TOTAL QUALITY MANAGEMENT, VOL. 10, NO. 8, 1999, 1147 ± 1168

Business Excellence model for supply chain
management
GOPAL K. KANJI1 & A LFRED WONG2
1Sheý eld Business School, Sheý eld Hallam University, Stoddart Building, City Campus,Sheý eld S1 1WB, UK & 2Lingnan College, Department of Management, Tuen Mun,
New Territories, Hong Kong

Supply chain management (SCM) has been increasingly adopted by companies worldwide so as to utilize better their supply chain activities for competitive advantages. This paper reviews
the relationships between total quality management (TQM) and SCM and concludes that existing
SCM models have inadequacies which can be enriched by TQM principles and concepts. The authors
selected Kanji’s Business Excellence model, which uses TQM principles and concepts to help companies
achieve business excellence, to ful® l the inadequacies of the existing SCM models and to create a new
structured model for SCM. The model was tested with the data using the supply chain activities of
139 companies in Hong Kong. The results support that the structured model provides a good ® t forthe supply chain activities. Business excellence indices, which can be obtained for companies’ SCM,
can be further developed based on this new model.
ABSTRACTIntroduction
Companies world-wide recognize the importance of meeting customers’ needs to succeed in
the competitive market-place. They realize that optimizing operations within the four wallsof their enterprises is not enough to achieve business excellence. They understand that the
involvement of suppliers, which is critical to improve quality and meet customer speci® cations,can enhance their performance. Hence, supply chain management (SCM) is advocated as ameans to help companies leverage their suppliers’ resources in improving their own competitive edges (Cavinato, 1991; Ellram & Cooper, 1990; Houlihan, 1985; Jones & Riley, 1985;
Towill et al., 1992). However, the authors found that there are inadequacies in the existing
SCM models which hamper their eþ ectiveness. Therefore, a new SCM model is developedin this paper so that organizations can make use of this new SCM model to achieve businessexcellence. Here, business excellence is de® ned by Kanji (1998) as ``the simultaneous
measurement of customers’ , employers’ and shareholders’ delights within an organization toprovide overall business success’’ . Total quality management (TQM) principles have been
incorporated into the existing SCM model to form the new SCM model.
Christopher (1992) de® nes a supply chain as the network of organizations that are
involved, through upstream and downstream linkages, in the diþ erent processes and activities
Correspondence: Prof. Gopal K. Kanji, European Centre for Organisational Excellence, Sheý eld Business
School, Sheý eld Hallam University, Stoddart Building, City Campus, Sheý eld, S1 1WB, UK. Tel:
0114 225 3137; Fax: 0114 225 5268.
0954-4127/99/081147-22

 1999 Taylor & Francis Ltd

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G. K. KANJI & A. WONG

that produce value in the form of products and services in the hands of the ultimate consumer.
According to Ellram (1991), SCM is an integrative approach to dealing with the planningand control of the materials ¯ ow from suppliers to end-users. It is an approach aimed atcooperatively managing and controlling distribution channel relationships for the bene® t of
all parties involved, to maximize eý cient use of resources in achieving the supply chain’ s
customer service goals. In fact, according to Giunipero and Brand (1996), SCM has evolved
into three typologies, represented by diþ erent writers: ¯ ow of goods approach (Houlihan,
1985; Jones & Riley, 1985; Scott & Westbrook, 1991); ¯ ow of goods and information
approach (Cooper & Ellram, 1993; Towill et al., 1993); and integrative value added approach(Cavinato, 1991; Langley & Holcom, 1992). Consolidating the diþ erent typologies indicatesthat SCM adopts a systems and integrative approach in managing the operations andrelationships among the diþ erent parties in a supply chain. SCM is not limited to managing
the total ¯ ow of goods and information from supplier to end-user, it also includes managing
entire value added activities of ® rms up to ® nal customer so as to provide best value for thecustomer. Adopting SCM often results in the forming of partnerships between companies
and their suppliers.
Relationship between TQM, SCM and partnering
Based on a literature review, some management principles are useful for improving theperformance of a company. They include management principles such as process management(Kanji & Asher, 1993; Zairi, 1997), customer satisfaction (Fornell, 1992; Gorst et al., 1998),
teamwork (Scholtes, 1992; Tjosvold, 1993), strategic leadership (Edgeman & Dahlgaard,
1998; Kanji, 1996; Tribus, 1998), systems thinking (Senge et al., 1994), continuous improvement (Imai, 1986) and scienti® c management advocated by Frederick Taylor. For a company
to perform well, blending together of these various management principles is required. In
fact, TQM is a holistic and integrated approach blending together these various principles
that are necessary for a company to achieve business excellence. According to Kanji and Asher(1993), because of the holism, TQM can be distinctive in aþ ording a strong philosophicalunderpinning to its prescriptions. A company which has adopted TQM will normally makeuse of the total quality principles to achieve business excellence. Within the company, thetop management, the middle management and the operational management will work
together towards satisfying the needs of the customers. This is the vertical view of TQM assuggested by Youssef et al. (1996) and the concept of internal partnering of Goetsch andDavis (1997).
On the other hand, in order to perform well, a company has to rely on the performanceof its upstream and downstream organizations, i.e. there is a quality chain or value chain
linking these organizations with the customers. This is the SCM concept, which focuses on
integrating the diþ erent parties together in order to meet the needs of the customers. This
customer and supplier chain concept is similar to the horizontal view of TQM as advocatedby Youssef et al. (1996) and the view of others such as Kanji and Asher (1993), who pointout that TQM has to be spread to a company’s suppliers. It is also referred to as external
partnering by Goetsch and Davis (1997). Hence, partnering is the key element of SCM,
while SCM is the horizontal view or part of a company’ s TQM system.
Customers of a supply chain
There are two parties in a supply chain: supplier and organization. The organization provides
information on its requirements to the supplier, and the supplier produces goods or services

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1149

Figure 1. Customers of a supply chain.

