The enablers to achieve supply chain agility in FMCG industry: empirical evidence from Germany

Purpose of this paper:
Supply chain (SC) agility enables companies to react quickly and more effectively to marketplace volatility and other uncertainties, thereby allowing them to establish a superior competitive position (Lee, 2004). In particular, SC agility is an essential characteristic for SCs to survive in dynamic markets such as innovative product manufacturing industry and fast moving consumer goods (FMCG) industry. Many previous studies have sought the enablers, characteristics, and index of SC agility including how to achieve it with various manufacturing contexts (i.e., Swafford et al. 2006). Nevertheless, surprisingly major barriers of achieving SC agility have yet to be rigorously disclosed in the prior studies, and it appears that they have neglected how to achieve SC agility in FMCG. The core research question will be “How can FMCG industry achieve SC agility?”

Design/methodology/approach:
Although Agarwal et al. (2007) has undertaken interpretive structural modelling (ISM) to analyse agile SC with automotive industry in India, this study expanded their model with a focus on German FMCG industry. Firstly, it conducted a series of interviews with practitioners to achieve SC agility in the FMCG industry. Secondly, it analysed 12 enablers found in the interviews using ISM in order to graphically demonstrate the interrelationships of those enablers. Lastly, the result was discussed based on the interviews and extant studies.

Findings:
The analysis showed that SC agility stems from the interactions of collaborative practices within a SC (i.e, process integration, communication channels, trust and supply chain collaboration), which leads to the diffusion of market information. These enablers generate unique corporate cultures, such as change alertness and sensitivity to the market. The cultures affect the competencies of flexibility and lead time reduction, which will eventually create an agile SC.

Value:
This study empirically found a common fundamental understanding of SC agility. It examined enablers that are relevant for achieving SC agility in German FMCG industry, and found that these enablers are highly interrelated to each other. The FMCG industry can achieve SC agility by fostering collaborative practices, market-sensitive corporate cultures and core competencies.

Research limitations/implications (if applicable):
First, the elements were selected through group discussions of selected participants, so the selection may have some biases. Second, this study solely focuses on the FMCG industry, thus, its finding is limited to this sector. The same applied to the country (Germany). Third, the cross-sectional research design illustrates a snapshot and thereby limits the horizon of the research. The future research may conduct a longitudinal study.