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The Role of some Activities of Lean Supply Chain Management (LSCM) in

Achieving Logistics Excellence

Article · March 2019

DOI: 10.26436/hjuoz.2019.7.1.466

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DOI: 10.26436/hjuoz.2019.7.1.466 March 2019

The Role of some Activities of Lean Supply Chain Management

(LSCM) in Achieving Logistics Excellence

Khairi Ali Auso, Duhok Polytechnic University . [email protected]

Anna Dunay, Szent István University. [email protected]
Farsat Ali Shaban, Duhok Polytechnic University. [email protected]

Abstract
The study sought to clarify the relationship between Lean Supply Chain Management
Activities (LSCM) which is represented by Lean Procurement, Lean Transportation and Lean
Warehousing; and Logistics Excellence by adopting four hypotheses and using correlations and
simple linear regression analysis in order to confirm the relationship between the study
dimensions. The study has been conducted in 80 food companies which produce nonalcoholic
beverages in Kurdistan region-Iraq. The questionnaire has been used as the main tool for gathering
data and it has been submitted to the supply chain managers. The number of the distributed
questionnaire were 80 and all of them returned back and were valid for statistical analysis. The
results of the statistical analysis supported the hypotheses of the study and showed that there are
relationships between LSCM activities and logistics excellence. The current study has been
chosen because there is no study has examined the nature of the relationship between the LSCM
activities and logistics excellence in the Iraqi environment according to researchers' knowledge.
Key word: Supply Chain, Lean , Logistic, Iraq.
Introduction
The managers of organizations have realized that using traditional Supply Chain Management
(SCM) activities means depletion of resources, loss customers and low market share.
The enormous changes in the business world as a result of the development of production
technology, communications, and intense competition have affected SCM and Logistics
activities. Therefore, many organizations have adopted the concept of lean with SCM (Slack et
al., 2010). Various organizations have been motivated to adopt lean concept as a result of
achieved benefits such as reducing costs, improving product quality, improving the quality of
customer service (Cudney & Elrod,2011), and enhancing logistics operations (Czarnecka et al.,
2017), which recently have been considered as the main tool to increase the competitiveness of
companies (Ozalp et al., 2010). LSCM has been adopted as an effective management approach
that helps to eliminate waste, reduces costs, offers better value to customers and achieve
competitive advantage (Sezen & Erdogan, 2009).
The manufacturing companies in Iraq suffer from many problems, which caused a significant
decrease in their performance (Najar & Kathem, 2017), and also the quality of logistics service
of companies is not at the required level as pointed by the (World Bank, 2014) which was 2.15
of the total value of the index which is 5 and Iraq was ranked 147 out of 160 countries. In the
report of 2017, it was noted that logistics performance was low in developing countries and had a
negative impact on their costs (World Bank, 2017). These indicators and facts have been taken
1
by the companies in the Kurdistan Region of Iraq in earnest and began to look for ways and
methods to improve their performance, especially in the supply chains and logistics activities.
Therefore, the current study tries to help the companies to achieve this goal because the
researchers have found that no study has examined the relationship between LSCM activities and
logistical excellence not just in Iraq but also in the Middle East.
The researchers found that there were many studies that discussed the relationship between
LSCM activities and practices with other variables such as the cost and quality of the product
(Wee and wu, 2009), performance (Daud, 2010; Nimeh et al., 2017) et al., 2016), productivity
(Al-Tit, 2016), industrial development (Oko, 2016) and supply chain improvement (Czarnecka et
al., 2017) but there is a dearth of studies which are connected with the logistics excellence which
is the main content of the current study.
The study seeks to add a new contribution to the literature on the current subject which can be
used by Iraqi companies. The study hypotheses come from the study question which is: Do
LSCM activities achieve logistics excellence in food companies for the production of non-
alcoholic beverages in the Kurdistan region-Iraq?
The study structure consists of Literature Review, Methodology, Hypotheses Testing and Results
and; Conclusion and Future Studies.
Literature Review
LSCM concept and Activities
The idea of using the concept of Lean with SCM came from lean research center at Cardiff
University in 1993 (Ugochukwu ,2012). And thoughts of the two authors (Womack and Jones) in
their book (Lean Thinking) emphasize the use of the concept with SCM (Rossini & Studacher,
2015).
The LSCM aims to eliminate all kinds of waste or any activity that does not add any value to the
SCM (Johansson,2010, Daud & Zailani, 2011, Agus & Hajinoor, 2012, Afonso & Cabrita , 2015;
Meera & Chitramani ,2015 and Rachid et al ., 2017).
SCM is known to be associated with a range of activities (Slack, et al., 2010) (Al-Aomar &
Weriakat, 2012)( Achieng et al., 2018) which can adopt the lean approach by using several types
of principles, practices, and techniques (Behrouzi & Wong, 2011; and Ugochukwu, 2012).
The present study is based on three of mentioned activities, which are lean procurement, lean
transportation and lean warehousing, which are applied in the food companies for the
production of non-alcoholic beverages in Kurdistan region- Iraq.