to meet the organization’s needs. The organization should try to develop good relationships
and close operation with the supplier, for it can meet the needs of its customers better withthe supplier’s support. These two parties of the supply chain have both internal and externalcustomers (Fig. 1). The internal customers of the supplier are mainly its employees and theexternal customers of the supplier refer to organizations, governments, etc. that purchasegoods or services from it. Regarding the organization, its internal customers are its employees
and its external customers are organizations, governments and individuals that buy its goods
or services. In order to meet the needs of the ultimate customers of a supply chain, both theneeds of the internal and external customers of the supplier and the organization should besatis® ed. For instance, when the supplier does not meet the needs of its employees, which
may be appropriate rewards, training, technical support, etc. the quality of their output will
be endangered and hence organizations obtaining supplies from the supplier will not besatis® ed if they receive its defective goods. If the organization includes the inferior quality ofsupply from the supplier into its products without knowing it and later sells the ® nishedproducts to its customers, then they will be dissatis® ed when using the products. Hence,dissatisfaction of internal customers will lead to the dissatisfaction of external customers. It
is believed that a supplier who has satis® ed internal customers should be able to serve best
its external customers. Furthermore, if it is satis® ed with the relationship and operations with
its external customers, it will be even more committed to serving them better in the future.
Therefore, a good SCM model should take into consideration simultaneously the supplier’s
satisfaction of its relationships and operations with the organization, the organization’ ssatisfaction with the contribution of the supplier, the competitive position of the organizationand the satisfaction of its external customers.
Existing SCM models and their inadequacies
As shown in Fig. 2, an essential element of the existing SCM model is a long-term relationshipbetween the parties. It is believed that a long-term relationship can generate a close

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G. K. KANJI & A. WONG

Figure 2. Existing SCM model and its inadequacies.

relationship which will make it easier for the parties to work together and arrive at a common
goal of meeting the needs of the ultimate customers. Therefore, supplier partnership isadvocated under the existing SCM model. It is useful as a measure to improve theinterorganizational relationship and operation. However, a close relationship does not comeeasily. It may require some cultural changes among the people in the supply chain. This
human factor is not covered in most work on SCM. Moreover, there is not much discussion
on the way to develop a close relationship between the parties, and the way to maintain andsustain the relationship. A possible area that should be covered in developing a close
relationship between the parties is that someone in the supply chain should assume theleadership to integrate the various parties. SCM writers focus mainly on managing the totalmaterial ¯ ow and the related information ¯ ow as the goal of SCM. Thus, a high customer
service level is being regarded as the need of the customers that SCM has to meet. However,quality and cost aspects should also be included in order to meet customers’ needs. The
supply chain should aim to meet the various needs of a customer so as to satisfy fully thecustomer. Information is required for the smooth operation of the supply chain. However,information being shared among supply chain members should not be limited to logisticalinformation, rather, information on quality and cost should be exchanged. Just having a close
relationship is not enough to ensure best performance from the supply chain. Suitable systems
and procedures will facilitate the operations of the whole chain in getting the right quantityof goods with best quality at the lowest cost. The process being covered in SCM should not
be limited to logistical process, it can also include design process, production process anddistribution process. In fact, buyer and supplier should be involved in diþ erent processes so
as to leverage their combined resources better. Their operations should be integrated so that
there is no gap between the buyer and the supplier and the processes will be smoother andquicker. Learning from one another should occur among the supply chain members so thatthe various processes can be improved. For instance, suppliers can help the buying company
design a better product through their expertise in the production of certain parts that cangive additional value to the products. On the other hand, the buying company (intermediatecustomer) can support the suppliers in improving their production process. Continuous
improvement of the supply chain is the key towards meeting the ever-changing needs of theultimate customers.
In conclusion, the existing SCM model focuses mainly on working closely with suppliers
in providing a high service level to customers; however, it ignores some fundamental issues

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1151

such as leadership’s in¯ uence on supply chain relationship, the building of cooperative andquality culture, ways to develop close relationship, initiatives to improve continuously,
managing processes other than logistics, and quality and cost requirements of customers(Fig. 2).
From Fig. 2 it can be seen that some inadequacies exist in the present SCM model.
These inadequacies include:
·
·
·
·
·
·

creation of cooperative and quality culture
the way to develop a close relationshipmanaging processes other than logistical processes
leadership’ s role in the supply chain relationshipquality and cost requirements of customers
initiatives to improve continuously.

The purpose of the new SCM model
The purpose of a new SCM model is to ful® l the inadequacies of the existing SCM model.
Companies can make use of the new SCM model to understand and manage better andutilize fully their supply chains to achieve organizational eþ ectiveness. This goal of the new
SCM model is similar to the goal of adopting TQM by a company which also strives fororganizational excellence. However, the new SCM model focuses on achieving organizational
excellence through managing better and utilizing fully the resources of the supply chain.
According to Hackman and Wagerman (1995), TQM as a management philosophy has
been proven to have convergent validity by way of consisting of a common set of assumptions
and practices as practised in various organizations. Although some TQM scholars haveacknowledged that the applications of TQM diþ er from one situation to another, nevertheless,most of them have advocated that TQM can be applied uniformly to all organizations ( Juran,
1986, cited in Sitkin, 1994). Hence, TQM can be applied generically. TQM implementation
is in¯ uenced by certain total quality principles and core concepts that are critical for theorganizations’ success (Kanji & Malek, 1999). It is believed that the generic total quality
principles that are useful to a company would also be useful to the supply chain. Where itdiþ ers is that the principles would be viewed from an interorganizational approach or fromthe customer/supplier approach rather than solely from a company’ s own view. In otherwords, it is also an extended TQM model, i.e. the horizontal view of TQM. Therefore, the
new SCM model should be supplemented by the TQM principles and concepts so as to help
companies achieve excellent performance from their supply chains.
Kanji’s Business Excellence model
In enriching the existing SCM model, Kanji’s Business Excellence model (1998) is used
(Fig. 3). It is used because it meets our selection criteria, i.e. general or special-purpose,emphasis on TQM principles, inclusion of critical success factors and model validation.
Kanji’ s Business Excellence model is developed from Kanji’s (1996) modi® ed pyramid model.
The Business Excellence model translated the pyramid model’ s principles and core concepts
into a structural model for business excellence. Kanji’s model consists of four principles:delight the customer; management by fact; people-based management; and continuous
improvement. Each principle is divided into two core concepts, that is: customer satisfaction
and internal customers are real; all work is process and measurement; teamwork and people
make quality; continuous improvement cycle and prevention. Leadership serves as a prime

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G. K. KANJI & A. WONG

Figure 3. Kanji’s Business Excellence model.

