Evaluating Performance Measurement Metrics for Lean and Agile Supply Chain Strategies in Large Enterprises

Abstract

Previous research has identified metrics that are applicable to both lean and agile strategies and has hypothesised that financial and efficiency metrics are more relevant to the lean supply chain strategy, while customer service and flexibility metrics are more relevant to the agile supply chain strategy. These metrics need to be assessed empirically to confirm their relevance and validate these hypotheses. Drawing upon contingency theory, which mandates that supply chain performance metrics should vary based on the supply chain strategy, the research methodology resulted in developing a survey instrument that has been subsequently tested in 45 large enterprises and analysed by Partial Least Square-Path Modelling using XLSTAT software v.2020.4. The results support the existing beliefs and suggest that financial and efficiency indicator sets are more applicable to the lean supply chain strategy, whereas customer service and flexibility indicator sets are more pertinent to the agile supply chain strategy. This research distinguishes itself, through its novelty, in validating an adaptable framework for supply chain performance metrics, acknowledging the necessity of developing a suitable supply chain performance system. Ultimately, the findings of this research might serve as an initial foundation for practitioners in shaping the design of supply chain performance systems since the strong relationship between SC strategies and specific metrics may serve as a strategic approach to evaluate and improve performance.