A conceptual model of supply chain flexibility
Leslie K. Duclos
Keywords
Flexibility,
Supply chain management
Abstract
This paper presents an integrated
conceptual model of supply chain
flexibility. It examines flexibility
classification schemes and the
commonalities of flexibility
typologies published in the
literature to create a theoretical
foundation for analyzing the
components of supply chain
flexibility. Even though there has
been a tremendous amount of
research on the topic of flexibility,
most of it has been confined to
intra-firm flexibility concerns. As
supply chain management goes
beyond a firm's boundaries, the
flexibility strategies must also
extend beyond the firm. This paper
identifies the cross-enterprise
nature of supply chain flexibility
and the need to improve flexibility
measures across firms.
Opportunities are identified for
future cross-functional research
that builds on this theoretical
foundation and leads to more
effective formulation of supply
chain strategies.
Industrial Management &
Data Systems
103/6 [2003] 446-456
# MCB UP Limited
[ISSN 0263-5577]
[DOI 10.1108/02635570310480015]
[ 446 ]
College of Business Administration, University of Northern Iowa, Cedar Falls,
Iowa, USA
Robert J. Vokurka
College of Business, Texas A&M University ± Corpus Christi, Corpus Christi,
Texas, USA
Rhonda R. Lummus
College of Business, Iowa State University, Ames, Iowa, USA
Introduction
In a recent interview with an associate
partner in the Accenture Supply Chain
Practice (Wimer, 2001), the partner noted:
Manufacturers must find a way to align their
supply chain partners with a common set of
goals and metrics to ensure that all the
elements of the supply network are focused on
flexibility, speed, and cost.
He continues by commenting that Accenture:
. . . has developed a wide array of supply chain
metrics and techniques for assessing the
flexibility of a supply chain.
He closes by defining some of the issues that
must be considered in evaluating supply
chain flexibility while stating that their
complete methodologies for evaluating
flexibility were proprietary. Like much of the
practitioner literature reviewed by the
authors, this article touts the importance of
achieving supply chain flexibility if
companies want to be successful in the
global, Web-linked environment of today.
While much practitioner literature discusses
the importance of supply chain flexibility,
little academic research has been done to
define what constitutes supply chain
flexibility.
To begin to fill this void, this paper defines
a conceptual model of supply chain
flexibility. This research does not propose to
test the model, but rather serves as
theory-building research and offers
suggestions for future propositions and
research to further build on the theory. As
outlined by Meredith (1993), theory-building
is an iterative process that cycles through
description to explanation to testing to
refined description and so forth. Throughout
the process:
. . . descriptive models are tested against
reality until they are eventually developed
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into theories as research study builds upon
research study.
It is important that this cycle not be
short-circuited, each of the steps is
important, beginning with the preliminary
description of the model.
The model proposed here fits the
description of a ``conceptual model'' as
defined by Meredith (1993):
It integrates a number of different works on
the same topic, summarizes the common
elements, contrasts the differences and
extends the work in some fashion.
As noted by Wacker (1998), theory is
important for researchers and practitioners
because:
(1) it provides a framework for analysis; (2) it
provides an efficient method for field
development; and (3) it provides clear
explanations for the pragmatic world.
He continues by noting that theory has four
components:
. . . definitions, domain, relationships and
predictive claims.
While this study does not include all the
components that make up a theory (namely
the domain or predictive claims) it takes the
first step in building theory by providing
definitions and relationships.
Wacker also stresses the importance of the
role of the literature search in the research
procedure to clarify definitions, and specify
previously identified relationships. This
paper will begin by reviewing the literature
to provide definitions of supply chain
concepts. From there, a brief review of
flexibility definitions and flexibility
classification schemes literature is provided.
A review of the limited literature on supply
chain flexibility will then be discussed.
Finally, a conceptual model of supply chain
flexibility and its components is proposed.
The current issue and full text archive of this journal is available at
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Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
Several contributions are made by this study.
The issues underlying supply chain
management strategies is an appropriate
area to research as firms today try to
improve supply chain performance and
revise existing industry practices. Even
though there has been a tremendous amount
of research on the topic of flexibility, most of
it has been confined to intra-firm flexibility
concerns. As supply chain management goes
beyond a firm's boundaries, the flexibility
strategies must also extend beyond the firm.
