean practices (SCLP). The results indicate that
both factors of SCLP and OMS have direct positive and significant impact on operational
performance. In contrast, both SCLP and OMS do not have a significant and direct impact on
SCM-related organizational performance. Also, as the direct relationship between the two
performance-constructs was found significant, both factors of SCM practices have an indirect
and significant positive effect on organizational performance through operational.

(Flynn et al., 2010) assessed the impact of three dimensions of supply chain integration (supplier
integration, customer integration, and internal integration) on operational and business
24
performance and stated that internal integration directly relates to both business and operational
performance and that customer integration directly relate to operational performance. Although
supplier integration is not relating directly to either type of performance, the integration of
supplier and customer were related to operational performance. Internal and external integration
influence each other along with performance. The effect of integration between corporate
competitive capability and SC operational capability on performance improvement becomes
insignificant as the developmental stage of SC integration increases (Otchere, Annan, & Anin,
2013).

On the research topic Supply Chain Management measurement and its influence on Operational
Performance conducted by Priscila and Luiz (2011), SCM measurements were considered as
consists of information sharing, long term relations, cooperation and process integration as
independent variables influences operational performance in case of Brazilian companies(Miguel
& Brito, 2011). The empirical results of this study provided evidence of a positive impact of
SCM measurements on operational performance.

Supply Chain Management, Product Quality and Business Performance in case of Malaysian
manufacturing companies conducted by Agus (2011) and the study specifically investigates
relationships between SCM, product quality and business performance and these associations are
analyzed and the result demonstrates that SCM dimensions namely ‘lean production’, ‘new-
technology and innovation’, ‘strategic supplier partnership’ and ‘postponement concept’ appear
to be of primary importance and exhibit significant effects on product quality and business
performance.

(Adebayo, 2012)conducted study on SCM Practices in Nigeria Today: Impact on SCM

Performance. The SCM practices considered in this paper were namely strategic supplier
partnership, customer relations practices, information sharing, information quality and
postponement. This paper provides empirical justification for five key dimensions of SCM
practices identified and describes the relationship among SCM practices and SCM performance
as well as the impact of these practices on SCM performance. The study thus showed that SCM
practices definitely impacts SCM performance. Mahbubul (2013) conducted research on Effects
of Supply Chain Management Practices on Customer Satisfaction in the pharmaceutical industry
of Bangladesh: Evidence from Pharmaceutical Industry of Bangladesh. The results of the study

25
indicate that SCM practices as observed in the industry comprise three dimensions, namely,
collaboration and information sharing, logistics design and IT infrastructure, and organizational
culture (OC). However, while the first two exerts their impact on customer satisfaction, OC does
not have any influence on it.

(Otchere et al., 2013) concluded in their studies that supply chain integration directly relates with
business performance. Internal collaboration directly affects firm performance. Higher levels of
integration generally lead to better performance.

Alireza et al. (2011) conducted study on Malaysia Electronic Industry to present a mode for
supply chain performance by employing supply chain design, supply chain information sharing,
and flexibility and delivery components as independent variables influencing supply chain
performance (Belay, 2018). The results from this study depicted that supply chain design
influences supply chain performance through delivery and information sharing. Furthermore,
information sharing and delivery have a direct influence on supply chain performance. The
findings also showed that flexibility influences supply chain performance through delivery.
Information sharing affects supply chain performance directly and has also an indirect impact on
supply chain performance through flexibility. This study elaborates the significant effect of the
design of the supply chain on its performance while considering the impact of information
sharing.

Moslem (2013), conducted research on impact of supply chain management practices on

competitive advantage in manufacturing companies of Khuzestan province (Iran) by using
strategic partnerships with supplier, customer relationship, information sharing, quality of
information sharing and internal lean practices as independent variables affecting the competitive
advantage(Lemma, 2021). The result from this study was indicates as there is relationships
between SCM practices and competitive advantage. .

2.10. Conceptual Framework& Design

On the basis of a brief literature review I have developed the following conceptual model to
pursue this study. The framework illustrates the various relationships between studied variables
which were developed after careful study of literature.

26
 Figure 0-1Conceptual Frame work

Supply Chain Integration

Organizational
Internal Integration (II) Performance
External Integration (EI) •Resposibility
•Growth of Sales
Supplier Integration (SI) •Efficiency of Business
•Organization
Customer Integration (CI) Objective
information Integration (INFI) •Employee Productivity
• Information Sharing
• Integration Of Technology

Measurment Integration (MI)

Source: Scheinbaum, A. C., 2011; Hussein et al., 2014

The figure determines a brief introduction of the variables of the present study. Independent
variable consists of Supply Chain Integration, which cover integration with customer, integration
with supplier, with information integration and intern
internal
al and external integration with in
organization.

Dependent variable is organizational performance which includes responsibility, reliability,

flexibility, quality and delivery. Furthermore, the model states that there is a positive relationship
between supply
upply chain integration and organizational performance of a firm. The model depicts
the direct role of supply chain integration on organizational performance as well as indirect
effect of supply chain management on organizational performance.

27
 2.11. Research Gaps

The Field of Supply Chain Management (SCM) includes various aspects such as procurement of
raw materials from the suppliers, storing of raw materials, manufacturing of products,
outsourcing the manufacturing with third party manufacturers, warehousing the final product at
various distribution centers in the distribution network and finally sending it to the designated
customer. This whole process has to be done in an optimal way to minimize the use of resources
and thus decreasing the cost involved in the processes and in turn increase the growth of sakes
for the company. There are lot of gaps in the supply chain integration and management that need
to be addressed and resolved which are possible through innovation using integration and
collaboration to achieve the competitive growth for the company (Srinivas).

Hence, previously accomplished studies are mainly focused on most of the prior research on SCI
are either focused on identifying challenges or done on measurement of organizational or firm
overall performance or competitive capabilities. As far as the researcher knowledge goes this
study will be first of its kind that to explore how the organizational performance can be improved
by applying widely applied supply chain integration constructs(Robert Bruce Carton, 2004).

28
 CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Research Design

This research was designed an explanatory study with survey based which focuses on expanding
knowledge on current issue and it describes the behavior of sample population. The study has
one independent variable which focuses on supply chain integration. Data has been collected
from the managers and experts of the oil seed organizations with related task functions. The main
objective of this study is to examine the roles of supply chain integration on organizational
performance in Amhara region food oil organizations. To achieve this objective descriptive type
of research design and inferential research with a quantitative data is used.

3.1. Research Approach

The study followed a quantitative research approach in this study, to achieve its purpose.
Therefore, this study focused on formulating research questions and objectives of the study that
have been achieved throughout the processes of the study.

3.2. Population of the Study

A population can be defined as all people or items (unit of analysis) with the characteristics that
one wishes to study. Sampling is the statistical process of selecting a subset (called a “sample”)
of a population of interest for purposes of making observations and statistical inferences about
that population (Bhattacherjee, 2012). The populations of the study were permanent employees
of selected food oil factories in Amhara region. Such employees who are able to comprehend the
subject matter and provide the needed answer for the research questions of the study are going to
be selected as target population. The target organizations for this study were three selected food
oil factories that are top performer food oil exporters in Amhara region which are listed down on
sample size determination. The samples of employees who are taken works different position of
the factories such Supply chain, Operation director, Logistics director, Procurement director,
finance teams and others.

29
 3.3. Sampling Technique

This study used probability sampling method which relay on simple random to draw the sample
from the population. A simple random sample is a randomly selected subset of a population. In
this sampling method, each member of the population has an exactly equal chance of being
selected. This method is the most straightforward of all the probability sampling methods, since
it only involves a single random selection and requires little advance knowledge about the
population. Because it uses randomization, any research performed on this sample should have
high internal and external validity(Thomas, 2020).

The researcher did not collected data from all employees of the food oil companies due to the
population’s large size and lack of availability and willingness of some employees and also
economically unaffordable. Therefore, for these reasons to undertake the study the researcher is
taken permanently hired employees of the Companies which were management and expert’s
staffs from selected food oil factories in Amhara Region.

