Integrative Activities with Suppliers and Customers to Achieve Supply Chain Integration

This paper analyzes nine integrative activities about demand forecasts, production plans, long-term relationships, joint planning, information through technologies, product development processes, product design processes, joint goals, that companies do in their daily activities with suppliers and customers in order to achieve supply chain integration. The objective is to analyze these integrative activities to determine if it exists collaboration among external partners of the supply chain in the food industry companies, to know the level or intensity of the exchange of information, communication and collaboration between companies and their external partners of suppliers and customers. The measurement instrument was applied to 93 companies from the food industry sector of Michoacán, México which are divided into nine sectors; grinding grains and seeds, obtaining oils and fats, confectionery with and without cocoa, preserving fruits, vegetables and prepared foods, dairy products, meat and poultry processing, preparation and packaging of fish and seafood, bakery and tortillas. The Integrative activities are analyzed by means of statistical descriptions, paired samples test, one-sided contrast, mean difference and confidence intervals and associations. The results indicate that the difference is always in favor of customers than for suppliers.


Introduction
Supply chain management seeks to improve competitive performance by tightly integrating internal cross-functions within a company and effectively linking them with the external operations of suppliers, customers, and other channel members to be successful [1]. This means that a company pursuing supply chain management practices should pay attention to supply chain integration and teamwork [2], as well as to an open communication climate within the organization to facilitate internal integration of supply management, further to support the influence of social aspects on supply chain integration [3].
To use the supply chain at its maximum level of performance, organizations must integrate their objectives and activities together. Integration becomes the key driving force in supply chain management, explaining that internal optimization

Theoretical background
According to Configuration theory, the alignment of strategy and systems or practices is reflected in the patterns observed in practice. This suggests the need for emerging joint patterns to the supply chain integration. According to Contingency theory, there is no optimal way to manage, but each situation depends on numerous internal and external elements [8,9].
The literature recognizes that all the value creation potential of the purchasing function (integrated system of suppliers and customers) can only be achieved if decisions, activities, investments and strategy are aligned, as well as the importance of achieving a state of alignment between functional domains and information technology. With the emergence of information technology systems that support the purchasing function, the challenge of aligning them with supply chain strategy and activities has improved [11].
The importance of aligning the information systems function with other business functions is widely recognized and empirical studies have found strategic alignment which is defined as the degree to which the mission, objectives and plans contained in the business strategy are shared and supported by the strategic alignment strategy to influence business performance. Alignment involves applying information technology in an appropriate and timely way and in harmony with business strategies, goals, and needs [12].
Alignment implies a shared vision of, commitment to, and plan for addressing areas considered critical to success. Alignment is related to organizational performance. Alignment between information systems and firm strategic plans should increase a firm's ability to realize its goals and objectives [13]. It is important to understand the importance of each other's contributions, communicate regularly and move towards shared goals, to experience improved managerial outcomes. Alignment leads to more focused and strategic use of information systems and, consequently, improved performance [11].
Relational perspective emphasizes that the distinctive competitive advantages will result from the cooperation between companies or networks and not of the organization's resources as unique or separate activities. From company collaboration, competitive advantages will be generated; the routine sharing of knowledge, complementary data sources, and effective governance.
Thus, it would be difficult for a company to create a competitive advantage by itself, based on the unique resources or ability, but on relational capabilities generated or created through active interaction and coordination among enterprises to achieve a common goal [14].
Company Performance involves Supplier Performance-Oriented, Customer-Oriented Performance and Financial Performance [15]. Supplier-oriented performance measures the performance of the supply chain in the upstream and customer-oriented performance measures the supply chain performance in the downstream. A combination of both is called supply chain performance. Supplier performance-oriented and customer performance-oriented affects the overall performance. Supplier-oriented performance and customer-oriented performance is an operations-oriented measurement which involves a variety of performance measurements [14].
Supply chain integration helps companies reconfigure their resources and capabilities internally and externally to consolidate their supply chain as a whole in an effort to improve long-term performance [2,12]. It is a collaborative process in which companies work together cooperatively to achieve mutually acceptable results.
Supply Chain Integration is the degree to which a firm can strategically collaborate with its supply chain partners and cooperatively manage intra-and inter-organizational processes to achieve effective and efficient flows of products, services, information, money, and decisions to provide the maximum value to the final customer with low costs and high speed [15].
According to the literature nine integrative activities were chosen to work in this analysis, Table 1 shows them with a definition of each activity and some of the authors that work with the same activities for suppliers and customers.

Integrative Activity
Suppliers Customers

Share Demand Forecasts
To share the demand forecasts, prediction of future demand with their main suppliers and the information provided by the customers to the company about their demand forecast, key to their production planning, and to have realtime information directly from the end customer, to make a common demand forecast in order to avoid disruptions.

Share Production Plans
To share their production plans with their main suppliers, and their main customers to achieve operational standardization. To have sufficient information to perform the procurement activities that meet real needs.

Establish Long-Term Relationships
To establish stable links with supply chain partners to enable mutual trust. The long-term relationship between the organization, its suppliers and its customers. It is designed to leverage the strategic and operational capabilities of individual participating organizations to help them achieve significant ongoing benefits.

Joint Planning to Anticipate and Solve Problems
To make available the supply chain members with information that allows joint planning that takes into account the constraints of the companies involved and seek to improve the planning process of comprehensive supply chain. To establish procedures under the normal order of the company against possible environment or business unexpected situations.

