The Effect of Sustainable Supply Chain Management on Company Performance Mediated by Competitive Advantage

Abstract

This study aims to examine the effect of sustainable supply chain management on company performance mediated by competitive advantage, the subjects of this study were the actors of the pottery Joint Business Group (JBG) in Banten Province, Indonesia. This type of research is quantitative research with descriptive research and causal research using questionnaires distributed directly to the JBG Pottery actors as many as 100 respondents. Moreover, Structural Equation Model (SEM) in the SmartPLS Software version 3.0.m3 (SmartPLS GmbH: Bönningstedt, Germany) was used for data analysis. The results of the study found that sustainable supply chain management affects competitive advantage, company performance was also observed to be influenced by sustainable supply chain management and competitive advantage while company performance was also found to be affected by sustainable supply chain management through the mediating effect of competitive advantage. The significant implication of this study is for managers to ensure competitiveness in the process of implementing sustainability supply chain to improve company performance, while providing recommendations to the government through Disperindagkop and SMEs in conducting the assistance process to MSMEs.

1. Introduction

The tight market competition requires businesspeople to continue to maintain maximum production levels, meet market demand with maximum sales levels as well. To meet this demand, companies must continue to improve innovation in products and services to stay ahead in the market and not be left behind by competitors. Companies must plan strategies hence they can survive in facing global competition. Companies must be able to maintain competitive advantage, quality and value, so that they can continue to survive among increasingly broad competitors and thrive irrespective of the competitive market [1]. The company’s performance must continue to be improved so that the company is able to compete. Organizational performance can be defined as the level at which an organization is able to fulfill the expectations of its key stakeholders including owners, employees, and consumers [2]. Company performance is an important benchmark for a company that reflects a company has achieved competitive advantage or not [3]. One of the best ways to competitive effectively in the market is to reduce the cost of producing an item to the bearable minimum required to meet the needs of the consumers, and this can be achieved through appropriate supply chain management which is considered to be very important to the performance of a business organization [4].

This has made sustainable supply chain management the focus of several scholars in recent times. This concept combines supply chain management and sustainability concepts [5] as well as require all company activities to improve the sustainability of their supply chains [6]. It is also defined as the strategic plan developed by a company towards achieving certain economic goals which involves systematically coordinating business activities between organizations as well as buyers and sellers [7]. In this context, every company manager must be able to plan, implement, control the supply chain management process. It is possible for business organizations to ensure sustainable competitive advantage through the implementation of efficient supply chain management which allows them to reduce the total cost of satisfying the needs of their consumers in comparison with the other competitors in the market.

One of the businesses developed in Indonesia is Small and medium-sized Micro Enterprises (MSMEs). MSMEs are companies with a small size but in economic development in Indonesia and have also been discovered to be very important considering the population of the poorly educated individuals that their lives depend on SME activities both in the traditional and modern sectors. There is a need for SMEs to take cognizance of threats and opportunities associated with the change in industrial environments in order to develop the best response system to address these challenges. The response to be provided is expected to vary based on the differences in the issues and external factors.

One industry that applies the supply chain concept is the micro, small, and medium (MSMEs). The development of this sector is considered very important to drive national economy due to its ability to significantly increase the income for those that have low income in the country. The development of Micro, Small and Medium Enterprises (MSMEs) in Banten Province is currently growing very rapidly and certainly has an impact or benefit on the environment. Data on the development of MSMEs in Banten Province in 2020 spread across regencies and cities, including 50.323 Lebak Regency, Tangerang Regency; 41.155, Serang Regency; 26.625, Tangerang City; 11.712, Cilegon City; 6.545; Serang City; 10.090, South Tangerang City; 9.582, and Pandeglang Regency; 1.000 SMEs.

MSMEs industry growth can be influenced by supply chain and good performance. In a well-integrated and maximally integrated supply chain, it can meet consumer demand and become a competitive advantage for the company, it is indicated by the lower prices and quality offered so that it can increase its own competitive advantage compared to its competitors. This type of industry is always in demand by most people. These opportunities inspire people to do business, so that the public’s interest in SMEs becomes very broad, one of which is Pottery SMEs.

The development of creative industries/small and medium-sized enterprises together with Joint Business Group (JBG) has developed in the Banten Province, Serang Regency, one of which is in Bumi Jaya Village, Ciruas District, in the form of pottery handicrafts. The pottery industry is basically a category of manufacturing industry that processes into output (products/goods). Although the production process uses simple and traditional tools such as firemen, presses (molds), and clay turning tools using human hands with the advantage of natural resource potential clay deposits, but they have the best quality.

