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A Real Life Application of Business Analytics.

Technological Integration for Efficient and Sustainable Supply Chain in

Indian Multi-Brand Retail

Aditya Bhushan

Amit Zanwar

Nishant Jain

Purba H Rao

Great Lakes Institute of Management

East Coast Road,

Manamai Village,

Tamil Nadu,

India 603102

Abstract

In Indian retail industry where the performance of supply chain is of paramount importance,

an initiative such as technological integration in operations at different phases of supply chain

has been considered to help in making it more efficient, competitive and high performing. In

its search for greater efficiency Environmental Sustainability usually has not been in the

strategizing process of the Management in Indian retail industry. In general, in India

Technological integration has often been thought of as a tool to drive efficiency and

Sustainability as a requirement for the business to survive. Could there be an interrelation

between the two concepts? Could Environmental Sustainability be achieved when

technological integration is incorporated in supply chains? The objective of this paper is to

study the supply chain of Indian multi brand retail and find out if technological integration

taken by a retailer can make its supply chain more efficient as well as more environmentally

sustainable. For our study, empirical data was gathered from the sampling frame of

employees in a major retail firm to assess their perception of the supply chain in their

organization. Data was analyzed using structural equation modeling approach. After

analyzing the data, it was found that technological integration in supply chain in the area

sales & marketing, indeed leads to operations efficiency in supply chain as well as helps in

achieving environmental sustainability. Technological integration in the area of operations

leads to financial efficiency and greening of supply chain but does not yet lead to

environmental performance.

Key words: technological integration, Retail supply chain, India, empirical, structural

equation modeling.

[Acknowledgement]. The authors thank Great Lakes Institute of Management, Yale Great

Lakes Committee and Shoppers Stop for their support in completing this study

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A Real Life Application of Business Analytics.

Technological Integration for Efficient and Environmentally Sustainable

Supply Chain in Indian Multi-brand Retail.

INTRODUCTION

In the global scenario retail is the largest private sector industry ( Singh and Prasad

2012). In India, with the Indian government’s approval of Foreign Direct Investment in retail

industry, this sector is poised to grow significantly. It has paved the way for retail innovation

and competition with global multi-brand retailers such as Wal-Mart and IKEA.( Bajaj 2012).

The retail market in India will be more competitive than ever before and hence Indian

retailers have to look for new ways to compete with the best of the world. In India retail is a

critical sector as it accounts for around 8 % of the total employment making in the country’s

second largest employer after agriculture. Currently comprising 18 % of the total market, the

retail share in India is expected to grow over the next decade to contribute a 40%

share.(Singh and Prasad 2012)

Logistics and supply chain efficiency are more and more considered key success

factors for most retailing houses, who represent the last link in a forward supply chain

( Gawankar and Kamble 2012). Thus efficiency of supply chain is looked upon as of

paramount importance and is expected to help a retail company to make proper product

available to the customer at the proper place and at proper time. In the face of ever changing

customer demand, fluctuating consumer preferences and changing spending patterns, this

efficiency is urgently needed for retail companies to survive.

Given the uncertainties and complexities a retail supply chain has to deal with,

improving efficiency with the help of technology, especially in information sharing context,

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is slowly gaining importance and acceptance in Indian retail sector.( Aanad and Grover

2012). These technological developments play a crucial role in operations of the retail supply

chain in the context of streamlining the flow of goods, services and information.

Technology and efficiency in Indian retail supply chain.

In today’s Indian markets technological and competitive forces are evolving at a very rapid

pace. To respond to these complexities in market conditions retail companies have

implemented technological innovations at various points in their supply chain to gain cost

advantage, speed and flexibility and overall efficiency in supply chain operations.(Ray

2010).These technologies help to capture data at various interfaces in the supply chain like

customer transactions, shipments to stores, inventory and warehousing activities, interactions

pertaining to planning and allocation of stock between retail outlets and so on. This data is

then analyzed for more effective decision making regarding purchasing, stocking and

logistics.( Aanad and Grover 2012; Bajaj 2012).

Globally, various retail organizations are trying to improve their supply chain efficiency

through the implementation of technology in the following forms:

(a) Using Radio frequency identification (RFID) where technology uses radio frequency

waves to transfer data between a reader and a movable item to help identify,

categorize, track and monitor products. This technology enables firms to integrate

inventory timeliness, reduce shrinkage, pertaining to losses doe to employee theft,

shoplifting, administrative error and vendor fraud.( Nativi and Lee 2012; Chen, Cheng

and Huan 2013).

