analysing factors affecting supply chain management

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DEVICE INDUSTRY INDONESIA

By

Timotius William Jefferson 21954010

MASTER’S DEGREE in

MASTER OF ARTS

FACULTY OF BUSINESS AND COMMUNICATION

SWISS GERMAN UNIVERSITY The Prominence Tower

Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 - Indonesia

AUGUST 2020

Revision after Thesis Defense on August 10, 2020

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Timotius William Jefferson I hereby declare that this submission is my own work and to the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

Timotius William Jefferson, S.T. B.Eng.

_____________________________________________

Student 20 July 2020

Approved by:

Dr. Antonius T.P. Siahaan, SE.Akt., M,M.

_____________________________________________

Thesis Advisor 20 July 2020

Dr. Nila K. Hidayat, SE., M.M.

_____________________________________________

Dean 20 July 2020

ABSTRACT

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Timotius William Jefferson Analyzing Factors Affecting Supply Chain Management Practices

towards Organization Performance in Medical Device Industry Indonesia

By

Timotius William Jefferson, S.T. B.Eng.

Dr. Antonius T.P. Siahaan, SE.Akt., M.M

SWISS GERMAN UNIVERSITY

Amidst so many competitions in the medical device market post JKN implementation, Supply Chain Management has emerged as a leading strategic management tools to create efficiency and effectiveness with the aims to increase organization performance to survive in the market. Based on the expansion of Resource-Based-View (RBV) Theory, this study focuses on several organizational capability factors such as Knowledge Management, Organization Agility, and Innovation Capability in relation with Supply Chain Management Practices. This study uses Structural Equation Modelling (SEM) based on Partial Least Square (PLS) Technique involving 93 respondents whose activities involving supply chain practices in the medical device firms operating in Indonesia. The empirical study shows that knowledge management, organizational agility, and innovation capability significantly and positively influence the practices of supply chain management in medical device firms with knowledge management being the major impact as it also influencing organization agility and innovation capability.

The primary contribution of this study towards supply chain management literature is to extend current limited study about factors influencing supply chain management practices. And also give manager in medical device firms Indonesia valuable managerial insight to enhance their supply chain management practices.

Keywords: Supply Chain Management Practices; Knowledge Management; Organization Agility;

Innovation Capability; Medical Device Industry

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Timotius William Jefferson

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Timotius William Jefferson DEDICATION

I dedicate this work for future Supply Chain Management Practice research.

And to my parents, brothers, and colleagues.

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Timotius William Jefferson ACKNOWLEDGEMENTS

First and foremost , all praises to the most high, Jesus for providing me this opportunity and granting me the capability to proceed successfully. Thank you for the blessing throughout years, lead me into this point. You given me the power to believe in myself to accomplish this master degree. I could never have done this without the faith I have in you, Jesus.

Secondly, I would like to express my gratitude and deep thanks to lecturers in Master of Arts in Business;to my advisor, Dr. Antonius T.P. Siahaan, SE.Akt., M.M, thank for the advisory and all the valuable help during this thesis work; to Dr. Soebowo Musa, whom without hesitation always willing to advise with any knowledge related to this topic; to M. R. Rizky Adam, S.T., M.S.M. thank for helping me with the introductory of data analysis in this thesis work, and for the advice; to Dr. Ir. Yosman Bustaman, M.Buss whom always taking the time for giving me valuable advice during this thesis study.

Thirdly, to my parents, who always pray for me and remains at my back to support me in completing this thesis. To all my colleagues in the Swiss German University; to Agatha Hintama, S.T B.Eng. and Imannuel Billy Tanjung, S.T B.Eng. thank you for the help, motivation, encouragement and thank you for always be there for me and showing a believe in me for completing this research. Also mentioning Tungky Ariwibowo, S.T B.Sc. thank you for fighting alongside me and encourage each other thought this thesis work. Without helps of the particular that mentioned above, maybe I would face many difficulties while doing this thesis.

