1. Introduction
The COVID-19 pandemic has caused sudden disruption and has affected all areas of life, including health services, and the economic, agriculture, education, sport, and manufacturing industries. As of 15 March 2021, COVID-19 has infected 119,603,761 people and 2,649,722 people have died, as stated by the World Health Organization [
1]. In 2021, there has been a significant increase in cases, compared to the previous year. As of 11 March 2020, the world community had confirmed 118,000 people were infected and 4291 had died in 114 countries, as declared by the World Health Organization [
2]. There has been a significant increase of more than 1000% within one year.
Many countries, including Indonesia, are trying to stop the spread of the COVID-19 pandemic by implementing a lockdown policy [
3]. However, the implementation of the lockdown has impacted the economic sector as well. For example, the Philippines experienced a significant decline of 16.5% GDP in the second quarter of 2020 due to the lockdown policy. An estimated economic loss of USD 42 billion was contributed to from the trade sector by 29.19%, the manufacturing sector by 13.11%, and the private sector by 13.11% [
4]. One of the sectors suffering most from the COVID-19 pandemic is the manufacturing industry. The pandemic has disrupted the global manufacturing supply chain network, increased the lead time, and resulted in high uncertainties in supply and demand. The bullwhip effect, due to raw material supply disruptions, has made customers face scarcities of finished products. Manufacturing companies are trying to fulfill product demand quickly by increasing the number of products available [
5]. The global pandemic has also significantly increased pharmaceutical product demand, such as drugs required for COVID-19 treatment, which have suddenly and continuously scaled up the supply chain challenges [
6].
The COVID-19 pandemic has significantly created an imbalance between supply and demand. The imbalance between downstream (demand) and upstream (supply) affects the planning and production recovery plan model [
7]. Changes to the upstream—or suppliers—include raw materials delivery, and to the downstream—or customers—include the finished goods flow, product loss, and even product scarcity [
8]. In other words, COVID-19 has suddenly resulted in uncertainty about the supply and demand for manufacturing companies covering raw materials delivery and finished product demand with scarcity [
3]. The imbalance between product demand and the availability of raw materials has affected companies’ production process [
7]. The global supply chain (SC) experienced rapid disruption due to the loss of raw materials and labor and has had a global impact [
4]. COVID-19 resulted in many people losing their jobs and resulted in uncertainty between the supply and demand in the supply of clothing products [
9]. Given this pandemic situation, manufacturing companies have no choice but to reconfigure their supply chain network capability in response to the high uncertainty in supply and demand. Many issues are emerging in the COVID-19 conditions, such as a lack of SC flexibility, a lack of government support, a lack of trust between suppliers and customers, a lack of security and safety, the imbalance between supply and demand, changes in consumer behavior, a lack of medical facilities, and a lack of access [
10]. The COVID-19 pandemic requires companies to have SC resilience, the ability to provide products or services in safe and healthy conditions for the community, even in a time of crisis [
11]. Furthermore, the current pandemic also requires companies to respond to external changes easily, quickly, and responsively, which is called the “agile supply chain.” A company’s ability to meet immediate customer demand changes by involving all internal functions of the company is called “supply chain (SC) agility” [
12]. The rapid changes in the fashion industry have greatly determined companies’ fast responses to building competitiveness [
13]. Companies require collective capabilities between internal and external functions to provide accurate and quick responses to disrupted changes [
14]. Collective capabilities are related to human resources and information resources within a single database that can integrate its internal capabilities [
15]. Information technology owned by a company can provide effectiveness and efficiency in all activities and the supply chain flow. Internal integration in manufacturing companies can enhance the supply chain (SC) partnership to balance supply and demand [
16].
Internal integration is a system that is implemented internally in a company to integrate all internal functions. Internal integration built at 539 Taiwanese third-party logistics (3PLs) companies impact SC partnerships with external integration, namely, customer and logistics collaboration integration [
17]. Internal integration in manufacturing companies in Malaysia affects SC resilience [
18]. Internal integration in companies is implemented by aligning business information systems at the operational level, namely, structural and social collaboration, to pursue increased organizational agility [
19]. Information systems used in company operations to synchronize, manage, control, and fulfill demand, can increase SC agility [
20]. Information sharing and supplier relationships in increasing supplier innovativeness in manufacturing companies can impact the increase in SC agility [
21]. Internal integration and external integration can improve company performance and generate sustainable advantages for fast-moving consumer goods companies [
22]. SC integration and SC agility improve organization performance by producing new products and improving customer satisfaction as a sustainable advantage [
14].
