With the recent fiercer global competition, a lot of manufacturing companies have paid more attention to how to build relationships between customers and suppliers and operate businesses. Manufacturers apply expanded process approaches that affect improvement of supply chain management outcomes. This is an expanded process concept that includes outside industries, suppliers and customers rather than putting the emphasis only on the middle process; it focuses on improving customer value and strengthening competitiveness and establishes management strategy to promote improvement projects. Such process includes not only procurement of raw materials, design and assembly of products, and transportation and logistics activities for complete products but also demand and satisfaction of customers. Manufacturing and distribution of products as well as optimizing the process for customers’ satisfaction with service are critical elements for successful business.
For survival and competitive edge of business, innovative products and innovation in the manufacturing process are required. Innovation is the characteristic of multi-level organizations, and the levels were classified into creativity, risk-taking, acceptance of changes, future orientation and progressiveness. From the viewpoint of organization, innovation can be referred to a process of creating new ideas to improve technologies and products. As for innovation, there has not yet been empirical research on Supply Chain Management (SCM).
With the recent recalls by global companies, quality management has faced risks. As the quality of customers’ lives has improved, interest in not only products or service itself but also safety of products has also increased; they have stronger desire for time for payment and appropriateness of price as well. As a result, the importance of supply chain management has gained spotlight. Since businesses have changed from the traditional production process where all productions were conducted by one company to the current professional process that design, production and transportation occurs in different places, SCM has been considered a basic service for customers in a simple outsourcing stage. That is, efficiency of production and the quality of products are generally improved by maintaining one’s own competitiveness and having the best partner in each area of production. As for business, it is required to build strategic cooperative relationships with all suppliers to become a competitive and outstanding business. Suppliers included in the supply chain are not the scapegoats to guarantee profits of the mother business but the partners that develop mutual values together. As shown from the recall by Toyota, asking suppliers continuously to lower cost prices can have negative impact on the performance of the mother business, because the suppliers end up degrading the quality of the products.
Delivering the right products to customers to the desired place on time is not only a pivot of business competitiveness but also a key element for survival of business. Also, the internal capacity of business needs to be strengthened as well as the quality of raw materials and parts provided by suppliers should be improved. Therefore, quality management has expanded from internal activities and capacity of business to the entire supply chain, and Supply Chain Quality Management (SCQM) has gained the spotlight. SCQM is to achieve competitive edge of business through cooperation among agents in the supply chain to improve products and quality provided to the final customers (Kim Tae-Gyu and Hyun Wan-Soon, 2009).
It is significant to conduct an empirical review on the relationships among components of SCQM activities - supply chain capacity, leadership and system and tracking system – and outcomes of the business, as it fills the gaps among theoretical studies on the relationships. As such, this research aims to investigate the impact of the responsiveness of supply chain on business outcomes focused on pharmaceutical, food and automobile companies implementing and applying SCQM.
Supply chain capacity was revealed to have significant impact on both quality and financial performance, which is similar to the participating factor of suppliers suggested by Lin et al. (2005) as the precedence factor of business performance. This is considered that process management, the key implementation factor presented from existing quality management research, had significant impact on business performance.
Supply chain leadership also showed significant impact on business performance. This means that companies recognize the importance of business responsibility clearly, and the business responsibility factor has influence on continuous improvement activities of the companies. For continuous improvement activities pursued in quality management system, top management should identify resources required for strategy implementation and achievement of organizational goals and control material and human resources necessary for the operations efficiently.
Supply chain system hadn’t on significant impact quality performance. Product realization is an essential factor for company management to satisfy demand of various stakeholders and customers. When it comes to securing long-term competitiveness of business, non-price competitiveness such as quality has huge potential. To secure such quality competitiveness, companies need to evaluate if the production process is complied with the fixed standard and procedure and if certain standard has been satisfied through objective documentation, and evaluate correction and improvement measures for preventing unsuitable products.
As for recall system tracking system, awareness of top management and compensation level had significant positive (+) impact, while proactiveness was rejected. Only if a company possesses fundamental capacity and system required for global-level quality, it can create excellent quality. Among such capacity and system, quality management within supply chain system is a critical factor. To be equipped with the ability and will to identify causes of faulty products and respond to the incident, companies should have recall systems. Tracking system enables to share information for improvement of product quality with suppliers and identify causes of faulty products within the supply chain. CEO can encourage employees and all members on the value chain to recognize and promote the quality capacity by valuing quality and paying continuous interest in it. Also, it takes some time for efforts for quality improvement to be resulted in actual performance; also, it takes another some time for the improved quality to be recognized by consumers and reflected in the business performance. When defective products were found, voluntary recall is better than compulsory recall for reliability of the company. In terms of overcoming quality crisis, the quality strategy of CEO and quality organization as well as response based on ethical management are very important. For global management, it is necessary to identify and response to defective product issues quickly.
The limitation of this research is that SCQM activity, which is divided into planning, executing and spreading, was used as a comprehensive single variable, failing to distinguish the role of outcomes clearly. Also, the study did not conduct an analysis on industrial products that recalls occur the most frequently. Therefore, it is necessary to identify the role of supply chain for quality management by expanding the scope of analysis in the future research.