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An integrative framework of Framework of

supply chain
supply chain flexibility flexibility
Ying Liao
Department of Marketing and Supply Chain Management, East Carolina University,
Greenville, North Carolina, USA 1321
Received 9 August 2019
Abstract Revised 19 December 2019
Purpose – It is crucial to recognize that supply chain flexibility is important to build sustainable competitive Accepted 3 February 2020
edge in coping with uncertainty. This study puts forth an empirically supported integrative framework to
understand supply chain flexibility from market-oriented and network-oriented perspectives,
interrelationships among its dimensions and the effect of supply chain complexity as a contingent factor.
Design/methodology/approach – The online survey data were collected from 201 manufacturing
companies and checked for common method variance, validity and reliability. Structural equation modeling
was then used to test the hypotheses.
Findings – The results of this study demonstrate that there are interrelationships among market-oriented and
network-oriented supply chain flexibility dimensions. It is the flexibility embedded in the supply chain network
configuration that plays critical roles in superior performance in flexibility capabilities to create customer
values. The interrelated effect among flexibility dimensions is contingent on the magnitude of the supply chain
complexity corresponding to the number of supply chain tiers.
Originality/value – This study takes a step to advance understanding of supply chain flexibility from an
integrative point of view consisting of market-oriented and network-oriented perspectives. This study is
expected to provide practitioners the foundation to implement supply chain flexibility considering the
interrelationships among flexibility dimensions. Our results suggest that to carry out a supply chain flexibility
strategy, the vertical complexity of the supply chain structure needs to be taken into consideration.
Keywords Supply chain flexibility, Market-oriented flexibility, Network flexibility, Supply chain complexity,
Contingency
Paper type Research paper

1. Introduction
Many firms are beginning to recognize that supply chain flexibility (SCF) is crucial to build
sustainable competitive edge in coping with uncertainty and complexity (Turner et al., 2018;
Leeuw et al., 2013; Strom et al., 2013). More than two-thirds of supply chain executives
responded, in the global supply chain and risk management survey (Strom et al., 2013), that
greater flexibility needs to be built in their supply chain network. Unfortunately, SCF is a
complex, multidimensional and hard-to-capture concept. The confusion and ambiguity about
SCF seriously inhibit its effective implementation and actualization of its benefits (Singh et al.,
2019). The answers to the research question of “do improvements in one supply chain
flexibility dimension affect improvements in another?” will be meaningful to practitioners in
designing supply chain strategy.
The mainstream of research on supply chain flexibility views supply chain flexibility as a
logical extension of manufacturing flexibility and understands it from process-based view
and operational perspective (Vickery et al., 1999; Lummus et al., 2003; Tiwari et al., 2015). Only
a limited number of cases and conceptual and empirical studies explore flexibility across
supply chain from network perspective but that does not seem sufficient (Manders et al., 2016;
Oh et al., 2013; Stevenson and Spring, 2007; Zhang et al., 2002). There has been a call for International Journal of
Productivity and Performance
attention to develop theoretical foundations in order to create proper understanding of SCF Management
for the operationalization and application (Tiwari et al., 2015). In particular, Stevenson and Vol. 69 No. 6, 2020
pp. 1321-1342
Spring (2007) argued that a holistic view should be taken to create proper insight of © Emerald Publishing Limited
1741-0401
interrelated supply chain flexibility at different levels. This study integrates market-oriented DOI 10.1108/IJPPM-07-2019-0359
IJPPM and network-oriented perspectives of supply chain flexibility. The market-oriented flexibility
69,6 is also defined as market flexibility, representing the ability of the system to meet customer
demands when market changes (Sethi and Sethi, 1990; Chang, 2012). It directly demonstrates
competitiveness of the market and shows the outcome of supply chain system capability.
Alamro et al. (2018) described market-oriented flexibility as “outside-in.” Then the network-
oriented flexibility can be viewed as “inside-out” that represents the ability of the supply
chain network system to adapt. These two types of flexibility are valuable to help firms
1322 maintain effectiveness and efficiency in business. Achieving flexibility can be expensive if a
firm decides to implement every aspect of flexibility in supply chain context (He et al., 2012).
More empirical studies are needed to explore the interactions between two types of flexibility
and within the multidimensional supply chain flexibility concept to further provide guidance
of practicing flexibility in different forms.
Through a review of the literature on supply chain flexibility, Fayezi et al. (2017)
highlighted the lack of attention given to contingency factors. What aspects of supply chain
flexibility are needed to fit different contexts thus becomes one of the core concerns for supply
chain executives willing to pursue the flexibility strategy. A few previous empirical studies
explain how supply chain flexibility should be aligned with environmental uncertainty (Yu
et al., 2015; Luo and Yu, 2016; Merschmann; Thonemann, 2011). However, complexity in supply
chain network structure as a major contingency remains poorly understood. Firms are
increasingly operating within more complex and dynamic networks; Thome et al. (2014)
suggested that the impact of network, of institutional and infrastructure contextual
dimensions, on flexibility types should be understood in multi-tier supply chain. The aim of
this study is to address the above-mentioned research gap by examining SCF by (1) conducting
an empirical research into supply chain flexibility from both network-oriented and market-
oriented perspectives, (2) exploring the interrelationships among the dimensions and (3)
investigating the effect of contingency factor – supply chain complexity – on flexibility.
The structure of the paper is as follows. Section 2 provides literature review on supply
chain flexibility, followed by the discussion of supply chain flexibility dimensions. The
research framework and hypotheses are presented and discussed in Section 3. Section 4
describes the methodology, and Section 5 presents the statistical analysis and results. Finally,
the paper concludes with the potential theoretical and managerial implications.