3.4. Sample Size Determination

The total populations in the study area were 220 employees who work direct related to food oil
production and management department, the targeted population for the study; it is very
expensive to collect data from all these employees, so that the researcher use Toro Yamane’s
(1973) sample size determination formula to determine the sample size which is from the
representative of total population. The sample size will determine by the following formula n=
(N/ (1+N (e2)) Where; n stands for sampling size, N stands for population size and e stands for
error term; taking 95% confidence level assume that for this formula to determine the sample
size, at e=0.05. Based on this, the study comprised 140 samples from the three oil production
factories respectively from Tsehay union of farmer cooperatives 40 samples, PhiBela business
group 60 and WA oil factory 40 samples for each firms.

30
 Table 3-1: Distribution of Organizational performance in each company

Name of the Place of the Numbers of Sample Invested Refining Land

organization factory Employee No of capital production coverage
Employee capacity
Tsehay Union Oil Gondar 70 40 70 Millioin 10,000 Ltr Oil 8734
Factory per day SqM
PhiBela Business Burie 80 60 4.5 Billion 1.5 million Ltr 300,000
Group Oil per day SqM
WA Oil Factory Debre 70 40 5 billion 1.3 million Ltr 101,103
Markos Oil per day SqM
Total 220 140
Source: Survey Data, 2022

n= (N/ (1+N (e2))

n= (220/1+220(0.052))

n= (220/1+220(0.0025)

n=220/1.5475

n=140

3.5. Data Type and Source

There are two types of sources of data; primary and secondary data sources. The researcher
collected primary data from the sample respondents via structure questionnaires. Moreover, the
researcher is used secondary data to support the study and to get the findings of other researchers
in the area. The source of secondary date is library books, journals, newspapers on business, and
magazines.

3.6. Data Collection Procedure

To collect quantitative data from the aforementioned sources the researcher used questionnaire
as major data gathering instrument. The questionnaire was adopted from Abdulhakim Haji with
adding minor modification to relevant for this study.

According to Flynn et al. (2016) questionnaire has been used in many studies, which
demonstrates its high reliability and validity. SCI and firm performance constructs will be
measured using questions. in the development, it is among the high-quality questionnaires will

31
be used in the study (Hendijani & Saeidi Saei, 2020). Product integrity questions dealt with the
collaboration with both suppliers and customers when designing and manufacturing new
products (Hendijani & Saeidi Saei, 2020). Demand uncertainty was measured by factors such as
demand for products, orders received to generate demand, and demand forecasting(Flynn et al.,
2016). Operational performance will be measured by factors such as flexibility in product
diversification, delivery speed, production capacity change and support services are compared to
the main competitor.

The data obtained through the questioner was first checked for completeness. Whether the
questionnaire found correctly filled and fitted for analysis, coded. All the data entered into
statistical package for social sciences (SPSS), and analyzed based on descriptive and inferential
statistics. The Reliability Analysis has been made using Cronbach's alpha (α) for the measure of
internal and scale consistency or reliability.

3.7. Data Analysis Method

Once the data is collected the next steps was tool used the data is analyzed by Statistical Package
for Social Science (SPSS) software for version 20 was employed to analyze and present the data
through the statistical tools used for this study, namely descriptive analysis, correlation and
multiple regression analysis in order to conduct whether there are significant relations between
variables or not.

Descriptive Analysis

The descriptive statistical results were presented by tables, and percentages to give a condensed
picture of the data. This was achieved through summary statistics, which computed for each
variable in this study. The descriptive statistics used included the frequencies, mean scores,
standard deviation, percentages and ratios. There was presented using tables for easier
interpretation.

Pearson Correlation analysis

In this study Pearson’s correlation coefficient was used to determine the relationships between
supply chain integration and organizational performance.

32
Multiple Regression Analysis

Multiple regression analysis was used to investigate the role of supply chain integration on
organizational performance.

A multiple linear regression model was done to establish the role of the six independent supply
chain integration variables on the performance of the organization. To establish the relationship,
a regression analysis was established. For each supply chain integration variables, an overall
mean was computed and matched with the mean of performance of the organization. From this
relationship, the model was generated to determine the relationship using the Multiple linear
regression analysis assumptions, such as the relationship between the Y and each of Xi's is
linear, those of nonexistence of multicollinarity (the independent variables are not related among
themselves), and another assumption include those of homoscedasticity and normality
distribution. The regression equation assumed the following form:

Y = βо + β1 X1 + β2 X2 + β3 X3 + β4 X4 + β5 X5 + β6 X6+ €

Where: Y is organizational performance;

βi (i = 0 – 6) is the regression coefficient;

X1 – External Integration

X2 – Internal Integration

X3 – Suppliers Integration

X4 – Customers Integration

X5 – Information Integration

X6 – Measurement Integration

€ – Error Term or Unexplained variables not explained by the model

The F- test was conducted to determine the significance of the regression while the coefficient of
determination, R2, used to determine how much variation in Y is explained by X. This was done
at 95% confidence level, and correlation analysis carried out to find the degree and direction of
the relationship between dependent variables and the independent variables.

33
Independent variables: supply chain integration

Dependent variables: organizational performance

3.8. Reliability and Validity

3.8.1 Reliability

The test of reliability is the important test of sound measurement. A measuring instrument is
reliable if it provides consistent results, which in turn does contribute to validity of the
instrument. In this study, a plot study is connected to refine the methodology and test instrument
used in the collection of data such as a questionnaire before administering the final phase. This
was to ensure that instrument collect reliable and valid data. As it is indicated in this research
paper questionnaire was tested on potential respondents to make the data collecting instrument
objectives, relevant, suitable to the problem and reliable. As stated in Nnnaly and Bernstein1994,
a Cronbach’s alpha value equal to or greater than 0.70 is considered satisfactory. Reliability
estimated between 0.70 and 0.60 are acceptable; whereas an alpha below 0.60usually is regarded
as unacceptable. In this study, each statement rated on five Likert response scales, which
includes very large, moderate extent low extent and does not occur.

Table 3-2: Reliability test Measurement Dependent and Independent variable

No Variables Number of Cronbach’s Alpha Internal

items Value consistency
1 Internal Integration 5 0.754 Accepted
2 External Integration 5 0.879 Good
3 Customer Integration 4 0.845 Good
4 Supplier Integration 4 0.802 Good
5 Information Integration 4 0.845 Good
6 Measurement 3 0.836 Good
Integration
7 Organizational 5 0.877 Good
Performance
Overall Reliability 29 0.95 Very Good
Source; Survey Data, 2022

The computed Cronbach’s alpha for the 29 questions items was to be found 0.95this
being greater than 0.7, it shows that there is greater internal consistency of the item in
the scale and that the research instrument used was very reliable.

34
 3.8.2 Validity

Questionnaires designed based on literature to ensure the sound of the result. The data
collected from reliable sources, from respondent who are employees and manager are
direct related to the subject matter so then the results are free error from material error,
from design of the questionnaire analysis of the data. Validity of research tool has
three Components, such as construct validity, content validity and internal validity.
This study tests construct validity which deals with the consistency of the questions
with the responses intended. This validity is assured by structuring the questionnaire
according to the specific objectives

3.9. Ethical Consideration

For the data collection processes, an appropriate ethical clearance was obtained from Gondar
University. Confidentiality of the information also ensured for the respondents by not recording
any identifying things like that of the respondent’s name and etc. While conducting the study,
respondents were informed that the research and collected information using instruments would
have been used for the academic purpose only. Additionally, respondents were confirmed that
the data collection process carried out whenever they are a willing to cooperate from their side.
Moreover, they were promised that the copy of the research would have been given them as soon
as the thesis finished before it is published.

35
 CHAPTER FOUR

ANALYSIS AND DISCUSSIONS

4.1. Introduction

This chapter present and discuss the final results and the process through which the results were
obtained. In addition to this, background information of respondents is presented. Finally, the
statistical methods of analysis were discussed, which included a descriptive analysis, a
correlation analysis, and a multiple regression analysis through SPSS.

4.2. Response Rate

Out of a total of 140 questionnaires that were distributed, 140 are returned. The returned
questionnaires signify a response rate of 100% and this response rate would be adequate and
enough to draw analysis.

4.3. Data Reliability and Validity

Selecting scales to include in the study is important to find scales that are reliable. There are a
number of different aspects to reliability. One of the main issues concerns the scale’s internal
consistency. This refers to the degree to which the items that make up the scale ‘hang together’.
One of the most commonly used indicators of internal consistency is Cronbach’s alpha
coefficient. Ideally, the Cronbach alpha coefficient of a scale should be above .7.