The Pottery is one of the various kinds of crafts that are specifically made using clay which is the potential of the existing area. The pottery industry is also a handicraft, its existence from the past until now is still alive from generation to generation. The best-known pottery center is in Bumi Jaya Village, Ciruas District, Serang Regency, Banten Province. Bumi Jaya Village is not far from the center of Serang City, only about 15 km to the east. Initially, this pottery was made only for household needs, namely kitchen needs. The existence of these pottery items cannot be replaced by other materials such as plastic, or aluminum.

This pottery craftsmanship has been known by the wider community for a long time, because Bumi Jaya pottery is famous for its beauty (aesthetics) and strength which is made from good quality clay (clay), as well as old or classic motifs which according to various sources have existed since the era of Sultanate of Banten. The Serang Regency Government through the Department of Cooperatives, Industry and Trade of Serang Regency has made a number of efforts to preserve and introduce Bumi Jaya pottery to the national and even international levels. One of them has collaborated with PT. Angkasa Pura II for the installation of pottery promotion displays at Soekarno-Hatta International Airport, Cengkareng, Tangerang.

In the process of making pottery, there are basically two techniques, namely the twist or twist technique and the printing technique (press) using the main raw material of clay. The products produced from pottery are as shown in the table below.

Based on

Table 1. Types of Pottery Products 2020.

No	Types of Pottery	Month
		July	August	September	October	November	December
1	Water fountain	100	100	80	100	50	70
2	Big Urn	300	400	200	400	100	100
3	Big Pot	200	300	200	300	200	300
4	Flower vase	500	500	500	500	300	400
5	Ashtray	500	500	700	700	500	500
6	Statue	-	50	-	30	-	-
8	Kowi	88.400	93.150	73.320	72.970	68.850	73.630

, it is explained that the types of pottery made include: fountains, large jars, large pots, flower vases, ashtrays, statues, and kowi (a place for burning gold metal). However, the type of pottery that is often produced is the type of kowi (a place to burn gold metal) because the consumer demand is a lot and the manufacture is very easy and simple, it doesn’t take a lot of time, just 2–3 min. The average monthly production of this type of kowi pottery reaches 96%.

As for the steps in the process of making pottery crafts Bumi Jaya Village; First, the process of selecting clay is to buy directly from the supplier of clay. The second is the process of processing clay, first the clay is sliced with a cutting tool so that small stones (gravel) can be separated, then moistened with a little water and then let stand for a while. 1–2 days, after the clay is allowed to stand, then the clay is milled with a machine or in the traditional way, which is trampled using feet and mixed with sand as an auxiliary material, then stir until evenly distributed. The third process is the formation of clay, when regularly the clay can be shaped according to creations, then pottery craftsmen can shape it using hands directly, as for the manufacturing technique in general there are two techniques, the first with a twist or twist technique, namely by using a turntable, and secondly with the press printing technique, namely by using a mold. Fourth, the drying process, when the manufacturing process is finished and for the process of strengthening the clay, the next step is the direct drying process under the sun, and take weeks or according to the weather. The fifth is the burning process, the hard and dry pottery craft, then the next step is the burning process, the burning process takes up to half a day. Last finishing process or refinement, pottery that has been burned needs quality control to check its condition and quality.

Based on

Table 2. Total Pottery Production Results 2020.

Month	Pottery Production Results
	Produk Quality (Units)	Product Defect/Fail (Units)	Total
July	88,000	2000	90,000
August	93,500	1500	95,000
September	79,000	1000	80,000
October	72,000	3000	75,000
November	66,000	4000	70,000
December	73,000	2000	75,000

, the production of pottery has experienced a fluctuating decline in September–December 2020. In October and November, production fell and the rate of defective/failed products increased to 3.000–4.000 units. Based on the results of research observations, this is due to several factors including: the first is because the tillage of the soil when mixing with sand is not evenly distributed, the second is because of the large number of gravel (small stones) contained in the clay causing cracks, and the third, during the rainy season, the drying or drying process will be slightly disturbed and affect the quality after the combustion process, many pottery products are cracked or defective.

Interviews result with several business actors who are members of the pottery joint business group (JBG), said that in the current pottery craft process, it has been difficult to obtain the main raw material for making pottery, namely clay because it has experienced a scarcity. Clay is rarely found especially in the rice cultivation season so that the process of making pottery is slightly disturbed which will ultimately affect the quality of the production. One other factor is that clay is rarely encountered by the community because clay is a natural potential that cannot be renewed so that slowly the sea will run out along with the needs needed in the process of making pottery.