2. Theoretical background
2.1 Supply chain flexibility
Supply chain flexibility was first defined as a performance measurement in supply chain
management literature (Beamon, 1999; Chan, 2003). Recent research has started to view
supply chain flexibility from a strategic and holistic perspective and has defined it as the
ability of an organization’s supply chain to effectively and economically respond to internal
and external uncertainties (Pujawan, 2004; Lummus et al., 2003; Vickery et al., 1999). Vickery
et al. (1999) suggested that supply chain flexibility should be examined from customer-
oriented perspective, and defines it as shared responsibilities of market-oriented flexibilities
that directly impact customer values. Similarly, Pujawan (2004) discussed flexibility relating
to supply chain functional scope and depicts supply chain flexibility from the perspective of
managing uncertainty inherent in the flow of goods to satisfy customer demand. The other
stream of literature takes the network-focused point of view and claims that supply chain
flexibility should reflect the network abilities enabling firms to cope with dynamics in
suppliers, market and technology (Tiwari et al., 2015; Mahapatra; Melnyk, 2002; Zhang et al.,
2002; Pujawan, 2004). Firms that can better structure, restructure when necessary and
coordinate a supply chain network commit to stronger capability to absorb uncertainty and
complexity (Oh et al., 2013; Kumar et al., 2006).
 Therefore, the definition of supply chain flexibility should be explicitly to describe the Framework of
nature of supply chain structure as well as market orientation. In this study, supply chain supply chain
flexibility is defined as the firm’s ability of configuring and managing the supply chain
through collaboration with supply chain partners in responding to a rapidly changing
flexibility
environment in an effective and efficient manner. This definition reveals several meanings. (1)
Each supply chain entity is a key determinant of the ability of the overall supply chain to
make rapid changes (Lummus et al., 2003; Mason et al., 2002). (2) Supply chain flexibility
includes the inter-organizational coordination. It engages technology, process, information 1323
and human factors toward coordination for developing capability to reconfigure supply chain
network (Oh et al., 2013; Yi et al., 2011; Mahapatra; Melnyk, 2002). (3) Flexibility in dealing
with rapid change must not result in performance deterioration such as a loss of productivity
and quality (Tiwari et al., 2015).

2.2 Supply chain flexibility dimensions

Early literature on supply chain flexibility extends beyond the manufacturing functions and
embraces a process-based view. Flexibility dimensions are identified in relation to core
processes and functions of manufacturing, product development and delivery (Moon et al.,
2012; Swafford et al., 2006; Kumar et al., 2006). These dimensions are also regarded as
“market-oriented” because they directly reflect a supply chain’s capability to satisfy
customers’ needs (Asikhia, 2009). Recent researches take much broader point of view and
propose that supply chain flexibility should be captured in relation to not only supply chain
processes but also network configuration (Oh et al., 2013; Stevenson and Spring, 2007;
Lummus et al., 2003; Gosling et al., 2010). When a supply chain is designed with change in
mind, it enables a responsive structure to switch supply sources, logistics channels and
information distribution effectively and rapidly. In summary, supply chain flexibility can be
seen as having two distinct aspects: market-oriented flexibility and network-oriented
flexibility.
(1) Market-oriented flexibility refers to the ability of a firm to respond to environmental
uncertainty by adjusting operational process across the supply chain, including
production and delivery. The set of flexibility consists of volume, mix and delivery
flexibility in this study (Vickery et al., 1999; Pujawan, 2004; Swafford et al., 2006).
(2) Network-oriented flexibility refers to the ability of a firm to respond to environmental
uncertainty by configuring the supply chain and adjusting the flow of material and
information. Supply network, logistics network and spanning flexibility are viewed
as network-oriented flexibility in responding to supply chain environmental
uncertainty (Tiwari et al., 2015; Stevenson and Spring, 2007; Yu et al., 2015).
Volume flexibility is defined as the ability of a firm to operate at various production output
levels, economically and effectively (Jain et al., 2013; Sethi; Sethi, 1990; Pagell and Krause,
2004; Zhang et al., 2002; Gerwin, 1993; Koste and Malhotra, 1999). Volume flexibility allows
organizations to respond to the dysfunctional variation in customer demand levels while
operating profitably (Goyal et al., 2018; Sethi; Sethi, 1990; Jain et al., 2013). A firm with high
level of volume flexibility is able to sustain competitive advantages by absorbing chaos when
products are suddenly in high demand with relatively lower inventory than the competitors,
which will ultimately have impact on the company’s bottom line.
Mix flexibility is defined as the ability of a firm to produce a wide variety of products
economically and effectively (Jain et al., 2013; Gerwin, 1993; Pagell and Krause, 2004; Zhang
et al. 2002). It represents the ability to produce a broad range of products or variants, with
presumed low changeover costs. Offering products with different features, multiple quality
and price levels is critical to the firm’s competitive advantages, but it also introduces high
IJPPM level of uncertainty and complexity in operations across the supply chain (Turner et al., 2018;
69,6 Campos et al., 2019; Merschmann; Thonemann, 2011). Product mix flexibility is portrayed in
the literature as an uncertainty coping mechanism, particularly where there is a considerable
complexity relating to customer and market demand (Kumar et al., 2006; Tachizawa and
Thomsen, 2007).
Delivery flexibility is defined as the ability of a company to effectively deliver products to
customers in response to uncertainties in planned delivery dates, volume and destination
1324 (Pagell and Krause, 2004; Pujawan, 2004; Stevenson and Spring, 2007, Kumar et al., 2006;
S
anchez and P
erez, 2005). Sethi and Sethi (1990) depicted delivery flexibility as an important
dimension of market-oriented flexibility, which includes means of creating flexibility in place,
time, size and assortment of deliveries to achieve customer satisfaction. Complexity in a
supply chain therefore grows as customer base and requirements expand (Angkiriwang et al.,
2014). With this larger and more dispersed market comes a greater demand for delivery
flexibility. Creating flexible delivery in responding to smaller, more frequent orders
challenges the company’s supply chain design (Pujawan, 2004; Chan et al., 2009; Vachon and
Klassen, 2002).
Since customer tastes change quickly, strategic complexity is associated with a firm’s
effort to respond quickly and supply the new products/services (Angkiriwang et al., 2014;
Tiwari et al., 2015). Meeting these needs in the supply chain requires the ability to adjust
supply chain structure for long-term and strategic benefits (Oh et al., 2013). Therefore,
architectural flexibility should be built into the supply chain structure in adapting to the
changes. Supply network flexibility is defined as the ability of a firm to efficiently and
effectively reconfigure the supply base with respect to environmental changes (Thome et al.,
2014; Duclos et al., 2003; Pujawan, 2004; Lummus et al., 2003; Gosain et al., 2005: Liao et al.,
2010). This study builds on the pioneering works of Lummus et al. (2003), Pujawan (2004) and
Duclos et al. (2003) in regard to the importance of taking a flexible perspective in designing
supply network.
Flexibility in logistics has been referred to flexibility in physical distribution,
transportation and warehousing (Jafari, 2015; Swafford et al., 2006; Lummus et al., 2003;
Naim et al., 2006). It is critical to supply chain because it reflects a firm’s ability to adapt to
dynamic market by using alternate resources in the physical distribution system, thereby
minimizing response time to consumers, transportation cost and facility cost (Jafari, 2015;
Cheshmehgaz et al., 2013). Several articles have discussed logistics flexibility from network
perspective and defined it as the ability of a firm to efficiently and effectively reconfigure
logistics structure with respect to environmental changes (Soon and Udin, 2011; Duclos et al.,
2003; Zhang et al., 2005). Flexibility in logistics is needed, in the short term, to provide
responsive physical connections across the supply chain, and, in the long term, to apply to
new inbound and outbound logistics.
Spanning flexibility refers to the ability of a firm to efficiently and effectively distribute a
variety of information along the supply chain with respect to environmental changes (Liao
and Marsillac, 2015; Lummus et al., 2003; Aranda, 2003; Zhang et al., 2002). According to
Sanchez and Perez (2005), in coordinating complex process, flexibility in information
dissemination is one of the most important prerequisite of a high level of connectivity
between the firm and its supply chain partners. Spanning flexibility enables information
visibility within the supply chain, and information passing along the supply chain. Vachon
and Klassen (2002) take the information processing perspective to observe complexity in the
forms of uncertainty and complicatedness in information processing. Spanning flexibility
involves aligning information dissemination along the supply chain quickly and accurately
so supply chain participants share knowledge about plans, requirements and status on a
timely basis (Duclos et al., 2003; Zhang et al., 2002). The list of supply chain flexibility
dimensions, along with their definitions and supporting literature, is summarized in Table 1.
Constructs Definitions
Volume The ability of a firm to operate at various
flexibility production output levels economically and
effectively
Mix flexibility The ability of a firm to produce a wide
variety of products economically and
effectively
Delivery The ability of a company to effectively
flexibility deliver products to customers in response to
uncertainties in planned delivery dates,
volume and destination
Supply network The ability of a firm to efficiently and
flexibility effectively reconfigure the supply base with
respect to environmental changes
Logistics The ability to adapt to dynamic market by
network using alternate resources in the physical
flexibility distribution system, thereby minimizing
response time to consumers, transportation
cost and facility cost
Spanning The ability of a firm to efficiently and
flexibility effectively distribute a variety of
information along the supply chain with
respect to environmental changes
Literature
Framework of
supply chain
Jain et al. (2013); Sethi and Sethi (1990); flexibility
Pagell and Krause (2004); Zhang et al.
(2002); Gerwin (1993); Koste and Malhotra
(1999); Stevenson and Spring (2007)
Jain et al. (2013); Gerwin (1993); Pagell and
Krause (2004); Zhang et al. (2002); 1325
Stevenson and Spring (2007)
Pagell and Krause (2004); Pujawan (2004);
Stevenson and Spring (2007), Kumar et al.
(2006); S
anchez and P
erez (2005)
Thome et al. (2014); Duclos et al. (2003);
Pujawan (2004); Lummus et al. (2003);
Gosain et al. (2005): Liao et al., 2010
Jafari (2015); Cheshmehgaz et al. (2013);
Swafford et al. (2006); Lummus et al., 2003;
Naim et al. (2006); Zhang et al. (2005)
Table 1.
Liao and Marsillac (2015); Lummus et al. Supply chain flexibility
(2003); Aranda (2003); Zhang et al. (2002) dimensions, definitions
and supporting
literature