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(b) Using Point of Sale technology, which is a computer based system to capture time and

place of sale, providing information on sales of different brands, sizes, colors, prices

etc.

(c) Using Electronic data Interchange EDI : which comprises exchange of electronic

information amongst organizations, allowing retailers to place instantaneous orders

with suppliers.

(d) Using Business to Business collaboration (B2B) which enables supplier and buyer

interact to conduct transactions.( Chen, Cheng & Huang 2013; Singh and Prasad

2012),

Etc.

In India however the technology which is being incorporated by the big business

houses comprise :

Cross channel strategy that fully integrates all sales channels

Efficient, non-redundant business processes incorporated across all sales channels.

Customer Information is shared across each of the sales channels

A system in company allows customer to buy from one store and pick up/return in another.

A system where Item information is shared across each of the sales channels.

Pricing strategies are shared across each of the sales channels

Inventory Availability Information is shared across each of the sales channels.

Forecasting and planning information is shared across each of the sales channels.

Transactional and Sales Information is shared across each of the sales channels.

A system to provide design specification to suppliers that include environmental

requirements for purchased items,

Technology Integration to help different points of interaction like kiosk, catalogue, brick and

mortar, web, wireless etc to be connected in the back end.

Technological Integration to help to reduce the problem of managing the same data in

multiple applications in the company.

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Technological integration to help to reduce data inconsistencies in daily operations,

Etc.

(http://www.inboundlogistics.com/cms/article/supply-chain-technology-integrating-the-old-

and-new/).

Some of these features of technological integration are found in sales & marketing and some

in operations. Many of them however, relate to both.

Sustainability in Supply Chain.

The Indian retail industry is still in its nascent stage and though many of the firms have

efficiency as one of their corporate goals, sustainability is still not looked upon as an

immediate objective. In India only the big players like Shopper’s Stop, Lifestyle, Bharati

Wal-Mart etc have taken environmental sustainability as part of their corporate goals. All the

same, ever since the early nineties, when industry became aware of the increasing relevance

of sustainable development, many business enterprises in Asia adopted environmental

initiatives as an integral part of their business practices. In time these organisations came to

realise that the environmental initiatives needed to encompass not only the organisation’s

own business practices but also the entire stretch of operations across the supply chain. In

other words they felt they needed to include everyone... employees, suppliers, customers,

waste handlers, and other business partners in the greening process.( Bacallan,2000). Thus,

an integrated supply chain approach was called for. Such an approach should be able to

identify the environmental aspects at every stage, assess the environmental impacts

associated with these aspects, prioritize them and design action plans to mitigate their adverse

effects on the environment if any. An integrated green supply chain approach would take into

consideration the inbound logistics phase of the supply chain, the production or internal

supply chain, the outbound logistics phase, and the reverse logistics phase (Rao and Holt

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2005; Sarkis 1999; Seuring et al.2008). For many organisations in Asia, the green supply

chain approach also emerged as a way to demonstrate their commitment to sustainability

(Seuring et al, 2008).

THE RESEARCH QUESTION

We have observed earlier that having an efficient supply chain can go a long way in

providing the right kind of impetus to the Indian retail industry. An optimized supply chain is

a result of truly synchronized operations which happens if supply chain behave as a single

linked entity – from end customer delivery to raw material procurements. Technology plays a

critical role in automating various operational processes and bringing consistency and

timeliness in operations. This paper aims to look at how the multi-brand retails in India are

endeavoring to fine-tune their Supply Chain Management through use of technology as a

resource to make it more efficient. Thereafter the paper would try to explore if the use of

technology in the supply chain would also make the retail organizations more

environmentally sustainable.

In its search for efficiency using technological integration at different points of the supply

chain, the Indian retail companies should not lose sight of another critical objective in a well

defined supply chain which is the attainment of environmental sustainability for the

company. In reality, however, as the retail supply chain becomes more efficient, there is a

significant reduction in solid and liquid waste, reduction in emission on account of

streamlined and clean production process, sustainable sourcing of raw materials from non-

polluting suppliers, clean & green distribution processes and even picking up end-of-life

products and packaging. These features lead not only to efficient supply chain but also to a

clean and green supply chain and ultimately to environmental sustainability for the company.

