Effects of Supply Chain Integration on Performance: An Analysis of Manufacturing Firms in Rwanda

Abstract

This study extends the developing body of literature on supply chain integration (SCI), which is the degree to which a manufacturer strategically collaborates with its supply chain partners and collaboratively manages intra- and inter-organizational processes to achieve effective and efficient flows of products and services, information, money and decisions to provide maximum value to customers. Previous researches were inconsistent in their findings about the relationship between SCI and performance. We attribute this inconsistency to incomplete definitions of SCI, in particular the tendency to focus on customer and supplier integration only excluding the important central link of internal integration. Mainly using a cross-sectional approach, we used a structured questionnaire to collect responses from 258 employees drawn from 580 registered companies in the Rwanda Development Board (RDB) and analyzed these with the help of Pearson’s correlation and structural equation modeling (SEM). We use three dimensions of SCI -- internal integration, supplier integration and customer integration -- to determine the effects of individual SCI dimensions and their interactions on a firm’s performance. The findings indicate that SCI is related to both operational and firm performance. Further, the results also indicate that internal and customer integration are more strongly related to improving performance than supplier integration.