The Effect of Supply Chain Management on Competitive
Advantage of Fabric Business in Cigondewah Textile
Area in Bandung City
Helmi Mulyana, and Yun Yun
Faculty of Economics and Business, Jenderal Achmad Yani University,
Cimahi, West Java, Indonesia
Abstract. The establishment of the ASEAN Economic Community brings an
opportunity as well as a challenge for Indonesia in the form of free-market flow.
Therefore, supply chain management is needed so that a product has high
competitiveness. Problems related to SCM so that low competitiveness is high
prices, limitations in accessing products and relatively long delivery time. This
is influenced by the lack of communication and good relations between SCM
actors. This study aims to achieve profits by implementing SCM. This research
is a quantitative descriptive. The sample in this study was 73 shop taking into
account the competitive advantage that was expected to be less than optimal. The
results of data analysis showed that there were partial and simultaneous
influences. SCM can be developed to assist fabric shop owners in making
decisions, selecting suppliers, selecting raw materials and reducing overall costs
to meet and serve the needs of consumers.
Keywords: Competitive advantage · AEC · Supply chain management · Fabric
business
1 Introduction
The establishment of the ASEAN Economic Community (AEC), Indonesia and nine
other ASEAN members entered a very fierce competition and experienced a free market
flow. Since the establishment of the MEA in 2015, various problems have emerged
such as Indonesia's unpreparedness in terms of economic fundamentals, infrastructure,
and human resources so that the competitiveness of Indonesia's export products is
relatively [1]. This condition occurs in the textile and textile product industry, the textile
industry and textile products is one of the industrial sectors whose development is
prioritized to contribute to the national economy [2].
At present competition is not only competing among companies but competition
between supply chain networks. The competition is mainly triggered by the high prices
of domestic raw materials, so the marketing success of a product must be supported by
a supply chain network from suppliers to distributors who deliver products to
consumers so that products produce high competitiveness [
3]. Problems that often arise
related to SCM so that low product competitiveness is high prices, limitations in
accessing products and relatively long delivery time. This is influenced by the absence
of good communication and the existence of disharmony between fellow members of
270
Mulyana, H. and Yun, Y.
The Effect of Supply Chain Management on Competitive Advantage of Fabric Business in Cigondewah Textile Area in Bandung City.
DOI: 10.5220/0009854900002900
In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 270-280
ISBN: 978-989-758-582-1; ISSN: 2655-9064
Copyright
c
 2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

SCM which results in a decrease in the competitiveness of textile products.
The textile industry needs to improve its corporate strategy, innovation, and
competitive activity planning to bring a company to have a competitive advantage. For
this reason, textile companies must compete to find solutions to improve their
competitiveness. The competitiveness of the textile industry in Indonesia has generally
been recognized as good quality to meet the needs of clothing, the needs of military
uniforms and fashion. One way to improve product competitiveness is to run SCM well.
West Java as one of the provinces that helped generate contributions from the
industrial sector to Gross Domestic Product (GDP). According to West Java Provincial
Government data, West Java accounts for 60% of the Gross Domestic Product (GDP)
of the national manufacturing industry sector [4]. One area of West Java, Bandung City
has a relatively large number of textile industries and textile markets, one of the largest
textile markets in Bandung is in the Cigondewah Textile Area which is a fabric
shopping area and a shopping center for textile products or fabric markets.
2 Literature Review
Supply chain management is an approach that is used efficiently. The focus of SCM is
to implement a total systems approach and to manage the flow of information, services
from suppliers of raw materials through factories and warehouses to end customers.