Once the dimensions of supply chain strategy
are defined, we go on to suggest opportunities
for future cross-functional research to
further examine these dimensions
In his article ``Toward a new architecture
for POM'', Hayes (2000) notes that real
operations managers are:
. . . managing people, flows, systems,
communications with other groups,
technological changes, performance
outcomes, and improvement activities.
He suggests that operations research today
should focus on the issues actually facing the
operations managers. Industries are
increasingly facing intensifying global
competition, rapid technology advances, and
increasingly more demanding customer
expectations. The traditional model of mass
production is being restructured and
reengineered to improve a firm's
competitiveness in this new environment. As
companies have improved their internal
operations by increasing product quality
while reducing costs, firms have achieved
parity on these dimensions in many
industries. These companies are now looking
to develop competitive advantages in areas
such as delivery, flexibility, and innovation.
All of these emphasize the importance of
time. Firms have found that a successful
initiative to accomplish this objective is
through supply chain management. The
Academic Alliance Forum (1999) suggested
that traditional competition of company
versus company is changing toward a
business model where supply chains compete
against supply chains.
As the basis of competition expands to the
supply chain and time becomes increasingly
important, a critical issue will be the
flexibility of the supply chain. The benefit of
supply chain flexibility lies in the ability to
facilitate the development of meaningful
organizational strategies and guidelines that
improve overall firm performance. Gupta
and Somers (1996) make a strong argument
for a linkage between business strategy,
manufacturing flexibility, and the financial
and growth performance of the firm. If
manufacturing flexibility improves
performance, supply chain flexibility, which
would include the manufacturing flexibility
of a manufacturing firm within the supply
chain, should further improve performance
when measured across the entire supply
chain. Before that can be confirmed, the
dimensions of supply chain flexibility must
be defined. In addition, performance
measures must be identified which measure
supply chain performance across supply
chain nodes to determine if real change in
customer value has been added.
Supply chain management and
flexibility
In today's competitive environment, markets
are becoming more international, dynamic,
and customer-driven. Customers are
demanding more variety, better quality and
service, including both reliability and faster
delivery. Technological developments are
occurring at a faster pace, resulting in new
product innovations and improvements in
manufacturing processes. The resulting
competitive environment requires low cost,
high quality products in increasing varieties.
These changes have instigated changes in
business and manufacturing strategies.
The three main strategic imperatives that
emerged in this century are low cost, high
quality, and improved responsiveness (both
delivery time and flexibility of product
delivery) (Aquilano et al., 1995). Cost
efficiency was the driving force behind
Henry Ford's mass production paradigm
with large production volumes providing low
per unit cost. Through the efforts of
W. Edwards Deming and Joseph M. Juran in
Japan, quality became the next strategic
imperative. The marketplace valued
efficiency and low prices, but began to
emphasize the quality of products and
services in product purchasing decisions. As
a result of increased global competition in
the 1970s, responsiveness emerged as the
third strategic imperative. Buyers became
more sophisticated, demanding more
customization and shorter product life
cycles. Manufacturers found they could no
longer maintain the large volumes of
production and cost efficiency of their
production processes with these higher levels
of change and uncertainty. As a result, firms
concentrated on the reduction of cycle time
and solving the tradeoffs between efficiency
and flexibility.
By the 1990s, firms recognized the
necessity of looking beyond the borders of
their own firm to their suppliers, suppliers'
suppliers, and customers to improve overall
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Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
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Data Systems
103/6 [2003] 446-456
[ 448 ]
customer and consumer value. This
movement, titled supply chain management
or demand chain management, changed
companies' focus from internal management
of business processes to managing across
enterprises. Several authors have defined
supply chain management. The
Supply±Chain Council (1997) uses the
definition:
The supply chain ± a term now commonly
used internationally ± encompasses every
effort involved in producing and delivering a
final product or service, from the supplier's
supplier to the customer's customer. Supply
chain management includes managing supply
and demand, sourcing raw materials and
parts, manufacturing and assembly,
warehousing and inventory tracking, order
entry and order management, distribution
across all channels, and delivery to the
customer.
