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Exploring Companies Perceptions in Employing Supply Chain Management Consulting Services: A Qualitative Study
Exploring Companies Perceptions in Employing Supply Chain Management Consulting Services: A Qualitative Study
Exploring Companies Perceptions in Employing Supply Chain Management Consulting Services: A Qualitative Study
DOI: https://doi.org/10.55057/ajrbm.2023.5.3.2
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1. Introduction
Supply chain management is defined as forward and reverse process of materials, services,
finances, and information from original manufacturer to final customer that involves
collaboration among stakeholders in order to increase profitability through efficiency, create
additional values, and provide customer satisfaction. (Stock et al, 2009) Although the concept
of supply chain managements has been introduced for substantial period of time, the supply
chain management process and implementation remain developing as the world attention
towards several areas of Sustainable Development Goals (SDGs), i.e.: SDG 9: Industry,
Innovation, and Infrastructure, SDG 11: Sustainable cities and communities, SDG 12:
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Responsible consumption and production, increases since 2018. With the current issue of
sustainability, companies are demanded to implement sustainability on their daily operations,
strategic and operational planning, and logistic process, which remains challenging worldwide.
(Lazar et al, 2021)
Moreover, the impacts of the COVID-19 pandemic on supply chain were globally severe as it
interfered operations and logistics which called new ways to use better-equipped technologies,
techniques, innovations, and approaches to bounce back its processes, minimizing overhead
and procurement costs, ease planning and distribution, and ensure that no shortages occurred.
(Farooq et al, 2021) Therefore, demand to continuously improve supply chain management
continually increases. However, as supply chain management is complex due to its
interconnected manner and involved large number of stakeholders and interests, efforts in
tackling challenges in supply chain management are not always efficient and successful.
(Groznika and Trkman, 2012)
This inefficiency in supply chain occurs worldwide, and is the case in Indonesia, as indicated
its cost-to-GDP ratio which has been higher than 23 percent since 2015, which was almost
three times higher than other benchmark countries (Germany, Japan, Singapore, South Korea,
and China). Although Indonesia’s rank in Logistics Performance Index has increase to 46 th in
2018 due to its rapid development of supply chain infrastructures, Indonesia’s logistics and
supply chain sector is still burdened by its supply chain functions (i.e: substandard operations,
long turnaround time, etc) and by its ecosystem that disadvantage supply chain sector (i.e:
archipelagic country with limited use of technology and capital, etc). (Kearney, 2022)
However, despite the complicated challenges in supply chain faced by companies in Indonesia
and the availability of supply chain consulting services, to date, study on Indonesian
companies’ preference in using supply chain management consulting services remains limited.
Therefore, this study aims to explore Indonesian companies’ perceptions in using supply chain
management consulting services in order to understand more in-depth about the market profile
of supply chain management consulting companies. The results of this study is informative to
further define the suitable marketing strategy for supply chain management consulting
companies operating in Indonesia.
2. Literature Review
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Asian Journal of Research in Business and Management
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Canato and Giangreco (2011) elaborated about the role of consultants as: information sources,
standard setters, knowledge brokers, and knowledge integrators. The latest systematic review
by Cerruti et al (2019) classified management consultancy company roles as change agents that
provided services in very wide variety sectors (i.e.: public and private sectors, small/ local
businesses, different scales of organizations) about organizational design and identity, strategic
consultancy, mediating new policies or programs, etc. On the contrary, management consulting
companies also act as agents of uncertainty and stability whose roles are to help clients at the
beginning of new program implementations and early periods of uncertainties. (Cerruti, 2019)
Services of management consultancy covers broad range of services, such as general and
strategic management, financial management, marketing and strategic management, supply
chain and operations management, human resource management, productivity and
performance management, merger and acquisition, information technology and digital
business. (Kubr, 2002).
2.2 Value chain activities and primary activities of management consulting company
Management consultancy company distinct its services among other services especially in the
nature of co-creation service that relies upon equal client-provider partnerships and
relationships aiming to enable and improve decision-making processes or change
implementation. (Baaij, 2013) Referring to the porter’s value chain, management consulting
firm value chain is categorized into primary activities and supporting activities. Primary
activities consist of marketing, sales, project design, data collection, data analysis, solution
generation for client, implementation assistance, and client relationships management.