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In this research one would therefore conceptualize a model depicting the interrelations

between three constructs, Technological Integration, Efficiency of supply chain and

sustainability. These three constructs have been broken down into sub-constructs which are

Technological integration in operations, Technological integration in sales & marketing,

financial efficiency, marketing efficiency and operations efficiency and green supplychain

and environmental sustainability. This forms our research question which would be tested

using an empirical research followed by data analysis using structural equation modeling.

BRIEF LITERATURE REVIEW

In India Retail industry is still at a very early stage with regard to technology adoption

(Kumar and Nambirajan 2012). Over the last few years retail sector has undergone drastic

changes and the industry is encountering ever-changing business situations. The challenges

retail sector has to deal with comprise uncertain customer demand, changing consumer

preferences and taste, product obsolescence, changing global outsourcing situation and other

environmental factors. There is immense pressure on retail industry by global clients to

reduce lead times, improve product quality, reduce the cost of production and service and

improve overall efficiency. As Rao, Sahu and Mohan ( Rao et al. 2011) say, this is achieved

if the different phases of the retail supply chain are able to communicate with one another and

are able to achieve two important technological requirements for sharing information :

(1) stable and secure electronic linkages between organizations, and

(2) an integrated high-bandwidth environment to provide a host of supply chain management

(SCM) support services, (Rao et al. 2011)

Technological integration especially relating to information technology is able to help in

improving the efficiency of retail supply chain by taking up an integral role in creating and

facilitating new forms of SCM (Nambisan 2000).

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Retail stores have always tried to connect people with products, and new technology doesn’t

change that. The maturation of technologies such as radio frequency identification (RFID)

and near field communication (NFC) along with the broad penetration of smart-phones,

tablets and e-readers have the capability to lead the revolution in customer experience and

improved supply chain.

(http://www.inboundlogistics.com/cms/article/supply-chain-technology-integrating-the-old-

and-new/)

A plethora of technologies having information-intensive and customer centric features

are available today for supply chains and promise enormous benefits including increased

flexibility, reduced costs and enhanced coordination (Shere, 2005; Singh and Prasad. 2012).

Today Managers are overwhelmed by the abundance of these technologies and find it

difficult to select the right technology for their company which will integrate well with the

existing infrastructure and give optimum cost-benefit (Amaratunga et al. 2001). The

relationship of information technologies and performance are interconnected as shown by

several empirical studies and it can be attributed to the attempt to consider the integration

aspects between different technologies (Gunasekaan et al 2007).

Technology integration is the choice of various technologies with different

functionalities to deliver a unique application that provides a new service, process, or

product.( Patterson, Grimm and Corsi 2003) The proliferation of technologies and

technology vendors has made it more important and relevant than ever before (Dey,

Hariharan and Clegg 2006). The various information systems create a higher degree of inter-

operability than what is achieved by standalone, mudularized systems. The integrated system

enables process automation, disseminate timely and accurate information which results in

improved managerial and employee decision-making (Kumar and Nambirajan 2012)

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A fully integrated cross-channel supply chain operates integrated information

systems for all sales channels that communicate and operate together. It enables the customer

to buy in one sales channel and pick up/return in another. Also such a system enables the

retailer supply chain to manage same data in multiple locations and in multiple applications.

Thus, the retailer has lot of operational and marketing-strategic reasons to move towards fully

integrated enterprise and this paper aims to test its effect on the efficiency and environmental

sustainability of retail supply chain.(Bajaj, 2012).

As already stated, environmental sustainability would be one of the key factors for

retailers worldwide (Retail Sustainability Report 2012). Companies have realized that

management of supply chain can be a critical aspect for competitive advantage (Rao & Holt,

2005). The emphasis on supply chain management is coming directly from the top

management (Walker & Preuss, 2008). Combining the above two, this paper tries to look at

an environmentally sustainable supply chain for a retailer in India.

Competitive advantage primarily talks about the economic performance and it can be

achieved in several ways – innovation, production & market management (including green

methodologies) (Seuring et al, 2008). Other than these three basic ways, competitive

advantage can also be achieved by improving the efficiency (Rao & Holt 2005).

