Chapter 4 Research Instrument Development and Content Validity
4.1 Stage 1 Scale Development
4.1.4 Results of item purification sorting process
The definitions of various constructs in it are summarized in Table 4.2. Table 4.3 presents the final round of item-placement ratios for the scales using Moore and Benbasat’s (1991) format, which provides additional insight into the performance of the proposed mea-surement scales. Each of the benefit and competency scales is listed on the rows of the table.
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For example, the operational benefits of ERP scale has 6 items, so perfect item placement for this scale would be a score of 30 (6 items x 5 judges). In this case, only 23 judge-items were classified as intended, while 5 were classified under managerial benefits and 2 under strategic benefits. The item-placement ratio for operational benefits thus equals 26/30 or 77%. Accord-ing to Moore and Benbasat (1991), an item placement ratio of 70% or greater is generally considered acceptable. All of the scales met or exceeded this criterion for the final sorting round.
Two pre-tests were conducted. Participants were asked to identify any confusion. Five EMBA students with business experiences performed the first pre-test. After the pre-test, the questionnaire was revised. The second pre-test was conducted on five IT managers from five Taiwanese IT firms. Minor modifications were incorporated into the final questionnaire (Ap-pendix). The pre-tests indicate that the questionnaire is deemed appropriate to examine the relationship between ERP and SCM in Taiwanese IT firms (Churchill, 1997). A seven-point Likert scale anchored at “strongly disagree” (1), “strongly agree” (7), and “neither agree nor disagree” (4) is used to collect most responses, while some questions involved absolute num-bers, percentages or binary variables. The final questionnaire had an embedded triangulation structure to reduce data bias (Jick, 1979) and was divided into:
(1) General data;
(2) Benefits for adopting ERP systems, and
(3) Firm competencies of SCM after adopting ERP systems
The final questionnaire consists of three parts (Appendix). The part of general data in-cludes 8 questions pertaining to industry, number of employees, estimated revenue, the pri-mary reason for adopting ERP system, type of ERP and SCM related software used, which modules of ERP system implementing, and the number of months and years since the ERP system initiatives. The parts of benefits for adopting ERP systems and firm competencies of SCM after adopting ERP systems include total of 47 items for eight constructs pertaining to
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the ERP benefits and firm competencies of SCM, as well as including 6 synthesis questions pertaining to the total impact of ERP adoption on firm competencies of SCM (Appendix).
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Table 4.1 Original and final measurement scales and items: Standardized path loadings from CFA
Construct and items
Standard Path Loading ERP benefits and associated items:
Operational benefits:
My firm has better control of business operating expenses and decreased opera-tions cost after adopting ERP system.
0.761 My firm has reduced production cycle times and increased inventory turns. 0.903 My firm has increased power user involvement by user training for operational
tasks
0.944 My firm has improved quality management and control. 0.964 My firm meets customer needs proactively and more efficiently. 0.845 My firm has less time and fewer errors in order process. 0.848
Managerial benefits:
My firm increased the capability of tailoring products to meet specific needs of
customer, and improving resource management to support customization. 0.893 My firm has more effective decision making by workers. 0.881 My firm’s ERP system has increased delivery flexibility 0.669 My firm’s ERP system has reduced ordering and invoice complexity 0.849 My firm has increased partnership with customer and vendor by information
sharing. 0.754
My firm has improved quality management and quality control. 0.778 My firm’s ERP system has enhanced the capability to reduce the time between
order receipt and customer delivery. dropped
Strategic benefits:
My firm has supported for business growth. 0.906
My firm has supported for business alliance. 0.628
My firm increased the capability of building business innovations and absorb
rad-ical change routinely 0.922
My firm has built cost leadership by reducing inventory-carrying cost and lower
labor cost. 0.826
My firm has generated product differentiation including customization. 0.783 My firm has built external linkages to have better connectivity with customer and
supplier. 0.700
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Organizational benefits:
My firm has changed organizational management processes in breadth and
broad-er horizon. 0.984
My firm has facilitated organizational learning and training for access of
enter-prise information. 0.988
My firm has training for decision making skills and worker empowerment for
taking actions. 0.983
My firm has built common vision. 0.893
My firm has better employee morale and satisfaction. 0.801 My firm has related to support organizational changes. 0.763
IT Infrastructural benefits:
My firm has built business flexibility for current and future changes. 0.867 My firm has reduced in cost of maintaining legacy systems. 0.902 My firm has increased IT infrastructure capability. 0.813 My firm has integrated and has real time to effectively support information. 0.797 My firm has standard procedures across different locations. 0.702 My firm has presented a single interface to customer and has consolidated
mul-tiple different systems of the same type. 0.870
SCM competencies scales and associated items:
Behavioral process competencies:
My firm has increased customer response time and percentage of resolving
cus-tomer’s first call 0.740
My firm has kept maintenance and modification of customer focus to continuous-ly match changing expectations.
