Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
Relating E-integrated, Triple-A Supply Chain to Environmental
Uncertainty, Market Competition and Firm Performance
Tesfaye Tolu Feyissa
Department of Industrial and Management Engineering
Indian Institute of Technology, Kanpur
208 016, UP, India.
[email protected], [email protected]
R.R.K. Sharma
Department of Industrial and Management Engineering
Indian Institute of Technology, Kanpur
208 016, UP, India.
[email protected]
Abstract—A modern supply chain (SC) is required to exhibit three important characteristics: agility, adaptability and alignment, collectively
known as the triple A of SC. SC flexibility, which is a major component of SC agility, has also attracted most SC researchers and practitioners.
Another desirable SC characteristic that is often advocated by academia is SC e-integration. SC scholars nowadays recommend the seamless eintegration of the SC, just as a strategic tool for efficient and effective coordination of business operations in a dynamic environment.
Consequently, the triple A’s and e-integration may be considered as the most desirable SC characteristics. In this study, we investigate the
relationship between SC e-integration and SC flexibility, the impact of environmental uncertainty and market competition on SC characteristics,
and the impact of SC characteristics on firm performance. To this end, we propose a conceptual model that depicts these relationships, which we
describe using our new hypotheses and other results from the literature. Further, we relate SC flexibility to organizational strategy types.
Keywords—Supply chain, flexibility, agility, adaptability, alignment, triple A, strategy, firm performance.
I. INTRODUCTION
A firm must make sure that its supply chain (SC) is efficient (meaning that the SC activities are carried out with the smallest
cost possible) in order to ensure competitive advantage and sustainability of its operations. According to Lee, however, the best
supply chains are not only cost-efficient but also agile, adaptable, and aligned [1]. Such SCs are believed to be instrumental for the
sustainability of the firm’s operations. A SC is said to be agile if it can easily and quickly respond to changes in the environment
such as short-term changes in demand or supply and external disruptions (such as logistics disruptions). Thus, an agile SC has the
capability to sense changes in the environment and modify its usual courses of action accordingly. Though SC agility is closely
related to SC flexibility, the two concepts are not exactly the same. SC flexibility is the capability of a SC to change its own process
without changing its structure [2]. When a SC is able to monitor changes in the environment and is able to make timely adjustments
in its courses of action, it becomes agile. Thus, SC agility incorporates SC flexibility.
However, responding successfully to one-time variations in the SC environment would not be sufficient for the success of a
firm, because such a responding capability cannot always be effective in the constantly changing business environment. Thus, the
structure and the processes in the SC should be as dynamic as the business environment itself. In other words, the SC should be able
to adapt itself to the structural changes and trends in the business environment and evolve accordingly. A SC with such a capability
is said to be adaptable. SC adaptability helps for the sustainability of business operations in the long run, whereas SC agility helps
the organization cope with relatively short-term changes.
In addition, SC members must synchronize their interests so that all of them work towards the optimal functioning of the
whole chain instead of their individual interests. A SC with such an arrangement is said to be aligned. Thus, SC alignment is the
degree to which strategies, information and incentives are synchronized across SC members. SC alignment can be attained by
developing a common understanding and an incentive system for all SC partners [1] towards an equitable sharing of costs, risks and
rewards in the SC, thus mitigating the conflict of interests. These three characteristics of a SC (agility, adaptability and alignment)
are commonly known as the triple A of SC.
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Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
Another desirable SC characteristic is SC integration. It may be defined as the process of enabling collaboration in order to
synchronize the activities across the different nodes in the SC for the optimal benefit of the overall SC. Information technology
plays a vital role in SC integration, thus giving rise to the concept of SC e-integration.
It is quite compelling to understand the impact of SC e-integration on SC flexibility, and the role of these and other important
SC characteristics in improving firm performance. On the other hand, other external forces such as environmental uncertainty and
market competition influence how the SC should behave. Thus, the impact of such external conditions on SC characteristics is also
worth investigation.