2.3 Contingency effect of supply chain complexity

In an effort to research how flexibility can be better understood within supply chains, prior
studies have addressed a number of arguments concerning the alignment between flexibility
and uncertainty (Luo and Yu, 2016; Merschmann and Thonemann, 2011). The arguments are
based upon the contingency theory, which is an organizational theory that emphasizes that
there is no one best way to manage an organization and that optimal form of management
depends upon internal and external situations (Thompson, 1967). While environmental
uncertainty is widely discussed as a contextual variable to understand flexibility strategy in
supply chain, a limited number of studies identified other contextual constraints in network,
institution and infrastructure (i.e. product complexity, supply complexity and diversity of
suppliers) (Blome et al., 2014; Thome et al., 2014). While there are other aspects of supply chain
structure complexity, the major contextual factor investigated in this study refers to vertical
complexity – the structural differentiation reflected by the number of tiers in a supply chain.
Adding a tier of supplier increases risks in information flows and physical flows and
complicates decision-making, which necessarily increases complexity (Bozarth et al., 2009;
Manuj; Sahin, 2011). When examining supply chains as complex social networks, longer
supply chains are associated with heavier load on coordination across it (Choi and Hong,
2002). Blome et al. (2014) took a contingency perspective to investigate the moderating effect
of supply complexity when achieving supply chain flexibility through knowledge transfer
processes. A conceptual framework is developed to explore if different aspects of supply
chain flexibility should be pursued with different levels of supply chain complexity in
response to today’s challenges.

3. Conceptual framework and hypotheses

The purpose of the paper is to understand the association among supply chain flexibility
dimensions and how the relationships are moderated by the number of tiers in a supply chain.
IJPPM According to Zhang et al. (2002), external capabilities are founded on the internal competencies
69,6 of a supply chain, and supply chain network competences become the foundation for external,
customer-facing capabilities. Market-oriented flexibility is viewed as external capability to
provide products and services, adapting to rapidly changing business environment. Since
interorganizational networks are strategic resources that managers design and develop over
time in order to meet their objectives, the ability to change the supply or logistics networks
over time in response to competition changes enables the supply chain to take advantage of
1326 opportunities to improve its operational performance (Madhavan et al., 1998). Therefore, this
paper proposes that the flexible network shapes a portfolio of external capabilities to respond
quickly to unforeseen events, and further help to improve the performance. Figure 1 depicts
the proposed model and hypotheses that are developed in the following paragraphs.
In this increasingly information-intensive work environment, linking stakeholders of
organizations through vital information networks is the noticeable practice of the excellent
supply network performance (Flynn et al., 2016). Information sharing between supply
network partners is essential to handle uncertainty related to lack of information
synchronization and chaos from uncertainty (Leeuw et al., 2013). With information being
considered as an integral part of supply chain network, spanning flexibility should also be
regarded as an essential ingredient to provide accurate and relevant information to enhance
the network performance. The focus on visibility of information in a broad range of areas is
one of the variables of the quick response to supply network described by Sanchez and Perez
(2005). The spanning flexibility enhances the quality and breadth of information sharing,
which further allows business to reconfigure the supply network. As a result, the supply

