Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

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Journal of Purchasing and Supply Management

journal homepage: www.elsevier.com/locate/pursup

How supply chain architecture and product architecture impact firm

performance: An empirical examination
⁎
Khawaja A. Saeeda, , Manoj K. Malhotrab, Sue Abdinnoura
a
Department of Finance, Real Estate, and Decision Sciences, W. Frank Barton School of Business, Wichita State University, Wichita, KS 67260, United States
b
Weatherhead School of Management, Case Western Reserve University, Cleveland, OH 44106, United States

A R T I C LE I N FO A B S T R A C T

Keywords: In order to enhance performance, manufacturing firms are building various capabilities and utilizing supply
Supply chain agility chain networks that are geographically dispersed around the globe. This study examines how decisions related to
Product modularity supply chain architecture and product architecture influence organizational competitiveness. Building on the co-
Performance specialization perspective, we evaluate the performance implications of product modularity and supply chain
Survey
agility. While, product modularity constitutes a product configuration related to sourcing and assembling of
Structural equation modeling
products, supply chain agility is a supply chain configuration related to velocity (sensing, comprehending, and
responding) and visibility (supplier network, internal operations, and external environment). Both the product
and supply chain architectural decisions can impact performance, individually and in conjunction with each
other. We empirically test the hypothesized relationships using data collected from 103 manufacturing firms.
Results show that supply chain agility and product modularity directly enhance responsiveness and enable or-
ganizations to reduce cost. Furthermore, supply chain agility partially mediates the relationship between pro-
duct modularity and both responsiveness and cost reduction. We elaborate on the key contributions of this study
for both research and practice, discuss limitations, and also offer various avenues for further research.

1. Introduction
Organizations have been challenged by the shift in perspective on
competitiveness. Accustomed to reaping the benefits of economies of
scale and scope, organization are scrambling to embrace new strategic
imperatives based on advantages associated with agility. It has been
reported that more than half of the companies placed on the Fortune
1000 list have disappeared from that list in the last decade and the
exclusion has been driven by their inability to adapt to change (Le Clair,
2013). In the current environment, organizational competitiveness de-
pends on the firm's vigilance about events that affect its performance,
and how well it can position itself to effectively respond to these events.
In other words, competitiveness demands that an organization con-
sistently strives to align what the marketplace demands and what it can
deliver. Supply chain architecture and product architecture are two
domains in which appropriate decisions can enable an organization to
handle a constantly changing market and the need for fast cycle times
(Dubeauchlard et al., 2015).
Among multiple initiatives, organizations are relying on agile stra-
tegies and processes to manage market disruptions (Gligor et al., 2015).
Agility is embedded in organizational processes, and captures a state in
which the firm depicts the characteristics of quickness and nimbleness
(Chiang et al., 2012). While numerous studies have examined different
facets of agility (Gligor et al., 2015; Sambamurthy et al., 2003; Tallon
and Pinsonneault, 2011), the concept of supply chain agility poses
conceptual and empirical assessment challenges (Tse et al., 2016).
Furthermore, in the light of proposed trade-offs between efficiency and
speed, it is unclear if strategies that rely predominantly on agile prac-
tices can also help companies contain costs (Fisher, 1997).
Decisions in handling changes and disruptions are not restricted to
only process initiatives, but also extend to the product domain.
Organizations have taken different approaches in how they assemble or
manufacture a product. Modular design approach breaks up products
into modules that are independent and interchangeable and enhances
an organization's ability to meet needs of the market, but can create
operational challenges and impact the level of service (Salvador et al.,
2002). Thus, implementation of a modular product architecture offers
benefits but can also create unintended challenges (Hu et al., 2008; Tu
et al., 2004). Results related to performance implications of a modular
product architecture are mixed, pointing towards a need for a deeper
assessment (Boer and Hansen, 2013).
Numerous studies have independently assessed performance

⁎
Corresponding author.
E-mail addresses: khawaja.saeed@wichita.edu (K.A. Saeed), malhotra@case.edu (M.K. Malhotra), sue.abdinnour@wichita.edu (S. Abdinnour).

https://doi.org/10.1016/j.pursup.2018.02.003
Received 15 October 2016; Received in revised form 13 February 2018; Accepted 26 February 2018
1478-4092/ © 2018 Elsevier Ltd. All rights reserved.

Please cite this article as: Saeed, K.A., Journal of Purchasing and Supply Management (2018), https://doi.org/10.1016/j.pursup.2018.02.003
K.A. Saeed et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

Table 1
Literature review on agility.