0.678 My firm has developed of a common vision of the total value creation process and
planning clarity concerning shared responsibility.
0.639 Our trading partners respect the confidentiality of the information they receive
from us.
0.729 Our trading partners have willingness to exchange key technical, financial,
opera-tional, and strategic information.
0.734
Operational process competencies:
My firm has increased product quality and customer’s product return rate. 0.816 My firm has improved responsiveness to urgent order. 0.807 My firm is being expanded to reflect more enterprise wide integrated processes. 0.761
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My firm has established the cross-functional policies and procedures to facilitate
synchronous operations. 0.797
My firm streamlines ordering, receiving and other paperwork from suppliers. 0.872 My firm is able to handle difficult nonstandard orders. 0.860 My firm is able to produce products characterized by numerous features options,
sizes and colors. dropped
My firm is able to rapidly adjust capacity so as to accelerate or decelerate
produc-tion in response to changes in customer demand. dropped
My firm has extended management to include hierarchical structure of suppliers’
suppliers. dropped
Control and planning process competencies:
My firm is able to facilitate supply chain resource allocation through seamless
transactions across the total order-to-delivery cycle. 0.777 My firm is able to exchange information between our trading partners and us in a
timely, responsive, and usable format. 0.748
My firm collaborates in forecasting and planning with partners. 0.749 My firm collaborates to develop shared visions and mutual commitment to jointly
generated action plans. 0.782
My firm has continuous quality improvement program. 0.807 My firm is able to develop comprehensive functional performance measurement
capability. 0.810
My firm has increased inventory accuracy and better material control. dropped
My firm has increased delivery flexibility dropped
My firm has enhanced purchase order fill rate dropped
My firm has reduced ordering and invoice complexity. dropped
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Table 4.2 SCM competences and ERP benefits definitions Operational process:
SOP1 Relevancy Maintenance and modification of customer focus to con-tinuously match changing expectations.
SOP2 Responsiveness Accommodation of unique and/or unplanned customer requirements.
SOP3 Cross-functional unification
Operations of potentially synergistic activities into ma-nageable operational processes.
SOP4 Standardization Establishment of cross-functional policies and proce-dures to facilitate synchronous operations.
SOP5 Operational fusion Linkage of systems and operational interfaces to reduce duplication, redundancy, and dwell while maintaining operational synchronization.
SOP6 Supplier manage-ment
Extended management to include hierarchical structure of suppliers’ suppliers.
Planning and control process:
SPCP1 Information man-agement
Commitment and capability to facilitate supply chain resource allocation through seamless transactions across the total order-to-delivery cycle.
SPCP2 Internal communi-cation
Capability to exchange information across internal func-tional boundaries in a timely, responsive, and usable format.
SPCP3 Connectivity Capability to exchange information with external supply chain partners in a timely, responsive, and usable for-mat.
SPCP4 Collaborative fo-recasting and plan-ning
Customer collaboration to develop shared visions and mutual commitment to jointly generated action plans.
SPCP5 Functional assess-ment
The development of comprehensive functional perfor-mance measurement capability.
SPCP6 Activity-based and total cost metho-dology
Adoption and commitment to activity-based costing, budgeting, and measurement of comprehensive identifi-cation of cost/revenue contribution of a specific entity such as a product.