in this model that must be transmitted through all the principles and core concepts in orderto achieve business excellence. The model components synthesize not only those criticalrequirements for quality management prescribed by eminent quality practitioners such as
Juran, Deming, Feigenbaum, etc. but also other critical success factors for business excellence.
Survey results of Kanji and Yui (1997) and Kanji and Malek (1999) indicate that respondents
regard the prime principles and core concepts of the Business Excellence model as critical
success factors. Moreover, most of the models in use (e.g. Deming, European, Baldridge,
Japanese) are indicative models, whereas Kanji’s Business Excellence model is an improvement model. The former models are indicative in the sense that they only highlight theimportant factors for business excellence, they do not utilize suitable statistical methods todetermine factor weights, factor scores and total evaluation score. They also do not show
structural relationships among factors and how the factor scores contribute to businessexcellence. On the other hand, Kanji’s Business Excellence model is an improvement
model because it performs simultaneous computation of mathematical equations of factor
relationships to obtain factor indices and business excellence indices which allow organizations
to compare themselves against the diþ erent organizations with whom they are competing.
This is of particular bene® t to organizations which are not doing as well as they might, as it
will give them an incentive to do something about their failings.
Principles and concepts of the new SCM model
In the development of the new SCM model, the managers responsible for managing the
supply chains of two large companies, one medium-sized company and one small company,
had been interviewed in-depth to explore the various salient variables relating to managing
the supply chain. The general ® nding from the managers was that the existing SCM model
was not suý cient to achieve the best results.
The new SCM model has the role of improving the performance of a supply chain.
There is a set of core principles and concepts underpinning the new SCM model. These core
principles and concepts were adopted from the Business Excellence model (Kanji, 1998),
with special focus on the supply chain level instead of on overall business level of an individualorganization. These core principles and concepts are essential for utilizing supply partners’

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1153

resources in achieving excellent business performance. They are discussed under the following
headings.
Leadership
The top management of diþ erent supply chain members should, together, set directions forthe operation of the supply chain and create a customer orientation, clear and visible values
and high expectations for the supply chain. The top management should commit themselvesto the development of the entire supply chain and should encourage participation, learning,
innovation and creativity by all supply chain members. The top management should also
commit themselves to maintaining and sustaining the relationship among the supply chain
partners. The cultivation of a quality culture for the whole chain and the forming ofcooperative and congruent goals among supply chain members are important tasks of the
top management of each member in a supply chain. Developing a quality culture for thewhole supply chain is important for ensuring quality output to ultimate customers (Kanji &Wong, 1998). Kanji (1996) pointed out that the leaders are very important to the implementation of quality management and, in fact, leadership is the base or the `prime’ of his pyramid
TQM model (Kanji, 1998). Hence, the leaders should serve as role models for theiremployees to work together for the betterment of the whole supply chain. They should also
demonstrate their commitment to quality.
Customer focus
The supply chain members should all have the goal of satisfying their ® nal customers’
requirements. This goal will direct the setting of strategies and plans, the operations andperformances of diþ erent supply chain members. Besides, in order to meet the needs of theultimate customers, the needs of diþ erent supply chain members should also be satis® ed.
The diþ erent supply chain members are, in fact, operating as internal customers and suppliers
within the supply chain. If the needs of a supply chain member are not satis® ed, this wouldaþ ect its performance downstream and the whole chain’s performance would be lowered.
Hence, customer focus is necessary in the model, which follows Kanji’s `delight the customers’
principle.
Cooperative relationship
Members in a supply chain have to work closely together in order to coordinate their work
better and obtain a synergistic eþ ect. Hence, teamwork with other supply chain members,
i.e. external teamwork, should be encouraged. Teamwork among diþ erent members in the
supply chain should lead to good performance for the whole chain. For teamwork to beeþ ective, it is essential to have frequent communication, a building of trust and commitment
among the chain members. It depends on the dynamics of the teamwork among the supply
chain partners. It is believed that having cooperative rather than competitive goals among
the partners will lead to best teamwork performance. Therefore, we need a cooperative
relationship in the model, which in fact relates to Kanji’ s `people-based management’principle.
Integrated process and information management
Process refers to linked activities with the purpose of producing a product or service for acustomer (user) within or outside the company. There are diþ erent kinds of process: design

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G. K. KANJI & A. WONG

processes, production/delivery processes and support processes. Supply chain members canbe involved in various processes. As processes often cut across organizationtal boundaries,
they may be broken or disrupted by lack of communication and coordination between
organizations. Good linkage between the operations/processes of diþ erent chain members is
critical for an eý cient and eþ ective supply chain. The operation should be smooth andseamless when involving diþ erent supply chain members in a process. Therefore, it demands
eþ ective and eý cient process management.
Generally, processes involve combinations of people, machines, tools, techniques andmaterials in a systematic series of steps or actions. Therefore, it is necessary to have an
integrated structure among diþ erent supply chain members so that resources can be channelled together to carry out the operation smoothly.
Information exchange between diþ erent supply chain members is necessary for better
coordination of work among members and it may also lead to improvements in the chain’s
operation. Having a system to facilitate the exchange and sharing of information is essential.
Information to be exchanged should be useful to the operation of the whole supply
chain. It may be demand forecast, product information, supply market information, technicalinformation, etc. Besides, some indicators that can re¯ ect the performance of the whole
supply chain should be established and the relevant information be collected so that thewhole chain can know its performance and treat it as a base for further improvement.
Integrated process and information management together re¯ ect Kanji’ s `management byfact’ principle.
Continuous improvement
In order to meet the ever-changing needs of the customers, the supply chain should also
continuously improve its performance. There is always room for improvement in the processof the supply chain so as to make it more integrated. Process improvement may be as a resultof benchmarking or going through a close study by the parties themselves on their operations.
The need to improve continuously has to be cultivated in the minds of diþ erent chain
members. They have to be conscious of preventing problems happening in the supply chain.
Problems may be related to the variability of the operation processes in the supply chain.
Moreover, there should be some channels or mechanism for chain members to voice theirsuggestions or to combine their eþ orts to improve further their operations. Improvements
may require joint planning and discussion between members.
Business excellence
The application of the principles and their related concepts should enable the whole supply
chain to achieve lower cost, better quality and quicker delivery of products or services tocustomers. These performance achievements are the combined eþ orts of diþ erent membersof the supply chain. Therefore, the new SCM model can provide an eþ ective way for
managing the supply chain for business results. The supply chain partners are also satis® edwith their relationship and the smooth operation processes. Each supply chain partner is
continuously contributing towards meeting the ever-changing needs of the ultimate customers. It is believed that when the chain members are satis® ed, they will be committed tousing their greatest eþ ort in serving the ultimate customers. When the ultimate customers
are satis® ed with the products or services they receive from a company, the customers will
be loyal to the company and the company can achieve good business results.
These six constructs that have incorporated the principles and concepts of both Kanji’s

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1155

Figure 4. A new SCM model (path estimates b are indicated in the diagram).

