Evaluating the Risks Associated with Supply Chain Agility of an Enterprise

Introduction

Over the last decade or so, intense competition, constant innovations, and most importantly, huge uncertainties in customer preference leading to shorter life cycle has completely changed the outlook of business enterprises. With the customer requirements becoming extremely uncertain and subjected to sudden fluctuations, enterprises had to shift their business processes towards more innovative methods. One of these methods can be stated as being agile, which is the ability of an organization to respond efficiently to unexpected changes in the business environment and meet dynamic customer requirement through effective reconfiguration of its organizational and managerial structure (Deschamps & Nayak, 1995; Ganguly et al., 2009; Mishra & Mahapatra, 2013; Nagel et al., 1991). Therefore, enterprises intending to be agile in nature have to harbor a set of distinguishing characteristics that enables them to deal with these changes - like responsiveness, competency, flexibility/adaptability and quickness/speed (Tseng & Lin, 2011; Yusuf, et al., 1999). A successful implementation of agility can lead to faster, better and cheaper products, all of which leads to customer satisfaction (Dove, 1991; Swafford et al., 2006). As a result, agility has increasingly become an essential component for survival and prosperity of the modern-day enterprises.

A very important component of achieving agility for an enterprise is to effectively synchronize its supply chain in order to take care of the peaks and valleys of customer demand. A supply chain can be defined as “a network of independent or inter dependent business entities collectively responsible for procurement, manufacturing, and distribution activities associated with the manufacturing of a product” (Swaminathan et al., 1998, p. 607). Supply Chain Management (SCM) therefore aids an enterprise to co-ordinate and collaborate with other components of its value chain, all with the intention of achieving the common target of meeting the continually changing customer demand and gaining competitive advantage in the market (Agarwal et al., 2007; Chen, 2015). Enterprises with an agile supply chain can effectively manage their supply and demand according to the sudden changes in the customer demands and in the process deliver better products quickly and that too at a cheaper cost (Da Silveira et al., 2001; Swafford, et al., 2008). An agile supply chain, therefore, is seen as a dominant competitive advantage in the present day business scenario (Jain et al., 2008) and can greatly increase the overall agility competiveness of the organization.