Table 4-1: Reliability Statistics

Reliability Statistics
Cronbach's Alpha Cronbach's Alpha N of Items

.959 .959 .29

Source; Survey Data, 2022

36
Each 29 items are included in the above reliability statistics; these were the questionnaire from 1
to 29. The list of items included in the reliability statistics test are listed down in the below item
total statistics table 4.2.

Table 4-2: Reliability Item-Total Statistics

Scale Scale Cronbach's

Corrected
Mean if Variance if Alpha if
Items List Item-Total
Item Item Item
Correlation
Deleted Deleted Deleted
Sourcing and tendering decisions 89.94 393.695 .463 .959
are easily made due to SC
Integration and information
sharing
There are external SC integration 90.10 399.817 .342 .960
that fastens flows such as, physical
and funds
Distribution and delivery is made 89.91 390.899 .559 .959
at the right time and place due to
SC integration, information
sharing and coordination.
There are integration of objectives, 89.76 386.584 .606 .958
planning, and resources with
external organizations.
Monitoring stock movement 89.90 388.235 .623 .958
has been made easier as a result
of the collaboration between
procurement, logistics and
warehouse/ inventory
management
There are internal integration of 90.01 386.698 .648 .958
functions and activities
With an integrated SC 90.02 390.280 .559 .959
technologies and systems
established, inter and intra
organizations’ communications
are optimized.
Due to information and 89.78 386.864 .666 .958
technology integration, there
are accesses of tracking
performances of SC partners.
A database of suppliers is easily 89.73 393.652 .526 .959
maintained as a result of SC
Integration.
With an integrated suppliers 89.79 388.242 .601 .958
supply chain, logistics services

37
are improved
SC Integration has provided the 89.57 381.858 .712 .957
organization the ability to
quickly and easily relate with
suppliers.
Supply chain integration is led 89.71 384.536 .760 .957
to a better supplier relationship
management.
Orders are easily processed as a 89.64 381.828 .698 .957
result of supplier integration.
SC Integration has assisted in 89.82 389.227 .679 .958
improving the quality of goods,
works and services offered to
the beneficiary
The speed of service delivery 89.99 378.870 .727 .957
has been enhanced due to the
supply chain integration
process
Customer integration has 90.04 383.517 .703 .957
enabled to deliver services
easily and quickly.
The speedy customer 89.97 385.409 .649 .958
collaboration has been
maintained as a result of SCI.
Due to information and 89.98 386.928 .689 .958
technology integration, there
are accesses of tracking
performances of SC partners.
With an integrated information 89.99 384.503 .690 .958
and measurement SC, supply
chain analysis has been done.
With an integrated suppliers 89.97 382.805 .669 .958
supply chain, logistics services
are improved.
There are external SC 89.94 381.615 .751 .957
integration that fastens flows
such as, physical and funds.
With an integrated SC 89.96 381.920 .762 .957
technologies and systems
established, inter and intra
organizations’ communications
are optimized.
Distribution and delivery is 89.88 379.316 .730 .957
made at the right time and place
due to SC integration,
information sharing and

38
coordination.
With an integrated SC 90.00 381.597 .717 .957
technologies and systems
established, inter and intra
organizations’ communications
are optimized.
The efficiency of the business 89.93 383.060 .729 .957
and process.
Employee productivity 89.89 388.053 .626 .958
Effectively organizations meet 90.02 382.611 .722 .957
their objective
The growth of sales 90.26 384.897 .695 .958
The alignment among business 89.89 382.542 .682 .958
functions, as well as those
function’ alignment with the
organization’s strategy
Source: Survey Data, 2022

The reliability test result (.959) proved that there were internal consistencies in those data
constructed in questionnaire. There are four other columns of output. The two first after the item
names show the change to the overall mean and variance if that particular item is omitted from
the scale. However, the last two columns provide useful information and should now be
inspected. The Corrected Item-Total Correlation column shows the degree to which each item
correlates with the total score for the scale. Low correlations suggest the item is measuring
something different to the scale as a whole. All the correlations are high and positive in this
study. The right-hand column (Alpha if Item deleted) shows the alpha value of the scale with that
item omitted. What are looking for are the items, which if removed, would increase alpha
(increase the internal consistency of the scale). The reliability of the scale used in the study
(0.960), could be improved by deleting only the 2nd question: Q2 alpha ⇒ .960. If any other
items were to be deleted, the reliability of the questionnaire would actually go down. In this
particular case it is not worth deleting the question. The difference is so slight that it could be
just due to chance. Note that if you omitted this one item then all values would change because
the overall scores obtained would change due to this omission. Validity of research tool has three
Components, such as construct validity, content validity and internal validity. Of all three types
of validity, this study tests construct validity which deals with the consistency of the questions
with the responses intended. This validity is assured by structuring the questionnaire according to
the specific objectives. The critical requirement to achieve validity is to measure the constructed

39
data to ensure free from measurement error(Mat Roni, 2015). Therefore, the constructed data in
the questionnaire were valid that proved by the above reliability test result with insignificant
(less than .3) measurement error.

4.3.1. Demographic Information of the Respondents

4.3.2. Gender
The Gender disaggregation of out of the 140 respondents of the study, 60 percent of the
participants of the survey result are male while female respondents account for 40 percent of the
study.

Table 4-3: Demographic Information

Gender
Frequency Percent Valid Cumulative
Percent Percent
Valid Male 84 60.0 60.0 60.0
Female 56 40.0 40.0 100.0
Total 140 100.0 100.0
Source: Survey Data, 2022

4.3.3. Educational Background

The respondents that are participated in this study have diverse educational background as it can
be seen in the below Table 4.2. Most of them, 72.9%, were a graduate of first degree and second
degree. Those who have first degree account 59.3% of the total. 20% of the responses are
Diploma holders.
Table 4-4: Level of Education

Level of Education
Frequency Percent Valid Cumulative
Percent Percent
Valid Certificate 10 7.1 7.1 7.1
Diploma 28 20.0 20.0 27.1
Degree 83 59.3 59.3 86.4
Masters 19 13.6 13.6 100.0
Total 140 100.0 100.0
Source: Survey Data, 2022

40
 4.3.4. Position in the Organization
The respondents were asked to indicate the positions they held, and there are also different
compositions of the position. They were provided with options to choose from; the findings in
the table below indicated that work in supply chain, operation director, logistic director,
procurement director, finance teams and others for a total 100% of the respondents. This
confirms that the respondents of this study were knowledgeable professionals who are well
familiar with supply chain integration and organizational performance issues.

Table 4-5: Position in the organization

What is your position in this organization?

Frequency Percent Valid Cumulative
Percent Percent
Supply Chain 10 7.1 7.1 7.1
Operation Director 18 12.9 12.9 20.0
Logistics Director 22 15.7 15.7 35.7
Procurement
Valid 12 8.6 8.6 44.3
Director
Finance Team 9 6.4 6.4 50.7
Other 69 49.3 49.3 100.0
Total 140 100.0 100.0
Source: Survey Data, 2022

4.3.5. Experience
The research also sought to establish the duration that the respondents have had by the time of
the study. The results illustrated in the table 4.2 confirm that 3.6% of them have been in
operation for more than 10 years whereas 22.10% is from 6-10 years. 42.9% of the respondent
has been working 2-5 years whereas the rest 31.40% is from around 2 years. As indicates in the
table 74.6% employees have had more than two and 10 years of experience. Hence, they would
have been an experienced worker to measure the relationship that exists between supply chain
integration and organizational performance in their firm.

41
 Table 4-6: Stayed at the Organization

How long have you stayed at this Organization?

Frequency Percent Valid Percent Cumulative
Percent
<2 Years 44 31.4 31.4 31.4
2-5 Years 60 42.9 42.9 74.3
Valid 6-10 31 22.1 22.1 96.4
Over 10 Years 5 3.6 3.6 100.0
Total 140 100.0 100.0
Source: Survey Data, 2022

4.4. Descriptive Analysis of Extent of Supply Chain Integration

The first objective of this study is to examine the extent of supply chain integration in the
organizational performance. The participants were asked to respond on the extent of supply chain
integration in their organization, and rated their responses on a five point Likert- type scale
where: 5-to a very large extent, 4-to a large extent, 3-to a moderate extent, 2-to a small extent,
and 1- to not occur. The findings were presented in the subsequent sub themes. In the process of
examining of the data, standard deviation was used. Small standard deviations (relative to the
value of the mean itself) indicate that data are not close to the mean whereas a large standard
deviation (relative to the mean) indicates that the data points are distant from the mean. The
mean is a poor fit of the data. Standard deviation is a measure of how well the mean represents
the data (Field, 2009).

