Supply chain flexibility and firm performance -: A conceptual model and empirical study in the automotive industry

Purpose - To explore the relationship between the dimensions of supply chain flexibility and firm performance in a sample of automotive suppliers. Design/methodology/approach - Empirical survey of a representative sample of 126 Spanish automotive suppliers during the months of September and October 2003. Data gathered through a mail survey to purchasing managers by using a structured questionnaire. Spearman correlation coefficients were used to analyse the relationship between the different supply chain flexibility dimensions, between supply chain flexibility dimensions and firm performance dimensions, and between supply chain flexibility dimensions and environmental uncertainty dimensions. A multivariate analysis studied the determinants of supply chain flexibility. Findings - The research has found a positive relation between a superior performance in flexibility capabilities and firm performance, although flexibility dimensions are not equally important for firm performance. On the other hand, the results show that companies enhance more the basic flexibility capabilities (at the shop floor level) than aggregate flexibility capabilities (at the customer-supplier level). However, aggregate flexibility capabilities are more positively related to firm performance than basic flexibility capabilities. Thus, companies might miss opportunities to improve competitiveness by underestimating customer-supplier flexibility capabilities. Finally, the results indicate that flexibility capabilities are enhanced in supply chains with higher environmental uncertainty, technological complexity, and mutual understanding, but with lower interdependence among the agents involved in the supply chain. Research limitations/implications - There are other factors not included in the model that could impact the relationship between flexibility, supply chain characteristics and firm performance. On the other hand, the research has used cross-sectional data, which are limited in order to explain causal relationships. Another limitation of the research is that we did not use any secondary data (like manual financial reports) to crosscheck firm performance. Practical implications - The results of the research contribute to a better understanding of the forces and constraints that companies face with flexibility capabilities. Originality/value - The paper analyses the relationship between supply chain flexibility dimensions and firm performance. The model provides a framework of supply chain flexibility dimensions that may be used as a test base for further research.