LEAN MANUFACTURING MODEL, SUPPLY CHAIN MANAGEMENT, AND THE ROLE OF GOVERNMENT TOWARDS INDUSTRIAL COMPETITIVENESS

Small and Medium Enterprises (SMEs) have significantly contributed to the economy of Indonesia; however, their competitiveness is still considered low. This study aimed to develop a competitive model of SMEs through lean manufacturing (LM) model and supply chain management (SCM) and the government serving as a moderating variable. The data were acquired through a survey of 42 companies clustered in leather industry. The results showed that the competitiveness model was reliable; however, the role of the government had a negative impact in moderating the supply chain management towards competitiveness. This study also confirmed the government policies did not solve such an issue as material supply and the lack of infrastructure and business facilities. It is recommended that the government conduct concrete industrial development to prevent future failure.