21340-Article Text-70583-1-10-20180907

Indonesian Journal of Business and Entrepreneurship, Vol. 4 No.
2, May 2018
Permalink/DOI: http://dx.doi.org/10.17358/IJBE.4.2.179 Accredited by Ministry of
Available online at http://journal.ipb.ac.id/index.php/ijbe RTHE Number 32a/E/KPT/2017
SSCM PERFORMANCE IMPROVEMENT STRATEGY

OF CONTAINER SHIPPING INDUSTRY IN INDONESIA
Gena Bijaksana*)1, Arief Daryanto**)1, Tridoyo Kusumastanto ***), and Nimmi Zulbainarni**)
*)
Sekolah Tinggi Ekonomi Islam Tazkia (STEI Tazkia)
Jl. Ir. H. Djuanda No. 78, Sentul City, Babakan Madang, Bogor 16810
**)
School of Business, Bogor Agricultural University
SB IPB Building, Pajajaran Road, Bogor, Indonesia 16151
***)
Department of Resources and Environmental Economics, Faculty of Economics and Management,
Bogor Agricultural University
Jl. Agatis Kampus IPB Darmaga, W3 L2 Darmaga Bogor 16680
Abstract: The objectives of this study are to measure and analyze the factors that significantly
impact the performance of Sustainable Supply Chain Management (SSCM) container
shipping industry in Indonesia. This research will then formulate recommendations on SSCM
performance improvement strategy using SEM-PLS method. The results show that currently the
business actor and service user perceive the SSCM performance of container shipping industry
in Indonesia as low. Furthermore, four latent variables give significant and positive impact
to SSCM performance. The latent variables include Technology, Integrated Logistic System,
Sustainable Market Orientation and Fair-Trade System. The Technology and Integrated Logistic
System as the priority should be give more attention. The conclusion of the research result shows
that strategy to improve the SSCM performance of container shipping industry in Indonesia must
be carried out through a holistic approach and seen as a system. The managerial implication of
this study is that the four latent variables of the model sorted, according to their priorities from
the total effect coefficients, can be applied as a strategy to improve SSCM performance.
Keywords: sustainable supply chain, container shipping, SEM, SSCM
Abstrak: Tujuan dari penelitian ini adalah untuk mengukur dan menganalisis faktor-faktor
yang secara signifikan mempengaruhi kinerja industri pelayaran kontainer SSCM di Indonesia.
Penelitian ini kemudian akan merumuskan rekomendasi strategi peningkatan kinerja SSCM
dengan menggunakan metode SEM-PLS. Hasil penelitian menunjukkan bahwa saat ini pelaku
usaha dan pengguna jasa melihat kinerja SSCM industri pelayaran kontainer di Indonesia
tergolong rendah. Selanjutnya ada empat variabel laten yang terbukti secara empiris memberikan
dampak positif dan signifikan terhadap Kinerja SSCM: Teknologi, Sistem Logistik Terpadu,
Orientasi Pasar yang Berkelanjutan dan Sistem Perdagangan yang Adil. Teknologi dan Sistem
Logistik Terpadu sebagai prioritas untuk lebih diperhatikan. Kesimpulan dari hasil penelitian
ini menunjukkan bahwa strategi untuk meningkatkan kinerja industri perkapalan SPCM di
Indonesia harus dilakukan harus dilakukan melalui pendekatan holistik dan dilihat sebagai
suatu sistem. Implikasi manajerial dari penelitian ini adalah bahwa empat variabel laten dari
model yang diurutkan, berdasarkan prioritasnya dari koefisien Total Effect, dapat diterapkan
sebagai strategi untuk meningkatkan kinerja SSCM.
Kata kunci: rantai pasok berkesinambungan, pelayaran peti kemas, SEM, SSCM
1
Corresponding author:
Email: [email protected]
Copyright © 2018, ISSN: 2407-5434; EISSN: 2407-7321 179

P-ISSN: 2407-5434 E-ISSN: 2407-7321 Indonesian Journal of Business and Entrepreneurship,
Vol. 4 No. 2, May 2018
Accredited by Ministry of RTHE Number 32a/E/KPT/2017
INTRODUCTION as highly relevant as a measure of the effectiveness of