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Timotius William Jefferson TABLE OF CONTENTS

Page

STATEMENT BY THE AUTHOR ...2

ABSTRACT...2

DEDICATION ...5

ACKNOWLEDGEMEN TS ...6

TABLE OF CONTENTS ...7

LIST OF FIGURES ...12

LIST OF TABLES ...14

CHAPTER 1 – IN TRODUCTION ...15

1.1 Background ...15

1.1.1Theoretical Background ...15

1.1.2 Industrial Background ...18

1.2 Research Problem ...19

1.3 Research Question...21

1.4 Research Objective ...21

1.5 Scope and Limitation ...21

1.6 Significance of Study ...22

1.7 Structure of Thesis ...22

CHAPTER 2 – LITERATURE REVIEW ...23

2.1 Supply Chain Management ...23

2.1.1 Supply Chain Management Practices ...24

2.1.2 Measurement Construct for Supply Chain Management Practices ...25

2.1.3 Collaboration Between Supply Chain Players ...26

2.2 Organization Theory and Supply Chain Management...27

2.2.1 Resource-Based Perspective (RBV) ...27

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2.3 Knowledge Management ...29

2.3.1 Relation Between Knowledge Management and Supply Chain Management ...32

2.3.2 Measurement Construct of Knowledge Management ...33

2.4 Organization Agility ...34

2.4.1 Relation Between Knowledge Management and Organization Agility ....34

2.4.2 Relation Between Organizational Agility and Supply Chain Management ...36

2.4.3 Measurement Construct of Organizational Agility ...38

2.5 Innovation Capability...38

2.5.1 Relation Between K nowledge Management and Innovation Capability ..39

2.5.2 Relation Between Innovation Capability and Supply Chain Management ...40

2.5.3 Measurement Construct of Innovation Capability ...41

2.6 Organization Performance ...42

2.6.1 Relation Between Supply Chain Management and Organization Performance...42

2.6.2 Measurement Construct of Organization Performance ...43

2.7 Previous Study ...43

2.8 State of the Art ...50

CHAPTER 3 – RESEARCH AND METHODOLOGY...52

3.1 Type of Study...52

3.3 Sampling Design ...54

3.3.1 Population and Sample Target...54

3.3.2 Sampling Method ...55

3.3.3 Sampling Size ...55

3.4 Location and Time Frame of Study ...56

3.5 Data Source and Collection...57

3.5.1 Type of Data ...57

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3.5.3 Questionnaire Structure ...58

3.6 Research Model...59

3.7 Variable Operationalization ...59

3.8 Pilot-Test ...63

3.8.1 Questionnaire Evaluation ...63

3.8.2 Pre-test Small Scale Sample ...65

3.9 Data Processing & Analysis...65

3.9.1 Data Processing ...65

3.9.2 Data Analysis...67

3.10 Model Evaluation ...68

3.10.1 SEM – based Model ...68

3.10.2 Partial Least Square (PLS) Technique...69

3.11 Research Methodology Flowchart ...70

CHAPTER 4 – RESULT AND DISCUSSION ...72

4.1 Medical Device Industry in Indonesia [Industry Profile] ...72

4.1.1 Medical Device Supply Chain in Indonesia ...73

4.1.2 Major Players...73

4.1.2.1Medical Device Supplier / Principal ...73

4.1.2.2 Medical Device Distributor ...74

4.1.2.3 Medical Device Manufacturers...75

4.2 Respondent Profile ...76

4.2.1 Respondents Individual Profile ...76

4.2.2 Respondent Organization Profile ...77

4.3 Descriptive Statistic Analysis ...78

4.3.1 Characteristic of Respondents ...79

4.3.2 Compare Means ...81

4.3.3 Classical Assumption Test ...82

4.3.3.1 Normality Test ...82

4.3.3.2 Multicollinearity Test ...84

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4.4.1 Measurement Model Evaluation (Outer Model) ...86

