Environmental uncertainty and supply chain performance: the effect of agility

Abstract

PurposeToday's businesses are facing a world that is more complex, turbulent and unpredictable than in the past with increasing levels of environmental complexity. Rather than proposing environmental uncertainty as a mediator/moderator of the relationship between agility and performance as others have done, the authors offer an alternative view where supply chain agility is seen as mediating the relationship between environmental uncertainty and supply chain performance.Design/methodology/approachThe authors propose that supply chain agility is a response to the effects of environmental uncertainty and, as such, environmental uncertainty should be seen as a driver of supply chain agility. Few studies test the direct relationship between uncertainty and supply chain performance, and none simultaneously test for agility's mediation and moderation effect between environmental uncertainty and agility.FindingsThe model was statistically assessed using partial-least-squares structural equation modeling (PLS/SEM) by analyzing survey data from manufacturing managers in 136 US firms. The study results did not indicate a significant relationship between environmental uncertainty and supply chain performance. However, the authors did find a significant positive relationship between agile manufacturing and supply chain performance using measures that were primarily operations-centered rather than financial. Additionally, the authors found that agile manufacturing fully mediates the relationship between environmental uncertainty and supply chain performance.Originality/valueThe authors’ model, though simple, provides a base for future research for them and other researchers who can incorporate other impacting variables into the model. The study results show that uncertainty can be a force for good and that utilizing agile manufacturing can be a new source of opportunity.