A Study of Supply Chain Integration, Flexibility and Performance

Abstract

Supply chain management (SCM) is increasingly recognized as ‘Key Business Processes’ across the organizations. Increasing interest in the SCM since 1980s shows that firms cannot perform and compete effectively in isolation. Collaborative relationships with the supplier and other entities in the supply chain benefits organizations. The research demonstrated that collaboration with partners synchronizes supply chain activities, which stimulate new product development to fulfill market needs. Many benefits of these practices, i.e., supply chain integration (SCI) and supply chain collaboration (SCC), include (but not limited to): operational and business performance, financial performance, non-financial performance such as market share, customer satisfaction and many more. SCI, according to current literature, is a prerequisite strategy for organizations to sustain in the competitive market. According to Stevens (1989), “integration involves all the points of contact between customer and supplier, which improves the customer service level, i.e., order fulfillment, delivery service, pre and post-service, and support, finances, etc.” Integration requires the collaboration of those functional units which directly affect customer service. Integration, therefore, emerged as a central area of supply chain strategy (Frohlich and Westbrook, 2001) and considered a highly effective approach for sustaining in a competitive world. Additionally, firms are spreading their capability and resources across the supply chain to resolve issues such as flexible operations, quick delivery, managing inventory. Studying SCI and supply chain flexibility (SCF) recently have increased the attention of researchers. Todays’ intensely competitive environment prompts customers to demand more, seek a variety of products, and better services, which enable organizations to design a flexible supply chain. Therefore, this study has developed an integrated supply chain performance (SCP) measurement framework by including both upstream and downstream supply chain partners. The proposed framework also studies the impact of SCI on SCF and SCP. Analysis of the data collected from the Gujarat region, using structural equation modeling, shows that integration is the pre-requisite in the supply chain strategy; however, flexibility is an essential element in converting the integration efforts into performance.