Table 4-7: Descriptive analysis for independent variables

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation

External Integration 140 1.00 5.00 3.1911 .74344

Internal Integration 140 1.00 5.00 3.1946 .78375
Supply Integration 140 1.00 5.00 3.4329 .80022
Customer Integration 140 1.00 5.00 3.1661 .85800
Information Integration 140 1.00 5.00 3.1536 .84638
Measurement Integration 140 1.00 5.00 3.1738 .97406
Source: Survey Data, 2022

42
According to the survey result, the mean of all the independent variables (External Integration,
Internal Integration, Suppliers Integration, Customers Integration, Information Integration, and
Measurement Integration) are fall in the above moderate extent from 3.1536 to 3.4329 for
information integration and supply integration respectively. The standard deviations of these
variables have also low variance from .74344 to .97406; external integration with the lowest
deviation, .97406 whereas measurement integration is the highest deviation occurred in this
result of analysis. Hence, this finding implies that there are high integrations of supply chain in
the organization with three independent variables (Internal Integration, Suppliers Integration and
External Integration) which were relatively low when compared to the remaining independent
variables. The finding of this survey result of extent of supply chain integration in the
organization is substantially consistent with the results of the Uwamahoro, 2018 that all the
independent variables are with high mean values. This implied us that as there are indirect
proportionality between mean values and significance level, since independent variables with
high mean are produce insignificant level.

Table 4-8፡ Descriptive analysis for dependent variables

Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation
The efficiency of the 140 1 5 3.19 1.024
business and process.
Employee productivity 140 1 5 3.23 .984
Effectively 140 1 5 3.10 1.048
organizations meet their
objective
The growth of sales 140 1 5 2.86 1.005
The alignment among 140 1 5 3.23 1.108
business functions, as
well as those function’
alignment with the
organization’s strategy
Organizational 140 1.00 5.00 3.1229 .84907
Performance

43
Organization performance is used as a dependent variable in the study. Table 4.8 presents
descriptive analysis for performance of the organization by using opinion of the respondents.
Respondents indicated with the same result for a mean of 3.23 that the company has above
moderate efficiency of employee productivity and the alignment among business function in the
selected factories in the region relative to the other variables. Efficiency of the business and
process is confirmed by the responses with mean of 3.19 which is moderate result. The
respondents agree that there are effectively organizations meet their objective with mean of
3.10 that the company meeting its objectives. But the responses indicated that growth of sales is
lowest with a mean of 2.86 when compared to other performance measures. These implies that
the company need to improve growth of sale market by using different mechanisms such as
increase the market share of the company, due to marketing strategies of the company such as
advertising, new product development and customer relationship, identifies the customer needs
and demand. On overall, the company is performing above moderate especially in employee
productivity and the alignment among business function the mean of .3.23. This is indicated
that the descriptive statistics organizational performance result 3.12 for overall performance the
of the company fall above moderate extent.

4.5. Supply Chain Integration and Organizational Performance

The second objective of the study is to determine the relationship between supply chain
integration and organizational performance. Correlation analysis is used to describe the strength
and direction of the linear relationship between two variables. The correlation is used for the
purpose of a relationship allows predictions to be made of one behavior from another; to
demonstrate a test scale validity by showing a significant relationship between it and another
accepted scale for a related construct; to show reliability consistency of measurement on two
occasions, to show internal consistency of scale items, and for theory verification use to support
hypotheses that predict the relationships between variables. Pearson's Product-Moment
Correlation is the best known correlation and the most used for interval data (Beech, 2006).

44
 Table 4-9: Interpretations and characteristics of correlations

Size Of Interpretation
Correlation
1 Perfect Positive/Negative Correlation
±.70 to ±.99 Very High Positive/Negative Correlation
±.50 to ±.70 High Positive/Negative Correlation
± .30 to ±.50 Moderate Positive/Negative Correlation
± .10 to ± .30 Very low Positive/Negative correlation
± .0 to ± .10 Markedly low and Negligible Positive/Negative Correlation
Source: Beech, 2006

Like the demographic factors, the scale typed questionnaire entered to the SPSS version 20 to
process correlation analysis. Based on the questionnaire, filled by the employees of the three
selected food oil firms in Amhara regional state, the correlation analysis is done Pearson
Correlation analysis conducted in order to determine on the relationship between the independent
and dependent variables such as Internal integration, External integration, Customer integration,
Supplier integration, Information integration and measurement integration and Organizational
performance.

The Correlation coefficient (r) guides;

1. From 0.1 up to 0.10 Negligible association\ Very low relationship

2. From 0.11 up to 0.29 Low association\ Low relationship
3. From 0.30 up to 0.50 Moderate association\ Moderate relationship
4. From 0.51 up to 0.69 Substantial association\ Strong relationship
5. From 0.70 and Above Very strong association\ Very strong relationship
Source: Joe W.Kotrlik, J.C.Atheron, A. Williams and M. Kathan Jab(2011)

The findings of the correlation matrix analysis between each indicators of supply chain
integration (i.e., External Integration, Internal Integration, Supplier Integration, Customer
Integration, Information Integration, and Measurement Integration) and organizational
performance are shown in the table 4.10 below.

45
 Table 4-10: Correlation Matrix

Correlations
Extern Intern Suppl Custo Inform Measur Organiza
al al y mer ation ement tional
Integr Integr Integr Integr Integra Integrat Perform
ation ation ation ation tion ion ance
External Pearso 1 .590** .583** .562** .545** .500** .497**
Integrati n
on Correl
ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140
Internal Pearso .590** 1 .681** .640** .724** .645** .617**
Integrati n
on Correl
ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140
Supply Pearso .583** .681** 1 .716** .735** .669** .689**
Integrati n
on Correl
ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140
Custome Pearso .562** .640** .716** 1 .709** .698** .742**
r n
Integrati Correl
on ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140
Informat Pearso .545** .724** .735** .709** 1 .726** .754**
ion n
Integrati Correl
on ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)

46
 N 140 140 140 140 140 140 140
Measure Pearso .500** .645** .669** .698** .726** 1 .768**
ment n
Integrati Correl
on ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140
Organiza Pearso .497** .617** .689** .742** .754** .768** 1
tional n
Perform Correl
ance ation
Sig. .000 .000 .000 .000 .000 .000
(2-
tailed)
N 140 140 140 140 140 140 140

**. Correlation is significant at p<.0.01 level (2-tailed).

Source: SPSS Output Data, 2022

For Correlation analysis result show in the table 4.10 indicates, the relationship between External
Integration and organizational performance had using inter-correlation analysis. This result
indicates that there is a significant, positive relationship between the two variables(r=.497, n=
140, p<.0.01). The relationship between the two variables is significant with moderate
correlation.

For Correlation analysis result of 4.10 indicates, the relationship between Internal integration and
organizational performance had using inter- correlation analysis. This result shows that there is
significant and positive relationship between two variables (r= .617, n= 140, p<.0.01).The
relationship between the two variables is significant with moderate correlation

As it can be seen from the findings of study, the Pearson correlation test conducted forSupply
integration and organizational performance indicates that there is a significant, positive and
moderate correlation. The result of the analysis of the two variables between Supplier and
organizational performance(r= .689, n= 140, p<.0.01).

47
The correlation analysis of Customer integration and organizational performance in the table
4.10 shows there is strong, high and positive correlation. The relationship between the two
variables result had using inter-correlation analysis with (r=.742, n= 140, p<.0.01) it indicate this
analysis are significant.

The Pearson correlation test conducted for Information integration and organizational
performance indicates that there is a significant, positive, strong and high inter-correlation with
correlation coefficient(r= .754, n= 140, p<.0.01).

High Pearson correlation test conducted for Measurement integration and organizational
performance relative from other variables. The relationship between the two variables (r= .768,
n= 140, p<.0.01), it indicated is a significant, positive and high, strong correlation. The
relationship between measurement integration and organizational performance was investigated
using Pearson product-moment correlation coefficient. Based on Andy F. (2009) statement, the
correlation among independent variables is below the limit of high correlation (by high mean
correlation of above .80 or. 90). The highest correlation is detected between measurement
integration and organizational performance (0.768), information integration and organizational
performance (0.754) and customer integration and organizational performance (0.742) and the
lowest correction compared with the others is scored between external integration and
organizational performance (0.497). Hence the correlations among independent variables are
below 0.80. To conclude the correlation of this study had moderate relationship between external
integration on organizational performance. Internal integration and customer integration had
strong relationship with organizational performance. In order to improve efficiency and
effectiveness, the integrative capabilities, whether external or internal, should be considered as
an approach.