Supply chain management has emerged as
the term defining the integration of all these
activities into a seamless process. It links all
of the partners in the chain including
departments within an organization and the
external partners including suppliers,
carriers, third-party companies, and
information systems providers. It
encompasses the processes necessary to
create, source, make to, and to deliver to
demand. It includes the technology to gather
information on market demands and
exchange information between
organizations. A key point in supply chain
management is that the entire process must
be viewed as one system. The performance of
each member of the supply chain (suppliers,
manufacturing plants, warehouses,
customers, etc.) affects the overall
performance of the supply chain.
As the concept of supply chain
management has gained acceptance in the
business community, the strategies required
to be successful in this environment must be
identified. Hamel (2000) notes:
. . . business concepts or business models are
becoming obsolete at an accelerating pace. It's
not only product life cycles that are
shrinking, strategy cycles are shrinking.
Companies are going to have to reinvent
themselves more frequently than before.
Part of identifying a supply chain strategy is
facing today's issues on customer demand.
Chase et al. (2000) summarized the
environment succinctly:
Recent trends such as outsourcing and mass
customization are forcing companies to find
flexible ways to meet customer demand. The
focus is on optimizing core activities to
maximize the speed of response to changes in
customer expectations.
This requirement for flexibility across the
supply chain must be better understood and
the dimensions of supply chain flexibility
must be defined.
Flexibility in the literature
Most of the previous literature on flexibility
has focused on internal manufacturing
flexibility. As supply chain flexibility would
also include the internal ability of a firm to
be flexible, manufacturing flexibility
research can be used to help determine the
components of supply chain flexibility. Three
recent articles have provided to the research
community a fairly comprehensive review of
the manufacturing flexibility literature
(Vokurka and O'Leary-Kelly, 2000; D'Souza
and Williams, 2000; Koste and Malhotra,
1999). These articles also serve to represent
the current state of research in
manufacturing flexibility as the research
moves from a conceptual to empirical focus.
It is generally agreed that manufacturing
flexibility does not refer to a single variable,
but rather it is a multi-dimensional
construct. Vokurka and O'Leary-Kelly (2000)
expanded the different dimensions developed
by Browne et al. (1984) (eight dimensions) and
Sethi and Sethi (1990) (11 dimensions) to 15
identified dimensions of manufacturing
flexibility. These 15 flexibilities include:
machine, material handling, operations,
automation, labor, process, routing, product,
new design, delivery, volume, expansion,
program, production, and market flexibility.
Further, they suggest a contingency
relationship between manufacturing
flexibility and firm performance. In their
examination of past studies, they found four
general forces ± strategy, environmental
factors, organizational attributes, and
technology ± comprise the dominant forces
influencing manufacturing strategy.
Koste and Malhotra (1999) also conducted a
comprehensive review of the manufacturing
flexibility literature and proposed four
elements of flexibility to be used for
measuring an organization's flexibility along
each dimension. These included:
. Range-number (number of options
± operations, tasks, products, etc.).
. Range-heterogeneity (heterogeneity of
options ± differences between operations,
tasks, products, etc.).
. Mobility (transition penalties ± time, cost,
effort of transition).
. Uniformity (similarity of performance
outcomes ± quality, costs, time, etc.).
They mapped these elements to ten
commonly cited manufacturing flexibility
Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
dimensions further refining the definition of
each dimension. They proposed a hierarchy
of flexibility dimensions using previous
literature that studied the relationships
between flexibility dimensions and building
upon the work of Hyun and Ahn (1990).
Finally, through a survey, they attempt to
determine if the elements can indeed be used
to measure the flexibility dimensions.
D'Souza and Williams (2000) focused on the
seven manufacturing flexibility dimensions
proposed by Gerwin (1993) and then collapse
the seven into four dimensions: (volume
flexibility, variety flexibility, process
flexibility, and materials handling flexibility),
each with two elements: range and mobility.
Like Koste and Malhotra (1999) they attempt
to operationalize and study the elements and
determine if the elements can be used for
measuring the different dimensions of
manufacturing flexibility.
The hierarchy of flexibility dimensions as
proposed by Koste and Malhotra (1999)
provides support for the argument that much
of the focus on flexibility concentrates on
flexibility within a single plant. They
developed a tiered perspective of flexibility
beginning at the top with strategic flexibility
and moving down through functional, plant
and shop floor flexibility and finally to
individual resource flexibility. The lower
three tiers ± plant, shop floor, and individual
resources ± have a single plant, internal
focus. Not until reaching the fourth level is
there recognition that flexibility for the
business unit is actually a combination of
flexibility in many functional areas.
