Being digital and flexible to navigate the storm: How digital transformation enhances supply chain flexibility in turbulent environments

Abstract

The growing environmental business uncertainties have forced companies to focus on developing more flexible supply chains. Digital transformation has been considered a key means to achieving such flexibility, but the literature lacks empirical evidence about how digital technologies effectively contribute to it. Thus, this study aims to analyze how Smart Supply Chain (i.e., a supply chain enabled by digital transformation) contributes to supply chain flexibility and operational performance in environments surrounded by customer and supplier uncertainty. We adopt the organizational information-processing theory to explain the fit between information needs to reduce these uncertainties through more supply chain flexibility (sourcing, delivery, and manufacturing) and information capabilities provided by three main dimensions of the Smart Supply Chain (digital transformation strategy, digital base technologies, and digital front-end technologies). We relate these information-processing fit between Smart Supply Chain and flexibility with the boundary conditions of environmental uncertainty and operational performance improvements. Such relationships are analyzed through moderation and mediation regression tests based on 379 manufacturing companies surveyed. Our findings show that Smart Supply Chain has a statistical association with operational performance through the sequential mediating role of the three supply chain flexibility dimensions. We also found that environments with high customer uncertainty increase the use of base technologies (IoT, cloud, big data, AI, and blockchain) to reach delivery flexibility and support manufacturing flexibility. When companies face high supplier uncertainty, they use front-end technologies (i.e., robotics, 3D printing, simulation, and augmented reality) to increase sourcing flexibility. We show new advances in supply chain flexibility through digital transformation.