Avery strong relationship for this research found Information integration and Measurement
integration on organizational performance. Preliminary analyses were performed to ensure no
violation of the assumptions of normality, linearity and homoscedasticity. High levels of
measurement integration associated with of organizational performance. It can be concluded that
the supply chain integration and organizational performance has a high and moderate, and
positive relation based on Pearson correlation coefficient. The overall tests of the Pearson

48
correlation matrix had above moderate and high correlation so the six dimension of SCI had a
significant and positive relationship with organizational performance.

4.6. Regression Analysis

4.6.1. Multiple Linear Regression Assumptions

1. Linearity Assumption

Linearity assumption states that the residuals should be linear relationship with the predicted
dependent variables scores. Linear relationship between independent variables and dependent
variables, this set of assumption can be examined to a fairly satisfactory extent simply by
plotting scatter plots of the relationship between each explanatory variable and the outcome
variable. It is important to check that each scatter plot is exhibiting a linear relationship between
variables (perhaps adding a regression line to help you with this). Alternatively, you can just
check the scatter plot of the actual outcome variable against the predicted outcome. The term
residual considered is the difference between outliers and influential cases a bit further (J, 2010).
The simple outlier influences the line to a far lesser degree but will have a very large residual
(distance to the regression line). The influential case outlier dramatically alters the regression
line but might be harder to spot as the residual is small - smaller than most of the other more
representative points in fact. To examine the scatter plot, you can also use influence statistics
(such as the Cook's distance statistic) to identify points that may unduly influence the
model(Wang, Rosner, & Goodman, 2016). If it is looked at the scatter plots below, the plot of the
below graph indicates that the residuals are normally distributed. Non-normal if points
substantially deviate from the diagonal line.

49
 Figure 0-1: Regression standardized

Source: Survey Data, 2022

2. Multicollinearity

A more precise approach to check whether or not a given explanatory variable has a strong
relationship with the other explanatory variables (an issue of multicollinearity exist in the
model), Tolerance and VIF (variance inflation factor) is the good indicators. For example,
Tolerance less than .1 (10%) hint at multicollinearity, and VIF (variance inflation factor) > 10
also implies multicollinearity. So that VIF must be between1-10 otherwise VIF 10 indicates
multicollinearity existence (Ge, 2013). According to Robert (2006) Multicollinearity assumption
states that independent variables should not be related to each other, if they are highly correlated,
then multicollinearity exists High predictor-predictor correlation (r > .85) results in unstable
regression model (J, 2010).The table 4.11 the relationships between independent variables,
Internal Integration, External Integration, Supplier Integration, Customer Integration,
Information Integration and Measurement Integration are below the correlation boundary line
(i.e., .85) for all of the independent variables.

50
 Multicollinearity test correlation coefficient below describes that both the tolerance and variance
inflation factor (VIF) are greater than 10%, and below 10 respective. The result for this study for
Tolerance is below and VIF (variance inflation factor) below 10 so then, it attained the standard.

Table 4-11: Multicollinearity Test of Independent Variables

Coefficientsa

Model Un Standa T Sig. 95.0% Collinearity

standardized rdized Confidence Statistics
Coefficients Coeffi Interval for B
cients
B Std. Beta Lower Upper Tole VIF
Error Bound Bound ranc
e
1 (Constant) .275 .199 1.381 .170 -.119 .668
External - .071 -.010 -.158 .874 -.151 .128 .572 1.748
Integration .011
Internal - .081 -.034 -.447 .656 -.197 .125 .387 2.585
Integration .036
Supply .097 .084 .092 1.152 .252 -.070 .264 .345 2.899
Integration
Customer .262 .077 .264 3.421 .001 .110 .413 .365 2.737
Integration
Information .278 .085 .277 3.279 .001 .110 .446 .306 3.272
Integration
Measurement .303 .065 .347 4.622 .000 .173 .432 .387 2.584
Integration
a. Dependent Variable: Organizational Performance
Source: SPSS Output Data, 2022

51
 3. Homoscedasticity
Homoscedasticity assumption elaborates that the variance of the residuals about the predicted
dependent variables scores should be the same for all predicted scores. Error variance is assumed
to be the same across all values of other variable. As it Jraph, the dots which are scattered evenly
are the indication of a homogeneity assumption (Mat Roni, 2014).

It could be checked that residuals do not vary systematically with the predicted values by
plotting the residuals against the values predicted by the regression model and looking for any
evidence that residuals vary in a clear pattern. Look at the following figure, the data points
appeared fairly randomly distributed with a fairly even spread of residuals at all predicted.

Figure 0-2: Homoscedasticity Multiple Regression Assumption

Source: Survey Data, 2022

This scatter plot is a result of what a scatter plot might look like if the assumption of
homoscedasticity is met. The data points seem to funnel towards both the negative of the x-axis,
and also toward the positive of x-axis indicating that there is equal variability in the residuals at
higher predicted values and at lower predicted values. This suggests that our model is equaled
accurate in estimating both lower values and higher values.

52
 4. Normally distributed residuals
A histogram of the residuals (errors) in a model can be used to check that the residuals are
normally distributed about the predicted dependent variables scores. However, it is often good to
tell if the distribution is normal from just a histogram, and additionally, a P-P plot should be used
as shown below figure. As it could have been seen from the below figure, the expected and
observed cumulative probabilities are matched perfectly. This suggests that the residuals are
seamlessly normally distributed. So in this survey result, the assumption of normality is not
violated

Figure 0-3: Normality Distribution Histogram

Source: Survey Data, 2022

4.6.2. The Role of Supply Chain Integration for the Organizational
Performance

The third objective of this study is to examine the effect of supply chain integration on the
performance of organization, since correlation cannot determine existence of cause and effect
due to there may be a number of other unmeasured variables which could be interrelated and
responsible for the relationship found. Multiple regression is not just one technique, but a family
of techniques that can be used to explore the effect between one continuous dependent variable
and a number of independent variables or predictors (usually continuous) (Beech, 2006). A

53
multiple regression analysis was conducted to predict the relationship between the supply chain
integration (external integration, internal integration, supplier integration, customer integration,
information integration, and measurement integration) and organizational performance using
regression analysis. The Model Summary table shows how much variance is explained by each
model. Whether the independent variables are a significant predictor of dependent variable will
be indicated by the value in the Sig. F Change for this model. Note that the value for the next
model reflects all independent variables entered.

R is the population correlation coefficient, and it takes on values between -1 and +1; 0 indicates
no linear association; 1 indicates a perfect positive linear relationship; -1 indicates a perfect
negative linear relationship (Ge, 2013).

According to the rule of Thumb, the model is strong fit .R2 value as follows

1. <0.1 Poor fit

2. 0.11 to 0.30 Modest fit
3. 0.31 to 0.50 Moderate fit
4. 0.50 Strong fit
Source; (Muijs, p.166) cited in Habtamu
Finally for R2 Square result shows in the table 4.12 indicates, the R2 is the coefficient of
determination it tries to show that a changes in the dependent variable on independent
variables. From the analysis, the R2 is given as 0.710, which covered to percentage is given
71.10% which means that 71.10% changes in the dependent variable is accounted for by the
independent variable. Thus, the according of the rule of thumb, the model R2 is strong fit.