Supply chain complexity

H7
H8c

Delivery
flexibility
Logistics
H8b network
flexibility

Spanning H2 Volume
flexibility flexibility

Supply
network
flexibility

Mix
flexibility

Figure 1.
Conceptual framework Supply chain complexity
chain partners can better identify new opportunities and be more ready for potential risks, Framework of
enabling a flexible network to cope with sudden changes in both the supply and customer supply chain
sides. This study therefore suggests the following hypothesis:
flexibility
H1. Spanning flexibility positively influences supply network flexibility.
The logistics network is becoming more complex since most supply chains include multiple
logistics and distribution firms across the chain. Supply network flexibility enables moving
products across the supply chain on a timely basis. Coordination among the supply bases is 1327
the key to attaining the flexibility necessary to enable them to progressively improve logistics
processes in response to rapidly changing market conditions (Goyal et al., 2018). Poor
coordination among the chain members can cause dysfunctional operational performance
(Jafari, 2015). Negative consequences of poor coordination include higher inventory costs,
longer delivery times, higher transportation costs, higher levels of loss and damage and
lowered customer service (Lee et al., 1997; Simatupang et al., 2002). Therefore, a positive effect
of supply network flexibility on logistics network flexibility is proposed.
H2. Supply network flexibility positively influences logistics network flexibility.
Customers’ requests for more frequent, small-quantity deliveries require greater ability of
distribution channels to coordinate in a cost-effective manner. Higher level of logistics
flexibility implies that links between logistics nodes can be established quickly and efficiently
to move physical products across the supply chain. Consequently, logistics network
flexibility enhances delivery flexibility because a flexible system can cope with unplanned
and unexpected events resulting from both logistics process and supplies (Naim et al., 2006;
Hartmann and de Grahl, 2011). In an attempt to explore causal relationship among various
supply chain flexibility dimensions, Singh et al. (2019) concluded that that ability of
transportation of goods quickly supports firms to fulfill customer requirements. Logistics
flexibility deals with changing demands in shipping volume or frequency while maintaining
a satisfactory level of performance (Zhang et al., 2005; Stevenson and Spring, 2007).
H3. Logistics network flexibility positively influences delivery flexibility.
H4. Logistics network flexibility positively influences volume flexibility.
Firms are buying supplier’s capabilities. Sometimes, the supply side’s capabilities limit the
manufacturer’s ability to respond rapidly to customer requirement changes. Supply base with
capabilities in responding to changes has direct impact on downstream supply chain flexibility.
Some researchers provide certain empirical support for such theories in the context of
flexibility. Nishiguchi (1994), after an in-depth analysis, attributed Japanese car manufacturers’
flexibilities primarily to a supply base distinguished by strong manufacturing flexibility
capabilities including volume and mix. Having a network of key suppliers able to synchronize
their production with the requirements of the company is preferred for a short life cycle or for
innovative products (Yi et al., 2011; Singh et al., 2019). With a supply base designed with change
in mind, as the company sees the need to change partners to adjust volume and mix of product,
new partners with the required capabilities will be found in a prompt manner.
H5. Supply network flexibility positively influences volume flexibility.
H6. Supply network flexibility positively influences mix flexibility.
Facilitated by the spanning flexibility, synchronized replenishment plans can be created,
leading to closer matching of production and distribution to current demand (Lee and Whang,
2005). A responsive information sharing system will support the information interchange
between the customer and the entire supply chain, so that firms can use the information to
support diverse strategies for distribution (Lau and Lee, 2000). Cisco has been one of the most
IJPPM successful companies engaged in using agile information sharing system for improving
69,6 delivery lead time and customer responsiveness. With elaborate web-based information
systems linking Cisco and its supply chain partners, all the necessary information flow is
utilized to make information visible across the supply chain.
H7. Spanning flexibility positively influences delivery flexibility.
Supply chains with more tiers exhibit greater uncertainty and complexity (Beamon, 1999;
1328 Milgate, 2000). Hierarchical levels contribute to uncertainty within a supply chain in three
different ways. First, small failures (e.g. late delivery) in a single tier may generate greater
ripple effect in a longer supply chain, which would eventually cause a major disruption
spread throughout the whole supply chain (Bode and Wagner, 2015; Milgate, 2000; Chen et al.,
2000). Second, having more tiers in a supply chain makes it harder for effective information
processing and transparency, and therefore more difficult to detect early warning signals
(Bode and Wagner, 2015; Vachon and Klassen, 2002). Finally, supply chain management
literature has highlighted supply chain as a social network consisting of a variety of
relationships and interactions among the suppliers. With more hierarchical levels in a supply
chain, there are more interactions (between suppliers) that are not visible to the focal firm
(Caridi et al., 2010). It is more challenging to oversee and manage a supply base with two
interrelated suppliers than a supply base with two non-linked suppliers. Recognizing that
sources of uncertainty stem from the structure in the supply chain as well as the external
environment, it is expected that the supply chain flexibility performance in different aspects
is contingent on the complexity of supply chain.
H8a. Supply chain complexity moderates relationship between spanning flexibility and
supply network flexibility.
H8b. Supply chain complexity moderates relationship between supply network
flexibility and logistics network flexibility.
H8c. Supply chain complexity moderates relationship between logistics network
flexibility and delivery flexibility.
H8d. Supply chain complexity moderates relationship between logistics network
flexibility and volume flexibility.
H8e. Supply chain complexity moderates relationship between supply network
flexibility and mix flexibility.
H8f. Supply chain complexity moderates relationship between supply network
flexibility and volume flexibility.
H8g. Supply chain complexity moderates relationship between spanning flexibility and
delivery flexibility.

