Sustainable supply chain management on firm performance: Evidence from manufacturing companies in developing countries

Abstract

This study examines the effect of Sustainable Supply Chain Management (SSCM) practices on firm performance in manufacturing companies in developing countries, focusing on manufacturing firms in Makassar City, Indonesia. A quantitative research design was employed, using purposive sampling to select 100 employees involved in production, procurement, distribution, and operational management from three manufacturing companies. Primary data were collected through a five-point Likert-scale questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 3.0. The findings demonstrate that all examined SSCM practices have a positive and significant effect on firm performance. Energy efficiency in production processes has the strongest effect (β = 0.739; p < 0.001), followed by supplier environmental performance evaluation (β = 0.341; p = 0.044), waste management and product recycling (β = 0.239; p = 0.047), and the use of environmentally friendly production technologies (β = 0.165; p = 0.026). These findings indicate that integrating sustainability into supply chain activities can strengthen operational efficiency and overall firm performance. The study implies that manufacturing firms should prioritize energy efficiency, strengthen environmental supplier assessment, adopt green technologies, and improve waste management and recycling practices to achieve sustainable competitiveness.