Business Excellence model and the existing SCM model are combined to represent a
structural Business Excellence model for SCM (Fig. 4). Through a literature review, themodel also has some content validity. Leadership of companies displayed in the form ofcreation of cooperative culture with suppliers, commitment to supplier relationship andcommitment to quality would impact the extent of commitment to customer satisfaction,
cooperative relationship, integration of processes between companies and their suppliers, theamount of information obtained and exchanged with suppliers and the extent of commitment
to continuous improvement with suppliers. These strong relationships and linkages with
suppliers in turn result in high contributions to business excellence for companies. A study
testing the Business Excellence model for SCM has been carried out and is reported in thispaper.
Methods of development of the new SCM model
Participants
Questionnaires were sent to managers with signi® cant responsibility for working with suppliers. From 1050 questionnaires distributed, 145 managers completed and mailed back theirquestionnaires, resulting in 139 usable responses. Their average age was 34 and had worked
for an average of 7.16 years in their organizations, and had been dealing with the supplier
they reported on for an average of 5.69 years. Most of the respondents were senior managers,
followed by a group of middle managers.
Sampling design
Companies that make a lot of purchases were the targets of this study. They include
manufacturers, importers and wholesalers. A convenient and often used directory has been
compiled by the Federation of Hong Kong Industries (FHKI). All members contained in the1156

G. K. KANJI & A. WONG

FHKI Members’ Directory 1997, with the exception of the ® nance companies, were includedin this survey.

Measures
Six sets of measures were adopted and used to measure each of the six constructs,
namely, leadership, customer focus, cooperative relationship, management by fact, continuous
improvement and business excellence. These measures were subjected to a formal pre-testby managers responsible for managing their supply partners. Some minor modi® cations werecarried out to make the meaning of some items clearer.
An internal consistency analysis was performed separately for each variable in thetheorized model by calculating the Cronbach± a s, i.e. the reliability alphas. The results inTable 1 show that the Cronbach-a s for all the variables in the model were above the criticalvalue of 0.7 (Nunnally, 1978). Hence, the authors concluded that all the items had been
appropriately assigned to each variable. The instrument developed also had content validity,
since the selection of measurement items was based on an exhaustive review of the literature
and a detailed evaluation by academics and practitioners. Content validity depends on how
well the researchers created the measurement items to cover the content domain of thevariable being measured (Nunnally, 1978). The study used a ® ve-point rating scale, i.e. from1 (strongly disagree) to 5 (strongly agree). The reliability alphas (a ) of diþ erent variables andsample items for each variable are discussed as follows.

Leadership
Leadership consists of the variables of cooperative culture (Culture), commitment to relationship (Longtm) and commitment to quality (ComQu). The view of the top management andthe overall policy of a company will aþ ect the company’s commitment to its supply
partners. Under leadership, the cultivation of a cooperative culture, commitment to supplier
relationship and commitment to quality will set the tone and facilitate the operations with its
suppliers. Items for cooperative culture and commitment to supplier relationship weredeveloped from one of the authors’ previous studies (Wong et al., 1999). Four items wereused to measure each variable under leadership. Subjects were asked to respond on a ® vepoint scale to these 12 items (1 5 strongly disagree; 5 5 strongly agree). Some sample items
for the three variables were ``Our top management perceives that we and this supplier seek
compatible goals’’ ; ``Our company considers that maintaining a long-term relationshipwith this supplier is important to us’’ ; ``Our top management supports long-term quality
improvement process’’ . Reliabilities (coeý cient alphas) of the three variables were 0.73, 0.83
and 0.80, respectively.

Customer focus
Customer focus consists of the variables of commitment to supply partner satisfaction(COMSU ) and commitment to customer satisfaction (COMCU). It represents commitment
to the internal customers within the supply chain and the external customers or ® nal
customers, respectively. A company’s commitment to the needs of its supplier should help it
meet the needs of its ® nal customers. Four items were used to measure each variable. Sample
items for these variables were ``We want our supplier satis® ed with the information we givethem to facilitate their work’’ ; ``Our ® rm commits to providing high quality products or

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Table 1. Constructs for the new SCM model
Constructs and variables

Reliability No. ofaquestions Sample questions

Leadership dimension
Cooperative culture (CULTURE)

0.85
0.73

12
4

Commitment to relationship(LONGTM)

0.83

4

Commitment to quality (COMQU)

0.80

4

Customer focus dimension
Commitment to supply partner
satisfaction (COMSU)

0.83
0.82

8
4

Commitment to customer
satisfaction (COMCU)
Cooperative relationship dimension
Supplier dynamics (SUPDY)

0.84

4

0.90
0.80

12
4

Cooperative goals (COOP)

0.83

4

Cooperative controversy (CC)

0.84

4

Management by fact dimension
Seamless operation (OPERAT)

0.90
0.73

16
4

Integrated structure (STRUCT)

0.75

4

Performance measurement(MEASURE)
Information exchange (INFOEX)

0.85

4

0.76

4

Continuous improvement dimension
Process improvement (processim)

0.83
0.77

8
4

Planning and prevention (PREVEN )

0.70

4

Business excellence dimension
Customer satisfaction (CUSAT)

0.88
0.79

16
4

Business results (BUSRESU)

0.82

4

Supplier contribution (SUPCONTR)

0.85

4

Supplier satisfaction (SUPSAT)

0.77

4

Our top management perceives that we andthis supplier seek compatible goals
Our top management considers thatmaintaining a long-term relationship withthis supplier is important to us
Our top management supports a long-term
quality improvement process
We want our supplier to be satis® ed with theinformation we give them to facilitate theirwork
Our ® rm is committed to providing highquality products or services to our customers
An atmosphere of cooperation exists between
our ® rm and this supplier
We and the supplier want each other tosucceedWe and the supplier listen carefully to eachother’s opinions
Our ® rm meets with this supplier’s senior
management on a regular basis to discussproblems
Tight operating linkages are planned for andimplemented between our ® rm and this
supplierOur ® rm assesses the supplier’s performancethrough a formal evaluation programme
Our ® rm and this supplier share work
improvement suggestions with each otherWe continuously work at integrating theprocess between our ® rm and this supplierOur ® rm has measures to prevent problems
arising from our relationship with the
supplier
Customers are satis® ed with the quality ofour product which has incorporated the
input of this supplier
Our product quality is very competitive inthe market
The supply partner helps us reach ourquality objectives
Our supplier is satis® ed with the information
we supply them to facilitate their work