Table 4-12: Model Summary

Model Summaryb
Model R R Adjusted Std. Error Change Statistics
Square R Square of the R Square F df1 df2 Sig. F
Estimate Change Change Change
a
1 .842 .710 .696 .46781 .710 54.147 6 133 .000
a. Predictors: (Constant), Measurement Integration, External Integration, Internal Integration,
Customer Integration, Supply Integration, Information Integration
b. Dependent Variable: Organizational Performance

54
R is the square root of R-Squared and is the correlation between the observed and predicted
values of dependent variable.
The finding of the analysis implies that there are an association of 84.2% between observed and
predicted organizational performance. Therefore; from this result, it can be interpreted as there is
a strong correlation between observed organizational performance and predicted performance of
the organization. R2 is called the coefficient of determination, it is the proportion of the variance
in the dependent variable (organizational performance) explained by variations in the
independent variables, it shows the level of variance explained by the model; which indicates
how the organizational performance varies with variation in supply chain integration practices,
Measurement Integration, External Integration, Customers Integration, Suppliers Integration,
Internal Integration, and Information Integration. The finding shows that, the independent
variables (Measurement Integration, External Integration, Customers Integration, Suppliers
Integration, Internal Integration, and Information Integration) that were studied explain only
71.1% the performance of the organization, in case of selected oil seed factory in Amhara region
as represented by the R2. Therefore, this means that another supply chain integration factors not
studied in this research contribute 29.1% of the organizational performance. Therefore, further
research should be conducted to investigate the others supply chain integration dimensions that
have a role for the performance of the organization.
Table 4-13: ANOVAa

ANOVAa
Model Sum of Squares Df Mean Square F Sig.
Regression 71.100 6 11.850 54.147 .000b
1 Residual 29.107 133 .219
Total 100.207 139
a. Dependent Variable: Organizational Performance
b. Predictors: (Constant), Measurement Integration, External Integration, Internal Integration,
Customer Integration, Supply Integration, Information Integration

The findings of the above Table 4.13Table indicated that the significance value of the model is p<
.0005; which is less than the significance level of 0.05 at a confidence level of 95%, thus the
model is statistically significant in predicting how Measurement Integration, External
Integration, Customers Integration, Suppliers Integration, Internal Integration and Information

55
Integration affect the performance of the organization. The F critical at 5% level of significance
was 2.2. Since this value of F calculated is greater than the F critical (value = 54.14), this shows
that the overall model is significant.

Table 4-14: Multiple Liner Regression Coefficients

Coefficientsa
Model Un standardized Standardized T Sig. 95.0% Confidence Collinearity
Coefficients Coefficients Interval for B Statistics

B Std. Beta Lower Upper Tolerance VIF

Error Bound Bound

1 (Constant) .275 .199 1.381 .170 -.119 .668

External -.011 .071 -.010 -.158 .874 -.151 .128 .572 1.748
Integration

Internal -.036 .081 -.034 -.447 .656 -.197 .125 .387 2.585
Integration
Supplier .097 .084 .092 1.152 .252 -.070 .264 .345 2.899
Integration

Customer .262 .077 .264 3.421 .001 .110 .413 .365 2.737
Integration

Information .278 .085 .277 3.279 .001 .110 .446 .306 3.272
Integration
Measurement .303 .065 .347 4.622 .000 .173 .432 .387 2.584
Integration

a. Dependent Variable: Organizational Performance

Source: Survey Data, 2022

The regression coefficient is the independent variable associated with it is contributing

significance to the variance accounted for in the dependent variable. From the findings in the
above table 4.14, the regression equation is: -
Y = 0.275 -0.011X1 -0.036X2 + 0.097X3 - 0.262X4 +0.278X5+0.303X6 + €
Where Y is Organizational Performance
X1= External Integration,
X2= Internal Integration,
X3= Supplier Integration,
X4= Customer Integration,
X5= Information Integration
X6= Measurement Integration
€= Error term

56
For the regression result shows in the table 4:14 indicates that there is insignificant relationship
between external integration and organizational performance with the Beta value (B= -0.010, P=
0.874). And the regression model, between internal integration and organizational performance
had insignificant relationship with Beta (B= 0.34, P= -0.447). There is also insignificant
relationship between organizational performance and supplier integration with Beta (B=0.92,
p=0.252).
The regression test in table 4.14 indicates that there are significant relationship between the reset
of independent variables respectively with customer integration (B= 0.264, P= 0.01), information
integration, (B= 0.277, P= 0.001) and measurement integration (B= 0.347, P= 0.000)on
organizational performance.
From the above regression model, the significance value of three independent variables
(customer integration, information integration and measurement integration) is less than 0.05
which show that the model is statistically significance to predict the analysis of supply chain
integration role on organizational performances, whereas the significance value of three
independent variables (external integration, internal integration and supplier integration) is
greater than 0.05 which show that the model is statistically insignificance to predict the analysis
of supply chain integration role on organizational performance. This implies that the independent
variable such as, customer integration, information integration, and measurement integration
have the greater influence on the performance of the firm. On the other hand, external
integration, internal integration, and supplier integration have no impact for the performance.

According to the finding, the multiple linear regression equation established that all independent
variables taking to be zero (when Measurement Integration, External Integration, Customers
Integration, Suppliers Integration, Internal Integration, and Information Integration are held at
Zero), it was found that organizational performance would be increase by 0.275 constant.
Decrease in external integration, would lead to a decrease in organizational performance by a
factor of -0.011 while internal integration would lead to a decrease in firm performance by a
factor of -0.036. The study also found that effective supplier integration increased performance
of the firm by a factor of 0.097; a unit increase in customer integration and information
integration will decrease performance of an organization to a 0.262 and 0.278 respectively while

57
a unit increase in measurement integration will lead to a 0.303 increase in performance of the
firm. This clearly indicates that there existed a positive relationship between supply chain
integration practices and organizational performance. These findings support other literature that
argues the supply chain management integration have a role on the performances of the
organization.

When the results of this study compared with those of previous research on supply chain
integration, the supplier integration, external integration and internal integration findings that
indicate as there are no significant impact in improving a firm’s performance is consistent with
the findings of (Uwamahoro, 2018),(Devaraj et al., 2007), and (Chirchir and Richu, 2013)
respectively.

The measurement integration result has significant result for the performance of the
organization; this finding is aligned with the study made by (Klemencic, 2006). As a result of
regression analysis in the table 4-14 shows, there is positive relationship between measurement
integration and organizational performance with coefficient of 0.303 and very significance level
of 0.000. This implies that the measurement integration is highly contributing to performance of
the organization by increasing the effectiveness of the organization.

Customer integration is significantly affecting the performance of the organization. Effect of the
customer integration is positive and significant on the performance at significance 0.001.The
finding of this study is consistent with the work of Carr and Pearson (1999) which describe that
focusing and maintaining the customer integration will enable the organizations to be more
responsive towards customers’ needs and will result creating greater customer loyalty, repeat
purchase and willing to pay premium prices for high quality product that will guaranty in
increasing market share. (H, Padmanabhan, & Whang, 2007) also identified that customer
relation practices lead to significant improvement in organizational performance. It enables to
manage customer complaints, building long-term relationships with customers, and improving
customer satisfaction. Close customer relationship allows an organization to differentiate its
product from competitors, sustain customer loyalty, and dramatically extend the value it provides
to its customers.

58
Information integration is very significant for performance of the organization is contingent with
the finding of the (Wong, Lai and Cheng, 2016).The result of this research paper indicates that
there is significant relationship between information integration and organizational performance
in practice of supply chain management is level of information integration which has strong
positive effect on organizational performance with coefficient 0.262 and significant at 0.001.
This result is consistent with the work of Lalonde (1998) which describes sharing of information
as one of five building blocks that characterize a solid supply chain relationship and have an
impact on the performance of organizations in supply chain. (Kroes & Ghosh 2010) stated that
the higher level of information sharing is associated with the lower total cost, the higher-order
fulfillment rate and the shorter-order cycle time. Simplified material flow, including streamlining
and making highly visible all information flow throughout the chain, is the key to an integrated
and effective supply chain. These findings support other literature that argues the supply chain
management integration have a role on the performances of the organization. When the results of
this study compared with those of previous research on supply chain integration, the supplier
integration, customer integration and internal integration findings that indicate as there are no
significant impact in improving a firm’s performance is consistent with the findings of
Uwamahoro, 2018, Devaraj, S., L. Krajewski and J.C. Wei (2007), and Chirchir and Richu, 2013
respectively

59
 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1. Summary of Major Findings

From the findings of the study’s objectives of this investigation, the results found were
summarized by the researcher in the following paragraphs.

The role of supply integration on organizational performance current practices of food oil
manufacturing industries that the research is conducted had results from six dimensions; there is
significant relationship measurement integration, information integration and information
integration with organizational performance. According to the paper there is no significant
relationship between external integration, internal integration and supplier integration on
organizational performance.