4.4.1.1 Validity Test ...86

4.4.1.1.1 Convergent Validity ...86

4.4.1.1.2 Discriminant Validity ...89

4.4.1.2 Reliability ...93

4.4.1.3 Analysis of Measurement Model ...94

4.4.2 Structural Model Evaluation (Inner Model) ...95

4.4.2.1 R-Squares...95

4.4.2.2 Effect Size (ƒ2) ...96

4.4.2.2 Predictive Relevance (Q²)...97

4.4.2.3 Goodness of Fit ...98

4.4.2.4 Model Fit ...98

4.4.2.5 Significance Test ...99

4.5 Analysis of Hypotheses...100

4.5.1 Hypothesis 1 – Supported...102

4.6 Overall Result Analysis and Discussion ...109

4.7 Study Contribution & Implication ...110

4.7.1 Theoretical Contributions ...110

4.7.2 Managerial Contributions ...111

CHAPTER 5 – CONCLUSION AND RECCOMENDATION ...113

5.1 Conclusion ...113

5.2 Limitations & Recommendation for Future Study ...114

REFERENCE...115

APPENDICES 1. ...125

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Timotius William Jefferson APPENDICES 3. ...134 APPENDICES 4 ...138 CURICULUM VITAE...149

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Timotius William Jefferson LIST OF FIGURES

Figures Page

Figure 1.1 Presentation of JKN member...18

Figure 1.2 Growth in Hospital N umbers in Indonesia ...19

Figure 2.1 A Generic Supply Chain System ...24

Figure 2.2 Conceptual framework of knowledge management system ...31

Figure 3.1 Research Design Classification ...52

Figure 3.2 Research Model ...59

Figure 3.3 Online Focus Group Discussion ...64

Figure 3.4 SPSS Software Logo ...65

Figure 3.5 SmartPLS Logo ...68

Figure 3.6 Example of Structural Model and Measurement Model ...69

Figure 3.7 Research Flowchart ...70

Figure 4.1 Medical Device Market Indonesia...72

Figure 4.2 Indonesia Healthcare Supply Chain O verview...73

Figure 4.3 Medical Device Supplier Indonesia ...74

Figure 4.4 Medical Device Distributor Indonesia ...74

Figure 4.5 Medical Device Manufacturers Indonesia ...75

Figure 4.6 Respondents by Gender ...76

Figure 4.7 Respondents by Education Level ...76

Figure 4.8 Respondents by Job Level ...77

Figure 4.9 Respondents by Working Experience ...77

Figure 4.10 Organization’s Functional Operation ...78

Figure 4.11 Organization’s Size...78

Figure 4.12 Mean value comparison of KM dimensions...79

Figure 4.13 Mean value comparison of OA dimensions ...80

Figure 4.14 Mean value comparison of IC dimensions ...80

Figure 4.15 Mean value comparison of IC dimensions ...81

Figure 4.16 Histogram Graphic (Left) and P-Plot (Right) of SCMP...83

Figure 4.17 Overall Outer and Inner Model Construct ...85

Figure 4.18 Average Variance Extracted ...89

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Timotius William Jefferson Figure 4.20 Cronbach Alpha ...94 Figure 4.21 R-square...96 Figure 4.22 Overall Structural Model ...101

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Timotius William Jefferson LIST OF TABLES

Table Page

Table 2.1 Table of Key Findings in Previous Studies ...44

Table 2.2 Table of Study Difference...50

Table 3.1 Table of Time Frame of Research Study ...56

Table 3.2 Table of Variable Operationalization...59

Table 4.1 Descriptive Statistics...79

Table 4.2 Table of Homogeneity ...81

Table 4.3 Table of Normality Test (SPSS Output) ...82

Table 4.4 Table of Coefficients (SPSS Output) ...84

Table 4.5 Table Factor Loading Output...87

Table 4.6 Table of AVE output...88

Table 4.7 Cross Loading K nowledge Management Output...89

Table 4.8 Cross Loading K nowledge Management Output...90

Table 4.9 Cross Loading Innovation Capability O utput ...91

Table 4.10 Cross Loading Innovation Capability O utput ...91

Table 4.11 Cross Loading Organization Performance Output...92

Table 4.12 Table of Formell- Larcker Criterion ...93

Table 4.13 Table of Reliability Output ...93

Table 4.14 Table of Cronbach Alpha Output...94

Table 4.15 Table of R-square output ...95

Table 4.16 Table of Effect Size ...97

Table 4.17 Predictive Relevance Output...97

Table 4.18 Table of Goodness of Fit ...98

Table 4.19 Table of Model Fit Summary...99

Table 4.20 Table of Path Coefficient Output ...100

Table 4.21 Table of Hypothesis Test Summary...101