SCM describes the overall supply chain activities starting with raw materials and
ending with satisfied customers
[5]. Furthermore, SCM as the management of materials,
money, and information to maximize customer satisfaction and enhance the
competitive advantage
[6]. The definition is based on several things: (1) SCM is an
organizing activity in managing the flow of information, products/services, companies,
and corporate partners, starting from raw materials and ending with satisfied end
customers who provide added value. (2) The purpose of SCM is to ensure a product is
in the right place and time to meet consumer demand without creating excessive stock
or shortage. (3) SCM emphasizes an integrated pattern in the process of production
flow from upstream to downstream. In the supply chain there are three types of flow,
namely [7]: (1) Upstream supply chain is an upstream supply chain process that
includes the activities of a company with suppliers. In the upstream supply chain, the
main activity is the process of procuring goods/services. (2) The internal supply chain
is an internal supply chain process covering all processes of receiving goods to the
warehouse, handover to end-users. In the internal supply chain, the main activity is the
process of quality control, storage, and inventory control. (3) The downstream supply
chain is a downstream supply chain process covering all activities involving the
transportation and distribution process from the allocation of inventory or goods
available to consumers. In the downstream supply chain, the main activities are
transportation, distribution, handover and after-sales services. SCM as the key to
implementation is divided into strategic supplier partnerships, customer relationships,
information sharing
[6].
2.1 Strategic Supplier Partnership
Suppliers are important partners in supporting the company's strategy. Supplier
The Effect of Supply Chain Management on Competitive Advantage of Fabric Business in Cigondewah Textile Area in Bandung City
271

selection must be careful because it has a positive impact or can be detrimental to the
company
[8]. SRM is defined as a process involved in managing preferred suppliers
and finding new ones while reducing costs, making predictable and repeatable
procurement, pooling buyer experience and extracting the benefits of supplier
partnerships
[9]. The cooperative relationship between suppliers and companies must
be managed properly to create a sustainable relationship that will become a long-term
relationship to increase profitability for companies and suppliers that are mutually
beneficial
[8].
2.2 Customer Relationship
Success in market demand will exceed satisfactory exchanges with customers, therefore
companies must be able to build good relationships with customers
[6]. Building a good
CRM will allow the company to be able to differentiate its products from competitors,
maintain customer loyalty and can provide added value to create competitive advantage
[6]. CRM is the strategic process of selecting customers that a firm can most profitably
serve and shaping interactions between a company and these customers. The ultimate
goal is to optimize the current and future values of customers for the company
[10].
2.3 Information Sharing
Information sharing needs to be done by the company because it can help in making
decisions related to meeting the needs of consumers. With quality, clear, and
transparent information, companies can avoid the bullwhip effect
[11]. Information
sharing is defined as the degree to which individual parties mutually provide
information in the context of supply chain management. Information sharing thus has
been considered an essential element for successful supply chain management and
therefore a critical element for the maintenance of efficiency, effectiveness, and
competitive advantage
[12]. With information sharing can help companies to
understand market desires, consumer needs, get new ideas in creating products and
improving company business processes.
2.4 Competitive Advantage
Competitive advantage is a position to maintain the competitiveness of products /
services compared to competitors
[13]. Competitive advantage is defined as the ability
of an organization to add value to its customers rather than competitors to achieve a
position of relative advantage
[14]. Therefore the strategic choice of pursuing
sustainability can be a determining factor that enables companies to create competitive
advantage
[15]. The four elements of competitive advantage are as follows [16]: (1).
Cost. In company competition, price is an important thing that must be maintained by
a company to produce more profit than competitors by providing lower prices compared
to competitors for the same benefits with the same product quality. (2). Time. Delay of
time or speed of operation can be measured as the time between customer requests for
a product to be able to serve the demand or on time delivery of products so that
customers feel satisfied so that the company's competitiveness is higher. (3). Quality.
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Quality is the priority that plays an important role in competitive advantage so that
quality can provide satisfaction to customers to provide increased dependence from
consumers to constantly use, use products / services. (4). Flexibility. Flexibility is
needed so that the company can adapt to changing customer needs and varying
demands.
3 Methodology
The study begins by identifying the problem, formulating the problem, then
determining the research objectives, namely analyzing the influence of the SCM
dimension on competitive advantage in the fabric business in the Cigondewah Textile
Area, Bandung City. This research is quantitative descriptive by distributing
questionnaires consisting of 32 statements and using a Likert scale. Population
characteristics used as respondents in this study were 73 shop owners and all members
of this population were used as samples. Validity and reliability tests were performed
using SPSS software. The data is said to be valid if the value of r count > r table
[17].