4. Research methodology
4.1 Measuring supply chain flexibility and supply chain complexity
Construct measurement items were generated through a literature review and from construct
definitions. The measurement of flexibility dimensions captures three attributes of range,
mobility and uniformity, which have been commonly used to define flexibility (Koste and
Malhotra, 1999). Range is typically regarded as the extent to which a system may adapt,
either in number of possible options or in the degree of difference between different options.
The mobility element addresses the ease with which the system moves from one state to
another. It is assessed via transition penalties such as time and cost. The uniformity element
represents any deterioration of the system associated with invoking a flexible response, Framework of
measured as quality in most of the cases. supply chain
The reasons for considering volume, mix and delivery flexibility as market-oriented
flexibility are threefold: first, they are visible to customers representing competitiveness in
flexibility
market; second, each of these flexibility dimensions contributes to the capabilities, enabling a
firm to deal successfully with unpredictable and volatile marketplace; finally, each of these
flexibilities has been addressed in the literature. Gerwin (1993) defined one set of flexibility
dimensions as “market-oriented” because they are related to uncertainties in market 1329
acceptance of different products, length of product life cycle, specific product characteristics
and aggregate product demand. The set of flexibility consists of mix, changeover, modification
and volume flexibilities. In a similar sense, Chang (2012) classified mix, volume and delivery
time as first-order flexibilities, which directly affect the competitive advantages and customer
value creation of the whole supply chain. Given previous discussion, volume, mix and delivery
flexibility are viewed as market-oriented in this study. Measurement items were developed
through a review of literature on manufacturing and supply chain flexibility as follows.
Volume flexibility: A three-item scale was adopted from Koste et al. (2004) to measure
attributes of range, mobility and uniformity of volume flexibility.
Mix flexibility: Three measurement items were taken from Koste et al. (2004) as well, which
include range, mobility and uniformity aspects of mix flexibility.
Delivery flexibility: Five measurement items of delivery flexibility were developed based
upon S
anchez and P
erez (2005) and Kumar et al. (2006). Three items relate to the ability to
accommodate delivery requirements in terms of time, destination and volume, and two items
relate to satisfying frequency or special delivery requests.
Supply network flexibility: Supply flexibility is operationalized by a four-item scale. The
number of alternate supply sources captures the supply range attribute of supply network
flexibility (Pujawan, 2004). The time and cost incurred for switching supply sources represent
mobility attribute of supply flexibility (Otto and Kotzab, 2003). The extent to how much the
incoming material’s quality performance is affected by switching supply sources is
addressed by the uniformity attribute (Pujawan, 2004).
Logistics network flexibility: In this study, logistics channel flexibility is operationalized by
(1) the number of logistics channels for different product/services (range), (2) the time and cost
incurred for restructuring logistics channels (mobility) and (3) the extent to which the
logistics performance is affected by restructuring logistics channels (uniformity).
Information dissemination flexibility: A three-item scale was drawn from Liao and
Marsillac (2015) to assess the ability of disseminating information along the supply chain
quickly and accurately. The number of ways and the variety of data that can be shared
seamlessly across the supply chain represent the range of alternate information distribution
channels. The ease of obtaining information from different internal and external sources
captures the mobility attribute. Finally, the quality of the information indicates the
uniformity of information dissemination flexibility.
Following Choi and Hong (2002), supply chain complexity is measured by the number of
supply chain tiers. The notion of complexity can be traced back to the structural
differentiation in organization design studies (Gerwin, 1994; Lin et al., 2006; Gibson et al.,
1997). Many have pointed out that organizations with more hierarchical levels are associated
with greater complexity (so-called vertical complexity) than organizations with fewer levels
(Bode and Wagner, 2015; Gibson et al., 1997; Dooley and Van de Ven, 1999).

4.2 Data collection

A detailed survey was designed to gather information on supply chain flexibility and
structure characteristics, as well as demographic data from firms and their respondents. All
IJPPM questions of supply chain flexibility measurement were answered on a five-point Likert scale.
69,6 The study population was obtained from company intelligence databases provided by two
leading direct marketing consulting companies. The study focuses on manufacturing
industry, as supply chain flexibility is defined in the scope of manufacturing context
consisting of logistics and manufacturing volume, and mix aspect. Firms belonging to six
industries were selected from the two-digit Standard Industrial Classification (SIC) level,
defined as follows: 23, Apparel and Other Textile Products; 30, Rubber and Plastics; 34,
1330 Fabricated Metal Products; 35, Industrial and Commercial Machinery; 36, Electronic and
Other Electric Equipment; 37, Transportation Equipment. Since this research focuses on the
supply chain management practices and flexibility, the survey was addressed to those
responsible for the firm’s supply chain, logistics and purchasing strategies and operations;
the vice president, director or manager of supply chain, purchasing, logistics or operations.
The data were collected using the web-based method. An email was sent to the sample
population, inviting them to participate in the study, with a brief description of the research.
A total of 288 respondents either received the questionnaire for consideration or agreed to
participate, yielding 201 useable responses. There is no consensus in the literature regarding
what would be the appropriate sample size for structural equation modeling (SEM). Bentler
and Chou (1987) suggest a ratio as low as five cases per variable would be sufficient when
latent variables have multiple indicators. With 22 observed variables (22 35 110) in this
study, the sample size of 201 is considered sufficient for SEM. The profile of the sample is
shown in Table 2.
The sample firms were from various industries with different firm sizes, increasing the
representation of the sample. In addition, more than 50% of respondents have over five years’
working experience with their firm, and 80% of them were at least middle managers. It can be
inferred that these respondents had visibility on their firms’ supply chain and logistics
activities, and thus were knowledgeable to fill the questionnaire.

