While it is generally acknowledged that an organization's supply chain agility is crucial to its competitive advantage, the impact of agility on firm performance has not been adequately researched. This research uses structural equation modeling to examine the effect of supply chain agility on firm performance. This study first presents a supply chain agility framework based on the key elements that determine the flexibility attributes of a firm's critical supply chain processes related to sourcing, manufacturing, and logistics. Next, the study describes the relationships between the elements of flexibility and supply chain agility. A set of survey data is used to examine the relationships between the constructs in the proposed research model. Survey results show that a firm's supply chain agility can be measured by two second-order constructs consisting of its information technology capability and supply chain flexibility. Additionally, the results show that supply chain agility affects firm performance through its competency in responding to the changing market environment.
[...] (2006a), The antecedents of supply chain agility of a firm: Scale development and model testing. Journal of Operations Management, 170-188. Swafford, P.M., Soumen, G., and Murthy, N.N. (2006b), A framework for assessing value chain agility. International Journal of Operations & Production Management, 118-140. Zhang, Q., Vonderembrse, M.A. and Lim, J., 2002a. Value chain flexibility: a dichotomy of competence and capability. International Journal of Production Research 561-583. Zhang, Q., Vonderembse, M. A. and Lim, J., 2002b. Manufacturing flexibility: defining and analyzing relationships among competence, capability, and customer satisfaction. [...]
[...] Table Fit Statistics - Measurement Models and CFA GOODNESS-OF-FIT STATISTICS χ2 Degrees of freedom χ2/df χ2 p-value RMSEA p-value (RMSEA [...]
[...] Supply chain agility is the mediator of these two constructs on firm performance. The research is not without its limitations. The model does not consider performance from multiple perspectives. For instance, it does not consider variables such as market structure from the industrial organization literature. The use of longitudinal data would also have been useful to study how changes in certain variables affect performance. Future research also needs to explore additional facets of supply chain flexibility and agility. References Christopher, M. [...]
[...] Supply Chain Agility Supply Chain Flexibility Supply Chain Internal IT Capability Supply Chain IT Integration Capability Supply Chain Range Supply Chain Adaptability - Cost Supply Chain Adaptability - Time Manufacturing Lead Time Product Development Cycle Time Levels of Customization Delivery Capacity/Capability Delivery Reliability Customer Service Responsiveness to Market Firm Performance Return on Global Assets Global Market Share Profit Margin Global Assets per Employee Figure Theoretical Research framework The process-based view of a supply chain posits that the three key value-adding segments of an organization are the procurement, manufacturing, and logistics processes [15][17]. [...]
[...] Table Measurement Models Factor Loadings and Composite Reliabilities Constructs Measured Variables/Indicators Std Factor Loadings Composite Reliabilities (ξ1) Supply Chain Internal IT Capability [IntrCap] (Standardized Cronbach's α = 0.785 ) XA1 The use of IT to coordinate and integrate activities in design & development 0.55 XA2 The use of IT to coordinate and integrate activities in procurement & sourcing 0.77 XA3 The use of IT to coordinate and integrate activities in manufacturing 0.76 XA4 The use of IT to coordinate and integrate activities in logistics and distribution 0.68 XA5 ERP or SC planning software is used to manage global SC activities 0.44 (ξ2) Supply Chain IT Integration Capability [IntgCap] (Standardized Cronbach's α = 0.846 ) XB6 Internet or B2B technologies are used to coordinate and manage the SC 0.59 XB7 The firm's IT infrastructure is used to provide a competitive advantage 0.75 XB8 Firm's IT infrastructure is used to identify global mkt trends for finished goods 0.72 XB9 Firm's IT infrastructure is used as a key enabler to integrate all SC activities 0.85 XB10 Firm's IT infrastructure is used as a key enabler of communication across SC 0.71 (ξ3) Supply Chain Range [RGE] (Standardized Cronbach's α = 0.566 ) XC11 Extent to which supplier lead time can be expedited/changed 0.26 XC12 Number of customer delivery frequencies used 0.31 XC13 Number of items handled by each distribution facility, on average 0.29 XC14 Range of volume over which distribution can operate cost effectively 0.45 XC15 Range of production volumes over which mfg can operate cost effectively 0.51 XC16 Number of products that each mfg facility, on average, can produce 0.41 XC17 Range of production capacity across which manufacturing can adjust 0.52 (ξ4) Supply Chain Cost Adaptability [AdapC] (Standardized Cronbach's α = 0.708 ) XD18 Change delivery times of order placed with suppliers 0.35 XD19 Alter delivery schedules to meet changing customer requirements 0.36 XD20 Change production volume capacity when necessary 0.76 XD21 Accommodate changes in production mix as required 0.80 XD22 Reduce manufacturing throughput times to satisfy customer delivery 0.58 (ξ5) Supply Chain Time Adaptability [AdapT] (Standardized Cronbach's α = 0.707 ) XE23 Change delivery times of order placed with suppliers 0.32 XE24 Alter delivery schedules to meet changing customer requirements 0.27 XE25 Change production volume capacity when necessary 0.78 XE26 Accommodate changes in production mix as required 0.81 XE27 Reduce manufacturing throughput times to satisfy customer delivery 0.57 (η6) Supply Chain Agility [SCA] (Standardized Cronbach's α = 0.797 ) YF28 Reduce manufacturing lead time 0.66 YF29 Reduce product development cycle time 0.48 YF30 Increase level of customization 0.58 YF31 Adjust worldwide delivery capacity / capability 0.43 YF32 Improve level of customer service 0.58 YF33 Improve delivery reliability 0.69 YF34 Improve responsiveness to changing market needs 0.71 (η7) Firm Performance [Perf] (Standardized Cronbach's α = 0.809 ) YG35 Return on global assets 0.80 YG36 Global market share 0.62 YG37 Profit margins 0.75 YG38 Total worldwide sales ( $ ) / Global number of employees 0.62 Notes: All measured variables are significant at α = 5%. [...]
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