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Critical success factors in agile Critical success

factors
supply chain management
An empirical study
Damien J. Power and Amrik S. Sohal 247
Department of Management, Monash University, Australia, and
Shams-Ur Rahman
Institute of Transport Studies, The University of Sydney, Australia
Keywords Agile production, Australia, Manufacturing
Abstract This paper analyses results from a survey of 962 Australian manufacturing
companies in order to identify some of the factors critical for successful agile organizations in
managing their supply chains. Analysis of the survey results provided some interesting insights
into factors differentiating ``more agile'' organizations from ``less agile'' organizations. ``More
agile'' companies from this study can be characterized as more customer focused, and applying a
combination of ``soft'' and ``hard'' methodologies in order to meet changing customer requirements.
They also see the involvement of suppliers in this process as being crucial to their ability to attain
high levels of customer satisfaction. The ``less agile'' group, on the other hand, can be
characterized as more internally focused with a bias toward internal operational outcomes. They
saw no link between any of the independent variables and innovation, and appear to see
technology as more closely linked to the promotion of these operational outcomes than to customer
satisfaction. The role of suppliers for this group is to support productivity and process
improvement rather than to promote customer satisfaction.

Introduction
The requirement for organizations to become more responsive to the needs of
customers, the changing conditions of competition and increasing levels of
environmental turbulence is driving interest in the concept of ``agility''. What it
really means for an organization to be ``agile'', as opposed to just being efficient,
effective, lean, customer-focused, able to add value, quality-driven, proactive
rather than reactive, etc., has been the source of considerable debate and
academic conjecture. Christopher (2000) makes a clear distinction between
speed (meeting customer demand in the context of shortened delivery lead
times), leanness (doing more with less) and agility (responding quickly to
changes in demand in terms of both volume and variety). Naylor et al. (1999,
p. 108) go further in stating that:
Agility means using market knowledge and a virtual corporation to exploit profitable
opportunities in a volatile marketplace.

The notion of agility is therefore recognized to be holistic rather than

functional, and of strategic rather than tactical importance. The concept has
also been extended beyond the traditional boundaries of the individual International Journal of Physical
Distribution & Logistics
organization to encompass the operations of the supply chain within which the Management, Vol. 31 No. 4, 2001,
pp. 247-265. # MCB University
organization operates. The effectiveness of an organization's response to Press, 0960-0035
IJPDLM rapidly changing market conditions will be largely determined by the
31,4 capabilities of trading partners. A manufacturer with key suppliers that have
poor quality and delivery records will find it very difficult to provide high
levels of customer service even in stable environments. Place this manufacturer
in a rapidly changing environment and it will be eliminated from participation
in the competitive game altogether. In this context reliability of supply becomes
248 a critical issue that can best be facilitated by the sharing of accurate, timely
information with suppliers. At the downstream end of the supply chain, this
same manufacturer will again find it hard to operate in this environment if
distribution channels are unable to respond due to physical or information flow
related issues. In this sense the development of strategies for competing on the
basis of agility become very much strategies for the management of the total
supply chain. Towill (1997) expresses this in terms of creating a ``seamless
supply chain'' where territorial boundaries between trading partners are
eliminated and they effectively operate as if part of the one organization.
This paper seeks to initially identify some of the factors critical for
successful agile organizations in managing their supply chains. The study
seeks to identify a range of factors that differentiate more agile manufacturing
organizations from less agile manufacturing organizations using historical
data. The purpose is to test some of these factors identified from the theory
(and other empirical studies), and to develop a framework on which to base
further research. The objective is to identify and understand key leverage
points when seeking to create an agile supply chain.

Background
The concept of supply chain management is often traced back to Forrester
(1958; 1961) who identified the dynamics of response to changes in demand in
supply chain situations. Forrester identified that there typically is a distortion
in demand patterns created by the dynamic complexity present in transferring
demand from end users along a chain of supply to manufacturers and material
suppliers. One of the key implications of this work was that the inter-
dependence of participants in supply chains was highlighted, such that any
participant's potential to optimize performance would be constrained by the
limitations inherent in the overall system. The complexity of the dynamics of
the supply chain has led to the isolation of many different sources for this
distortion such as flows of information between and within companies,
material flows between companies and chaos theory (Evans et al., 1993; Towill,
1996; Wilding, 1998; Holweg and Bicheno, 2000).
Handfield and Nichols (1999, p. 2) state that the supply chain:
. . . encompasses all activities associated with the flow and transformation of goods from the
raw material stage (extraction), through to the end user as well as all information flows.