Lean Procurement
The procurement is one of the supporting activities referred to by Porter in the value chain and
incorporated into SCM to improve its management procedures (Hagstrom & Wollner, 2011).
The procurement costs account for a high proportion of the total costs of the organization. In
industrial companies (60-70%) of products total cost goes to the cost of purchasing raw materials
(Reddy et al., 2016). Therefore, there has been great interest in lean procurement concept to
address the problem of rising purchasing costs and to meet the challenges of market fluctuations
and short product lifecycle, error forecasting and the growing needs and desires of customers
(Macharia, 2015).
Lean procurement processes rely on the understanding what the customer wants and conveying
his needs and desires correctly to suppliers to diagnose and provide them correctly (Oko, 2016).
The advantage of lean procurement is reducing costs and prices by building new relationships
2
with suppliers (Wilson & Roy, 2009). The principles of lean procurement are: continuous
improvement, supplier selection and monitoring, assistance to suppliers and training, incentives,
JIT dispatches, synchronization of production and logistics scheduling, standardization of
packaging, quality of materials and control of logistics network (Costantino et al., 2015).
Small and frequent lot sizes, relationship with suppliers and timely delivery (Wilson & Roy,
2009). Continuous improvement, Kanban cards and relationship with suppliers (Hagstrom &
Wollner, 2011). Continuous improvement, relationship with suppliers, e-procurement, pull-out
system, TQM, employee participation, site organization 5S. The study said that these practices
reduce lead times and costs, improve demand management and quality of service (Macharia,
2015).

Lean Transportation
Transport activities are linked to value and customers, and organizations deal with this activity as
a strategic part of their work to eliminate waste from their activities to remove additional costs
that the customer does not want to bear and to increase value. Therefore, the organizations have
paid attention towards adopting lean transportation to reduce waste and deliver goods and
services at specific time (Taylor & Martichenko, 2006). Thuranira (2016) supports the view that
many organizations have adopted lean transportation after knowing the advantages of reducing
waste. Arriaga et al. (2013) consider that lean transportation is a strategic approach towards
eliminating waste in transportation and the results of the study showed that lean transportation
reduced order cycle by (46%), the number of roads by (35%) and reducing the packing loss by
60%, thus reducing overall costs in general. The lean transportation enhances the efficiency of
supply chain management (Villarreal et al., 2016; Hezbon ,2016).
The practices of lean transportation are intermodal, 5S, work teams, visual management,
continuous improvement (Gnich, 2012), as well as, JIT (Villarreal, et al., 2012). Wodalski et al.,
(2013) classified the lean transportation practices into three categories according to ease of
application which are:
- Easy to apply: JIT practices, 5S, relationship with customers, daily meetings, pull system,
Visibility.
- Average ease: reduce the batch size, continuous flow, visibility.
- Difficult to apply: Kanban card.

