THE EFFECT OF SUPPLY CHAIN DRIVERS ON PRODUCTION PERFORMANCE IN THE INDONESIAN FOOD AND BEVARAGE MANUFACTURING INDUSTRY

Abstract

The food and beverage industry is a major contributor to the Indonesian economy, and the Covid-19 epidemic heavily influenced its supply chain sustainability. The purpose of this study is to examine the effect of innovation and demand optimization on partnerships in production and production performance in the food and beverage manufacturing industry in Indonesia. This research is a quantitative study using PLS-SEM. Data collection in this study was carried out by distributing questionnaires with a sample of 54 respondents of owners and managers working in the medium-large food and beverage manufacturing companies in Indonesia. The findings indicate that innovation and demand optimization can encourage companies to do partnerships in production. Innovation and demand optimization also shown to improve company’s production performance. However, there is no significant effect between partnerships in production and production performance. This is because partnerships often experience a dilemma due to the influence on company performance which may either be favorable or unfavorable to the production performance. The research findings extend literature of supply chain management in the context of internal perspectives of the companies. The context of the research is limited to small numbers of medium-large companies in Indonesia, thus, call for further examination with a larger sample size and in different contexts for further finding generalization. This research provides broader view on the internal perspectives of company’s supply chain management through the perspective of Resource Based View, as well as providing several suggestions for managers of medium-large food and beverage manufacturing companies in developing countries.