44 ALIGNMENT BETWEEN THE SUPPLY , MANUFACTURING AND DISTRIBUTION STRATEGIES AND THE BUSINESS STRATEGY

the study aims to identify the degree of alignment between the supply, manufacturing and distribution practices on the one hand and the generic business strategies suggested by Porter (1996): differentiation, low cost, focus on differentiation and focus on low cost on the other and to obtain some insights into how these relationships influence business performance. the gestalt and profile deviation (Venkatraman, 1989) approaches were used to identify the relationship between practices and the degrees of alignment in the respective strategy groups. When compared to other strategy groups, the group of companies predominantly devoted to the Focus on Low Cost strategy (49,25%) was found to have: greater consistency in the development of practices between supply, manufacturing and distribution, a high degree of alignment of most of these practices with that strategy, a greater tendency towards achieving better business performance.


INTRODUCTION
the value of studies such as the present is increasingly apparent, since industrial companies are constantly introducing new knowledge and new technologies, of both a technical and managerial nature, which often causes internal misalignment between operations (Smaczny, 2001;Wheelwright, 1984).Misalignment is the result of low synergy between the processes, usually due to the difficulty that leaders encounter in clearly communicating the company's strategy to other levels within the company (Hax & Wilde II, 2001;Luftman, 2000;Papke-Shields & Malhotra, 2001).the likely effect of this is the development of practices that are disconnected from each other, reproducing flaws and imperfections throughout the production process, which can compromise the achievement of objectives and business goals and consequently performance.Strategic align-ment in this context means that the decisions taken within the dimension of each sub-strategy should be mutually consistent and converge with the overall business strategy (Joshi, Kathruia & Porth, 2003;Sun & Hong, 2002).the aim of this paper is to examine to what extent the supply, manufacturing and distribution practices are being developed in a manner coherent with each other and consistent with business strategy, and also attempt to evaluate the extent to which alignment and performance are related in the study sample.
pany's scope of operations, gives rise to four generic strategies -cost leadership, differentiation, focus on low cost and focus on differentiation -which allow the company to achieve above average performance in their respective segment or industrial sector. the hybrid strategy is a real option in companies, mainly in those within industrial supply chains and engaged in world-class manufacturing, which besides being competitive in terms of price also need to be competitive in terms of quality, flexibility, speed and reliability (Harrison, 1998;Hill, 1988).Decisions taken at the level of production and operations strategy in the scope of industrial firms -supply, manufacturing and distribution, are expected to converge with decisions concerning the generic business strategies (Skinner, 1969;1974;Wheelwright, 1984).

The Manufacturing Strategy
the manufacturing strategy reflects how a company intends to compete in the market by making internal choices consistent with their competitive priorities of cost, quality, flexibility, reliability and speed of delivery to achieve global success (Hayes & Wheelwright, 1984;Hill, 1985;Skinner, 1969;Spring & Boaden, 1997).By setting the priority in a competitive dimension, for example, low cost, production goals and action plans should reflect this particular direction (Kim & Arnold, 1996;Neely, 1993;Richardson, taylor & Gordon, 1985;Schroeder, Scudder & Elm, 1989).
In the present study, these four structural aspects of decision-making (Hayes & Wheelwright, 1983) are considered attributes and correspond to the variables related to the manufacturing strategy (Chart 1): Constant Capacity, Specialist Facilities, Flexible High Technology and Vertically Integrated Production.

Manufacturing
Strategy Attributes

Capacity
Capacity is a key determinant in response time to customers.The increase in capacity utilization is directly related to the higher rate of return on capital.Rajagopalan and Yu (2001); Wheelwright (1984) Specialist Facilities Represents a competitive weapon because its structure is dedicated to perform a particular production task, arising from the business strategy and marketing objectives, whose goal is to serve a niche or particular market segment.Griffiths and Margetts (2000); Ketokivi and Jokinen (2006); Skinner (1974); Van Donk and Van Der Vaart (2007); Wheelwright (1984) Flexible High