Lean Warehousing
Warehousing activity is one of the most important logistics activities in the industrial and service
organizations. Production systems and supply chains depend on warehousing due to its
importance in the quality and cost of the products and the level of customer service (Manzini,
2012). The concept of lean can be used with warehousing to improve operations, maintain
inventory, reduce processes that do not add value and reduce warehouse space (Tostar &
Karlsson, 2008). It also contributes to collecting the orders and managing them in an efficient
way and reducing activities that do not add value to receiving, storing, packaging and shipping
(Myerson, 2008; Gergova, 2010; Dharmapriya & Kulatunga, 2011) and increase the response of
customer order (Mahfouz, 2011).
According to Sobanski (2009), the practices of lean warehouses namely the Standard processes,
quality assurance, visible management, 5S, small batches size, material flow, continuous

3
improvement; and two more practices have been added by (Bozer, 2012; Swart, 2015) which are
standard tools and equipment and pull system.

LSCM Activities and Logistic Excellence

Logistics is a process for managing procurement, transportation and warehousing strategies both
within and outside the organization to meet their needs and to provide their distribution channels
with the lowest costs and the greatest profitability (Law, 2016).
Many organizations in the world and developing countries, especially Iraq, have recently sought
to focus on logistics activities in order to achieve excellence to face many issues which affect the
companies. The question which appears and remains in the area of discussion shows how the
organizations will achieve logistic excellence. In spite of the scarcity of literature on the concept
of logistics excellence, however, based on the previous proposal of researchers in the current
subject, the points of convergence and linkage between LSCM activities and logistics excellence
can be described through some of its practices as follows:
 Continuous improvement: It is a practice of lean procurement and warehousing which
contribute in enhancing logistics operations and achieves logistics excellence (Groznik &
Xiong, 2012). The improvement of logistics operations ensures cost reduction and
contributes to achieving logistics excellence (Kakouris et al., 2015). Improving the
performance of logistics activities by improving timeliness and delivery will reduce logistical
costs and achieve logistics excellence (Pettersson, 2015).
 Relationship with customers: It is a practice of lean procurement and transportation. The
relationship with customers by understanding their requirements improves the quality of the
logistics service and enhances the spatial and temporal value of the logistics service provided
and is a way of achieving logistics excellence (Mentzer et al., 2001; Deji, 2013).
 JIT: One of the lean procurement and transportation practices. JIT improved logistics and
achieved significant benefits (Ozalp et al., 2010). JIT affects the performance of logistics
operations, enhances their performance and achieves a range of advantages for logistics
operations (Othman, et al., 2016).
 Relationship with suppliers: one of the lean procurement practices. The relationship with
suppliers contributes to developing logistics operations (Gadde & Snehota, 2000). It is one of
the main dimensions of the logistics service quality and significantly contributes to cost
reduction and achieving logistics excellence (Mentzer et al., 2001).
 5S: One of the lean warehousing practices. Using 5S by companies which offer logistics
services contributes to improving productivity and becomes more efficient (Wojtynek et al.,
2018). As well as, the productivity of logistics services are greatly enhanced and improved
(Belekoukias et al., 2017).
According to the theoretical part which showed the nature of the relationship between LSCM
activities and logistics excellence, the current study tries to answer the question of the study by
the following hypotheses:
H1: There is a correlation between combined LSCM activities and logistics excellence.

H2: There is a correlation between each activity of LSCM activities and logistics excellence.

4
H3: There is an impact relationship of combined LSCM activities on logistics excellence.

H4: There is an impact relationship for each activity of LSCM activities on logistics excellence.