Christopher (2000, pp. 38-9) has identified a number of characteristics that a

supply chain must have in order to be ``truly agile''. These include market
sensitivity (through the capturing and transmission of point of sale data),
creating virtual supply chains (based on information rather than inventory), Critical success
process integration (collaboration between buyers and suppliers, joint product factors
development etc.) and networks (confederations of partners linked together as
against ``stand alone'' organizations). An underlying assumption in this model
is that of open relations between the supply chain participants, the sharing of
information and the use of technology to create ``connectivity'' (i.e. the ability
for organizations to share information in ``real time''). Christopher (2000, p. 43) 249
also stresses that agility in individual organizations can be significantly
hindered by the level of complexity in terms of brands, products, structures and
management processes. In developing a model for achieving agility in
manufacturing organizations, Zhang and Sharifi (2000) identified a number of
``agility providers'' (practices, methods, tools, techniques facilitating a
capability for agility). As a result of surveying 1,000 companies, and
conducting case studies in 12 of them, they concluded that practices related to
people and organization issues were both more effective and important for
manufacturers. They also found that the Internet, mass-customization and
virtual organizations were only used by a small percentage of respondents, and
usually only partially. Narasimhan and Das (2000), based on the result of an
empirical study of purchasing managers in manufacturing firms, found that a
key determinant of the ability of manufacturing to make rapid changes was the
selection, development and integration of suppliers with appropriate
capabilities.
Gunasekaran (1999) has proposed a conceptual model for the design of agile
manufacturing systems based on the four key dimensions of strategies,
technology, people and systems. He also notes that most of the literature in this
area focuses on strategies or techniques, but there is little or no focus on the
integration issues. He also states that there is a lack of empirical studies testing
hypotheses based on theory in this area. This view is supported by Sheather
and Hanna (2000, p. 5) who state that:
. . . there is a dearth of empirical evidence regarding the operational characteristics of supply/
buy networks, the appropriate performance measures, the principles of structural intuition
underlying their operation and theoretical models to guide empirical research.

Methodology
This study is based on the results of a survey carried out in Australia during
1994. This data set represents the most comprehensive survey of Australian
manufacturers to date, and was conducted at a time when this sector had
undergone a period of significant tariff reduction, labour market deregulation,
technological change and, in general, exposure to increased levels of
competition. Given that a primary objective of this analysis was to provide a
basis upon which to build further research, it is seen to provide a source of data
for analysis still relevant to today's competitive environment. A total of 3,000
Australian sites were surveyed of which 962 responded (a response rate of 32
per cent). Tables I and II show the demographic breakdowns by industry type
and company size for the full data set.
IJPDLM Industry subdivision Frequency Per cent
31,4
Fabricated metal products 121 12.6
Chemical, petroleum 118 12.3
Miscellaneous manufacturing 109 11.3
250 Basic metal products 81 8.4
Non-metallic mineral products 78 8.1
Other machinery 76 7.9
Wood, wood products 68 7.1
Food and beverage 67 7.0
Transport equipment 67 7.0
Clothing and footwear 63 6.5
Textiles 55 5.7
Paper, paper products 54 5.6
Table I.
Not answered 5 0.5
Breakdown of the data
set by industry type Total 962 100.0

Company size Frequency Per cent

100 or more 420 43.7

50-99 258 26.8
20-49 225 23.4
Not answered 36 3.7
Table II.
Breakdown of the data 1-19 23 2.4
set by company size Total 962 100.0

The questionnaire consisted of a total of 246 questions developed by a

committee of academics, site managers and prominent members of the
Australian Quality Awards Foundation. The focus of the questions was on the
degree to which ``best practice'' had been adopted, implemented and developed
within Australian manufacturing firms and the extent to which organizational
performance had been affected. This study was seen to be appropriate because:
. There were a number of questions relating to issues relevant to
organizational flexibility and agility.
. The large number of responses provided a sample of sufficient weight to
justify confidence that quantitative analysis would be useful.
The results of the survey have been subjected to testing for respondent fatigue
and awareness of respondents. The data was tested for inconsistent responses
in different sections of the survey, and for respondents failing to pay attention Critical success
to changes in the tone of the survey (awareness tests). In all cases little factors
evidence was found of these types of bias leading the researches to conclude
that: ``. . . the length and complexity of the survey instrument did not seriously
erode the quality of the replies''. A telephone survey of 108 non-respondents
was also conducted to test for response bias. No significant response bias was
found. 251
Variable selection
A total of 43 variables were identified as relevant to agility, supply chain
management practices and specific organizational performance outcomes of
interest. The selection of these variables was based on a combination of
support from recent literature, and results of recent research where these
constructs had been tested and validated. These variables were then separated
into independent and dependent categories. The independent variable group
were subjected to factor analysis to determine whether the independent
variable set could be reduced to a manageable set of constructs whose
reliability and validity had been tested and confirmed.