II. LITERATURE REVIEW
In this section, we give a brief review of relevant literature on organizational strategic approaches, SC flexibility, agility,
adaptability and alignment, as well as SC e-integration and firm performance.
A. Strategic Approaches
Michael Porter claims that every firm has a strategy [3]. Based on their studies, many researchers attempted to classify firms
into different strategic groups. Some offered to classify strategies at firm level (e.g. [3], [4]). Others classified just a certain
dimension of strategy such as manufacturing strategy (e.g. [5]), marketing strategy, etc.
Miles & Snow et al. argue that “mature” organizations must solve three broad problems of organizational adaptation: the
entrepreneurial problem, the engineering problem and the administrative problem [4]. Accordingly, they classify firms into four
strategic groups: Defenders, Prospectors, Analyzers, and Reactors.
Defenders are organizations which have narrow product-market domains and seek to create and maintain stability in their
domains [4]. They penetrate the current market through product quality and try to protect their domain from new entrants through
competitive pricing and excellent customer service. As they are cautious, Defenders involve in limited product development related
to their current products only, but ignore current developments in the environment. They gain incremental growth through market
penetration. They tend to adopt cost-efficient and single-core technology, and practice vertical integration. Moreover, they attempt
to ensure efficiency through strict control and continuous improvement to technology. They tend to implement functional structure
with extensive division of labor, high degree of formalization, centralized decision making, simple coordination mechanisms, and
hierarchical channels of communication. In Defenders, finance and production experts are most influential.
Prospectors are organizations with broad product and market domains [4]. They monitor environmental trends and introduce
changes in the industry. Their growth results from product and market development and might happen dramatically. They avoid
long-term commitment to a single technology by focusing on multiple, flexible prototypical technologies, and on technologies
embedded in people. They allow decentralized control, horizontal information flows, complex coordination mechanisms, less
formalization, as well as less routinization and mechanization. Marketing and R&D experts are most powerful in Prospectors.
Defenders and Prospectors are ideal forms of strategy types lying on opposite ends of the strategy continuum, both with
patterns of consistent and proactive response mechanisms. Reactors are organizations with no consistent pattern of response
mechanisms, while Analyzers are those which exhibit hybrid characteristics resembling both Defenders and Prospectors in different
ways [4]. Analyzers operate both in a stable domain like the Defender and in a changing domain like the Prospector. They seek to be
efficient in their stable sub-domain and flexible in their changing sub-domain by adopting loose matrix structure with both
functional divisions and product groups, moderately centralized systems, both horizontal and vertical communication and
information flows. In Analyzers, marketing and engineering experts are most powerful, followed closely by production experts.
On the basis of how manufacturers value 11 “competitive capabilities”, Miller & Roth classy them into three strategic groups:
Caretakers, Marketeers and Innovators [5]. Accordingly, Caretakers are organizations which compete on the basis of price. They
tend to place relatively lower emphasis on improvement programs than their counterparts. They have the most mature and heavily
standardized products. Caretakers are roughly Defenders of the Miles & Snow et al. typology. Marketeers are organizations which
exhibit market-oriented competitive capabilities focusing on broad distribution, broad product lines, and responsiveness to changing
volume requirements. Marketeers’ highest priorities are conformance quality, dependable deliveries, and product performance.
Finally, Innovators are organizations with relatively higher emphasis on bringing about changes in design and introducing new
products quickly [5]. They manufacture the most customized products. Innovators invest more seriously in R&D than the other
strategy groups, especially more so than the Caretakers. Due to Innovators’ emphasis on expanding their market share through new
product development for both old and new markets, engineering and R&D are the strongest and most influential functional units in
Innovators.
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Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
B. SC Flexibility, Agility and E-Integration
The business environment nowadays is full of uncertainties resulting from the constantly changing customer expectations,
demand and supply variations, continuous technological changes, and fierce competition. Business organizations have no choice
but to carry out their operations in such a turbulent world where a dynamic system is required. SC is one of the most important areas
affected greatly by the ever-changing business environment. Consequently, firms should make their SCs as flexible as possible.