supply chain management (Vasileiou & Morris, 2006).
The performance of sustainable supply chain
management (SSCM) has proven to give a significant Mentzer et al. (2001) state that supply chain
contribution to the superiority of industrial competitive management is a systemic strategic and tactical
advantage. Several previous studies confirm the positive coordination of traditional business functions within
relationship of SCM/SSCM to competitive advantage in a business function within a company and across a
various contexts. Yusuf et al. (2014) confirm that supply company in a supply chain. The goal is to improve the
chain management influences competitive advantage long-term performance of the company individually
in the petroleum industry. The issue of sustainability and its entire supply chain (Mentzer et al. 2001).
within the triple bottom line (3BL) framework of While the dimension of supply chain management is
green supply chain management is also confirmed the integration of key business processes from end
to positively impact the competitive advantage and users to initial suppliers, providing products, services
performance of container shipping companies (Yang et and information adds value to consumers and other
al. 2013). Supply chain management is also confirmed stakeholders (Seymour et al. 2007).
to positively impact the competitive advantage of the
communications network industry (Liao et al. 2017). Therefore, what is the difference between supply chain
management and sustainable supply chain management?
Several previous studies specific to shipping and Theoretically, sustainability terminology refers to
maritime industry have also proved the SSCM attempts to realize the optimum performance of the
performance contribution to the competitiveness of the economic-social-economic triple bottom line (Reuter
shipping industry in some countries. Unfortunately, et al. 2010). In the concept of sustainability, social and
there is no specific research to discuss strategy to environmental aspects are as important as economic
improve SSCM performance in strategic maritime goals, such as profitability, business growth, and ROI.
industries such as container shipping. The effectiveness All three factors have equal weight in decision-making
of the supply chain influences has proven to contribute and business performance parameters (Vasileiou &
to the competitive advantage of the Greek container Morris, 2006). Carter & Rogers (2008) argue that the
shipping industry (Lagoudis & Theotokas, 2007). framework of sustainable supply chain management
Sustainable supply chain management becomes a is the integration and strategic achievement of social,
new source of competitive advantage (Markley & environmental and economic goals in the systemic
Davis, 2007). Furthermore, supply chain management coordination of all major cross-organizational
has even a positive effect on competitive advantage businesses process and SCM.
under "uncertain" conditions (Wu et al. 2017). Green
supply chain management has an effect on competitive In strategic management research, Supply Chain
advantage and industrial economic performance (Rao Management (SCM) and Sustainable Supply Chain
& Holt, 2005). Management (SSCM) strategies tend to be associated
with the resource-based view management (Carter &
Today, more and more business entities are beginning Easton, 2011). SCM and SSCM are associated with
to implement the principles of sustainable business internal and company-focused strategies. The scope of
practices both internally and with other companies this strategy also tends to be limited within the scope of
in their supply chain (Golicic & Smith, 2013). While the company (Carter & Easton, 2011). However, from
economic and business considerations will essentially the era of 2000s to present time, SCM and SSCM have
be a consideration for all participants in supply chain been associated with a market-based strategy (market-
management, it has proven unable to guarantee based view). Dung dan Martin (2016) mentioned that
business sustainability (Vasileiou & Morris, 2006). SCM and SCM-Green contribute positively to the
Sustainability is becoming increasingly important economic development cluster in Than Hoa Vietnam
in the supply chain, especially in highly competitive especially in the aspect of cost optimization. As it is
industries (Flint & Golicic, 2009) like container known, that cluster terminology is associated very
shipping industry. In contrast, the principles of business closely with market-based view strategy.
sustainability are empirically and academically proven
180 Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017
Vol. 4 No. 2, May 2018
Other researchers also linked the concept of SSCM study of SSCM performance improvement strategy of
and market-based strategies as in Porter's Diamond the container shipping industry in Indonesia in Market
thinking framework (1990). Sardy et al. (2009) include Based View paradigm.
SCM and SSCM in their twin Diamonds Model, in the
supporting industry and international factors. Seymour Based on previous literature assumptions and studies,
et al. (2007) associate the four elements in the porter this research seeks to fill the academic gap on SSCM
diamond framework as the basis for the application performance improvement strategy in the container
of RFID-based SCM. Lee & Wilhelm (2010) linked shipping industry in Indonesia. The first purpose of
Porter's diamond frame (1990) to a global SCM this study was to assess the sustainable supply chain
implementation strategy. Sagheer et al. (2009) prove that management performance of container shipping industry
the Porter and SSCM diamond frames simultaneously in Indonesia. The second was to measure and analyze
impact each other in the agri-food chain in India. Jin & the factors that significantly impact the performance of
Moon (2006) show that SSCM has a significant effect SSCM container shipping industry. The third purpose
on the performance of supporting and related industries of this research was to formulate recommendations
of the apparel industry in South Korea. on SSCM performance improvement strategy using
SEM-PLS method. In addition, this research will result
Indonesia provides a good example of how SSCM in a priority set of strategies for SSCM performance
performance of the container shipping industry is improvement in the container shipping industry in
influenced by other systemic factors. Indonesia is a Indonesia.
country that relies on the container shipping industry.
The country consists of 70% sea and waters, making The scope of this research was to develop a strategy
economic activities such as international trade and based on Market-Based View to improve the SSCM
the distribution of goods in Indonesia are highly performance of container shipping industry. The focuses
dependent on sea transportation (Kusumastanto, of this research were the level of container shipping
1998; Kusumastanto, 2010; Oktaviani and Drynan, industry operating in Indonesia and division on the
2000). The performance of the business aspects of the container shipping industry operating in Indonesia:
supply chain management of the Indonesian container international container shipping and domestic container
shipping industry is represented in the LPI (Logistic shipping
Performance Index). Latest data on the World Bank
Indicators website state that in 2016 Indonesia was only
able to achieve a score of LPI of 2.93. With that score, METHODS
Indonesia was in the 63rd position globally. Meanwhile
the environmental and social aspects can be represented This research took place in Indonesia, and the research
from the level of CO2 emissions reaching 1.89 metric data collection began in early December 2017 and
tons in 2014 and poverty rate reaching 10.9% in 2016 was completed by the end of January 2018. This