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G. K. KANJI & A. WONG

services to our customers’’ . Coeý cient alphas for the two variables were 0.82 and 0.84,
respectively.
Cooperative relationship
Cooperative relationship consists of external teamwork, i.e. supplier dynamics (SUPDY),
cooperative goals (COOP ) and open-minded interaction (CC ). Supplier dynamics measures
a company’s general relationship with its supplier. Cooperative goals measure the nature ofgoal interdependence between a company and its supplier. Open-minded interaction orconstructive controversy is the set of behaviours that have been found to develop fromcooperative goal interdependence in problem-solving situations. Items for the latter two
variables were developed from previous studies based on Deutsch’s theory of cooperationand competition (Tjosvold et al., 1986, 1991). Four items were used for each of the threevariables. Sample items for the three variables were ``An atmosphere of cooperation exists
between our ® rm and this supplier’’ ; ``The supplier and we want each other to succeed’’ ; and``This supplier and we listen carefully to each other’s opinions’’ . Reliability alphas for thethree variables were 0.80, 0.83 and 0.84, respectively.
Integrative process and information management (Management by facts)
Integrative process and information management includes the variables of seamless operation(OPERAT) and integrated structure (STRUCT ). In order to have best performance fromutilizing the resources of a company’s supplier, operation between them should be seamlessand smooth, which also requires an integrated structure or closely linked structure. Seamless
operation measures the frequency of communication between the company and its supplierand the supplier’s involvement in the company’s value creation activities. Integrated structure
measures the structural linkage between the company and its supplier, which includes theestablishment of channels of communication, boundary spanning roles, etc. Items for thesetwo variables were developed from the studies of Blancero and Ellram (1997) and theCustomer± Supplier Trust project of the Lean Enterprise Research Centre (1996). Four items
were used for each of the two variables. Sample items were ``Our company meets with this
supplier’ s senior management on a regular basis to discuss problems’ ’ ; ``Tight operating
linkages are planned for and implemented between our ® rm and this supplier’’ . Reliability
alphas for the two variables were 0.73 and 0.75, respectively.
Information management entails the variables of performance measurement (MEASURE)
and information exchange (INFOEX ). Information on the performance of the supply chain
members can help members know what should be improved. Besides, information sharing
between the members can facilitate their operation. Performance measurement measures
how much information the company has on the performance of its supplier. Informationexchange measures the extent of information sharing between the company and its supplier.
The items of information exchange were developed from the studies of Blancero and Ellram(1997) and Monczka et al. (1995). Four items were used for the two variables. Sample items
included ``Our company assesses the supplier’s performance through a formal evaluation
programme’ ’ ; ``Our ® rm and this supplier share work improvement suggestions with eachother’’ . Reliability alphas for the two variables were 0.85 and 0.76, respectively.
Continuous improvement
Continuous improvement includes the variables of process improvement (PROCESSIM) andplanning and prevention (PREVEN). Process improvement is always necessary in streamlining

BUSINESS EXCELLENCE MODEL1159

the supply chain processes to meet continuously the customers’ needs. Channels or mechanism for solving operational problems should be planned and set up so as to prevent problems
from escalating to dysfunctional con¯ ict. Process improvement measures the extent of
involvement in process improvement by the company and its supplier. Planning and prevention measures the eþ ort the company and the supplier have spent on planning to prevent
problems from coming up and escalating. Four items were used for each of the two variables.
Sample items include ``We continuously work at integrating the process between our company
and this supplier’’ ; ``Our company has measures to prevent problems arising from ourrelationship with the supplier’’ . Reliability alphas for the two variables were 0.77 and 0.70,
respectively.

Business excellenceBusiness excellence includes customer satisfaction (CUSAT ), business results (BUSRESU),
supplier contribution (SUPCONTR ) and supplier satisfaction (SUPSAT ). It is believed thatthe new SCM model should lead to business excellence. First of all, the buyer and the
supplier should be satis® ed with the support of their partner. It is argued that if the supply
partner is best managed, they will also try to help the company to meet their customer’ sneeds best. There should also be some relationship between customer satisfaction and thebusiness result of the company. Four items were used for each of the four variables. Sample
items for the four variables were ``Customers are satis® ed with the quality of our productwhich has incorporated the input of this supplier’ ’ ; ``Our product quality is very competitivein the market’’ ; ``The supply partner helps us reach our quality objectives’’ ; and ``Our supplieris satis® ed with the information we supply them to facilitate their work’’ , respectively.
Reliability alphas for the four variables were 0.79, 0.82, 0.85 and 0.77.

Results
Descriptive statistics
Means of diþ erent variables
The mean values of the diþ erent variables are discussed as follows according to the diþ erent
dimensions (Table 2).

Leadership
The mean values on a ® ve-point scale (1 5 strongly disagree; 5 5 strongly agree) of the threevariables under leadership were 3.93, 4.21 and 4.19 for cooperative culture, commitment torelationship and commitment to quality, respectively, which indicated that the respondents
believed that the top management or the company was committed to the long-term relationship with the supplier partner and also committed to pursuing quality initiatives. The
respondents also agreed that there was a cooperative culture between the company and its
supply partner.

Customer focus
The responses indicated high mean values of commitment to supply partner satisfaction(COMSU ) and commitment to customer satisfaction (COMCU), which were 4.22 and 4.45,

CULTURE
LONGTM
COMQU
COMCU
COMSU
SUPDY
COOP
CC
OPERAT
STRUCT
MEASUREINFOEXPROCESSIMPREVENSUPSATSUPCONTR
CUSAT
BUSRESU

3.92
4.21
4.19
4.45
4.21
4.01
3.90
3.90
3.29
3.50
3.24
3.39
3.69
3.57
3.82
3.86
3.83
3.71