Technology
The result of combining high technology with process flexibility is to achieve technical accuracy and the ability to execute different product designs.Morita and Flynn (1997) The Supply Strategy the supply strategy involves a set of definitions that depend on the primary decision "make or buy" (De toni, Nassimbeni & tonchia, 1994).Supply-related decisions are still eminently operational in a large number of companies.With the emergence of the supply chain management approach, there was a change of focus in relation to supply activities, which became a strategic area of business performance (Lee, Kwon & Severance, 2007;tan, Kannan & Handfield, 1998;Vaart & Van Donk, 2006) The Distribution Strategy the distribution strategy involves a number of decisions which are intended to determine how the company will serve the market and customers with its products and services (Pagh & Cooper, 1998;Stock & Lambert, 2001;Wanke, 2004).Such decisions must be consistent with the business strategy and the specifications of the client.For this research, four attributes have been listed (Chart 3) for the distribution strategy, two decisions pertaining to the more technical side of logistics -Centralized Distribution and Responsiveness to the Customer, and two belonging to the attitudes-service composite Customer Oriented and Company-Customer Operating Collaboration.

Alignment of Supply, Manufacturing and Distribution with the Business Strategy
Strategic alignment became a focus of study when it was found that companies in which the organizational structures were suitably adjusted to the business strategy performed better than others (Chandler, 1962;Rumelt, 1974).Since then, specific studies have been carried out on the alignment of resources and internal processes with business strategy and competitive advantage (Croteau & Bergeron, 2001;Decoene & Bruggeman, 2006;Defee & Stank, 2005;Edelman, Brush & Manolova, 2005;Scherpereel, 2006;Sussland, 2003;Venkatraman, 1989).
Figure 1 shows the alignment model that guides the following research question: Does having the supply, manufacturing and distribution practices aligned with each other and with the business strategy lead firms to perform better?
Vertical alignment (Figure 1) is achieved when the supply, manufacturing and distribution substrategies are developed in such a way as to reflect the business strategy (Hax & Wilde II 2001;Kathuria, Joshi & Porth, 2007).Horizontal alignment (Figure 1) becomes apparent when the development of a practice within a sub-strategy enables or supports the development of a practice in another sub-strategy, all of which are shaped by a particular business strategy (Venkatraman & Camillus, 1984).Studies have shown that the greater the horizontal and/or vertical alignment within a company the better it tends to perform in relation to its main competitors (Mcadam & Bailie, 2002;Sun & Hong, 2002).Miller & Friesen, 1986).
In Chart 4, the "+" sign suggests that the company should give more emphasis to that aspect of supply, manufacturing or distribution, if it is more directed towards that strategy."Emphasis" means a "heavily biased action" by the company to develop that aspect.the "-" sign suggests that the company should not emphasize this point because it is not theoretically consistent with the scope of the dominant strategy.the symbol "0" means that aspect is irrelevant for the development of that strategy.

Research Methodology
this study is descriptive in nature and culminates in the development of all study employing a survey (Gil, 1999).the survey was conducted among industrial enterprises belonging to the metal-working sector in Caxias do Sul, Brazil.Of the 2,500 companies registered with the SIMECS (Union of Metallurgical, Mechanical and Electrical Material de Caxias do Sul), 500 responded to questions from the questionnaire by telephone.the respondent in each company had to be the company owner, the production manager or the sales/marketing manager.

Scales of the Survey Questionnaire
the questionnaire used to gather the data consisted of 17 variables-attributes for which scales were used containing multiple measurement items, whose scores were then standardized from 0 to 1 and represented the corresponding variable.Some of the scales are original, some adapted and previously validated, and some were developed from the literature review (Charts 1, 2 and 3) and their purpose is to identify the use of strategic practices by companies.For the variables of the business strategy and the attributes of the supply, manufacturing and distribution, the original scales used to collect data were interval of intensity ranging from 1 to 5 where 1 = totally disagree and 5 = totally agree.For the variables of business performance, a scale was used in order to measure the comparative performance of the interviewed company in relation to its major competitors, where 1 = much worse than competitors and 5 = much better than the competitors.