Behavioral process:
SBP1 Role specificity Clarity concerning leadership process and establishment of shared versus individual enterprise responsibility.
SBP2 Guidelines Rules, policies, and procedures to facilitate
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ter-enterprise collaboration, leverage, and conflict reso-lution.
SBP3 Information shar-ing
Willingness to exchange key technical , financial, opera-tional, and strategic information.
SBP4 Gain/risk sharing Framework and willingness to apportion fair share re-ward and penalty.
SBP5 Strategic alignment Development of a common vision of the total value cre-ation process and planning clarity concerning shared responsibility.
Operational benefits:
EOP1 Cost reduction For better control of business operating expenses, de-creased operations cost.
EOP2 Cycle time reduc-tion
Complex assortments, shorter cycle times, less invento-ry.
EOP3 Productivity im-provement
Power user involvement in user training for operational tasks
EOP4 Quality improve-ment
Improved quality management and control.
EOP5 Customer service improvement
Meet customer needs proactively and more efficiently.
EOP6 Error reduction Less time and fewer errors in order process.
Managerial benefits:
EMN1 Resource man-agement
Tailoring products to meet specific needs of customer, and improving resource management to support custo-mization.
EMN2 Decision-making and planning
More effective decision making by workers.
EMN3 Performance im-provement
Reduce cost, increase revenues, and improve market value.
EMN4 Partnership with customer and ven-dor.
Management within and outside the firm’s boundaries between groups
EMN5 Scheduling Allows users to generate supply chain schedules ad-dressing customer needs.
EMN6 Quality manage-ment
Improved quality management and quality control.
Strategic benefits:
ESTG1 Worldwide expan- Support for business growth
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sion
ESTG2 Business alliance Support for business alliance ESTG3 Business
innova-tions
Building business innovations and absorb radical change routinely
ESTG4 Cost leadership Building cost leadership by reduce inventory-carrying cost and lower labor cost.
ESTG5 Product differen-tiation
Generate product differentiation including customization ESTG6 External linkages Building external linkages to have better connectivity
with customer and supplier.
IT infrastructural benefits:
EIT1 Flexibility Building business flexibility for current and future changes
EIT2 IT cost reduction Reduction in cost of maintaining legacy systems.
EIT3 Enabling e-commerce
Increased IT infrastructure capability EIT4 Information
man-agement
Integrated and real time to effectively support informa-tion.
EIT5 Improve IT archi-tecture
Standardize procedures across different locations.
EIT6 Single interface Present a single interface to customer and consolidate multiple different systems of the same type
Organizational benefits:
EOG1 Changing work patterns
Change management processes; breadth and broader ho-rizon.
EOG2 Organizational learning
Facilitating organizational learning and training for access of enterprise information.
EOG3 Empowerment Training for decision making skills and worker empo-werment for taking actions.
EOG4 Common vision Building common vision
EOG5 employee morale Better employee morale and satisfaction EOG6 Behavior Training for decision making skills.
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Table 4.3 Pretest item-placement ratios (Final sorting round, n = 5)
Actual Classifications
Intended ERP Benefits and SCM competencies
(No. of items in scale) Operational benefits Managerial benefits Strategic benefits IT infrastructure benefits Organizational benefits Operational process Planning and control process Behavioral process Synthesis Total* Item Placement Ratio
Operational benefits (6) 23 5 2 30 77%
Managerial benefits (6) 3 25 1 1 30 83%
Strategic benefits (6) 1 3 25 1 30 83%
IT infrastructure benefits (6)
6 1 1 22 30 73%
Organizational benefits (6) 1 1 6 1 21 30 70%
Operational process (6) 27 2 1 30 90%
Planning and control process (6)
4 26 30 87%
Behavioral Process (5) 2 5 18 25 72%
Synthesis (6) 3 1 2 2 22 30 73%
Total Item Placements: 265 Hits: 209 Overall Hit Ratio: 79%
*Total number of item placements (number of items in scale x number of judges (5)).
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