The impact of supply chain complexity on manufacturing plant performance

TLDR

The study defines supply chain complexity and tests it using data from 209 plants in seven countries, linking systems‑complexity theory to flexibility and lean production prescriptions. The authors develop a model of supply chain complexity and empirically test it with plant‑level data from 209 plants across seven countries. Upstream, internal, and downstream complexity all negatively affect plant performance, with dynamic‑complexity drivers having a greater impact than detail‑only drivers. Information‑processing alternatives for coping with manufacturing environment complexity (Decision Sciences 30(4):1021–1052).

Abstract

Abstract This paper puts forth a model of supply chain complexity and empirically tests it using plant‐level data from 209 plants across seven countries. The results show that upstream complexity, internal manufacturing complexity, and downstream complexity all have a negative impact on manufacturing plant performance. Furthermore, supply chain characteristics that drive dynamic complexity are shown to have a greater impact on performance than those that drive only detail complexity. In addition to providing a definition and empirical test of supply chain complexity, the study serves to link the systems complexity literature to the prescriptions found in the flexibility and lean production literatures. Finally, this research establishes a base from which to extend previous work linking operations strategy to organization design [Flynn, B.B., Flynn, E.J., 1999. Information‐processing alternatives for coping with manufacturing environment complexity. Decision Sciences 30 (4), 1021–1052].