(World Bank Indicators, 2018). study considered sample populations with the criteria
of the national level managers in container shipping
Several previous studies have contributed to elaborate companies as well as users of container shipping
the role of supply chain management performance and services. This study used the primary data collected
container shipping industry in Indonesia. Kusumastanto from questionnaires filled out by operators and users of
(2003) constructed the direction of Indonesian container shipping services in Indonesia. In December
maritime policy and economic empowerment based 2017, as many as 350 questionnaires were distributed
on sea transportation. The study mentioned that the via LinkedIn social media to middle management
sustainability of supply chain management becomes levels upward in this container shipping industry. Only
one element that must be focused. Nugroho et al. (2016) 103 were willing to fill in and return the questionnaires.
provide the logical background of port selection from Three of returned questionnaires were invalid due
the perspective of actors and users of shipping industry to the homogeneity of the answers. Details of the
services. Zaman et al. (2015) analyze the connectivity characteristics of the respondent can be seen in Table
of port and supply chain in eastern Indonesia in 1.
operational aspect. Unfortunately, there is no specific
Indonesian Journal of Business and Entrepreneurship, Vol. 3 No. 2, May 2017 181
Vol. 4 No. 2, May 2018
Table 1. The respondent sample performance, social performance and economic criteria
Sample Criteria Respondent % was assessed using a five-point Likert scale, ranging
Gender from ‘1 = very poor’ to ‘5 = very good’.
Man 78 78%
Women 22 22% This research used SEM-PLS methodology developed
Age by Hair et al. (2012). SEM-PLS presupposes that all
Under 30 years old 15 15% variables in the model must be latent. Each variable in
30 to 40 years old 39 39% the model can only be measured through parameters
40 to 50 years old 39 39% that reflect that variable. There are two academic
Above 50 years old 7 7% reasons behind the use of SEM-PLS methodology
Type of work in this study. First is that the SEM-PLS approach is
Practitioner/Business Actor 45 45%
predisposed to confirmative – Predictive (Hair et al.
2015). In this study, the approach that must be carried
Service User 55 55%
out was to combine confirmative and predictive
Work Period in the industry
approaches. The confirmative approach is where there
Under 5 years 17 17%
is a very strong theory background about measuring the
5 to 10 years 25 25%
performance of SSCM. On the other hand, this study
10 to 15 years 22 22%
also used a predictive approach because there is no
5 to 20 years 24 24%
theory that specifically examines SSCM performance
Over 20 years 12 12%
improvement strategies in the container shipping
Level of Position
industry in Indonesia. SEM-PLS accommodates these
Junior Manager/Manager 35 35%
two approaches by allowing data processing based
Assistant/Senior Supervisor
on strong, moderate and weak hypotheses (Hair et al.
Manager/Senior Manager 39 39%
2015).
General Manager/Head of Division 14 14%
Vice President 3 3%
The second reason is the characteristics and availability
Director 9 9%
of respondents. This study used the primary data, taken
Number of employees
from the opinion of service users and business actors in
<50 Employees 26 26%
the field of container shipping industry through online
50 to 100 Employees 13 13% questionnaires. SEM-PLS has a considerable flexibility
100 to 250 Employees 17 17% in data processing with limited sample quantities (Hair
250 to 500 Employees 9 9% et al. 2012). The number of samples required is equal to
> 500 Employees 35 35% ten times the number of parameters on the variable with
Type and Scope of Workplace the largest number of parameters (Hair et al. 2015).
National 18 18% Figure 1 shows that the initial structural model of this
National and Regional Asia/ 21 21% study had four parameters on the variable of FTS (Fair
Southeast Asia Trade System). Therefore, the minimum requirement
National and Global 61 61% of the sample in this study only amounted to 40
Number of Samples 100 Respondents samples. As many as 100 samples were collected in
this study and had exceeded the minimum requirement
This research used multi-item measures for constructs for subsequent processing.
for the theoretical framework to improve reliability,
reduce measurement error, ensure greater variability The framework of initial structural model in this study
among survey individuals, and improve validity consisted of five latent variables connected and interacted
(Churchill, 1979). The instrument was pretested before with each other as a system. There are four endogenous
a questionnaire was informed to the respondents through variables influenced by other variables, whereas the
online forms. Each building block consisting of items Technology (TEC) latent variable is an exogenous
was assessed using a five-point Likert scale (1932), variable that is not influenced by other variables. The
ranging from ‘1 = strongly disagree’ to ‘5 = strongly Outer model, consisting of 16 parameters, is entirely
agree’. Also, the sustainable transportation performance reflective of its latent variables. In the reflective based
that consisted items representing environmental structural model, the manifest variables associated with
Vol. 4 No. 2, May 2018
the latent variables exist to measure the indicators that the performance of its supply chain management
manifest the parameters. Parameters are the effects (Lee-Partridge et al. 2000; Mangina & Vlachos, 2005;
of empirically observed latent variables (Hair et al. Gunasekaran et al. 2006; Boone & Ganeshan, 2007;
2012). Dolgui & Proth, 2008; Autry et al. 2010; Tseng et al.
2011; Zhu et al. 2012;Lin, 2014;Marinagi et al. 2014;
Hypotheses of this structural model are visually Diaz-Osborn & Osborn, 2016). The level of technology
represented by a diagram in Figure 1. The structural is also proven to have impacts on the performance of
model resembles five circles of the latent variables integrated logistics systems. The level of technology
connected each other as a system through the single impacts the performance of a fair-trade system (Kleine,
headed arrow. This model was mapping the significant 2008; Reed, 2009; Heeks, 2013). Level of technology
latent variable that is predicted to have a positive impacts performance Sustainable market orientation
influence on SSCM performance in Indonesia container (Ozkaya et al. 2015; Kasim & Altinay 2016; Hsu et al.
shipping industry. This model hypothetically shows 2016). Thus, this research developed four hypotheses
that SSCM performance is influenced by four latent related with level of technology as follows:
variables i.e. Technology, Integrated Logistic System, H 1 : The level of technology impacts the SSCM
Free Trade System, and Sustainable Market Orientation. performance.
Table 2 summarizes the parameters for the framework H 2 : The level of technology impacts the
in Figure 1. The parameters were adopted or modified performance of integrated logistics
from the parameters established in extant research to systems.
avoid scale proliferation. H 3 : The level of technology impacts the
performance of a fair-trade system.
Level of technology in the industry in previous research H 4 : The level of technology impacts the
is proven to give a positive influence on another performance of sustainable market
variable. The technological level of the container orientation.
shipping industry is considered to have an effect on
Figure 1. Research framework (SSCM: Sustainable Supply Chain Management; SMO: Continuous market
orientation; FTS: Fair trade system; SLI: Integrated logistics system; TEC: Technology Level)
Vol. 4 No. 2, May 2018
Table 2. Variables and parameters