Supporting activities consist of recruitment, knowledge management, human resource
management, firm leadership and other support functions. Proceeding both primary and
supporting activities generate margin for consulting firm’s profitability. (Cerruti, 2017)
The primary activities of management consulting firm can be categorized into 3 categories:
Pre-project, project delivery, and post project. Pre-project become the first steps to conduct
management consulting business which consist of marketing and sales activities. In the
marketing activities, firms define target audience. Understanding the demand of consulting
services is important in defining the correct target audience. In the marketing strategy, firms
also build network and publish ads & promotions in order to increase the brand awareness of
the prospective clients. In the sales activities, firms can sell the service to existing client or
approach new prospective clients. For both activities, understanding the customer preference
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Asian Journal of Research in Business and Management
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in choosing management consulting services become key success factor in order to obtain the
consulting project. (Cerruti, 2017)
3. Research Methodology
3.2 Respondents
Respondents of this stage involved consulting companies’ potential customers which were
purposively recruited through maximum variety sampling method. Respondents included
stakeholders representing different company types (private and state-owned enterprise),
employee position (operation, middle management, top management level), and line of
business (manufacture, FMCG, retail, logistic and supply chain).
Twelve in-depth interview was conducted in the customer analysis phase with middle to upper
level of management level from different types of companies. The distribution of respondent’s
company type is considered by using three main parameters:
i. Company type: this parameter is considered based on the main share holder of companies.
There are 4 types of companies considered in this study:
a. Indonesian private: Private company owned majority by Indonesian.
b. Indonesian public: Public listed companies owned majority by Indonesian.
c. Indonesian SOE: Company whose owned majority by Indonesian government.
d. Multinational companies: Private company owned by country whose operating in
multiple country globally.
ii. Company scale:
e. Small to Medium: Company who operate only in one area/region in Indonesia, having
employee under 500 persons.
f. Medium to Large: Company who operate in more than one area/region in Indonesia,
having employees more than 500 persons.
iii. Industry type and product and service: This parameter is considered based on the company
or industry which is potentially to become SCM consultant’s client.
All respondents signed electronic consent form. The lists of respondents’ characteristics were
further elaborated in Table 1.
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Asian Journal of Research in Business and Management
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4. Results
Four themes were emerged from the thematic analysis which illustrate several factors that
influence Indonesian companies’ preference and consideration in hiring supply chain
consulting company services, which includes client’s business views, policy, and company
culture; supply chain consulting company branding and reputation; supply chain consulting
company competency and services; and current business trends, governmental regulations, and
international standard. Figure 1 elaborated the process of Indonesian companies’ preference
and consideration in hiring supply chain consulting company services.
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Asian Journal of Research in Business and Management
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Figure 1: Factors influencing Indonesian companies’ preference in hiring SCM consulting services
“We are very focus on Cost-Ratio, how much profit we gain from every investment we spend.
Hence, almost all efficiency improvement in internal process utilizes our internal employee.”
(Interview 11- Manager Distribution- Indonesian FMCG Company).
The Indonesian developing and developed scale companies would prefer to hire professionals
as full-time employees rather than using consulting company services. This was due to the
consideration of the more committed and long-term engagement and the responsibility towards
the end-to-end process as they have the talents within their organizations. The example of this
issue was stated by the Senior Vice President at a tech company:
“We prefer a long-term incentive alignment. Consultant is not responsible for long term result,
hence, we prefer to hire the talent as our employee. To retain the talent, we can share some of
company equity with the long term expected result, example after 4 years.” (Interview 6- Senior
Vice President- Indonesian Tech Company).
Meanwhile, some multinational or foreign investment companies mentioned that all the
policies related with solving issue as well as operation improvement were managed by their
headquarters, as mentioned by a Senior Manager at Multinational Logistic and Transportation
company:
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Asian Journal of Research in Business and Management
e-ISSN: 2682-8510 | Vol. 5, No. 3, 11-23, 2023
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“All of our activity should align with Global Policy from APAC regional HQ. Any consultant
or supplier should contact regional HQ directly”. (Interview 4- Senior Manager-
Multinational Logistic and Transportation Company).
Understanding the company policies and culture was mentioned as important factors for
consulting companies to be in business with the prospective companies. Several respondents
highlighted on the importance of understanding the comprehensive business process of the
companies and the expectations of the companies’ end customers, hence, approaches to these
companies should consider the needs of their end customers. It was mentioned by one of the
production managers at an automotive parts company:
“All of our operation (e.g. production, warehouse operation, etc) is adopting the process and
requirement of our end customers. We will change or improve our operation only if we get
complain or new requirement from our end customers.” (Interview 8- Manager Production -
Multinational Automotive Parts company).
Besides, the management level of the consulting company team members commencing the first
communication with the prospective companies would also create impact for certain
companies. For some family business companies which relies upon business community for
networking, acknowledgements of the consulting company from the business community were
also important. Furthermore, it is better for consulting companies to be aware of the time, rules,
and regulations of securing budget according to the fiscal year since each company has
different timeline of budgeting. Knowing the correct timing will increase the probability to win
the project since the budget already secured by the company, as elaborated by the R&D
Manager at a cosmetic company:
“When we need consultant services, we will try to find the person who we already know and
join the same business community with us. It is more trusted to use consultant which
acknowledged by our business communities.” (Interview 5- R&D Manager- Indonesian Beauty
and Cosmetics company).
