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Advances in Social Sciences Research Journal – Vol.7, No.7
Publication Date: July 25, 2020
DOI:10.14738/assrj.77.8710.
Hakim, M. A., Maulina, E., & Purnomo, M. (2020). Supply Chain Integration In Fashion Industry, Bandung City. Advances in Social
Sciences Research Journal, 7(7) 619-629.
Supply Chain Integration In Fashion Industry, Bandung City
Marsha Aulia Hakim
Department of Business Administration,
Universitas Padjadjaran, Bandung, Indonesia
Erna Maulina
Department of Business Administration,
Universitas Padjadjaran, Bandung, Indonesia
Margo Purnomo
Department of Business Administration,
Universitas Padjadjaran, Bandung, Indonesia
ABSTRACT
The Fashion Industry in Indonesia is one of the industries with the most
businesses. This makes this industry have a high level of competition.
The higher level of competition will require a good flow of information
in each supply chain. Each stage in the supply chain is an important
aspect, especially in terms of distribution of both goods and
information. The implementation of supply chain integration will help
businesses to collaborate throughout the supply chain. The greater
number of distribution channels both in downstream and upstream
each business will need supply chain integration. This research will be
conducted with descriptive analysis and qualitative methods.
Researchers will conduct interviews directly to businesses in the
fashion industry, especially who made their own products. The results
of this research is the supply chain integration carried out at the
upstream part of the supply chain, the business actors are still very
competitive with other business actors because the raw material taken
is not much so they are not immediately given a specialization by the
supplier. Whereas in the downstream part of the supply chain,
businesses have various promotions carried out new customers.
Keywords: fashion industry, supply chain integration, upstream,
downstream.
INTRODUCTION
Bandung was chosen to be one of the creative cities by creative city network, UNESCO (United
Nations Educational, Scientific and Cultural Organization) in 2015. As one of the creative cities that
were chosen because of the design that was built around the city can solve various urban issue and
it made the creative industry livelier. Based on Statistik (2017), West Java has 16 sectors that
actively involved in the creative industry. There are two biggest sectors with the most numbers of
businesses which are culinary and fashion. There are 17.77% of industry creative are filled by the
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Hakim, M. A., Maulina, E., & Purnomo, M. (2020). Supply Chain Integration In Fashion Industry, Bandung City. Advances in Social Sciences Research Journal,
7(7) 619-629.
fashion industry in west java (1). This is the second most numbers of business in this field and
mostly this industry growing fast in Bandung City. At 2017, 52.78% of industry creative are filled
with the fashion industry in Bandung City (2). The big number of this sector businesses made
Bandung known as their fashion industry and many tourists came to Bandung to buy the fashion
items.
The more well-known Bandung as a city that has many business players in the fashion industry, it
made the competition between businesses will not be avoided. The competition is not only between
the domestic actor. But also, they have to compete with the international actors who likely to import
their product to Bandung. This makes the businesses required to develop their innovation and
creativity so they can survive and achieving their competitive advantage. The process itself to
achieve a competitive advantage, every business needs to know their own upstream and
downstream. Every aspect of upstream and downstream will be flowed by much key information
that will be needed for the business. This upstream and downstream can be studied in the supply
chain. The supply chain is a network between companies that work together to create and deliver
the products and services produced to end-users (3).
Supply Chain will help every flow in the business to work well in every circumstance and also an
added value to the business. If the business succeeds to achieve their goals which is a competitive
advantage. On the other hand, the problem that happened with the businesses is the high of
operational cost. This will make the business suffer some lost or the goal cannot be achieved. That
is why the supply chain can be helpful for this kind of problem when the business needs to make
efficiency. The efficiency can be happened by increasing the relationship between the business and
their stakeholders (4).
There are some of the phenomena that the researcher finds when tried to interview some of the
fashion businesses, like the businesses cannot predict their supply availability in their supplier; the
uncertainty of the quality when they are receiving the material; they don’t have a customer
relationship program; the products of fashion are very seasonal, so they need to move fast to get
updated. We can conclude that uncertainty can become one of the problems that will make the
business cannot be developed. The issue of this uncertainty encourages the business to eliminate or
decrease the uncertainty by increasing their supply chain stability and performance (5). Besides
that, they need an integration to makes the supply chain more stable. The supply chain integration
can help the business to ensure every need and makes a decreasing of the uncertainty (6).
