Int. J Sup. Chain. Mgt Vol. 8, No. 2, April 2019 585 Internal Performance of an Integrated Supply Chain: Does Flexibility Matter? Aida Wijaya #1 , Ivan Gumilar #2 , Arief Rahmana #3 , Nadeem Khalid *4 1, 2, 3 Widyatama University 4* Moscow State University, Russia nadeemsfort@yahoo.com Abstract— The prime objective of the currents study, is to investigate the link between supply chain integration (SCI) and Internal Supply chain performance (ISCP). Apart of investigation the impact on internal performance of integrated supply chain, the current study is also interested in investigating the mediating role of Supply Chain flexibility (SCF) in the relationship between SCI and supply chain internal performance ISCP. The structural equation modeling which a twostep process i.e. inner model assessment and outer model assessment is and is an upgraded version of multiple regression is used to answer the research questions. The current study has used the AMOS to analyze the data collected from production managers of Indonesian manufacturing firms. The findings of the study have revealed the fact that SCI has significant impact on the internal supply chain performance (ISCP). The SCF has significantly mediated the relationship between SCI and ISCP. The study will be helpful for policy makers in researcher in understanding the issues related to supply chain, its integration, flexibility, and internal performance. Keywords: SCI, flexibility supply chain management, Indonesia 1.0 Introduction Just as the external chain was defined as dealing with the external parties, the internal chain refers to interested parties within the organization. It is related to the internal aspects [1]. This consists of all functions within the organization such as production, maintenance, quality, human resource, accounting, engineering, etc. In the work by [2], they illustrate the relationship of a company's supply chain where specifically the internal supply chain was described. Internal supply chain can be across departments such as Purchasing, Human Resource and Finance or it can be within the production line itself which can be from one production process to another (such as from bonding to molding and cutting etc). Emphasis on internal supply chain research can be seen in studies such as the one on future research direction for supply chain [3], and those that talks about how the use of information and communication technology (lCT) such as enterprise resources planning (ERP) should be deployed in a small and medium sized manufacturing environment compared to a large corporation [4]. In the work by [4], they highlighted the lack of study into the knowledge gap faced by organizations of differing sizes in the implementation of the ERP system. The knowledge level (both from the aspect of education as well as experience) required in each organization would be contingent upon their size (example it is expected that for successful ERP implementation in big organizations they knowledge level required would be more than those of smaller organizational size). Parties involved in the internal chain basically are related to the function they play in the supply chain [6]. For example those related to the production function could be engineering staffs, production operators, supervisors managers, quality inspectors etc.. In some organizations the parties are categorized into two main groups, namely the direct staffs such as operators, inspectors, line- leaders etc. and the indirect staffs who are those such as supervisors, managers etc. This traditional thinking however is not relevant today. In fact, now it is expected that every functional area can interact with customers, especially electronically [7]. Though the active parties are as mentioned earlier on, it is not uncommon to have the external parties dealing directly with the internal members especially in todays well-connected world [8]. As such the active parties in the internal chain (all the personnel within the organization) are all in a sense linked to the external chain too [9]. As we enter or rather as we are in an "age of information", an area that is much related to the internal supply chain is communication. It is not only verbal or non-verbal but covers the issue of communication ethics of which managers of today would need to be aware of. A wise manager should be well aware of this matter in their specific environment when they make decisions and communicate them [10].Many organizations (especially Multi-National Corporations (MNC» are linked to their external supply chain for both suppliers as well as customers via business-to- ______________________________________________________________ International Journal of Supply Chain Management IJSCM, ISSN: 2050-7399 (Online), 2051-3771 (Print) Copyright © ExcelingTech Pub, UK (http://excelingtech.co.uk/)