Latent Variable Parameter References
SSCM Environmental Performance of SCM Foerstl et al. (2010); Vasileiou & Morris (2006);
Social Performance of SCM Carter & Rogers (2008); Vural (2015)
Economic and Business Performance of
SCM
Fair Trade System Effectiveness of Anti-Trust Regulations and McCoy (1983); Rodriguez & Williams (1994);
Consumer Protection Sagers (2006); UNCTAD (2016); Bureau of Trade
Equal In the whole business communities Analysis (2012); Moxham & Kauppi (2014);Borrell
Shipping Container Services & Jiménez (2008)
Cartel-Free Industry
Compelling Action Against Cartel Efforts
Sustainable Market Industry Orientation and Business-Based Kumar et al. (2011); Cosimato & Troisi (2015)
Orientation Markets
Industrial Orientation and Environment-
Based Markets
Industry Orientation and Social-Based
Market
Integrated Logistic National SCM Blueprint Bhattacharyay (2010); Reuter et al. (2010);
System SCM Efficiency Shepherd and Serafica (2011); Lam & Yap (2011);
Kim & Lee (2012);Alam et al. (2014); Özceylan
Effectiveness of SCM
et al. (2016); Herdiawan et al. (2015); Tovar et al.
Vertically Integrated Shipping Company (2015); Shepherd (2016); Li et al. (2016)
Connectivity
Level of Technology Information Technology Lee-Partridge et al. (2000); Mangina & Vlachos
Cargo Handling Technology (2005); Gunasekaran et al. (2006); Boone & Ga-
neshan (2007); Dolgui & Proth (2008); Autry et
Container Handling Technology
al. (2010); Zhu et al. (2012); Tseng et al. (2011):
Marinagi et al. (2014); Lin (2014); Diaz-Osborn &
Osborn (2016)
Integration of logistic system in the industry in previous market orientation (Taylor, 2005; Golding & Peattie,
research is proven to give a positive influence on another 2005; Bacon, 2010; Raynolds, 2012). Thus, this
variable. Integrated logistics systems impact SSCM research developed four hypotheses related with level
performance (Brandenburg et al. 2014; Cosimato & of technology as follows:
Troisi, 2015). On the other hand, integrated logistics H7 : Fair trading system impacts the SSCM
systems also give a positive impact on performance performance
Sustainable market orientation (Cosimato et al. 2016;
H8 : Fair trade system impacts the sustainable
Hsu et al. 2016). Thus, this research developed
market orientation
four hypotheses related with level of technology as
follows:
Sustainable market orientation impacts the SSCM
H5 : Integrated logistics system impacts the performance (Carter & Jennings, 2004; Green
SSCM performance et al. 2006). The presence or absence of a clear
H6 : Integrated logistics system impacts market orientation and pays close attention to the
the performance of sustainable market environmental, social and business performance of
orientation an industry. Clear market orientation has been shown
to have a positive effect on business performance in
Fair trading system of the industry in previous research both short and long-term contexts (Kumar et al. 2011).
is proven to give a positive influence on another The superiority of sustainable competitiveness of the
variable. Fair trading system impacts the SSCM business performance of companies with clear market
performance Teuscher et al. (2006); Seuring & Müller orientation tends to be better compared to others
(2008); Vermeulen & Seuring (2009); Moxham & (Kumar et al. 2011). In the micro strategy context,
Kauppi (2014). Fair trade system impacts sustainable this clear market orientation has a direct impact on
Vol. 4 No. 2, May 2018
the effectiveness of total quality management (TQM) supported by the good performance of sustainable
implementation. (Demirbag, 2006). Culturally within supply chain management. The lowest score lies in
the internal organization, the existence of a clear market social performance 3.08 followed by the business
orientation has a direct impact on financial performance performance of 3.13 and environmental performance
(Homburg and Pflesser, 2000) and the relationship of of 3.28. The strategy that will be developed will
these two things becomes more intense in dynamic answer the challenge to improve the performance of
industries such as the container shipping industry. sustainable supply chain management of the container
H9 : Sustainable market orientation impacts the shipping industry as reflected in those parameters. One
SSCM performance of the three SSCM performance parameters that most
reflect the performance of SSCM container shipping
In the SEM-PLS methodology, there are two steps of industry is a business performance followed by social
analysis i.e. “measurement model”, and “structural and environmental performance.
model” (Hair et al. 2012). The measurement model is
the model that can illustrate the relationship between a Those three SSCM performance parameter priorities
latent variable and its parameter. In the measurement are reflected in the value of outer loading coefficient
model, there are five tests that must be carried out to in Table 3, indicating that the business performance
make sure that the model is valid, reliable and fit with (SSCM3) such as profitability, revenue and return on
the phenomenon. The tests include convergent validity, investment must remain a top priority. Thereafter, it
