STUDYING OF THE EFFECT OF INFORMATION TECHNOLOGY ON SUPPLY CHAIN PROCESSES AND ORGANIZATIONAL PERFORMANCE (CASE STUDY: PARSIAN GAS REFINERY COMPANY)

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1 Pinnacle Research Journals 1 STUDYING OF THE EFFECT OF INFORMATION TECHNOLOGY ON SUPPLY CHAIN PROCESSES AND ORGANIZATIONAL PERFORMANCE (CASE STUDY: PARSIAN GAS REFINERY COMPANY) KHODAKARAM MOHAMMADI CHESHME GOL*, ESMAEIL HASAN POUR GHOROGHCI**, IMANEH KHALILI GORJI*** a Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran. b Corresponding Author, Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran. c Department of Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran. ABSTRACT Competition existence makes organizations to maximum use of existing facilities in obtaining resources, despite limited resources. So, all organizations need to increase productivity and efficiency of available resources. Searching for determination the effective factors of the organizational activities in optimum using of resources and improve them is the first step in increasing the productivity and efficiency of the organization. Nowadays, with the development of technology, the effect of the information technology on business environment can t be ignored. IT can directly or indirectly influence on improving organizational processes. This research aims to investigate the effect of information technology on supply chain processes and performance in Parsian Gas Refinery Company and provide solutions to increase productivity and efficiency of in the company's processes. After determining the processes that affect the Company's operating activities include the supply chain and operational performance of the company, indicators were selected for evaluation and then a questionnaire was prepared. Statistical population is about 1200 people. Sample was determined 291 people by using the Morgan table and the questionnaire was distributed among them. The results of questionnaire were collected and SPSS software and the statistical techniques were used to investigate the effect of information technology on supply chain processes and performance. According to verify the effect of information technology on indicators, its effect on supply chain processes and performance was confirmed. Next, the Friedman test showed that the effect of information technology process of purchasing (supply chain) and profitability (in organizational performance) is more than the other indicators. KEYWORDS: Information Technology, Organizational performance, Supply Chain

2 Pinnacle Research Journals 2 INTRODUCTION The success of a company depends on the proper use of the new technology and knowledge. Technology is one of the features that can provide opportunities for the organization. Using the technology in the supply chain and its effects on the organization has a special importance and managers exploit its advantages because of the development of information and communication technologies in various fields. Today no company can t overlook of supply chain management and has expected to survive. Thus, the concept of a supply chain has become common concept in all companies around the world (Zuckerman, 2002). On the other hand major cause of uncertainty in the supply chain is poor flow of information, which can include incorrectness, incompleteness and information incorrect management. Information technology by strengthening management affects the dimensional information flow of the supply chain, such as cost, quality, flexibility and timely delivery goods and services and ultimately benefit of organization (Quoted from Doroudchi and Nikmehr, 2007). The importance of using IT in the report by Roberts (1998) showed that there is 8-35% reduction in supply chain costs, 22-85% reduction in inventory, % in improvement of delivery and % in improvement of cycle time. For this purpose, managers should familiarize themselves with the new methods to get closer to their goals and can better coordinate with suppliers and consumers. Given that the evaluation and assessment the variables of organizational performance and supply chain play an important role in achieving the objectives, assessing performance and making decisions about future policies, this study seeks to evaluate the relationship of these variables with the information technology in Parsian Gas Refinery Company. Since gas is one of the energy resources available in country, determining the effective factors on its refining and exporting of refined gas refineries including Persians, causing more economic development, and acquisition of appropriate economic position in the region. This research aims to investigate the effect information technology on supply chain processes and the performance and also the effect of information technology on all dimensions of supply chain variables (purchasing, warehousing and distribution) and the performance of the company (empowerment, improve processes, customer orientation and profitability). PREVIOUS RESEARCH The studies of Nikmehr and Doroudchi (2007) showed that information technology improves transportation and distribution information and significantly improves supply chain efficiency. Manian, Mousa Khani and Jam Parazmi (2010) examined the relationship between strategic alignments of information technology and business with organizational performance by using the contingency and systematic approach models and were identified the results obtained from the alignment of IT and business performance. Mohammadi, Sahrakar and Yazdani (2012) investigated the effect of information technology on capacity and performance of supply chain in dairy companies in Fars province. The results

