Supply Chain Integration: A Framework of Validation using Structural Equation Modeling

Abstract

The purpose of this study was to test and redefine the measurement of supply chain integration practices in the manufacturing industry in Malaysia as a developing country. The study employed a survey method where data collection was done through a questionnaire composed of supply chain integration dimensions; internal integration and external integration. Data was obtained from 113 respondents, from manufacturing firms across Malaysia. The collected responses were analysed using Partial Least Square based Structural Equation Modeling, [PLS] to test and validate supply chain integration measurement and its model confirmation in a developing country. Findings suggest that supplier, customer and internal integration eminently established inter-organisational capabilities through supply chain integration both externally and internally. The sample consisted logistics managers, supply chain managers and operational managers with vast operational experience. As there was only one respondent from each of the firms, it is open to response biasness. Managers from manufacturing firms in Malaysia could employ the selected supply chain integration elements in developing key performance indicators to enable and enhance inter-organisational capabilities. The research is an original contribution to the body of knowledge as supply chain integration is used to measure inter-organisational integration among manufacturing firms in a developing country like Malaysia – something that has not been attempted by researchers in this field.