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A Review on Global Supply Chain Competitiveness

Hadiyan Wijaya Ibrahim & Suhaiza Zailani

School of Management,
Universiti Sains Malaysia,
11800, Penang, Malaysia
Tel: 04 6533888 ext 2531
Email : hadiyan_tmi_itb@yahoo.com, shmz@usm.my

ABSTRACT
Scholars agree that supply chain management (SCM) is statistically related to
competitiveness. Scholars believe that good SCM leads companies to have good
competitiveness. There are 6 dimensions which believed linking the global SCM to
competitiveness. This study tries to review the role of the hexagon dimensions of
global supply chain in achieving competitiveness
This paper is based on secondary data, by conducting review on several global
supply chain competitiveness related researches and link it with the hexagon global
SCM application.
After link reviewed the hexagon dimension of global SCM on global supply chain
competitiveness, this paper addresses the 6 dimensions of hexagon of global SCM
giving a truly global competition to the companies and results in global supply
chain.
Theoretically, this study has enriched the literature on the integration of view
distinct bodies of knowledge and broadened the understanding of hexagon global
SCM as the driver in supply chain striving competitiveness. Practically, this study
would like to suggest employing hexagon dimension perspective as the driver of
competitiveness and also constructing strategy of global supply chain by using
hexagon dimension for better competitiveness. Further research should be
employing quantitative approach with hexagon dimension as mediator.

Key words: Global Supply Chain Competitiveness, Review, Hexagon

1. INTRODUCTION

To be competitive in global marketplace environment, and effectively in using global supply

chain competitiveness, the supply chain has to be “world class”. Regarding on that the companies
have to be open minded and provided innovative technology-driven dissemination of international
business knowledge (Hult, 2004; Kale, 2007). Supply chain in early decade has improved. The
improvement encourages Global supply chains requiring additional information includes
international logistics, laws, customs, culture, ethics, language, politics, government, currency,
security. Team approaches should use for developing global supply chain; and including sources of
potential supply chain such as international expansion of domestic suppliers, current or potential
suppliers in target countries and third countries (Kauffman, Crimi, and Stading, 2006).
In the importance of excellent international businesses the companies have changed the way
in which their operations management, and cover the areas on the hexagon global supply chain. The
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hexagon global supply chain consists of four main areas (and six total areas): marketing, logistics,
supply management, and operation management; marketing is subsequently composed of competitor
orientation, customer orientation, and supply chain coordination (Hult, 2004).
The discussion on hexagon dimension of supply chain management is relatively new issue,
which expected by the application of that idea can link significantly the international business and
global supply chain (Hult, 2004). The latter, it relates the competitiveness of companies. In this
matter, we can see the acceleration of global business competition development as global
phenomenon, which encourage companies to strengthen the business networking for having the
competitiveness. As we know, supply chain is a competitive strategy of company that used to
improve affectivity (Kale, 2007). Many scholars have discussed supply chain and make supply chain
as fast moving issue (Hult, 2004). Interestingly, it is generally accepted that global supply chain can
improve competitiveness, but rarely discuss the contributing factors of the supply chain strategy on
the competitiveness. This issue should be discussed further. This issue become our research gap and
tries to investigate the contributing factors. Moreover, it becomes this study underlying theory to
examine the extent of global supply chain orientation in the hexagonal supply chain form in term of
competitiveness.

