Quantifying the degree of supply chain leagility and assessing its impact on firm performance

Abstract

Purpose

The purpose of this paper is to investigate the supply chain leagility proposing all supply chains are leagile with different magnitudes of leanness and agility. A new index, “Deviation from Leagility” (DFL), is introduced, aiming to optimise supply chain design and investigate the relationship between supply chain leagility and firm performance.

Design/methodology/approach

The partial least squares (PLS) method was employed to analyse data collected from 299 Australian firms by administering a structured questionnaire.

Findings

The results indicate that most companies adopt the leagile supply chain rather than the lean or pure agile design. Furthermore, better business performance is achievable when deviation from a balanced supply chain in which both aspects of leanness and agility are equally embedded is minimised.

Research limitations/implications

The study is limited to a number of constraints that measure leagility; further research is needed to incorporate different aspects of agility.

Practical implications

The findings of this study could provide a guideline for supply chain executives to improve their company’s performance by designing a more balanced leagile supply chain.

Originality/value

This study is unique in its in-depth empirical investigation of modelling of leagile supply chain using a new index, and also addressing: first, the current mismatch between the well-known mutually exclusive strategies (lean/agile); and second, what has later been found when the proposed models were quantitatively tested.

Citation

Fadaki, M., Rahman, S. and Chan, C. (2019), "Quantifying the degree of supply chain leagility and assessing its impact on firm performance", Asia Pacific Journal of Marketing and Logistics, Vol. 31 No. 1, pp. 246-264. https://doi.org/10.1108/APJML-03-2018-0099