Summary of the variables

Independent variable group
. Participative management style ± six variables. A group of questions
relating to specific human resource management practices were
recognized as relevant for companies attempting to achieve higher levels
of agility. Hodgetts et al. (1999) have noted that as organizations face a
requirement to become more agile, the role and techniques of human
resource management will also need to be reviewed. Lancioni (2000)
supports this view by highlighting the need for coordination within
companies seeking to be more agile. He points at the fact that agility will
largely be a function of the ability of disparate functions to cooperate by
working as teams with common goals. The reliability and validity of
this specific group of variables had previously been tested in earlier
research (Power and Sohal, 2000).
. Computer-based technologies ± six variables. The role of technology in
facilitating agility has received significant support in theory.
Schonsleben (2000) states that agile companies compete through
increased levels of ``knowledge and competency'', allowing them to
broadly implement information technology. Bovel and Martha (2000), in
quoting a 1999 survey by Mercer Management Consulting, indicate that
the use of information technologies was a major indicator of supply
chain management best practice, particularly if employed to connect
customers, suppliers and value adding activities. This view is supported
widely in the literature (Lee and Billington,, 1995; Davis and O'Sullivan,
1999; Cachon and Fisher, 2000; Kaufman et al., 2000).
IJPDLM . Resource management ± four variables. The management of inventory
31,4 and planning of production are central to the aspiring ``agile'' company.
Flexibility of both process and product are pre-requisites for being
nimble and responsive to changing market requirements. Organizations
have used many different methodologies to optimize the use of their
resources (e.g. MRP, ERP, OPT, JIT, etc.). Tan et al. (1999) have noted
252 that many organizations have gone beyond merely using resource
management systems (ERP, etc.) for their own internal control and
application requirements. Directly involving suppliers and customers in
resource management decisions through the use of supplier scheduling
and other VMI type practices has become a cornerstone of many supply
chain management initiatives.
. Continuous improvement enablers ± three variables. A recent survey
conducted in the USA by consulting firm Tompkins Associates (1999)
found that 86 per cent of respondents felt current supply chain
management solutions did not address the demands of the marketplace.
A total of 53 per cent stated that they were disappointed with return on
investment from these initiatives; and 98 per cent believed their
organization would benefit from a more holistic and continuous
improvement focused approach designed to meet customer
requirements. Supply chain performance will be highly dynamic given
the interdependencies that are being managed, and the partnerships that
are encouraged. The need for a continuous improvement focus when
trying to reengineer these complex relationships has been widely
recognized by many authors (Lamming, 1996; Cohen et al., 2000;
Handfield et al., 2000; Lancioni, 2000).
. Supplier relations ± three variables. The importance of close supplier
relations in striving toward an agile supply chain has also received
considerable support in the literature. Christopher (2000) states that
confederations of partners linked into networks is a primary ingredient
of agility. Bovel and Martha (2000) also cite collaboration as being a key
differentiator for companies involved in supply chain management best
practice. They even note that in some cases this extends to collaboration
with competitors on non-strategic issues. Stock et al. (1998) extend this
argument by applying it to the role of collaboration in achieving highly
integrated and efficient logistics networks.
. Just-in-time methodology ± two variables. The issues of ``leanness'' versus
``agility'', as a business characteristic, have been argued to be two
distinct concepts that should not be confused. Christopher (2000) makes
the point that some organizations that are ``lean'' in their operations are
far from ``agile'' in their supply chain. This does not, however, mean that
the two concepts are mutually exclusive. In fact, some authors see the
two models as needing to be balanced, rather than ``traded off'' (Slack,
1991), or that their relevance has more to do with the intensity of the
 requirement for ongoing innovation (Lamming et al., 2000). Magretta and Critical success
Dell (1998) use case study evidence from Dell Computers to show that (in factors
the case of this company) aspects of the two are being combined
successfully. Either way, it was decided to include these variables in order
to test their relative importance in both ``more agile'' and ``less agile''
companies.
253
. Technology utilization ± two variables. Much of the literature focuses on
the implementation of new and emerging technologies as a means of
providing an ``agile'' capability. It may be that a better alternative for
some companies lies in the appropriate application and use of existing
technologies. Although the importance of effective utilization is implied
in much of the literature, there is little empirical research into how
important this may be in a supply chain context. As one of the objectives
of this research is to provide pathways to further empirical studies, it
was felt important to include these variables to test for their
significance.
Dependent variable group. Nine items were selected as dependent variables
based on their relevance as indicators of agile performance. These related to
performance outcomes such as: customer satisfaction, process changeover
times, productivity, delivery performance, technological competitiveness, stock
turns, and product innovation.