2. LITERATURE REVIEW

2.1 Global Supply Chain and Supply Chain Concept

The objective of global supply chain is exceeding worldwide customer expectation at the
lowest strategic cost. In the general objectives of global supply chain are the same as domestic
supply chain, the main differences are the scope of supply chain and types of participants
(Kauffman, Crimi, and Stading, 2006). The challenges of barriers of global supply chain in
international environment are uncertain stability of politic, lack of infrastructure, communication
difficulties because of different time zone, unpredictable supplier lead times, difficult to link to
global project work, supply chain management skill gaps (Kauffman, Crimi, and Stading, 2006).
Companies must be comprehend of the barriers and able to identify the opportunities in the global
market. The global environment is changing rapidly, technological advance, regulation, shortening
product life cycles, and globalization of competition are among the factors responsible for the
shifting business landscape (Yoon, 2004). Nowadays the orientation of companies change
dynamically, in early 19 century to survive in the competition, companies have to be product
oriented. Then it changed to market and customer orientation in 20th century. Now, to maintain
survivorship in competition, companies have to have value driven orientation. Supply chain partners,
cost-efficiency of supply chain, and customer service (Andersen, Larsen, 2009). In other words, to
improve competitiveness and economic efficiency the companies have to have dynamic structural
adjustment (Yoon, 2004).
The key factor for successful in global management, global companies get a supply
advantages a worldwide supplying network of resources, organize the whole supply structure and
delivers high product variety and customer service at the lowest feasible cost (Yoon, 2004).
Likewise, a customer may be the final customer of the finish product or input to another process
(Harrison, 2001). The industrial related Supply chain is the increasing need of industry to compete
with its product in global market, across cost, quality and service dimension, has driven the need to
develop logistic systems more efficient than those traditionally employed (Ramalhinho, 2001). So it
can be concluded that good inventory system is needed in global competition

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3. METHODOLOGY

The methodology applied in this study is based on secondary data, by conducting review on
several global supply chain competitiveness related researches and link it with the hexagon global
supply chain management application. The approach is exploratory in nature. The undertaken issue
in this research substantiates in capture the global supply chain competitiveness in the hexagon
global supply chain perspective.

Figure 1. Hexagon global supply chain management

Source: Hult, (2004)

This study use hexagon global supply chain management which introduced by Hult (2004) to
review the link between global supply chain and competitiveness. As earlier mentioned, there are 6
dimensions in the hexagon which are: Customer Orientation, Competitor Orientation, Supply Chain
Coordination, Logistic Management, Operation Management, and Supply Management. These 6
dimensions is the main analysis tool in this study.

4. DISCUSSIONS

4.1 Global Supply Chain Competitiveness and Hexagon Global SCM: Coffee Case

Figure 1, 2, 3, 4, 5, and 6 depict the application of hexagon dimension on global supply

chain. It portrays about how hexagon can be employed in the global supply chain. The first
dimension which depicted by figure 1 is the role of customer orientation on global supply chain to
achieve competitiveness. It shows how companies apply the strategy of customer orientation on
global supply chain. The figure 2 shows the role of competitor orientation to achieve
competitiveness in term of global supply chain. Figure 3, 4, 5, and 6 consecutively expose the role of
logistic management, operation management, supply management, and supply chain coordination in
global supply chain for competitiveness. As shown by the figures, it addresses that 6 dimensions of
hexagon global supply chain is the main role in term achieving competitiveness.
Comparing
Performance to
Competitor
Brokers
Brokers Futures Exchange,
Futures Exchange, Subdistrict Bank, Custom, Others Foreign
Bank, Custom, Farmers intermediator
Subdistrict Others Foreign Local Company Country Exporter
Farmers intermediator
Local Company Country Exporter

Importer
Exporter Company,
Importer Company, Red Cherry Coffee Parchment Coffee Dry Company Trading
Exporter Company Company
Red Cherry Coffee Parchment Coffee Dry Trading Company

Pulper Red Cherry Huller/Mill

Parchment Coffee Dry Roasted
Coffee Parchment Coffee
Huller/Mill Local Foreign
Pulper Red Cherry Coffee Parchment Coffee Dry Roasted
Parchment Coffee
Local Foreign Foreign Market,
Supermarket,
Foreign Market, Competitor Unsorted Huller/Mill Coffee Shop,
Supermarket, Permentation Parchment Coffee
Orientation Green Coffee Dry Retailer
Unsorted Huller/Mill Coffee Shop,
Permentation Parchment Coffee
Green Coffee Dry Retailer

Unsorted Consumer
Parcment Coffee Wash Green Coffee Dry
Unsorted Consumer
Local Importer,
Parcment Coffee Wash Green Coffee Dry Trading
Company
Local Importer,
Trading Company
Parcment Coffee Dry Sea Freight,
Air Freight
Parcment Coffee Dry
Local Local Market;
Company, Coffee Shop,
Local Market; Coffee Collector Trading Supermarket,
Local Company, Company Retailer
Coffee Shop,
Trading
Coffee Collector Supermarket,
Company
Retailer
FOREIGN
Roasted Consumer MARKET
FOREIGN Parcment Coffee Dry
Roasted Consumer MARKET
Parcment Coffee Dry Sea Freight, Consumer
Air Freight LOCAL MARKET
Consumer Comparing
Consumer
Performance to
LOCAL MARKET Orientation
Competitor