SC agility requires increased cooperation and dependence on supply chain partners to meet customer requirements with acceptance costs, and overall response time is minimized [
19]. The supplier–buyer relationship enhances collaboration and improves organization agility [
23]. The strategic partnership with external partners impacts the company’s operational performance and competitive advantage [
24,
25,
26]. The implementation of SC agility requires managers to know when to invest in resources, how much to invest, and where to invest in the supply chain flow to achieve improved performance [
27]. SC agility can balance supply and demand to improve operational performance [
28]. The company’s SC agility, supported by its SC capability, can improve the company’s competitiveness [
29]. SC agility reduces instability and increases response to customers with rapid environmental changes [
30,
31]. Organizations that have good SC agility will be able to face disruption quickly. SC agility reflects the capability of the supply chain network to resolve the disruptions and return to normal conditions quickly in the supply chain flow process [
32]. A company’s goal should be how to survive and not be susceptible to disruption in the supply chain.
Furthermore, SC resilience is a company’s capability to cooperate with its partners to resolve and recover from any unexpected disturbance and carry out normal activities in its operational functions and structures [
33]. Operation capability related to resource planning, production capability in producing products, market the products, and use of resources will determine a manufacturing company’s resilience [
14]. A strong company can manage internal company resources and establish a good system to resolve any sudden emerging problem [
34]. Companies always try to return to normal conditions quickly from sudden disruptions in the supply chain and with minimized consequences [
35]. Exchange companies in Tehran, by building SC partnerships through trust and information sharing, affected the increase in SC resilience [
36].
Meanwhile, SC partnerships in companies can increase supplier innovativeness and carry out strategic sourcing that can be implemented to impact SC resilience on an ongoing basis [
37]. A survey of 207 supply chain professionals indicated that the relationship between SC partnerships and internal integration could balance supply and demand visibility and affect SC resilience significantly [
16]. Big data analytics capability is moderated by organization flexibility and SC agility as a form of fast and responsive response to its functional recovery to increase organizational resilience and competitive advantage in India’s automotive components manufacturers [
38]. The SC resilience that companies achieve, along with SC integration, can impact their sustainable advantages through customer service and cost-efficient performance [
18]. The conditions during the COVID-19 era required scarce raw material resources due to lockdowns in many countries [
5]. The company’s dependence on scarce resources that can be accessed, controlled, and utilized optimally can be a competitive advantage in the market [
39]. A company’s SC resilience deal with rapidly changing problems when returning to normal conditions. The condition of COVID-19 had a big impact and changed the manufacturing environment drastically. The ability of a company’s management to maintain its readiness in response to disruption, quickly recover from disruption, and quickly return to normal conditions is a conceptualization of SC resilience [
40]. SC resilience is a manifestation of maintaining the supply chain network, adapting, and recovering from disruption to meet customer needs and ensure company performance [
41].
As discussed above, in this study, five constructs were selected from the literature, namely, internal integration, supply chain partnership, supply chain agility, supply chain resilience, and sustainable advantage. The reason for selecting those constructs is their relevancy with the current pandemic situation, characterized by disrupting supply and demand and higher risk due to increasing uncertainty. Then, supported by previous studies, this research builds a model relating those constructs. Many studies have discussed the conceptual relationship between two or three of these constructs. However, to the best of the authors’ knowledge, no study has dealt with these five constructs in one single model. This model aims to examine the effect of internal integration on sustainable advantage through the mediating role of SC partnership, SC agility, and SC resilience. Therefore, this research model raised three primary research questions. Firstly, it asks whether internal integration affects SC partnership, SC agility, and SC resilience. Secondly, it asks whether SC partnership, SC agility, and SC resilience improve sustainable advantage. Thirdly, it asks whether SC partnership, SC agility, and SC resilience mediate the influence of internal integration on sustainable advantage. This study used a quantitative research approach to examine and answer the research questions developed. Data collection used questionnaires, and data analysis used the partial least square (PLS) technique. The study is expected to provide managerial insights to help companies to recover from the disruption era caused by the COVID-19 pandemic. This study is also expected to enrich the current research in supply chain management.
The rest of the paper is organized as follows:
Section 2 deals with the literature review, which explores previous studies to support and develop the research hypotheses.
Section 3 is the research methodology, which describes the methodology used to collect and analyze the data obtained from respondents. Furthermore,
Section 4 deals with data analysis and discussion to examine the hypotheses. Finally,
Section 5 provides the conclusions and summarizes the main results and their relevance to the research questions.