This research will examine the relationship of supply chain management and company performance. The influence of supply chain management on a company’s performance has been empirically tested in research [2,8,9]. In this study, the authors added the competitive advantage as an intervening variable to test the effect of supply chain management on a company’s performance on the assumption that competitive advantage is a steppingstone for companies to achieve good performance. This is supported by the opinion [10], stating that competitive advantage is a form of strategy to help the company in maintaining its survival. Excellence in competing is a means to achieve the company’s final goal of improving the company’s performance. Previous research has shown that supply chain management influences competitive advantage [8,10,11,12,13]. Referring to previous research, this study will test the role of competing advantage as mediating variables in testing the influence of supply chain management on company performance.

2. Theoretical Review

2.1. Sustainable Supply Chain Management

There is recently a global focus on sustainability as indicated by several organizations including United Nations and this has made it important for companies to ensure sustainable practices in their business processes. In the literature, there are different definitions of SSCM which indicates the different perspectives of the scholars in this new field [14]. Some important definitions of SSCM are presented in

Table 3. SSCM Definition.

Author	Definition
Carter and Roger, 2008 [15]	Strategic, transparent integration to achieve the social, environmental, and economic objectives of organizations in the systemic coordination of business processes between organizations primarily to improve the long-term economic performance of each company and its supply chain
Pagell and Wu, 2009 [6]	The particular managerial actions implemented towards ensuring the supply chain management is sustainable
Vendasan G, 2010 [16]	Focus on how well supply activities are carried out by organizations in traversing three sustainability aspects, including economic, environmental, and social.
Gupta et al., 2011 [17]	The managerial practices designed with the focus on showing the importance of the environmental impact in all the processes associated with each product’s value chain, and also defined as a multi-disciplinary concept that covers a product’s lifecycle.
Mahmoud Al-Odeh and Jim Smallwood, 2012 [18]	The process of managing SCM activities by considering issues related to the environment, economy and social to improve long-term economic goals in both individual organizations and their supply chains
Suhaiza Zailani, et al., 2012 [19]	Supply chain management and sustainable development can be integrated to produce three dimensions which include the economic, environmental, and social issues associated with the development of humans and which are related to the strategies and activities of a company.
Brandenburg, et al., 2014 [20]	The concept of SSCM is strategic and transparent and involves managing the activities associated with supply chain through the integration of economic, social, and environmental sustainability in all the processes to satisfy the requirements of the relevant stakeholders.
Hong Jiangtao, et al. 2018 [21]	SSCM practices consist of the internal and external practices of companies to make the supply chain more sustainable in terms of all three sustainability dimensions.
Stefan Gold, et al. 2017 [22]	Some of the concepts related to SSCM include management of inventories, green design, planning and supervision of production process, modification of the products as well as the management of energy usage, wastes, and logistics, and the reduction of emissions.
Raut, et al., 2017 [23]	The management process which involves integrating environmental, social, and economic contributions. The variations in the demands made by customers and the complexities associated with product components have led to a significant internal competition between businesses in addition to the prevalent global competition.
Swayam S.P., et al. 2018 [24]	The management process which involves integrating environmental, social, and economic contributions. The variations in the demands made by customers and the complexities associated with product components have led to a significant internal competition between businesses in addition to the prevalent global competition.
Panigrahi S., et al. 2019 [24]	It is a management process which involves integrating environmental, social, and economic contributions. The variations in the demands made by customers and the complexities associated with product components have led to a significant internal competition between businesses in addition to the prevalent global competition
Kannan G., et al. 2020 [25]	The concept of sustainability has been continually discussed in several major global forums such as the United Nations with the focus on ensuring organizations understand the importance of accomplishing sustainability in their business processes.
Joash Mageto, 2021 [26]	Sustainability involves integrating environmental, economic, and social concerns towards ensuring the satisfaction of the needs associated with the present times without causing any compromise for those needed by the coming generations

below.

2.2. Competitive Advantage

Sustainable competitive advantage (CA) is the value that a company is able to create for its customers on an ongoing basis [27]. Sustainable competitive advantage was observed from the perspective of the accuracy associated with the products provided in the market by a company and the responses they provide to the complaints made by consumers in relation to their needs, quality of products, mastery of new market, and ensuring continuous innovation for products [28]. Moreover, a company has a sustainable competitive advantage when its products cannot be duplicated or very expensive to be imitated by a potential competitor. Competitive advantage according to [29], is a way of meeting customer needs by differences in the most important attributes of the resulting product compared to its competitors, where obtaining consistent these differences are a direct impact of the gap between the manufacturer and its competitors. Companies that carry out continuous innovation are seen as a source of CA. A company has a CA when it is able to create economic valuemore than competitors. Economic value is defined as the variation between the benefits associated with the products or services offered to customers and their economic costs. Furthermore, the company is said to have a CA if there is a difference between the economic value of the company and the economic value of competitors [4]. According to [1], competitive advantage is defined as a company’s ability to stay above its competitors. Consistent with this view [30], concluded that competitive advantage includes resources or capabilities that are difficult to imitate and are essential in helping an organization outperform its competitors in the marketplace. According to [1], explains that excellence is the ability of a company to utilize its resources with a strategy to achieve the ultimate goal expected by a company. Capability that has the capacity to influence supply chains and critical industrial outputs, beyond the normal course of business [31]. So, the advantage is the supply chain’s strategic ability to manage capabilities, for example integrated information exchange, system level coordination, integration between companies and supply chains.