Figure 2. Global supply chain and customer orientation Figure 3. Global supply chain and competitor orientation
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Brokers
Futures Exchange,
Subdistrict Bank, Custom, Others Foreign Brokers
Farmers intermediator
Local Company Logistic Country Exporter Futures Exchange,
Subdistrict Bank, Custom, Others Foreign
Farmers intermediator
Local Company Country Exporter

Importer Company,
Exporter Company
Red Cherry Coffee Parchment Coffee Dry Trading Company Importer
Logistic
Exporter Company Company,
Logistic Red Cherry Coffee Parchment Coffee Dry Trading Company

Huller/Mill
Pulper Red Cherry Coffee Parchment Coffee Dry Roasted
Parchment Coffee
Local Foreign Pulper Red Cherry Huller/Mill
Parchment Coffee Dry Roasted
Coffee Parchment Coffee
Local Foreign
Logistic Logistic Foreign Market,
Supermarket, Coffee Foreign Market,
Logistic Unsorted Huller/Mill
Permentation Shop, Retailer Supermarket,
Green Coffee Dry Parchment Coffee Huller/Mill
Unsorted Coffee Shop,
Permentation Parchment Coffee
Logistic Green Coffee Dry Retailer

Unsorted Consumer Consume

Parcment Coffee Wash Green Coffee Dry Unsorted
Parcment Coffee Wash Green Coffee Dry r
Local Importer,
Trading Company Local Importer,
Trading Company

Parcment Coffee Dry Parcment Coffee Dry

Operation
Sea Freight,
Local Local Market; Management
Local Market; Air Freight
Coffee Shop, Company, Coffee Shop,
Local Company,
Coffee Collector Trading Company Supermarket, Trading Supermarket,
Logistic Logistic Coffee Collector
Retailer Company Retailer

FOREIGN
FOREIGN MARKET MARKET
Roasted Consumer Consume
Roasted
Parcment Coffee Dry r
Parcment Coffee Dry Sea Freight,
Air Freight
Consumer Consume
r
LOCAL MARKET LOCAL MARKET

Figure 4. Global supply chain and logistics management Figure 5. Global supply chain and operation management
Brokers Brokers
Futures Exchange, Futures Exchange,
Bank, Custom, Supply Bank, Custom,
Subdistrict Others Foreign Subdistrict Others Foreign
Farmers intermediator Farmers intermediator
Local Company Coordination Country Exporter Local Company Supply Country Exporter

Importer Company, Importer Company,

Exporter Company Exporter Company
Red Cherry Coffee Parchment Coffee Dry Trading Company Red Cherry Coffee Parchment Coffee Dry Trading Company
Coordination
Supply
Coordination

Supply
Huller/Mill Huller/Mill
Pulper Red Cherry Coffee Parchment Coffee Dry Roasted Pulper Red Cherry Coffee Parchment Coffee Dry Roasted
Parchment Coffee Parchment Coffee
Local Foreign Local Foreign

Foreign Market, Foreign Market,

Coordination Coordination Supermarket, Supermarket,
Coordination Unsorted Huller/Mill Coffee Shop, Huller/Mill
Permentation Parchment Coffee Unsorted Coffee Shop,
Green Coffee Dry Retailer Permentation Parchment Coffee
Green Coffee Dry Retailer
Coordination Supply

Unsorted Consumer Unsorted

Parcment Coffee Wash Consumer
Green Coffee Dry Parcment Coffee Wash Green Coffee Dry
Local Importer,
Local Importer,
Trading Company
Trading Company

Parcment Coffee Dry Supply

Coordination Parcment Coffee Dry
Sea Freight,
Local Market; Air Freight
Local Market;
Local Company, Coffee Shop,
Supermarket, Local Company, Coffee Shop,
Coffee Collector Logistic Trading Company Coordination
Retailer Coffee Collector Trading Company Supermarket,
Retailer
Supply

FOREIGN MARKET
Roasted Consumer FOREIGN MARKET
Roasted Consumer
Parcment Coffee Dry
Parcment Coffee Dry Sea Freight,
Air Freight
Consumer
Consumer
LOCAL MARKET
LOCAL MARKET

