Supply chain flexibility

Supply chain flexibility has emerged from the manufacturing flexibility literature (Stevenson and Spring, 2007). Slack (1987) defined two aspects of flexibility: range and response. Range flexibility is related to capability and range of the production system (i.e. how much the system change), while response flexibility is related to response of the system and affects cost and time (i.e. how fast the system changes). At the total manufacturing system level, Slack (1987) also identified four main types of flexibility: product, mix, volume and delivery flexibility. Slack and Correa (1992) also compared the flexibility between a pull/push system in terms of coping with product variety and uncertainty and argued that pull systems had far great response flexibility than push systems. Furthermore, Gerwin (1993) has stressed the importance of manufacturing flexibility and suggested several flexibility dimensions including mix, changeover, modification, volume, rerouting and material flexibility. Manufacturing flexibility enables the manufacturing system to respond to changes in demand, product design, process technology, and material supply (Slack, 1983, 1987; Sethi and Sethi, 1990; Upton, 1995; Duclos et al., 2003; Sánchez and Pérez, 2005).

Da Silveira (1998) investigated the gaps between the strategic importance of product variety and companies’ capabilities, and suggested the implementation of an adaptive and flexibility strategy to close the gaps. Five strategic flexibilities (e.g. product, mix, production, volume and expansion flexibility) and six operational flexibilities (e.g. delivery, process, programming, routing, machine and labour flexibility) were proposed.

Vickery et al. (1999) identified five dimensions of supply chain flexibility: product flexibility; volume flexibility, new product flexibility, distribution flexibility, and responsiveness flexibility. The findings of their research indicate that volume flexibility and launch flexibility are key responses to marketing uncertainty and product uncertainty.

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Volume flexibility is also positively related to all measures of overall firm performance and highly related to market share and market share growth (Vickery et al., 1999). On the other hand, Narasimhan and Das (1999) highlighted procurement flexibility in the supply chain and noted that strategic sourcing representing the firm’s ability to utilise supplier capabilities can impact on the firm’s manufacturing capabilities.

Duclos et al. (2003) added the requirement of supply chain flexibility within and between all partners in the chain including departments within an organisation and external partners including suppliers, carriers, third-party companies, and information systems providers. They proposed six dimensions of flexibility: operation system flexibility, market flexibility, logistical flexibility, supply flexibility, organisational flexibility, and information flexibility. Lummus et al. (2005) also suggested flexibility characteristics for supply chain management and used an Internet-based Delphi study involving a group of expert practitioners to enumerate the characteristics and the importance of those characteristics in making a supply chain flexible. They investigated six Delphi characteristics aligned with the conceptual model: customer / marketing focus, internal process/operation focus, information and system support focus, wide organisational focus, supply focus and logistics focus.

Sánchez and Pérez (2005), based on the bottom-up classification of flexibility including basic, system and aggregate flexibility, suggested different types of supply chain flexibility dimensions (see Figure 2-6). The dimension of product, volume and routing flexibility represent shop-floor capabilities that impact on the supply chain (basic flexibility); the delivery, transshipment and postponement flexibility are hierarchically located at the company level (system flexibility); and launch, sourcing, response and access flexibility link to supplier-customer relationships (aggregate flexibility).

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Figure 2-6 Supply chain flexibility dimensions

Source: Adapted by Sánchez and Pérez (2005)

Gosain et al. (2004) argued that there are two types of supply chain flexibility: offering flexibility and partnering flexibility. Offering flexibility refers to the ability of an existing supply chain linkage to support changes in product or service offerings in response to changes in the business environment (i.e. the robust network view). On the other hand, partnering flexibility implies the ease of changing supply chain partners in response to changes in the business environment (i.e. supply flexibility).

Swafford et al (2006) posited that flexibility in a firm’s supply chain process is derived from the coalignment of its range and adaptability dimensions. Furthermore, they divided supply chain flexibility attributes into three critical processes; procurement/sourcing, manufacturing and distribution/logistics flexibility. They also found that a firm’s supply chain agility is impacted by the synergy among the flexibilities of these three processes. In short, supply chain process flexibility is regarded as an important antecedent of supply chain agility.

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Stevenson and Spring (2007) reviewed the supply chain flexibility literature and sub- divided it into four categories: linking firm’s flexibility to the supply chain, flexibility in the supply chain relation, flexibility in design of the supply chain and flexibility of the inter- organisational information system. Stevenson and Spring (2009) also investigated a wide range of supply chain flexibility practices: collaboration, product design, supplier training, information sharing, sourcing policy, shared resources, inventory policy, tactical outsourcing, leasing / hiring, standardisation and codification. The authors termed the ability to change counterparts “configuration flexibility” and the ability to change the timing, volume and design of supply “planning and control flexibility” in terms of inter-organisational aspects of flexibility. Thus the research suggested that firms make complex trade-offs between these elements in the interest of achieving overall supply chain flexibility.