discriminant validity, goodness of fit, multicollinearity must be continued on social performance (SSCM2) such
check, and predictive relevance while the structural as employee welfare, stakeholders to the communities
model is an illustration for a relationship among the involved. Once business and social performance have
latent variables. This research used the “reflective” been fulfilled, the environmental performance (SSCM1)
measurement model type, indicating that all latent becomes a variable that should not be abandoned. These
variables are measured by the value that is reflected at three parameters make the supply chain management
its parameters (Hair et al. 2012). Resume of assessment of the container shipping industry more sustainable.
target value of SEM-PLS process can be seen below in
Table 3. Table 3. Convergent validity checking: outer loading
value
Latent Variable FTS SLI SMO SSCM TEC
RESULTS
FTS1 0.82
FTS2 0.85
SSCM performance of Container Shipping Industry
FTS3 0.83
in Indonesia
FTS4 0.86
SLI1 0.96
In this SSCM optimization model, the SSCM
SLI2 0.91
performance of Indonesian container shipping can be
SLI3 0.92
measured from 3 parameters. These three parameters
had undergone the selection process based on the SMO1 0.83
factor weight of 0.50 or more, so it is considered to SMO2 0.88
have a strong enough validation to explain the latent SMO3 0.68*
variables (Hair et al. 2010). These three parameters SSCM1 0.68*
include business performance, social performance and SSCM2 0.81
environmental performance. SSCM3 0.86
TEC1 0.87
In general, the perceptions of industry actors and TEC2 0.94
service users are still perceived to be low at an TEC3 0.95
average of 3.16 of the highest five. In other words, Remarks: * Outer loading under 0.7 but still maintain because
the strength of theory
Indonesian container shippers and service users still
consider that the industry has not been adequately
Vol. 4 No. 2, May 2018
Assessment on Measurement Model (SRMR) of 0 to 0.10 (Hu & Bentler, 1999) while the
multicollinearity test is checking to ascertain whether
Table 3 shows that of the 16 parameters compiled, only within an arranged model there is inter-correlation or
two variables that have outer loading values below collinearity between its latent variables. The reference
7.00 i.e. SMO3 (Business-based business orientation) value for the multicollinearity test is Variance Inflation
and SSCM1 (Performance supply chain environment). Factor) VIF less than 5.0 for moderate tolerance, in this
However, both parameters are maintained because they case of social science (Hair et al. 2012)(Table 5).
are very strong in theory. In the concept of sustainability,
sustainable SCM and SMO measurement parameters Table 6 shows the result of Q2 value test on the predictive
include the economic performance, social performance relevance. Q2 value for the structural model measures
and environmental performance of an industry (Carter how well the observed value is generated by the model
and Rogers, 2008). Therefore, these three parameters and its parameter estimation. The result obtained by this
must remain and are calculated simultaneously in a structural model for Q2 testing of predictive relevance
measurement model. is 0.913. This shows that the structural model built has
reached a predictive relevance degree of 91% of the
Table 4 shows the result of data processing through actual phenomena occurring in the field.
Smart PLS 3.0 software in which all variables in
this model have been valid. The value of composite Assessment on the Structural Model
reliability and the average extracted variance have
exceeded the limits required by Hair et al. (2010) i.e. When the measurement model is convergent and
0.70 and 0.50. discriminant, the next step is to test the validity of the
inner model. Table 7 shows the result of the test of
Before the hypothesis testing, the final examination of the Bootstrapping. The bootstrapping method is a method
model that had been prepared included goodness of fit, based on resampling the sample data with the condition
multicollinearity test and predictive relevance. Testing of returning the data in completing the statistics of the
a goodness of fit hypothesis is a hypothesis testing to size of a sample in the hope that the sample represents
determine whether a model has the expected frequency the actual population data, and usually resampling size
equal to the frequency obtained from a distribution, takes thousands of times to represent the population
such as the binomial, Poisson, normal distribution, data. Resampling using 500 times sample should be
or from other comparisons. The predicted reference sufficient for bootstrapping (Hair et al. 2015).
value is the Standardized Root Mean Square Residual
Table. 4 Discriminant validity test: composite reliability & average variance extracted (AVE)
Latent Variable Composite Reliability Average Variance Extracted (AVE)
Fair Trade System (FTS) 0.91 0.70
Integrated Logistic System (SLI) 0.95 0.87
Sustainable Market Orientation (SMO) 0.84 0.64
Sustainable Supply Chain Management (SSCM) 0.83 0.62
Technology (TEC) 0.94 0.85
Table. 5 Variance Inflation Factors (VIF)

