Performance Outcomes of Responsiveness: When Should Supply Chains Be Fast?

Abstract

Responsiveness is considered a “basis of competition” attribute of supply chain performance (APICS 2016). Nonetheless, there remains ambiguity under which conditions a supply chain that is fast enough to fulfill customers’ lead time requirements constitutes competitive advantage. We examine the benefits and costs associated with supply chain responsiveness using secondary data from a leading chemicals manufacturer. Our results indicate that responsiveness can improve financial performance in two distinct ways: either by matching supply and demand or by decreasing supply-chain-related costs depending on the characteristics of the products that are being sold. Based on these findings, this study advances well-known frameworks in supply chain strategy (Fisher’s framework) and performance management (SCOR model).