2.3. Company Performance

Performance is defined as the extent to which an operation achieves goals, and the important steps to meet customer needs [32]. Performance measure is the extent to which the organization achieves organizational, market and financial objectives [11]. Company performance (CP) can be evaluated through the ability of a company to satisfy its employees and achieve certain financial goals [8]. Moreover, organizational performance is defined as an organization’s ability to achieve the market-oriented and financial goals it sets while performance is explained to be the rate at which the goals of a company are achieved. Performance is an optimal work performance carried out by a person, group or business entity [1,31,33] defines performance appraisal as a measurement measure that is carried out on all activities or activities in the value chain that exist within a company. The findings from the measurements are normally used to obtain information related to the performance of the plan and the moment the activities need to be adjusted. Performance is also defined as an achievement achieved by a company in a certain period of time that describes the health level of a company, which refers to how well a company is able to achieve financial and market-oriented goals [1]. Organizational performance was defined as an organization’s ability to fulfil its financial goals [9] while performance was explained as the occasional evaluation of the operational activities, sections, and employees of an organization in line with certain standards and targets that have been predetermined [34]. It is also defined as the total assessment of an organization over a certain period with the focus on the successes or failures recorded based on its resources and operational activities [34].

2.4. Hypothesis Development

2.4.1. Sustainable Supply Chain Management Affects Competitive Advantage

Barney showed that it is possible for an organization to develop sustainable supply chain management (SSCM) through the use of certain resources which are associated with incompetence, scarcity, and competence [35]. Sustainable supply chain combines SCM and sustainability concepts [5], and require all company activities to improve the sustainability of their SC [29]. Indicators of SCM have an important role and have an impact on company performance. Some of the factors influencing effective SCM include the strategies implemented to develop products, manage supplier relationship, production and distribution, planning and control, purchasing, and information quality. Study [8] shows the potential of SCM to effectively improve the competitive advantage of an organization as indicated by the minimization of delay and assurance of quality raw materials and products based on the relationships established with suppliers and customers, thereby, strengthening its competitiveness in the market. It also allows the provision of fast service with different ranges of products at low cost in order to compete effectively in the industry that is considered to be highly competitive [36]. Moreover, it is possible to determine the relations between SCM and competitive advantage through the findings of [12]. It is also important to note that that application of a good SCM has the ability to improve the performance of a company both in terms of operations and finances [37]. Certain indicators of SCM such as supplier partnership strategy, information sharing, and customer relationships which affect those associated with competitive advantage such as price, product innovation, quality, time to market, and delivery dependability. This simply shows that the use of a good SCM has the ability to improve the competitive advantage of a company [37]. From the description, the researcher formulates the following hypothesis:

Hypothesis 1 (H1).

There is a significant influence of supply chain management on competitive advantage.

2.4.2. Sustainable Supply Chain Management Affects the Company’s Performance

Previous research has identified that Sustainable Supply chain management (SSCM) and company performance (CP) shows a positive relationship. In general, activities SSCM includes monitoring and support in integrating sustainability performance criteria into the supplier selection process [38]. The literature explains that various dimensions in supply chain management including strategy supplier partnership, customer relationship, and information sharing have an influence on several aspects of the company’s performance, namely financial performance, operation performance and price/cost [37]. According to [8], effective SCM can be used to enhance the performance of a company through five dimensions which include, customer relationship, supplier relationship, level of information, level of information sharing, and postponement. The results support research [12,39] also showed that SCM has both internal and external integration which can be used to achieve competitive advantage in price, product innovation, quality, delivery, information sharing, and time to market. Moreover, it was also discovered from [36] and [12] that SCM is an important factor required to achieve competitive advantage. Therefore, it is closely related to company performance as indicated by the findings of [12] that it is positively related to production quality and performance. Result of [37] also showed that SCM performance is positively related to company performance. Studies [8], also supports this research, showing that SCM has a positive influence on performance. Based on the description above, the researchers formulated the following hypothesis:

Hypothesis 2 (H2).