Mean

2

3

4

5

6

7

a

8

9

10

11

12

13

14

15

16

17

18

1.00
0.64** 1.00
0.38** 0.32** 1.00
0.33** 0.33** 0.53** 1.00
0.39** 0.45** 0.26** 0.38** 1.00
0.65** 0.48** 0.21** 0.30** 0.51** 1.00
0.69** 0.66** 0.35** 0.36** 0.56** 0.66** 1.00
0.51** 0.46** 0.29** 0.29** 0.49** 0.54** 0.61** 1.00
0.33** 0.23** 0.28** 0.28** 0.12 0.34** 0.33** 0.39** 1.00
0.38** 0.35** 0.30** 0.28** 0.31** 0.45** 0.47** 0.51** 0.68** 1.00
0.22** 0.12 0.46** 0.36** 0.12 0.23** 0.23** 0.27** 0.49** 0.51** 1.00
0.32** 0.22** 0.26** 0.27** 0.20* 0.33** 0.39** 0.44** 0.66** 0.56** 0.56** 1.00
0.40** 0.42** 0.42** 0.40** 0.36** 0.35** 0.44** 0.40** 0.49** 0.58** 0.35** 0.40** 1.00
0.48** 0.38** 0.38** 0.40** 0.34** 0.40** 0.51** 0.41** 0.44** 0.54** 0.51** 0.46** 0.65** 1.00
0.60** 0.46** 0.23** 0.25** 0.56** 0.64** 0.53** 0.55** 0.30** 0.34** 0.20* 0.36** 0.31** 0.46** 1.00
0.51** 0.44** 0.31** 0.29** 0.42** 0.63** 0.62** 0.50** 0.35** 0.45** 0.32** 0.38** 0.51** 0.41** 0.47** 1.00
0.52** 0.45** 0.35** 0.50** 0.36** 0.48** 0.47** 0.39** 0.28** 0.33** 0.37** 0.27** 0.39** 0.42** 0.41** 0.44** 1.00
0.40** 0.31** 0.17** 0.45** 0.30** 0.42** 0.26** 0.24** 0.29** 0.32** 0.29** 0.27** 0.32** 0.38** 0.35** 0.23** 0.65** 1.00

1

Table 2. Mean values and correlations among variables

Mean values are from a ® ve-point scale (1 5 strongly disagree; 5 5 strongly agree).
*Correlation is signi® cant at the 0.05 level (two-tailed).
**Correlation is signi® cant at the 0.01 level (two-tailed).

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Variablea1160
G. K. KANJI & A. WONG

BUSINESS EXCELLENCE MODEL

1161

respectively. It revealed that the respondents very much agreed that their companies werecommitted to the needs of their supply partners and their customers.
Cooperative relationshipConcerning the relationship between respondents’ companies and their suppliers, therespondents agreed that there was good supplier dynamics, with a mean value of 4.02. For
instance, the operations between respondents’ companies and their supply partners weresmooth. The respondents agreed that the partners in the supply chain had cooperative goals,
a mean value of 3.91. Respondents also agreed that the supply chain partners had openminded interaction with each other, with a mean value of 3.9.
Integrative process and information management (Management by facts)
The mean value of seamless operation was 3.29, which indicated that the respondents weremore or less neutral when considered under the ® ve-point scale. This implied that there
should be room for improvement in communication with suppliers and involving suppliersin the value creation activities of the companies. The mean value of integrated structure was
3.51, which suggested that the respondents generally agreed that there was structural linkage
between their companies and their suppliers.
The mean value of performance measurement and information exchange were 3.24 and
3.4, respectively. The results implied that the respondents were more or less neutral, thoughskewed towards agreeing that there was information sharing between the company and they
have objective ways to measure the performance of their suppliers.
Continuous improvement
The mean values of process improvement (PROCESSIM ) and planning and prevention(PREVEN ) were 3.69 and 3.57, respectively. The results suggested that the respondents
generally agreed that their companies and their suppliers continuously worked at improving
or streamlining the operations and processes between them. The respondents also generally
agreed that there was a mechanism set up to prevent problems from arising in the relationshipwith their suppliers.
Business excellence
The mean values of customer satisfaction, business results, supplier contribution and suppliersatisfaction were 3.84, 3.71, 3.87 and 3.83, respectively. The results indicated that the
suppliers were satis® ed with the assistance given to them by the companies. The respondents
generally agreed that their suppliers could have various contributions to their companies.
The respondents also generally agreed that their customers were satis® ed with their companies’ products. Moreover, the respondents also generally agreed that the overall performanceof their companies was very competitive in the market.
Correlations between variables
Table 2 shows correlations between diþ erent variables and their level of signi® cance (p).
They are discussed as follows.

1162

G. K. KANJI & A. WONG

Leadership
Under leadership, the three variables had signi® cant correlations with each other, whichsuggested that companies having a cooperative culture with their suppliers were able tocommit to the long-term relationship with their suppliers (r 5 0.649, p< 0.01), and commit
to quality initiatives (r 5 0.386, p< 0.01). Companies that committed to quality initiatives
would also commit to supplier relationship (r 5 0.322, p< 0.01).
Besides, the three variables also had high correlations with other variables. The results
indicated that companies which had a cooperative culture with their suppliers were able todevelop cooperative goals (r 5 0.699, p< 0.01), smooth operations (r 5 0.657, p< 0.01) andopen-minded interactions with their suppliers (r 5 0.518, p< 0.01). Cooperative culture
would also help companies prevent problems from arising in the relationship with suppliers(r 5 0.486, p< 0.01). Cooperative culture would also lead to the contribution of suppliers(r 5 0.515, p< 0.01). The end result of cooperative culture would be customer satisfaction(r 5 0.527, p< 0.01) and competitive business results (r 5 0.4, p< 0.01).
Customer focus
The two variables (commitment to supplier satisfaction, commitment to customer satisfaction) in the construct of customer focus were related to one another (r 5 0.387, p< 0.01).
Companies which were committed to customer satisfaction were also committed to quality(r 5 0.534, p< 0.01). In order to meet customers’ needs, companies would improve thesupply chain’s processes (r 5 0.402, p< 0.01) and prevent problems from occurring(r 5 0.402, p< 0.01). Companies that commit to customer satisfaction would also have an
atmosphere of cooperation within companies (r 5 0.434, p< 0.01) and cooperative goals
among employees (r 5 0.477, p< 0.01). Commitment to customer satisfaction would lead tocustomer satisfaction (r 5 0.5, p< 0.01) and business competitiveness (r 5 0.455, p< 0.01).
Companies that committed to supplier satisfaction would develop long-term relationship(r 5 0.456, p< 0.01) and cooperative goals (r 5 0.565, p< 0.01), and had smooth operations(r 5 0.516, p< 0.01) and open-minded interactions with their suppliers (r 5 0.497, p< 0.01).
Commitment to supplier satisfaction would also result in supplier satisfaction (r 5 0.565,
p< 0.01) and supplier contribution (r 5 0.422, p< 0.01).
Cooperative relationships
Companies with good supplier dynamics would have cooperative goals with their suppliers(r 5 0.668, p< 0.01) and open-minded interactions with suppliers (r 5 0.54, p< 0.01).
Companies that have cooperative goals with their suppliers would have open-minded interactions with their suppliers (r 5 0.618, p< 0.01).
Companies having good supplier dynamics were committed to supplier satisfaction(r 5 0.516, p< 0.01), were able to develop an integrated structure with their suppliers(r 5 0.45, p< 0.01) and prevent problems arising in the relationship with their suppliers(r 5 0.46, p< 0.01). In return, the companies would have higher satisfaction with theircontributions (r 5 0.635, p< 0.01). Good supplier dynamics would also lead to customer
satisfaction (r 5 0.486, p< 0.01) and business results (r 5 0.42, p< 0.01).
Integrative processes and information management (Management by facts)
The two variables, i.e. seamless operation and integrated structure, in this construct wereclosely related to each other (r 5 0.689, p< 0.01). Companies that had developed seamlessBUSINESS EXCELLENCE MODEL