Demographic dimension Percentage

Industrial sector – SIC code

23 Apparel and Other Textile Products 1.99
30 Rubber and Plastics 2.99
34 Fabricated Metal Products 5.47
35 Industrial and Commercial Machinery 22.89
36 Electronic and Other Electric Equipment 49.75
37 Transportation Equipment 6.97
Others 9.95
Number of employees in your company
Less than 100 26.87
101–250 18.41
251–500 11.94
501–1,000 11.44
over 1,000 30.85
Average annual sales of your company
Less than $10 mil 18.41
$10 to $24 mil 13.43
$25 to $49 mil 9.45
Table 2. $50 to $99 mil 10.45
Profile of the sample More than $100 mil 45.77
5. Results Framework of
5.1 Measures supply chain
Prior to empirically testing hypotheses, the validity and reliability of measurement scales
were evaluated. Construct validity was assessed via confirmatory factor analysis, and the
flexibility
lowest factor loading value was 0.66, over the critical threshold of 0.5 (Hair et al., 1998). All
loadings were significantly related to their theoretical constructs (p < 0.001). Construct
validity was tested via confirmatory factor analysis of first-order factor measurement model.
A set of goodness-of-fit statistics was reported in Table 3. All indices values indicate a well-fit 1331
model. The discriminant validity was assessed by comparing the square root of the average
variance extracted (AVE) of a latent construct to its correlation with all other latent variables
(Fornell and Larcker, 1981). As shown in diagonal of Table 4, the square root of AVE for each
construct is greater than all correlations between constructs. The discriminant validity is
therefore supported. Table 5 summarizes measurement items used in the research and
provides evidence of reliability and validity. The scales’ reliability was evaluated using the
composite reliability (CR) statistics, AVE and Cronbach’s α (Hair et al., 2006). The results
show acceptable values for reliability and internal consistency of the measurement items (CR
> 0.7, AVE > 0.5 and Cronbach’s α >0.8).
Following Harmon’s one-factor test (Podsakoff et al., 2003), the statistical analysis of
common method variance was conducted to avoid systematic measurement error stemming
from the self-reported data. The unrotated principal components factor analysis resulted in
six factors, with the largest variance explained by a single-factor account for 28.5% of the
covariance among variables. As all six factors explained 74.6 % of variance, there is no one
factor that contributes to the majority of the total variance. Moreover, the single-factor
confirmatory factor analysis model did not fit the data well (GFI 5 0.44, NFI 5 0.34,
CFI 5 0.36, TLI 5 0.294, χ 2/df 5 9.12, RMSEA 5 0.202). The results suggest that common
method variance is not an issue.

Goodness-of-fit index Value Cut-off*

Chi-square/degrees of freedom (χ 2/df) 1.382 ≤2

Goodness-of-fit index (GFI) 0.90 ≥ 0.90
Comparative fit index (CFI) 0.972 ≥ 0.95
Table 3.
Incremental fit index (IFI) 0.972 ≥ 0.90 Assessment of
Tucker–Lewis index (TLI) 0.967 ≥ 0.90 goodness-of-fit (first-
Root mean squared error of approximation (RMSEA) 0.044 ≤ 0.08 order factor
Source(s): Hair et al. (1998), Byrne (2001, 2010), Ernest et al. (2008), and Hu and Bentler (1999) measurement model)

Constructs 1 2 3 4 5 6 Mean SD

1. Volume flexibility 0.64 3.71 1.03

2. Mix flexibility 0.526** 0.64 4.15 1.03
** **
3. Delivery flexibility 0.316 0.456 0.57 4.16 0.71
4. Supply network flexibility 0.234** 0.249** 0.113 0.75 3.30 1.14
5. Logistics network flexibility 0.267** 0.180* 0.207** 0.326** 0.78 3.78 1.19
6. Spanning flexibility 0.242** 0.195** 0.300** 0.214** 0.159* 0.68 3.56 1.00 Table 4.
Note(s): *Correlation is significant at the 0.05 level, **Correlation is significant at the 0.01 level Correlation matrix
IJPPM Standard Standardized Cronbach’s
69,6 Constructs/Items Mean deviation loading alpha

Volume flexibility 0.81

CR 5 0.84; AVE 5 0.64
We can operate profitably at different production 3.74 1.23 0.75
volumes
We are able to change our production volume in a 3.83 1.16 0.82
1332 short time
We are capable to change our production volume 3.56 1.22 0.82
with low cost
Mix flexibility
CR 5 0.84; AVE 5 0.64 0.84
We can produce an extensive variety of products 4.32 1.09 0.83
in the plant
We can make products which are very different 4.15 1.32 0.85
from each other in the plant
We can easily change the production of product 3.99 1.15 0.72
mix in the plant
Delivery flexibility
CR 5 0.87; AVE 5 0.57 0.83
We are able to accommodate varied delivery 3.99 0.96 0.75
times in case-specific customer requirements
change
We can accommodate varied delivery 4.32 0.79 0.78
destinations in case specific customer
requirements change
We are capable to accommodate varied delivery 4.10 0.94 0.84
volumes in case-specific customer requirements
change
We have capability to satisfy frequent delivery 4.32 0.82 0.66
orders from the customer
We can handle an extensive variety of special 4.09 0.98 0.73
customer requests for delivery
Supply network flexibility
CR 5 0.92; AVE 5 0.75 0.91
We have multiple supply sources for most 3.35 1.34 0.81
purchased items
We are able to replace one supply source for 3.29 1.27 0.90
another with low cost
We are capable to replace one supply source for 3.17 1.29 0.90
another in a short time
We can switch supply source with little negative 3.38 1.26 0.84
effect on component quality and design
Logistics network flexibility
CR 5 0.93; AVE 5 0.78 0.92
We have multiple distribution channels for a 3.98 1.27 0.74
variety of products/services
We can easily restructure physical distribution 3.67 1.32 0.94
channels in response to changes in market
demand
We are able to easily restructure physical 3.76 1.37 0.92
Table 5. distribution channels in response to changes in
Descriptive statistics of competition
the measurement
scales (continued )
 Standard Standardized Cronbach’s
Framework of
Constructs/Items Mean deviation loading alpha supply chain
We are capable to easily restructure physical 3.73 1.32 0.91
flexibility
distribution channels in response to changes in
business condition
Spanning flexibility
CR 50.86; AVE 5 0.68 0.81 1333
We can share many kinds of information (e.g. 3.42 1.23 0.86
text, video, database) with our major suppliers
We are able to exchange information with major 3.93 0.95 0.80
suppliers in a short time
Information can be exchanged automatically with 3.34 1.34 0.81
our major suppliers using information systems Table 5.