And reliable < 0.60 means low, 0.70 means enough and > 0.80 means good [18]. After
that the data of 73 respondents were processed by SEM-PLS. Evaluation of the PLS
model is divided into two namely
[19]: 1) Evaluation of the outer model, including
values: Indicator reliability (valid when outer lading > 0.5). Discriminant validity (cross
loading is valid if the value of indicator variables is greater than other latent variables).
Internal consistency (reliable when CR > 0.6). Convergent validity (valid when AVE >
0.5). 2) Evaluation of the inner model includes the significance value and R square (R
2
).
Below is a research model:
Fig. 1. Research Conceptual Model.
Judging from the conceptual model in Figure 1, the research hypothesis is as
follows: H
1
) Information sharing has a positive effect on competitive advantage. H
2
)
SRM has a positive effect on CA. H
3
) CRM has a positive effect on CA. H
4
) IS, SRM,
CRM affect competitive advantage.
4 Results and Discussion
4.1 Descriptive Analysis of Supply Chain Management
Analysis of supply chain management variables is based on primary data obtained
through questionnaires. The results are presented as follows.
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Table 1. Descriptive Analysis of Supply Chain Management.
Dimension Supply Chain Management Percentase (%) Category
Information sharing 3.38 Sufficient Good
Supplier relationship management 3.33 Sufficient Strong
Customer relationship management 3.40 Hurry Up
Average supply chain management variable 3.37 Sufficient
From the table above, the dimensions of IS, SRM are in a sufficient category. This
means that the owners of fabric shops in the Cigondewah Textile Area are still less
active in implementing SCM in their businesses. These results are in accordance with
Labdhagati & Mahfudz (2017)
[20] and Rachbini (2016) [21].
4.2 Descriptive Analysis of Competitive Advantage
Excellence Competing in a fabric business shop in Bandung City Cigondewah Textile
Area is measured in 4 dimensions: cost, time, quality, and flexibility. The results are
explained as follows.
Table 2. Descriptive Analysis of Competitive Advantage.
Indicator Percentase (%) Category
Cost
3.01
Sufficient Appropriate
Time
3.37
Sufficient Appropriate
Quality
3.61
Appropriate
Flexibility
3.34
Sufficient Appropriate
Average Competitive Advantage
3.34
Sufficient Appropriate
From the table above, the dimensions of cost, time, and flexibility are in a sufficient
category. This means that the competitive advantage of fabric products must still be
increased because, for the dimensions of price, time and flexibility are still
Sufficient
appropriate. Although it already has a competitive advantage, the owner of a fabric
shop in the Cigondewah Textile Area must be able to improve its competitiveness.
Because competitive advantage always has the ability to understand changes in market
structure and be able to choose effective marketing strategies. These results are in
accordance with Yun & Kurniawan (2017)
[22].
4.3 Partial Least Square Data Analysis - Structural Equation Model
(PLS-SEM)
Before testing the hypothesis to predict the relationship between latent variables in the
structural model, an evaluation of the measurement model is first performed. The first
criterion, Indicator reliability shows how much the variance of the indicator can be
explained by latent variables as in the following figure.
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274

Fig. 2. PLS Alghoritm.
Based on Figure 2 above, the outer loading values of the indicators IS.1, IS.2, IS.5
IS.7, SRM.2, SRM.3, SRM.5, SRM.6, CRM.4, CRM.7, CRM .8, CA.1, CA.3, CA.4,
CA.6, and CA.9> 0.5. So, overall each latent variable has been able to explain the
variance of each indicator that measures> 0.5, meaning that the indicator variable must
be maintained.
The next criterion is Discriminant validity which compares correlations with other
latent variables.
Table 3. Discriminant Validity (Cross Loading) Value.
