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Chapter 03

3.0 METHODOLOGY

3.1 Overview

Research methodology was proposed to achieve desired objectives of the research

study in the best level and it was selected with a careful study of the research nature

and information gathered from the methodologies of related literature.

Co-objectives of the research study were achieved in two phases of data collection. It

was decided to proceed as a quantitative study to reach the fixed targets, as the

research question needed a numerical answer. Quantitative studies are given

flexibility to follow unexpected initiatives during research and search procedures

effectively (Ospina, 2004). Statistical analysis was needed to gain a comprehensive

output and primary data for the study was gathered by two questionnaires in two

phases. After the analysis of the data collected at the first phase, study proceeded into

the second phase, using grounded theory. Data were recorded and examined

immediately after the data collection and findings of the analysis were included in

the second questionnaire, when the researcher enters into the field for the second

time (Hancock, 1998).

First questionnaire was arranged based on the supply chain operations reference

model, which is an effective way of organizing the supply network (SCOR Model

9.0, 2008). It indicates five functions; plan, source, make, deliver and return which

stand for identification of the smooth operation of a supply chain and the supply

network elements. The supply network elements studied in the research are the sub

processes of plan, source, make, deliver and return.

Second Questionnaire was designed to achieve the rest of the objectives 3, 4 and 5.

Sorted supply network elements from the first phase, which were knowledge rich,

supply critical elements, were studied in this phase. Lockamy and McCormackb

(2009) specified major factors of risk identification. Risks were categorized into

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three major types as operational, network and external risk, and to assess these risks,

risk factors were specified. Risk factors were identified from research studies such

as, Lockamy and McCormackb, 2009 and Schoenherr & Tummala, 2011 for the

second questionnaire. Risk profiles were identified through these risk factors and to

calculate the probability occurrence of risk profiles Bayesian network was used.

Bayesian networks are used for missing data to know causal relationships and

understand various situations to predict the future.

Nine methods are used to mitigate the risks occur in supply networks due to external

relationships, as identified by Faisal et al. (2006) and the author addressed supplier

selection process based on the protection of core competence of the company. Faisal

et al., 2006 pointed out two indexes called capability for innovation and proper

practice which are used to evaluate the supplier. Second questionnaire was based on

these lessons learnt from the literature.

The final study addressed the impact of outsourcing knowledge rich, supply critical

elements on the long term sustainability of the network. Carter and Rogers (2008)

improved a framework of sustainable supply chain management to describe

relationships between environmental, social and economic performance. Sustainable

supply chains which attain social, environmental and economical wealth achieve a

long term economical performance. Socially and environmentally sustainable supply

networks achieve high supplier performance and low operations cost, while

economically sustainable supply networks achieving high revenue. Combinations of

these three key indicators, long term sustainability in supply networks were

evaluated.

The overall methodology has shown in the figure 3.1.

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Figure 3.1 Methodology

SCOR Model

SPSS, Microsoft office

Excel

Analyze data

Finalize the output

Final report and presentation

Prepare the First questionnaire, do a pilot survey and adjust the questionnaire

appropriately.

Identify the Sample (Simple Random Sampling)

Fill the questionnaire via emails

Literature survey

Research problem definition

Theoretical background

Identify Supply Network Elements

First Data collection

Objective 1 & 2

Finalize the output

Second Data collection

Identify Risk identification

measures

Microsoft office Excel

Literature survey

Prepare the Second questionnaires

Discuss with industry experts to confirm the questionnaire appropriateness

Do a pilot survey and adjust the questionnaires appropriately

Fill the questionnaires via an online survey- Target population identified at the first

stage

Analyze data

Objective 3, 4 & 5

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3.2 Identify the Sample

Supply network outsourcing was the main focus of the research; therefore

manufacturing companies in Sri Lanka were selected as the sample frame for the

study. Data was collected from the manufacturers’ perspective as risk profiles were

studied for the better performance of manufacturers.

The sample selection method was simple random sampling. Sukamolson indicated

that in simple random sampling, each and every item in the sample frame has an

equal chance of insertion in to the sample. When determining the sample size for the

phase one and two the equation used by Israel (1992) for proportions was applied.

Further, Israel (1992) indicated that reliable sample does have a lower margin of

error and high confidence level, but the confidence level can’t reach above 90% as

most of the past researchers indicated that in the field of Supply chain and logistics

confidence level is low (Wagener & Kemmerling, 2010). Therefore, 90% of

confidence level and 5% of margin of error were assumed for further calculations.

The variability in the proportion was 0.62 according to past researches. Wagener &

Kemmerling (2010) specified that 62% of proportion was present in a population

related to logistics oriented surveys after 2003.