SC flexibility has been extensively studied and discussed in the literature [2] [6-16]. Lummus et al. conducted a Delphi study
on SC flexibility, and identified important characteristics of flexible SCs such as: ability to synchronize to customer delivery dates
and times, visibility of customer demand, accuracy and timeliness of data, efficiency of information flows throughout the SC, ability
to shorten cycle times, and ability to shorten lead times [6].
Singh & Acharya conducted a comprehensive review of the flexibility literature; they define SC flexibility as the ability of an
organization to respond to the changes frequently occurring in the environment [2]. They further argue that SC flexibility allows an
organization to “make shifts in the process within the existing SC structure and without changing the entire design of the SC.” They
identified 22 dimensions of SC flexibility:
(1) Product Flexibility: responsiveness (or adaptability) to future changes in product design;
(2) Volume Flexibility: ability to produce above/below installed capacity;
(3) Trans-shipments Flexibility: ability for monitored movement of material between locations at the same echelon;
(4) New Product Development/Launch Flexibility: ability to introduce new products or features catering to customer demands;
(5) Sourcing Flexibility: ability to have more than one supplier for the same product;
(6) Physical Distribution Flexibility: ability to change the distribution process;
(7) Demand Management Flexibility: ability to quickly and effectively respond to a variety of customer needs (such as service,
delivery time and price);
(8) Coordination Flexibility: integrative capabilities for partnership relationship management;
(9) Logistics Flexibility: ability to respond to changing customer needs in inbound and outbound delivery, support and services;
(10) Manufacturing Flexibility: ability to change levels of production quickly;
(11) Information System Flexibility: ability of organization’s information system to adapt and support changing requirements of the
business functions;
(12) Routing Flexibility: ability to vary the path a part takes through the manufacturing system;
(13) Delivery Flexibility: ability to change delivery as the wish of the customer;
(14) Response-to-Market Flexibility: ability to respond quickly to the need of a market;
(15) Access Flexibility: ability to provide a wide-range distribution;
(16) Postponement Flexibility: ability to deliver the desired product type at the required time as per the customer’s real demand;
(17) Process Flexibility: ability to produce different products using the same facilities;
(18) Operation Flexibility: ability to manufacture a product using multiple alternative sequences of operations;
(19) Expansion Flexibility: ability to expand system capacity as needed;
(20) Machine Flexibility: ability of a machine to perform various tasks;
(21) Labour Flexibility: ability to assign varying number of operators;
(22) Material Handling Flexibility: ability to move a product within a manufacturing facility.
Wadhwa et al. note that higher SC flexibility leads to higher complexity in the SC; they further explain that better SC
coordination leads to more SC flexibility, and argue that firms should choose an appropriate level of flexibility in the SC as
flexibility is costly [7]. Moreover, it is noted that supplier collaboration enhances manufacturing flexibility [7] [8].
Similarly, Merschmann & Thonemann investigated the relationship between SC flexibility and environmental uncertainty [9].
They argue that firms should introduce SC flexibility that is proportional to the level of environmental uncertainty they face, since
high flexibility is costly. They further explain that in environments with low uncertainty, companies with low SC flexibility perform
better than companies with high SC flexibility, whereas in environments with high uncertainty, companies with high SC flexibility
perform better than companies with low SC flexibility.
Swafford et al. make a distinction between SC agility and SC flexibility: “agility is a measure of reaction time, while
flexibility is a measure of reaction capabilities” [10]. They suggest that SC e-integration enhances SC flexibility, and that higher SC
flexibility results in higher SC agility and ultimately higher competitive business performance.
Pereira et al. described flexibility as an attribute of control structures in a system, which allows for responsiveness and
adaptation to the dynamics of a specific environment [11]. They analyzed the bullwhip effect using a framework that measures SC
flexibility in terms of three dimensions: the adjustment degree, the responsiveness degree and the effort of adjustment. Kim & Park
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Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
argue that there is a tradeoff between controllability and flexibility in a supply chain, where controllability is a firm’s ability to
control its own processes, while flexibility is a firm’s ability to cope with uncertainties [12]. They further explain that a firm’s
integrating effort (endeavor to communicate with SC members, to coordinate its own departments and activities, and to conduct
activities for innovation and improvement) helps it overcome this tradeoff.
