DRIVERS OF SUPPLY CHAIN INTEGRATION · DRIVERS OF SUPPLY CHAIN INTEGRATION: EMPIRICAL EVIDENCE FROM...
Transcript of DRIVERS OF SUPPLY CHAIN INTEGRATION · DRIVERS OF SUPPLY CHAIN INTEGRATION: EMPIRICAL EVIDENCE FROM...
Erl inda Yunus
FORUM KAJIAN PENGEMBANGAN
22 Januari 2013
DRIVERS OF
SUPPLY CHAIN INTEGRATION: EMPIRICAL EVIDENCE FROM INDONESIA
INTRODUCTION
Research gaps and research questions
THEORY DEVELOPMENT
Research model and hypotheses
METHODOLOGY
RESULTS
DISCUSSION
Implications for research
Implications for practice
Limitations and suggestions
Contributions
OUTLINE
INTRODUCTION
The importance of supply chain management practices in
today‟s business ( Lee , 2002 ; Anderson & Narus , 1990 ; Chr i s t opher, 1997 ; S imch i -Lev i e t
a l . 2002) .
0
50
100
150
200
250
300
1991-19931994-1996
1997-19992000-2002
2003-20052006-2008
10 19 42
87
175
255
Figure 1. Total Number of SCM Articles (13 Journals)
Adapted from Jain et al. (2010)
Improved performance (e.g., Droge et al., 2004; Flynn et al., 2010)
Mixed findings (Fabbe-Costes & Jahre, 2008): need a clear definition,
valid measures, and other contextual factors
Drivers of Supply Chain Integration (SCI):
Increasing global competition (Lummus & Vokurka, 1999; Handfield &
Nichols, 1999)
Demand changes, supply uncertainties, technological
changes (Mentzer et al., 2000; Afuah, 2001; Chen & Paulraj, 2004)
Opportunity of new markets (Frohlich & Westbrook, 2002)
Internal motivation?
Supply chain management practices in developing countries?
INTRODUCTION
Research Gaps
RQ1: To what extent do manufacturing firms integrate with
their supply chain members?
RQ2: To what extent firms‟ integration with supply chain
members improve their performance?
RQ3: To what extent do firms‟ external drivers trigger the
integration with supply chain members?
RQ4: To what extent do firms‟ internal drivers trigger the
integration with supply chain members?
INTRODUCTION
Research Questions
Definition of Supply Chain Integration (SCI)
The interrelationship among “the departments, functions, or
business units within the firm that „source‟, „make‟, and „deliver‟
products” and the external relationships “with entities outside the
enterprise, including the network of direct suppliers and their
suppliers and direct customers and their customers” (Rosenzweig, 2003)
Scope of SCI (Naras imhan & K im , 2002 ; Campbe l l & Sankaran , 2005 ; F l ynn e t a l . , 2010 ;
Zhao e t a l . , 2010) :
Internal Integration
Supplier Integration
Customer Integration
A focal firm as an appropriate unit of analysis (F ranke l e t a l . , 2008)
SCI: measures the degree of integration that a focal firm pursues
with its supply chain partners.