Variables FTS SLI SMO SSCM TEC
Fair Trade System (FTS) 1.62 1.62
Integrated Logistics (SLI) 1.44
Sustainable Market Orientation (SMO) 1.44
Sustainable SCM (SSCM)
Level of Technology (TEC) 1.00 1.62 1.62
Vol. 4 No. 2, May 2018
Table. 6 Predictive Relevance Value (Q2)

Latent Variable R2 (1-R2)
FTS 0.38 0.62
SLI 0.45 0.55
SMO 0.53 0.47
SSCM 0.46 0.54
Q2 = 1 – (1-R12)(1-R22)….(1-Rn2) 0.94 0.85
Q2 0.9134542 (91%)
Table 7. Bootstrapping result: T-Statistics

Direct Indirect Original
Hypothesis
T- Statistics T-Statistics Sample
H 1 Sustainability market orientation →SSCM performance 2.920 0.38
H 2 Fair trade system→ SSCM performance 0.981* 4.62 0.32
H 3 Integrated logistics system → SSCM performance 2.976 0.39
H 4 Technology level → SSCM performance 1.699* 7.72 0.47
H 5 Technology level → Integrated logistics system 3.637 0.38
H 6 Technology level → Fair trade system 9.988 0.62
H 7 Technology level→ Sustainability market orientation 2.687 0.34
H 8 Integrated logistics system → Sustainability market orientation 1.451*
H 9 Fair trade system → Sustainability Continuous market orientation 3.951 0.46
H 10 Fair trade system → Integrated logistics system 3.010 0.37
Remarks: * Direct hypotheses rejected
In this research, the resampling is 1,000 times i.e. two The result is Hypotheses H2 and H4 still can stay put
times than normal resampling in Bootstrapping process. in the structural model. The cause is that SMO and SLI
In this bootstrapping process tested is the T-Statistic can be intermediate variables of those H2 and H4. In
value of each prepared hypothesis. With an expectation this bootstrapping test, the value of original sample was
of 95% confidence level, the T-Statistic value that is also measured. This original sample value represents
required is at least 1.96. A hypothesis with a minimum the relation of hypothesis, whether it is positively
value of 1.96 will be maintained. Hypotheses with influential or negative. In this model, we can see that all
values less than 1.96 are rejected and will be temporarily hypotheses are positive. Considering the bootstrapping
excluded from the existing structural model. test and looking for the significance level of each
variable, this research finalized the structural model.
However, it does not mean those hypotheses are The final structural model in Figure 2 consisted of 5
automatically excluded from the model. In the next latent variables with 16 parameters. Within the model,
phase, in Total Factor analysis, the hypotheses will there were five straight lines representing the direct
be re-tested. The total factor test is not testing the relation of the latent variables.
direct influence but using intermediate variables. This
intermediate variable will either enhance or weaken Besides, there are two dotted lines representing the
the relationship between endogenous and exogenous indirect relation among the latent variables. This
variables. The result of bootstrapping test is to divide model has been validated in measurement model and
the hypotheses into accepted and rejected ones, based structural modal. The results confirm that the SSCM
on the T-Statistics value of the hypotheses. There are Performance measurement model was reflected in
six hypotheses accepted and 3 hypotheses rejected. To three sustainability parameters: business, social and
ensure that the rejected hypotheses still can be put in the environmental. Of the three parameters, the one that
structural model, we rechecked the in-direct T-Statistic most reflects the performance of SSCM Container
value. shipping industry in Indonesia is a business performance
followed by social and environmental performance.
Vol. 4 No. 2, May 2018
The business performance included profitability, data processing through SEM PLS method, and data of
revenue and return on investment that must remain a total influence directly and indirectly were obtained as
top priority. Thereafter, it must be continued on social presented in Table 8.
performance such as employee welfare, stakeholders
to the communities involved. Once business and social Priority of Strategy
performance have been fulfilled, then environmental
performance becomes a thing that also should not be Level of supporting technology (TEC) has been
abandoned. These three parameters make the supply confirmed to be the most significant role to increase
chain management of the container shipping industry SSCM performance. This SSCM optimization model
more sustainable. further confirms that technological improvement
not only positively impacts business parameters but
Total Effect Coefficient also other sustainability aspects such as social and
environmental parameters (Lee-Partridge et al. 2000;
Total Effect is equivalent to the direct + indirect effects Mangina & Vlachos, 2005; Gunasekaran et al. 2006;
of constructs through mediation (Hair et al. 2012). Dolgui & Proth, 2008; Boone & Ganeshan, 2007; Autry
The total effect coefficient is the measurement used et al. 2010; Tseng et al. 2011; Zhu et al. 2012; Lin,
as the main reference to know whether a variable has 2014; Marinagi et al. 2014; Diaz-Osborn & Osborn,
more dominant influence than other variables in the 2016). In this study, it is proven that the aggregate of
structural model. The purpose of the analysis of the the average perception value of business actors and
total effect coefficient is to perform priority ranking. service users to supporting technology variables is 3.00
Based on these ratings in Table 8, strategies were then out of 5. This reflects a still low assessment of the level
formulated and planned for implementation. Based on of Technology supporting the shipping industry.
Figure 3. Structural Model for Improvement Strategy of SSCM of container shipping industry in Indonesia
Table 8. Total effect coefficient

