Supply chain capabilities, agility and firm performance in a developing economy

Abstract

Nowadays, the business environment is characterised by faster technological development, customer satisfaction, shorter product life cycles, and more intense global competition. This new competitive landscape has forced firms to acquire new ways to achieve competitive advantage actively since a firm's competitive advantage is now dependent on operating efficiency and productivity across functional areas of the firm. The most successful manufacturers seem to be those that have carefully linked their internal processes to external suppliers and customers in unique supply chains. The manufacturing sector represents 15 per cent of gross domestic product (GDP) of the South African commercial industry. Competitive challenges in the modern business environment have resulted in the need for firms to collaborate their business processes strategically across other business units within the supply chain. Supply chain network theory, dynamic capabilities theory, and the resource-based view theory are discussed to better understand the importance of firms' supply chain capabilities, supply chain agility, and firm performance. The primary objective of this research study was to investigate the association between supply chain capabilities (supply chain network design, supply chain information competency, and supply chain integration) and supply chain agility on firm performance in the manufacturing sector of the Gauteng province in South Africa. It also aimed to ascertain the kind of relationships between supply chain network with supply chain agility, supply chain network with firm performance, supply chain information competency with supply chain agility, supply chain integration with supply chain agility, supply chain integration with firm performance, and finally supply chain agility with firm performance. Structured questionnaires were distributed to various manufacturing firms in the Gauteng province. The data were collected from manufacturing firm managers and owners. SPSS 25.0 was used to analyse the data, and AMOS 25.0 used to perform the confirmatory factor analysis (CFA) and path analysis. The structural equation modelling (SEM) was used to assess the proposed model fit and to test the statistically significant relationship between the various hypotheses. The research study results revealed that supply chain technologies and supply chain vi agility positively influence firm manufacturing performance. This study contributes new knowledge to the existing literature by providing a research framework that can enhance manufacturing firms' performance and also offer practical recommendations based on the research findings for manufacturing firms and future research. Furthermore, as one of the first studies to address the association between supply chain capabilities and supply chain agility on firm performance in the Gauteng province, this study generates new insights and information, as well as outlines the strategic reasons for manufacturing firms' managers and owners to improve on their organisational relationships. Hence, the study found that firms have realised significant supply chain coordination through supply chain capabilities and supply chain agility and that firms have been able to attain strategic goals, reduce risks and improve internal and external coordination of operational processes. Keywords: supply chain network design; supply chain information competency; supply chain integration; supply chain agility; firm performance.