3 Pinnacle Research Journals 3 showed that based on the research process, the use of information technology had effect on supply chain capabilities and consequently on the performance of supply chain. Li and Ragu-Nathan (2006) with the elimination the indicator of lean production operations of the supply chain management variable, studied the effect of this variable on organizational performance in various US industries. Zeam and et al. (2007)benefited different indicators to measure supply chain management operations in contrast to previous research to investigate the effect of supply chain management on organizational performance related to supply chain management and organizational performance midsize companies in the manufacturing of metal products and machinery of general application in Turkey. Blankly (2008) investigated the effect of information technology on supply chain and performance of commercial firms. Results showed that three factors: technical quality of information technology, the usefulness of information technology, support and encouragement of senior managers from information technology are effective in the effect of information technology on supply chain. THE RESEARCH VARIABLES This research aims to investigate the effect information technology on supply chain processes and the performance of organization. For this purpose, indicators related to each variable of supply chain management and organizational performances (as independent variables) are separately identified and expressed as follows. In addition information technology has been considered as an independent variable. Information Technology: is a branch Technology which makes possible study and application of data processing in the field of storage, transfer and manage data by using the hardware, software, networks, software (Fathi, 2007). Supply Chain: defined as a hybrid system that includes 4 processes such as plannig, source, making and providing and which connects the various sections, including suppliers of materials, production facilities, distribution services and customers by sending material and current information (Christopher, 1998). Organizational performance: the process of determination of quality of effectiveness and effectiveness of past actions. According to this definition, the performance is divided into two components: 1) The efficiency which is describing how organization uses the resources to produce services or products which means the relation between the true and proper composition in inputs to produce certain outputs. 2) The efficiency which is describing degree of achieving organizational goals (Nili et al., 2002, quoted by the Rahnavard, 2008).

4 Pinnacle Research Journals 4 Indicators of supply chain processes: Purchase: One characteristic of a supply chain is procurement of raw materials, supplies and quality services, at the right time and with a reasonable price. Supply chain is an infrastructure network which has the duty of buying materials, production materials to products and finally the distribution of end products to customers. Identification of suppliers and their evaluation and improvement purchase process is one of the factors determining purchase indicator. In Parsian Gas Refinery Company, this process involves the buying gas and transferring it to the company which is done by the National Iranian Gas Company, buying services, goods and required property is done by company and procurement unit. The storage and distribution: The proper management and efficient of production, sale and use of resources require the existence of a system for managing and controlling the entry and exit of goods, materials and products. Undoubtedly, the accurate production planning, making decisions about resource allocation and supply of products to market require the exact knowledge of the storage information. Integration storage systems with other, subsystems lead other departments such as sales, management and delivery of materials, basic knowledge of engineering to gain more information warehouse and inventory accounting. Distribution is one of the marketing pillars which mean delivering goods and services to the client (Wikipedia). Storage process of Parsian Gas Refinery Company includes maintenance of technical tools and products such as gas condensate from the process which is maintaining in the enterprise s storage and storage tanks. Distribution of products includes natural gas sending to pipeline and distribution by the provincial gas companies and distribution the equipment needed in internal different processes. Indicators of organizational performance: In the evaluation history of organizational performance, several performance criteria based on cost, responsiveness to customers and financial indicators are observed. Indicators of client perspective (customer orientation) internal business processes view (improving organizational processes) innovation and learning view (empowerment) and profitability are such common criteria in many studies. Empowerment and improving organizational processes: In today's competitive environment, businesses are trying to create a sustainable competitive advantage by improving organizational performance and adapt themselves with changes. Most previous studies in the field of organizational performance are based on financial performance. In 1994, the American Institute of Certified Accountants, it was suggested non-financial was included in performance indicators. This information can be reflected the intellectual capital, social accountability and increasing in the level of organizational knowledge (Wu and Liu, 2010). Determining the need of staff to train and improvement level of educational planning and implementation of the evaluation period could be indicative of the ability of the organization. Customer orientation processes in Parsian Gas Refinery Company, by increasing the quality of the produced natural gas are efforts to increase production capacity and ensure the production of gas. On the production of Gas condensate, they need to respect the rights of consumers and to

5 Pinnacle Research Journals 5 ensure that customers buy their products because of the competition in the maintenance and improvement of the level of demand. Profitability: Profit is always used by investors, managers and financial analysts as a guide to pay of dividend profit and the assessment tool to evaluate the effectiveness of organizational performance and tool for decision-making and predicting, (Saghafi, 1994). Sovin and Johnson (1996) in a study on 478 companies, they have considered 10 indicators as indicators of successful companies and profitability and liquidity were considered as company performance indicators. Profitability is one of the most important indicators in assessing the company's performance (Tavakoli and Fathi, 2009). Parsian Gas Refinery Company needs to make a profit from its activities along with inherent duty like any economic unit to survive. CONCEPTUAL MODEL OF THE RESEARCH Purchase Improving organizational processes Storage Process SCM Organization performance Customer orientation Distribution Information technology Profitability Empowerment FIGURE1: CONCEPTUAL MODEL RESEARCH METHODOLOGY In terms of purpose, this is an "applied" research. Due to the nature of the research, the datacollection method and the goals of the research, the method used in this research is "descriptive survey". The population of this research includes all the employees of Parsian Gas Refinery Company which they were 1200 people. Sample size was selected 291 people by Morgan table. Library and survey method were used to collect data. Reliability of questionnaire was evaluated using Cronbach's alpha and the validity of question had been performed by using content validity (approved by tutors and experts). Kolmogorov Smirnov test and Spss software were used to test the normal distribution of data. Friedman test was used due to lack of normal distribution of data and determination of effect of IT on all variables. Content validity was used to determine the validity and their relationship and significantly of variables had been approved by the supervisors, managers and industry experts. The internal

