E rl i nda Yunus
FORUM K A J IA N P E NGE MB A NGA N 22 J anuari 2013
DRIVERS OF
SUPPLY CHAIN INTEGRATION:
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
INTRODUCTION
The importance of supply chain management practices in
today‟s business
(Lee, 2002; Anderson & Narus , 1990; Christopher, 1997; Simchi -Levi et al. 2002). 0 50 100 150 200 250 300 1991-1993 1994-1996 1997-1999 2000-2002 2003-2005 2006-2008 10 19 42 87 175 255Figure 1. Total Number of SCM Articles (13 Journals)
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
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
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
(Narasimhan & Kim, 2002; Campbell & Sankaran, 2005; Flynn et al., 2010; Zhao et al., 2010): Internal Integration
Supplier Integration
Customer Integration
A focal firm as an appropriate unit of analysis
(Frankel et al., 2008) SCI: measures the degree of integration that a focal firm pursues
with its supply chain partners.
THEORY DEVELOPMENT
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
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
D ATA C OLLE CTIO N & A N A LYS IS P R OCEDURE 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
RESULTS
RESULTS
MEASUREMENT RELATED
Te
st 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,
RESULTS
MEASUREMENT RELATED
R ELIABILITY A N D C ON VERGENT VA LIDITY Ext er nal d ri ver s Int er nal dri ver s Firm pe rf ormance
R ELIABILITY A N D
C ON VERGENT VA LIDITY
(contd.)
RESULTS
MEASUREMENT RELATED
RESULTS
MEASUREMENT RELATED
Second-order construct analysis for supply chain integration (SCI)
Supply Chain Integration Customer Integration Supplier Integration Internal Integration
RESULTS
1.00 2.00 3.00 4.00 5.00 Customer
Integration IntegrationSupplier IntegrationInternal
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 H3bRESULTS
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
The findings supported previous studies related to the positive
relationship between supply chain integration and firm performance
(e.g., Droge et al., 2004; Flynn et al., 2010; Germain et al., 2008; Wong et al., 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
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.
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 (Churchill, 1979; Malhotra & G rover, 1998; Li et al., 2005).
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