“So far, our company only use external consultant for IT and HR matters. We never heard
SCM consultant before”. (Interview 7- Senior Manager- Indonesian Automotive company).
Despite their limited knowledge, respondents mentioned that the main roles of consultants were
to sell idea and reputation, hence, maintaining the consulting company reputations and
relationships with clients or prospective clients were very important. Furthermore, as most
consulting companies benefit from repeat orders (Baaij, 2013), respondents also mentioned
how customer retention was very important. A senior vice president at Indonesian home
appliance company and vice president of a startup business mentioned how supply chain
consulting companies would also benefit from “word of mouths” in order to get new projects
in similar industries:
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“I usually ask my friend who already have experience to use the consultant in the similar area.
I would trust the consultant which mentioned by my friend rather than finding the consultant’s
information from internet or ads”. (Interview 3- Senior Vice President- Indonesian Home
Appliance company)
“Introduction from our networks makes it easier to have deeper discussion.” (Interview 12-
Vice president- Indonesian startup in Sustainable product)
Furthermore, for some companies, the consultants and personnel expertise, in terms of
educational backgrounds, working experience, and certifications, should be highlighted as it
would serve as potential branding for the consulting companies, especially in proposing their
service for the ministry and state-owned enterprise (SOE), as mentioned by one of the director
in electricity and EPC SOE during the interview:
“Who is the consultant? Is he/she a professor? What is the educational background of the
consultant? Does the consultant hold any specific certification? This personal expertise of the
consultant is one of the interesting points for us to use their services”. (Interview 2- Director -
Indonesian Electricity and EPC SOE).
As the consulting companies usually comes from various origin country, we find that for most
Indonesian-origin companies (state-owned and private companies) or licensed companies with
major shareholders from Indonesia were unconcerned about the consulting companies’ country
origin. This was mentioned by a director of Indonesian industrial valve and pipe company:
“Consulting company country of origin is not important. We consider the consulting company
based on the portfolio and recommendation from our relatives.” (Interview 1- Director/CEO-
Indonesian Industrial Valve and Pipe industry).
In several industries, of which the equipment used were originated from certain countries, i.e:
the Netherlands, Japan, and other industrial countries, the country origin of the consulting
companies was considered important, as the consulting company may have expertise in regards
to the equipment and supply chain processes related to the particular industries. This was
mentioned by a manager at Indonesian pharmaceutical SOE:
“We have many equipment with Japan brand. We will interest to discuss with Japanese
consulting company as we think they are familiar with the Japan brand equipment.” (Interview
10- Manager- Indonesian SOE pharmaceutical company).
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The proposed service and deliverables should also consider highlighting the measurable impact
towards the business processes that the user company would gain from being in business with
the consulting companies. Some companies also proposed the payment scheme of which the
chargeability of the project could be claimed if only the targeted impact were reached. The
latest was proposed by the respondent from tech company:
“We cannot measure the impact of using consultant services to our business. It will be
interesting if consulting company can provide the payment scheme which allows us to paid
only after the projection target is achieved.” (Interview 6- Senior Vice President-Indonesia
Tech company).
As for the expense of the services provided by the consulting companies, despite the various
reasonable expense range mentioned by the respondents depending on the type of industry and
services provided, some respondents highlighted that consulting companies would benefit from
promotional pro-bono projects for developing rapports and company portfolios. Besides,
possibility for price deduction and flexibility in payment terms should also be considered as it
would increase the opportunities in winning the projects. A manager from oil & gas SOE
mentioned the example of pro-bono expert sharing that has been previously conducted in his
office as way to introduce the service area of a consulting company:
“It would be interesting (for our company) if there were rooms for getting free expert sharing
related to specific issue.” (Interview 9- Manager- Indonesia Oil & Gas SOE).
“When there were suddenly government regulations to limit import in Q2 2020, we should
transform from importer to manufacturer company as soon as possible. We need support from
external consultant for the new area expertise which we never touch before.” (Interview 3-
Senior Vice President- Indonesian Home Appliance product company).
The state official instructions and recommendations from the related ministry should be
continuously studied. The proposed service and deliverables should also consider in-depth
understanding of applied standards in each particular type of industries. This was mostly
emphasized by industries that are focused on specific products and services such as
pharmaceutical company:
“Our warehouse and production operation in closely monitored following the standard from
WHO (World Health Organization). We afraid the misalignment with the standard if we involve
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external parties. We should make sure the capability of the parties who handle the operation”.
(Interview 10- Manager - Indonesian SOE pharmaceutical company).