However, when reviewing the attempts by
Koste and Malhotra (1999) and D'Souza and
Williams (2000) to measure a dimension of
flexibility, it may be argued that the
measurements overlap into multiple
functional areas.
For example, volume flexibility refers to
the ability to quickly and efficiently adjust
output to match demand. Having a wide
range on volume for which a plant can
operate efficiently as measured by
production costs, quality levels, or system
profitability indicates a high level of
flexibility. One question in this measure
should be how to include the cost of changing
input volumes. Where is the impact of
changing the quantity ordered from a
supplier measured? As quantities are
changed, does this impact product cost? The
inputs appear to be outside of the
manufacturing dimensions. Does the cost of
changing input volumes, then, fall into some
set of marketing dimensions that have yet to
be defined?
Similar discussions can be included for the
dimension of product flexibility. Product
flexibility has been defined as the ability of
the plant to introduce new products or
modify existing products. Again, the focus is
on the plant. But for an organization to bring
a new product or a modified product to
market more parts of the ``system'' must be
considered than just internal plant
operations. How do the issues in product
flexibility relate to marketing? To research
and development?
The manufacturing flexibility literature
has recognized that manufacturing flexibility
is not only a potential element of a
manufacturing strategy, but it may also be a
component of marketing and R&D strategies
as well (Hyun and Ahn, 1990; Sethi and Sethi,
1990). It is also recognized as one element of a
business strategy, with certain dimensions
impacting growth and financial performance
of the firm (Gupta and Somers, 1996).
However, while the manufacturing flexibility
literature provides a ``bottom-up'' view of
flexibility in an organization, it is perhaps
business strategy literature that provides the
``top-down'' view.
One strategy for gaining and keeping a
competitive advantage in a dynamic
environment is to create a flexible
organization (Sanchez, 1995). It is proposed
that with a wide range of different strategic
options, the organization can more quickly
respond to its environment. Sanchez (1995)
proposes that strategic flexibility is
composed of two dimensions:
1 Resource flexibility ± the extent to which a
resource can be applied to a range of
alternative uses, the costs and difficulties
associated with the switching from one
resource to another, and the time required
for the switch.
2 Coordination flexibility ± flexibility in
those processes that redefine product
strategies, reconfigure chain of resources
to produce product, and re-deploy those
resources needed to produce the product.
This idea is further supported and developed
by Lau (1996, p. 11). He defines strategic
flexibility as:
. . . a firm's ability to respond to uncertainties
by adjusting its objectives with the support of
its superior knowledge and capabilities.
He also proposes a framework for attaining
strategic flexibility (Lau, 1994) that provides
a broad picture of flexibility for an
organization. The framework identifies six
characteristics leading to strategic flexibility
including:
1 manufacturing capabilities;
2 skills and knowledge;
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Rhonda R. Lummus
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3 organizational transformation;
4 mass customization;
5 development of skills and capabilities in
the future; and
6 swift change of manufacturing strategies
and competitive priorities.
It is this work that begins to recognize that
flexibility is associated not only with
manufacturing capabilities, but also with the
linkages between manufacturing units and
suppliers and customers ± the supply chain.
Extending flexibility dimensions to
the supply chain
The components of manufacturing flexibility
play an important role in supply chain
flexibility. However, as the supply chain
extends beyond the enterprise, supply chain
flexibility must also extend beyond one
firm's internal flexibility. A limited number
of authors have begun to discuss flexibility
from a supply chain perspective. In their
paper on matching the supply chain to the
marketplace, Mason-Jones et al. (2000) do not
discuss supply chain flexibility per se, but
discuss the importance of matching supply
chain improvement initiatives to customer
demand. They stress the importance of
combining the lean concepts of eliminating
waste with the agility concepts of exploiting
opportunities in a volatile market. Their
definition of ``leagility'' includes creating a
supply chain capable of delivering to an
unpredictable marketplace that includes a
decoupling point along the chain where
product becomes unique. Prior to the
decoupling point lean concepts are applied
and product built to forecast. After the point,
customer orders drive supply chain
processes.
