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THE INFLUENCE OF SUPPLY CHAIN MANAGEMENT ON
COMPANY OPERATIONAL PERFORMANCE
INTRODUCTION
ARIZONA STATE UNIVERSITY
SCM 502 - OPERATIONS AND SUPPLY CHAIN MANAGEMENT
SPRING 2024
Introduction:
Nowadays, the level of competition in the business world is getting higher and higher.
The high level of change in consumer tastes causes companies to be able to deliver their
products to consumers more effectively and efficiently. In the dynamics of business
competition today, every company manager must be able to implement good supply chain
management. The more sophisticated and advanced civilization today, of course, makes
consumer demand higher for a product offered or sold by the company. Consumer tastes
certainly change with the times. The rapid advancement of science and technology has made
it very easy for consumers to find various information about the products they want. In
terms of choosing, consumers are smart and intelligent in choosing a product or service
offered by a company because previously they have sought information in advance about the
product or service they want.
With the development of the times, supply chain management is now not only
considered a new thing for companies. Lots of companies have implemented supply chain
management in running their business to increase the efficiency and effectiveness of the
company. Of the many companies, not necessarily all of t h e m
able to implement supply chain management properly. The supply chain basically aims to
harmonize consumer demand and supply effectively and efficiently. With the supply chain,
companies can see how the flow of information and product flow management is
developing. According to Simchi Levi (2013), supply chain management is an approach that
is able to streamline the integration of suppliers, manufacturers, warehouses, so that with
supply chain management, goods are produced and distributed in the right quantity, right
location, right time so as to minimize costs incurred and be able to provide satisfaction for
end consumers. Basically, every company will strive to increase productivity, efficiency,
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fast and easy service and continue to create new innovations so that the company remains
superior and can survive in the market.
Furthermore, according to Ariani (2013) the importance of establishing cooperation
with company suppliers if it is well fostered will provide benefits for the company, both in
the long and short term. As is the case when the company is faced with urgent needs, the
supplier will immediately fulfill the request from the company. In this case, it can also
provide benefits for the company, namely when viewed in terms of stable shipping costs, so
this allows the company to be more efficient in saving costs. Companies that are engaged in
manufacturing products, of course, have The goal is to be able to obtain high profits. In this
case, of course, the company will do its best to always improve company performance, work
efficiency, fast and friendly service and make new strategies or innovations so that the
company can still compete competitively. At present, there are many incidents, namely
products or services offered by companies, consumers will look first in terms of price,
quality and speed of service, so that when consumers want to buy products or services,
consumers always want affordable prices and when viewed in terms of quality, have good
quality, this is what will give the company plus points.
In the supply chain management chain, there are several very important aspects, one
of which is retailers or finished goods that will be consumed by the public. At present, the
Bantul area is densely populated so that the increasing competition in retail stores that sell a
variety of needs / needs of the community is very much found everywhere. Current
competition is also getting tougher. This increasingly fierce competition, of course, makes
retail traders in the Bantul area must be able to provide the best service to consumers so that
consumers feel comfortable and when consumers are comfortable, of course, they will return
to the store. When viewed from the retailer's point of view, the application of supply chain
management to retail stores in the Bantul area is very important. What is very important is
the availability of products sold by a company. Consumers will feel satisfied if the goods or
products that It is fulfilled or available in the store. It would be nice if retail stores were able
to find out what items were sold out and there were no more supplies in the warehouse so
that supply chain management was needed. As a manager, the manager should always know
and guarantee the stock availability of goods or products in the warehouse so that all kinds
of products needed / desired by consumers can be fulfilled, of course, things like this are
what makes consumers feel satisfied.
With the implementation of supply chain management in a strategic company, it can
reduce the inventory of goods in the storage warehouse. Inventory is a key asset for the
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company. If a good relationship is established, namely between the company and the
supplier, it will have a big effect on both parties because basically they are interdependent
on each other. In implementing good supply chain management, there are several factors
that influence it such as information sharing, longterm relationships, cooperation and
process integration. If supply chain management is able to be integrated properly, it is able
to produce what is expected or desired by the company so that the needs, desires of
consumers will be fulfilled and operational performance in the company will also be better.