Sustainability is defined as the capacity to endure. Specifically, environmental

sustainability includes the long term maintenance of environmental dimensions. A green

supply chain would be one which would reduce wastes, water consumption energy

consumption etc. Also, when we are talking about supply chain, the role of suppliers becomes

very important. For retail outlet to have a green supply chain, support of the suppliers in

green sourcing and green supply is of paramount importance.

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Any company will manage their Supply chain based on what is best for their own company.

Collaboration with other companies in the Supply chain will present win-win situations for

the own company and for other companies in the Supply chain (Bajaj 2012). Providing the

right degree of responsiveness and having an efficient supply chain at the same time is a goal

that is hard to achieve and that typically involves trade-off decisions by management, since

increased responsiveness can be perceived to come at the expense of reduced efficiency, and

vice versa. However, there may be strategies, such as revised planning approaches, that

restructure supply chain processes to achieve both goals at the same time and enable a supply

chain to be responsive and efficient simultaneously.

Supply Chain Management has received an increased amount of interest both from

researchers and in the industry. The SCM concept emerged in a significant way in the last

three decades.( Rao & Holt, 2005). The study of SCM efficiency increased in the 1980s and

had a dramatic increase in the 1990s (Hines and Johns, 2001)). More and more companies

had to focus on their Supply chain in order to be successful in their business. Already in 1997

top managers had recognized the importance of having effective Supply chains to create

competitive advantage (Strader, Lin & Shaw , 1999, Bowen et al., 2001; Hall, 1993)..

Efficiency in broad terms is defined as output produced per resources utilized. A

supply chain is considered efficient if the focus is on cost reduction and waste reduction

(Kamath, 2012). In an efficient supply chain the entities involved i.e. suppliers,

manufacturers and retailers manage all the processes such that they are able to meet demand

at a lower cost. They manage – implicitly through independent ordering processes between

tiers or through explicit coordination of ordering decisions of the different supply chain

elements – their activities in order to meet predictable demand at the lowest cost (Sanchez

and Perez, 2001)

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For the Sustainability goal of the supply chain, as per the Retail Sustainability report

(2012) published by Retail Industry Leaders Association (RILA is a group of top US retailers

like Walmart, Best Buy, IKEA etc), sustainability is one factor which has become a key

consideration for retailers worldwide. Also, the report highlights the fact that in future the

retailer- supplier relationship will use sustainability as a means to generate value. The

different variables which can help Indian multi-brand retail to compete with the Wal-marts of

the world are discussed in the next section and leads to the conceptual framework adopted by

our research.

CONCEPTUAL FRAMEWORK

The basic research framework adopted in our current research explores the interrelations

between three constructs, Technological Integration, Efficiency of supply chain and

sustainability.

Construct 1: Technological Integration

There are several information-intensive and customer-centric technologies available today

that provide significant performance improvements for retail supply chains. It is a challenge

for managers to choose which technology to invest in and how to integrate the technologies

so that the promised performance benefits of the technologies can be realized. The level of

technological integration can be measured based on the presence or absence of different

information technologies adopted by the retailer. Technological Integration is a challenging

and costly affair and should be carried with exhaustive pre-analysis.

Regarding technological integration managers are often overwhelmed by the abundance of

technologies which promise significant performance improvements for manufacturing and

service supply chains. The selection of technology and its subsequent integration with

existing technological infrastructure determines level of Technological Integration.

The need for technological integration is felt more as the scale of operations increase in terms

of retails stores and number of suppliers and customers. The need is also felt to encounter

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competition – The intense competition for margins in retail industry makes companies

looking for value for money in their IT investments and hence company move towards

technological integration.

The expected consequences of technological integration are :

Improving Performance of Supply Chain – Technological integration brings a seamless

supply chain which brings agility, responsiveness and reliability.

Improving Customer Satisfaction – In stores, technological integration can help in less

waiting time in billing queues, price verification and prompt assistance from store personnel

which will enhance customer satisfaction.

Increased sales – Since data is synchronized, it helps in better stock replenishment and hence

sales are not lost because of stock out.

The second construct we considered was:

Construct 2: Efficiency of Supply Chain

Efficiency in broad terms is defined as output produced per resources utilized. A supply

chain is considered efficient if the focus is on cost reduction and waste reduction (Naylor,

Naim and Berry 1999). In an efficient supply chain the entities involved i.e. suppliers,

manufacturers and retailers manage all the processes such that they are able to meet demand

at a lower cost. Technology and Sustainability are two factors which can help in making a

supply chain sufficient. Today, visionary companies are adopting innovative technologies as

well as implementing green solutions in order to make their supply chain more efficient and

hence have a cutting edge over its competitors.