Figure 6. Global supply chain and supply chain coordination Figure 7. Global supply chain and supply management

4.2 Supply Management

Supply management profession is conducted in the environment that has characteristic: (1)
the main issue is focus on the cooperation of Global Economy. (2) Supplier selection is based on the
mutual relationship; the mutual relationship is related to the best worldwide supplier; (3) Heading
forwards and has global long-term relationship. (4) SCM orientation on the supplier selection and
relationship management issue come from traditional business perspective “buyer-seller” which
related to worldwide system (Burt, Dobler, and Starling, 2004).
One of the most important responsibilities of a supply chain manager is to ensure that
suppliers have the ability, motivation, and adequate information to produce material and the
specified quality components in a cost-effective manner. Supply managers try to make their efforts
more proactive and to realize improving their quality management system. The reason for global
sourcing, one of complexities of buying goods and services of foreign origin is the wide variability
among the producing countries in characteristics such as quality, service and dependability, in the
global sourcing can yield large rewards compared with domestic, but requires additional effort. Six
command reasons for purchasing goods and service in international sourcing which are:
(1) Superior quality, it is the key reason to obtain the required level of quality, the industries still
looks to global resources to fulfill their most critical quality requirement.
(2) Better timelines, to improve the certainty of the supplier requirements, order lead-time
lengths variability in the lead-time estimations may be better than those provide by domestic
sources.
(3) Lower cost, If it compares to domestic price, doing international sourcing can reduce raw
material purchase cost up to 20% of total cost after adding all the miscellaneous expenses.

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(4) More advanced technology, doing global sourcing in several Industries will acquire more
advanced technology compare to the domestic technology.
(5) Broader supply base, doing global sourcing will have a possibility of many optional in
supplier selection by company in term of getting best supplier.
(6) Information technology, the success of company in applying information technology is the
key of success to gain logistic competitiveness (Burt, Dobler, and Starling, 2004).
There are three phases on global supply management worldwide sourcing which are:
(1) international purchasing- organization is focus on volume increasing, price minimization, and
inventory management;
(2) Global sourcing- organization is focus on global chances in emphasizing the supplier ability,
supporting production strategy, and servicing customer market;
(3) Global Supply Chain Management – Organization optimizes supply network by doing
effective logistic and effective of procurement management (Monczka and Trent, 1991 as
cited in Burt, Dobler, and Starling, 2004).

4.3 Logistics Management

Logistics concern on the movement of goods. In many case, logistics is responsible for both
incoming goods and distribution of goods to the next member of the supply chain and frequently to
the end of customer itself (Burt, Dobler, and Starling, 2004). Logistical competitiveness will secure
if the companies employ five key capabilities in relationship with leading global firm within the
global supply chain. These capabilities include information technology, information sharing,
standardization, simplification, discipline, and responshipness (CLM, 1995). Logistics
competitiveness is the important factor in fixing on global competitiveness in globalization. Based
on survey study, it is proved that efficient logistic information system facilitates the information
which also important elements in fixing advance logistic system by increasing logistic activities. The
enhancing logistic cost has the potential to weaken the export commodity competitiveness and to
influence the national economy as the whole. The increasing of transportation cost, especially it
relate to the less investment on transportation infrastructure, causes most of the enhancing of total
logistic cost; thus, the physic infrastructure procurement does not guarantee the logistic system. The
relationship between raw material supplier and product consumers, inter or intra companies, the
difficult networking from normal relationship is called by supply chain. Supply chain is a system
that integrating all sub systems, which are supplier, production facilities, distribution services and
customers; and related each other’s.
The strategy is to achieve the maximum benefits from logistic. The strength in each aspect of
functional activities is only relevant if it is seen from the enhancing efficiency point of view and the
effectiveness of continuous logistic. For this, information technology holds the important role.
Information technology, including hardware application, software, networking, can increase the
information flow and facilitate decision-making. Logistic environment becomes more complex as
the result of globalization and market segmentation strategy.
1. Information technology is one of many logistic aspects that propose performance
enhancement and lower cost. Information technology makes company to be able to maintain
key information that easier and accessible, in operational decision and planning. Adopting
and the success in planning need hardware, software, and network technology of logistic.
Those are the pre-requirement to achieve the goals. Survey study by Kang and Kwon (1997)
address technology information can increase logistic competitiveness.