1.1 Literature Review
Previous research conducted by Fitrianto and Sudaryanto (2016) with the title "The
Effect of Supply Chain Management on Outlet Operational Performance" aims to determine
and analyze how the influence of independent variables such as information sharing, long
term relationships, corporation and process integration on the dependent variable, namely
the company's operational performance (Case Study on Mobile Counter Registered at PT.
Mutikom Indonesia Semarang Branch). The population contained in this study were 171
outlets, while the sample used in this study were 120 outlets which are located in the
Semarang area. In this study using multiple linear analysis and data processed using the
SPSS 16 program. The results of this study indicate that information sharing, longterm
relationship, corporation, and process integration have a positive influence on operational
performance in the Semarang area.
Then previous research conducted by Ariani and Dwiyanto (2013) with the title
"Analysis of the Effect of Supply Chain Management on Company Performance" (Case
study on Small and Medium Industries of Processed Food Typical of Padang West
Sumatra). This study used 100 samples from two industries, namely: small industries and
medium industries using as many as 736 existing populations, as well as in the analysis of
the effect of supply chain management on company performance. This sampling used simple
random sampling technique and data collection using a questionnaire. In this study using
multiple linear analysis and data processed using the SPSS program. Furthermore, the results
of the research conducted show that information sharing, longterm relationship,
corporation, and process integration have a positive influence on company performance.
Furthermore, research conducted by Suharto and Devie (2013) entitled "Analysis of
the Effect of Supply Chain Management on Competitive Advantage and Company
Performance". This study aims to determine whether there is a significant influence between
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supply chain management on the competitive advantages and performance of manufacturing
companies in the Surabaya area. In this study, supply chain management variables are
measured from several indicators such as price, quality, delivery, dependability, product
innovation and time to market. While the company performance variable can be measured
using two indicators, namely financial performance and company operational performance.
Then, the technique in collecting data was carried out, namely by distributing questionnaires
and using respondents who were sampled as many as 90 company managers. This study uses
structural equantion modeling using partial least square. The results of the research
conducted show that this study succeeded in proving the existence of a significant
relationship between supply chain management on the financial performance of the company.
competitive advantage and firm performance and competitive advantage to firm
performance.
In previous research conducted by Rahmasari (2013) entitled "The Effect of Supply
Chain on Company Performance and Competitive Advantage Case Studies in Creative
Industries in Central Java Province". This study aims to determine the significant influence
between supply chain management on company performance and competitive advantage. In
conducting this research, the technique used in sampling is purposive sampling of a total of
105 creative industry companies in the Central Java region. Then, in conducting data
analysis, namely by using the AMOS 5 program. The results of this study indicate that
supply chain management has a positive influence and has a significant effect on company
performance and competitive advantage.
Furthermore, research conducted by Maddepunggeng (2017) entitled "The Effect of
Supply Chain Management on Competitiveness and Performance of Construction Services
Companies in DKI Jakarta". This study aims to determine the effect of competitiveness to
improve company performance. Then, in data analysis using the AMOS V21 program that
has been collected from 133 people (both consisting of managers and employees). Then, this
study developed a 3-dimensional concept, namely supply chain management (material,
financial, information), company competitiveness (price, cost, quality) and company
performance (internal, external), and market situation). The results of this study were able to
show that supply chain management has a positive impact and causes increased
competitiveness and company performance.
Previous research conducted by Lia Anatan (2010) entitled "The Effect of
Implementation of Supply Chain Management Practices on Supply Chain Performance and
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Competitive Advantage". This study aims to determine the effect of supply chain
management practices on competitive advantage and supply chain performance. Then, this
study uses indicators of strategic supplier partnerships, relationships with consumers, level
of information sharing, quality information and postponement. This study uses a sample
method of manufacturing companies with the criteria of having a large scale, engaged in
automotive, machinery, electronics, and computers. This study uses primary data obtained
from distributing questionnaires. Furthermore, in analyzing the data, namely by using the
simple regression test. Furthermore, the results of this study show that supply chain
management practices have an influence in improving supply chain management
performance.
Furthermore, previous research conducted by Yongki Kristianto Pratama (2015)
entitled "Analysis of the Effect of Supply Chain Management on Competitive Advantage
and Performance of Manufacturing Companies in East Java". This study aims to analyze the
effect of supply chain management on competitive advantage and performance companies in
Manufacturing companies in East Java. Supply chain management variables are measured by
indicators of strategic supplier partnership, customer relationship and information sharing.