Retailers face one of the biggest challenges for supply chain management due to a high

number of product variants, strict traceability requirements, short shelf-life of the products,

the need for temperature control in the supply chain, and the large volume of goods handled.

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Efficient supply chain is one of the differentiating factors for the multi-brand retailers

competing on global grounds. Also, its Efficiency advantage relates into pricing and resource

management as well as in increased information sharing, product visibility and real-time

information made available at every phase of the supply chain.

Specifically technological integration comprises installation of technologies - allowing sales

data to be collected and analyzed daily which enables managers to learn what merchandise is

moving slowly, and thus avoiding overstocking and deep discounting as well as training

employees – acquainting employees with the newly implemented supply chain practices and

show them how such practices determine the efficiency with which the benefits can be reaped

out of the system.

As a consequence profit Margins increase –deceasing cost in improving the efficiency

directly affect the profit margins.

Shrinkage reduces – euphemism for pilferage and shoplifting can be reduced drastically.

Reduces replenishment cycle time – Helps in reducing the cycle time and increase the

efficiency

Construct 3: Environmental Sustainability

Increasingly companies are realizing in order to effectively manage their sustainability

impacts, which comprise economic as well as environmental impacts, they must ensure their

suppliers are doing the same. Due to this more and more companies are engaging suppliers on

providing green solutions to the conventional ones. This has led to a proliferation of

initiatives aimed at assessing and improving supply chain sustainability performance.

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Although the term “sustainability” has an ambiguous meaning in various fields, the term

indicates not only harmonizing corporate environmental performance with stockholders’

expectations but also developing a critical new source of competitive advantage in terms of

management perspective (Gupta, 1994). According to Gupta (1995), environmental

management relieves environmental destruction and improves environmental performance by

institutionalizing various greening practices and initiating new measures and developing

technologies, processes and products.

Ever since the 1992 Earth Summit in Rio, (where “Sustainable Development” was a key

concept and governments had pledged to protect environment and consider it as part of their

long-term economic development strategy) there has been an increasing focus on

Sustainability.

Incorporating Sustainability of course ensures that a company’s supply chain meets with

ethical practices and meets with environmental and social norms. In addition these best

practices help them to move towards Risk Mitigation – by decreasing the dependency on

fossil fuels, the organization becomes less affected by the market volatility and price

fluctuations, achieve Industry Reputation – with the increased emphasis on Go-Green, having

a sustainable supply chain improves the reputation of the firm in the entire industry.

Also these sustainable standards encourages Innovation because driving innovative business

strategies often leads to development of new technologies and processes.

Indian retailers are cognizant of the fact that global standards have to be followed in order to

stay in the game. They have started considering sustainability as part of their core strategy,

but they still lag way behind the international standards. An article published in Live Mint on

April 12, 2012 states that an average Indian shopping mall consumes 30% to 40% more

power and water than they should ideally be consuming.

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The three constructs –Technological Integration, Efficiency of Supply Chain, and

Sustainability were divided into sub-constructs to give a more precise measurable component.

These sub-constructs are as follows –

Definition of Sub constructs

Main Construct – Technological Integration

Sub Construct1 – Technology Integration in Sales & Marketing (TISM)

Sub Construct2 – Technology Integration in Operations (TIO)

Technological integration leads to a seamless supply chain and as a result there is an

improvement in many of the processes which were done manually. It also leads to less

wastage, errors and reduces lead time. Since the data is synchronized, suppliers get an instant

update of the status of an SKU. As a result suppliers tend to supply more. Also it also makes

sure that an item is not out stock because of information delay and hence sales are not lost.

This shows that integration leads to an increase in revenue and better supply chain, although

it is to be seen whether the cost of technological integration is superseded by its benefits.

Main Construct – Efficiency in Supply Chain

Sub Construct3 – Efficiency in Finance related function. (Financial Efficiency, FE)

Sub Construct4 – Efficiency in Operations related functions(Operational efficiency,OE)

Sub Construct5 – Efficiency in Marketing related functions. (Marketing Efficiency,ME)

Under this main construct we have studied three sub constructs viz. Financial Efficiency,

Marketing Efficiency and Operational Efficiency. Understanding how to make the best use of

a complex array of marketing technologies is becoming an increasingly difficult challenge.