Vickery et al. (1999) defined five supply
chain flexibilities based on previous
operations literature. The author states that
supply chain flexibility ``should be examined
from an integrative, customer-oriented
perspective''. Flexibilities viewed as directly
impacting a firm's customers and the
responsibility of two or more functions,
whether internal or external to the firm, are
included. The five defined flexibilities
include:
1 Product flexibility or the ability to
customize product to meet specific
customer demand.
2 Volume flexibility or the ability to adjust
capacity to meet changes in customer
quantities.
3 New product flexibility or the ability to
launch new or revised products.
4 Distribution flexibility or the ability to
provide widespread access to products.
5 Responsiveness flexibility or the ability to
respond to target market needs.
While these descriptions of flexibility are
appropriate, most of the responsibility for
one of the types of flexibility lies with one
functional area of a particular firm.
Manufacturing is generally responsible for
volume flexibility, marketing is generally
responsible for distribution flexibility,
research and design is responsible for new
production introduction flexibility, etc. By
focusing on these flexibilities from an
internal perspective much of the
contribution of a supply chain perspective is
lost.
Supply chain flexibility
components
Previous literature on flexibility fails to
consider the cross-functional, cross-business
nature of supply chain management. A
complete definition of supply chain
flexibility components will include the
flexibility dimensions required by all the
participants in the supply chain to
successfully meet customer demand. From
the previous definitions of supply chain
management, those activities include
delivering a product from raw material
through to the customer, including sourcing
raw materials and parts, manufacturing and
assembly, warehousing and inventory
tracking, order entry and order management,
distribution across all channels, delivery to
the customer, and the information systems
necessary to monitor all of these activities.
Flexibility in the supply chain adds the
requirement of flexibility within and
between all partners in the chain, including
departments within an organization, and the
external partners, including suppliers,
carriers, third-party companies, and
information systems providers. It includes
the flexibility to gather information on
market demands and exchange information
between organizations.
Six components of supply chain flexibility
have been identified from the literature on
manufacturing flexibility, strategic
flexibility and the limited writings on supply
chain flexibility. These six components are
defined here and described in Figure 1:
1 Operations system flexibility (both
manufacturing and service) ± ability to
configure assets and operations to react to
emerging customer trends (product
changes, volume, mix) at each node of the
supply chain.
Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
Figure 1
Components of supply chain flexibility
2 Market flexibility ± ability to mass
customize and build close relationships
with customers, including designing and
modifying new and existing products.
3 Logistics flexibility ± ability to cost
effectively receive and deliver product as
sources of supply and customers change
(customer location changes, globalization,
postponement).
4 Supply flexibility ± ability to reconfigure
the supply chain, altering the supply of
product in line with customer demand.
5 Organizational flexibility ± the ability to
align labor force skills to the needs of the
supply chain to meet customer
service/demand requirements.
6 Information systems flexibility ± the ability
to align information system architectures
and systems with the changing
information needs of the organization as it
responds to changing customer demand.
Each of these supply chain flexibility
components will be further discussed.
Operations system flexibility
Operations system flexibility includes both
manufacturing and service operations. Many
of the dimensions of manufacturing
flexibility would be included in this category
with the dimensions measuring the
flexibility associated with a specific node in
the supply chain. This could be a
manufacturing unit, a supplier, or a
customer (distribution unit). As with the
various dimensions of manufacturing
flexibility defined in the literature, this
would cover the capabilities to change
products, equipment, people and processes
within the operations function. Building on
previous discussions of supply chain
flexibility (Anderson and Lee, 2000; Radjou,
2000) as well as the manufacturing flexibility
literature, it concentrates on flexibility
gained through the configuration of assets
and operations needed to produce a product
or service.
In a summary of the results from a
combined study between Anderson
Consulting, Stanford University,
Northwestern University, and INSEAD on
Consumer Driven Demand Networks
Anderson and Lee (2000) identified the
components of supply chain strategy that add
value to a firm. One component identified in
successful supply chain strategies is the
ability to be ``operationally agile''. This
includes the ability to configure assets and
operations to react to consumer trends for
both products and geographic areas. Also
necessary is the ability to redesign
manufacturing systems to respond to new
market requirements (Wu, 2001).