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2. Information Sharing is the willingness to set strategy and tactics based on the available data
and sharing it to other members from the global supply chain. It is based on the initiative to
share the information to other supply chain partner in term of improving substantial
performance, reducing uncertainty, and having benefit for the whole supply chain system.
3. Standardization is a general policy, procedure, and best practices to facilitate logistic
operation. Generally, standard application, methods, and procedure of the facilities to reduce
operation logistic variance;
4. Simplification is the ability to design workings routinely to improving efficiency and
effectiveness. In term of fulfilling market needs to increase operational performance,
company has to learn again each logistic aspect. It is important because it will reduce
redundant and limit the excessive works.
5. Discipline is compliance on policy and general procedure in every organization to operate
routinely and continuously. Logistic flexibility is earned from the high level of routine
discipline of the best practices. The policymaking and general procedure give best practices
without limiting the flexibility and response from field operation.
6. Responsive is the ability to focus on customer needs changes. As time is changing, most of
customers need new services.
Logistic services method which provided by supplier will not ever same and vary each
customers. For these, company has to aware the changes, because it is related to performance and
customer expectation in company’s logistic system. It will make company to be more competitive
and integrating with the members of global supply chain (Yoon, 2004).

4.4 Operations Management

Other dimension in the hexagon global supply chain management is Operation Management.
Operation management can defined as an area of business concerned with the production of products
and involves the responsibility of business operation, started with inputs conversion and ended with
outputs utilization, by effectively and efficiently in processing the product construction. In term of
competitiveness, operation management play role. Airport competition has concerned to this matter
in response to the application of operation management in term of hexagon SCM towards
competitiveness. Airport, after the free market competition involves, has competed roughly. Thus,
airport who applied good operation management and supply chain management will has more
competitiveness (Lowson, 2002). It can be seen by comparing Heathrow Airport, Stansted Airport,
and Norwich Airport.
The operation management in airport industry is started by segmenting the main customers,
which are: (1) aviation operators, (2) service operators, and (3) passenger. These main customers
drive airport to start the chain of operation from runaway, hangars, maintenance, apron services,
caterers, car hire firms, up to security. Indeed, the supply chain also beginning from the runaway
services until the security outsourcing. However, again, the airport which is applied the good
operation management in the supply chain management has the survivorship in the competition.
Norwich Airport, which well-known as the most sustainable competitive advantage, applies the
operation management strategy in their supply chain management to achieve competitiveness.
Indeed, after Grupo Ferrovial, a Spanish Consortium, acquired Glasgow, Edinburgh, Gatwick and
Stansted, the airport competition in UK has alarmed of monopolistic situation. It is hardly for other
airports to survive against the price competition. Thus, again, Norwich Airport is survived.
Norwich Airport changed their paradigm of operation management to the supply chain
terminology. It can be seen in their strategies at their chains. For aviator operation, Norwich believes
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KLM UK as the international hub. KLM UK is known as competitive aviation company, which has
230 destinations. For in-house charters, Norwich delegates it to major global tour operator such as
First Choice, Thomas Cook, and Thomson Holiday. This strategy stimulates tourist to come to
Norwich through Norwich Airport. It is reported that number of tourist coming to Norwich is 10
times comparing to six years ago. Norwich Airport also diversifies their operation to provide training
facilities and helicopter service. The Queing system of Airport is not charge based on minutes but on
hours. It also gives another benefit for delaying airlines. Because of the changing of operation
management strategy on their supply chain management, Norwich still can compete with Grupo
Ferrovial which owned Heathrow, Gatwick, and Stansted. In other words, the application of
operation management in supply chain management gives Norwich sustainable competitiveness
(Lowson, 2002).