Competitive advantage with indicators of price, quality, delivery, dependability, product
innovation and time to market. And company performance is measured by indicators of
financial performance and operational performance. The method used in this study is
quantitative by distributing questionnaires with a sample of managers working in
manufacturing companies in East Java as many as 116 respondents. Hypothesis testing and
data using structural equation modeling (SEM) with AMOS V21 software. The results of
this study are supply chain management has a positive effect on competitive advantage.
Supply chain management has a positive and significant effect on company performance.
And competitive advantage has a positive and significant effect on company performance.
Furthermore, previous research conducted by Ratih Nurdianti (2017) entitled
"Analysis of the Effect of Supply Chain Management Practices on Competitive Advantage
and Organizational Performance in Handicraft and Bag MSMEs in Semarang". This study
aims to determine how the influence between SCM practice variables, competitive
advantage and organizational performance on Handicraft and Bag MSMEs in Semarang.
The method used in this research is primary data through filling out questionnaires, with 52
respondents from Handycraft MSMEs in Semarang. Hypothesis testing is processed using
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SEM-PLS (Structural Equation Modeling-Partial Least Square) with SmartPLS 3 software.
The results of this study indicate a significant positive influence between supply chain
management practices on organizational performance and competitive advantage.
1.2 Theoretical Foundation
1.2.1 Supply Chain Management
Supply chain management or commonly referred to as supply chain management is a
series of activities required by companies to plan, control, and carry out the flow of
production of goods / services. In this case, it includes the process of obtaining raw
materials, the production process of goods, and finally the distribution of products to end
consumers.
Supply chain management can also be interpreted as an organizational network related
to the relationship of companies from upstream to downstream, using different processes
and being able to produce value in the form of goods or services that will be offered to end
consumers. The importance of the role of all parties ranging from suppliers, manufacturers,
distributors, retailers and customers in creating a product that has a low price, good quality
and fast, this is what later became the birth of the concept of supply chain management
(Pujawan and Mahendrawati, 2010).
According to Indajit and Djokopranoto (2005), the term supply chain management
was first used by several logistics consultants. around the 1980s, then by academics further
analyzed in the 1990s, so that the concept of supply chain management was born.
1.2.2 Key Components of Supply Chain Management
According to Turban Rainer and Porter (in Ariani, 2013), there are three (3) kinds of
flows in supply chain management that must be managed, namely:
1. Upstream supply chain
In terms of transferring goods, upstream supply chain management takes care of the
relationship between companies and vendors or other parties. So, goods or products
produced by a company do not go directly to the hands of consumers but are channeled first
to third parties or other distributors. An example is: a company that produces speakers.
These speaker products do not go directly to the hands of consumers, but there are other
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parties who will channel and send their products to suppliers.
2. Downstream supply chain
Management that has the task of taking care of the transfer of goods from the company
directly to the consumer, namely the downstream supply chain (directly purchased by
consumers). An example is a furniture company, they produce goods according to the
wishes of consumers.
3. Internal Supply Chain
Internal supply chain management is related to all activities of entering goods. What
must be considered in this case are: production management, manufacturing and raw
material availability control.
1.2.3 Supply Chain Management Activities and Functions
According to Heizer and Render (2010), supply chain management has several
activities in determining: transportation with vendors, accounts payable, warehousing and
existing inventory levels, order fulfillment and sharing information about customers,
prediction and production of goods. The above activities, of course, cannot be separated
from the functions of supply chain management which were previously stated by Klapper et.
al (in Rahmasari, 2010) suggesting that there are four functions of supply chain
management:
1. Planning
A process that balances demand and supply to establish the best course of action that
meets established business rules.
2. Source
The process of procuring goods and services to meet planned or actual needs.
3. Create
The process that transforms goods to the completion stage to immediately fulfill
planned or actual needs.
4. Shipping
Processes that provide finished goods and services, including order management,
transportation management and warehouse management to meet planned or actual
needs.