One of the most commonly used indicators of reliability of the research internal consistency by
using Cronbach’s alpha coefficient. Ideally, the Cronbach alpha of a scale should be above .7.
The reliability test result with coefficient (.959) proved that there were internal consistencies in
those data constructed in questionnaire. According to the standard the result of this research is
very good.

The second result of the analysis made on the extent of dimensions of supply chain integration
practices were revealed that the result of information integration (3.15), external integration
(3.191), measurement integration (3.17), supplier integration (3.43), internal integration (3.194)
and customer integration (3.16) ranked from one to six respectively. The result of the analysis
implies the above moderate extent of supply chain integration practices by the organization since
all of the dimensions have been fall in the above (3.15) rate as per the survey scale instrument.

The result of the third objective of the study to examine the correlation between supply chain
integration and organizational performance has experienced that the relationships of the
dependent variable (organizational performance) are high with internal integration (.617)
information integration (.754), customer integration (.742), supplier integration (.689),
measurement integration (.768) and moderate correlation with external integration (.497);

60
Accordingly, the findings of the result were implying that customer integration, measurement
integration and information integration vary together with organizational performance;
measurement integration and organizational performance are substantially change together; but
supplier integration is not completely change with organizational performance whereas internal
integration adversely change with the change in organizational performance.

The last objective of this study is to examine the effect of supply chain integration on the
performance of organization. According to the finding, the multiple linear regression analysis the
significance value of customer integration, information integration and measurement integration
are less than the statistical level (i.e., .05), so these variables were statistically significant. The
significance value of supplier integration, internal integration and external integration are greater
than the statistical level (i.e., .05), so these variables were statistically insignificant. The result
implies that the degree of customer integration, information integration and measurement
integration substantially changing together with organizational performance had relevant effects;
adversely, the degree of supplier integration, external integration and internal integration varying
together with performance of the organization were not relevant. The coefficient of
determination (R2) of the model has produced that supply chain integration explained 71%
variance of performance of the organization; indicating that 29.1% of the organizational
performance could be explained by another factors which are not considered by the study. The
regression coefficients (ß) of the model were also -.011, -.036, .097, .094, .262 and .303 for
external integration, internal integration, supplier integration, customer integration, information
integration and measurement integration respectively. Given that the statistical values of
customer integration (.001), information integration (.001) and measurement integration (.000)
were significant. Thus, they have the power to impact the performance of the organization.
Generally, the model was statistically fit in predicting organizational performance since its
statistical value (P<.0005) less than statistical level (ά .05).

61
 5.2. Conclusions

There is high extent of practices of supply chain integration by the organization since all of the
dimensions have been fall in the great rate as per the survey scale instrument. The external
integration, internal integration and supplier integration slightly vary together with
organizational performance; measurement integration and organizational performance are
substantially changed together. Customer integration, information integration and measurement
integration were statistically significant. The supplier integration, external integration and
internal integration were statistically insignificant. Hence, that degree of customer integration,
information integration and measurement integration changing together with organizational
performance had relevant effects; adversely, the degree of supplier integration, external
integration and internal integration varying together with performance of the organization were
not relevant. The supply chain integration explained 29.1% variance of performance of the
organization; 71.1% of the organizational performance could be explained by another factor
which is not considered by the study.

Customer integration and measurement integration have a direct as well as positively influenced
the performance of the organization, provided that developed relationships between customers,
and supply chain partners performance assessment which holds each individual firms or units
accountable for meeting its deadline lead to high performance of the organization; information
integration that coordinated information transfer, collaborated communication and supported
technology has an indirect potential to improve organizational performance. The overall
assessment results of the structural model revealed that the model had satisfactory statistical
power in predicting the research model. To conclude the practice of SCI, have a long process
from collecting raw materials for production up to distribute to the final consumer, there are
many challenges for implementation, so managers need to give attention for all dimension by
minimize cost of process and resources and maximize growth of sales, efficiency of the business.

Generally, the study showed that the result of the analysis implies the high extent of supply chain
integration practices by the organization to attained supply chain integration that indicated there
is significant relationship between information, customer and measurement integration with
organizational performance and insignificant relationship between internal, external and supplier
integration with organizational performance.
62
 5.3. Recommendations

Grounded the study’s summary of major findings and conclusions drown the under listed
recommendations are projected as a way forward from findings of the study.

• Supply chain integration current practices should be improved and undertaken in the
organization, so that optimal performance would be achieved with all partners in the
chain.
• Another factor of supply chain integration that have not seen in this study, but might have
explained organizational performance should be considered and retreated in order to
minimize the effects of unpracticed supply chain integration.
• All the dimensions of supply chain integration should be created as well as practiced by
the organization to attain superior performance.
• Focus on activities to benefit with each other partners such as suppliers, customer
importer and exporter for maximum potential to produce, distribute, and market
significant volumes of fortified edible oils to benefit local communities.
• Those oil factories shall be engage in more activities that complement and support
cooperatives with farmer or other clusters of smaller-scale producers who could refine
and fortify oils centrally to attain the increasing demand.
• It is recommended that all the six dimensions of supply chain (external integration,
internal integration, supplier integration, customer integration, information integration
and measurement integration) should have to be integrated at the optimal level through
system automation, framework agreement and relationship management in order to be an
efficient and effective organizational performance
• Internal integration, external integration and supplier integration is not optimal level in
the organization so then, those dimension should be improved more.

63
 5.4. Further Study Direction

The present study’s geographical scope was limited to the region, Amhara; so that the future
studies should have to consider expanding this scope to cover the whole regions. Moreover, the
study was also limited to the selected food oil factories in one region only, future studies should
have to incorporate partner organizations, such as supplier, customer, and intra-organizations.
Finally, I would like to suggest that the future studies have to focus on the three variables
(internal integration, supplier integration and external integration) that were insignificant by this
study. Although the present study makes a significant contribution to the SCI and performance
literature, there are several limitations that should be noted. First, because of the small sample
size (140), we suggest that a broad survey is needed to provide better insight into the relationship
between SCI and performance. Second, like many other studies, this study used a single
informant from each company. A dataset with multiple informants could enhance the validity of
the findings. Also, this study uses cross-sectional data which is static in nature. Although the
causal interrelations were analyzed and could imply temporal aspects, collecting data over time
from informants can offer richer implications. Future research might be undertaken to test the
findings of this study using time-series data.

64
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Company information’s fromWaoilfactor.com/about-us

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Company information’s fromgoogle.com/amp/s/www.foodbusiness.com

Company information’s from Addis fortune; the largest English weekly in Ethiopia

Company information’s frombelaynehkinde.com/index.php

Company information’s from www.business.linkupaddis.com/fibela

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 Appendix-I

QUESTIONNAIRE

UNIVERSITY OF GONDAR COLLEGE OF BUSINESS

AND ECONOMICS DEPARTMENT OF MANAGEMENT

POST GRADUATE PROGRAM (MBA)

Greetings, am a researcher from University of Gondar, This questionnaire is developed for an

academic effort planned for the collection of data to conduct a thesis paper on the title “The Role
of Supply chain Integration on organizational performance on selected Food oil factories in
Amhra region” in order to fulfill the University’s requirement set for awarding of a Master of
Business Administration. The information obtained from this questionnaire will be kept
confidential for academic purpose only. Hence, I am kindly asking respondents to give your
candid information.

Please try to answer every question. The questionnaire seeks basic information and you can tick
the option that you chose.

General instruction

• It is not necessary to write your name

• Try to address the entire question given below

• Use (√) mark for your choice in the given box

Thank you for your cooperation! Tel:- 0924908725 Email: - sofiajemal23@gmail.com

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 Appendix I Questionnaire

Instruction: Please Mark X where necessary.

I. Section A: Demographic Information (Make “X” Symbol for Your Answers)

1. Sex: Male Female
2. Age: 25 – 35 Between 35 – 45 Between 45 – 55 Above 55
3. Level of Education: Certificate Diploma Degree Masters PhD
4. How long have you stayed at this organization?
A. <2years
B. 2-5 years
C. 6-10 years
D. Over 10 years
II. Section B: Extent of SC Integration please indicates the extent to which the
following statements concerning the level of SC Integration within your
organization occur.
1. What is your position in this organization?
a. Supply Chain
b. Operation Director:
c. Logistics director
d. Procurement Directorate
e. Finance Team
f. Other

Use the scale of:

1) DOES NOT OCCUR 2) SMALL EXTENT 3) MEDIUM EXTENT

4) LARGE EXTENT 5) VERY LARGE EXTENT

Statement 1 2 3 4 5
Extent of Supply chain integration
External integration
Sourcing and tendering decisions are easily made due to SC Integration
and information sharing
There are external SC integration that fastens flows such as, physical
and funds
Distribution and delivery is made at the right time and place due to SC
integration, information sharing and coordination.