There is a significant influence of supply chain management on company performance.

2.4.3. Competitive Advantage Affects the Company’s Performance

As shown in Figure 1, it is possible for a company to use sustainable competitive advantage (CA) to harness some advantages which can be use as the strength to ensure adequate performance and create values needed to continue competing in the market, maximizing profits, and maintaining a high level of operational efficiency. This means it has the ability to provide indirect assistance towards implementing the strategies required to enhance organizational efficiency and competitiveness [2]. According to [8], competitive advantage will improve company performance (CP) as indicated by the direct positive effect of competitiveness on organizational performance. However, it is important to note that the competitive advantage of a company is confirmed when it has a higher profit rate compared to the competitors. According to [40], competitive advantage is temporary because competitors often look for ways to the competitive advantage gained. However, the organization must busy to continue to develop new competitive advantages to stay ahead. The company’s performance depends on the competitive advantage according to the required conditions. [36], states that to achieve competitive advantage a company does not have to be the best in all dimensions. However, according to [41], must excel in value creation [10], states the interdependence of competitive advantage and firm performance. Competitive advantage can be developed from the value a company offers its buyers using based on price, quality, delivery dependability, time to market, and product innovation [2,8,34,40,42,43]. This, therefore, led to the formulation of the following hypothesis:

Hypothesis 3 (H3).

There is a significant influence of competitive advantage on company performance.

3. Method

The focus of this study was to determine the relationship of sustainable supply chain management as the exogenous variable, competitive advantage as the intervening variable, and company performance as the endogenous variable, and to examine the mediation effect of intervening variable (competitive advantage) as well as the relationship between intervening variable (competitive advantage) and endogenous variables (company performance) whose results are expected to produce new research [44]. The research design used is a quantitative research model that is the methods applied to analyze certain theories between relevant variables. The results of the questioner spread are calculated and tabulated in the form of numbers by following statistical procedures, obtained from primary data derived from the results of questioner deployment.

3.1. Variable Operational Definition

Research variables and operationalization in this study are poured into indicators that can sharpen the focus of the research. Furthermore, from each of these indicators made research instruments in the form of questionnaires to acquire primary data. There are three variables developed in the research, namely sustainable supply chain as exogenous variable, competitive advantage as variable mediating, and company performance as endogenous variable.

3.1.1. Sustainable Supply Chain Management Variables

Sustainable supply chain management variables adopted from previous research [8,30,32,36] consist of 5 indicators, such as strategic supplier partnership (SSCM1), customer relationship (SSCM2), information sharing level (SSCM3), information sharing quality (SSCM4), postponement (SSCM5).

3.1.2. Company Performance Variables

Company performance indicators adopted from previous research [2,9,32] consist of market share (CP1), return on assets or capital (CP2), the average selling price is compared to competitors (CP3), Overall product quality (CP4), Overall competitive position (CP5), Overall level of customer service (CP6).

3.1.3. Competitive Advantage Variables

The indicators of competitive advantage variable adopted from previous research [8,30,33,45] are price (CA1), quality (CA2), delivery dependability (CA3), innovative product (CA4), time to market (CA5).

3.2. Population and Sample

This study used the 100 individuals in the Joint Business Group Actors (JBG) Pottery as the population. The data used in this research is primary data, through the delivery of questionnaires to JBG Pottery actors in Banten Province as shown in

Table 4. Data of Pottery Craftsmen in 2020.

No	Joint Business GroupI b	Number of SMEs
		2016	2017	2018	2019	2020
1	Joint Business Group (JBG 1)	18	22	22	24	30
2	Joint Business Group (JBG 2)	34	34	8	34	36
3	Joint Business Group (JBG 3)	21	21	21	22	24
4	Joint Business Group (JBG 4)	12	12	11	12	20
Total		85	89	62	92	100

below.

4. Results and Discussion

According to [46], the loading factor between 0.5–0.6 is sufficient and moderate, while the loading factor value is high if it correlates more than 0.70 with the construct measured. This study uses a loading factor limit of 0.70. The results of Smart PLS are shown as

Table 5. Outer Loading Indicator Value.

Matrix	Company Performance	Competitive Advantage	Sustainable Supply Chain Management
CA1		0.878
CA2		0.698
CA3		0.857
CA4		0.760
CA5		0.816
CP1	0.920
CP2	0.716
CP3	0.944
CP4	0.632
CP5	0.951
CP6	0.934
SSCM1			0.686
SSCM2			0.940
SSCM3			0.738
SSCM4			0.936
SSCM5			0.843

.