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1.2.4 Supply Chain Management Process
According to Indrajit and Djokopranoto (2003) in the supply chain there are several
main players who are companies that have an interest in the flow of goods, the main players
are:
1. Supplier
2. Manufacturer
3. Distributor
4. Retail outlets
5. Customers
The chain process that occurs between the main players is as follows:
Chain 1: Supplier
The network that starts from here, is the source that provides the first material,
where the chain of goods distribution will begin. This first material can be in the form of
auxiliary materials, merchandise, spare parts and so on. This first source is called a supplier.
The number of suppliers can be many or few.
Chain 1-2: Supplier - Manufacturer
The first chain is linked to the second chain, which is the manufacturer or other form
that does the work of making, fabricating, assembling, converting, or finishing the goods.
This relationship with the first chain has the potential to make savings. For example, the
inventory of raw materials, semi-finished materials and finished materials at suppliers,
manufacturers and transit points is a target for savings. It is not uncommon for savings of
40-60% or more to be obtained from inventory carrying costs in this chain.
Chain 1-2-3: Supplier - Manufacture - Distributor
The finished goods produced by the manufacturer can be distributed to customers.
Generally, the goods are channeled through distributors and this is usually pursued by most
of the supply chain. Goods from the factory through its warehouse are distributed to the
distributor's warehouse or trader in large quantities so that in time the wholesaler distributes
in smaller quantities to retailers or retailers.
Chain 1-2-3-4: Supplier - Manufacture - Distributor - Retail Outlet
Wholesalers usually have their own building facilities or can also rent buildings from
other parties. Basically, this warehouse is used to stockpile goods before they are distributed
to retailers. In this case, there is an opportunity to obtain savings in the form of the amount
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of inventory and warehouse costs by redesigning the delivery patterns of goods from both the
manufacturer's warehouse and retailers or retailers.
Chain 1-2-3-4-5: Supplier - Manufacture - Distributor - Retail Outlet - Customer
From their shelves, retailers offer their goods directly to customers, buyers or users
of these goods. Outlets include shops, stalls, department stores, supermarkets or
cooperatives where consumers make purchases. Although physically this can be said to be
the last link in the chain, but actually there is still one more link name, namely the buyer,
because basically the buyer is not necessarily the end user. The supply chain only really
stops after the goods in question arrive at the real customer and real user.
According to Pearce and Robinson in Mayasari (2008), the industry needs a good
strategy and in accordance with the company in order to survive in the market, able to face
competition and existing threats and market opportunities. The industry must also be able to
have a supply chain management strategy to be able to direct the course of the company's
goals to be achieved so as to improve company performance. Actually, there are many
factors that affect the performance of supply chain management in companies, including
information sharing, longterm relationships, cooperation and process integration.
According to Rahadi (2012), companies in implementing supply chain management
basically aim to increase the competitiveness of the company by realizing it in improving the
company's operational performance. Information sharing is a very important element in
supply chain management, with transparent and accurate information sharing, it can
accelerate the supply chain process starting from suppliers to consumers. Longterm
relationship will basically be created if there is a continuous relationship between all parties
involved in supply chain management and with good cooperation or cooperation will
certainly mutually benefit all parties involved. Then the last is process integration which is
the overall incorporation of all activities in supply chain management so that all activities
can run well and smoothly. The following is an explanation for more details:
1. Information Sharing
Information sharing is the intensity and capacity of the company in its interactions to
share information with partners related to the company.
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joint business strategy (Ariani, 2013). According to Gordon B. Davis (1991: 28),
information is data that has been processed into a form that is meaningful to the recipient
and useful for current or future decision making. Therefore, information is used as a basis
for decision making which must be obtained at the right time, quickly and in good quantity.
Basically, information is the basis of supply chain implementation. Information sharing can
help companies improve the efficiency and effectiveness of the supply chain. Information
sharing is also an important factor in achieving effective coordination in the supply chain
and is used as a controller along the supply chain.
Information must have several characteristics to be useful in supply chain decision
making (Chopra and Meindl: 2010), such as:
1. Accurate. Information must basically describe the actual conditions so that managers can
make good decisions. There is always the possibility that the information contains errors.
2. Appropriate. In this case, the company must really consider what information is needed so
that the company does not waste resources on the right information collecting, storing and
maintaining information that is not actually needed.
3. Accessible when needed. It often happens that the information needed is actually there, but it
is not accessible when needed, so it cannot help in decision-making.