Research Model

In order to introduce the question and hypotheses of the study clearly, the Figure 1. Which
illustrates the correlation and impact relationship between LSCM activities and logistics
excellence.
H1

LSCM Activities

Logistic Excellence
H3
Lean
Procurement H2

Lean
Transportation H4

Lean
Warehousing

Correlation relationship
Effect relationship

Figure 1. Model of Study

The Study Field and Data Gathering

The food industry in the Kurdistan Region of Iraq is a vital sector contributing to the provision of
various products to consumers, and the companies of non-alcoholic drinks have a good
reputation and confidence among local consumers. These companies offer a variety of drinks
which cover the needs of the local market and some other Iraqi provinces. In view of the
importance of this sector, the researchers selected 80 companies out of 89 companies. The
questionnaire has been used as the main tool for data collection and it was submitted to the
supply chain managers via e-mail. Some of them were delivered by hand and all of them were
returned.
The researchers have used the five-point Likert scale to measure the response of the respondents
in the questionnaire. The scale is arranged as five options (strongly agree, agree, neutral,
disagree, strongly disagree) with weights (5, 4, 3, 2, 1). The questionnaire is divided in two main
parts:
Part 1: The questions of the independent variables of LSCM activities were based on previous
studies as illustrated below:
- Lean procurement was based on (Hagstrom & Wollner, 2011); (Oko, 2016).

5
- Lean Transportation was based on (Taylor & Martichenko, 2006); (Johansson, 2010); (Arriaga,
et al., 2013); (Thuranira, 2016).
- Lean warehousing was based on (Tostar, 2008); (Bozer, 2012); (de Visser, 2014); (Swart,
2015).
The questions are equally distributed for each activity which 8 questions per activity and the total
questions for LSCM activities 24 questions.
Part 2: This part contains the questions which describe logistics excellence. It has been depended
on (Wirtz et al., 2008; Groznik & Xiong, 2012 and Pettersson, 2015) in formulating the
questions and the total questions related to this variable is 20 questions.

Validity and Reliability

Credibility refers to the accuracy of a tool or measure (Campbell & Stanley, 1963). In order to
verify the credibility of the questionnaire, the researchers sent it to 15 professors at the
universities of the Kurdistan Region before distributing the questionnaire to the managers. The
experts suggested some recommendations, and the necessary amendments were made according
to their observations. Reliability refers to the ability of the scale to produce similar results under
different conditions. Cronbach's Alpha has been used to check the reliability of the scale (Drost,
2011). The minimum acceptable value for Cronbach's Alpha in human studies is α. 70
(Robinson, 2017).
Table 1. indicates descriptive statistics such as mean arithmetic and standard deviation of the
responses of the respondents and the value of Cronbach's Alpha for the variables. It has noted
from the results that the value of Cronbach's Alpha was within the required level, and the
average of the individual responses of the research sample were all above the average arithmetic
mean 3 which mean that the agreement and low standard deviation which mean that the study
sample understand the questions of the study variables very well.
Table 1. Descriptive statistics and the value of the Cronbach’s alpha

Scale and factors items  M SD

LSCM Activities 24 0.893 3.964 0.749
Lean Procurement 8 0.857 3.8 0.85
Lean Transportation 8 0.831 3.96 0.7
Lean Warehousing 8 0.848 4 0.698
Logistic Excellence 20 0.861 3.9 0.702
Source: Authors’ own based on SPSS results
Hypotheses Testing and Results
The statistical program SPSS has been used to conduct correlation and impact analysis in order
to verify the hypotheses of the study between the independent variable represented by LSCM
(Lean Procurement, Lean Transportation, Lean Warehousing) and the dependent variable
represented by logistics excellence as illustrated in Table 2.
Table 2. Correlation between LSCM Activities and Logistical Excellence
Hypotheses LSCM Activities Correlation coefficient Result
H1 Combined LSCM Activities 0.814 ** Acceptance
Lean Procurement 0.682** Acceptance
H2 Lean Transportation 0.665** Acceptance
Lean Warehousing 0.763 ** Acceptance
N = 80 P-Value ≤ 0.01 Response variable: Logistic Excellence
6
Source: Authors’ own based on SPSS results
The results of Table 2 show there is significant correlation relationship between combined
LSCM activities and logistics excellence based on the correlation coefficient value 0.814 at a
significant level (0.01), therefore, the hypothesis H1 is accepted.