Wang et al. consider virtual integration as a strategy to enable SC flexibility in an effort to reduce the impact of environmental
uncertainty [13]. They also argue that the two main sources of environmental uncertainty (i.e., demand volatility and industry
clockspeed) also serve as important drivers for motivating firms to implement IT-based SC integration mechanisms.
More recently, Jin et al. argued that IT-enabled information sharing capability has a direct impact on SC flexibility (which
includes a firm's product development, production and logistics, suppliers' and supply base flexibilities) [14]. They showed that SC
flexibility in turn influences the firm's competitive advantage and ultimately the firm's competitive performance. They further argue
that firm-specific and relation-specific IT-enabled information sharing capability may also enhance the sustainability of the firm's
competitive performances because it is dynamic and cannot easily be copied by competitors.
Researchers in the area of SC management have placed a considerable focus on the relationships among SC coordination, SC
e-integration, SC flexibility and SC agility [10] [15-18]. These concepts have clear distinctions though they are closely related. SC
coordination is managing the dependencies between SC members, and it requires joint efforts of all the members to achieve
mutually defined goals in a more flexible manner [15]. It relies on the availability of prompt and accurate information that is visible
to all actors in the SC. E-integration is creating inter- and intra-firm connections with the aid of information technology in a bid to
facilitate efficient coordination of SC activities.
White et al. noted that there exists a tradeoff between the level of SC integration and SC flexibility, and suggested from a case
study that new information systems and technologies such as web services and e-hubs offer an opportunity for deep integration and
increased flexibility [16]. More recent literature also gives key attention to the role of e-integration in achieving responsiveness of a
firm’s system to the uncertainty in the environment resulting from dynamic situations. In line with this, Danese et al. assert that both
a firm’s internal integration (which is the degree to which functions work together interactively and cooperate to align their
activities) and external integration (which involves the coordination of plans/activities, information sharing and partnerships)
significantly enhance responsiveness (which includes flexibility and delivery performance) [17].
Similarly, DeGroote et al. suggested that IT improves the SC’s ability to sense market changes by improving the quality of
information (the adequacy, accuracy, accessibility, and timeliness of the information flows among members) of the SC [18].
Further, they suggested that IT increases the SC’s ability to respond to market changes by reducing the cost, and improving the
quality and timeliness of developing and executing coordinated plans to respond to market changes throughout the SC. In short, they
showed that supply chain e-integration enhances supply chain agility. The capability to respond to unexpected situations by making
changes in the SC process (the second component of SC agility) is indeed what we understand as SC flexibility [2].
Human capital plays a very important role in achieving flexibility [19]. On the other hand, information sharing is an important
prerequisite for effectively managing the SC [20]. Blome et al. found a positive and significant relationship between knowledge
transfer and SC flexibility [21]. Since SC e-integration enhances knowledge transfer through information sharing, it can also be
deduced consequently that SC e-integration enhances SC flexibility.
C. SC Adaptability and Alignment
In the literature, SC adaptability has been recognized as a key tool for the sustainability of business operations. According to
Lee, the objective of SC adaptability is to adjust the SC's design in order to meet structural shifts in markets, and to adjust supply
network to new strategies, products, and technologies [1]. Further, Lee suggests the following methods to attain SC adaptability: (1)
monitor global economies to spot new supply bases and markets, (2) use intermediaries to develop fresh suppliers and logistics
infrastructure, (3) assess the needs of ultimate consumers, not just immediate ones, (4) create flexible product designs, and (5) assess
the position of the company’s products in terms of technology cycles and product life cycles.