From Figure 2, it is known that the range of outer loading values to the three research variables is competitive advantage (0.698–0.878), company performance (0.632–0.951), and sustainable supply chain performance (0.676–0.827). Referring to the convergent validity assumption requirement, the outer results of the model indicate that there are some indicators that are declared invalid. These indicators include SSCM1 (0.686), dan SSCM2 (0.940).

Based on the results of the model estimation in Figure 3, all indicators have an indicator score above 0.7, this indicates that there is a correlation between each indicator. The indicator will be considered valid if the variable dimension outer loading has a loading value >0.5, so it can be concluded that the measurement has convergent validity criteria. The value of the outer loading of each indicator on its construct can be seen in

Table 6. Outer Loading Indicator Value.

Matrix	Company Performance	Competitive Advantage	Sustainable Supply Chain Management
CA1		0.878
CA3		0.857
CA4		0.760
CA5		0.816
CP1	0.920
CP2	0.716
CP3	0.944
CP5	0.951
CP6	0.934
SSCM2			0.940
SSCM3			0.738
SSCM4			0.936
SSCM5			0.843

.

The outer loading value of each indicator was to test for the convergent validity based on each construct’s AVE value and the model was declared valuable when the value is more than 0.5.

4.1. Discriminant Validity

Discriminant validities were used to understand the difference between the concept of each latent variable in comparison with the others. A model is confirmed to have a good discriminant validity when the AVE square for each of the exogenous construct was found to exceed its correlation with the other constructs. The results of discriminant validity testing are obtained as follows.

Table 7. Discriminant Validity.

Average Variance Extracted (AVE)
Construct	Original Sample	Sample Mean	Standard Deviation	T-Statistics	p-Values
Company Performance	0.819	0.818	0.034	23.868	0.000
Competitive Advantage	0.699	0.699	0.050	13.920	0.000
Sustainable Supply Chain Management	0.786	0.786	0.049	15.877	0.000

the data from the average variance extracted analysis illustrates that the entire construct has an AVE above 0.5, meaning the entire construct has met good convergent validity.

4.2. Composite Reliability and Cronbach’s Alpha

It is possible to determine the construct reliability using Cronbach’s alpha and composite reliability values of each construct such that a high reliability is achieved when the Cronbach’s alpha and composite reliability values are more than 0.70.

Based on

Table 8. Composite Reliability.

Composite Reliability (CR)
Construct	Original Sample	Sample Mean	Standard Deviation	T Statistics	p-Values
Company Performance	0.957	0.956	0.010	94.193	0.000
Competitive Advantage	0.902	0.899	0.022	40.168	0.000
Sustainable Supply Chain Management	0.936	0.934	0.019	50.463	0.000

, the Cronbach’s alpha was greater than 0.7, composite reliability was higher than 0.7, and the AVE was more than 0.5 for all constructs, thereby indicating they all have good construct reliability.

4.3. Data Analysis

4.3.1. Assessing the Outer Model (Measurement Model)

This analysis is carried out to ensure that the measurement used is suitable for measurement (valid and reliable). The results of data quality testing (outer model) are as follows.

4.3.2. Outer Research Variable Model

Based on the outer loading test results in Figure 4, the structural model does not have convergent validity problems because all indicators have an outer loading value above 0.70. Thus, the model is worth further analysis.

4.4. Hypothesis Testing through Inner Model

Hypothesis testing describes the measure of significance of a hypothesis support specified at the beginning by looking at the probability value (p-value) and the t-statistical value (t-count) compared to the t-table. With an alpha of 5%, the probability value (p-value) is less than 0.05 and the t-table value was discovered to be higher than 1.96, thereby, indicating the acceptance of the hypothesis since the t-statistics is higher than t-table and p-value < 0.05 and vice versa. Hypothesis testing in this study was conducted by comparing t-table values and t-statistical values obtained from bootstrapping analysis on the SmartPLS 3.0.m3 program. The bootstrap test was used to reduce the possibility of inaccuracy in the data used for the research, and the findings are presented in the following

Table 9. Result for Inner Weight.

Path Coefficient
Construct	Original Sample	Sample Mean	Standard Deviation	T Statistics	p-Values
Competitive Advantage → Company Performance	0.289	0.283	0.049	5.934	0.000
Sustainable Supply Chain Management → Company Performance	0.707	0.714	0.046	15.286	0.000
Sustainable Supply Chain Management → Competitive Advantage	0.845	0.850	0.021	40.323	0.000

.

Table 10. Research Hipotesys.