6 Pinnacle Research Journals 6 consistency of the questionnaire was determined by calculation of Cronbach's alpha coefficient. Cronbach's alpha coefficient was used for different parts of the questionnaire showed that the Cronbach's alpha for all indexes was more than 0.7, so reliability was confirmed. RESEARCH FINDING Inferential statistics used to test the research hypotheses, but it is necessary to mention two points. First point: a criterion score is required to test the hypotheses which the mean of respondents score from each of the impact spectra of information technology on supply chain processes and organizational performance and their dimensions are to be compared with it. If the respondents mean scores of each variable are more than criterion score, information technology has positive and significant effect on that dimension and the hypothesis is confirmed and otherwise the hypothesis is rejected. Second point: according to the non-normal distribution of data for all variables, the Friedman nonparametric test was used to test the hypotheses. Information technology has impact on main processes of supply chain. The results showed that that mean of the respondents scores of information technology impact on supply chain processes is 36.8, which is more than the mean scores of the spectrum that is 27. Friedman's test results showed that the mean rank of the respondents scores from the spectrum of Information technology impact on the supply chain processes is While the mean rank of criterion scores is This difference is obtained according to the chi-square (X 2 =283.1) with 1 degree of freedom 1 and significant level of 95% and the conclusion that information technology has impact on supply chain processes in Parsian Gas Refinery Company is confirmed. TABLE 1: MEAN TEST OF RESPONDENTS SCORES FROM THE SPECTRUM OF INFORMATION TECHNOLOGY IMPACT ON THE SUPPLY CHAIN PROCESSES WITH CRITERION SCORES OF 27 Number mean Rating mean X 2 Df Sig. Respondents Scores Criterion Scores Information technology has impact on organizational performance. The results showed that that mean of the respondents scores of information technology impact on organizational performance is 57.45, which is more than the mean scores of the spectrum that is 39. Friedman's test results showed that the mean rank of the respondents scores from the spectrum of Information technology impact on organizational performance is 2. While the mean rank of criterion scores is 1. This difference is obtained according to the chi-square (X 2 =291) with 1 degree of freedom 1 and significant level of 95% and the conclusion that information

7 Pinnacle Research Journals 7 technology has impact on organizational performance in Parsian Gas Refinery Company is confirmed. TABLE2: MEAN TEST OF RESPONDENTS SCORES FROM THE SPECTRUM OF INFORMATION TECHNOLOGY IMPACT ON ORGANIZATIONAL PERFORMANCE WITH CRITERION SCORES OF 39 Number mean Rating mean X 2 Df Sig. Respondents Scores Criterion Scores 39 1 Information technology has impact on the processes of supply chain and organizational performance. The results showed that that mean of the respondents scores of information technology impact on the processes of supply chain and organizational performance is 94.25, which is more than the mean scores of the spectrum that is 66. Friedman's test results showed that the mean rank of the respondents scores from the spectrum of Information technology impact on the processes of supply chain and organizational performance is 2. While the mean rank of criterion scores is 1. This difference is obtained according to the chi-square (X 2 =291) with 1 degree of freedom 1 and significant level of 95% and the conclusion that information technology has impact on the processes of supply chain and organizational performance in Parsian Gas Refinery Company is confirmed. TABLE3: MEAN TEST OF RESPONDENTS SCORES FROM THE SPECTRUM OF INFORMATION TECHNOLOGY IMPACT ON PROCESSES OF SUPPLY CHAIN AND ORGANIZATIONAL PERFORMANCE WITH CRITERION SCORES OF 66 Number mean Rating mean X 2 Df Sig. Respondents Scores Criterion Scores 39 1 Determining the impact of Information technology on the dimensions of supply chain of company Friedman's test results showed that information technology has the greatest effect on the purchase dimension of supply chain (mean rank= 2.55) and the lowest impact on the distribution (mean rank= 1.58). These results can be generalized as a whole population statistic based on the results of the chi-square (X2 =184.56). TABLE4: MEAN TEST OF RESPONDENTS SCORES FROM THE SPECTRUM OF SUPPLY CHAIN PROCESSES