Citation Concept Definition Dimensions

Tse et al. (2016)
Eckstein et al. (2015)
Gligor, 2015
Chiang et al. (2012)
Lu and Ramamurthy
(2011)
Braunscheidel and Suresh
(2009)
Nazir and Pinsonneault
(2008)
Swafford, 2006
Overby et al. (2006)
Houghton, 2004
Sambamurthy et al.
(2003)
Supply Chain Agility Braunscheidel and Suresh (2009). Demand responsiveness, customer responsiveness,
joint planning
Supply Chain Agility Sense short-term, temporary changes in the supply chain and Dynamic sensing, dynamic flexibility, dynamic speed
market environment (e.g. demand fluctuations, supply
disruptions, changes in suppliers’ delivery times), and to rapidly
and flexibly respond to those changes with the existing supply
chain (e.g. reducing replacement times of materials, reducing
manufacturing throughput times, adjusting delivery capacities).
Supply Chain Agility To quickly adjust tactics and operations within supply chains. Alertness, accessibility, decisiveness, swiftness, and
flexibility
Supply Chain Agility The capability of the firm, internally, and in conjunction with its Customer responsiveness, demand response, & joint
key suppliers and customers, to adapt or respond in a speedy planning
manner to changing marketplace, contributing to agility of the
extended supply chain.
Organizational Agility A firm-wide capability to deal with changes that often arise Market capitalizing agility & operational adjustment
unexpectedly in business environments via rapid and innovative agility
responses that exploit changes as opportunities to grow and
prosper.
Supply Chain Agility The capability of the firm, internally, and in conjunction with its Joint planning, demand response, visibility, &
key suppliers and customers, to adapt or respond in a speedy customer responsiveness
manner to changing marketplace, contributing to agility of the
extended supply chain
Organizational Agility The ability to sense and respond to market opportunities and Sensing & responding
threats with speed and surprise.
Supply Chain Agility The capability of an organization to adapt and react to Supply chain agility: reduced lead times, product
marketplace changes or to seize /exploit market opportunities development times, adjustment in delivery,
with speed and quickness. Supply chain agility is the capability to responsiveness, setup or changeover time
adapt and respond in a speedy manner to a changing marketplace
environment.
Enterprise Agility The ability of firms to sense environmental change and respond Sensing & Responding
readily.
Vigilant Information Sensing: to detect changes and enhance managerial visibility from Observe, orient,
Systems the factory to the corporate headquarter.
Responding: capabilities that help decision makers reach decisions decide, & act
and take action.
Agility Ability to detect and seize market opportunities with speed and Customer agility,
surprise. partnering agility, &
operational agility

implications of supply chain architecture and product architecture de-
cisions. Fine (1998) highlights that lack of joint assessment of product
and supply chain architectures is a major gap that needs to be ad-
dressed. Similarly, articles in the trade press suggest that decisions on
product design need to be integrated with decisions on supply chain
design (Gorden, 2015; Khan et al., 2016). However, limited empirical
investigation exists on how supply chain agility and product modularity
jointly influence delivery performance and cost reduction, which are
two different and often used performance indicators (Pashaei and
Olhager, 2015). Our study addresses this issue, and offers three im-
portant contributions. First, we build on prior work on agility to con-
ceptualize and empirically validate the concept of supply chain agility.
Second, we theorize and evaluate the joint role of product modularity
and supply chain agility in improving performance. Third, we evaluate
two divergent performance indicators in the form of responsiveness and
cost reduction. The results of the study will provide guidance to both
academics and managers on making decisions related to the supply
chain and product architectures for achieving improved performance.
2. Literature review
Process and product domains evolved from the process/product
matrix paradigm of Hayes and Wheelwright (1984), and as such have a
rich history in the operations management literature. For example, in
the process domain, studies have investigated how process innovations
on the supplier network side such as just in time, postponement, and
integration have enabled firms to enhance performance (Eriksson,
2015; Frohlich and Westbrook, 2001; van Hoek, 2001). On the product
side, studies have assessed the value of product complexity, product
variety, product versioning, and product personalization (Novak and
Eppinger, 2001; Salvador et al., 2002). We build on the knowledge
offered by these studies to develop a research model that examines the
performance implications of supply chain agility (process centric in-
itiative) and product modularity (product centric initiative). Prior work
separately examines the performance implications of decisions firms
make regarding supply chain processes and product modularity (Eck-
stein et al., 2105). Limited understanding exists on the interplay be-
tween these two types of decisions.
To address this gap in literature, we frame the relationship among
the study variables based on the co-specialization perspective. Co-spe-
cialization highlights the combinative aspect of resources as a source of
competitiveness (Powell and Dent-Micallef, 1997). In order to better
understand the notion of resource combinations, it is important to ex-
plore the mechanism through which the combinations are manifested.
When two or more resources combine to offer superior returns, they
have complementarity. The value generated by complementarity is a
continuum that is subject to how well the resources “fit” or “align”. So
the value generated by co-specialized resources is a function of selec-
tion, and how well the selected resources align with each other. A
contrary co-specialization perspective suggests that a resource may
offer inferior value in absence of another resource. This logic is based
on resource dependency. When multiple resources have dependencies,
presence of a single resource in the absence of others offers inferior
returns. It is likely that an organization treats configuration of supply
chain architecture and product architecture as two distinct decisions.
Co-specialization perspective argues that in order to attain better