4.5 Customer Orientation

Customer orientation is a sequential process in which firm attain customer information,

dissemination that information and implement product and service improvement. One must first
attain customer information to understand customers’ root needs and value, how they are served by
current products and services, and how will likely be served by the future products and service, the
second goal is to disseminate this customer information to all the elements in the organization that
are either directly or indirectly involved in satisfying customer. The purpose is to prepare the entire
organization to translate customer need into effective actions. The third goal is to act on
disseminated customer information through processes of implementation. The purpose is to follow
through and provide the customers with new and improved products and services (Johnson, 1998).
Marketing concept, which emphasizing on customer orientation and innovation, is the
foundation from all business strategy and plans. Marketing research has renewed the management
approach that based on interest on customer business orientation (Shapiro, 1988). By not excluding
the important of customer for company in competitive market, literature review of marketing shows
that majority of customer orientation research based on large organization. The supporters of
marketing concepts argue that customer orientation business will improve market performance, thus
also be suggested to link customer orientation with organization innovation and external
environment (Appiah-Adu and Singh,1998). A customer orientation involved more than just
understanding the customer need, but must learn to communicate this understanding and follow
through in delivery of high quality product and service (Johnson, 1998).

4.6 Competitor Orientation

Competitor orientation is a frame of reference from which the company differentiates itself,
employing its relative corporate strength to improve, or deliver in a different way by comparing the
management to its competitor. It has the equal importance to the others market orientation such as
customer orientation (Narver and Slater, 1990). It represents a relative emphasis on collecting and
processing information pertaining to customer preferences and competitor capabilities. Literature
states competitor orientation has improved the profitability (Narver and Slater, 1990; Armstrong and
Collopy 1996), affected the firm’s strategy (Porter, 1980), enhancing innovation (Gatignon and
Robertson, 1993), and strengthen the research and development (Coopers, 1984).
The improving profitability, firm strategy, enhancing innovation, and strong research
development are the tools to survive in competitiveness (Armstrong and Collopy 1996). Again, as it
described earlier, competitiveness is comparative concept of the performance and ability of company
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to sell, buy, supply, and distribute products in a given market (Kale, 2007). It means comparing the
performance of company to two or more companies to maintain the survivorship. If the company has
better or worse performance than other, the experience of others can be learning as the tool to
survive in competition. It can be conclude, competitor orientation is an important factor on
increasing competitiveness.
The case of Telecommunication Company’s competition is the good example in explaining
how competitor orientation is useful in supply chain and generating competitiveness. In
telecommunication industry, the chain is started from the tower development. Building a tower will
cost company many bags of cash. However, if it does not have tower or under city cable, it will not
able to sell the main product, which is communication. The supply chain management play role in
term of conglomeration. Many telecommunication companies such as Telkom Indonesia, Singapore
Telecommunication, Qatar Telecommunication, and other telecommunication companies do
outsourcing to solve the problems. This how the supply chain is important. They competitively lease
others tower, cable, or satellite, domestically or globally, to have tower or cable under city. Other
examples, for equipment supplier of telecommunication companies will use Lucent, Motorola,
Cisco, or Nortel Network; for electronic manufacturing suppliers will use Flextronic Inc, Sanmina,
or C-Mac; or to be more integrated, telecommunication has made mutual relationship with mobile
phone manufacture such as Nokia, Samsung, Sony Ericsson, or Motorola. In term of competitor
orientation, telecommunication companies gather information to gain less cost, higher innovation,
and indeed, higher profit. This is explaining why Telecommunication Company has to reduce the
margin, find the best and most demanded mobile phone manufacturer, find the most low cost
equipment suppliers, or even has to acquire competitors. The competitor orientation plays role in
term how each telecommunication depicted others strategy to survive in the market. In the condition
of survivorship, the companies depict how others employ the supply chain from the beginning
(servers and communication hub such as towers) until the end (the mobile manufacturer and pricing
competition) (A Market Research Report of the Insight Research Corporation, 2007).