The supply chain integration will help increase collaboration from upstream to downstream of all
stakeholder involved in the supply chain. The scope of supply chain integration is consumer,
supplier, internal and external channel in the business (7). Suppliers and consumers have a broader
level in a relationship when it comes to supply chain integrations (8). In the businesses itself, to
knows about the demand and also offer can help to improve their strategy to achieve a competitive
advantage. Some researcher finds that supply chain integrations have great influences the
competitive advantage (9–11). This is the reasons for the researcher to find out more about supply
chain integration in the fashion industry.
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LITERATURE REVIEW
Supply Chain
The supply chain is a network of manufacturers and service providers that work together to create
products or services needed by end-users (12). This explanation can be said that supply chain as
one of operational function in the business that delivering value to the consumers. The other
statement of Bozarth & Handfield (2013) said that supply chains link together the operations
functions of many different organizations to provide real value to customers. This is the reasons
why organizations will need supply chain in their operation management. Besides, purchasing,
marketing and operation management are shown as part of the firm’s internal value chain. These
are internal function of the firm and they occur in every firm that is a member of supply chain (13).
The supply chain can be said as a key role in an organization that can help them to achieve their
goals. Enabling sustain competitiveness is one of the goals that the organization needs to achieve.
The stream in a firm can be called as the lifeblood to delivering the product to revenue, procuring
components or services at globally competitive new ideas from design to delivery (14). This is the
key point to make the supply chain succeed so every information can be delivered perfectly.
Supply Chain Integration
The supply chain can help the organization to increase their efficiency when their relationships with
suppliers also increase (4). This can be managed by the organization through supply chain
integration in a way to collaborate with every stakeholder, started from the supplier until their
customers. This way, every information will flow more clearly so it will help the process of the
supply chain. This activity can be called as supply chain integration. Supply chain integration can be
defined as a broader activity of every member in supply chain, starting from supplier until customer
to be integrated (15). The stream of a supply chain can be divided by upstream and downstream.
The upstream side is the material flow from the suppliers and on the downstream side is the
material flow from customers (16).
Supply Chain integration can reach every aspect of internal and external, from suppliers to customer
(7). This can be seen in three dimensions of supply chain integration, like internal integration,
supplier integration and customer integration (11, 17). Every aspect matter in the supply chain, that
is why all this three-dimension need to be integrated to get a competitive advantage. Improvement
of business operations and also value added to the customer can be achieved while the organization
applied supply chain integration (18). In added, the organization can achieved efficiency when they
integrated inbound and outbound of supply chain (19). There have been so many researchers who
researched supply chain integration. They said that supply chain integration can make the company
achieve their best firm performance (20–25).
The first aspect of supply chain integration is internal integration. Internal Integration is a
collaborative system to find customer satisfaction while maximizing the function in manufacture
(26). Internal integration will help organization to worked together without make a boundary of
every task and business function so every information will flow more quickly (27). Then, Customer
Integration is activity that will help integration from external that can brought up coordination of
inter-organization to developed their key competitiveness (28). Supplier Integration is one of the
external integration that needs a collaboration strategy between supplier and manufacturer in
every production activity (29, 30).
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Hakim, M. A., Maulina, E., & Purnomo, M. (2020). Supply Chain Integration In Fashion Industry, Bandung City. Advances in Social Sciences Research Journal,
7(7) 619-629.
METHODS
The research will be conducted with descriptive analysis. Descriptive analysis can help researcher
to find out the details of the topics. Then, the analysis is based on qualitative data analysis. This
qualitative method can be brought up explicit knowledge in the field rather than excluding it as far
as possible as intervening variables (31). The data will be collected by structured in-depth personal
interviews with the key informant. This method is used in order to find more about the details of
the issues by discussions and follow-up questions. The Respondents in this research are the owner
or the manager of the fashion business in Bandung City. There are ten respondents that were chosen
on the basis of they are already in the business for more than 3 years and also the product is made
by them. The reasons are every respondent that will be interviewed are the respondent who has
every knowledge in their business and also not randomly selected.
The process of the research is every respondent interviewed on average lasted for 70 min. at the
end of the interviews, the respondents were asked whether they agreed or not with the general
findings. The interviews were conducted directed in person. In the first discussion, the researcher
will always ask about their willingness to spend their necessary time to do the interviews, share
their ideas, knowledge and experience about the topics, and agreement for not revealing their
business identity. The analysis process using qualitative analysis was conducted manually and
every finding were summarized according every aspect of the topics which is internal integration,
customer integration and supplier integration. Interpretations of the documents and a summary of
preliminary findings were then independently reviewed by the researcher.