Data preparation and evaluation

The initial screening of the data identified and eliminated missing values,
transformed non-normal distributions and tested for univariate outliers.
Further screening covering issues such as linearity, homoscedascity,
multicollinearity and further tests for outliers and normality were conducted as
required during the analysis.

Factor analysis
Factor analysis was performed of the 32 independent variables, and as a result
nine factors were extracted. This list was reduced to seven as a result of checks
for reliability revealing that two of the factors had very low alpha scores. The
seven factors that remained covered a total of 26 independent variables, and are
listed in Tables III-IX.

Multiple regression
Multiple regression models were developed for each of the seven factors with
each of the nine dependent variables listed in Table X.
The scales used for each of these variables follow in Table XI.
The primary reason for using this method was to generate values for R, R2
and adjusted R2 for comparison of strength of relationship and strength of
contribution to variance. The adjusted R2 value was used for comparing the
IJPDLM Factor 1: participative management style
31,4
Variable 1 Senior managers actively encourage change and implement a culture of
trust, involvement and commitment in moving towards ``best practice''
Variable 2 There is a high degree of unity of purpose throughout our site, and we have
eliminated barriers between individuals and/or departments
254 Variable 3 ``Champions'' of change are effectively used to drive ``best practice'' at this
site
Variable 4 At this site we proactively pursue continuous improvement rather than
reacting to crisis/``fire-fighting''
Variable 5 Ideas from production operators are actively used in assisting management
Variable 6 Our site has effective ``top-down'' and ``bottom-up'' communication processes
Table III. Notes:
Independent variables Alpha score: 0.817 (five-point Likert scale: strongly disagree-strongly agree)
comprising factor 1 ± This set of variables was given the label ``participative management style'' as they
participative represented a style or approach to managing the organization that attempts to maximize
management style human potential and encourages involvement at all levels

Factor 2: computer-based technologies

Variable 1 Extent of contribution to competitive position: computer-aided design (CAD)

and/or computer-aided engineering
Variable 2 Extent of contribution to competitive position: CAD output used to control
manufacturing machines (CAD/CAM)
Variable 3 Extent of contribution to competitive position: computer numerically
controlled (CNC) machines
Variable 4 Extent of contribution to competitive position: local area computer network
(LAN) for technical data
Variable 5 Extent of contribution to competitive position: electronic data interchange
(EDI)
Variable 6 Extent of contribution to competitive position: computer integrated
manufacturing (CIM)
Table IV.
Independent variables Notes:
comprising factor 2 ± Alpha score: 0.8603 (five-point Likert scale: negative contribution-major contribution)
computer-based The labelling of this group as ``computer-based technologies'' reflects the focus of the six
technologies variables on the use of information technology in managing manufacturing processes

contribution to variance in the dependent variables accounted for by the factors

and their combinations across varying sample sizes.

Segmentation of the data

From the original data set of 962 companies, two sub-sets were isolated and
named ``more agile'' and ``less agile''. The ``more agile'' companies (N = 66) were
 Factor 3: resource management Critical success
factors
Variable 1 This site has an advantage/disadvantage in the area of: materials
management and warehousing
Variable 2 This site has an advantage/disadvantage in the area of: production planning
and control
Variable 3 The following have improved factory operations: warehousing and materials 255
management
Variable 4 The following have improved factory operations: production planning and
control
Notes:
Alpha score: 0.7409; Variables 1 and 2 (five-point Likert scale: large disadvantage-large Table V.
advantage); Variables 3 and 4 (five-point Likert scale: negative contribution-major contribution) Independent variables
The four variables comprising this factor were labelled ``resource management'' as they comprising factor 3 ±
captured some essential manufacturing resource management issues resource management

