CHAPTER ONE

INTRODUCTION

1.1 Introduction

This work is organised into five chapters. The first chapter comprised of the background of the study, statement of the problem, research questions, research objectives, hypotheses, significance of the study. Chapter two is made of the conceptual framework, theoretical review and empirical review. Chapter three comprises of background of the study area, research design, data collection, methodology, and limitation of the study. Chapter four is comprised of data presentation and analysis of results. Chapter five is made of summary of finding, conclusion, and recommendations.

1.2 Background of the study

In the last decades, organisations have been hit with the undisputable fact that the creation of competitive advantage lies in human resources. Organisations have recognised the potential for their people to be a source of competitive advantage. In the not distant past, so called Human Resource function was preserve for ‘personal managers’ whose duties included amongst others but principally recruiting and selecting, appraising, promoting and demoting. Worthy of note is that these superficial duties were considered to be performed by any manager, and as such seemed unnecessary to employ an expert human resource manager let alone create a whole department dedicated to Human Resource Management (HRM). As a result, little attention was paid to human resource management principles and its impact on performance. In today’s competitive and rapidly changing business world, organisations especially the service industry need to ensure maximum utilisation of their resources to their own advantage; a necessity for organisational survival.

Lately, organisations are focused on achieving superior performance through the best use of talented human resource as a strategic asset. Human Resource Management principles or strategies must align to business strategies for organisational success. Irrespective of the level of technology and mechanization developed, human resource remains ideally one of the most important tools of any success-oriented organisation. After all, the success of any business is built on the strengths of exceptional people. Human resource management (HRM) has now gained significance in the academic and business world and can therefore not be relegated to the background or left in the hands of non-experts. Attention must be paid to the human resources organisations spent considerable time and resources to select (Barber, 1998).

Human resource management practices have the ability to create organisations that are more intelligent, flexible and competent than their competitors. A combination of practices that concentrate on recruiting, selecting, training skilled employees and directing their best efforts to cooperate within the resource bundle of the organisation. This can potentially consolidate performance and create competitive advantage, setting the organisation on the pedestal of success contrary to such structures that do not implicate the importance of human resource practice.

AccordingtoHaslinda(2009),humanresourceis an organisation greatestassetthat ensureseveryday activitiessuchasmanagingpublicservice,communicationanddealing withcustomers would not becompleted.It is evidentthat,employeesandthepotentialthey possessarekeydriversoftheorganisation’ssuccess.

Fierce competition in today’s global markets, the introduction of products with short life cycles, and the heightened expectations of customers have forced business enterprises to invest in, and focus attention on, the relationships with customers and suppliers (Simchi-Levi et al., 2000). The concept of Supply Chain Management (SCM) has become part of the senior management agenda since the 1990s. Executives are becoming aware that the successful coordination, integration and management of key business processes across members of the supply chain will determine the ultimate success of the single enterprise (Van der Vorst, 2000). According to Christopher (1998), businesses no longer compete as solely autonomous entities, but rather as supply chains. The increased interest in SCM has been spurred by developments in Information and Communication Technology (ICT) that enable the frequent exchange of huge amounts of information for coordination purposes. Consequently, there is a need and an opportunity for a joint approach of chain partners towards the establishment of more effective and efficient supply chains.

More and more companies have to focus on their Supply chain in order to be successful in their business. Top managers had recognized the importance of having effective Supply chains to create competitive advantage according to Higginson and Alam (1997) and Cooper et al. (1997). The margins for many companies are becoming smaller and smaller due to increasing demand from the customers on lower prices. Solvang (2001) writes that one of the biggest challenges for manufacturing Supply chains is to continuously improve their performance so that their competitiveness can be sustained in long term. To be able to survive on the market the companies have to cut cost in all areas and focus on SCM. Tummala et al. (2006) state to make changes to the Supply chain helps to lower cost and enables a company to more easily compete based on the price. Many concepts for Supply chain design and Supply chain modelling have been presented during the last couple of years with different focus according to Svensson (2003).

The world transformed into a global village and as technology integrated the processes, business environment became highly dynamic. Organisations faced higher risk and greater degree of uncertainty due to the increase in global competition. These risks and uncertainties decreased market share at national and international levels, and affected organisational efficiency. However, organisations managed to survive in this condition by continuously altered, redesigned and developed their strategies.  Moreover, continuous development in the field of management enabled different functions to be integrated to produce more significant results.

The healthcare industry has contributed significantly in both economic development and social welfare in modern economies. It is a highly competitive industry and it is heavily reliant on a vast and complex network of companies working to design, manufacture, deliver, and administer a wealth of health and medical related products and services. The management of health care has stimulated a great deal of attention of several researches and practitioners over the past two decades. The main challenge in the healthcare supply chain management is to achieve improved performance and service. The healthcare supply chain shares a number of similarities with other chains, not only in terms of processes (e.g. procurement, warehousing, distribution), but also in terms of discerning customers and management structures (Walters and Rainbird, 2007). There are also considerable differences in the chain that are associated to the specific characteristics and requirements of the sector. In general, healthcare supply chains are very complex, fragmented, diverse, and dynamic. The main reason for this increasing level of complexity is due to the participation of multiple organisations, who are involved across the entire value chain and it requires key competencies.

It is essential to determine what needs to happen in the m

medical service industry to put the right material in the right place at the right time in the right quantity and receive a positive outcome from the company, the hospital, patient and doctors. (Medina et al, 2014, p-1). According to a research study presented to the Medical Device Supply Chain Council in 2011, 40-45% of the hospital operating expense is represented by supply chain and potential savings of 5-15% of supply chain cost can be realized with better supply chain management strategies (Global Healthcare Exchange, 2011).

Achieving better supply chain performance requires successful, effective and efficient exploitation of an organisation’s resources and competencies in order to impact and position locally and internationally.

The 1990’s decade witnessed the integration of supply chain management into the organisation processes, and further with other organisational management functions, was considered as the strategic advantage for the firm around the world (Shub and Stonebraker, 2009). However, the integration process may vary among firms, sectors and industries around the region. Similarly, human resource management function also emerged as a dominant organisational function, which has a significant effect on organisational functions and performance (Zheng, 2009). Likewise, other organisational functions in human resource management proactively contributed to the emergence of supply chain performance (Wellins and Rioux, 2000). On the other hand, supply chain management has direct and indirect effects on human resource management practices (Kinni et al, 1999). However, few studies have been available which reported the relationship between human resource management practices and supply chain management performance, especially in the context of health care industry.