A study on the relationship between supply chain integration, disintegration and organizational efficiency

Abstract

Supply chain integration (SCI) which is a supply chain management (SCM) activity is progressively playing a critical capacity in the organization. An efficient supply chain is the key determinant factor for any process industry to stay competitive. The study suggests that organizations are opting for integrated supply chain system for seamless information flow among the stakeholders without analyzing the degree of integration beneficial for supply chain efficiency (SCE). Using data, primarily from a large oil & gas industry in Malaysia that has an integrated environment, this research studied how SCI and selective disintegration (DIS) affects supply chain efficiency (SCE) and organization performance (PER). In particular, this research has examined the benefits of disintegration of selective business processes from core supply chain system, which in-turn improves the efficiency of the chain. The study has incorporated multiple data collection and analysis techniques, combining qualitative and quantitative approaches and partial least square (PLS) structural equation modeling (SEM) has been employed to test the theoretical framework and hypotheses. The findings reveal that, almost 59% of PER and 76% SCE is improved as a result of the DIS. The main managerial lesson is that, in contrast to what has been written in many books and popular publications, efficient supply chain system is a cycle of integration and selective disintegration.