....................................... (3.1)

n = required sample size

t = confidence level at 90% (value of 1.645)

p = proportion of an attribute that is present in the population

m = margin of error at 5% (standard value of 0.05)

n= (1.645)² x 0.62(1-0.62)

0.05²

n=255

The sample size was 255 supply chain operations senior executives or managers

from 77 selected manufacturing companies.

n= t² x p (1-p)

m²

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3.3 Data Collection

Data was collected via questionnaires filled by respondents from selected companies.

First set of data was collected based on the functions of the supply chain operations

reference model. There were five questions in the first questionnaire including plan,

source, make, deliver and return which helped to identify supply network elements

comprehensively. During the first data collection knowledge rich, supply critical

elements were studied and percentages that supply network elements outsource or in-

source were calculated to achieve the first and second objectives. First questionnaire

was mailed to the respondents, as it was the most extensively used method in

different economic and business surveys. Before applying this method a Pilot Study

for testing the questionnaire was conducted to expose the weaknesses of the

questionnaire (Sukamolson, 2010).

Second stage of the data collection was started stepping into risk identification and

risk mitigation process (Gunasekaran et al., 2012). The data collection type was an

online survey with a close ended questionnaire (Seibert, 2002). This was selected as

an effective way for data collection, because responding time was limited and it was

easy to motivate the respondent from this method. After sending the invitation for

participation, reminders were sent per five days.

Pilot surveys were conducted for both the first and second Phases to make the

wordings of the questionnaire correct and to make sure that the data was in correct

order to analyze (Williamson et al., 2004). Selecting the respondents for the survey

was also important to maintain the quality and standards of survey findings.

Therefore, a dedicated approach was practiced to select respondents from each

company, because their perception was evaluating and the output was totally based

on the respondents.

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3.4 Questionnaires

3.4.1 First Questionnaire

Identification of variables was a very crucial factor for the accomplishment of the

research study. Supply chain operations reference model was used to identify sub

processes of the supply network. The literature survey was the base to explore these

variables and they were included into the questionnaire to determine knowledge rich,

supply critical elements. A Pilot survey was carried out to test the questionnaire

appropriateness Factor analysis and reliability analysis were carried out to ensure the

validity and the reliability of the variables selected and identified poor designed

questionnaires were dropped from the questionnaire.

Table 3.1 Design of Questionnaire one

Literature Finding for the questionnaire

Supply Chain Council (2008), SCOR

Model 9.0

Supply network elements

Chritensen at el. (2004), Lavastre et al.

(2011) and Srinivasan et al. (2010)

Using Likert Scale Questionnaires

Alvarenga, CA & Malmierca, P (2010) Core competency in SCM

3.4.2 Second Questionnaire

Questionnaire two was designed to achieve objective three, four and five as an on-

line survey. www.surveymonkey.com was used, as it was a data secured, reliable and

flexible on-line survey service provider. Furthermore, an important characteristic of

Survey-monkey is the variation of question types is enormous compared to other

online surveys service providers.

There were six close ended questions aligning to final three objectives (Appendix 05)

and basic input for the questionnaire was the findings of the first phase. Knowledge

rich, supply critical elements sorted at the first phase and supply network elements’

outsource and in-source percentages in the current market were used for phase two.

First question was designed to estimate the types of knowledge supply network

elements contain and to know which type of knowledge have high risk profiles to

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transfer to an external party. A brief explanation about the types of knowledge was

included at the beginning of the question to explain the question to the respondents.

Questions two, three and four were designed to attain objective four. Second

question was a multi factor matrix. Participant could elect on risk profiles occur with

outsourcing of knowledge rich, supply critical elements with their knowledge and

experience on outsourcing. Third and fourth questions were created to come up with

a risk mitigation plan. Questions five and six were utilized to achieve the final

objective of the research study. Three key performance indicators; annual revenue of

the company, service provider performance and operations cost of the company were

used to study the impact on the long term sustainability of the network.

Before proceeding, the data collection all the variables were laid before a panel of

industry experts for evaluation. They had commented on the risk profiles selected

from the literature and selected the most relevant and important once, which were

clearly described objective three, four and five. Furthermore, to verify the

questionnaire alignment with the objectives and to ascertain if it was in proper order,

a pilot survey was carried out.

Table 3.2 Design of Questionnaire - Stage Two

Literature Finding for the questionnaire

Alvarenga and Malmierca (2010) Types of Knowledge

Hancock (1998) Grounded Theory

Seibert (2002) Use of On-line surveys

Lockamy and McCormackb (2009)

Schoenherr and Tummala (2011)

Risk Factors (Appendix 04)

Supply Chain Risks

Faisal et al. (2006) Risk Mitigation plan

Carter and Rogers (2008) Framework of sustainable Supply

Chain Management