The Role of Corporate Governance in Creating a Capable Supply Chain: a Case of Indonesian Tin Industry
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View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by ExcelingTech Publishing854 Company (E-Journals) Int. J Sup. Chain. Mgt Vol. 8, No. 3, June 2019 The Role of Corporate Governance in Creating a Capable Supply Chain: A Case of Indonesian Tin Industry Petcharaporn Chatchawanchanchanakij#1, Chanapong Arpornpisal#2, Kittisak Jermsittiparsert* 3 1 King Mongkut's Institute of Technology Ladkrabang Prince of Chumphon Campus, Thailand [email protected] 2 Faculty of Management Science, Nakhon Pathom Rajabhat University, Thailand Corresponding author: [email protected] 3*Social Research Institute, Chulalongkorn University, Thailand [email protected] Abstract— The prime objective of the current study to improving production flexibility [5], satisfying examine the role of corporate governance in buyer; [6],and strengthening of relationships determine the supply chain capability. The study is [7],Various researchers;[8], [9],[10], [11],have interested din knowing the direct impact of supply defined Supply Chain Management as a network of chain information technology capability, supply chain organizations that connects every section of an relational capability and corporate governance on the supply chain operational performance of Indonesian organization, and at each step adds value to its manufacturing firms operating in Tin industry. In strategic operations. SCM refers as an organized set addition to that we have also examined the of activities which starts from procurement, moderating role of corporate governance in the production and then ends to the customers [7].They relationship between supply chain capabilities and claimed that a successful supply chain, assist firms supply chain operational performance. To achieve the in taking knowledgeable decisions at each unique objectives of the current study, the authors connection of this network. Many preliminary have employed the SEM-PLS technique. The findings authors [7],,and[11],have discussed SC as an of the current study have provided support to with operation of information flow within the the proposed. The results have shown that the along with customer focus approach the firms are also organization, they also argued that systematic flow following the production focus approach. The of information thus optimize material flows and in findings pf the study will be helpful for policy makers turn minimizes cost that usually arises due to poor in understanding the issues related to corporate flow of information or information delay. A joint governance supply chain management. In author role is played by the increased involvement of knower this is among few pioneering studies on these information technology, in developing and issues. advancing the processes of supply chain by regulating the flow of information. Whereas, the Keywords--- Supply Chain operational performance, corporate governance, Indonesia extended network of supply chain proceeds beyond individual operating firm towards inter- 1. Introduction organization operations, including, customers, suppliers, service providers, trading partners, The term supply chain management (SCM) has manufacturers, transporters, and retailers. appeared as one of the important strategies necessary for operational success of a SC. It also The operational performance of SC can be defined appeared as a worldwide strategy that connects all as the result of efficient and effective flow of stakeholders, i.e. buyers, consumers and sellers into information and materials to and from different a chain type arrangement, through shared planning, organizations, as services and processed products partnership, and information sharing. However, [12].The SCM also significantly affect the effectiveness of SCM is based entirely on its ability international trade. Although, SC is a concept, but to minimize cost [3], presenting innovation [4], it would be appropriate to consider it as a phenomenon, based on several sub factors and ______________________________________________________________ International Journal of Supply Chain Management IJSCM, ISSN: 2050-7399 (Online), 2051-3771 (Print) Copyright © ExcelingTech Pub, UK (http://excelingtech.co.uk/) 855 Int. J Sup. Chain. Mgt Vol. 8, No. 3, June 2019 phenomena, such as agility, logistic, operation, [15].As the current study revolves around supply lean, etc. During modern decades, supply chain chain’s operational performance, the aspects of management has appeared as an indispensable tool flexibility, responsiveness, cost and reliability will for attaining viable competitive advantages. be used as dimensions for measuring its Contribution of supply chain have been found in performance. Although, in defining SCOR model, theory as well as in practice that has attracted asset management is more about focusing on return on investment while operational performance is the practitioners and scholars to further observe it in concerned area in measuring non-financial detail. performance. Consequently, asset management is The tin industry of Indonesia is considered as a then excluded from the variables of supply chain operational performance that are to be measured. major contributor to Gross Domestic Product Basically, the goal of a SC is to provide higher (GDP). Tin manufacturing Indonesian firms are quality goods and services efficiently to customers delivering their products to Malaysia, China, with minimum cost, and at minimum time. Firms Singapore, UK, and some other industrialized will face failure if they have less knowledge about economies. The SC of tin industry has gain greatest the factors which ensure success in supply chain, interest among other areas. The functions of tin these are of high quality i.e. reliability of SC; lower manufacturing industry and SC operations are cost i.e. total costs of supply chain; quick response somehow complicated. Christopher [13], defined i.e. SC responsiveness; and flexibility i.e. agile SC operational performance as an outcome of nature of SC[16]. Thus, the aim of SCM can also efficient, strategic, and systematic integration of be reviewed in order to enhance operational and standard business operations across and within the financial performance of all partners and for the organization, that includes actions and functions global SC [17,54-58],,.According to [17], related to transforming inputs into outputs. Within performance measurement is highly essential for this research context, four constituents involving supply chains and firms for enhancing their responsiveness of supply chain, reliability of SC, performance. While, measurement using costs, and supply chain agility are combined to performance measurement systems (PMSs) are the tools for the purpose of performance assessment measure operational performance of supply chain, that are employed at the monitoring stage of SC for the purpose of giving absolute performance performance [18]. The term performance measurement all through the research. From the measurement can generally be defined as “a variable of SC operational performance, asset process of quantifying the efficiency and management has excluded, as no emphasize is effectiveness of actions”. Lohman [18], defined given over financial performance. As in defining performance measurement system as a set of the SCOR model, asset management is considered metrics that are used for quantifying efficiency as more as a return to investment. This study defines well as effectiveness of the actions. This system supply chain reliability as the supply chains’ also provides solution for detecting any potential quality in maintaining and performing absolute gaps and problems necessary for the improvement order fulfilment, that deliver needed requirements in supply chain. It also allows users to know the and products. In addition, responsiveness of SC performance status of the supply chain involving its referred as speed of supply chain in providing weaknesses, strengths, and level or status of current information, products and services to the supply performance with the purpose of enabling chain members[14], Moreover, supply chain agility companies to make fully informed decisions against possible threats and opportunities. is the ability of supply chain to readily adjust the Organizations can take informed decision and operations and strategies in accordance with the appropriate actions accordingly at the best possible changing market conditions. Furthermore, supply time, for effective enhancement of their chain costs are the costs which is related to the performance [16],[19], and [20]. operations of the supply chain Measures of effectiveness and efficiency are used 2. Literature Review for explaining performance standards. Measure of effectiveness is employed to describe the standards 2.1 Supply Chain operational Performance of external performance, while measure of efficiency is employed for describing internal Performance of supply chain is generally standard of performance. In modern supply chain determined by the supply chain responsiveness, management, the standards of efficiency and reliability, asset management, cost, and flexibility 856 Int. J Sup. Chain. Mgt Vol. 8, No. 3, June 2019 effectiveness are high priority concerns among Srinvasan [31],The basic advantage of supplier firms . Efficiency and effectiveness can also be partnership is the fact that buyers can consistently measured using six important components assure quality products as well timely distribution including employee fulfillment, product