Discriminant Validity
Cross Loading
Variables IS SRM CRM CA
Indicator (X
1
) (X
2
) (X
3
) (Y)
IS.1 0.810 0.055 -0.130 0.175
IS.2 0.773 -0.045 -0.125 0.174
IS.5 0.684 0.073 0.061 0.186
IS.7 0.592 0.046 0.012 0.081
SRM.2 0.086 0.650 0.243 0.435
SRM.3 0.273 0.632 0.255 0.345
SRM.5 -0.116 0.821 0.583 0.659
SRM.6 0.009 0.782 0.362 0.459
CRM.4 0.090 0.306 0.596 0.346
CRM.7 -0.093 0.531 0.863 0.613
CRM.8 -0.101 0.346 0.782 0.590
CA.1 0.019 0.632 0.564 0.757
CA.3 0.332 0.289 0.361 0.604
CA.4 -0.030 0.351 0.672 0.652
CA.6 0.311 0.521 0.417 0.705
CA.9 0.214 0.559 0.417 0.802
From table 4 above, it can be seen that the value of cross-loading for each indicator
of each latent variable has the greatest correlation value compared to the correlation
The Effect of Supply Chain Management on Competitive Advantage of Fabric Business in Cigondewah Textile Area in Bandung City
275

value of other latent variables. So that each latent variable already has good
discriminant validity or can be said to be feasible to advance to the next stage.
The next criterion, internal consistency, is used to measure the reliability of a construct by
looking at the value of composite reliability and Cronbach's as follows:
Table 4. Composite Reliability and Cronbach's Alpha Value.
CONSTRUCT RELIABILTY
Variables Cronbach's Alpha Composite Reliability
Criteria
IS (X
1
) 0.697 0.809 Reliable
SRM
(
X
2
)
0.705 0.815 Reliable
CRM (X
3
) 0.623 0.796 Reliable
CA
(
Y
)
0.747 0.832 Reliable
Based on table 4 above, it can be concluded that all constructs meet the reliable
criteria, this is indicated by the value of composite reliability and Cronbach's alpha
above 0.60, meaning that the established indicators have been able to measure each
latent variable properly or it can be said that all four measurement models have values
good internal consistency.
The next criterion is convergent validity. The better is shown by the higher
correlation between the indicators that make up a construct.
Table 5. Average Variance Extracted (AVE).
Variables AVE
IS
(
X
1
)
0.518
SRM (X
2
) 0.527
CRM
(
X
3
)
0.570
The AVE value is shown in table 5 above, it can be concluded that the square root
value of AVE shows that the four latent variables have AVE values above the minimum
criteria, which is 0.50 so that the convergent validity size is good or can be said to have
met the convergent validity criteria.
Inner model testing is done to see the relationship between construct, significance
value and R-square of the research model. The structural model was evaluated using R-
square for the latent construct of the t-test dependent and the significance of the
coefficient of structural path parameters.
The coefficient of determination measures how much variation in the dependent
latent variable is explained by the independent latent variable. The following is a table
of estimated R-square adjusted results:
Table 6. R-Square Value.
R Square
Dependent Latent Variable R Square R Square Adjusted Category
CA
(
Y
)
0.687 0.673 Stron
g
Based on table 6 above, it can be concluded that the value of R square adjusted (R2)
of 67.30% is a contribution from the supply chain management variable. This means
that there is an effect of variations of the SCM variable on CA of 67.30% and the
remaining 32.70% is explained by other factors not examined. From the results of
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67.30%, it can be said that the implementation of supply chain management is in the
strong category of competitive advantage in the fabric shop in the Cigondewah Textile
Area. These results are in accordance with Yun & Kurniawan (2017)
[22] , Nurdianti, et
al (2017)
[23] , Suharto & Devie (2013) [24] .
The next criterion is testing the hypothesis. In PLS statistical testing is done by
bootstrapping the sample. The loading results along with the t-statistic value obtained
from the bootstrapping process using 73 samples for resampling and 5000 repetitions
are as follows:
Fig. 3. PLS Bootstrapping.