ANALYSIS
The research was conducted by interviewing ten respondents. The demographic of the respondent
details is included size and age of enterprise. The age of enterprise at least has 3 years experiences
because it can show that the businesses are sustained. The size measurement of enterprises by the
income per year. This is adjusted based on Law Number 20 of 2008 concerning Micro, Small and
Medium Enterprises. These enterprises were generally known in fashion industry. The interviewees
were the owners. Researcher finds out that half of the respondents are micro enterprise (5
respondents or 50% of overall samples), some respondents are small enterprise (2 respondents or
20%) and the other respondents are medium enterprise (3 respondents or 30%). This number of
sizes showed that many of respondents still in micro enterprises. But there are some respondents
have a bigger size of enterprises to make the analysis more comprehensive.
In addition, to amplify that the respondent can be reliable, the researcher also finds out about their
age of enterprise and number of employees. In case of age of enterprises, 6 fashion enterprise or
60% of overall samples have done the business from 3 to 5 years, so most of the respondent are
quite new in the business but they can sustain and grows their business until now. On the other
hand, the researcher finds out that all of the enterprises have employees less than 50 people. There
are 7 enterprises who have 6-20 employees or 70% of overall samples. This number is quite a lot,
because only one enterprise who has 36-50 employees and the other 2 enterprises have 21-35
employees. The number of employees does not consider as the size of enterprises because some of
the operations can be automation and might not need a lot of people to work on. But this number
give an information of how big is the enterprise to manage their internal firm. Table 1 shows the
demographic details of these fashion enterprises.
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Table 1. Demographic details of respondents
Demographic Details Value Frequency Percentage
Size of enterprise Micro (<Rp 300.000.000) 5 50%
(no. of income per year)
Small (Rp 300.000.000-Rp
2.500.000.000) 2 20%
Medium (Rp 2.500.000.000 – Rp
50.000.000.000 3 30%
Age of enterprise
3-5 years 6 60%
5-10 years 2 20%
More than 10 years 2 20%
Number of employees
6-20 employees 7 70%
21-35 employees 2 20%
36-50 employees 1 10%
Source: obtained from primary data
This demographic of respondents can be determined that they are have a stable business but still
they might meet uncertainty. This uncertainty can happen in the process of their business that
related to supply chain. There are some aspects in supply chain that will be impactful to the business
performance. In this research, researcher tried to find out about how the fashion industry do their
supply chain integration to suppress their uncertainty. The supply chain integration can help the
business to ensure every need and makes a decreasing of the uncertainty (6). In supply chain
integration, there are three aspect that will affect the process like internal integration, customer
integration, and supplier integration. Every process in this area will affect the process in the
business to make a good collaboration and a good flow of information that will needed for business
strategy.
Firstly, researcher finds out about the number of suppliers that the enterprises have to collaborate.
The findings are 40% enterprises have 4-7 suppliers and also 40% enterprises have more than 12
suppliers. Only 20% enterprise have 8-11 enterprises. The fashion industry tends to have many
suppliers so they can fulfill their needed in production. The respondent said that it will be very
helpful to have many suppliers because not every supplier has their needed. Every supplier has
their own standard of quality and requirements of every order. Not only that, the requirements itself
can be challenging for the enterprise if it is not suitable for their business. In this case, the enterprise
needs to have an alternative for this kind circumstance. That is why, the enterprise has many
suppliers so they have a back-up plan.
Figure 1. Number of Suppliers
Source: obtained from primary data
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Hakim, M. A., Maulina, E., & Purnomo, M. (2020). Supply Chain Integration In Fashion Industry, Bandung City. Advances in Social Sciences Research Journal,
7(7) 619-629.
On the other hand, researcher also finds out about the reasons why the fashion enterprises choosing
their supplier. There are several reasons that appeared such as material, price, quality, design,
service and trust. Mostly respondent said that quality and price are the main reason for choosing
their supplier. Material, design, service and trust are the second reason that they are mention. The
respondents, said that for quality and price are really matter for the outcome of their products. If
the quality of the materials did not match to their standard quality that will decreasing their
performance. Even for price, it will have an effect to the market of the products. Because, today
consumer not only seeing just quality of the product but also the price. this happened because in
fashion industry there are so many businesses so the environment of the business is very
competitive.
The first aspect that researcher will discuss is supplier integration. There are three aspect in
supplier integration that will be asked to the respondent, such as the level of information exchange
with supplier, the establishment of quick ordering system with supplier, and the participation level
with major supplier (11, 17). Those three aspects will be asked in three question that will represent.