1163

operation with their suppliers also had objective information to measure suppliers’ performance (r 5 0.511, p< 0.01). They would have good information exchange with their suppliers(r 5 0.662, p< 0.01) and emphasize improving the processes (r 5 0.496, p< 0.01) andpreventing problems arising (r 5 0.444, p< 0.01) between companies and their suppliers.
Performance measure and information exchange were related to each other (r 5 0.56,
p< 0.01). Companies that had performance measures on their suppliers were also committed
to quality (r 5 0.469, p< 0.01). In general, these two variables were closely related to variablesin the constructs of integrated processes and continuous improvement.
Continuous improvement
Process improvement and planning and prevention were closely related to each other(r 5 0.651, p< 0.01). They were also very closely related to the variables in integrative
processes and information management. Companies that paid attention to continuous
improvement also had cooperative culture and a long-term relationship with their suppliers.
They were also committed to quality.
Business excellenceContributions of suppliers would lead to customer satisfaction (r 5 0.447, p< 0.01). Suppliercontribution was closely related with companies having a cooperative culture with suppliers(r 5 0.515, p< 0.01), a long-term relationship with suppliers (r 5 0.447, p< 0.01) andcommitment to suppliers (r 5 0.422, p< 0.01). Supplier contribution was also closely relatedwith having good relations with suppliers, i.e. supplier dynamics (r 5 0.635, p< 0.01),
cooperative goals with suppliers (r 5 0.623, p< 0.01), open-minded interactions with suppliers (r 5 0.509, p< 0.01), and with preventing problems from arising with suppliers(r 5 0.412, p< 0.01).
Business results was closely related to customer satisfaction (r 5 0.655, p< 0.01), commitment to customers (r 5 0.455, p< 0.01), relations with suppliers (r 5 0.42, p< 0.01) andcooperative culture with suppliers (r 5 0.4, p< 0.01).
Customer satisfaction was closely related to business results (r 5 0.655, p< 0.01),
commitment to cooperative culture with suppliers (r 5 0.527, p< 0.01), commitment tocustomers (r 5 0.5, p< 0.01) and relations with suppliers (r 5 0.486, p< 0.01). The companies that had satis® ed suppliers had also satis® ed customers (r 5 0.419, p< 0.01). Suppliersatisfaction was closely related with companies having cooperative culture with suppliers(r 5 0.6, p< 0.01) and commitment to suppliers (r 5 0.565, p< 0.01). Supplier satisfaction
was also closely related to having good relations with suppliers, i.e. supplier dynamics(r 5 0.646, p< 0.01), cooperative goals with suppliers (r 5 0.537, p< 0.01), open-mindedinteractions with suppliers (r 5 0.554, p< 0.01), and with preventing problems from arisingwith suppliers (r 5 0.463, p< 0.01).
Structural analysis results
Path analysis was used to examine the underlying relationship among company leadership,
customer focus, cooperative relationship, integrative processes and information management,
continuous improvement and business excellence. The path analysis of the interrelationshipamong these constructs was analyzed using the EQS for Macintosh program (Bentler & Wu,
1995).
Structural equation analyses were used to examine possible causal relationships. The

1164

G. K. KANJI & A. WONG

Table 3. Structural equation analysis of the new SCM model or theBusiness Excellence model for SCM
Structural pathPathestimates

Leadership to customer focus
Leadership to cooperative relationship
Leadership to management by fact
Leadership to continuous improvement
Customer focus to business excellence
Cooperative relationship to business excellenceManagement by fact to business excellenceContinuous improvement to business excellence

0.690***
0.813***
0.654***
0.739***
0.292***
0.381***
0.107**
0.113*

Model v 2
Degree of freedom
Comparative ® t index (CFI)
Normed ® t index (NFI)

5.627
1
0.993
0.991

*p< 0.10; **p< 0.05; ***p< 0.01.

results support the model outlined in Fig. 4. Since the variables in the model are in factindicators of the six constructs, the values of variables within each construct are aggregated
together to give the value of the construct they represent. Hence, cooperative culture(CULTURE), commitment to relationship (LONGTM) and commitment to quality(COMQU ) together form the construct of leadership (LEADERSH), with a reliability alphaof 0.85 (Table 1). Commitment to supply partner satisfaction (COMSU ) and commitment
to customer satisfaction (COMCU ) form the construct of customer focus (CUSTOMER),
with a reliability alpha of 0.83. Supplier dynamics (SUPDY), cooperative controversy (CC)and cooperative goals (COOP ) combine into the construct of cooperative relationship(COOPRELA), with an alpha value of 0.90. Seamless operation (OPERAT) and integrated
structure (STRUCT ), performance measurement (MEASURE) and information exchange(INFOEX ) together form the construct of management by fact (MGTBYFCT), with a
Cronbach’ s-a of 0.90. Continuous improvement (CONTIMPR) is composed of the variablesof process improvement (PROCESSIM ) and planning and prevention (PREVEN), with analpha of 0.83. Business excellence is made up of the variables of supplier satisfaction(SUPSAT ), supplier contribution (SUPCONTR ), customer satisfaction (CUSAT ) and business results (BUSRESU ), with an alpha of 0.88. All the reliabilit y alphas of the six constructs
indicated that they had good internal consistency.
The new SCM model relates leadership directly to the setting up of integrative processes,
information management, the devotion to continuous improvement, commitment to customer
and supplier satisfaction and development of cooperative relationship. In turn, these factors
are related to the business performance of the companies. The analysis in Table 3 shows thatthe model has a v 2 of 5.627 (df 5 1), a comparative ® t index (CFI ) of 0.993 and a normed® t index (NFI ) of 0.991. Values for both the NFI and CFI range from zero to 1.00 and,according to Bentler (1992), a value greater than 0.90 indicates an acceptable ® t to the data.
Hence, the new SCM model ® ts the data very well.
Assessment of parameter estimates
When examining z statistics associated with the structural estimates of the model, we candetermine some parameters estimates that are statistically signi® cant at the 5% level, i.e. test
statistics greater than 6 1.96.

