Re‐Examining Supply Chain Fit: An Assessment of Moderating Factors

• Date: 01 December 2017
• Published date: 01 December 2017
• DOI: http://doi.org/10.1111/jbl.12163

Re-Examining Supply Chain Fit: An Assessment of Moderating

Factors

David Gligor

University of Mississippi

Research has emphasized the importance of matching products’characteristics with their supply chain design (i.e., supply chain fit). Fisher

(1997) introduced the notion of supply chain fit and indicated that before developing a supply chain firms must consider the nature of the

demand for their products. I expand on the Fisher (1997) framework by offering a more comprehensive understanding of when it pays off for

firms to deploy resources to achieve supply chain fit. I argue that it is simplistic to assume that perfect supply chain fit will always lead to

improved financial performance because the benefits generated by perfect supply chain fit might be offset by the resources deployed to achieve

that fit. In order to execute this research I use archival and survey data to evaluate the moderating effects of six dimensions of environmental

uncertainty (e.g., munificence, market dynamism, technological dynamism, technical complexity, product diversity, and geographic dispersion)

on the relationship between supply chain fit and financial performance.

Keywords: supply chain fit; environmental uncertainty; firm performance

INTRODUCTION

Companies that do a better job matching their supply chains to

their products’characteristics (i.e., supply chain fit) enjoy a

higher market capitalization outperforming the S&P 500 Index

on average by 18.9% and by as much as 44.5% (Grosse-Ruyken

and Wagner 2010). At an operational level, companies that lack

supply chain fit experience more quality issues, delivery delays,

and excessive logistics costs (Grosse-Ruyken and Wagner 2010),

which combined can have a negative impact on various stake-

holders. Consider the example of Home Depot. Robert Nardelli’s

demise as chief executive officer of Home Depot resulted, in

part, from the company’s lack of supply chain fit. During Nardel-

li’s six-year reign, Home Depot expanded at a rapid rate and

doubled its sales, but failed to take into account supply chain

requirements. Home Depot’s network of over 10,000 suppliers

was not able to keep up with increased production demands and

operate at the level of supply chain responsiveness dictated by

changes in demand (Hitt et al. 2012).

Fisher (1997) introduced the notion of supply chain fit and

indicated that before developing a supply chain firms must con-

sider the nature of the demand for their products. He recognized

that “the root cause of the problems plaguing many supply

chains is a mismatch between the type of product and the type

of supply chain”(Fisher 1997, 106). According to Fisher (1997),

products were categorized as either predictable or unpredictable,

and supply chains as either efficient or responsive. Supply chain

fit was considered to have been achieved when developing

responsive supply chains for unpredictable products and efficient

supply chains for predictable products (Fisher 1997).

Although Fisher’s (1997) framework became one of the most

popular frameworks within strategic, operations, and supply

chain management, it has an important limitation: It does not

account for the impact of the firm’s operating environment on the

relationship between supply chain fit and firm performance. Fisher

(1997) presented his model almost 20 years ago, and today, com-

panies are part of global supply chains and operate in uncertain

environments with various levels of dynamism, turbulence, and

complexity (Gligor et al. 2016). Christopher and Holweg (2011)

point out that most supply chain models originate from a period of

relative stability, while current-day supply chains experience

increasing turbulence. Strategic research indicates that, to offer a

good understanding of the relationship between complex variables,

researchers should account for the important role of the environ-

ment in which firms operate (Child 1972; Wolf and Egelhoff

2002). In fact, Wagner et al. (2012) specifically call for further

research on the uncertainties that impact supply chain fit. These

authors argue that such research would lead to a better understan-

ding of fit. I respond to that call and put forth the following

research question: Under what environmental conditions do firms

benefit most from supply chain fit?

I make several contributions. First, I contribute to the growing

stream of research on fit within supply chain management (Fisher

1997; Lee 2002; Randall et al. 2002; Wagner et al. 2012). Wag-

ner et al. (2012) empirically examine the link between supply

chain fit and firm performance and find a positive link. My

research helps provide a better understanding of this relationship

by evaluating the environmental conditions under which firms

benefit most from supply chain fit. Consistent with a rich tradi-

tion of research, I evaluate environmental uncertainty in terms of

munificence, dynamism, and complexity (Dess and Beard 1984).

Archival and survey data were used to measure the moderating

effects of six dimensions of environmental uncertainty: munifi-

cence, market dynamism, technological dynamism, technical

complexity, product diversity, and geographic dispersion.

Second, I contribute to the supply chain strategy literature.

Traditionally, strategy researchers have investigated the linkages

between competitive strategy, structure, and environment but

have not accounted for functional strategies (Drucker 1973;

Miles and Snow 1978). More recent research has shown the

importance of incorporating functional strategies, such as

Corresponding author:

David Gligor, University of Mississippi, 253 Holman, Oxford, MS

38655, USA; E-mail: dgligor@bus.olemiss.edu

Journal of Business Logistics, 2017, 38(4): 253–265 doi: 10.1111/jbl.12163

© Council of Supply Chain Management Professionals