The question for the first aspect was “How much information that you can exchange to the
supplier?”. There are several responds from the respondents, there are 7 of them who said that they
did exchange so much information for their supplier. The reasons are they can get a collaborative
project for time to time. Not only that, they can get a lot of information that will give benefit for the
fashion business. On the other hand, 3 of them did not think that it will necessary for them to have
a long engagement with the supplier. Three of them were only have transaction engagement with
the supplier and not sharing any kind information that have a business related.
There is not only a benefit that can affect the business when they have a strong engagement with
the supplier. Some of them who have a strong engagement get a bad experience while having a
collaboration with the supplier. But this experience did not make them not to share any information
again to the other key supplier as replacement. One of their experience were about the design of the
fabric that they were going to use in their next fashion project. The design that was made by the
designer of the fashion businesses were stolen by the supplier to get a higher sale in their store. This
event made the collaboration break and the fashion business tried not have any kind collaboration
with the same supplier also tried to find the key supplier who have the same qualities were difficult.
This difficulty came up when the fashion business tried to find the supplier who have the same
quality and vision for the business.
On the other hand, for the other business who do not have any collaboration with the supplier also
have an uncertainty for their material. This happened because they do not know the business
environment of the supplier. When they are not exchange any information of their business, they
have to compete with the other businesses to get the raw material. This is making them have an
uncertainty availability of the raw material. Those responds from the respondent of the fashion
businesses in this aspect have many points of view. For those statement cannot conclude anything
to find out that supply chain integration will succeed with close relationship with their supplier.
The second aspect in supplier integration is the establishment of quick ordering system with
supplier. The question for this aspect was “How fast is supplier delivering their supply to the
enterprise?”. For this question, all of the respondent has a positive respond that the supplier had
delivered all the material on time. The last question for the third aspect was “how extent is your
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collaboration with supplier?”. This question has a similar respond for the first question but for 7 of
them who have collaboration with the supplier said that they did a design collaboration for the
material also the pattern of the material. Not only that, they can have a business collaboration to
sell the product.
The second aspect that the researcher will discuss is about internal integration. This aspect will
discuss about how the management in the businesses tried to fulfill their achievement. There are
three aspect in internal integration, such as data integration among internal function, internal
management communicates frequently, informal face to face meetings when problem arise (11, 17).
There are four question that researcher asked to the respondent. The first aspect was questioned
to the respondent in two questions which are “are the management have all of the businesses data?”
and “is the data will be reliable, accurate and can be guaranteed?”.
The respondent who respond to the first question said that the data is really important in their
business even though they are still in Small and Medium Size Enterprises. Because they need to
generate all the customer data, their availability of the product like inventory, quality control of
their product and they can count their level of financial ability to invest more in their businesses or
on other assets. The management itself have divided to their function of businesses so it has a more
division on their business. On the other hand, for the micro size enterprises said that they do not
have many permanent employees and the management is mostly done by the owner of the
businesses. So, for the first question is only the owner who have an access to all of the business data
because mostly they are employed a temporary labor. The responds for the second question are
mostly they have an accurate and reliable data. Every data that they have can be guaranteed because
they not have database only in manual book but also in computer. So, everything has been
configured into the data system. They did this to make them easier to find out every data that they
would need.
The second aspect in internal integration is about internal management communicates frequently.
The aspect was asked with this question “How often they have a meeting with their management?”.
The respond on these questions are they have a regular meeting in every week to review their
management or to find an idea for some issue in their business. On the other hand, they not only
have a meeting in office only, if they need a coordination, they have a chat group to follow up every
situation that they have to face every day. The respondent said that there are benefit after have a
regular meeting such as, the owner of the businesses can have a good relationship with their
employee, less mistake that will happened in the future, the employee more proactive, and have a
contribution to achieve the businesses goals.
The last aspect that will be discussed in internal management is about informal face to face meetings
when problem arise. The respondent was asked with this question “How do you dealing a problem
with your employee?”. Every respondent has a similar answered that the owner will have a meeting
to find directly the problem or to make a decision for those issues. The meeting will help the owner
to clearly understanding the situation and good coordination with the employee. The respondent
said that it is because they are still in Micro, Small and Medium Enterprises so it might be better for
the owner who will decide some big issues.
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Hakim, M. A., Maulina, E., & Purnomo, M. (2020). Supply Chain Integration In Fashion Industry, Bandung City. Advances in Social Sciences Research Journal,
7(7) 619-629.
The last aspect in supply chain integration is customer integration. The customer integration will
find out how the businesses have an engagement with the customer. There are three aspects in
customer integration, such as close contact with customer, customer actively involved in product
design process and survey customer needs (11, 17). The first aspect that will e discussed is about
close contact with customer. There were two question that researcher asked to the respondent
which are “are there any event that the businesses held to make the customer update with the new
product?” and “do the businesses have a data base of their customer?”.
