The implementation of the Internet of Things (IoT) in the supply chain is the key to driving supply chain process integration (SCPI) from a retail industry company. The application of IoT in SCPI will have implications for the development of supply chain capability (SCC), which in turn will affect the company’s performance improvement. Information Communication Technology (ICT), in this case IoT, is an enabler for increasing the competitive advantage of the retail business.
IoT implementation will improve the performance of retail companies by increasing their supply chain capabilities to meet customer experience and demands for more innovative products and services. “In the industrial era 4.0, the retail industry has entered a changing business ecosystem compared to previous times. ICT in the digital era has major implications for the value chain of the retail industry because it can change the way products are designed, manufactured, and delivered to customers,” said Dr. Yana Ernawan at a doctoral promotion session in the field of Administrative Science, Postgraduate Program in the Faculty of Administrative Sciences, Universitas Indonesia (FIA UI).
In his dissertation entitled “Pengaruh Kapabilitas Internet Of Things (IoT) dalam Integrasi Proses dan Kapabilitas Rantai Pasok Terhadap Kinerja Perusahaan Ritel“, Yana explained that the retail industry plays an important role in the people’s economy. There is no economy in this world that can move without retail activity. However, due to the Covid-19 pandemic which has been reported since the end of 2019 in China, the growth of the global retail industry has slowed down and dropped to minus 2.8% in 2020.
According to Yana, this was the result of consumers’ reluctance to spend more amid a pandemic and economic uncertainty. However, in 2021, it is reported that the performance of global retail industry companies has again increased by 12.1% although this growth is expected to slow down again to 3.4% in 2026. This global phenomenon is impacting Indonesia. Statistics Indonesia (BPS) noted that the performance of the wholesale trade and retail sectors decreased drastically to minus 8.32 points in 2020 compared to 2019.
The novelty of Yana’s research is to reconstruct the results of previous research conducted by De vass et all (2018) and Huo (2012) with research by Chen and Landry (2009:32). The reconstruction is done by incorporating the SCPI variable into the research framework, where previously no researcher had done so.
“The results of the first study with regard to aspects of the relationship between the IoT capability variables on supply chain performance show that IoT implementation has a significant effect on the company’s internal supply chain. Meanwhile, the implementation of IoT in the supply chain of suppliers and customers has no effect. The results of the second study show that in retail companies, the IoT capability variable in SCPI; the implementation of IoT in the company’s internal supply chain affects the company’s internal SCPI,” said Yana.
Yana made three recommendations. First, the implementation of IoT in the retail industry in Indonesia is significantly able to drive the company’s internal SCPI, which is able to drive the company’s internal SCC, and ultimately affect the company’s performance. From a practical perspective, this is very beneficial because it can increase the competitiveness of retail industry companies in Indonesia. Therefore, it is recommended that the implementation of IoT needs to be implemented immediately in retail companies in Indonesia.
The second recommendation is addressed to retail business managers, especially small and medium scale. Yana said that retail business managers need to be given a new understanding and awareness of the importance of implementing digital technology (IoT and e-commerce) in managing the integration of supply chain process and capability development as a driver of sustainable company competitiveness.
“Third, support from regulators for retail business actors, especially small and medium scale, is needed both in the form of policies and training related to the implementation of information and communication technology, in this case the use of the IoT platform. It is recommended so that these small and medium retail business actors will be able to strengthen their business performance and compete properly and be protected from the threat of digital technology disruption,” he said again.
Thanks to his research, Dr. Yana Ernawan obtained his doctoral degree in Administrative Sciences. He is the 212th graduate in the field of Administrative Science and the 24th doctor at FIA UI. The Doctoral Promotion Session was chaired by the Chairman of the Defense Session Prof. Dr. Haula Rosdiana, M.Sc. with Promoter Prof. Dr. Chandra Wijaya, M.Sc., M.M., and Co-Promoter Dr. Fibria Indriati Dwi Liestiawati, M.Sc. The examiner team consisted of Dr. Akhmad Greece, S.E., M.T .; Dr. Wilfridus B. Ellu; Dr. Heri Fathurahman, M.Sc.; Dr. Pantius Drahen Soeling, M.Sc.; Dr. Andreo Wahyudi Atmoko, M.Sc. This session was held at the EDITION 2020 Auditorium, 2nd floor M building, Faculty of Administrative Sciences UI Depok (29/12/2022).
Author: Debie Puspasari| Editor: Mariana