Rather than defining flexibility, Forrester
Research summarizes the conditions that
make global manufacturers inflexible
(Radjou, 2000). From Forrester's study of 50
global manufacturers, Radjou concluded
inflexibility could be surmised by the firm's
inability to transfer production from one
plant to another and its inability to
successfully respond when capacity is
constrained. The author states that global
manufacturers must be able to respond to
``dynamic trade'' which is defined as ``the
ability to satisfy current demand with
customized response''. An integral
component of supply chain flexibility would
be the operations flexibility at each node of
the chain. In order to meet the end
customer's needs, each node needs to be able
to deliver the product or service in a
timely manner.
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Robert J. Vokurka and
Rhonda R. Lummus
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[ 452 ]
Market flexibility
Market flexibility is the responsiveness to
changing market conditions and customer
needs and wants. Dimensions of this
component of flexibility would include new
product design and introduction,
customization, product configurations,
product postponement, and post delivery
support. A critical need in today's
competitive environment is the ability to
design and introduce new products as
customers' needs, materials, and
technologies change. This requires a
concurrent engineering approach utilizing
representatives from different nodes of the
supply chain to develop a more effective
product with a short development time.
Uncertainty about demand is inherent to
many products today. In his framework for
matching supply chains with products,
Fisher (1997) defines the requirements for
market-responsive supply chains. He
believes their primary purpose is to:
. . . respond quickly to unpredictable demand
± to minimize stockouts, forced markdowns,
and obsolete inventory.
From a product design standpoint he also
suggests using modular designs so that
product differentiation is postponed for as
long as possible.
Logistics flexibility
Logistics and distribution management
includes all the processes of transporting
goods from suppliers to manufacturers, to
distribution centers and to the final
consumption point (Ricker and Kalakota,
1999). These processes include packing and
shipping, preparing documentation,
inventory and warehouse management,
transportation planning and management,
customs transactions, reverse logistics, and
tracking and delivery.
Fuller et al. (1993) suggest that the logistics
systems of a single firm are one of the key
areas for bringing ``distinct value to distinct
customers''. Distinct value to distinct
customers implies ensuring logistics
flexibility within the supply chain to serve
each distinct customer's needs. Most supply
chains include multiple logistics and
distribution firms across the chain and
require flexibility in including the right
component for each customer. Flexibility
includes selecting logistics components that
can accommodate wide swings in demand
over short periods, handle a wide-range of
products, have flexible reverse logistics and
return policies, have the ability to pack
product-in-transit to suit individual
customers' requirements with product
arriving from multiple shipping points, and
have the ability to customize products close
to the customer.
As Anderson et al. (1997) noted:
. . . the logistics network probably will be
more complex, involving alliances with
third-party logistics providers, and will
certainly have to be more flexible than the
traditional network.
They further observed that for many
companies, tailoring distribution assets
could be a source of differentiation for a
manufacturer, more so than the product
itself. Logistics flexibility is required to meet
changing channels, especially as electronic
commerce expands and markets open in
developing countries and sourcing,
manufacturing and distribution are
becoming more global (Bradley, 1997).
Lummus and Vokurka (1999) argue that
successful supply chains will develop
customized logistics networks tailored to
each customer segment.
Supply flexibility
The ability to meet the changing needs of
customers requires changing the supply of
product, including mix, volume, product
variations, and new products. Meeting these
needs in the supply chain requires flexibility
in sourcing product from raw materials to
outsourced finished product. The supply
chain should be designed with change in
mind. As one member of the chain sees the
need to add partners to complete a task, new
partners with the required capabilities must
be found (Jordan and Michel, 2000). As those
partners complete the tasks they were
brought into the chain to provide, provisions
must be made to reconfigure the supply chain
and dissolve the partnerships. Supply
flexibility includes the ability to handle
variable life cycle lengths, the ability to ramp
up production quickly, the ability to adopt
processes to specific products, the capability
to downsize, the ability to attract a portfolio
of partners that changes as customer needs
change. As markets continue to change, the
competitive priorities of the supplier
partners must include a parallel shift in focus
at each level of the supply chain down to the
remotest level of supply (Rich and Hines,
1997).