The results of PLS Bootstrapping in Figure 2 above show that the value of t-count
IS affects CA by 2.438, SRM affects CA by 4.550, and CRM affects CA by 6.370.
Based on Figure 2 above, the form of the equation in this study is as follows
η = 2.438ξ
1 +
4.550ξ
2 +
6.370 ξ
3 +
ς (1)
Table 7. Output Result for Total Effect (Inner Weights).
R
ESULT FOR INNER WEIGH
T
Independent Variable
to Dependent
Variable
Original
Sample
(
O
)
Sample
Mean
(
M
)
Standard
Deviation
(
Stddev
)
T Statistic
(Io/stdevI)
P Value Information
IS (X
1
) CA (Y) 0.246 0.239 0.101 2.438 0.008* Accepte
d
SRM
(
X
2
)
CA
(
Y
)
0.400 0.407 0.088 4.550 0.000* Acce
p
te
d
CRM (X
3
)CA (Y) 0.510 0.486 0.08 6.370 0.000* Accepte
d
*) Significance with a level of 0.05
Hypothesis 1st test results in Table 7 show the value of t-count (2.438) > t-table
(1.667) and a significance value of 0.008 ≤ 0.05. This means that information sharing
activities can influence increasing competitive advantage for fabric business shop
owners in the Cigondewah Texture Area of the City of Bandung City. From these
results, hypothesis 1st is accepted. These results are in accordance with Quynh & Huy
(2018) [6], Nurdianti, et al (2017)
[23] , Ilmiyati & Munawaroh (2016) [25] , Sanjaya, et
al (2016)
[11] and Rachbini (2016) [21] .
Hypothesis 2nd test results in table 7 t-count (4.550) > t-table (1.667) and a
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277

significance value of 0,000 ≤ 0.05. This means that the activities between suppliers and
fabric shop owners must be managed well and always be improved so that there is a
sustainable relationship with suppliers to increase good relationships in the long term
and mutual trust. From these results, hypothesis 2nd is accepted. These results are
consistent with Quynh & Huy (2018)
[6], Sanjaya, et al (2016) [11], and Ilmiyati &
Munawaroh (2016) [25].
Hypothesis 3rd test results table 7 shows the value of t-count (6.370) > t-table
(1.667) and a significance value of 0.000 ≤ 0.05. This means that CRM activities can
have an effect on increasing competitive advantage for fabric shop owners to be able to
support and support the company's goals in terms of creating potential customers who
can make repeat purchases of products and can increase the competitiveness of products
produced by fabric shop owners in the fabric business in the Cigondewah Texture Area.
From these results, hypothesis 3th is accepted. These results are following Quynh &
Huy (2018)
[6], Nurdianti, et al (2017) [23], Ilmiyati & Munawaroh (2016)[25].
The simultaneous test results give a calculated value of 47.336. The value of f-count
(47.336) > f-table (2.737) so that Ho is rejected Ha is accepted, meaning that there is a
simultaneous influence of the SCM variable dimensions on CA. These results then
hypothesis 4th is accepted. These results are following Handoko, et al (2015)
[26].
5 Conclusion
Based on the foregoing discussion, the dimension of CRM CRM gives a direct effect
of 6.370 to CA. This means that the owner of a fabric shop in the Cigondewah Textile
Area of Bandung City must maintain that a good relationship strategy with customers
can continue to support and is very important because it will help increase profits and
increase customer loyalty in generating added value. Also, IS and SRM must be
improved because the dimensions of IS and SRM are still in a sufficient category. The
competitive advantage in fabric shops must still be improved because, for the
dimensions of cost, time and flexibility are still in the sufficient category. This means
that even though it already has a competitive advantage, the owner of a fabric business
shop in Cigondewah Textile Area, Bandung City, must be able to improve its
competitiveness. SCM has a strong influence on CA in the fabric business in
Cigondewah Textile Area, Bandung City. So to be able to maintain the sustainability
of the fabric business, it must pay attention to SCM that can provide good added value
for fabric products offered by fabric shop owners in Cigondewah Textile Area,
Bandung City.
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