70
There are integration of objectives, planning, and resources with
external organizations.
Internal integration
Monitoring stock movement has been made easier as a result of the
collaboration between procurement, logistics and warehouse/ inventory
management
There are internal integration of functions and activities
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.
Due to information and technology integration, there are accesses of
tracking performances of SC partners.
Supplier Integration
A database of suppliers is easily maintained as a result of SC
Integration.
With an integrated suppliers supply chain, logistics services are
improved
SC Integration has provided the organization the ability to quickly and
easily relate with suppliers.
Supply chain integration is led to a better supplier relationship
management.
Orders are easily processed as a result of supplier integration.
Customer Integration
SC Integration has assisted in improving the quality of goods, works
and services offered to the beneficiary
The speed of service delivery has been enhanced due to the supply
chain integration process
Customer integration has enabled to deliver services easily and quickly.
The speedy customer collaboration has been maintained as a result of
SCI.
Information Integration
Due to information and technology integration, there are accesses of
tracking performances of SC partners.
With an integrated information and measurement SC, supply chain
analysis has been done.
With an integrated suppliers supply chain, logistics services are
improved.
There are external SC integration that fastens flows such as, physical
and funds.
Measurement Integration
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.
Distribution and delivery is made at the right time and place due to SC
integration, information sharing and coordination.
With an integrated SC technologies and systems established, inter and
intra organizations’ communications are optimized.

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 2. Section C: Organizational performance.

Please indicate the extent to which the following statement concerning the relationship that
exists between your SCI and the performance of your organization occurs.

Use the scale of:

1) VERY LOW EXTENT 2) LOW EXTENT 3) MODERATE EXTENT

4) GREAT EXTENT 5) VERY GREAT EXTENT

Statement 1 2 3 4 5
Organizational performance
The efficiency of the business and process.
Employee productivity
Effectively organizations meet their objective
The growth of sales
The alignment among business functions, as well as those function’
alignment with the organization’s strategy

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 Appendix II-SPSS Output

SEX
Frequency Percent Valid Percent Cumulative
Percent
MALE 84 60.0 60.0 60.0
Valid FEMALE 56 40.0 40.0 100.0

Total 140 100.0 100.0

LEVEL OF EDUCATION
Frequency Percent Valid Percent Cumulative
Percent

Certificate 10 7.1 7.1 7.1

Diploma 28 20.0 20.0 27.1

Valid Degree 83 59.3 59.3 86.4

Masters 19 13.6 13.6 100.0

Total 140 100.0 100.0

How long have you stayed at this organization?

Frequency Percent Valid Percent Cumulative
Percent
<2 Years 44 31.4 31.4 31.4

2-5 Years 60 42.9 42.9 74.3

Valid 6-10 31 22.1 22.1 96.4

Over 10 Years 5 3.6 3.6 100.0
Total 140 100.0 100.0

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 Correlations
External Internal Supply Customer Information Measurement Organizational
Integration Integration Integration Integration Integration Integration Performance
Pearson
1 .590** .583** .562** .545** .500** .497**
Correlation
External
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
.590** 1 .681** .640** .724** .645** .617**
Correlation
Internal
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
.583** .681** 1 .716** .735** .669** .689**
Correlation
Supply
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
.562** .640** .716** 1 .709** .698** .742**
Correlation
Customer
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
.545** .724** .735** .709** 1 .726** .754**
Correlation
Information
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Pearson
.500** .645** .669** .698** .726** 1 .768**
Correlation
Measurment
Sig. (2-
Integration .000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
Organizational Pearson
.497** .617** .689** .742** .754** .768** 1
Performance Correlation

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 Sig. (2-
.000 .000 .000 .000 .000 .000
tailed)
N 140 140 140 140 140 140 140
**. Correlation is significant at the 0.01 level (2-tailed).

Item Statistics
Mean Std. N
Deviation
Sourcing and tendering decisions are easily made due to SC Integration and information sharing 3.18 1.013 140
There are external SC integration that fastens flows such as, physical and funds 3.02 .925 140
Distribution and delivery is made at the right time and place due to SC integration, information
3.21 .971 140
sharing and coordination.
There are integration of objectives, planning, and resources with external organizations. 3.36 1.073 140
Monitoring stock movement has been made easier as a result of the collaboration between
3.22 .982 140
procurement, logistics and warehouse/ inventory management
There are internal integration of functions and activities 3.11 1.004 140
With an integrated SC technologies and systems established, inter and intra organizations’
3.10 .999 140
communications are optimized.
Due to information and technology integration, there are accesses of tracking performances of SC
3.34 .973 140
partners.
A database of suppliers is easily maintained as a result of SC Integration. 3.39 .903 140
With an integrated suppliers supply chain, logistics services are improved 3.34 1.015 140
SC Integration has provided the organization the ability to quickly and easily relate with suppliers. 3.55 1.088 140
Supply chain integration is led to a better supplier relationship management. 3.41 .936 140
Orders are easily processed as a result of supplier integration. 3.48 1.109 140
SC Integration has assisted in improving the quality of goods, works and services offered to the
3.30 .871 140
beneficiary
The speed of service delivery has been enhanced due to the supply chain integration process 3.13 1.168 140
Customer integration has enabled to deliver services easily and quickly. 3.09 1.042 140
The speedy customer collaboration has been maintained as a result of SCI. 3.15 1.052 140
Due to information and technology integration, there are accesses of tracking performances of SC
3.14 .941 140
partners.
With an integrated information and measurement SC, supply chain analysis has been done. 3.14 1.026 140
With an integrated suppliers supply chain, logistics services are improved. 3.15 1.118 140
There are external SC integration that fastens flows such as, physical and funds. 3.19 1.043 140
With an integrated SC technologies and systems established, inter and intra organizations’
3.16 1.020 140
communications are optimized.

75
Distribution and delivery is made at the right time and place due to SC integration, information
3.24 1.150 140
sharing and coordination.
With an integrated SC technologies and systems established, inter and intra organizations’
3.12 1.089 140
communications are optimized.
The efficiency of the business and process. 3.19 1.024 140
Employee productivity 3.23 .984 140
Effectively organizations meet their objective 3.10 1.048 140
The growth of sales 2.86 1.005 140
The alignment among business functions, as well as those function’ alignment with the
3.23 1.108 140
organization’s strategy

Scale Statistics
Mean Variance Std. Deviation N of Items

93.12 413.316 20.330 29

Model Summaryb
Model R R Square Adjusted R Std. Error of Change Statistics
Square the Estimate R Square F Change df1 df2 Sig. F
Change Change
1 .842a .710 .696 .46781 .710 54.147 6 133 .000
a. Predictors: (Constant), Measurement Integration, External Integration, Internal Integration, Customer Integration, Supply
Integration, Information Integration
b. Dependent Variable: Organizational Performance

Coefficientsa

Model Unstandardized Standardized t Sig. 95.0% Confidence Collinearity

Coefficients Coefficients Interval for B Statistics
B Std. Error Beta Lower Upper Tolerance VIF
Bound Bound
(Constant) .275 .199 1.381 .170 -.119 .668
1 External
-.011 .071 -.010 -.158 .874 -.151 .128 .572 1.748
Integration

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 Internal
-.036 .081 -.034 -.447 .656 -.197 .125 .387 2.585
Integration
Supply
.097 .084 .092 1.152 .252 -.070 .264 .345 2.899
Integration
Customer
.262 .077 .264 3.421 .001 .110 .413 .365 2.737
Integration
Information
.278 .085 .277 3.279 .001 .110 .446 .306 3.272
Integration
Measurement
.303 .065 .347 4.622 .000 .173 .432 .387 2.584
Integration
a. Dependent Variable: Organizational Performance

ANOVAa
Model Sum of Squares df Mean Square F Sig.
Regression 71.100 6 11.850 54.147 .000b
1 Residual 29.107 133 .219
Total 100.207 139
a. Dependent Variable: Organizational Performance
b. Predictors: (Constant), Measurement Integration, External Integration, Internal Integration, Customer
Integration, Supply Integration, Information Integration

77