THEORY DEVELOPMENT SUPPLY CHAIN INTEGRATION
THEORY DEVELOPMENT RESEARCH FRAMEWORK
External Drivers Supply
Uncertainty
Demand
Uncertainty
Technology
Uncertainty
Supply Chain
Integration
Customer
Integration
Internal
Integration
Supplier
Integration Internal Drivers
Customer
Orientation
Anticipation of
Benefits
Firm
Performance
H2a +
H1a,1b
+
Business
Performance
Operational
Performance
H2b +
H2c +
H3a +
H3b +
METHODOLOGY SAMPLE - INSTRUMENT
Sample Indonesian-based manufacturing firms (2010 Kompas Directory &
PPM Database)
Two informants from each firm
Senior managers in Supply Chain/Logistics > Internal drivers and SCI
Senior managers in Marketing/Finance > External drivers, Firm performance
N=223 out of 813 firms (160 invalid contact info) – 34.15% response rate
Profile
20.6% owner or top management (e.g., CEO) and 48.7% senior managers
34.8% 1-5 years with the company; 26.2% 5-10 years, 30.7% more than 10 years
Instrument Translated into B. Indonesia and back translated into English
External Drivers 5-pt Likert scale (1=“strongly disagree” and 5=“strongly agree”)
Supply Uncertainty (SU)
Demand Uncertainty (DU)
Technology Uncertainty (TU)
4 items
5 items
4 items
Chen and Paulraj (2004)
Internal Drivers (new measure) 5-pt Likert scale (1=“strongly disagree” and 5=“strongly agree”)
Anticipation of Benefits (AB)
Customer Orientation (CO)
5 items
3 items
Lummus & Vokurka, 1999; Frohlich & Westbrook, 2002
Chen & Paulraj, 2004; Kaynak & Hartley, 2008;
Lockström et al., 2010
Supply Chain Integration 5-pt Likert scale (1=“not at all” and 5=“extensive”)
Customer Integration (CI)
Supplier Integration (SI)
Internal Integration (II)
6 items
6 items
8 items
Flynn et al. (2010)
METHODOLOGY INSTRUMENT DEVELOPMENT
Firm Performance 5-pt Likert scale (1=“strongly disagree” and 5=“strongly agree”)
Operational Performance (OP)
Business Performance (BP)
6 items
4 items
Flynn et al. (2010)
DATA
COLLECTIO
N &
ANALYSIS
PROCEDURE
Literature review
& interview with
2 VPs of SCM
Initial Instrument
for Internal
Drivers
Pilot-test using 61
practitioners
Establishing
content validity
Testing for
reliability &
construct validity
Refinement
Data collection
with full
questionnaire
Test for internal
consistency using
Cronbach’s alpha
Test for uni-
dimensionality &
validity using CFA
Testing for
criterion-related
validity
Pre-test with
academicians and
SCM practitioners
Establishing
content validity
METHODOLOGY EXPLORATORY FACTOR ANALYSIS
EFA for the new scale: Internal drivers
RESULTS MEASUREMENT RELATED
RESULTS MEASUREMENT RELATED
Test for normality and multicollinearity
Test for normality using skewness-kurtosis statistics and Histogram
Test for multicollinearity using Tolerance (>.20) and VIF (<4.0)
All VIF values were below 4.0 except for SCI14 (VIF = 5.196) and SCI15 (VIF = 4.735)
Test for non-response bias
Split data: Oct-Dec 2011 (n1=89) and Jan-Feb 2012 (n2=134)
Using simple t-test for all constructs > all values were insignificant, except for Technology Uncertainty and Firm Age constructs
Test for common method variances
Harman‟s single factor test using EFA (Podsakoff et al., 2003):
11 factors explaining 70.85% of the variance (first factor = 23.89%)
CFA (Byrne, 1998; Hu & Bentler, 1999) showed a poor fit
(χ2(1034) = 5102.15, CFI = .77, GFI = .43, normed fit index or NFI = .73,
NNFI = .76, and RMSEA = .160)
RESULTS MEASUREMENT RELATED
Unidimensionality: Goodness-of-fit indices
RELIABILITY
AND
CONVERGENT
VALIDITY
Ext
ern
al d
rive
rs
Inte
rna
l d
rive
rs
Fir
m p
erf
orm
an
ce
RELIABILITY
AND
CONVERGENT
VALIDITY
(contd.)