Factor 4: continuous improvement enablers

Variable 1 Extent of contribution to competitive position: flexible manufacturing cells

(FMC) or systems (FMS)
Variable 2 Extent of contribution to competitive position: total quality management
(TQM)
Variable 3 Extent of contribution to competitive position: value adding management
(VAM)
Notes:
Alpha score: 0.6877 (five-point Likert scale: negative contribution-major contribution)
This factor captures three variables associated with the implementation and application of Table VI.
continuous improvement methodologies. Although the alpha score for this factor was below Independent variables
the nominal cut off point of 0.7, this construct was left intact as deleting any of the comprising factor 4 ±
variables did not improve the reliability of the measure. It was also felt that deletion of continuous
particular items could affect the overall integrity of the construct improvement enablers

Factor 5: supplier relations

Variable 1 Our suppliers work closely with us in product development

Variable 2 We work closely with our suppliers to improve each other's processes
Variable 3 Our suppliers have an effective system for measuring the quality of the
materials they send to us
Notes: Table VII.
Alpha score: 0.7208 (five-point Likert scale: strongly disagree-strongly agree) Independent variables
These three variables reflect the extent to which an organization has a collaborative or comprising factor 5 ±
``arms-length'' relationship with their suppliers supplier relations
IJPDLM segregated on the basis of a mean score of 3.5 or greater across three separate
31,4 sets of Likert scale variables. The ``less agile'' group (N = 198) were those
companies with mean scores of less than 3.5 on the same groups of variables.
The three sets of variables covered the following issues relevant to practices
and outcomes associated with ``agility'':
(1) Set 1: new product introduction lead-time, order delivery time, process
256 changeover time and delivery performance.

Factor 6: just-in-time methodology

Variable 1 Contribution of just-in-time to improved factory operations

Variable 2 Extent of contribution to competitive position: just-in-time
Table VIII.
Independent variables Notes:
comprising factor 6 ± Alpha score: 0.7376 (five-point Likert scale: negative contribution-major contribution)
just-in-time The extent of use and impact of JIT on organizational operations is captured by this
methodology construct

Factor 7: technology utilization

Variable 1 Our core manufacturing technology (e.g. type or age) is appropriate for our
needs and allows us to be competitive in the marketplace
Variable 2 We utilize our manufacturing technology to its maximum potential
Notes:
Alpha score: 0.5516 (five-point Likert scale: strongly disagree-strongly agree)
This construct reflects the appropriateness and degree to which an organization uses
technology. The alpha score for this construct was also lower than the nominal cut off of
Table IX. 0.7, but it was left intact on the basis of its construct and face validity, and the fact that
Independent variables there was little to be gained from separating the two variables. It was also felt that despite
comprising factor 7 ± doubts about the reliability of the measure, using the results from this construct would
technology utilization provide some valuable insights for future research

Variable 1 Site's current performance level: customer satisfaction

Variable 2 Site's current performance level: average process changeover time
Variable 3 Site's current performance level: productivity
Variable 4 Site's current performance level: delivery in full on time
Variable 5 Site's current performance level: relative technological competitiveness
Variable 6 Site's current performance level: ratio of annual sales to average total stock
Variable 7 Competitive advantage through: process technology
Variable 8 Competitive advantage through: ability to develop new products
Table X.
Dependent variable list Variable 9 Rating of performance in the area of: product innovation
Attribute 1 2 3 4 5 Critical success
factors
Variable 1 Sometimes Generally Consistently Always meets Expectations
meets meets meets expectations exceeded
expectations expectations expectations delighted
customers
Variable 2 Lags Could be Adequate More than A key to 257
competition improved adequate success
Variable 3 Decreasing Static Moderate Consistently Major and
improvement improving significant
gains
Variable 4 (%) < 50 50-80 81-90 91-96 97-100
Variable 5 Behind In catch up Some strengths Advantages Technological
competitors mode that can be over leader,
further competitors competitors
developed seek to catch
up
Variable 6 < 2.0 2.0-4.99 5.0-9.99 10-20 > 20
Variable 7 Large Disadvantage Same Advantage Large
advantage advantage
Variable 8 Large Disadvantage Same Advantage Large
disadvantage advantage Table XI.
Variable 9 Most Least important Dependent variable list
important ± scales used

(2) Set 2: knowledge of customer requirements, dissemination of these

requirements across the company, involvement of customers in design
processes, design for manufacture, customer complaint procedures and
measures of customer satisfaction.
(3) Set 3: involvement of suppliers in product and process development, and
supplier/customer involvement in development and monitoring of
quality systems.