Validation of the Scales in the Survey Questionnaire
the Content validity or expression is meant to subjectively evaluate the degree to which the questions are understood (Hair, Anderson, tatham & Black, 2005).to meet this requirement two verbal comprehension pre-tests were carried out with the first version of the questionnaire.two university professors, one a PhD in Production Engineering and the other a PhD in Administration were involved.Some measuring items were replaced and others were eliminated because they failed to meet the required orthogonality of the remaining items in the same variable.
the unidimensionality of multiple scales for each of the 17 variables and internal reliability of the questionnaire were analyzed using two statistical tests involving pre-exploratory factor analysis with the principal components extraction method.Unidimensionality assumes that the items of the same scale or variable should be strongly associated with each other and represent a single concept (Hair et al., 2005;Malhotra, 2001).the reliability of the scale was assessed using Cronbach's Alpha (Hair et al., 2005).the first statistical pre-test was conducted with 40 students attending an MBA course in Production Strategy.the second statistical pre-test was conducted with 50 companies from within the study population.

Calculating the Alignment in the Research Model
two approaches from Venkatraman (1989) were used to analyze the alignment in the research: Gestalt and the Profile Deviation in relation to the theoretical Profile.
In the Gestalt perspective, the horizontal alignment was evaluated through analysis of the correlation between the attributes-variables of the supply, manufacturing and distribution functional strategies in the specific context of each business strategy while taking into account the constructed theoretical Profiles (Chart 4).
In the Profile Deviation Perspective, the misalignment or Euclidean distance is obtained from the square root of the square of the difference between the score of each variable of the interviewed company for the attributes of the supply, manufacturing and distribution in the context of its dominant business strategy and the ideal theoretical values.the "+" and "-" signs and the symbol "0" that appear in Chart 4 assume, in the misalignment formula, the following numeric values: (+) = 1; (0) = 0.5, (-) = 0. the rate of alignment is obtained by subtracting the score of the theoretical maximum misalignment with that business strategy and the score of misalignment obtained in each respondent company in relation to that same business strategy (Kathuria et al., 2007;Sabherwal & Chan, 2001): Alignment in each company = (Score for the maximum theoretical misalignment) -(Score for the misalignment obtained in each company).
the alignment score is sensitive to the scale used, so the values of the variables were standardized so as to vary in a range from 0 to 1. the misalignment formulas corresponding to the theoretical profiles of the four business strategies presented in Chart 4 are described in the following formulas (1) to (4).In order for all the alignment scores in each respondent company to also vary from 0 to 1, the formulas used to calculate the alignment within the context of each business strategy are presented in sequence from ( 5) to (8).
For the Low Cost Strategy in formula (1), by replacing each variable with maximum values that contrast to the theoretical value in each term of the formula, the theoretical maximum misalignment for the Low Cost Strategy equals 3.46, then, formula (5) for the alignment of each respondent company with the Low Cost Strategy is equal to: (5) (8) A (FC) = 1 -(M (FC) obtained in each company / 3.12) The Research Model Variables the standardized scores of the variable Business Performance represented the dependent variable in the analysis of the vertical alignment (Figure 1) and the standardized scores of the vertical alignments with their respective business strategies -A (LC) , A (D) , A (FD) , A (FC) , represented the independent variables.the standardized scores of the original variables (table 2), the attributes of Supply Strategy, Production Strategy and Distribution Strategy, were also used in order to be interrelated in the analysis of the horizontal alignments.

Statistical Techniques employed in the Analysis of the Research Model
Exploratory factor analysis was used together with Cronbach's alpha to confirm the validity of the scales of the variables and the questionnaire in the field research.Pearson's method of bi-variate correlation was used in the analysis of the horizontal alignments (Gestalt) in which the variables-attributes of the Supply, Production and Distribution and Strategies were related to each other.Multiple Linear Regression was used to establish the relationship among the supply, manufacturing and distribution attributes, and the dependent variable, business strategy.

Final Sample
When sifting the data, cases in which all the items of a variable remained unanswered were excluded, thus negating the variable, likewise in cases with marking problems and bias in the responses.there was no confirmation of outlier cases.the final sample (N) consisted of 400 cases and was shown to be representative of the study population (table 1), since the metal-working sector is previously characterized by a significant predominance of small businesses (SEBRAE, 1999), formed in supply chains and belonging to the metallurgical sub-sector.