Similarly, Malhotra et al. explain that partnerships in an adaptable SC are able to: (a) adjust their procedures, processes, and
structures to suit each partner, and (b) leverage each partner’s knowledge resources so as to meet the knowledge requirements in the
emerging market environment [22]. They further argue that standard electronic business interfaces (SEBIs) enhance SC adaptability
by providing the following strategic benefits: (1) help overcome barriers that impede knowledge transfer among enterprises in the
SC, (2) enable partners to gain insight into their broader environments, and hence enrich each partner’s perspective, and (3) help
strengthen the collaborations among partners, motivating each of them to adapt for collective benefit.
SC alignment is apparently the most important element of the triple-A SC, since the remaining two capabilities (viz., agility
and adaptability) will just be an unused potential unless SC members share a common motive for synchronizing their efforts. In his
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Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
thematic analysis of literature on SC alignment, Ogulin maintains that the aim of SC alignment is the effective and efficient
coordination of resources and capabilities within an organization and across SC members, to achieve desired goals [23]. He
identified four important antecedents that lead to SC alignment, viz.: strategy alignment, process alignment, information technology
alignment, as well as people and incentive alignment. He argues that SC alignment in turn leads to better SC performance.
Once they understand the importance and requirements of SC alignment, companies may devise their own ways of achieving
it. In this connection, Lee explains that SC alignment may be achieved in various ways, but he recommends that SC partners first
align information (i.e., enable information visibility to all partners), then align identities (i.e., define roles and responsibilities of
each partner), and finally align incentives [1].
III. CONCEPTUAL MODEL AND HYPOTHESES
In this section, we develop a conceptual model that relates a firm’s external situations to SC characteristics, and SC
characteristics to firm performance. Our premise is that external situations, which include market competition and environmental
uncertainty, influence SC characteristics which in turn influence firm performance. In our model, we consider five important SC
characteristics, viz.: SC e-integration, SC alignment, SC adaptability, SC agility as well as SC flexibility. We attempt to find out the
relationship between SC e-integration and SC flexibility, the impact of firm’s external conditions on SC characteristics, and the
impact of SC characteristics on firm performance (Figure 1).
Out of the 12 relationships depicted in the conceptual model, five have already been established in the literature. We establish
the remaining 7 relationships as new hypotheses. In subsections A, B and C, we describe all the relationships shown in the model. In
subsection D, we propose two more hypotheses relating SC flexibility to organizational strategy types.
A. The Impact of External Situations on Supply Chain Characteristics
Competition compels a firm to coordinate its SC activities in a cost-effective way. For example, a firm must collect demand
information, plan accordingly, and manage its internal activities and external relationships on a real-time basis in order to ensure the
sustainability of its customer base. In other words, it must effectively manage the interactions between its functions and processes,
as well as its collaboration with external partners in order to effectively and efficiently meet customer demands. Since traditional
information exchange could be too slow, inaccurate and costly, IT-based information sharing becomes mandatory. This evidences
the need for seamless internal integration within the enterprise as well as inter-firm integration among the SC members.
All competitive strategies such as cost reduction, mass customization and differentiation require the collaboration of SC
partners. For example, if a firm intends to face market competition through cost reduction, it certainly requires the cooperation of its
SC partners to facilitate low-cost production, transportation, service delivery, etc. Such a cooperation is secured only if the interests
and incentives in performing the SC activities are aligned. This shows that competition necessitates SC alignment.
SC Agility
SC Flexibility
Environmental
H2a
Uncertainty
H2b
H3
Competition
Firm
Adaptability
H4
SC
H1a
Market
SC
Performance
Alignment
H1b
SC
H1c
E-integration
Figure 1: Conceptual model showing the relationship among a firm’s external conditions, SC characteristics and firm performance.
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Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management
Kuala Lumpur, Malaysia, March 8-10, 2016
Finally, competition tends to induce irreversible changes in the market environment such as new product features, new quality
standards, and new production and service delivery options. A business firm will survive the fierce competition by adapting its ways
of doing business, thereby evolving along with the environmental dynamics [18]. This applies to all SC members though the degree
of adaptation needed might vary from firm to firm, meaning that each enterprise is required to evolve with the new trends induced
by competition. Thus, competition is an antecedent of SC adaptability.
From the above argument, we may propose the following hypotheses.