4. Data Analysis and Discussion
4.1. Results
There are 456 questionnaires considered valid for analysis, and the respondents’ profile is demonstrated in
Table 4. Most of the respondents (80%) are located in Java island, while the rest are located in Sumatera, Kalimantan, Sulawesi, Nusa Tenggara, and Papua.
Based on the gender, it was found that the respondents consist of 66% male and 34% female, which means that men dominate the employee working in the manufacturing companies. The respondents are in charge of various departments, including production (33%), marketing (30%), finance/accounting (19%), purchasing (6%), warehousing, PPC, supply chain management, and IT (12%). This department’s composition indicated that respondents covered all the internal functions of an organization. The position of the respondents shows a balance between the lower level (32%), middle management (42%), and top management level (25%), thus indicating their respective roles in the supply chain based on individual roles and functions. Based on the length of work, most of the respondents have working experience of more than two years (85%), which shows that employees have understood the company’s working system well and are eligible to answer questionnaires. Most of the companies are of medium and large size since 77% have more than 20 workers.
A hypothesis is accepted when the t-statistic value of the path coefficient exceeds 2.36 for a significant level of 1% or 1.96 for the significant level of 5%, and 1.65 for the significance level at 10%. This study considers that the path coefficient with a significant 10% or t value level greater than 1.64 is acceptable.
Table 5 shows that the minimum value of the t-statistic is 1.919, which means that this study supports all nine hypotheses proposed. The result supported eight hypotheses with a significant level of 1%, while one hypothesis (H8) with a significant level of 10%. However,
Table 5 and
Figure 2 demonstrate the only direct relationship of each two consecutive constructs. Simultaneously, the research model presents three intervening variables that mediate internal integration influence on sustainable advantage. Based on these findings, this result reveals that internal integration only affects the sustainable advantage through the mediating role of the three intervening variables, namely, SC agility, SC partnership, and SC resilience.
The first hypothesis (H1), internal integration affects SC partnerships in manufacturing companies, is supported as the t-statistic value is 25.203. The second hypothesis (H2), internal integration influences SC agility, is supported in manufacturing companies with the t-statistic value is 6.847. The third hypothesis (H3) that internal integration affects SC resilience is accepted since the t-statistic value is 6.190.
The fourth hypothesis (H4) testing indicated a t-statistic of 6.019, which means the hypothesis is accepted, i.e., SC partnership affects SC agility in manufacturing companies. The fifth hypothesis (H5), with a t-statistic (4.468), is also accepted, i.e., SC partnership has an impact on SC resilience in manufacturing companies. The sixth hypothesis (H6) with a t-statistic of 5.620 is accepted, which means that SC Agility impacts SC resilience in manufacturing companies. The seventh hypothesis (H7), with a t-statistic of 6.063, is also supported, i.e., SC partnerships impact sustainable advantage in manufacturing companies. The eighth hypothesis test (H8) obtained a t-statistic value of 1.919; therefore, it is supported that SC agility has an impact on sustainable advantage in manufacturing companies at the level of significance 0.1. The ninth hypothesis (H9), with a t-statistic of 9.836, is supported, namely, that SC resilience has an impact on sustainable advantage in manufacturing companies.
4.2. Discussion
The first hypothesis (H1), internal integration impacts SC partnerships in the manufacturing companies, is supported. Internal integration, which is implemented by data integration between departments, and data changes are communicated quickly to other functions, can improve SC partnerships. The marketing department could coordinates directly with the production department concerning the incoming customer orders. The company’s purchasing department coordinates actively with suppliers when there is a change in orders from customers. This study supports previous research results stating that internal integration impacts SC partnerships in companies [
14,
16,
17,
35,
42].
The second hypothesis (H2) states that internal integration impacts SC agility in manufacturing companies. Companies carry out internal integration to coordinate promptly between functions in charge, and data integration during the pandemic affects SC agility to respond to changes. Manufacturing companies can make changes to production planning quickly to adjust to conditions during a pandemic and simultaneously make the production process change rapidly according to a customer’s needs. Manufacturing companies in Indonesia continue to run normally, but some companies keep working distance by replacing two shifts previously with only one shift to maintain production capacity. This research is in line with research that states that internal integration impacts SC agility in manufacturing companies [
13,
19,
20,
21,
43].