The flexibility of supply includes flexibility
in establishing the relationships with
partners. Companies may choose to solicit
short-term bids, enter into long-term
contracts and strategic supplier
relationships, form joint ventures, form
consortiums, create problem-solving councils
or vertically integrate. Flexibility in forming
these relationships along with managing the
relationships is key to successfully meeting
Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
changing customer requirements. As
Bensaou (1999) states:
Successful supply-chain management
therefore requires the effective and efficient
management of a portfolio of relationships:
first, firms must match the optimal type of
relationship to the various product, market,
and supplier conditions; second, they must
adopt the appropriate management approach
for each type of relationship.
Companies must select the most appropriate
relationships to match the specific set of
circumstances (Cooper and Gardner, 1993).
Organizational flexibility
Organizational flexibility targets the
flexibility that a node can achieve through its
workforce and the organizational structure,
business practices, and culture within which
that workforce operates. This component of
supply chain flexibility is used to recognize
the fact that reconfiguration and adjustment
of operations will only be as successful as the
flexibility of the workforce and
organizational environment allows. Many of
these dimensions have already been
recognized in the flexibility literature within
and outside that of manufacturing flexibility.
Vokurka and O'Leary-Kelly (2000)
extensively reviewed the manufacturing
flexibility literature and then defined the
dimension of labor within manufacturing
flexibility as the range of tasks that an
operator can perform within the
manufacturing system.
Research in the area of flexibility in
business practices can be seen through a
variety of sources. Miles (1989) argues that a
new organizational form, plus a secure,
mobile, and well-trained workforce, is needed
to meet the challenges inherent in the global
economy. Lau (1996) adds support for the
dimension of organization structure. He
argues that deep organizational hierarchies
impede cooperation and communication and
prevent cross-functional integration, a
requirement for successful supply chain
management, and employee participation.
Hall and Parker (1993) look at workplace
flexibility, one part of the business practices
dimension, and finds that this flexibility can
enhance corporate performance. Wright and
Snell (1998) apply Sanchez's (1995) model of
resource and coordination flexibility
specifically to the human resources
management (HRM) function targeting both
business practices and workforce. They
illustrate the importance of creating
flexibility specifically in HRM practices and
argue that the breadth of individual skills
available to the firm, as well as the flexibility
of employee behavior provides indicators of a
firm's potential flexibility.
Information systems flexibility
The changing environment in which an
enterprise operates, so too changes the
information needs and data processing
requirements of the enterprise. Change
within the supply chain may be inhibited if
the information system cannot respond to
these changing needs. Inter-firm business
synchronization requires inter-firm data
sharing and communication. Supply chain
partners must be willing to adapt their
information systems to meet the needs of all
partners and upgrade the business processes
as the market evolves. As Dabbiere (1999)
states:
When a major player in the supply chain
decides to upgrade to a new technology or
adopt a new technical functionality, the rest
of the industry is challenged to synchronize
the change throughout the supply chain.
This synchronization must incorporate the
changing requirements of business partners,
including items such as order information
and shipping data. Lee and Hong (2002) note
that for organizations to thrive in a
hyper-competitive market environment,
information technology applications must
support capturing customer data through
data warehouses. Reddy and Reddy (2002)
found that large companies often admit to a
lack of flexibility in information systems due
to complex legacy systems with huge
volumes of data.
The dimensions that can possibly measure
flexibility with respect to information
systems throughout the enterprise are not
clearly defined in existing literature. Lau
(1996) argues that strategic flexibility is
supported through the use of advanced
information technologies. Vokurka and
O'Leary-Kelly (2000) found one dimension of
manufacturing flexibility to be the extent to
which flexibility is housed in the automation
(computerization) of manufacturing
technologies. For the supply chain, this
automation extends beyond computerization
represented by flexible manufacturing
systems and computer-integrated
manufacturing. Programs and interfaces that
allow automation of processes, such as
purchasing, between suppliers, operations,
and customers must be included as well.
Further, flexibility must also consider the
speed with which changes can be made to
hardware architecture and software to allow
for synchronization between firms in the
supply chain. Research appears to support
the contention that information system
flexibility impacts both organizational and
[ 453 ]
Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
[ 454 ]
operations flexibility (Lucas and Olson, 1993; product in line with customer demand.
