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Supply Chain Management in

Telecommunication Industry: The Mediating
Role of Logistics Integration
CONFERENCE PAPER AUGUST 2014
DOI: 10.13140/2.1.3820.8646

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Adam Mohd Saifudin
Universiti Utara Malaysia
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Supply Chain Management in Telecommunication Industry: The

Mediating Role of Logistics Integration
Noraini Ahmad1, Adam Mohd Saifudin 2
1

Othman Yoep Abdullah Graduate School of Business Universiti Utara Malaysia

School of Technology Management and Logistics College of Business Universiti Utara Malaysia

Abstract. Increase in the competitive environment in Telecommunication industry, customer

demand for more cheap product with better quality service. Hence, Telecommunication companies
need to operate efficiency for their supply chain management in order to perform the best performance.
The supply chain management practice has mostly been analyzed as a strategy that to gain competitive
advantage in business performance. Therefore, the purpose of this paper is to propose the structural
relationship between the supply chain management practice and supply chain performance and
whether this relationship is mediated by the logistics integration in the Telecommunication industry.
The proposed framework expects to be tested using Statistical Package for Social Sciences (SPSS)
21th version for testing the measurement model and the data will be collected from companies in the
Telco industry. The research is limited literature review and end with suggested future research.

Keywords: supply chain management practice, supply chain performance, logistics integration,
Telecommunication industry

1. Introduction
Department of Statistics Malaysia reported that the percentage share of economic activities main
sector are service sector(54.6%), followed by manufacturing (24.9%), mining and quarrying (8.4%),
agriculture (7.3%) and construction (3.5%) (Department of Statistics Malaysia, 2012).
Telecommunication industry is under service sector. Thus it showed that the Telecommunication
industry contribute a lot in the Malaysia economic activity. Besides that, Industry Performance Report
by Malaysia Communication and Multimedia Commission (MCMC) highlighted that communication
industry in a steady growth 7.2% and this growth rate is in line with government nation status
2020(Report, 2012).
This study focuses on Telecommunication companies in Malaysia since Telecommunication
industry contributes a high percentage of shares of economic activities. Therefore, in order to maintain
the companies remain competitive, supply chain needs to manage accordingly.
The Telecommunication industry consists of the few businesses along with the supply chain.
Figure 1 showed the high level supply chain structure in the Telecommunication industry.

Figure 1 :High level supply chain structure in Telecommunication industry(Pettersson &

Segerstedt, 2013)

Corresponding author. Tel.: + 60192662466

E-mail address: aienaini@gmail.com.

1.1 Objective
The purpose of this paper is to propose the structural relationship between the supply chain
management practice and supply chain performance and whether this relationship is mediated by the
logistics integration in the Telecommunication industry. This paper will discuss the literature review,
the proposed research framework, methodology, contribution, conclusion and suggestion for future
research.

2. Literature Review
Supply chain management practice define as a set of activities undertaken by organization to
promote effective management of its supply chain (Li, Ragu-Nathan, Ragu-Nathan, & Subba Rao,
2006). From past literature, there are a lot of the supply chain management practice dimension discuss
by the researcher. Table 1 summarizes the theoretical studies of dimension of supply chain
management practice from the past research. In this study, four dimensional of supply chain
management practice which are a strategic supplier partnership, customer relationship and information
sharing will be used as a independent variable. Logistics integration will be used as a mediating
variable and supply chain performance as a dependent variable.
Table 1: Dimension of Supply Chain Management Practice
Source

Mediator/Moderator

Industry/Country

Strategic supplier partnership, Customer

relationship,
Information sharing, Information
quality,
Internal lean practice,
Postponement

None

Different industries

(Koh,
Demirbag,
Bayraktar,
Tatoglu, &
Zaim, 2007)

Strategic collaboration and lean practice,

Outsourcing and multi supplier

None

SME companies from Turkey

(Chow et al.,
2008)

Customer and supplier management

Supply chain features, Communication and speed,
Information sharing, Customer relationship

None

US and Taiwan
manufacturing comparison

(Omain,
Bakar,
Hamid,
Rahman, &
Rahim,
2010)

Customer relationship, Close supplier relationship ,

Information sharing, Supply chain integration,
Logistics, Strategic location

None

Agriculture in Malaysia

(Cook,
Heiser, &
Sengupta,
2011)

Information sharing, Long term relationship,

Advance planning system, Leveraging the internet,
Distribution Network Structure

Supply chain roles as

a moderator

Nonacademic North America

membership of the Institute
of Supply Chain

(Sundram,
Ibrahim, &
Govindaraju,
2011)

Supplier strategic partnership, Customer

relationship,
Information
Sharing, Information quality, Postponement ,
Agreed vision & goal, Risk and reward
sharing

None

Electronics Industry in
Malaysia

(Li et al.,
2006)

Supply Chain Management Practice Dimension

(Tan, 2012)

Information and technology management,

Demand management, Customer relationship
management, Supplier relationship management ,
Capacity and resource management