The first question in this aspect was responded with a similar respond, such as the businesses have
an online shop that can inform the customer who follow their account will directly get the
information if there are any event of their new product. The online shop that the businesses already
have are Instagram, Shopee, Tokopedia, and website. Those platforms really helpful for the fashion
businesses to keep updated their information and will be received by the customer really fast. Not
only that, the businesses also sometimes invite media to get the news from their event so the event
will be publish and every customer also potential customer get to know their new products. This
publicity will inform them not only the new product but also various promotion that the businesses
offered to gain engagement with their customer.
The second question in aspect of close contact with customer was responded in various responds.
The businesses in micro size did not have any data base of their customer. Usually their engagement
happened only if there are any transactions. But for the best delivering the product to the customer,
the businesses have a line business like reseller or agent. They tend to have a close relationship with
their line businesses to keep them up with the selling. The close engagement that they build are
using a treatment like discount for a certain minimum of quantity and also make a database to
inform every event of their businesses. On the other hand, for the Small and Medium Enterprises
have a membership program to have a database and easier to inform the customers are necessary.
The third question is from the second aspect about customer actively involved in product design
process. The question that was asked “are you giving a chance for the customer to give a feedback
or suggestion about your design product?”. The respond of the respondent about this question was
similar that they really open to all the customer who bought their product to give a feedback or
suggestion for their next design product. Usually, they are using a platform that give an online form
and sending it to the customer while delivering their product by phone or e-mail. The second
question about this aspect was “are you make the customer involved directly to your design process
of your products?”. The respondent was responded similarly, even though they are really open to
any suggestion but if it already in choosing the right design for their next new product, they tend to
be closed. The reasons are they need it to be private and have their own signature for the design.
The suggestion from the customer will be used for them as reference.
The fifth question is from the third aspect about survey customer needs. The researcher was asked
“do you using a survey to find out about the customer’s need?”. The respond for this question is
various, some of the enterprise did not using a survey but some are using it. There are four of them
who did not using a survey because they said that they have been in the business for a long time and
they already have a loyal customer for their fashion businesses. The customer who likely to bought
their products, usually it was because of their signature design of the fashion product. So, this is
making the enterprises did not even bother to do a survey. On the other hand, the 6-respondent
tried to do the survey when they tried to choosing a new material for their products or to find out
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more about what the customers like of their products. This question will be as final conversation
that the researcher asked to the respondent.
The supply chain integration is involving three aspects like supplier integration, internal integration
and customer integration. All of the three aspect had been asked to the respondent and there are
several views that researcher find about supply chain integration in fashion industry. As we know
that Supply Chain integration can reach every aspect of internal and external, from suppliers to
customer (7), so it might be better of the fashion enterprises can integrate all of those aspect to
maximize their performance and also competitive advantage.
There are view point that make the supply chain in the fashion industry did well was because the
role of the leader or the owner that can have a quick decision making also how they manage the
internal to have a good coordination. On the other hand, the enterprises who had a strong
engagement with the supplier can reduce the uncertainty of raw material. Some of the respondent
who did not have a collaboration with the supplier will have to compete with the other enterprises
to get the raw material that they need. This might be affected to their quality of product so to get a
good supplier integration the collaboration can be a solution for them. And for the customer
integration, the enterprises did not do many engagements like a membership or special treatment
to their customer. And the researcher finds that to get a close relationship with the customer not
only by that but also doing a publicity to inform every event and promotion will make the customer
more interested to their products.
CONCLUSION
The more well-known Bandung as a city that has many business players in the fashion industry, it
made the competition between businesses will not be avoided. The supply chain integration can be
a solution to get their competitive advantage. There are several findings that the researcher finds
about fashion industry in Bandung through supply chain integration. The supply chain integration
involved in three aspect, such as supplier integration, internal integration and customer integration.
The supplier integration that mostly of the respondent was have collaboration with their supplier
but some still did not. For the fashion enterprise who did not have any collaboration will face an
uncertainty of their raw material because they need to compete with the other enterprises. The
interesting one is that the fashion businesses have internal integration with a good coordination.
This is the affect role of the leader or the owner and communications that is build in the enterprises.
The last one is the customer integration that the enterprises did a close relationship with their
customer by publicity in online platform. Today, the online platform might be more effective to get
closer with their customer so they tend to inform any kind of information using that platform such
as promotion, event and the launch of their new products.
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