Basically, the success of this supply chain is highly dependent on the information
system, if the information obtained is not appropriate, of course, it causes failure in the
supply chain. The absence or lack of coordination in the supply chain also causes
information distortion or the so-called bullwhip effect phenomenon (Ariani, 2013). Bullwhip
effect is defined as an increase in demand variability that occurs at each level of the supply
chain as a result of information distortion.
Inaccurate information or distorted information at every level of the supply chain from
bottom to top can cause several important problems (Susilo, 2008), including:
1. Excessive inventory
2. Loss of income
3. Decreased level of customer satisfaction
4. Ineffective delivery
5. Errors in production scheduling
6. Inefficient use of resources
2. Longterm Relationship
Currently, the growing globalization and rapid technological development and the
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current unpredictable economic situation is one of the factors that encourage companies to
come up with a concept of long-term relationships with suppliers. Of course, this long-term
relationship can be realized through a good adaptation process, especially in the process and
products, increasing compatibility with each other, information sharing and reducing
sources of uncertainty (Bujang, 2007).
This long-term relationship basically has advantages such as if the company stays with
the supplier, the supplier will understand more about consumer desires so that this forms a
strength, namely a competitive advantage in the long run. Long-term relationships are also
able to provide opportunities for consumers to engage with suppliers in a continuous
improvement process. For example, to improve the products and services provided. This can
be achieved through product development and process development.
The company's relationship with suppliers is one of the most powerful collaborations
in the context of the value chain or supply chain. Here, suppliers play a role in providing
materials or materials to be used or sold by the company. In principle, the ultimate goal of
this long-term relationship is to obtain continuous profitability of the company and the
creation of a mutually beneficial relationship between the two parties that is sustainable and
consistent.
According to Ganesan in Indriani, defining long-term relationships as the perception of
the buyer's interdependence on suppliers, either in the context of products or relationships
that are expected to provide benefits to buyers in the long term. Basically, the relationship
between suppliers, customers and companies must be managed properly and must always be
improved so that a sustainable relationship is established.
3. Cooperation
Indrajit and Djokopranoto (2002) say that cooperation is a very good alternative in
conducting optimal supply chain management. One of the reasons is that organizations or
companies that are in the supply chain management network, of course, require an accurate,
smooth information system and require the trust of participants in the procurement of goods
and services. All of this will not be achieved if there is no good cooperation. Effective
cooperation is of course a desire to develop relationships that will generate trust and
commitment. Businesses and suppliers must know how such cooperation can be developed
and sustained to create a long-term and satisfying collaborative relationship.
Ariani (2013), cooperation is a very good alternative in carrying out optimal supply
chain management, because companies that are in the supply chain management network
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certainly really need an accurate information system and need trust in the procurement of
goods and services. Basically, all of this will not be achieved if there is no good cooperation
within the company and outside the company. There are several principles of cooperation
that must be held and developed continuously by the company, namely:
a. Believes in having a common goal
b. Must be mutually beneficial
c. There must be mutual trust
d. Be open
e. Able to establish long-term relationships
f. Always make improvements in the quality and cost of goods or services
Cooperation is a situation where there are several parties working together to achieve
goals that can benefit all parties. Cooperation will be effective if there is trust and
commitment. The importance of cooperation with suppliers are increasingly realized by the
company. Such as when there is a condition where the company needs an urgent shipment of
raw materials / goods, the supplier will certainly immediately send the raw materials / goods
when there is stock because a good relationship has been established so far. The
establishment of company cooperation with reliable suppliers, of course, is expected to be
able to produce a good understanding of the needs and needs of each party (Ariani, 2016).
4. Process Integration
Supply chain management aims to integrate all major business processes in the
company starting from upstreams and downstreams even to the end user. According to
Miguel and Brito (2011), the integration process is to consider the organizational aspects
that will work together to create a sustainable and efficient flow of materials and resources.
In the supply chain, integration shows a complex process of cooperation between
companies, suppliers and buyers if managed properly can increase efficiency in company
operations and can increase profits for the company and can provide satisfaction for all
parties (Fitrianto, 2016). There are three issues related to the development of supply chain
integration efficiency, namely:
a. Local optimization
Supply chain members will focus on local or limited knowledge-based profit maximization.
b. Incentives
Incentives encourage trading within the sales chain that did not previously occur. This leads
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to fluctuations which in turn become expensive. These incentives take the form of sales
incentives, discounts, quotas and promotions.
c. Large lots
In this case there is often a bias towards large lots because it tends to reduce the cost per
unit. On the one hand, shipping in large quantities such as full truck sizes will reduce the cost
per unit, but does not reflect the actual sales value.