The third hypothesis (H3), internal integration impacts SC resilience in manufacturing companies, is also supported. Internal integration shows that all departments can access company data in real time and coordinate quickly in interdepartmental changes affecting SC resilience. Manufacturing companies can still serve customer demands during a pandemic and adapt quickly during a pandemic to form SC resilience. The cross-functional ability to find information quickly can make the right decisions to adapt during a pandemic quickly. Company employees can find out about the arrival and inventory of material stock, adjusted to the number of orders ordered, and decisions are made directly to the company’s operations to fulfill customer orders. This study supports the research results that state that internal integration impacts SC resilience in companies [
17,
18,
31,
33,
34,
35,
40,
41].
Furthermore, the fourth hypothesis (H4) that SC partnership affects SC agility in manufacturing companies is accepted. The SC partnership built allows suppliers to understand changes in orders during a pandemic to adjust the production process to change quickly according to needs during a pandemic as a form of SC agility. Moreover, SC partnerships allow delivery of materials from suppliers on time, impacting the production process normally during a pandemic to fulfill predefined orders. The purchasing function, marketing function, and production function are coordinated every morning through online meetings. The resulting coordination can anticipate changes in the production process and can provide good service to customer needs. The results of this study support the results of research that state that SC partnerships have an impact on SC agility in companies [
19,
20,
21,
23,
24,
28,
43].
As expected, the fifth hypothesis (H5) is also supported. SC partnerships impact SC resilience in manufacturing companies. SC partnership is in the form of a supplier understanding of order changes which allows the companies to maintain its buffer stock to keep products that customers may need are available during the pandemic. Partnerships that can collaborate with suppliers during a pandemic will increase SC resilience because they can serve customer demands during a pandemic normally. This study supports the research results that SC partnerships impact SC resilience in manufacturing companies [
18,
31,
36,
37].
The sixth hypothesis (H6) can be accepted, and it is stated that SC agility has an impact on SC resilience in manufacturing companies. The company keeps the production process running normally during the pandemic to fulfill orders as a form of SC agility, so it is necessary to maintain a buffer stock during the pandemic period in order to be able to maintain SC resilience. The company maintains the production process by changing it into two shifts so that the work system is adjusted quickly according to government regulations to determine the occurrence of SC resilience for customers by maintaining production capacity during a pandemic. The company’s SC agility can increase SC resilience [
12,
30,
31,
40].
The seventh hypothesis (H7), SC partnerships have an impact on sustainable advantage in manufacturing companies, is also supported. A solid SC partnership allows suppliers to deliver material on time so that the company’s production process runs according to a predetermined schedule and directly impacts product delivery on time during a pandemic period to increase the sustainable advantage. The company always coordinates every morning in carrying out production planning by taking into account the availability of raw materials. Additionally, SC partnerships that involve collaborating suppliers to help companies during a pandemic impact product quality that can be maintained during a pandemic period. SC partnerships impact manufacturing companies’ sustainable advantage [
18,
37,
44].
The eighth hypothesis (H8) can be accepted, and it is stated that SC agility has an impact on sustainable advantage in manufacturing companies. According to pandemic conditions, the company’s SC agility by adjusting the resulting production capacity is associated with reliable sales volume, compared to competitors in pandemic conditions due to the company’s sustainable advantage. Besides that, the company’s agility in determining production planning regarding rapid changes in adjusting to the situation during a pandemic is related to the timely delivery of products during the pandemic to achieve sustainable advantage. This study supports previous researchers who stated that SC agility impacts sustainable advantage in companies [
5,
11,
13,
27,
30,
38,
43].
The ninth hypothesis (H9) is accepted that SC resilience impacts sustainable advantage in manufacturing companies. The company’s ability to maintain buffer stock during a pandemic period makes SC resilience reliable, thus determining a sustainable advantage in delivering products on time during a pandemic and reliable sales volume, compared to competitors in pandemic conditions. Many manufacturing companies experience difficulty in raw materials in the pandemic era, especially companies that are essential to preventing the spread of COVID. For companies with a high buffer stock, the disruption conditions are an advantage in meeting customer demands. Resilience during a pandemic condition for manufacturing companies still serves customer requests during the pandemic period because there is no lockdown, but the company runs a Health protocol while employees are working. Work activities carried out routinely maintain production capacity so that company profits can be relied on during a pandemic to increase the sustainable advantage. This research supports previous research that states that SC resilience impacts sustainable advantage in companies [
17,
18,
38,
40,
44].