2
K.A. Saeed et al.
returns or avoid sub-optimal outcomes, it is important to assess com-
plementarity and dependencies across these decisions (Coates and
McDermott, 2002). Our study addresses this interesting, albeit un-
explored issue.
2.1. Supply chain agility
Supply chain agility is a unique process configuration that can
support organizational competitiveness. Swafford et al. (2006) define
supply chain agility as the ability of an organization to adapt and react
to marketplace changes or to seize/exploit market opportunities with
speed and quickness. A broader level definition is offered by
Braunscheidel and Suresh (2009). They define it as “the capability of
the firm, internally, and in conjunction with its key suppliers and cus-
tomers, to adapt or respond in a speedy manner to a changing mar-
ketplace”. Agility is not just organization specific, but also extends to
suppliers and customers. Thus, an expanded perspective describes agi-
lity as the ability to quickly adjust tactics and operations within supply
chains (Gligor, 2016). Another important issue that these definitions
recognize is the dual nature of agility, which can be contextualized as
seizing or exploiting an opportunity, or adapting to manage an adverse
event. Studies that focus on a firm's ability to adapt to adverse events in
a timely manner use the term resilience to describe the supply chain
(Ponomarov and Holcomb, 2009). Supply chain resilience is designed
into supply chain processes and focuses on risk mitigation through in-
fusion of agile practices (Christopher and Peck, 2004; Kirilmaz and
Erol, 2016). Thus, a key characteristic of a resilient supply chain is the
extent of agility embedded in its supply chain processes. Table 1 pro-
vides a detailed review of the supply chain agility literature.
Fig. 1 shows to be resilient to adverse events, a comprehensive
perspective on supply chain agility needs to include both visibility and
velocity dimensions and progress is needed in both domains to achieve
a higher level of supply chain agility. This perspective is also supported
by Christopher and Peck (2004). Visibility captures organizational
vigilance to state of affairs and events taking place in the supply chain,
which can range from simple monitoring of inventory levels to assess-
ment of the probability of plant shutdowns due to inclement weather. It
captures the scope of events across which an organization needs to be
vigilant (Braunscheidel and Suresh, 2009; Chiang et al., 2012; Tallon
and Pinsonneault, 2011). Velocity captures the time dimension, and
subsumes the quickness in recognition of an event and the rapidity of
response. It is important to recognize that the value of information is
subject to a very small window of opportunity. Velocity reflects how
well an organization is able to reduce the time between event re-
cognition and an informed response (Nazir and Pinsonneault, 2008;
Overby et al., 2006). We next elaborate on both the visibility and
HIGH SUPPLY
CHAIN
AGILITY
MEDIUM
VISIBILITY SUPPLY
CHAIN
AGILITY
LOW SUPPLY
CHAIN
AGILITY
VELOCITY
Fig. 1. Supply chain agility perspectives.
3
Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx
velocity concepts in greater detail.
2.1.1. Visibility
We identify supplier network, operations, and external environment
as three important domains (Huan et al., 2004; Huo et al., 2013; van
Oosterhout et al., 2006; Wang and Wei, 2007) across which an orga-
nization may strive to achieve vigilance. These areas can trigger events
such as non-forecasted change in demand, supplier plant shutdown,
natural disasters, and shift in economic conditions which can adversely
impact an organization (Supply Chain Council, 2010). Higher visibility
is manifested in the ability to be vigilant across a broad set of domains.
Supply network covers procurement of resources and structure of
the supply market. Shifts in availability of components/material and
supplier markets can adversely impact an organization's ability to de-
liver on its commitments (Eckstein et al., 2015). Operations can be a
source of influence as well (Sambamurthy et al., 2003). An organization
may be faced with erratic demand, and thus has to cope with changing
capacity requirements and adjustments to production and delivery
schedules. Disruptions can also come from internal factors such as as-
sembly line breakdown and delivery bottlenecks. Finally, the external
environment includes changes in regulation, changes in the competitive
landscape, and shifts in economic conditions (van Oosterhout et al.,
2006). All these aspects can have a serious impact on the organization
and its long-term survival.
2.1.2. Velocity
Velocity captures the speed with which an organization is able to
sense and respond to an event of interest. Sensing and responding are
two key themes that are consistently emphasized by prior con-
ceptualizations of organizational agility (Lu and Ramamurthy, 2011;
Tallon and Pinsonneault, 2011). The OODA cycle (Observe, Orient,
Decide, and Act) offers an extended perspective on velocity that in-
cludes aspect of prior conceptualizations and offers a unique perspec-
tive (Houghton et al., 2004). Observe is similar to sensing, while decide
