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Introduction
In the current business environment firms are dealing with a myriad of challenges including constant change, shorter product life cycles, diverse customer requirements and increased uncertainty of demand (Christopher, 2000; Gligor, 2015). While any of these issues alone are difficult to deal with, combining them makes it increasingly difficult for firms to satisfy the demands of their customers in a timely manner. The concept of agility has been suggested as a means for handling change, increasing customer responsiveness and mastering market turbulence (Swafford et al., 2006; Gligor et al., 2016).
However, companies no longer compete against each other as autonomous entities; instead today’s competition is supply chain against supply chain (Christopher, 2000; Christopher and Towill, 2001). One of the most important lessons for achieving competitive advantage in the modern business environment is that companies have to coordinate with suppliers, the suppliers of the suppliers, customers and the customers of the customers and even with the competitors in order to streamline operations. This is also a fundamental principle for creating supply chain agility; members of the supply chain must be capable of rapidly coordinating their collective capabilities to respond to changes in supply and demand (Gligor and Holcomb, 2014). To illustrate, Ford relies on hundreds of suppliers and service providers to offer the F-150 XL in over 4bin different configurations (Appel, 2016). As such, Fords relies on a high level of supply chain agility to successfully deliver on its customers’ widely variable and highly unpredictable expectations. Carrying too much or not enough inventory has important implications for firms. In 2001 Cisco’s supply chain did not anticipate a sudden decline in demand. The company carried $2.5bn in surplus raw materials resulting in a $2.69bn net loss in a single quarter. The same day the announcement of the loss was made Cisco’s stock price dropped by 6 percent (Narayanan and Raman, 2004). Consequently, it is no surprise that supply chain agility has been identified by researchers and managers alike as one of the most important issues of contemporary supply chain management (Lee, 2004).
Various disruptions, such as political changes, accidents, natural disasters and supplier failures can affect both the revenues and costs of the entire supply chain (Craighead et al., 2007). The 2011 tsunami...