5.2 Hypothesis testing

The conceptual model illustrated in Figure 1 demonstrates hypothesized relationships among
the supply chain flexibility dimensions and the moderate effect of supply chain complexity as
a contingent factor. The structural model was assessed by examining the path coefficients,
their statistical significance and the overall model fit. Figure 2 displays the path diagram
resulting from the SEM analysis using analysis of a moment structures (AMOS) 23.0. Overall,
the model has a satisfactory fit with GFI 5 0.86, NFI 5 0.88, CFI 5 0.94, TLI 5 0.93, χ 2/
df 5 1.764, RMSEA 5 0.062.
The relationship proposed in H1, H2 and H7 was found to be significant. Increased
flexibility of information sharing will improve flexibility of sourcing with respect to changes.
The results point to the importance of structuring information flows in dynamic business
environment. Spanning flexibility integrates activities by reaching across organizational
boundaries to satisfy changing customer needs. It enables the synchronization of demand

0.322**

Delivery
flexibility
Logistics
network
flexibility

Spanning 0.349* Volume

flexibility flexibility

Supply
network
flexibility

Mix
flexibility Figure 2.
Results of
structural model
Note(s): *p < 0.01; **p < 0.05
IJPPM and supply. It also determines the speed with which firms acquire information from a mass of
69,6 accessible data and transform it into valuable business assets. Delivery flexibility requires
considerable development in capability to facilitate the information flow and exchange with
customers and suppliers, allowing companies to share real-time data on a variety of
information. Companies opting to compete on the basis of logistics and supply network
flexibility should consider the ability of disseminating information an important enabler of
other network and customer-oriented flexibility capabilities.
1334 The results support H3 and H4 as well, indicating that the higher level of logistics network
flexibility leads to higher level of market-oriented flexibility in terms of volume and delivery
flexibility. Customer demand is typically perceived as the main uncertainty. Customers may
need to postpone shipments or expedite them, request specific packaging or change delivery
destination or volume. Uncertainties may also come from logistic processes such as supply
shortage and resources capacity change. In order to reduce the negative impact of demand
and process variability on the supply chain performance, supply chain configuration with
flexibility of logistics channels is important. In the conceptual framework for implementing
and managing supply chain flexibility by Kumar et al. (2006), logistics takes full
responsibility for implementing delivery flexibility. With logistics flexibility, firms should
be able to deliver on a certain request date, the specific product the customer requires to the
specific location even when the needs of volume and delivery time change over time.
Another important flexibility capability embedded in supply chain was found to be the
supply network flexibility. Both H5 and H6 are found to be supported, suggesting the
contribution of flexible supply base to a supply chain’s external competence in adapting to
dynamic business environment. The external flexibility capabilities improve as supply
flexibility increases because the integration of flexibility enables better cross-functional
collaboration and interorganizational coordination. In addition, the ability to change the
supply networks over time and in response to competition changes enables the network
participants to take advantage of opportunities to improve their individual positions and
performance. Volume and mix variations with respect to market changes can be absorbed by
the flexible supply side. As a result, one would expect improvements on each node with a
flexible supply chain.
The sample was split into two groups by the number of tiers in the supply chain to test the
moderating effect of supply chain complexity. A supply chain with no more than three tiers is
categorized as a short supply chain, while long supply chain is defined as having at least four
tiers. Table 6 shows the analysis results of two structural models for groups of short and long
supply chains. A moderator hypothesis is supported if the path coefficients in two models are
significantly different (Keil et al., 2000). The results indicate that all hypotheses regarding a
moderating effect of supply chain complexity were supported, except for H8a and H8f.
Although spanning flexibility significantly affects supply network flexibility in both models,
the effect does not demonstrate significant differences. The same result was found in the
relationship between supply network flexibility and mix flexibility. The effect of logistics
network flexibility on volume flexibility was not found significant in firms with relatively
long supply chain, while in the short chain group, it remains significant. In order to achieve
delivery flexibility, logistics network and spanning flexibility do not play a significant role for
relatively short supply chain, while in the long supply chain group, those relationships
remain significant.

6. Discussion
6.1 Contributions to research in supply chain flexibility
This study takes a step to advance understanding of supply chain flexibility from an
integrative point of view consisting of customer-oriented and network-oriented perspectives.
 Short supply Long supply
Framework of
chain model chain model supply chain
Path Path Path coefficient Hypothesis flexibility
Path coefficient coefficient comparison (t-test) test results

Spanning flexibility → Supply 0.286* 0.229*** 0.325 (n.s.) H8a not

network flexibility supported
Supply network 0.325* 0.396* 5.168* H8b supported 1335
flexibility → Logistics network
flexibility
Logistics network 0.138 (n.s.) 0.203** 4.704* H8c supported
flexibility → Delivery flexibility
Logistics network 0.251*** 0.108 (n.s.) 6.845* H8d supported
flexibility → Volume flexibility
Supply network 0.302** 0.205** 6.039* H8e supported
flexibility → Volume flexibility
Supply network flexibility → Mix 0.241*** 0.218*** 1.317 (n.s.) H8f not
flexibility supported
Spanning flexibility → Delivery 0.202 (n.s.) 0.397* 2.15** H8g supported
flexibility

Goodness-of-fit statistics Goodness-of-fit statistics

Chi-square/df 1.443* 1.672*

CFI 0.92 0.92
NFI 0.78 0.82
Table 6.
GFI 0.77 0.81 SEM results for
TLI 0.91 0.91 moderate effect of
RMSEA 0.075 0.075 supply chain
Note(s): *p < 0.01, **p < 0.05, ***p < 0.1 complexity