4.7 Supply Chain Coordination

Supply chain coordination improves if all stages of the chain take action that together
increase total supply chain profits (Chopra and Meindl, 2007). Supply chain coordination requires
each stage of the supply chain to take into account the impact its actions have on other stages.
Supply chain management (SCM) is the integration and management of supply chain organization
and activities through cooperative organization relationship, effective business process, and high
levels of information sharing to create high-performing value systems that provide member
organizations a sustainable competitive advantage (Hanfield, 2002). There are 3 important issues
from supply chain management: the purpose of supply chain management, the impact from cost
control of supply chain management application, and the company’s services quality to the
customers (Hanfield, 2002). The purpose of the SCM is to run effectiveness and affectivity, started
from supplier, manufacturer, warehouse, and stores. It will cause large-scale loss if there is no good
coordination among each related parties. Hanfield (2002) describes one of the effects namely
“Bullwhip Effect”. It occurs if there is lack coordination in information exchange between retailer,
distributors, and company. The bullwhip effect has a negative effect on performance at every stage
and hurts the relationship between different stages of the supply chain. There is a tendency to assign
blame to other stages of the supply chain because each stage feels it is doing the best it can. The
bullwhip effect thus leads to a loss at trust between different stages of the supply chain and make any
potential coordination efforts more difficult. The impact of the bullwhip effect on supply chain
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performance increases manufacturing cost, inventory cost, replenishment lead-time, transportation

cost, shipping and receiving cost, and decreases of level of product availability, and profitability.
In one side, when the retailer shop see there is increasing demands from customers, then the
increasing will catch by the distributor, and further it will catch by the company in large scale, so it
will have huge snowball that will downfall (Hanfield, 2002). The problem is if the demand is read in
long term period. Nowadays, the customer needs has changes rapidly. This can be seen from the
various products in the market. It will make companies to manage the inventory well. Because each
demand changes of certain product will make changes in company’s inventory policy, especially the
repurchase and reorder policy. SCM discusses about how to manage distribution to company.
However, SCM is not only about simple product distribution. SCM discusses how to integrate the
supply chain up to the end customers.
Supply chain shows there is a long chain, which started from supplier until end customer. As
classified by Ramalhinho (2001), the main players that involved in supply chain are: Supplier, it is
the first chain in supply chain. The sources provided the first product and first product distribution
(from raw material, work in process, complementary material, by products, and components);
Supplier-Manufacturer, from the supplier will continue to manufacturer. Manufacturer is the place
to process and finish the goods (finishing goods). The relation between supplier and manufacturer
has the potential to reduce cost such as: inventory carrying cost by developing supplier partnering
concept; Supplier-Manufacturer-Distribution, next chain from manufacturer to distribute the
product to customers, it will use distributor or wholesaler services; Supplier-Manufacturer-
Distribution-Retail Outlets, From the wholesaler, products is distributed to retail outlets. However,
there cases where manufacturer make direct selling to customer; Supplier-Manufacturer-
Distribution-Retail Outlets-Customer, customer is the last chain in supply chain as the end-user.

5. CONCLUSION

Huge body literatures agree that supply chain management is statistically related to
competitiveness. Scholars believe that good supply chain management leads companies to have good
competitiveness. In the dynamic market competition, there are 6 dimensions which believed linking
the supply chain management to competitiveness. There are Logistic Management, Supply
Management, Operation Management, Customer Orientation, Competitor Orientation, and Supply
Chain Coordination giving a truly global competition to the companies and results in global supply
chain.
From the theoretical point of view, the present study has enriched the literature on the
integration of view distinct bodies of knowledge such as global supply chain, international business
and competitiveness. The present study has certainly broadened the understanding of hexagon global
supply chain management as the driver in supply chain to strive competitiveness. Regarding to the
relationship between global supply chain and competitiveness, the present study is one of the
foremost studies that strives to light up the path for supplementary research by adding the hexagon
dimension of global supply chain.
As the practical contribution, the present study would like to suggest company to employ
hexagon dimension perspective as the driver of competitiveness in term of global supply chain
management. It also suggests the manager of companies to construct strategy of supply chain by
using hexagon dimension of supply chain management for better competitiveness and indeed for
performance.
As this study is a review study, we suggest conducting further research to link global supply
chain and competitiveness with hexagon dimension as mediator by employing quantitative approach.
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Armstrong J.S., Collopy F. (1996). Competitor Orientation: effects of objectives and information on
managerial decisions and profitability. J Mark Res, 33, pp.188–99
Burt, David N., Dobler, Donald W., and Starling, Stephen L. (2004). World Class Supply Management, The
Key to Supply Chain Management, McGrow Hill, Singapore.
Cooper, L. (1984). The Twinning of Institutions; its use as a technical assistance delivery system, World Bank
Tech. Paper, 23, pp.46
Council of Logistics Management. (1995). World Class Logistics: The Challenge of Managing Continuous
Change.
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