Supply chain information systems strategy: Impacts on supply chain performance and firm performance

This paper examines the relationship between supply chain (SC) strategy and supply chain information systems (IS) strategy, and its impact on supply chain performance and firm performance. Theorizing from the supply chain and IS literatures within an overarching framework of the information processing theory (IPT), we develop hypotheses proposing a positive moderating effect of two supply chain IS strategies - IS for Efficiency and IS for Flexibility - on the respective relationships between two SC strategies - Lean and Agile, and supply chain performance. Based on confirmatory analysis and structural equation modeling of survey data from members of senior and executive management in the purchase/materials management/logistics/supply chain functions, from 205 firms, we validate these hypotheses and show that the IS for Efficiency (IS for Flexibility) IS strategy enhances the relationship between Lean (Agile) SC strategy and supply chain performance. We also show a positive association between supply chain performance and firm performance, and a full (partial) mediation effect of supply chain performance on the relation between Agile (Lean) SC strategy and firm performance. The paper contributes to the supply chain literature by providing theoretical understanding and empirical support of how SC strategies and IS strategies can work together to boost supply chain performance. In doing so, it identifies particular types of supply chain IS application portfolios that can enhance the benefits from specific SC strategies. The paper also develops and validates instruments for measuring two types of SC strategies and supply chain IS strategies. For practice, the paper offers guidance in making investment decisions for adopting and deploying IS appropriate to particular SC strategies and analyzing possible lack of alignment between applications that the firm deploys in its supply chain, and the information processing needs of its SC strategy. (C) 2012 Elsevier B.V. All rights reserved.