Barron, 1993; Dougherty et al., 1998). Organizational flexibility is the ability to
Therefore, the model of supply chain align labor force skills and organizational
flexibility shows organizational and structure to the needs of the supply chain to
operations flexibility operating within meet customer requirements. Information
information system flexibility. systems flexibility includes the ability to
align information system architectures and
systems with the changing information needs
Conclusions and suggestions for of the organization as it responds to changing
future research customer demand.
To begin the process of building a theory
To be successful, firms must elevate
for supply chain flexibility, this paper
flexibility from an operational perspective to
describes a conceptual model. From this
a strategic, cross-organizational perspective.
model, researchers can proceed through the
At the same time, companies must realize
iterative research cycle of explanatory
that real competition is not firm-to-firm, but
frameworks tested against reality and
supply chain-to-supply chain. The evolution
refined as studies build upon one another.
from individual organization flexibility to
There are several research questions that can
cross-firm flexibility results in the
be raised to advance the understanding of
requirement that entire supply chains be
supply chain flexibility and improve its
flexible. At issue is, what are the components
practice. Some of these are suggested below:
of supply chain flexibility? Much has been . Are the components of supply chain
written on the components of strategic
flexibility as defined in this research the
flexibility and manufacturing flexibility
relevant components? Have all the
within a firm. A brief summary of that
relevant sub-components been identified?
literature has been provided. Not clear,
Is it necessary to identify a specific set of
however, is how to combine internal
sub-components, assuming there is a
flexibility, both strategic and operational,
universal set of sub-components?
with the external integration necessary to . Is supply chain flexibility a component of
make the entire supply chain flexible. The
strategic flexibility and only considered
issues underlying supply chain management
from an intra-firm perspective? The
strategies is an appropriate area to research
proposed framework suggests that the
as firms today try to improve supply chain
important issue with flexibility is having
performance and revise existing industry
the entire chain flexible to meet changes
practices.
in customer demand. Can one
This paper begins to address those issues
organization, through internal
by identifying the components of supply
improvements in flexibility meet
chain flexibility. A review of the limited
changing market needs or can an
literature on supply chain flexibility is
organization excel in one component of
included. Most of the research is confined to
flexibility and be successful?
evaluating one aspect of supply chain . How can dimensions for each component
flexibility, such as selecting flexible
be measured as the ongoing research has
suppliers. The view of supply chain
proposed for manufacturing flexibility?
flexibility presented here incorporates both
What specific elements can be used to
within-firm and between-firm flexibility. The
measure the dimensions? Performance
components of intra-firm flexibility would
measures must be identified which
generally repeat at each node of the supply
measure supply chain performance across
chain. A new conceptualization of supply
supply chain nodes to determine if real
chain flexibility is proposed which includes
change in customer value has been added.
the six flexibility components suggested in . How do the components relate to one
Figure 1.
another? Do improvements in one
Operations flexibility includes the ability
component affect improvements in
to configure assets and operations at each
another? What are potential barriers to
node of the supply chain to react to emerging
flexibility and how should they be
customer trends. Market flexibility describes
overcome? How will organizations
the ability to mass customize and build close
integrate with their supply chain partners
relationships with customers. Logistics
and ensure flexibility across
flexibility includes the ability to cost
organizations?
effectively receive and deliver product as
sources of supply and customers change. Empirical research is needed which gives
Supply flexibility is the ability to reconfigure deeper insights into what constitutes
the supply chain, altering the supply of flexibility in supply chains in various
Leslie K. Duclos,
Robert J. Vokurka and
Rhonda R. Lummus
A conceptual model of supply
chain flexibility
Industrial Management &
Data Systems
103/6 [2003] 446-456
industries. Case and field research studies
should be used to generate knowledge that
supports the flexibility components
suggested here or adds new components. At
the same time, performance measures should
be identified which can be used to evaluate
the success of flexibility initiatives across the
supply chain.
The results from these studies should have
implications for managers in various
organizations in the supply chain. Many
companies are just beginning to understand
the concepts of supply chain management.
Research must be conducted that can aid
these firms in understanding how flexibility
can improve their competitive position. As
supply chains compete with supply chains in
the future, companies must understand that
flexible supply chains will outperform those
that are less agile.
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