8 Pinnacle Research Journals 8 Variables Number mean Rating mean X 2 Df Sig. Purchase Storage Distribution Determining the impact of Information technology on the dimensions of organizational performance Friedman's test results showed that information technology has the greatest effect on the profitability (mean rank= 2.81) and the lowest impact on the empowerment (mean rank= 2.08). These results can be generalized as a whole population statistic based on the results of the chisquare (X2 =55.7). TABLE5: MEAN TEST OF RESPONDENTS SCORES FROM THE SPECTRUM OF ORGANIZATIONAL PERFORMANCE Variables Number mean Rating mean X 2 Df Sig. Empowerment Improving organizational processes Customer orientation Profitability The results showed that that information technology has a positive effect on the supply chain processes in Parsian Gas Refinery Company. In addition, Information technology improves transportation and distribution of information and significantly improves the efficiency of the supply chain. The effects of Information technology in supply chain management can be increasing the accountability, creating new relationships with customers to identify their needs, improving supply chain performance and improving competitive position. Also, the results showed that that information technology has a positive effect on the organizational performance in Parsian Gas Refinery Company. It means that organizational performance is improved which includes empowerment and education, improving production processes, customer orientation, appropriate response to customer and profitability if they use information technology and pay attention to the exchange of electronic data. Using the information technology has impact on supply chain capabilities and consequently has impact on organizational performance. The impact of information technology on production processes is a principle to achieve a better performance and internal processes. Significant impact of information technology on the main processes of the supply chain and performance in Parsian Gas Refinery Company is accordance with the previous research results of Blankly (2008), and Nikmehr and Doroudchi(2007), Mohammadi, Sahrakar and Yazdani (2012) and Manian, Mousa Khani and Jam Parazmi (2010).

9 Pinnacle Research Journals 9 PRACTICAL SUGGESTIONS 1. If the organization wants organizational performance improvement, especially in the process of purchasing, storage and proper distribution, it must try to make balance between the organizational culture supportive and commitment of senior management in the IT field. 2. Using of information technology infrastructure in purchasing in order to select suitable suppliers of persons who are able to communicate with them through the electronic exchange. 3. Equipping the storage system and maintenance products to IT infrastructure and use the appropriate spaces in the storage process which can reduce inventory levels and inventory control. 4. Evaluation meetings of employees and using payment system based on of performance make possible the goals of employees and organizations and increase the labor productivity. 5. Continuing education for all staff to update information technology related to the supply chain using these tools to achieve maximum productivity and realization of organizational goals. 6. Creating and strengthening public accessible information system that includes information such as the interests and the future needs of their customers. This information can be used to achieve the objectives and long-term vision of the company. 7. Strengthening the organizational culture through raise awareness and ongoing training of employees is other factors in the success of supply chain and operational performance of the organization. In order to establish a good corporate culture, managers play the most critical role. Because managers play a fundamental role in shaping the organizational culture in acceptance of new technologies with their behavior such as the acceptance of new technologies in the company's activities and acceptance of replacing them instead of the old technology. 8. Replacing old technologies with lower efficiency with new technologies and make improvements the old processes are the he functions of industrial management and research unit by the support of managers. REFERENCES Blankley, A. (2008) A conceptual model for evaluating the financial impact of supply chain management technology investments, The International Journal of Logistics Management, 19, Christopher, M. (1998) Logistics and Supply Chain Management, London: Pitman Publishing Doroudchi,M. Nikmehr, N. (2007). Study and application of information technology in supply chain management. Tehran: Proceedings of the Fourth National Conference on Electronic Commerce.

10 Pinnacle Research Journals 10 Fathian, M. (2007) Foundations and management of information technology, Tehran: Iran University of Science and Technology Li, S., Ragu-Nathan, B., Ragu, T.S., Subba R.S. (2006) the impact of supply chain management practices on competitive advantage and organizational performance, Omega. 34, Manian,A Mousa Khani,M. Jam Parazmi,M (2010) Examine the relationship between information technology and business with organizational performance in active companies in the field of information technology by using structural equation modeling. Information Technology Management, 1 (3), Mohammadi,A. Sahrakar,M. Yazdani,H (2012) Investigate the effect Information Technology on the availability supply chain and performance of the dairy companies in Fars Province. Technology Management, 3 (8), Rahnavard, F. (2008) effective factors on performance improvement of Iran public sector organizations, Journal of Management, Vol. VIII Wu, S.I., & Liu, S.Y. (2010) The performance measurement perspectives and causal relationship for ISO-certified companies, A case of opto-electronic industry. International Journal of Quality & Reliablity Management 27 (1), Zuckerman, A. (2002) Supply chain management, Axford: Capstone publishing

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