Manufacturing companies are always trying to make integrated information systems an important tool during a pandemic because the interaction between cross-functional parties can be reduced but still reliable for the company’s internal and external coordination. Information systems are used for internal and external integration or SC integration, which relies on SC partnerships. The company’s ability to involve external and cross-functional parties on the internal side increases SC agility and SC resilience. SC partnership, SC agility, and SC resilience impact increasing sustainable advantage during the COVID period to become a theoretical contribution to research. The practical contribution of research impacts top management to continue to empower all company internal and external functions. The company adjusted the work system by making two production shifts to carry out government regulations related to preventing the spread of the virus as a form of resilience organization, but still producing products according to customers’ orders quickly within the built agility.
Other essential findings of this study are the revelation of the mediating role of the intervening variables, namely, supply chain partnership, supply chain resilience, and supply chain agility. As shown in the research model, the second research question examines whether the SC partnership, SC resilience, and SC agility mediate the relationship of internal integration on the sustainable advantage. The mediating role of the three variables was examined by looking at the two direct relationships consecutively. It has been noticed that internal integration directly affects the SC partnership (H1) and SC partnership directly affects sustainable advantage (H7). It implies that internal integration indirectly affects sustainable advantage through the mediating role of SC partnership. In other words, SC partnership does mediate the influence of internal integration on sustainable advantage. Similarly, internal integration influences SC agility (H2), and SC agility affects sustainable advantage (H8), implying that internal integration indirectly improves sustainable advantage through SC agility. Furthermore, since internal integration directly affects SC resilience (H3), and SC resilience directly influences sustainable advantage (H9), it can be concluded that internal integration indirectly affects sustainable advantage through SC resilience. As expected, the results indicate that those three intervening variables do mediate the relationship. This finding implies that internal integration has multiple effects on the sustainable advantage when a company implements supply chain partnership, supply chain resilience, and supply chain agility. These findings have highlighted the importance of internal integration to improve the sustainable advantage of a company. Moreover, the organization also needs to integrate with its external partners enabling quick coordination to pursue any customer demand changes. The integration with external partners allows the company to establish supply chain partnerships, develop supply chain agility, and supply chain resilience to pursue improved sustainable advantage. The collaboration with an external partner such as supplier and distributors, called supply chain partnership, enables the company and partner to forecast, plan, and adjust the production to any customer demand variation. SC partnerships allow suppliers to understand changes in orders during a pandemic, adjust the production process to change quickly, and increase their buffer stock and adjust to customer needs. Furthermore, the supply chain agility enables the company and its partners to cope with any sudden changes in demand volume, product varieties, and delivery schedule requested by the customer. At the same time, the supply chain resilience allows the company and its partners to meet its promise to the customer even though any constraints due to disruption in supply, transportation, and logistic network. Finally, when the company implements internal integration and establishes supply chain partnerships, it enhances supply chain agility, and supply chain resilience will increase the sustainable advantage, enabling the company to meet any change in customer demand at any time.
5. Conclusions
The initial purpose of this study is to examine the impact of internal integration, supply chain partnership, supply chain agility, and supply chain resilience on sustainable advantage. As expected, the results indicate that data support all nine hypotheses developed, and all findings are in line with previous research referenced in this study. Internal integration influences SC partnerships (H1), internal integration affects SC agility (H2), internal integration affects SC resilience (H3), SC partnership influence SC agility (H4), and SC partnership improves SC resilience (H5). Furthermore, SC agility improves SC resilience (H6), SC partnerships affect sustainable advantage (H7), SC agility influences sustainable advantage (H8), and SC resilience affects sustainable advantage (H9). The interesting findings of this study are the existence of the mediating role of the three intervening variables—supply chain partnership, supply chain resilience, and supply chain agility. Internal integration indirectly influences the sustainable advantage through the mediation of SC partnership, SC agility, and SC resilience. In summary, the implementation of internal integration within an organization and the collaboration with the external party in establishing supply chain partnerships, supply chain agility, and supply chain resilience enable the manufacturing company to enhance its sustainable advantage. This result implies that internal integration provides multiple effects in improving the sustainable advantage. These findings have highlighted the importance of internal integration to improve the sustainable advantage of a company.
As discussed previously, this research provides a practical contribution on how the manufacturing companies could recover from the current disruption era due to the COVID-19 pandemic. The company needs to establish an excellent internal integration, enhance supply chain partnerships, supply chain resilience, and supply chain agility to pursue an improved sustainable advantage. This study could also enrich and extend the acceptance of the current research in the context of the manufacturing industry.
This work has some limitations, particularly in terms of the population and the variable involved. Further studies on the current topic are suggested to involve the variables such as supply chain risk management and customer relationship management to cover more stakeholders and functions involved in the supply chain network.