Data analysis and discussion

Introduction
Table XII contains the results of the regression analysis for the seven
independent factor variables with the nine dependent variables for both the
``more agile'' and ``less agile'' companies. This table captures only the
relationships found to be significant at p < 0.05.
The regression analysis revealed that overall the ``more agile'' group of
companies had stronger relationships between the independent and dependent
variables than the ``less agile'' group. That is, where a relationship was found
between two variables for the ``more agile'' group it had in every case a higher
value for adjusted R2 where there was a comparable relationship found for the
``less agile'' group. This difference was also demonstrated by the comparative
 31,4

258
IJPDLM

Table XII.
Comparison of

agile'' companies
``more agile'' and ``less
regression analysis for
Independent variables
Factor 1 Factor 2 Factor 4
``Participative ``Computer- Factor 3 ``Continuous Factor 5 Factor 6 Factor 7
management based ``Resource improvement `Supplier ``Just-in-time ``Technology
style'' technologies'' management'' enablers'' relations'' methodology'' utilization''
More Less More Less More Less More Less More Less More Less More Less
Dependent variables agile agile agile agile agile agile agile agile agile agile agile agile agile agile

Customer satisfaction ± site's

current performance level 0.234** 0.090** 0.308** 0.122* 0.095** 0.216** 0.064* 0.060**
Average process changeover time ±
site's current performance level 0.120* 0.103** 0.084* 0.088**
Productivity ± site's current
performance level 0.147** 0.120** 0.027* 0.028* 0.171** 0.068**
Delivery in full on time ± site's
current performance level 0.152* 0.058** 0.104* 0.094** 0.070*
Relative technological
competitiveness ± site's current
performance level 0.065* 0.298** 0.219**
Ratio of annual sales to average
total stock ± site's current
performance level 0.079** 0.097* 0.121* 0.060** 0.040**
Competitive advantage through:
process technology 0.050** 0.031** 0.152**
Competitive advantage through:
ability to develop new products 0.042* 0.128** 0.041**
Rating of performance in the area
of: product innovation 0.134* 0.110* 0.120**
2
Notes: Comparative results for ``agile'' (N = 66) and ``non-agile'' (N = 198); Companies ± adjusted R (* = significant at 0.05; ** = significant
at 0.01)
mean values for adjusted R2 between the two groups. For the ``less agile'' group Critical success
this was 0.070, while for the ``more agile'' companies it was more than twice this factors
value at 0.142. Balanced against this, it was also found that the ``less agile''
group had a greater number of significant relationships between variables than
did the ``more agile'' group (22 as against 18).