Does technological integration and green supply chain can really help in improving

marketing efficiency that we have tried to study? Then there is a growing demand for

financially efficient supply chains, with companies and their suppliers under conflicting

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pressures to improve payment terms reduce prices and improve cash flow efficiencies. Also

achieving the highest level of operational efficiency will require manufacturers to collaborate

to a much greater degree than before with their partners and their competitors throughout the

supply chain. They will need to seek those within their chain that specialize in functions that

complement their own. Device companies that share customers can ally themselves to share

warehousing or transportation to save costs. More flexible relationships will allow companies

to tailor products or consolidate operations to meet customer needs.

Main Construct –Environmental Sustainability

Sub Construct6 – Achieving environmental performance (Environmental Performance)

Sub Construct7 – Greening the supply chain (GSCM).

With fluctuating cost of fossil fuels, move towards environment friendly technologies help in

reducing costs and creating efficient supply chain. The benefits of green initiatives are

usually long term but in today’s world they constitute a compulsory as well as ethical

framework for company strategies.

In this research we investigate if Technological Integration helps in tracking entities across

supply chain and as a result there is less wastage and spillage. Also greener initiatives are

supported by technology in tracking their effect and it can be further used to enhance

sustainable processes and operations. Therefore technology integration should lead to a

greener supply chain.

The hypotheses above leads to a research hypothesis which forms the conceptual

framework for the research undertaken. In graphical format this conceptual framework works

out to:

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Figure 1: Conceptual Framework showing inter relations between Technology

Integration , Efficiency and Environmental Sustainability.

RESEARCH METHODOLOGY

Data Collection

The industry chosen for this study is the Indian multi brand retail industry. Within

Indian multi-brand industry the company in which we have pursued our study is “Shopper’s

Stop”. An executive who handled the Supply Chain of Shopper’s Stop has functioned as our

industry guide for this project and has our point of contact for any communication with the

company.

Research Methodology

The research instrument used in the study was a survey questionnaire, which

comprised a demographic section and questions on technological integration, efficiency and

sustainability. The items on the questionnaire corresponded to manifest variables measuring

each construct as well as sub-construct, as given below. The responses were measured on a 5-

point scale. The sampling frame was the total number of employees at all branches of

Shopper’s Stop and the final sample size was 149.

TISM

FE

TIO

OE

ME

Environmental

performance

performance Green supply

chain

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DATA ANALYSIS: STRUCTURAL EQUATION MODELING

This is an analytical approach where we study the linkages between unobserved variables or

latent variables/constructs and observed variables or manifest/indicator variables which

constitute the unobserved variables.

The model connecting unobserved variable to observed variable =measurement model. The

model connecting unobserved variables to unobserved variables=structural model.

SEM estimates a series of separate but interdependent multiple regression equations

simultaneously. Linear SEM approach is used (Joreskog and So¨rbom, 1993) to validate the

causal relationships between the different latent constructs. Generally, the fit criteria of a

structural equation model indicates to what extent the specified model fits the empirical data.

Only one goodness-of-fit measure, i.e., the χ2 test statistic, has an associated significance test,

while all other measures, such as GFI, CFI, AGFI, NFI, are descriptive.

For the chi-square test of goodness of fit of the model as a whole, the chi-square value should

not be significant if there is a good model fit: the higher the chi-square the more the

difference between model-estimated and actual covariance matrices, hence the worse the

model fit. If the p-value associated with the χ2 value is larger than 0.05, the null hypothesis is

accepted and the model is regarded as compatible with the population covariance matrix Σ. In

this case the test states that the model fits the data. For a good model fit, the ratio χ2/df should

be as small as possible.

As there exist no absolute standards, Chi square/ degrees of freedom < 2.

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Critical Ratio: After the model is run, each arrow has a regression coefficient. This

coefficient divided by its standard error is called critical ratio. This ratio is very much like the

t-value but applies even when the normality assumption does not hold.

Consider any arrow/link from one variable to another.

For any regression coefficient b, the H0 : β =0, H1: β =\= 0.

Under 5 % level of significance, if critical ratio is > 1.96, the link is considered significant.

