Fast and dramatic changes in customer expectations, competition, and technology are creating an increasingly uncertain environment. To respond, manufacturers are seeking to enhance flexibility across the value chain. Manufacturing flexibility, a critical dimension of value chain flexibility, is the ability to produce a variety of products in the quantities that customers demand while maintaining high performance. It is strategically important for enhancing competitive position and winning customer orders.This research organizes literature on manufacturing flexibility and classifies it according to competence and capability theory. It describes a framework to explore the relationships among flexible competence (machine, labor, material handling, and routing flexibilities), flexible capability (volume flexibility and mix flexibility), and customer satisfaction. It develops valid and reliable instruments to measure the sub-dimensions of manufacturing flexibility, and it applies structural equation modeling to a large-scale sample (n = 273). The results indicate strong, positive, and direct relationships between flexible manufacturing competence and volume flexibility and between flexible manufacturing competence and mix flexibility. Volume flexibility and mix flexibility have strong, positive, and direct relationships with customer satisfaction.

Porter [Porter, M.E., 1996. What is strategy? Harvard Business Review 74 (6), 61–78.] claims that a proper link between strategy and manufacturing operations is a key to developing sustainable competitive advantage. To be successful in this globally competitive, rapidly changing environment, organizations must formulate strategic plans that are consistent with their investment in and use of manufacturing technology. This study proposes that organizations that invest in advanced manufacturing technology and develop mechanisms for manufacturing managers to participate in strategy formulation will have improved competitive capabilities and better performance than firms that do not. Using the result from a large‐sample survey, this study develops valid and reliable measures of advanced manufacturing technology and manufacturing managers' participation in strategy formulation as well as the competitive capabilities of a firm. Linear structural equation analysis (LISREL) results show that the relationships between a firm's practices in these two areas and its competitive capabilities are found to be statistically significant and positive. Also, high levels of these competitive capabilities lead to high levels of performance as measured by customer satisfaction and marketing performance.

No abstract

PurposeThe purpose of this article is to empirically test the impact of supply‐chain management (SCM) capabilities on business performance so as to determine to what degree customer‐oriented SCM issues influence competitive position and organizational performance.Design/methodology/approachA rigorous methodology is employed to generate a reliable and valid measurement instrument. Responses from 474 manufacturing managers are then utilized to test a causal model using LISREL®.FindingsThe results indicate significant positive relationships exist among three types of SCM capabilities (outside‐in, inside‐out, and spanning) and business performance (perceived customer value, customer loyalty, market performance, and financial performance).Practical implicationsThe article demonstrates that strategically developing SCM capabilities such as efficient inbound and outbound transportation, warehousing, and inventory control, production support, packaging, purchasing, order processing, and information dissemination enable a manufacturing firm to identify and take advantage of opportunities in the global marketplace.Research limitations/implicationsThe sample was drawn from manufacturing firms in the USA across four SIC codes. Future studies could collect more extensive data to confirm, refine, and expand upon the model presented and the associated construct measures utilizing confirmatory factor analysis. Extending the research to include additional industries and firms from outside of the USA would enhance the generalizability and usefulness of the findings.Originality/valueThe paper statistically validates that managers should regard the cultivation of SCM capabilities as a proprietary resource that facilitates competitive advantage. It also contributes a concise instrument that may be used by academics interested in the areas of supply‐chain management processes and firm performance.