Analysis by performance outcomes (dependent variables) 259

Please note that all results discussed in this section relate to the results for pairs
of independent/dependent variables in Table XI.
Customer satisfaction. For the ``more agile'' companies there were significant
relationships found between five of the independent variables and customer
satisfaction (moderate to strong relationships were found for participative
management style, computer-based technologies and supplier relations, with
resource management and technology utilization also recording significant
scores), while for the ``less agile'' group there were three (significant though
weak) associations with participative management style, resource management
and technology utilization. These results were interpreted to be indicative of a
high level of customer focus in the ``more agile'' companies driven by the use of
a combination of management techniques and new technology. This is
consistent with an emphasis in the literature on the importance of integration,
and points to the need to be able to blend so-called ``hard'' and ``soft'' issues to
achieve this (Bensaou, 1999; Gunasekaran, 1999; Kanji and Wong, 1999;
Christopher, 2000; Ellinger, 2000; Hagy, 2000; Handfield et al., 2000). Also of
particular interest is the moderately strong and significant relationship found
with supplier relations. This relationship for the ``more agile'' group signifies a
link between working closely with suppliers on developing products,
improving processes and quality initiatives, and higher levels of customer
satisfaction. Of the three variables making up the factor ``supplier relations'',
the dominant item related to working closely with suppliers on product
development. This provides support for the notion of the holistic model of a
supply chain, with all players working as a unit focused on the requirements of
the ultimate customer (Gupta, 1997; Landry, 1998; McCutcheon and Stuart,
1999; Cachon and Fisher, 2000; Lancioni, 2000; Lancioni et al., 2000; Masella
and Rangone, 2000). It is also notable that customer satisfaction is the only
dependent variable found to have a significant relationship with supplier
relations in the ``more agile'' group. By contrast, in the ``less agile'' group there
are two dependent variables with significant (though weak) associations found,
being productivity and competitive advantage through process technology.
This was seen to indicate that for the ``less agile'' companies, relationships with
suppliers are seen to impact internal operational performance rather than the
delivery of customer satisfaction.
Average process changeover time. Resource management was found to have
a significant (though weak to moderate) association with this dependent
variable for both groups, although slightly stronger for the ``more agile''
companies. This group also indicated that continuous improvement enablers
IJPDLM were important, while the ``less agile'' companies saw technology utilization as
31,4 being related to process changeover time. Given that the resource management
factor captured production planning and resource allocation issues, it would be
expected that both groups would see it to be linked to this dependent variable.
In fact it would be expected that most manufacturing organizations would do
likewise. What is of interest is that the ``more agile'' group also associate
260 continuous improvement enablers with process changeover time, whereas the
``less agile'' group connect technology utilization with this dependent variable.
The ``more agile'' companies appear to place a greater emphasis on the
importance of continuous improvement methodologies, as against the ``less
agile'' group seeing this as being a function of the type of technology they have
and how they utilize it. This perhaps supports some recent work of Naylor et al.
proposing that the lean and agile manufacturing paradigms are
complementary rather than contrary views, particularly in the sense that a
focus on quality and elimination of waste support both models (Naylor et al.,
1999).
Productivity. The ``more agile'' group reported a significant (moderately
strong) association between only one independent variable and productivity,
that being technology utilization. The ``less agile'' group on the other hand
found significant associations with five of the independent variables. Moderate
links were seen with participative management style and resource
management, while weaker ones with continuous improvement enablers,
supplier relations and technology utilization were reported. It is difficult to say
what the exact meaning of this difference is for the two groups. It perhaps
indicates a view within the ``more agile'' group that the optimal application and
use of technology is the primary determinant of operational performance, or it
could be indicative of the fact that this group have perhaps been early adopters
of new technologies. For the ``less agile'' group it could also be a further
indication of the focus in these companies on internal operational performance.
Delivery in full on time. Resource management was found to be associated
with delivery performance to a similar degree for both groups of companies.
Again, this is not surprising given the nature of manufacturing and its reliance
on effective planning and resource allocation. Both groups also linked
participative management style with on-time delivery, but the relationship was
far stronger for the ``more agile'' group. This again provides a contrast with the
``less agile'' companies who saw a relationship of similar strength with
productivity (reported above). This further indicates that the ``more agile''
companies see their management processes and systems as impacting
ultimately on the organization's ability to meet customer requirements (i.e.
delivery in full, on time). In these companies operational performance and
productivity are perhaps seen to be a function of ultimately how successful you
are in meeting customer requirements. This group also reported a significant
association between technology utilization and this dependent variable,
perhaps reinforcing the importance placed by this group on optimizing
technology as reported in the previous section.
 Relative technological competitiveness. Both groups reported significant and Critical success
moderately strong relationships between this dependent variable and factors
technology utilization, although the score for adjusted R2 was higher for the
``more agile'' companies. The ``less agile'' group also saw a significant (if weak)
association with resource management. The link between the utilization of
technology and the ability to compete in this area is not surprising for either
group, although it is again interesting that the ``more agile'' companies reported 261
a stronger relationship, consistent with the findings for other dependent
variables such as productivity and delivery in full, on time. The focus on the
importance of technology appears to be a key difference between the two
groups. This again reflects much of the recent literature, where the importance
of applying new technologies to facilitate agility in the management of the
supply chain is reinforced (Towill, 1997; Strader et al., 1999; Unal, 2000; Upin et
al., 2000; Wadhwa and Rao, 2000; Zhang and Sharifi, 2000).
Ratio of annual sales to average total stock. Stock turns were found to be
associated with both resource management and continuous improvement
enablers for the ``more agile'' companies. For the ``less agile'' companies, links
were found with participative management style, just-in-time methodology and
technology utilization. In this case it is difficult to draw specific conclusions
from these results, other than to note that the scores for adjusted R2 were higher
in both cases for the ``more agile'' group, indicating a stronger relationship. It is
also worth commenting on the fact that the ``less agile'' companies saw no
significant link between resource management (i.e. planning and allocation of
resources) and stock turns. It could be expected that this would be a common
link associated with all manufacturing organizations.
Competitive advantage through process technology. None of the seven
independent variables were found to be associated with this dependent variable
for the ``more agile'' group of companies. By contrast, the ``less agile'' group
reported significant relationships with resource management, supplier
relations and technology utilization, with the latter being the strongest. This
appears to indicate that for the ``more agile'' group, competition through
processes (in this case it can be assumed this means manufacturing processes)
is not seen to be as important as it is in the ``less agile'' group. It also shows
again the comparatively greater focus on internal operational outcomes in the
``less agile'' group, particularly emphasizing the role for technology in this
regard for these companies.
Competitive advantage through ability to develop new products. For the ``more
agile'' group the only significant association found with this dependent variable
was with technology utilization. This same association (although weaker) was
found for the ``less agile'' group, along with a link with participative
management style. The application of technology to provide an ability to
compete through the development of new products is consistent with the focus
on customer service in the ``more agile'' group. It is also consistent with themes
in the literature such as flexibility in terms of product variety driven by market
sensitivity (Christopher, 2000) and virtual organizations and networks
IJPDLM (Anupindi and Akella, 1993; Bensaou, 1997; Camarinhamatos et al., 1998). The
31,4 apparent contrast between the two groups on the issue of how technology can
contribute to competitive advantage is again highlighted by the results for this
and the previous dependent variable. These results indicate that the ``more
agile'' group see the application of technology as enabling them to compete
more effectively by offering a wider variety of products, whereas the ``less
262 agile'' companies see it as impacting on operational processes, and thus
providing competitive advantage through more efficient and effective
operations.
Product innovation. The results for this dependent variable complement
those for the development of new products above. In this case there are no
significant relationships found between the independent variables and product
innovation for the ``less agile'' companies. By contrast, there are three cases for
the ``more agile'' group, being with participative management style, continuous
improvement enablers and just-in-time methodology. Technology utilization is
not found to have a significant association. The primary determinants of
product innovation in the ``more agile'' group are so called ``soft'' issues such as
management style and the promotion of continuous improvement
methodologies rather than technology (seen to be associated with development
of new products). This indicates that the ``more agile'' companies see innovation
to be facilitated by appropriate management (e.g. human resources, knowledge
management, etc.) processes, and see it to be an issue distinct from that of
actually developing a new product. This is a subtle and important difference,
particularly as it indicates a certain degree of sophistication and discretion in
the way these companies operate. It also provides another contrast with the
``less agile'' group who report no links with innovation.