Share Information through Information Technologies
To make compatible the information systems so as to allow access to Devaraj

Method
The measurement instrument applied to 93 companies in the food industry sector of Michoacán, México, collects information on the supply chain integration, referring to the integration of suppliers and customers, through a five-point Likert scale. The measurement instrument, in terms of external measurement with suppliers and customers, coincides in nine activities that are intended to be analyzed,

Participation in Product Design Processes
To maintain close communication with suppliers and customers about product design change considerations.
To guide organizations towards a joint search for the end customer satisfaction.

Set Joint Goals
To involve in the setting of goals the supply chain members to benefit companies and activities.

Develop Joint Responsibilities
To involve the Supply chain members in decision making.
Source: Own Elaboration. activities of manufacturers towards suppliers and customers, to know the level or intensity of the exchange of information, communication and collaboration. The nine activities are practical on how the business organization has been implementing supply chain management in general. The variables used for this research are integrative activities referring to demand forecasts, production plans, long-term relationships, joint planning, information through information technologies, involvement in product development processes, participation in processes of production design, joint objectives and joint responsibilities. The activities are the same for both, suppliers and customers, which allow to relate both concepts.
Although food industry sector includes the activity of food for human and animals' consumption, beverages and tobacco, for the purpose of this research, only the food sector for human will be taken into account, without taking into account prepared animal food, or the beverage or tobacco industry. In this research we will take the description of the food industry from [40,41], which is comprised of the following subsectors with their respective frequency of companies for this study; 1) grinding grains and seeds (11 companies), 2) obtaining oils and fats (4 companies), 3) confectionery with and without cocoa (21 companies), 4) preserving fruits (7 companies), 5) vegetables and prepared foods (31 companies), 6) dairy products (2 companies), 7) meat and poultry processing (7 companies), 8) preparation and packaging of fish and seafood (1 company), 9) bakery and tortillas (9 companies).

Analysis of the integrative activities that make up the supply chain integration
The following Table 2 shows the descriptives for the integrative activities that food companies have with their suppliers and their customers, as well as a test of paired samples.

Suppliers
Integrative Negative t-values indicate that all variables take higher mean values for customers than for suppliers, which indicates that the difference is always in favor of customers. In the p-value of the significance test, the difference is only statistically significant for six of the nine integrative activities, since the value is less than 0.05.
The following Figure 1 shows the mean differences between suppliers and customers, together with the corresponding 95% confidence intervals, constructed directly with each difference variable, using the Normal approximation of the mean distribution.
All mean values are located below the zero level (horizontal line in the graph), indicating that integrating activities have systematically higher values for customers than for suppliers. Only two activities have upper interval limits that exceed the zero level, so the mean is not significantly different from zero with a two-sided contrast in those two cases.
If we apply a one-sided test, more appropriate considering that the negative value of the difference is systematically observed in all cases, the statistical significance of the effect extends to all activities except "develop joint objectives", as indicated in the following Table 3. Table 4 below shows the analysis of individualized associations expressed in percentages or relative frequencies of questions by company for the integrative activities in a recoded form (H = High, M = Medium, L = Low) to understand and  Source: Own Elaboration based on the collected data. Table 3.
Unilateral contrast for integrative activities.

Activity 1. Share demand forecasts Activity 2. Share production plans
How often do your customers provide your company with information about their demand forecast, which is key to your production planning?
How often does your company share its production plans with its main customers to achieve operational standardization? interpret the questions easily of the instrument for measuring the activities referring to integrative activities. When the p-value is greater than 0.05, we must accept that there is no relationship -for this activities-between suppliers and customers (they behave independently), or more exactly there is not empirical evidence that this relationship exists (perhaps because the sample is not big enough), those are the cases for activities 1, 2, 3 and 5. When the p-value is less than 0.05 it can be accepted that the two characteristics crossed in the table are associated or related to each other, those are the cases for activities 4, 6, 7, 8 and 9.

Limitations, future research directions and conclusions
This paper has a number of limitations. First, there were no official institution with the exact number of food companies of Michoacán, so we tried to look on the internet, to visited every store, bazar, event, market, to checked labels of products, and we found that there were a lot of new creation companies, some others that had a lot of years, some others that disappeared but their information remained valid on the internet, some others shell companies with fictitious information, some others that were not legally registered. We also got in touch with leaders of some state and local Institutions but they did not know of the existence of any registry or database for companies in Michoacán, so we took as base the registry of the national statistical directory of economic units, [42] but we found companies that did not belong to the food industry sector, so we had to do a thorough review. Besides the willingness of companies to respond to the measurement instrument due to the insecurity of the state of Michoacán or apathy or lack of availability of time or desire to help research, so an important limitation was the number of companies surveyed.
Future research may consider looking at integrative activities in different industries or different states or countries, in order to make a comparison. The application of new statistical techniques such as multivariate analysis and data mining to the study of the data under investigation. The preparation of a manual of good integration practices that can be used by companies to improve their results.
In general we can conclude that the results were always in favor of customers, maybe because literature and practice always pull through customers trying to understand what customers want, need, how to satisfy them with studies of  customer satisfaction, customer loyalty, customer relationship management, marketing that usually works for customers and with customers; but hardly ever work with suppliers or for suppliers, almost never hear of suppliers process, suppliers selection, supplier relationship management, or activities were suppliers are involve, like parties, trainings or events, but is more often to include customers in this kind of activities. Also, it is odd for manufacturers to were asked about their daily activities with suppliers, but so it is with customers too, because normally there is no relationship with them, so this was the case for the food industry companies of Michoacán.

Author details
Bertha