The impact of supply chain agility on business performance in a high level customization environment

Abstract

To improve business performance in rapidly changing environments, supply chain agility can be a crucial requisite to address responsiveness issues, especially in environments with high levels of customization. This paper examines the effect of supply chain agility on customer service, differentiation, and business performance. A survey research methodology was employed using a sample of 156 manufacturing firms that provide high levels of customization. In particular, structural equation modeling (SEM) was employed to evaluate the proposed model. The results suggest that supply chain agility influences customer service and differentiation positively. However, it does not affect business performance directly; instead, better business performance can be achieved and mediated through improved customer service and differentiation. In particular, differentiation through customer service is the most effective way to improve business performance, and supply chain agility can help to achieve high-level customer service. The paper advises managers on details of how to fulfil their business performance ambitions better through suggested key agile supply chain management activities.