Latent Variable FTS SLI SMO SSCM TEC
Level of Technology (TEC) 0.62 0.60 0.63 0.47
Fair Trade System (FTS) 0.37 0.46 0.32
Integrated Logistic System (SLI) 0.39
Sustainable Market Orientation (SMO) 0.38
Vol. 4 No. 2, May 2018
Three parameters that reflect the level of technology in the and effectiveness of SSCM operations (Sanberg &
supply chain management of container shipping industry. Abrahamsson, 2011), encourage trade performance
The first one is information technology, and this includes (Shepherd and Serafica, 2011), improve supply chain
the traceability and integration of information systems. performance (Alam, 2014) and indirectly contribute on
Elvandra et al. (2017) also mention that disintegration of economic growth and distribution of welfare (Özceylan
information comes with additional risk in supply chain. et al. 2016).
For information technology parameters, the combined
value provided by business actors and service users is This SSCM optimization model further confirms that
2.89 out of five, with a loading factor value of 0.87. integrated logistics system not only positively impacts
business parameters but also other sustainability aspects
The second parameter is container-handling technology. of social and environmental parameters. In this study, it
This parameter is used to measure perceptions about is significantly proven that, on an aggregate basis, the
how high the level of technology used by a country average perception value given by business actors and
container shipping industry in handling containers. The service users to LSI variable is 2.92 out of five. This
scope ranges from micro level handling technology in reflects the level of the Indonesian container shipping
the loading area to macro level in the port area. The logistics system perceived to be low.
operational level scope is from automation software,
management up to infrastructure technology as mentioned This will be a huge task for all stakeholders in Indonesia
by (Gharehgozli et al. 2017). The combined assessment container shipping industry because empirically, this
provided by business and user is 3.07 out of five with a study proves that this integrated logistics system aspect is
loading factor value of 0.94. one of the most important aspects in SSCM optimization
strategy of Indonesia container shipping industry. The
The third parameter that reflects the level of technology value of the loading factor of these three parameters is
in supply chain management of Indonesia container entirely subject to the SLI variable of above 0.91 while
shipping industry is cargo-handling technology. the total effect value of this variable on SSCM is 0.39.
Unlike the two previous technologies, cargo-handling
technology involves a longer value chain and supply to The clarity of the blueprint of the national logistics system
the owner of the goods. Therefore, the involvement of is the first parameter and has the highest perception
all stakeholders to focus and improve the use of cargo value of 3.04 out of five. This gives an indication that
handling technology is necessary. generally the business actors and service users are not
sure whether the Indonesian container shipping industry
Increasing the level of supporting technology should has had a good blueprint, and even this value tends to be
be the top priority in the strategy of optimizing the less agree that the blueprint of national logistic system
performance of sustainable supply chain management of is clear enough.
the container shipping industry. In the structural model,
it has been proven that technology positively influences The second parameter is the efficiency of the supply
as an enabler in the supply chain management system chain system. Slightly lower than the first parameter,
of Indonesia container shipping industry to become the combined perceptions value of actors and users tend
sustainable. Supporting technologies influence other to be steadier on this point. With a combined average
significant factors in the model: improved integrated value of 2.90 out of five, the perceptions of actors and
logistics system (0.60), improvement of sustainable business users tend to disagree that the supply chain
market orientation (0.63) and fair-trade system (0.62). system of Indonesia container shipping industry has
been efficient.
Integrated Logistic System (LSI) is the second variable
that should be a priority in SSCM optimization efforts of The third parameter is connectivity. In line with the
Indonesia container shipping industry. The results of this efficiency parameter, the perceptions of the combined
study reinforce the results of previous studies suggesting assessment of Indonesian container shippers and service
that integrated logistics systems positively influence users tend to be low on this point. The given value is
the sustainability of supply chain management in an 2.83 of five. This perceptual value is the lowest among
industry. In previous research, it also has been proven the three parameters in this SLI variable. Level of
that integrated logistics systems improve the efficiency connectivity are still considered low.
Vol. 4 No. 2, May 2018
Fair Trade System (FTS) is the third variable that The second parameter of this variable is equality among
should be a priority in strategy to optimize SSCM all business actors and users of container shipping
Indonesia container shipping industry. The results services. Represented by a value of 3.24 out of 5,
of this study reinforce the results of previous studies business actors tend to assess that Indonesia container
suggesting that a fair-trade system positively influences shipping industry is sufficient to treat business actors
the sustainability of supply chain management in an and service users equally without discrimination. On
industry (Moxham and Kauppi, 2014). The combined the other hand, the users of container shipping industry
perception of business actors and service users towards services, which is 3.00 out of 5, give a lower perception
the fairness in trading system variables tend to be low. value. Therefore, in total, the combined value is 3.11
The combined value given is 2.90 out of 5. Business out of 5. This value represents the perceptions of
actors provide a value of 3.03 out of 5 and service users actors and users who disagree that the business actors
provide a value of 2.80 out of 5. and users receive the same treatment in the container
shipping industry. In other words, business actors
This becomes a government homework as the regulator and service users still argue that governments tend to
of the container shipping industry in Indonesia because be discriminatory against some business actors and
empirically this research proves that this aspect of service users.
fair trade system is one of the most important aspects
in efforts to optimize SSCM of Indonesia container The third parameter of this variable is the perception
shipping industry. The value of the loading factor of of cartel/mafia free industry. Represented by a value
these three parameters is subject to the FTS variable of of 2.67 out of 5, business actors tend to assess that
0.81 to 0.86 while the total effect value of this variable Indonesia's container shipping industry is still not free
on SSCM is 0.32. from cartel and mafia practices. On the other hand, the
users of the container shipping industry services of 2.53
The discussion on the perception of fair trade system out of 5 gave even lower perceptual values. Therefore,
in the Indonesian container shipping industry is one total the combined value is 2.59 out of 5. As a special
of the most interesting aspect in this research. Not just note, this value is the lowest value of all parameters
because of its strategic role, this theme is also a quite in this search. This value represents the perceptions of
sensitive discussion in trying to uncover some rumors actors and users who do not agree that the Indonesian
circulating in the industry for a long time. Issues container shipping industry is free of cartel and mafia
concerning fair competition, equality of treatment, practices.
cartel and law enforcement are the four parameters
that reflect the variables of this fair-trade system. The fourth parameter is the firm commitment against
As previously discussed, the four variables are valid the cartel's practice. Represented by a value of 2.98
discriminant with the loading factor value of 0.82 to out of 5, business actors tend to disagree that there is
0.86. now a firm takeover of cartel and mafia practices in
Indonesia's container shipping industry. On the other
The first parameter of this variable is the existence hand, users of container shipping industry services of
of effective regulation related to fair competition and 2.64 out of 5 gave even lower perceptual values. Thus,
consumer protection. Represented by a value of 3.24 the total combined value of 2.79 out of 5. This value
out of 5, Business actors assess that Indonesia container represents the perceptions of actors and users who
shipping industry is sufficiently implementing effective disagree that the present container shipping industry
regulation. On the other hand, the users of container Indonesia has adopted a firm action against cartel and
shipping industry services perceiving the value of 3.02 mafia practices.
out of 5 give a lower perception value. Therefore, in
total, the combined value is 3.12 out of 5. This value Orientation on sustainable markets (SMO) is the last
represents the perceptions of actors and users who variable that should be a priority in SSCM optimization