The three issues above usually contribute to the emergence of distorted information
about what is actually happening in the supply chain. Therefore, there is a need for an
accurate system of how many products are pulled through the supply chain. As a manager
who leads the process of supply chain integration, efficiency is certainly a possible
substance. Materials that come from suppliers, then go to the production process, then go to
warehousing, and then go to distribution that in the end will go to consumers with different
placements and often associated with independent organizations. Therefore, in order for
everything to be successful, it starts by paying attention to three things, namely:
1. Mutual agreement on goals, a supply chain integration requires more than an agreement
in a contractual buying and selling relationship but partners must be appreciated not
only with money but on the supply chain to the end consumer. This can be realized if
there is an understanding of the mission, goals and strategies of the participating
companies, because supply chain integration is something to add economic value and
maximize total product content.
2. Trust
Members of each supply chain must enter into relationships that share information in
order to build trust between each member of the supply chain. Without a sense of trust,
of course, supply chain management will not run well. The relationship can be said to
be successful if it is able to minimize risk and is able to create cost savings.
3. Compatible organizational cultures
An equal organizational culture will make the relationship positive between buying and
offering when this happens.
According to Becker, Hamidin, and Surendro (2010), there are four types of
integration introduced by Noord, namely:
1. Physical integration, refers to changes in processes and activities to improve efficiency in
core processes.
2. Information integration, refers to the exchange of information related to inventory levels,
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transportation or manufacturing planning, forecasting and so on.
3. Coordination integration, refers to the alignment of decision-making processes in the
supply chain.
4. Supply chain design integration, refers to cooperation in the change of supply chain
structure.
5. Company Operational Performance
Performance is the periodic determination of the operational effectiveness of the
organization, parts of the organization and its employees based on predetermined goals,
standards and criteria (Srimindarti, 2006).
According to Ariani (2013), performance is something that can be produced by the
company during a certain period with reference to predetermined standards.
1. Assessment of the Company's Operational Performance
In assessing the company's operational performance, it can be measured based on
certain standards. According to Mukti, et.al., (2013), states that operational performance
includes productivity, product error rates, warranty costs, quality costs and the level of
product storage to reach consumers in a timely manner. In order for this to be achieved, a good
performance appraisal system is needed, including:
a. Organizational activities and emphasis on improving the customer perspective
b. Assess each activity using customer-oriented performance measurement tools.
c. Consider all aspects of overall performance that can influence consumers
d. Provide feedback information to help recognize problems and make continuous
improvements (Rahadi, 2012).
1.2.5 Relationship between Supply Chain and Company Operational Performance
The relationship that occurs between supply chain management and operational
performance is direct and indirect. If healthy supply chain management is created, it can
make operational performance better. Implementation of integrated supply chain
management can improve product quality and service to consumers. The company's
operational performance refers to how well a company is market-oriented and goal-oriented
financial. Decreasing the performance of supply chain management in the company, then
causing operational performance will also decline. Basically, this supply chain management
has a very significant influence on the company's operational performance.
1.3 Framework of Thought
According to Heizer and Render (2010), supply chain management is the integration
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of the activities of procuring materials and services, converting semi-finished goods into
finished goods and final products and shipping them to consumers.
1) Information Sharing on Company Operational Performance
Information sharing in the company relates to companies sharing information with
partners related to jointly owned business strategies. This information sharing also allows
supply chain members to be able to maintain, obtain and convey accurate and necessary
information so that decision making becomes more effective. The description of this
variable can be measured from the main elements of information sharing, namely: efficient
sharing of continuous information on financial, product, distribution and performance
aspects. This information sharing has a positive and significant effect on company
performance (Ariani, 2013).
2) Longterm Relationship to Company Operational Performance
Longterm relationship in the company, namely the relationship between the company
and suppliers and employees who are able to make the company's long-term relationship
with suppliers. Strong collaboration in the context of the value chain or supply chain. In this
case, long-term relationships between owners and employees within the scope can be
measured by communication, loyalty and trust. This long-term relationship has a positive
and significant effect on company performance (Rahmasari, 2011).