Validation of the Scales in the Study Sample
In table 2, it can be seen that, with the exception of "Focus on Differentiation Strategy" all the other variables had Cronbach's alpha scores greater than 0.600, meaning that the items measuring the multiple scales of the variables are sufficiently interrelated to represent such variables.Some variables are also shown to have an explanatory power below 50%, which is the pre-set minimum percentage for the explained variance of each variable.Since none was below 40%, the analysis involving these variables must be carefully examined.the KMO index of all the variables was above 0.600, which is the minimum acceptable value for adequacy of the factor analysis because the study is descriptive in character (Hair et al., 2005;Malhotra, 2001).

Assumption Inherent to the Multivariate Statistical Analysis
Analyses of the statistical assumptions of data normality, linearity between dependent and independent variables, equal variance over the entire domain of the independent variable, low multicollinearity among independent variables (Hair et al., 2005) were conducted with the scores for the variables previously standardized from 0 to 1.

Classification of the companies according to the dominant business strategy
the highest standardized score obtained from among the four variables of strategy was defined as the business strategy of each company.Five classes of business strategy were stratified in the study sample.Class 5 was formed by companies with scores tied in two or more business strategies (Figure 2).In more than 80% of the companies participating in the research the predominant business strategy was found to be that of low cost (LC), Classes 1 and 2. the internal consistency between the strategic supply, manufacturing and distribution practices (dyadic relationships) was assessed in accordance with the Gestalt perspective (Venkatraman, 1989) through bivariate correlation analysis (Figure 3) between the respective original variables.
In this analysis, only the relationships that correlated > 0.300 with a significance level of 0.05 and mutually consistent according to theoretical profile were presented.Based on the results in Figure 3, Class 3, corresponding to companies classified in the Focus on Differentiation Strategy presented the largest number of consistent relationships.
It is worth mentioning that no theoretical profile was developed beforehand for Class 5, More than One Business Strategy, due to the difficulty of faithfully representing ambiguous practices.thus, it was not possible to obtain consistent relations in this class of strategy.Class 4, Differentiation Strategy, shows the highest correlations between practices.Such correlations should be interpreted with caution due to the insufficiency of the sample size.In Figure 3, there is a trend for the relations between practices to be more present in the Supply -Distribution dyad than in the other two dyads, Supply -Production and Production -Distribution.

Vertical Alignment and Business Strategy Relationship
to check the internal consistency of the practices with the prevailing business strategy, linear regression was performed, in which the dependent variable is the business strategy and the independent variables are the functional practices of the supply, manufacturing and distribution strategies.
According to  In Class 1, the Low Cost Strategy, the regression model had a low percentage of explanatory power (9.3%) by the only significant variable, Flexible High Technology (FT) which is not consistent with the theoretical profile of the Low Cost Strategy.
For Class 4, Differentiation Strategy, it was not possible to obtain a regression equation, due to the lack of cases in the sample.For Class 5, More than One Business Strategy, the standardized score of each strategy (LC, FC, D, FD) was taken, one at a time as the dependent variable in linear regression analysis, and none of the attributes of the supply, manufacturing and distribution were found to have a linear combination coefficient with a minimum significance of 0.05 with any business strategy.
Statistical analysis according to the required parameters for significance and representativeness of the samples showed a tendency of the companies that are predominantly directed towards the Focus on Differentiation Strategy and Focus on Low Cost Strategy to have higher internal consistency between the supply, distribution and manufacturing practices and greater consistency among some internal practices for the development of the respective strategies.Standardized scores from 0 to 1 were used for all the independent and dependent variables.
*Multiple linear regressions were not performed due to the insufficient sample size.
-Variables of the model that are consistent with the theoretical profile constructed for this strategy (Chart 4).

Alignment versus Business Performance
the key question is to see which alignments with the theoretical profiles of the business strategies are related to business performance (Figure 1).this analysis was conducted using bivariate correlation with Pearson's correlation coefficient and a significance limit of 0.05 (table 4) between the independent vari-able, the alignment with business strategies (A (LC) , A (FC) , A (D) , A (FD) ) in the total sample and the stratified samples of class of strategy (Figure 2), and the dependent variable of the research model, the business performance.the business performance matched the standardized score of the sub-variables profitability, gross sales revenue, productivity, sales growth and market share.