Studies have emphasized the necessity to absorb and accommodate uncertainty as supply
chain managerial responses, which are characterized by varied information exchange
mechanisms and the presence of structural flexibility that can support various interactions
(Leeuw et al., 2013; Ashmos et al., 2000; Turner et al., 2018). Although flexibility embedded in
resources and process adaptability is cited as organizational capability to deal with internal
and external uncertainty (Gr€oßler et al., 2006), flexibility in the context of supply chain
remains poorly understood. Supply chain flexibility is a multidimensional concept with
issues regarding mutual consent on definition, dimensions and operationalization from a
network perspective (Tiwari et al., 2015). This study puts forth an empirical support for a
detailed framework to investigate supply chain flexibility from market-oriented perspective
and network-oriented perspective as well. The delivery, volume and mix flexibility are
market-oriented capabilities in response to environmental changes because they directly
affect the competitive advantages and customer value creation of the whole supply chain. It is
the flexibility embedded in the supply chain network configuration that plays critical roles in
superior performance in flexibility capabilities to create customer values.
According to Kumar et al. (2006, p. 314), “the responsibility in achieving each type of
required supply chain flexibility should be shared by various stakeholders.” For instance, the
significant positive effect of spanning flexibility on supply network flexibility implies that
information sharing is key to a flexible supply chain. A company must have the ability of
promptly sensing the need for changes in its current supply process configuration. Both the
company and the suppliers are responsible for achieving the spanning flexibility by working
IJPPM together to leverage the channels of information flow in a broad range of areas (Gosain et al.,
69,6 2005). Manufacturers may continuously exchange information about their sales and
customer delivery requirements. Simultaneously, suppliers may share information about
their production planning, inventory, resources capability and involvement in product
development. As a result, the changing demand is visible across the supply chain. The supply
chain system is flexible enough to cope with complexity and uncertainty stemming from
sudden changes in demand, with daily point-of-sale analysis and feedback of customers’ likes
1336 and dislikes. In other words, spanning flexibility integrates activities by reaching across
organizational boundaries to satisfy changing customer needs.
The scope of the analysis was extended to provide a contingency perspective on supply
chain flexibility and note that the interrelationships among supply chain flexibility aspects
are contingent on the complexity in the supply chain structure. Our results suggest that to
carry out a supply chain flexibility strategy, the vertical complexity of the supply chain
structure needs to be taken into consideration. A closer look at the contingency effect of
supply chain vertical complexity reveals that when the supply chain vertical complexity
increases, the effect of supply network flexibility on logistics network flexibility, and further
on delivery flexibility, is significantly greater. For firms with more complex vertical structure,
the impact of supply network flexibility and logistics network flexibility on volume flexibility
is considerably stronger than that of firms with less vertical supply chain complexity. Hence,
the ability to reconfigure the supply network seems to have the most effect on other network-
oriented and market-oriented flexibility aspects, and therefore is the most crucial for
accommodating different types of complexity. With the current study, results indicate that
the interactive effect among market-oriented and network-oriented supply chain flexibility is
contingent on the magnitude of the supply chain complexity.

6.2 Managerial implications

According to a global supply chain survey conducted by PwC and the MIT Forum for Supply
Chain Innovation in 2013, flexibility in network and process architecture is one of the most
important capability enablers and one of the top two advancing practices firms have
implemented gradually (Strom et al., 2013). To better understand how to accommodate the
impact of uncertainty in the supply chain, this study provides the foundation to implement
supply chain flexibility considering the interrelationships among flexibility dimensions.
Business professionals used to believe that simplifying processes and separating the
company from noises are beneficial for long-standing cost, quality and speed
competitiveness. The reality is that the business world is becoming more and more
disruptive, and firms have failed to act to develop differentiators enabling adaptability to
uncertainty and associated complexity. Adaptability not only protects a firm from disruption
but also makes it hard for competitors to imitate underlying complexity of the value
chain (Ashkenas et al., 2014; Gr€oßler et al., 2006). This paper offers a more detailed supply
chain flexibility framework that can provide guidance in optimizing the overall supply chain
flexibility consisting of different flexibility aspects.
The supply network configuration should be designed and managed with change in mind
in order to achieve flexibility competitive advantages. Being able to reconfigure supply
network and logistics network effectively and efficiently should be recognized as a critical
capability corresponding to supply chain flexibility strategy (Oh et al., 2013; Barad and Sapir,
2003; Jafari, 2015). A firm with a higher level of logistics and supply network flexibility can
accommodate more uncertainty in product delivery, mix and volume associated with
customer demands. When supply chain professionals understand that uncertainty is an
inherent nature in the system, the primary focus should not be put on trying to eliminate
them. Instead, initiatives should be made to invest in information systems or relationships
that enhance the ability to process information. Usually insecurity in decision-making stems Framework of
from being without information or having too much information; spanning flexibility plays a supply chain
crucial role to increase information processing capacity in support of making sense of
dynamics across supply chain. This role is particularly important for supply chain with
flexibility
multiple tiers.
Logistics flexibility is concerned with the coordination of logistics partners. Companies
and logistics partners should take responsibility for implementing strategies and
methodologies to adapt physical distribution chain to serve differentiated customers in a 1337
cost-effective way. As Barad and Sapir (2003) noted in their discussion on flexibility in
logistics systems, logistics flexibility combines principles of routing flexibility and decision-
making flexibility. Given more frequent and small quantity of delivery requirements, the
investment put into building a flexible logistics network is required to meet these
requirements in a quicker and more cost-effective way.
Taking the contingency perspective, supply chain professionals should recognize the
moderate effect of supply chain structural complexity on supply chain flexibility strategy.
When the number of supply chain tiers is relatively short, neither logistics network flexibility
nor spanning flexibility plays an important role in enabling delivery flexibility. As
uncertainty in delivery lead time and reliability of suppliers is less when the supply chain is
shorter, delivery flexibility may depend upon on capabilities at functional level rather than
that embedded in network infrastructure. Supply and logistics network flexibility have
greater effect on volume flexibility for low complex supply chain than high complex supply
chain. Practitioners and scholars have common belief that rapid evolving technologies, rising
customer accommodations, growth in supply chain partners and relationships, increasingly
competitive intensity and turbulent markets have contributed to making the business more
complex (Leeuw et al., 2013; Campos et al., 2019; Strom et al., 2013). The high degree of
complexity promotes supply chain vulnerability and thus amplifies the likelihood of supply
chain disruption and the threats to undermine operations and supply chain performance
(Bode and Wagner, 2015; Vachon and Klassen, 2002; Choi and Krause, 2006). Results from
this study suggest that spanning flexibility acts as a more critical role in pursing delivery
flexibility in high complex supply chain than in low complex supply chain. Adding tiers in a
supply chain necessarily increases information flow, making spanning flexibility important
to enable information dissemination capability for a wide range of complicated information
flow. Investing in information distribution and sharing capability to enhance supply chain
visibility is a core business skill that can accommodate complexity associated with multi-tier
supply chain.

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About the author

Dr. Ying Liao is an Associate Professor of Operations and Supply Chain Management at the College of
Business, East Carolina University. She received Bachelor’s in Mechanical Engineering from Tsinghua
University in China, and the M.S. and Ph.D. degrees from the University of Toledo, USA. Her research
interests lie in supply chain strategy and management, knowledge management, and innovation
management. The results of her research have been published in academic journals including Journal of
Operations Management, Journal of Supply Chain Management, Supply Chain Management: An
International Journal, International Journal of Product Economics, International Journal of Production
Research, among others. She has received the Best Paper Award in Journal of Operations Management.
Ying Liao can be contacted at: liaoy17@ecu.edu

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