Hipotesys
Construct	Original Sample	T Statistics	p-Values	Discription
Competitive Advantage → Company Performance	0.289	5.934	0.000	Significant: H1Accepted
Sustainable Supply Chain Management → Company Performance	0.707	15.286	0.000	Significant: H2 Accepted
Sustainable Supply Chain Management → Competitive Advantage	0.845	40.323	0.000	Significant: H3 Accepted

shows there is a positively significant relationship between CA and CP as indicated by 0.289 coefficient with 5.934 t-count and p-value of 0.000 at t = 1.96. Moreover, there is a positively significant relationship between SSCM and CA at 0.845 coefficient with 40.323 t-count and p-value of 0.000 at t = 1.96, and also between SSCM and CP at 0.707 coefficient with 15.286 t-count and p-value of 0.000 at t = 1.96.

The results obtained from the analysis are highlighted as follows:

• Based on the data processing results in the path coefficients table, with the hypothesis CA positive and significant effect on CP(H₁), then it can be explained or described as follows; CA positive effect on CP (competitive advantage (CA) → company performance (CP)), this is indicated by the original sample parameter coefficient of 0.289. From the results of data processing (path coefficients) obtained a t-statistic value of 5.934, with a p-value of 0.000. Thus, the hypothesis is accepted, namely competitive advantage (CA) positively and significantly affects company performance (CP).
• Based on the data processing results on the path coefficients table, with the hypothesis SSCM positive and significant effect on CP (H₂), then it can be explained or described as follows; SSCM positively affects CP (Sustainable supply chain management (SSCM) → company performance (CP) as indicated by the original sample parameter coefficient of 0.707. The data processing or path coefficients analysis showed a 15.286 t-statistic value which was observed to be higher than the t-table at a p-value of 0.000. Therefore, this means the hypothesis formulated to show the existence of a positive and significant relationship between supply chain management (SCM) and company performance (CP) was accepted.
• Based on the data processing results in the path coefficients table, with the hypothesis SSCM positive and significant effect on CA (H₃), then it can be explained or described as follows; SSCM positive effect on CA (Sustainable supply chain management (SSCM) → competitive advantage (CA) this is indicated by the original sample parameter coefficient of 0.845. From the results of data processing (path coefficients) obtained a t-statistic of 40.323 (greater than t-table) with a p-value of 0.000. Therefore, this means the hypothesis developed to show the positively significant effect of sustainable supply chain management (SSCM) on competitive advantage (CA) was accepted, thereby, indicating the ability of an adequate supply chain management system to improve a company’s competitive advantage.

4.5. Simultaneous Influence

The Bigpartial effect of exogenous variables on endogenous variables can be seen from the R square model value (for models with exogenous variables that do not exceed 2), while the magnitude of the effect of those with more than 2 was determined using adjusted R square value which was interpreted in line with those used in ordinary regression analysis. The simultaneous or together effect of the exogenous variables on endogenous ones was determined based on the R-square value which represents the PLS model strength.

This is observed from the fact that 0.75 R-square value represents a strong PLS model, 0.50 is for moderate, and 0.25 indicates for the weak [47]. The R square and adjusted R square values obtained for the research variables are, therefore, presented as

Table 11. R Square.

Construct	R-Square	R-Square Adjusted
Company Performance	0.930	0.928
Competitive Advantage	0.714	0.711

.

The results of the calculation of R-Square table above are as follows:

• The 0.711 R-square value recorded for competitive advantage showed that the predictive power of the model designed using company performance as the moderating variable is in the moderate category. This denotes 71.1% of the variation in the performance of the company can be determined based on the variables of supply chain management.
• The 0.928 R-square value recorded for firm performance also showed that the predictive power of the model formulated using firm performance as exogenous variable is in the moderate category. This means 92.8% variance of CP variables can be explained by SCM variables and CA.

4.6. Discussion of Research Results

4.6.1. Competitive Advantage Is Influenced by Sustainable Supply Chain Management

Sustainable supply chain management was positively related to competitive advantage as indicated by 0.565 coefficient, 39.839 t-count, and a p-value of 0.000 at t = 1.96. This was discovered to be in line with the findings of [35] that sustainable SCM has an effect on competitive advantage, sustainable supply chain combines SCM and sustainability concepts [5], and require all company activities to improve the sustainability of their SC. Moreover, [6,8] found a positive relation of the concept with competitive advantage and this is observed to be the same as the findings of this current research. The other studies by [7] also established a positive relationship between SCM and CA as indicated by previous empirical research on the influence of supply chain management on several variables such as organizational performance and competitive advantage [48].