DiSCUSSioN oF The ReSULTS
Upon analyzing the results, based on the theoretical profiles constructed for each business strategy, it was found that few of the supply, manufacturing and distribution practices contained in this research showed a significant relationship (p ≤ 0.05) with each other with a correlation above 0.500 (Figure 3).this correlation would provide greater reliability in order to assert that a particular practice, when developed in a functional strategy allows the development of another practice in another functional strategy.Functional practices with significant correlations with each other are present in Classes of Low Cost, and Focus on Differentiation Strategies (Figure 3).
the linear regression (

FiNAL ReMARkS
Whereas firms rarely adopt a pure strategy, the results revealed that of the 400 companies in the sample, 96.25% (385 cases) had a dominant Business Strategy, and in the remaining 3.75% (15 cases) there was no single predominant strategy, but the coexistence of two or more strategies developed by the respective companies.In most firms (81.75%) the actions were predominantly directed towards cost, 32.5% for Low Cost and 49.25% for the Focus on Low Cost.Most of these companies, as well as other members of the other classes of business strategy within the metallurgical industry sub-sector, have up to 10 employees and other industrial companies as their main customers (Figure 2).these results corroborate a particular feature of this population -most companies in the metal-working sector in Caxias do Sul are members of large supply chains.

LiMiTATioNS oF The STUDy
the indices involving the alignment are dependent on the theoretical profiles constructed for the Business of Low Cost, Focus on Low Cost, Differentiation and Focus on Differentiation Strategies.Given the subjectivity involved when considering the emphasis attributed to the use of each practice in each Business Strategy (the "+", "_", "0" in Chart 4) and the risk of researcher bias in interpreting the approaches relat-ing to business and functional strategies, there may be failures in the preparation of profiles and consequently the theoretical calculations of alignment.
the sample proved to be representative of the industry and significant in relation to the size, 400 cases, equivalent to 16% of the study population and yet, the analyses of the results are valid for all the studied companies.
theories of RBV (Resource Based View) and TCE (Transaction Costs Economics) whose main reasons for its maintenance are: achieving higher profits, reduced costs, reduced risk of dependence on other firms and absence of a qualified supplier.Ellison (2005); Fine (2000); Hoffmannand Schaper-Rinkel (2001)

Figure 1 :
Figure 1: Alignment in the Research Model Misalignment in the context of the Low Cost (LC) Business Strategy: Misalignment in the context of the Differential (D) Business Strategy: Misalignment in the context of the Focus on Differentiation (FD) Business Strategy: distribution attributes Misalignment in the context of the Focus on Low Cost (FC) Business Strategy: LC) obtained in each company/ 3.46) the formulas for the calculation of alignment with other Business Strategies, by similarity, are presented in (6) (8).Alignment in the context of the Differentiation Business Strategy (D): (6) A (D) = 1 -(M (D) obtained in each company / 3.46) Alignment in the context of the Focus on Differentiation Business Strategy (FD): (7) A (FD) = 1 -(M (FD) obtained in each company / 3) Alignment in the context of the Focus on Low Cost Business Strategy (FC):

Figure
Figure 2: Descriptive Analysis of the Companies classified according to Business Strategies

Figure 3 :
Figure 3: Correlations in the functional dyads within the classes of Business Strategy

III) Attributes of the Supply Strategy
table 3, the variables or attributes Flexible High Technology (FT), Strategic Selection of Suppliers (SS) and Responsiveness to the Customer (RC) were able to explain 39.8% in the dependent variable of Focus on Low Cost Strategy.However, only the variable-attribute

Table 4 : Correlation of the Alignment with the Strategies and the Business Performance
table 3) indicated that the Strategic Selection of Suppliers (SS) practice in supply, the Flexible High Technology (FT) in manufacturing and Responsiveness to the Customer (RC) in distribution had an explanatory power of almost 40% in the Focus on Low Cost Strategy.Likewise, the Vertically Integrated Production (VP) practice in manufacturing, Responsiveness to the Customer (CR) and Customer Oriented (CO) in distribution explained 60.9% in the Focus on Differentiation Strategy.Responsiveness to the Customer (RC) emerged as a common practice which contributes to reaching targets both in the low cost and differentiation strategies.By the way, only in the alignment of the supply, manufacturing and distribution with Focus on Low Cost Strategy there was trend to obtain better performance.