Applying agility to improve customer performance when supply and demand vary from core conditions

Abstract

PurposeThe purpose of this research is to extend existing knowledge of supply chain agility by identifying the interrelationships among key elements of agility that may impact customer performance improvement when conditions of demand and supply vary from the core assumptions used to design supply chain networks.Design/methodology/approachThe research employs the principles of middle range theorizing (Merton, 1968) to incorporate observations from field interviews and data collected from executives, managers, and analysts from six global manufacturing firms across a range of industries to form research propositions about the nature of relationships among cognitive agility dimensions, antecedent impediments to cognitive agility, and the relationships between cognitive and physical agility to improve performance that can later be subjected to deductive testing.FindingsThe supply chain designs used by the participating firms to deliver value for core products were not sufficiently agile to meet desired customer performance levels when certain supply or demand conditions varied significantly from the norm. In collaboration with partner firms, the findings suggest that improving cognitive abilities to see, think and act by deploying information-based tactical initiatives in planning, inventory positioning, and supplier lead time performance monitoring enable improved physical agility that enable a firm to respond to changes swiftly and flexibly in the demand and supply environment. Importantly, the findings also suggest that the dimensions of cognitive agility are correlated and are formative elements of the latent construct of cognitive agility, which is antecedent to physical agility.Research limitations/implicationsThese findings are limited in scope to the six companies that participated in this research. Future explorations should generalize to a broader population of firms and conditions. The results do provide evidence of the relationships between the dimensions of agility that are both a contribution and should guide future research on the subject.Practical implicationsFrom a managerial standpoint, the research findings provide insight into how firms might manage agility to improve performance when demand and supply conditions vary from those for which the core supply chain was originally designed. The findings suggest that improving the ability to capture, process, and disseminate information, i.e. cognitive agility dimensions of alertness, accessibility, and decisiveness, facilitates improved information-based initiatives in planning, inventory positioning, and supplier lead time performance monitoring, which in turn enables improved physical initiatives to swiftly and flexibly respond to changes in the demand and supply environment. Such improvements ultimately result in heightened customer service and inventory performance.Originality/valuePrevious research is mute regarding the interrelationships among the identified dimensions of supply chain agility, specifically those considered to be “cognitive” elements and those that involve physical actions. The finding suggesting that the dimensions of cognitive agility are correlated and are formative elements of the latent construct of cognitive agility provides an important theoretical insight that contributes to enhanced understanding of the nature of supply chain agility to foster future quantitative explorations to better understand the phenomena.