3) Cooperation on Company Operational Performance
Cooperation is an action taken by the company in a collaborative and interdependent
relationship to be able to achieve the expected joint results continuously. To get good
performance through a collaboration between the two parties is absolutely necessary.
Cooperation is one of the best alternatives in carrying out optimal supply chain
management, it is certain that companies need an accurate, smooth information system and
trust between participants in the procurement of goods and services. All of this will certainly
not be achieved if there is no good cooperation from both parties. The description of this
variable can be measured from the main elements of cooperation or cooperation, namely
discussing sales planning and forecasting, cooperation is determined based on objective
conditions, increasing sustainable relationships (Madepunggeng, 2017). In this study,
cooperation has a positive impact on increasing company performance.
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4) Process Integration on Company Operational Performance
Basically, the integration process in a complex supply chain management between
companies and suppliers and buyers if managed properly, it can increase efficiency in
company operations and this can also increase company revenue and all parties who feel
satisfaction. An integration must be achieved for organizations or companies that are in the
supply chain management network and all links in the procurement of goods. The
standardization that occurs in the integration process makes integration must be
characterized as cooperation, collaboration, information sharing, trust, partnership,
technology sharing, compatibility, sharing risks and benefits, commitment and the same
vision (Hamidin and Surendo, 2010). The description of this variable can be measured from
distribution, inventory, transportation and material flow. In this study, the integration
process has a positive influence on the company's operational performance (Fitrianto, 2016).
1.4 Research Hypothesis
A hypothesis is a temporary answer or conjecture. The hypothesis is a temporary
conclusion which will still be tested and there must be evidence of its truth. Therefore, from
the description above, the hypothesis test can be found as follows:
H1: Information sharing affects the company's operational performance H2: Longterm
relationships affect the company's operational performance H3: Coorporation affects the
company's operational performance
H4: Integration Process affects the company's operational performance
4.1.1 Coefficient of Determination Analysis
Based on the multiple linear regression analysis mentioned, the coefficient of
determination (R2 ) is 0.487. This means that it shows that the independent variables
together affect the dependent variable by 48.7%, the remaining 51.3% is influenced by other
variables not included in the research model.
4.1.2 The Effect of Information Sharing on Company Operational Performance
The results of hypothesis testing prove that the information sharing variable has no
significant effect on the company's operational performance. The results obtained can be
seen in table 4.18 which shows the results of the pvalue of 0.510 which means 0.510> 0.05.
The results of this study are inversely proportional to previous research which is conducted
by Ariani and Dwiyanto (2013) where information sharing has a positive influence on the
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company's operational performance. Research conducted by Ariani and Dwiyanto (2013)
shows that information sharing significantly affects the company's operational performance
because information sharing is the intensity and capacity of the company in its interactions
with suppliers and employees to share information related to joint business strategies. This
information sharing can also help companies improve the efficiency and effectiveness of the
supply chain and is a very important factor in achieving effective coordination in the supply
chain. Meanwhile, research conducted at retail traders in the Bantul area shows that
information sharing has a negative and insignificant effect on the company's operational
performance because it still has a low assessment by employees or shop owners. Some of
the assessments that are considered low by employees or shop owners include an assessment
of the continuous formal exchange of information to warehouse employees with an average
assessment of 3.54. In addition, the assessment of the company always cooperating with
business partners in informing them of circumstances or changes that might affect their
business has an average rating of 3.76. Finally, the assessment of information sharing with
employees regarding performance aspects has an average assessment of 3.93. Conclusions
that can be drawn From this research, namely the lack of clarity of information in
information sharing between suppliers and company employees regarding the availability of
existing goods. The quality of information sharing is also very necessary in determining
strategies along the supply chain.
4.1.3 The Effect of Longterm Relationship on Company Operational Performance
The results of hypothesis testing prove that the longterm relationship variable has a
positive and significant effect on the company's operational performance. The results
obtained can be seen in table 4.18 which shows the results of the pvalue of 0.002 which
means 0.002 <0.002 <0.002>. 0.05. The results of this study are supported by research
conducted by Fitrianto and Sudaryanto (2016) where longterm relationships have a positive
and significant effect on the company's operational performance. Basically, the relationship
that exists between suppliers, customers and companies must be managed properly and
always improved so that the relationship can be established on an ongoing basis so as to
produce good product quality.