and act overlap with responding. However, the concept of orientation
which captures comprehending the implications of the signals/events is
unique. In the sense and respond loop, it is important to include com-
prehension as an intermediate step (Eckstein et al., 2015; Gligor et al.,
2015). Thus, we propose that the velocity dimension of supply chain
agility is represented by the speed with which an organization is able to
sense, comprehend, and respond to an event of interest. We elaborate
on these three perspectives next.
2.1.2.1. Sensing. Sensing is formally defined as the extent to which an
organization can quickly identify events in the supply chain, while
maintaining quality and cost effectiveness. Sensing enables the
organization to detect signals that may require attention (Eckstein
et al., 2015). Pavlou and El Sawy (2011) highlight gathering,
disseminating, and responding to market intelligence as three
routines that constitute sensing capability. Firms put in place
mechanisms and procedures to actively scan the shifts in the demand
for products, changes in the supply markets, and manufacturing
paradigms (Nazir and Pinsonneault, 2008; Pavlou and El Sawy,
2011). These procedures may include active participation in trade
organizations, conferences, and getting regulatory updates. Firms can
establish internal systems to gain access to real time information. For
example, many companies have put in place supplier evaluation
processes that track parameters of interest in real time and provide
visual assessment of compliance with the tolerance limits. Further,
processes are put in place that alert the firm to shifts in demand in a
timely manner. These processes and procedures enable the firm to
quickly identify adverse events that have operational and financial
implications.
2.1.2.2. Comprehending. Comprehending is formally defined as the
extent to which an organization can quickly understand the implication
K.A. Saeed et al.
of events in the supply chain and assess which course of action is
appropriate, while maintaining quality and cost effectiveness.
Comprehending constitutes a two-step process. The first step is to
drill down into information related to the event in order to demystify its
impact on supply chain operations (Houghton et al., 2004). The second
step involves evaluating the options to determine the best course of
action. If a firm detects a surge in the demand for a product, the natural
reaction will be to increase the production. However, before the
organization really understands the reasons for why the demand has
increased, and whether it is a long-term trend or just a transient spike
driven by some other external reasons, increasing the supply will be an
option that constitutes a knee jerk reaction to an event (Tse et al.,
2016). The organization may have to drill down into the information to
comprehend the root cause of the issue or detect the pattern behind
demand increases (Eckstein et al., 2015). Quickly comprehending the
implications of the events is beneficial, because it assists in outlining
the pros and cons of different options and increases the likelihood of
making an informed decision.
2.1.2.3. Responding. Responding constitutes getting all the necessary
resources and processes in place in order to put the plan into action
(Gligor, 2016). In conceptual terms, a response constitutes a behavior
that is initiated as a result of an external or internal stimulus (Tse et al.,
2016). The stimulus can be internal to the organization, such as limited
manufacturing capacity or changes in production schedule or external
events such as changes in the supplier markets or regulation. Although
the complexity of the response may vary based on the event, the critical
aspect from a supply chain agility perspective is the speed and
quickness in executing the actions that are judged to be appropriate
(Overby et al., 2006).
In summation, we define supply chain agility as “an organization's
ability to sense, comprehend, and respond to events emanating from the
supply network, operations, and external environment with speed and
quickness, while maintaining quality and cost effectiveness.” Table 2 pro-
vides the proposed conceptual structure of supply chain agility. The
columns capture the process aspect including sensing, comprehending,
and responding. The rows represent the scope across which each aspect
of the process extends including supplier network, operations, and ex-
ternal environment. Each box in Table 2 represents a subcomponent of
the overall supply chain agility of the firm. The aggregation of these sub
components form the overall supply chain agility profile of a firm. This
structure allows the organizations to evaluate themselves across various
sub-components to get a more granular perspective. It also provides the
flexibility to aggregate these sub-components to get an overall supply
chain agility profile. For example, the intersection of sensing and sup-
plier network captures the level of speed an organization possesses in
detecting a signal across its supplier network, which can be reviewed
independently or combined with sensing across operations and external