Allience integrated
network as mediator

Public healthcare in Malaysia

(Asmida,
Sah,
Habidin,
Latip, &
Salleh,
2014)

Leadership , Supplier relationship, Customer

focuses,
Quality information and
analysis, Internal lean practice

None

Automotive Industry in
Malaysia

2.1 Strategic supplier partnership

Li et al described strategic supplier partnership as a long term relationship to influence the both
parties between supplier and company to achieve significant benefit between them (Li et al., 2006).
Long term relationship refer to the deal is not temporary (Chen & Paulraj, 2004). Indra et al has
investigated that strategic supplier partnership has significant relationship with competitive advantage
of the firm in term of quality, price, delivery, time to market and product (Sukati, Abu, Abdul, Prof, &
Baharun, n.d.). The supply chain performance affected by the competitive advantage(Datt, 2009).
Hence, the strategic supplier partnership is crucial to enhance the supply chain performance.

2.2 Customer relationship

Customer relationship is how to manage the customer complaints, enhanced customer
satisfaction and create long term relationship with customer (Sundram et al., 2011). Chow et al in
their research found that supply chain management practice made up of customer relationship has
direct impact on organizational performance in Taiwan but indirect impact on organizational in US
(Chow et al., 2008). Hence, customer relationship will be able to enhance supply chain to better
performance.

2.3 Information sharing

Information sharing refer to how the critical information is being shared among the supply
chain member regarding to customer information, product and market (Sundram et al., 2011).
Information sharing is an essential dimension in supply chain management practice. Sezen in his study
on manufacturing firms in Turkey found that information sharing are correlated with supply chain
performance but with lower relative effect size(Sezen, 2008). Thus it is essential to include in
information sharing in this study.

2.4 Logistics integration

In 2013, Moskdanian and Molahosseini reported that logistic integration is one of important
variable in measuring the performance(Moshkdanian & Author, 2013).Stock described logistics
integration as a logistics practices and operational activities that coordinate the flow of material from
supplier to customer throughout the value stream (Gregory, 1998). Bannet and Klug in their studies
concluded that logistics integration is a new form of criteria for companies to evaluate the performance
between the company and supplier (Bennett, 2012) . Moskdanian and Molahosseini in their research
demonstrated that there is positive and strong relationship between logistics integration and
performance in Bahaman Group which is a manufacturing company (Moshkdanian & Author, 2013).
Projogo also believed that improvement in logistics integration contribute to the increasing of
operational benefit (Prajogo, 2012). But the research is limited in manufacturing industry and
organizational performance, due to the research gap , this paper interested to study the logistics
integration mediating effect on structural relationship between the supply chain management practice
and supply chain performance in Telco industry.

2.5 Supply chain performance

Supply chain performance can be measured using efficiency and effectiveness (Hsu, 2005). There
are two indicators for supply chain performance, first, cost containment indicator such as warehousing
cost, cost inbound and outbound activities and increasing asset turnover. Second, reliability indicator
which include inventory turns, safety stocks and order fulfilment (Lee, Kwon, & Severance, 2007).
Veerat et al argues that supply chain performance measure long term goal which increase market share
and short term goal which include reduce cost (Sundram et al., 2011). Supply chain performance is
important for company to compete in global market. Previous literature shows that supply chain
performance has a positive relationship with supply chain management practice in different industry,
country and context.

3 Proposed Research Framework

Based on the discussion on the literature review, there are a lots of study were explored regarding
on supply chain management practises and supply chain performance but limited study on mediating
and moderating effect (Danese, 2013). Thus, Figure 2 proposed the research framework of this study.

Figure 2: Research Framework

4 Methodology
This research is an empirical study which will employ the research by using the quantitative
method. The method of data collection is by distributing the questionnaire to the managerial and
executive level of worker from Telco companies. The proposed framework expects to be tested using
Statistical Package for Social Sciences (SPSS) 21th version for testing the measurement model.

5 Contribution
This study will investigate empirically on the mediating effect of logistics integration on the
relationship of supply chain management practice and supply chain performance in the
Telecommunication industry. Academically, the past literature review has been studied on different
country and different industry of supply chain management practice(Hong & Zailani, 2011; Koh et al.,
2007; Omain et al., 2010; Sundram et al., 2011) but did not cover the mediating effect that will affect
the relationship(Sundram et al., 2011).Thus, an alternative framework sufficient to be added to
measure the mediating effect in the supply chain management practice.

6 Conclusion and suggestion for future research

Supply chain management practice and supply chain performance are becoming a crucial factor
for the companies to establish in the global market. The fierce competition among companies in
Telecommunication industry has driven supply chain management practice to the fore of key values
drivers for companies to gain supply chain performance. The paper proposed the conceptual
framework that there is the mediating effect of logistics integration on the relationship of supply chain
management practice and supply chain performance in the Telecommunication industry. Future
research may improve by extending the analysis to include others dimensional of supply chain
management practice such as leadership, postponement, just in time and also extending on the
mediating effect such as supply chain integration and information integration.

7 References
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