H1a: High market competition calls for high SC adaptability.
H1b: High market competition calls for high SC alignment.
H1c: High market competition calls for high SC e-integration.
The relationship between environmental uncertainty and SC flexibility has been established in the literature. Accordingly, high
environmental uncertainty leads to a critical demand for high SC flexibility [9]. In more general terms, high environmental
uncertainty calls for high SC agility [10].
A higher environmental uncertainty forces firms to devise mechanisms so as to prevent the potential adverse effects and
change the situation into an opportunity. As environmental uncertainty becomes higher, firms in the SC are required to coordinate
their individual efforts collaboratively instead of competing for individual benefits. In other words, they need to align their interests.
By working collaboratively, they can collectively overcome the challenges of environmental uncertainty. Moreover, they need to
develop capabilities required to cope with environmental dynamics such as new trends in demand and emerging technologies. Thus,
high SC alignment and adaptability are required in an environment where uncertainty is high.
Hence, we make the following hypotheses.
H2a: High environmental uncertainty calls for more SC adaptability.
H2b: High environmental uncertainty calls for more SC alignment.
The relationship between environmental uncertainty and SC e-integration, namely that environmental uncertainty calls for SC
e-integration, has been established in literature [10] [13] [17]. In an uncertain business environment, unanticipated events like
supply disruption, demand variability including bullwhip effect, fast technological changes, etc. are common. In order to achieve
desirable performance in the presence of such turbulences, a firm must monitor trends in the environment and plan and act
accordingly. To that end, a firm must coordinate its external and internal activities in collaboration with its SC partners (such as
logistics providers, suppliers and customers). These coordination capabilities can be enabled through deep SC e-integration.
On the other hand, environmental uncertainty comprises complexity (difficulty to understand) and variability (difficulty to
predict) [24]. Hence, high levels of environmental uncertainty make it difficult for an organization to determine its integration
requirements. SC e-adoption without the necessary information about current and future technological trends and without a reliable
forecast of the organization’s future technological requirements would be challenging.
Thus, we propose:
H3: High environmental uncertainty poses challenges for SC e-integration.
B. The Impact of Supply Chain E-integration on Supply Chain Flexibility
The impact of SC e-integration can be studied by considering the corresponding impacts of its three components: internal eintegration, supplier e-integration, and customer e-integration. Internal e-integration involves synchronizing internal functions and
processes in the organization. On the other hand, supplier and customer e-integration respectively involve closely working with
suppliers and customers, by enabling synchronization ranging from information sharing to strategic collaboration.
In general, there is a tradeoff between SC integration and SC flexibility [16]. Information technology enables the capability of
a SC to sense and respond to market changes in a cost-effective way [18], which implies that e-integration enhances SC agility. In
particular, it is quite evident that IT-enabled information sharing capability enhances SC flexibility [14]. For example, virtual
integration (i.e., e-integration) plays a vital role in enabling manufacturing flexibility [13]. Moreover, information sharing in an eintegrated SC enables other forms of flexibility such as logistics flexibility, demand management flexibility, routing flexibility,
trans-shipment flexibility, etc. Indeed, the tradeoff between SC e-integration and SC flexibility can be reduced by the use of
emergent information systems such as e-hubs and web services [16]. This way, deep SC e-integration will result in more flexibility.
Clearly, environmental uncertainty implies the possibility of eventualities that require changes in SC processes and
relationships. This requirement for changes grows as environmental uncertainty increases. In other words, more changes are
required for SCs in environments with high uncertainty than those with low uncertainty. Nevertheless, a highly e-integrated SC
necessitates relation-specific and partner-specific investments, making it difficult for a firm to switch from one supplier to another
and/or from one retailer/wholesaler to another.
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Consequently, we suggest the following hypotheses.
H4a: Deep supplier e-integration leads to reduced supplier sourcing flexibility.
H4b: Deep customer e-integration leads to reduced retailer/wholesaler flexibility.