Structural Equation Modeling (SEM) was applied in our current research in our endeavor to

validate the hypothesis presented in the conceptual framework in Figure 1.

Different models with different constructs were run and compared. Of these runs the most

meaningful models along with the indicators of model fit and the associated estimates would

be presented below. Before these results, we first present the seven sub-constructs and the

associated manifest variables.

THE SUB-CONSTRUCTS AND THE ASSOCIATED MANIFEST VARIABLES

Main Construct – Technological Integration

Sub Construct1 – Technology Integration in Sales & Marketing (TISM)

1.Effectiveness of cross-channel strategy that fully integrates all sales channels with respect

to technological integration

2. There is efficient, non-redundant business processes incorporated across all sales channels.

3.The system in company allows customer to buy from one store and pick up/return in

another.

4.Customer Information is shared across each of the sales channels.

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5.Item information is shared across each of the sales channels.

6.Pricing strategies are shared across each of the sales channels

7.Inventory Availability Information is shared across each of the sales channels.

8.Forecasting and planning information is shared across each of the sales channels.

9.Transactional and Sales Information is shared across each of the sales channels.

Sub Construct2 – Technology Integration in Operations (TIO)

10.Technological integration helps to reduce data inconsistencies in daily operations?

11. Technological integration helps to avoid loss of sales due to poorly managed inventory?

12. Technological integration helps in reducing margin erosion due to better managed

inventory

13. Technology Integration helps different points of interaction like kiosk, catalogue, brick

and mortar, web, wireless etc to be connected in the back end.

14. Technological Integration helps to reduce the problem of managing the same data in

multiple applications in my company.

Sub Construct3 – Efficiency in Finance related function. (Financial Efficiency, FE)

15. Technological integration, deceases Total Cost.

17. Technological integration practices, helps to increase Return on Investment (ROI)

18. Technological integration practices, increases Sales (Total Revenue)

Sub Construct4:Efficiency in Operations related functions (Operational Efficiency OE),

19. Technological integration decreases Supplier Response Time.

20. Technological integration practices increases On-time Deliveries.

21. Technological integration practices reduces spillage / Shrinkage / pilferage.

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Sub Construct5 – Efficiency in Marketing related functions. (Marketing Efficiency,ME)

Marketing Efficiency

22. Technological integration practices decease Customer Response Time.

23. Technological integration practices decrease Customer Complaints

24. Technological integration practices deceases the time taken to introduce and produce new

products (this includes the modification of existing products)

Main Construct: Environmental Sustainability

Sub Construct6 – Achieving environmental performance (Environmental Performance)

25. Company has achieved Cross-functional cooperation for environmental improvements

26. Company has achieved Commitment towards Total quality environmental management

27. Company has achieved Environmental compliance and auditing programs like ISO 14001

certification

28. Company has achieved sale of excess inventories/materials (Disposing off obsolete,

scrap, or surplus goods in a manner that maximizes the return while minimizing the costs and

liabilities)

Sub Construct7 – Greening the supply chain (GSCM).

29. Company has achieved commitment of GREEN SUPPLY CHAIN MANAGEMENT

from senior managers

29. Company has provided design specification to suppliers that include environmental

requirements for purchased items

30. Company has achieved cooperation with suppliers to improve environmental objectives

31. Company has achieved environmental audit for suppliers’ internal management

32. Company has achieved ISO14000 certification consideration while choosing suppliers

RESULTS OF STRUCTURAL EQUATION MODELING

As indicated earlier several models were run of which the two most meaningful ones would

be presented below.

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Model 1: Model connecting technological integration and efficiency of supply chain.

The hypothesis/ proposed model here was as given below:

Figure2 : Proposed Model inter- relating Technological Integration and Efficiency.

Legend :

TISM= Technology Integration in Sales & Marketing

TIO: Technology Integration in Operations;

FE: Financial efficiency

OE: operations efficiency

ME: marketing efficiency

Upon running the model given above the following Indicators of Model Fit and Regression

estimates were obtained.