Supply chain integration
RESULTS MEASUREMENT RELATED
Discriminant validity analysis
RESULTS MEASUREMENT RELATED
Second-order construct analysis for supply chain integration (SCI)
Supply
Chain
Integration
Customer
Integration
Supplier
Integration
Internal
Integration
RESULTS RESEARCH-QUESTION RELATED
1.00
2.00
3.00
4.00
5.00
Customer
Integration
Supplier
Integration
Internal
Integration
3.72 3.63 3.58
3.80 3.67
3.75
RQ1 - The Extent of SCI and a Comparison
223 Indonesia Mfg Firms (2011-2012)
151 Thailand Mfg Firms (Wong et al., 2011)
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Customer Integration Supplier Integration Internal Integration
5.21 5.08 5.02
5.32 5.14
5.25
4.26
3.51
4.05
5.58
4.82
5.43
5.09
4.88
5.47 5.36 5.16
5.49
The Extent of SCI
223 Indonesia Mfg Firms (2011-2012)
151 Thailand Mfg Firms (Wong et al., 2011)
617 China Mfg firms (Flynn et al.,2010; Zhao et al., 2011)
57 US Automotive-Parts Firms (Vickery et al., 2003)
244 Korean Mfg Firms (Narasimhan & Kim, 2002)
379 Japan Mfg Firms (Narasimhan & Kim, 2002)
RESULTS HYPOTHESES TESTING – RQ2-4
Model fit: χ2(487) = 678.49, χ2/df = 1.39, CFI = .97, NFI = .90, GFI = .85, NNFI = .96, RMSEA = .042
Supply
chain
integration
Supply
uncertainty
Demand
uncertainty
Technology
uncertainty
Anticipation
of benefits
Customer
orientation
-1.56
Operational
performance
Business
performance
1.16
6.69**
2.24*
2.83**
Firm
size
Firm
age
Control Variables
2.14* .90
-0.87
0.57
SUMMARY OF RESULTS
External Drivers Supply
Uncertainty
Demand
Uncertainty
Technology
Uncertainty
Supply Chain
Integration
Customer
Integration
Internal
Integration
Supplier
Integration Internal Drivers
Customer
Orientation
Anticipation of
Benefits
Firm
Performance
H2a
H1a,1b
Business
Performance
Operational
Performance
H2b
H2c
H3a
H3b
RESULTS FOLLOW-UP ANALYSIS
Hierarchical regression results for dimensions of SCI
DU
AB
SU
TU
CO
CI
SI
II
DU
AB
SU
TU
CO
CI
SI
II
DU
AB
SU
TU
CO
CI
SI
II
DISCUSSION
The findings supported previous studies related to the posit ive
relat ionship between supply chain integration and f irm performance ( e . g . , D roge e t a l . , 2004 ; F l ynn e t a l . , 2010 ; Germa in e t a l . , 2008 ; Wong e t a l . , 2011)
It investigated SCI in a developing country.
Insignificant external influences on SCI
Indonesia as a moderate-economy growth
2008: Indonesia=28% manufacturing share of GDP; China=34% (WB, 2010).
2000-2008: Indonesia‟s manufacturing sector grew 4.9% annually; China‟s
grew 11.6% annually (WB, 2010).
2011 (est.): Indonesia=3.50% annual industrial production growth;
China=13.90% (The World Factbook, 2011).
Liu et al. (2010): coercive power significantly influenced e-SCM adoption.
Type of industry
DISCUSSION
Follow -up analysis
Demand uncertainty and technology uncertainty induce internal integration
Implications for practice
Through SCI firms could improve their operational and business
performances.
Close collaboration to perform logistics synchronization, information sharing,
incentive alignment, and collective learning.
Internal integration: remove silo mentality, close coordination among units.
DISCUSSION
Limitations and suggestions for future research
Cross-sectional study: SCI practices and performance were measured
at the same time.
Future research: incorporate time lag or use longitudinal study.
Perceptual measure for firm performance: using multiple items and
two informants.
Future research: triangulates results with objective data and different
methods.
The context of the study: manufacturing firms in Indonesia.
Future research: compares and contrasts findings from different countries
and different types of industry.
DISCUSSION
This study brings a different perspective of supply chain
integration as it provides evidence from a developing country.
This study extends the examination of integration
antecedents by investigating firm‟s external and internal
drivers.
This study contributes to the OM literature by providing a
new measure, that is, internal drivers, which was tested and
validated using a rigorous process (Church i l l , 1979 ; Ma lho t ra & G rove r,
1998 ; L i e t a l . , 2005) .
CONTRIBUTIONS
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