Supply Chain Integration and Flexibility and Its Impact on Business Performance

Abstract

This study explores the significance of integration and flexibility as critical determinants of business performance by examining the connection amongst supply chain integration and flexibility on the one hand and business performance on the other.  Using mainly a cross-sectional approach, structured questionnaire was used to collect responses from two hundred and fifty-five employees drawn registered companies in the Kumasi Metropolis and analyzed with the help of Pearson’s correlation and structural equation modeling (SEM). Three elements of supply chain integration (company integration with suppliers, cross functional integration within a company and company integration with customers) and three elements of supply chain flexibility (adaptability, alignment and agility) were subjected to analysis. The results indicate that supply chain integration and supply chain flexibility exhibit significant correlation with firm performance. Supply chain integration and supply chain flexibility have high correlation with ‘financial performance’ followed by ‘logistic performance’ and then ‘operational performance’. Also, the results demonstrate that four supply chain integration surrogates; ‘production data integration’, ‘going after customers for feedback’, ‘periodic connection with customers’ and ‘real time search of inventory’ and two supply chain flexibility proxies specifically ‘technology’ and ‘supply network strategies’ are crucial as they exhibit the most noteworthy influence on firm performance. Results of this study offer remarkable demonstrations of the effects of integration and flexibility in enhancing performance of businesses and greater attention must be paid to those proxies of supply chain integration and flexibility that exhibited the most significant impact on firm’s performance.