4.6.2. Sustainable Supply Chain Management Affects Company Performance

The results show sustainable SCM with positive CA at coefficient = 0.707 with t count = 14.791 and (p-value = 0.000 at t = 1.96. These results support previous research [49] which states that sustainable supply chain is a company’s strategic efforts to achieve economic goals through the systematic coordination of relationships between buyers and suppliers and business processes between organizations [49]. Activity sustainable supply chain have an influence in improving performance [9,50], states that SCM has an influence on company performance. It was discovered from several empirical research that effective supply chain management has the ability to improve the competitive advantage and overall performance of a company. Further studies also confirmed that competitive advantage is directly related to organizational performance [2] while SCM was reported to also have an influence on company performance [9].

4.6.3. Competitive Advantage Affects the Company’s Performance

The findings showed that competitive advantage had a positive and significant relationship with company performance at coefficient = 0.289 with t count = 5.703 and (p-value = 0.000) at t = 1.96. In accordance with research results [51], that competitive advantage has a positive relationship with company performance. This signifies the ability of a company to have a higher competitive advantage usually leads to a significant improvement in its performance [48,51]. Moreover, the competitive advantage is normally determined when a company has a different economic value in comparison with its competitors [4]. This, therefore, further confirms that competitive advantage is directly related to organizational performance [2], and this is in line with the findings of previous several studies which state that the excellence of a company has a significant contribution to its performance [37].

4.7. Influence Analysis

In this research, variable competitive advantage was the mediator of variable influence sustainable or variable intervening. This shows that sustainable SCM has an indirect influence on CP through the mediating effect of CA.

Competitive advantage in mediating the influence of supply chain on company performance, a mediation test is carried out with the following hypothesis; competitive advantage can mediate indirect effects.

H_o was observed to be accepted when the p-value < 0.05 at and this means the relation between SSCM and CA was mediated by CA as presented in

Table 12. Direct and Indirect Effects.

Indirect Effect	Original Sample	Sample Mean	STandard Deviation	T Statistics	p-Values
Sustainable Supply Chain Management → Company Performance	0.245	0.241	0.043	5.683	0.000

as follows.

Based on Table 10 above, it shows that the magnitude of the parameter coefficient for sustainable supply chain management (SSCM) variables on company performance (CP) through competitive advantage (CA) is 0.244 which means there is a positive indirect influence of SSCM on CP through CA. It can also be interpreted that the higher the value of sustainable supply chain management (SCM), the company performance (CP) through competitive advantage (CA) will increase as well. An increase in one unit of sustainable supply chain management (SCM) will improve the company performance (CP) through competitive advantage (CA) by 24.4%. Based on calculations using bootstrap or resampling, where the results of the SCM sustainable estimation coefficient test on the company’s performance through competitive advantage (CA) bootstrap results are 0.241 with a t-count of 5.683 and a standard deviation of 0.043. Therefore, the p-value is 0.000 < 0.05, meaning the indirect influence of sustainable SCM on the company’s performance (CP) through competitive advantage (CA) is meaningful or statistically significant. This corresponds to empirical study conducted by [39], to test sustainable influence SCM on CP, with CA as a mediating variable. CA has a significant positive effect on CP.

5. Conclusions and Recommendations

5.1. Conclusions

Based on the data analysis results in hypothesis testing following the results of conclusions that can be made. First, sustainable supply chain management (SSCM) has a positive relationship with company performance (CP). This shows that the better MSMEs in carrying out SSCM practices that include relationships with customers, sharing information with partners, Information that is skinned, and also increases response to customer demand will result in better company performance (CP).Second, sustainable SCM positively affects competitive advantage (CA), low price, proper delivery dependability, innovative product that is carried out continuously, and, time to market quickly, the company is able to compete with other companies. Third, competitive advantage (CA) has a positive relationship with company performance (CP). The more superior one company is from another by developing market share, the average selling price compared to competitors, overall competitive position, and overall customer service levels, so that the company’s performance is increasing.

5.2. Recommendations

This finding reveals the managerial implications of how pottery MSME businesses are able to compete in marketing their production, of course, in addition to the role of the government through the Cooperative Trade Industry Office and Small and Medium Enterprises (Disperindagkop and UKM) in the process of mentoring from business legality, product legality, access to financing and marketing, MSME business actors must also continue to strive to be able to create excellence from products. Uniqueness and other advantages that must be displayed in pottery production, in addition to lower prices, proper delivery dependability, innovative products that are carried out continuously, and fast time to market. Continues to be carried out by MSME business actors. This research has successfully proven the proposed hypothesis. However, it is realized that there are limitations in this study, hence the results may not be generalized to other MSME industries. Therefore, further research can re-examine by examining other industries such as the service industry or retail industry and expanding the number of samples. Further research can look at the variables of antecedents for sustainable supply chain management so that the results of subsequent research can expand the understanding of sustainable supply chain management and its relationship with company performance.