Table 1: Indicators of Model Fit:

Chi-square/ degrees of Freedom = 1.994

Overall p-value for the model = .000

CFI = .996

GFI= .848

AGFI= .767

NFI= .834

TISM

TIO

FE:financial efficiency

OE: efficiency in operations

ME: efficiency in marketing

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Table 2 :Regression estimates:

Construct regression coefficient standard error critical ratio p-value

FE <--- TISM 0.178 .122 1.457 .145

ME <--- TISM .070 .107 .650 .516

OE - TISM .687 .151 4.539 ***

FE - TIO .380 .114 3.331 ***

ME -TIO .448 .110 4.058 ***

OE - TIO .063 .134 .472 .637

From the results obtained above the significant links ( critical ratio > 1.96) are:

OE - TISM ; FE - TIO ; ME - TIO

Thus technological integration in Sales & Marketing significantly leads to operations

efficiency but does not lead to financial and marketing efficiency yet.Again, Technological

integration in Operations significantly leads financial and marketing efficiency but does not

significantly lead to operations efficiency yet.

Thus the final result for the first model considered and run by SEM is:

Figure3 : Final Model inter- relating Technological Integration and Efficiency.

The continuous line denotes significant link and the dotted line denotes a link not significant.

TISM

TIO

FE:financial efficiency

OE: efficiency in operations

ME: efficiency in marketing

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Model 2: Model connecting technological integration, efficiency and Sustainability

achieved in the supply chain.

The proposed model considered in this run is as follows:

Figure 4: Proposed Model connecting technological integration, efficiency and

Sustainability achieved in the supply chain.

(Please note that this model is the same as presented in the conceptual framework)

Table 3: Indicators of Model Fit:

Chi-square/ degrees of Freedom = 1.333

Overall p-value for the model = .015

CFI = .972

GFI= .920

AGFI= .847

NFI= .903

RMSEA= .047

TISM

FE

TIO

OE

ME

Environmental

performance

performance Green supply

chain

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Table 4: Regression estimates:

Construct regression coefficient standard error critical ratio p-value

FE TISM .101 .059 1.703 .089

ME TISM .087 .066 1.329 .185

OE TISM .933 .152 6.155 ***

FE TIO .598 .109 5.483 ***

ME TIO .015 .023 .647 .518

OE TIO .087 .116 .753 .451

EnvperfFE .216 .189 1.139 .255

GSCM FE .388 .135 2.882 .004

Envper ME 2.135 .398 5.361 ***

GSCM ME .412 .160 2.584 .010

Envper OE .592 .113 5.236 ***

GSCM OE -.302 .074 -4.089 ***

From the above results the final model emerges as :

Figure 5: Final Model connecting technological integration, efficiency and

Sustainability achieved in the supply chain.

TISM

FE

TIO

OE

ME

Environmental

performance

performance Green supply

chain

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DISCUSSION

Multi-brand retail is on the rising phase in India and retailers need to follow the best practice

to stay competitive in the game. Supply Chain is an important competitive advantage and

technology plays an important part in determining the green component and efficiency of

supply chain.

Technological integration in Sales & Marketing has been found to lead significantly to

operations efficiency which again leads significantly to green supply chain as well as top

environmental performance. However, it neither leads to Marketing efficiency nor to

Financial efficiency. Technological integration in Operations, on the other hand,leads to

Finance efficiency and thereafter to Green Supply Chain but not yet to environmental

performance.

Technological integration is the choice by managers of a retail firm to

choose technology in a way that it integrates with the existing infrastructure instead of

creating silos. We obtained some insightful results from our survey. The effort on integrating

sales and marketing systems leads to operations efficiency and not to finance or marketing

efficiency. That means it leads to fewer maintenance issues, less manpower and less rework,

all of which leas to operations efficiency. However, this does not lead to cost savings or to

better marketing plan or better sales. At the same time, integrating operation systems lead to

significant improvement in financial efficiency. Therefore a company looking for financial

stability should focus on technological integration in operation systems first so as to reap

maximum financial advantage.

Similarly technological integration in sales and marketing systems leads to

operations efficiency and then to GSCM and to higher environmental performance.

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Operations efficiency leads to greener supply chain and environmental friendliness. This is

logical again as efficient operations extract more value from same resources.

In conclusion one may note that as observed from the data analysis, technological integration

in Sales & Marketing is indeed leading to efficiency in operations and thereafter to

Environmental Sustainability, whereas financial efficiency is achieved through such

technological integration in operations. . This is encouraging for Indian Retail companies and

the research recommends technological integration for both Sales & Marketing as well as in

operations to achieve finance efficiency, which may be the urgent immediate need, and

Sustainability of the entire supply chain.

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