C. The Impact of Supply Chain Characteristics on Firm Performance
Apparently, there is agreement in the literature that high SC alignment leads to high firm performance, as it fosters cooperation
and shared objectives. More generally, the Triple-A SC is an important prerequisite for sustainable competitive advantage, and
hence leads to superior firm performance [1]. In particular, it has been established in the literature that high SC flexibility leads to
high firm performance [8] [10] [14] [19]. Such a performance improvement could be reflected in the form of better customer service
or timely delivery, since SC flexibility helps the firm in its attempt to accurately and timely respond to customer demands. Further,
it has been stressed in the literature that high SC e-integration leads to high firm performance [14] [17]. Thus, e-integration,
flexibility, agility, alignment and adaptability are desirable SC characteristics that have a positive impact on firm performance.
D. The Impact of Organizational Strategy on the Relationship between E-Integration and SC Flexibility
Even though SC e-integration enhances many dimensions of SC flexibility [14], it is stressed in the literature that there is a
tradeoff between the levels of e-integration and SC flexibility [16]. It has also been noted that ERP implementation leads to reduced
flexibility [25], and that flexibility is more related to people in the organization than to computerization [26]. However, a multiprocess ERP (enterprise resource planning) implementation mitigates such limitations [27] [28]. Obviously, automated multiple
processes offer the possibility of manufacturing a product through different sequences of operations or plans, as required.
On the other hand, introduction of new products or features would demand change in the sequence of the existing
manufacturing processes or might require an entirely new set of processes. In such cases, the existing highly automated
manufacturing processes couldn’t handle the new manufacturing task. Thus, the implementation of new product designs that require
new technological processes would be delayed until the newly required processes are incorporated into the automated system. This
is equally true for outsourced components, since deep upstream SC e-integration too would limit the possibility of outsourcing new
components to new suppliers in case the existing suppliers fail to manufacture in accordance with new product requirements. Thus,
deep supplier and internal e-integration will delay the launch of new products that cater to new customer demands.
Since Prospectors and Innovators frequently introduce new products or features, deep supplier and internal e-integration will
limit the speed with which they can introduce new products or features.
This leads to the following hypotheses:
H5a: Deep internal e-integration will lead to lesser product launch flexibility for Prospectors and Innovators.
H5b: Deep supplier e-integration will lead to lesser product launch flexibility for Prospectors and Innovators.
IV. CONCLUSION
This paper discussed some of the most desirable SC characteristics: flexibility, alignment, adaptability, agility and eintegration. We proposed a conceptual model and hypotheses that relate these SC characteristics to environmental uncertainty,
market competition and firm performance. Accordingly, we suggest that high environmental uncertainty calls for more SC
alignment and SC adaptability. However, we argue that high environmental uncertainty poses challenges for SC e-integration. We
also argue that deep supplier e-integration leads to reduced supplier sourcing flexibility, and that deep customer e-integration leads
to reduced retailer/wholesaler flexibility. We also propose that fierce market competition calls for high levels of SC alignment, SC
adaptability and SC e-integration. Further, we suggest that deep supplier and internal e-integration will lead to lesser product launch
flexibility for Prospectors and Innovators.
The issues we raised in the discussion, the conceptual model and the hypotheses certainly provide a good insight both for
practitioners and researchers. In our future work, we intend to empirically test the hypotheses.
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Authors’ Profile:
Dr. R.R.K. Sharma is a professor in the Department of Industrial and Management Engineering at Indian Institute of
Technology, Kanpur, India. He did his B.E. in Mechanical Engineering at Vishweshwariya Regional College of Engineering,
Nagpur, India. He is a Fellow of Indian Institute of Management, Ahmedabad, India. He has published more than 120 articles in
national and international journals. He is also winner of a number of prestigious awards and honors.
Tesfaye Tolu Feyissa is a PhD research scholar in the Department of Industrial and Management Engineering at Indian Institute
of Technology, Kanpur, India. He did his B.Sc. and M.Sc. in Mathematics at Addis Ababa University, Ethiopia, and B.A. in
Business Administration at Adama Science and Technology University, Ethiopia.
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