Conclusion
Analysis of these survey results provided some interesting insights into factors
differentiating ``more agile'' companies from ``less agile'' organizations. ``More
agile'' companies from this study can be characterized as more customer
focused, and applying a combination of ``soft'' and ``hard'' methodologies in
order to meet changing customer requirements. They also see the involvement
of suppliers in this process as being crucial to their ability to attain high levels
of customer satisfaction. The ``more agile'' companies were also found to be
using technology to promote productivity, new product development and
customer satisfaction. This group also appear to be able to differentiate
between new product development and innovation, understanding them to be
two different things requiring different applications of ``soft'' and ``hard''
techniques and organizational resources. In the case of new product
development, the important factor is the appropriate utilization of technology,
while innovation is seen to be associated more closely with a participative
management style and continuous improvement methodologies. The ``less
agile'' group, on the other hand, can be characterized as more internally focused
with a bias toward internal operational outcomes. They see no link between
any of the independent variables and innovation, and appear to see technology Critical success
as more closely linked to the promotion of these operational outcomes than to factors
customer satisfaction. The role of suppliers for this group is to support
productivity and process improvement rather than to promote customer
satisfaction.
This study, apart from providing some insights into characteristics of ``more
agile'' and ``less agile'' companies, also highlights some areas for future 263
research. The importance of the mix of strategies used by companies in
promoting an agile supply chain is an important area that requires further
study. Integration of supply chain management processes and methodologies is
an issue highlighted regularly in the literature, and is again evident from the
results of this study. What requires further research is the form and focus that
integration should have, the situational issues relevant to integration and the
relevance of these issues both at the level of the individual organization and the
supply chain as a total system.
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