This paper examines how buying organisations can configure their supply networks to achieve supply chain flexibility. Supply chain flexibility can be rationalised by considering two key antecedents of flexibility, sourcing and vendor flexibility. Network co-ordinators can group their suppliers under three categories, framework agreement suppliers, preferred suppliers and approved suppliers, each with different flexibility implications. It is possible to maintain a suitable level of supply chain flexibility by maintaining a pool of suppliers in each category. Case studies from the construction sector are used to explore supply chain flexibility, which include a house building contractor from the UK and six of its suppliers.
The turbulence of the modern business environment is well documented (Christopher, 2005). Globalisation, technological change and more demanding customers, amongst other drivers, result in higher levels of uncertainty for organisations. Agile supply chains have been promoted as a route to competitive advantage in such an environment with flexibility as a key enabler to cope with high levels of uncertainty (Christopher, 2000; Naylor et al., 1999; Prater et al., 2001; Yusuf et al., 1999). Manufacturing flexibility has been well addressed in the literature (Gerwin, 1993; Koste and Malhotra, 1999; Oke, 2005; Upton, 1994 and Upton, 1995), but flexibility in the larger context of supply chain flexibility has received less attention by researchers. As Oke (2005) has noted, the subject of flexibility can be complex and confusing. The plethora of research on flexibility has resulted in many perspectives and definitions. Ambiguity regarding terminology still exists, although the fundamental ideas appear to be very similar (Naim et al., 2006).
This paper examines how supply chain flexibility can be achieved in the construction industry, where high levels of uncertainty arise from project specific demands. The ‘strategic partnering’ approach to construction has recently been promoted by UK government reports and government bodies, such as the Latham Report (1994) and Constructing Excellence (2003), and there has also been a growing interest by researchers (Akintoye et al., 2000; Beach et al., 2005; Bresnen and Marshall, 2000; Cox and Thompson, 1997; Ireland, 2004). However, in an industry dominated by projects, often varying in frequency, scope and scale, strategic partnerships need to be considered vis-à-vis flexibility requirements. In this paper, we begin by proposing a framework to rationalise supply chain flexibility that identifies two antecedents of supply chain flexibility, vendor and sourcing flexibility. Six supplier case studies are then used to explore vendor flexibility. The paper then addresses combinations of sourcing and vendor flexibility strategies and discusses the implications of these combinations.
In this paper, we have argued that an agile and flexible supply chain is a way of coping with the high levels of uncertainty in the construction industry and have rationalised supply chain flexibility by considering two key antecedents, sourcing and vendor flexibility. Network co-ordinators operating in project environments can achieve supply chain flexibility by balancing vendor flexibility and sourcing flexibility through three different categories of supplier: framework agreements, preferred and approved. Framework agreement suppliers are associated with high levels of vendor flexibility and approved are associated with higher levels of sourcing flexibility. Preferred suppliers are an intermediate category offering moderate levels of vendor and sourcing flexibility. A network co-ordinator can maintain a healthy balance of supply chain flexibility by maintaining a pool of suppliers in each category.
The literature review in this paper provides an overview of different perspectives on supplier selection and procurement models. By exploring the role of supply chain flexibility in depth, we have investigated an important dimension that previously has had little consideration for supplier selection. The development of supply chain flexibility is of particular importance when developing an agile supply chain in uncertain market conditions. However, like many exploratory case-based studies, limitations such as the small sample size, contextual bias and subjective criterion for some of the variables considered have to be noted. While the focus of this paper has been to rationalise supply chain flexibility and explore its relationship with different categories of supplier further questions are posed. The following research questions are proposed to guide further research:
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How generalisable is this model to different industries?
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How can the supply chain flexibility models described in this paper be integrated with other supplier portfolio models?
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What are the criteria for promoting and demoting suppliers in the different categories?
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How can vendor flexibility for framework agreement suppliers be developed?
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How can sourcing flexibility be developed to switch between approved suppliers more effectively?