disagree that the existing regulation is effective enough strategy of Indonesia container shipping industry. The
to regulate fair business competition and protect results of this study reinforce the results of previous
consumers. studies suggesting that sustainable orientation has a
positive impact on long-term and short-term business
performance (Kumar et al. 2011), total quality
Vol. 4 No. 2, May 2018
management (TQM) (Demirbag, 2006), and culturally good enough. The perceptions of business actors tend
on business financial performance (Homburg dan to be higher than the perception of service users of 3.31
Pflesser, 2000). compared with 3.16 of scale five.
The combined perceptions of business actors and The environmentally oriented market orientation
service users towards this sustainable market orientation parameter is the lowest of the three parameters in the
variable tend to be low. However, it is still better than latent variables of SMO. The combined value given by
the other latent variables. The combined value provided the respondents is 3.01 out of 5. It can be perceived that
is 3.40 out of 5. The Indonesian container shipping respondents argue that the environment-based market
industry provides 3.18 out of 5 and the service user orientation of Indonesia's container shipping industry
gives a value of 3.18 out of 5. It can be concluded is still not good enough. The perception value of
that the perceptions of business actors and service business actors tends to be higher than the perception
users towards the sustainable market orientation of of service users of 3.13 compared with 3.91 of scale
the container shipping industry the Indonesian pack is five. From the three parameters, Indonesian container
reasonably good . However, this does not diminish the shipping industry is still not very concerned about the
fact that Indonesia's container shipping industry still orientation of the environment-based market.
has sufficient development space to increase up to the
perception value of 4 out of five. Managerial Implication
This becomes the homework for all of the stakeholders The managerial recommendation from this research is
of the container shipping industry in Indonesia. the level of priority that all container shipping industry
Therefore, the results of this study prove that this stakeholder need to focus on the increase of the
aspect of sustainable market orientation becomes one performance of SSCM. The first is Level of Technology.
of the most important aspects in efforts to optimize the This research supports previous research in SSCM area
performance of SSCM Indonesian container shipping that found the strategic role of Technology as enabler
industry. The total effect of this latent variable on of the SSCM is a system. There are three aspect of
SSCM performance is 0.38. On the other hand, SMO technology that must be focused to improve, namely:
is also an intermediate variable on sustainable trading information, container handling and cargo handling.
technologies and systems to positively and indirectly The most impactful enhancement will come from
impact SSCM performance of the container shipping container handling technology improvement including
industry. the automation technology and the infrastructure
technology in container port area.
As with SSCM, the latent variables of sustainable market
orientation (SMO) are represented by parameters on a The second managerial recommendation is to improve
triple bottom line basis that is market orientation based the integrated logistic system of container shipping
on business, social and environment. The combined industry in Indonesia. There are three aspects of this
assessments given by the respondents to these three latent variable, including the clarity of the national
parameters also varied. For business-oriented market logistic blueprints, efficiency of logistics, and
orientation parameters, the respondents gave a connectivity of logistic network. With the priority, the
reasonably good score of 3.60 out of 5. Business actors outer loading value will be Connectivity and Efficiency,
rated 3.76 and service users rated 3.47 out of five. This followed by the clarity of national logistic blueprint.
parameter is the highest of the other three parameters.
Therefore, it can be concluded that the current market Third managerial recommendation is maintaining
orientation that becomes the priority of business actors both Sustainable Market Orientation (SMO) and Fair-
and service users is still on the business side. Trade System (FTS). The empirical reason to put these
two aspects as together is because all stakeholders of
On the social-market orientation parameters, the Indonesia container shipping industry must apply these
combined value given by respondents is 3.23 out two aspects together and simultaneously. Sustainable
of five. It is slightly lower and can be perceived that market orientation requires all stakeholders to put same
respondents argue that the social-market orientation of attention at 3BL (Business, Social and Environment)
the Indonesian container shipping industry is still not together. On the other hand, the Fair-Trade System can
Vol. 4 No. 2, May 2018
only be achieved through mutual commitment from the strategy. The priority of this strategy is based on the
government as regulator, business actors at supply side, value of total effects calculated in the structural model.
and users at demand side. The following latent variables recommended to be
implemented as a strategy gradually and sequentially
The government needs to put its highest commitment based on its major impacts include the improvements
to design and implement the effective regulation that of the technological support, integration of logistics
can protect all stakeholders’ needs for fairness. This systems and fair trade, and maintenance of a sustainable
includes the regulation, implementation of regulation market orientation.
and the regulation enforcement. On the other hand, the
business actors and users of container shipping industry Recommendations
in Indonesia also must put their highest commitment to
ensure the market is competitive to gain efficiency. Academic recommendation for the next research is
that it should be based on contribution and limitation
of this research. In the academic aspect, this research
CONCLUSIONS AND RECOMMENDATIONS has contributed to the development of strategic concept
of enhancing the SSCM performance in the industrial
Conclusions scope of container shipping in Indonesia. However,
this study also has limitations. The limitations of this
The first conclusion of this research is a valid study are the focus on the container shipping industry
information that sustainable supply chain management in Indonesia. Therefore, there is still much room for
performance of container shipping industry in Indonesia the development of previous researchers to test, give
is still under expectation for the business actors and the criticisms or develop concepts that have been prepared
users. In general, the perceptions of the industry actors in this study. Researchers can then focus on the same
and service users are still low at an average of 3.16 model but with a broader context such as Southeast Asia
of five. In other words, Indonesian container business and Asia. The next researcher can also draw the focus
actors and service users still consider that the industry of the development of this research on a more specific
has not been adequately supported by well-performed sphere, for example, only industry players focusing on
sustainable supply chain management. The lowest score global shipping alone or domestic shipping alone.
lies in social performance 3.08 followed by business
performance of 3.13 and environmental performance
of 3.28. ACKNOWLEGEMENT
The second conclusion is that improvement strategy This research was supported by LPDP of Republic of
of SSCM of container shipping industry in Indonesia Indonesia. We thank our colleagues from Department
must be conducted through a holistic approach and of Transportation of Republic of Indonesia and all
seen as a system. There are two empirical reasons anonymous experts who provided insights and expertise
behind this conclusion. First, SSCM performance that greatly assisted the research, although they may
optimization model shows that all latent variables give not agree with all the interpretations and conclusions
significant and positive impacts to SSCM performance of this paper.
of container shipping industry in Indonesia. The second
is that all latent variables also give significant and
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Indonesian Journal of Business and Entrepreneurship, Vol. 4 No.

SSCM PERFORMANCE IMPROVEMENT STRATEGY

Keywords: sustainable supply chain, container shipping, SEM, SSCM

Copyright © 2018, ISSN: 2407-5434; EISSN: 2407-7321 179

INTRODUCTION as highly relevant as a measure of the effectiveness of

Table 2. Variables and parameters

Table. 5 Variance Inflation Factors (VIF)

Table. 6 Predictive Relevance Value (Q2)

Table 7. Bootstrapping result: T-Statistics

Table 8. Total effect coefficient

orientation and organizational performance?. 86–110. https://doi.org/10.1108/IJOPM-06-

Lee C, Wilhelm W. 2010. On integrating theories of SCM-09-2013-0332.

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agrifood chain. International Journal of sbspro.2011.10.546.

196 Copyright © 2018, ISSN: 2407-5434; EISSN: 2407-7321

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