BUSINESS EXCELLENCE MODEL

1165

In the new SCM model, nearly all the structural estimates are signi® cant at the 5% level,
except business, Contimpr, which is signi® cant at the 10% level. The results of z values using
the EQS program are as follows: Leadersh, Customer (12.341); Leadersh, Cooprela (14.493);
Leadersh, Mgtbyfct (7.583); Leadersh, Contimpr (10.864); Businese, Customer (4.398); Businese,
Cooprela (6.086); Businese, Mgtbyfct (2.158); Businese, Contimpr (1.791).
Path coeý cients
The path coeý cients (b ) of the theorized new SCM model help to explore the ® ndings more
speci® cally (Table 3). Leadership had a signi® cant impact on commitment to suppliers andcustomers, i.e. customer focus (b 5 0.69, p< 0.01), on cooperative relationship with suppliers(b 5 0.813, p< 0.01), on management by fact (b 5 0.654, p< 0.01) and on continuous
improvement (b 5 0.739, p< 0.01). Customer focus in turn had a signi® cant impact on
business excellence (b 5 0.292, p< 0.01). Cooperative relationship also had a signi® cant
impact on business excellence (b 5 0.381, p< 0.01). Management by fact had an impact on
business excellence (b 5 0.107, p< 0.05). Also, continuous improvement had an impact on
business excellence (b 5 0.113, p< 0.1). These ® ndings on path coeý cients provide good
support for the study’s hypotheses. They, along with the analysis of the structural equation
models, suggest that leadership would lead to customer focus, cooperative relationship,
management by fact and continuous improvement, which help companies achieve businessexcellence.
Discussion and conclusion
Results support the theory that companies focusing on creating cooperative culture with
suppliers and commitment to supplier relationship and quality, commit themselves tosupplier satisfaction and develop cooperative relationships with supply partners. These strong
relationships with suppliers would lead to suppliers’ quality contributions to the companies.
Besides, the evidence suggests that companies that have a cooperative culture with suppliers,
commitment to supplier relationship and quality, develop integrative processes with suppliers,
obtain and exchange information with suppliers and engage in continuous improvement
activities with suppliers. These close linkages and interactions also lead to suppliers’ quality
contributions to the companies, which enables companies to achieve business excellence.
It can be argued that when the top management of a company adopts a cooperative
culture in its relationship with its supply partners and commits to quality improvement, it
will make the company more committed to meeting its suppliers’ needs and satisfying its
customers. It also enables the company to develop eþ ective teamwork with its supply
partners, i.e. through cooperative goals, instead of competitive goals, and through constructive
controversy or open-minded discussion in the interaction with its suppliers. These are the`soft’ factors that are essential for achieving good relationship with supply partners. As aresult, the suppliers are more satis® ed with the relationship with the company and they are
more willing to contribute their best in helping the company improve its competitivenessthrough providing quality inputs and improvement suggestions to the company. The end
result will be that the customers are more satis® ed with the company’ s product or service
and the company can thus achieve a better competitive advantage than its competitors.
On the other hand, leadership will also help a company establish integrated operations
with its supply partners. Under the auspices of the top management, integrative processes
can be set up, information can be exchanged more frequently and more eþ ort can be spenton continuously improving the operation processes with its supply partners. These are the1166

G. K. KANJI & A. WONG

`hard’ factors that have to be taken care of in order to get the best performance fromsuppliers. When the operations are smooth and close, suppliers’ contributions can befacilitated. With suppliers’ contributions, companies are in a position to serve better theircustomers and ® nally achieve competitive positions. Besides, continued close interactions
may somehow help to breed cooperative culture between the company and its suppliers.
However, relatively speaking, the `soft’ factors are more important than the `hard’ factors.
Sometimes, companies do not necessarily require a high level of smooth and close operations
with their suppliers as long as the suppliers are cooperative enough to do their best at theirend. Hence, developing a cooperative relationship is much more important. The new SCM
model also re¯ ects that the `soft’ factors, i.e. customer focus (Customer) and cooperative
relationship (Cooprela) have more statistically signi® cant relationships with business excellence
than the `hard’ factors, i.e. information management (Informat), integrated process (Integpro)
or the construct of management by fact.
Regarding the development of a cooperative relationship, the Business Excellence modelof SCM has also made use of Deutsch’s theory of cooperation and competition. Deutschsuggested that the way in which people believe their goals are related is an important variableaþ ecting the dynamics and outcomes of their interaction. He identi® ed three alternativesof people’s interpretation of their goal interdependence: cooperation, competition andindependence. Perceptions of goal interdependence aþ ect interaction outcomes signi® cantly
because these perceptions aþ ect their expectations and actions.
The results con® rm that once cooperative goals with suppliers have been developed
under the leadership of the top management, the company and its suppliers are able toacknowledge each other’ s perspective, communicate and in¯ uence eþ ectively, assist andsupport each other and discuss opposing ideas openly. This study has extended the applicationof the theory from focusing on the individual-to-individual level of previous studies (Deutsch,
1973; Johnson & Johnson, 1989) to focusing on ® rm-to-® rm level. This study also showsthat cooperative goals and open-mindedness contribute to eþ ective and productive relationships. The results also have support from the ® ndings of the studies of one of the authors(Wong et al., 1999).
From structural analysis, the new SCM model or the Business Excellence model for
SCM provides a good ® t to the data, which implies that the causal relationships of thediþ erent constructs or the structure of the model should be valid. This model is better thanother existing SCM models because the other models do not show the causal relationships
for the diþ erent constructs. Since the new SCM model has incorporated in it the successfactors of the TQM principles and concepts, it can enable companies adopting this model
successfully to manage and utilize the resources of its suppliers so as to achieve businessexcellence. The business excellence index (BEI) for companies’ SCM can be further
derived from the model using statistical methods. The BEI for companies’ SCM will allow
organizations to compare their SCM performance against those of diþ erent organizations
with whom they are competing. This is of particular bene® t to organizations who are notdoing as well as they might, as it will given them an incentive to do something about theirfailings.
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