Supply chain exploration:

Exploration is associated with intricate search, innovation, variation, risk taking, relaxed control,

loose discipline and flexibility and it involves experimenting with ideas, paradigms,

technologies, strategies and knowledge in expectation of discovering new substitutes that are

better than the outdated practices. The exploration strategy similar to a responsive supply chain

(RSC) method in which the successful adaptation is determined by the readiness of the

organizations to react swiftly to the various stimuli emerging from the market place on an

uninterrupted basis (Asree, 2016).

Supply chain exploration can be achieved through the reduction of redundancies in operations,

while supply chain exploitation can be attained via experimenting, finding innovative solutions,

and opportunities for supply chain issues.

Asree, S. (2016) ‘Ambidextrous supply chain in an emerging market: impacts on innovation and
performance’, International Journal of Supply Chain and Operations Resilience, Vol. 2, No. 1, pp.1–11

Supply chain exploration focuses more on developing new SC competencies by sensing and

experimentation of new processes and ideas, which can reduce uncertainties about external

environment and technologies changes and avoid being locked-in with out-of-date technologies

(Chandrasekaran et al. 2012). Therefore, on the one hand, high SC exploration continually seeks

new SC solutions to SC problems to improve the firm’s efficiencies (Kristal et al. 2010), such as

collaborating with SC partners to better plan production cycles and reducing stock out

occurrence through Internet-enabled SCM (Kulp et al. 2004; Sanders 2008). On the other hand,

high SC exploration also proactively explores new opportunities by externalizing, combining,

and socializing with external new knowledge and ideas in the SCM (Huang et al. 2008; Kristal et
al. 2010), such as enabling the development of novel and close associations and linkages with

partners, and thus can quickly respond to and capitalize on market, demand, or customer need

changes (Lu and Ramamurthy 2011).

Chandrasekaran, A., Linderman, K., and Schroeder, R. 2012. "Antecedents to Ambidexterity Competency
in High Technology Organizations," Journal of Operations Management (30:1–2), pp. 134-151.

Kulp, S.C., Lee, H.L., and Ofek, E. 2004. "Manufacturer Benefits from Information Integration with Retail
Customers," Management Science (50:4), pp. 431-444.

Lu, Y., and Ramamurthy, K. 2011. "Understanding the Link between Information Technology Capability
and Organizational Agility: An Empirical Examination," MIS Quarterly (35:4), pp. 931-954
Supply chain exploitation:

The goal of SC exploitation is to enhance the firm’s current capabilities by leveraging their

already installed base of SC competencies, processes and technologies, as well as rationalizing

and reducing supply costs (Kristal et al., 2010). This set of practices refines and extends existing

abilities and resources to achieve lower costs and higher reliability, while maintaining

relationships with current suppliers and searching for SC solutions using available resources.

Exploitation refers to fine tuning of the firms’ current strategies and operations; however,

exploitation strategies are required to tackle the dynamic environment, for example,

experimentation, risk taking, and search. Researchers agree on the view point of striking the right

balance between exploitation and exploration [14].

Supply chain exploitation is regarded as the number of processes used to refine and enhance

current resources and skills to improve the supply chain, while supply chain exploration stands

for the number of practices used to design innovative supply chain solutions.

14. Partanen, J.; Kohtamäki, M.; Patel, P.C.; Parida, V. Supply chain ambidexterity and manufacturing
SME performance: The moderating roles of network capability and strategic information flow. Int. J.
Prod. Econ. 2020, 221, 107470. [CrossRef]

Firms with SC exploitation jointly broaden their existing knowledge and skills, and thus leverage

their current SC competencies to achieve efficiency and low costs (Jansen et al. 2006; Kristal et

al. 2010). With exploration, firms continually seek new knowledge and resources by inter-

organizational collaboration through digital enablement (Kristal et al. 2010; Sanders 2008). High
SC exploitation would enhance the firm’s ability to perform the routine tasks by reducing

operational redundancies in the SC relationships, such as cutting down the redundant staff and

reducing coordination costs (Im and Rai 2008; Sanders 2008), which would improve the firm’s

financial performance. In addition, SC exploitation makes firms focus more on the existing skills

and knowledge to refine the current SC processes and technologies (Huang et al. 2008), such as

reconciling the inventory and payments by adopting the IT-enabled systems (i.e., electronic data

integration systems) (Sanders 2008). Thus, SC exploitation can not only improve the firm’s

financial performance, but also contribute to operational performance improvement.

Jansen, J.J.P., Van Den Bosch, F.A.J., and Volberda, H.W. 2006. "Exploratory Innovation, Exploitative
Innovation, and Performance: Effects of Organizational Antecedents and Environmental Moderators,"
Management Science (52:11), pp. 1661-1674.

Sanders, N.R. 2008. "Pattern of Information Technology Use: The Impact on Buyer–Suppler Coordination
and Performance," Journal of Operations Management (26:3), pp. 349-367.

Im, G., and Rai, A. 2008. "Knowledge Sharing Ambidexterity in Long-Term Interorganizational
Relationships," Management Science (54:7), pp. 1281-1296.

Huang, X., Kristal, M.M., and Schroeder, R.G. 2008. "Linking Learning and Effective Process
Implementation to Mass Customization Capability," Journal of Operations Management (26:6), pp. 714-
729.