In addition, there is a significant correlation between lean procurement activity and logistics
excellence based on the value of correlation coefficient 0.682 at a significant level 0.01, and
there is a significant correlation between lean transportation and logistics excellence based on the
correlation value 0.665 at a significant level 0.01, as well as, the correlation coefficient value
between lean warehousing and logistics excellence is 0.763 at a significant level 0.01, therefore,
the hypothesis H2 is accepted.
The above results indicate the correlation between combined LSCM activities, as well as, LSCM
activities separately with logistics excellence. The correlation relationship increases when firms
apply all activities together and it is low when measuring the activities separately. The activities
can be arranged according to the strength of the correlation relationship with the logistics
excellence, starting with lean warehousing, then lean procurement and lean transportation.
Table 3 shows the relationship between the combined LSCM activities and logistics excellence.
A significant positive effect of LSCM activities on logistics excellence was found according to
calculated F value and the value of Beta and R2. The combined LSCM activities interpret 66%
of the variance in the logistics excellence, therefore, Hypothesis H3 is accepted.
Table 3. The impact of Combined LSCM Activities on Logistics Excellence
Hypotheses Combined LSCM Beta R2 F t Sig Result
Activities

B0 B1 0.814 0.66 151.1 1.07 0.00

H3 B
0.319 0.914 12.2 Accepted

N=80 P ≤ 0.01 df ( 1 ,77) Response variable: Logistic Excellence

Source: Authors’ own based on SPSS results
The results of Table 4 indicate that there is a significant positive effect for each LSCM activity
on logistics excellence based on T value and the value of Beta and R2. Lean warehousing
activity has the strongest effect which interprets about 62.6% of the variation in the logistics
excellence. Whereas, the lean transportation interprets 56.9% of the variance in logistics
excellence, and finally lean procurement activity interpret 53% in logistics excellence. Based on
the results of the previous effect relationships, the H4 hypothesis will be accepted.

Table 4. The impact of LSCM Activities (single) on Logistic Excellence

LSCM B0,
Hypotheses t R2 F Beta Sig. Result
Activities B1
Lean 6.667 1.930 Accepted
0.530 51.418 0.633 0.00
Procurement 7.171 0.536
Lean 5.068 1.576 Accepted
H4 0.569 60.931 0.665 0.00
Transportation 7.806 0.601
Lean 4.103 1.189 Accepted
0.626 94.462 0.742 0.00
Warehousing 9.719 0.690
N=80 P ≤ 0.01 df (1 ,77) Response variable: Logistic Excellence
Source: Authors’ own based on SPSS results
7
The effect of LSCM activities together is greater compared with separate activities and it is
logical because the nature of the work of these activities is interrelated and complementary to
one another.

The researchers were unable to compare or support the results of the current study with previous
studies because of the lack of similar studies dealt with the same variables, especially in Iraq,
according to researchers' awareness, whether within the same sector or other sectors.

Conclusion and future research

Many companies have recently tried to adopt LSCM activities and practices to adapt and cope
with the tremendous changes that have occurred in the local and international business
environment and to achieve a range of benefits and competitive advantages indicated by previous
studies. Because of many conditions and problems experienced by the companies operating in
Iraq in general and the Kurdistan region in particular which negatively affected their supply
chains and logistics activities, the present study come to support the companies to introduce by
implement the current study in food companies to produce drinks through finding correlation and
impact relationships between the study variables represented by LSCM activities (Lean
Procurement, Lean Transportation, Lean Warehousing) and logistics excellence.
Four hypotheses were adopted after researchers confirmed that there were no similar studies that
examined the variables, not in Iraq or the Middle East. The results of the study supported and
proved all hypotheses through correlation and impact relationships since LSCM activities
contribute to achieving logistics excellence and according to the opinion of supply chain
managers in the surveyed companies.
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