Managing supplier flexibility performance as a relational exchange investment in make-to-stock versus make-to-order production environments

Abstract

Purpose This paper aims to develop and test a model of buyer–supplier relational investment that links supply chain integration (SCI) to supplier flexibility performance (SFLEX) advantages in different manufacturing environments. Relational stability (RS) and information quality (IQL) are viewed as key indicators of intermediating commitment investments in supplier relationships to help support supplier accommodations for special requests for order flexibility. The model is applied to investigate the relative importance of manufacturer relational investments with suppliers in both make-to-stock (MTS) and make-to-order (MTO) production environments. Design/methodology/approach A survey of 206 US manufacturing firms was used to test the proposed research model using structural equation modeling and multiple-group analysis techniques. Findings Social exchange investments in relationship stability and information quality are found to fully mediate the positive performance relationship between supply chain integration and supplier flexibility performance for manufacturers. However, the relative importance of each form of investment in enhancing supplier flexibility performance varies based on the buyer’s (manufacturer’s) order fulfillment environment (make-to-stock versus make-to-order). Originality/value The proposed model may assist manufacturers make more informed relational exchange investments and supply chain configuration decisions that most conducive to enhancing supplier flexibility performance for different production environments.