Triastity R in Rachbini (2016) has the principles of longterm relationship
management with the ultimate goal to be achieved, namely obtaining the company's
probability continuously through a longterm relationship that benefits both parties so as to
create a consistent and sustainable longterm relationship The element of trust is also a very
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important factor for success in establishing a good longterm relationship. This good
relationship will be created if there is a sense of trust between each party involved.
Furthermore, there is another element in achieving the success of a longterm relationship,
namely a commitment. Commitment is the belief of one party that fostering good
relationships with suppliers and customers is very important and greatly affects the survival
of the company (Morgan and Hunt in Bernard, 2011).
4.1.4 The Effect of Cooperation on Company Operational Performance
The results of hypothesis testing prove that the cooperation variable has a positive
and significant effect on the company's operational performance. The results obtained can be
seen in table 4.18 which shows the results of the pvalue of 0.009 which means 0.009 <0.05.
The results of this study are supported by research conducted by Fitrianto (2016) and Ariani
(2013) where cooperation has a positive and significant effect on the company's operational
performance.
Cempakasari and Yoestrini in Fitrianto (2016) state that with good cooperation with
suppliers and employees, it is expected to be able to produce good understanding and
understanding of the needs of each party involved so as to increase the profitability of the
company itself. When a company has a sense of trust in partners The company will view
this cooperation relationship as an asset, strategy and tool for the company to strengthen its
competitive ability. Cooperation will not work if there is no trust and commitment. Suppliers
need to know how the cooperation is developed so that there is a long-term collaborative
relationship that can satisfy each party.
Nowadays, companies are increasingly realizing the importance of cooperation with
suppliers and company employees. This cooperation is not only for short-term interests, but
also for long-term interests. With good cooperation between the company and suppliers and
employees, it is able to obtain many benefits from long-term and short-term cooperation. In
the relationship with suppliers, if a good relationship is created, the supplier will also
provide benefits at a delivery cost that is always stable so that this can reduce and reduce
costs to be more efficient (Rahardian, 2011).
4.1.5 The Effect of Process Integration on Company Operational Performance
The results of hypothesis testing prove that the process integration variable has a
positive and significant effect on the company's operational performance. The results
obtained can be seen in table 4.18 which shows the results of the pvalue of 0.011 which
means 0.011 <0.011> 0.05. The results of this study are supported by research conducted by
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Ariani (2013) and Fitrianto (2016) which proves that process integration has a positive and
significant effect on the company's operational performance.
Integration can basically improve relationships throughout the value chain, facilitate
decision making, create value and the process of delivering goods from suppliers to end
users which is very useful in operational systems for the flow of information, knowledge,
equipment and physical assets (Hamidin and Surendo, 2010). Process integration in supply
chain management is a process of cooperation between companies with suppliers and
customers which, if managed properly, can increase efficiency in terms of company
operations and can provide satisfaction for all parties involved (Consineau etal in Setiawan
and Rahardian, 2005).
5.1 Conclusion
Based on the results of the hypothesis testing above, the conclusions of this study are:
a. The results of hypothesis testing prove that information sharing has a negative and
insignificant effect on the company's operational performance. The results of data
analysis obtained a regression coefficient value of -
0.073 and a pvalue of 0.510, which means that the result is not significant because the
pvalue (0.510) > 0.05.
b. The results of hypothesis testing prove that longterm relationships have a positive and
significant effect on the company's operational performance. The results of data analysis
obtained a regression coefficient value of 0.555 and a pvalue of 0.002, which means that
these results are significant because the pvalue (0.002) <0.05.
c. The results of hypothesis testing prove that cooperation has a positive and significant
influence on the company's operational performance. The results of data analysis
obtained a regression coefficient of 0.594 and a pvalue of
0.009, which means that the result is significant because the pvalue (0.009) <0.05.
d. The results of hypothesis testing prove that process integration has a positive and
significant effect on the company's operational performance. The results of data analysis
obtained a regression coefficient of 0.591 and a pvalue of 0.011, which means that the result
is significant because the pvalue (0.011) <0.05.