5. Discussions
This study aims to explore Indonesian companies’ perceptions in using supply chain
management consulting services to understand more in-depth about the market profile of the
supply chain management consulting companies. Through in-depth interview with different
representatives from different types of companies, resonating the results of other previous
studies (Farooq et al, 2021; Dolya and Jha, 2022), the results of this study showed how supply
chain activities remain challenging and the processes are varied across company business. This
reemphasize that the demand for the services is widely open across company types in
Indonesia.
The results of this study is aligned with previous studies that consultants’ competency and the
consulting company competencies were central to the supply chain management consulting
company as its main services are in providing services and knowledge management (Baaij,
2013). Figure 1 elaborated how supply chain management consulting company should not only
obtain deep understanding about the knowledge in regards to the services being proposed, but
also the understanding about the culture, policies, and context of the prospective companies.
Through understanding its culture, policies, and context, supply chain management consulting
company could create impactful branding and marketing strategy in order to be in business
with the prospective companies.
The results of this study to some extent showed how companies’ preferences in using supply
chain management consulting services are highly affected by the sociocultural dimensions of
the society. The scale and country origin of the business showed strong influence on decision-
making and budgeting policies. Furthermore, as particular company business views, policy,
and culture became a prominent factor affecting its decision in using supply chain management
consulting services, and that the familiarity towards supply chain services was low, engaging
in business community in order to commence first communications with community is thought
to be important. This result was to some extent related to the highly collectivistic cultural
dimension index of Indonesia. With high collectivism index, Indonesian society, including the
business society perceive their involvement in particular community to be important (Hofstede,
2010). This also showed that the “word of mouth” plays the most effectively for branding to
Indonesian company. Furthermore, this engagement in business communities is not only
potential for opening the new opportunity for consulting companies, but also important to build
the trust and customer retention as most consulting companies would benefit from (Baaij,
2013).
In order to build the trust and promote customer retention, this study also showed how
consulting companies’ competency in delivering excellent services with tailor-made
approaches for creating solutions and improvements in different types of companies are
prominent. This was in line with the importance of building project portfolios and knowledge
management for consulting companies (Cerruti, 2017). The results of this study also provoke
collaboration across industries and academic community in providing excellent services in
supply chain management as respondents of this study mentioned how consultants’
professional reputation, certification, and formal academic degree is seen as important factors
in selection or bidding processes.
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In regards of the demand for the scope of services, with the current rapid development of
technology, it was demanded that supply chain management consulting companies provided
service menu in regards to technology. With the current Industry revolution 4.0 which started
in 2019 and focuses on interconnectivity, real-time data, automation, and machine learning,
this revolution comes along with the massive rises of internet technology. In many industries,
especially manufacturing industries, Industry 4.0 promotes smart manufacturing which equip
production process with digital technology. This approach involving technology could also
include big data, as the main part of this digital technology, that would enable the connected
ecosystem for companies to easily access the real-time insights across process, partners,
product, and people (Epicor, 2022).
Lastly, the results of this study emphasize on the needs for consultants providing services to be
updated with the current business trends, governmental regulations, and international applied
standards for particular industries. This manifested on consulting companies’ ability to conduct
good governance, which should be understood not only to be able to provide and implement
excellent services for the customer, but also to holistically understand the customers’ needs
and roles in order to create effective decision-making solution (Sison, 2011)
This study is not without limitation. As this study was conducted in singular country, the results
of this study may be context specific. The respondents of this study, despite how authors tried
to involve respondents from different industries, were mostly in middle management level,
which to some extent may affect the perspectives and results of this study. However, the results
of this study, especially in regards to the high demand of this digital service in supply chain
management consulting service that followed rapidly changing global standards and trends,
still highly resonated on how the current disruptions calls for new business model innovation
and digital transformation among global management consulting companies, which is
suggested for further research in the future.
The results from this study, thus, put more emphasized on the needs to enrich consulting
companies’ ability in providing end-to-end digital solution, as the practical implications. In
answering towards this demand, consulting companies may consider not only collaborating
with other companies or providers with digital and technology as its main business, but also
investing or acquiring its business as strategy to build this digital knowledge and capabilities
(Kazemargi et al, 2021)
Furthermore, in defining suitable marketing strategy for this particular consulting business in
Indonesia, continuous attempt to increase consultants’ knowledge, qualifications, and expertise
in current area and in new area, especially in regards to digitalization and technology, should
be prioritized. Strengthening network through involvement in business community, widening
services menu in technology through collaboration and/or acquisition, as well as providing
flexible payment terms could also create strong impact to increase brand awareness and
profitability of the supply chain management consulting company.
6. Conclusion
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and international standard. The results of this study resonated how the current disruptions call
for business model innovation and digital transformation in supply chain management
consulting business, and therefore, the results of this study could be implied to further define
the suitable marketing strategy for supply chain management consulting companies operating
in Indonesia and other countries with similar sociocultural dimension.
Acknowledgement
The authors would like to thank all respondents for participating in this study.
References
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