environment to get an aggregate picture of the sensing ability.
2.2. Product modularity
Ulrich (1995) defines product architecture as “the scheme by which
the function of a product is allocated to physical components.” It is the
fundamental structure of the product that is captured through its
component types and interfaces between those components. Firms have
taken great strides in reconfiguring product architectures, and the
Table 2
Conceptual structure for assessing supply chain agility.
Visibility / Velocity Sensing Comprehending Responding
Supply Network
Operations
External Environment
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Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx
change is visible in many industries ranging from automobiles, to more
recently aircrafts. Modular product architecture has emerged as a way
to reduce cycle times and support mass customization (Meyer and
Lehnerd, 1997). The basic idea is to develop subassemblies in-
dependently, and put them together to assemble the final product
(Sanchez, 2000). Multiple perspectives have been offered on the con-
cept of product modularity. We take the perspective of contrasting
modular vs. integral product structure, and define product modularity
as the degree to which a system's components can be separated and
recombined (Tu et al., 2004; Ulrich, 1995).
Product modularity can support mass customizations and enable a
firm to be more responsive to market needs. However, it also poses risks
in the form of managing multiple component life cycles and making
appropriate decisions in terms of collaborative structures across the
supply chain. Uneven rates of changes in components may create in-
tegration challenges that need to be effectively managed. Thus, to gain
benefits of a modular product architecture the organization has to make
strategic choices. Prior research has shown that product modularity can
help a firm in their mass customization strategy (Duray et al., 2000;
Salvador et al., 2002; Squire et al., 2006; van Hoek, 2001). Organiza-
tions through rationalization of product variety can reduce costs. For
example, an organization can improve product variety and common-
ality of sub components across product types to achieve economies of
scale. It can also improve delivery performance through establishing
extensive collaboration processes with supply chain partners. This re-
quires a level of collaboration at which components can be swapped
seamlessly. The global production systems used by many companies are
a manifestation of this concept. The products are broken up into com-
ponents, the manufacturing is distributed across suppliers, and the
process is managed through a collaborative infrastructure. Overall,
there is support that product modularity can directly reduce cost and
improve organizational delivery performance (Jacobs et al., 2007).
3. Research model and hypotheses
3.1. Performance effects of supply chain agility
The speed with which changes are taking place in an organization's
eco-system has enhanced the importance of organizational vigilance in
the context of its supply chain. When demand for products starts to shift
rapidly or new product paradigms are introduced that threaten existing
business models, organizations that are slow to adapt face losses or even
extinction. Firms develop coping mechanisms to deal with rapidity of
change. Literature on dynamic capabilities (an extension of resource
based view of the firm) highlights the need to identify specific processes
that provide a tangible view of these coping mechanisms (Teece et al.,
1997). For example, ability to detect and manage disruptions, ability to
adapt by recombining resources to sustain competitiveness, and quickly
seizing on trends once they are recognized are outlined as mechanisms
that reflect dynamic capabilities (Teece, 2007). Assessment of supply
chain agility based on the guidelines outlined by Teece (2007) shows a
good fit. Thus, a firm that possesses an agile supply chain should be able
to undertake the activities associated with dynamic capabilities. Agile
processes and practices are built on strong interlinkages across orga-
nizational and inter-organizational functions to enhance an organiza-
tion's capability to quickly and efficiently address market disruptions.
Thus, a constellation of routines that speed up the sense, comprehend
and respond cycle can lead to higher agility and improve performance
outcomes.
Organizations that can identify signals related to shifts in quantity
requirements, disruptions in supply of materials, and changes in reg-
ulatory requirements early are in a better position to reconfigure their
approach such that they remain aligned with market needs. For ex-
ample, agile organizations can accommodate a high level of variance in
production plans by quickly sensing material events and take corrective
action to minimize the impact of any disruptions. This reduces the time
K.A. Saeed et al.
between detecting events and taking action to address them, and in-
creases the speed with which decision are made. Faster decision-making
enables the organization to align supply and demand in real time, and
thereby meet its obligations on-time. Thus, we argue that organizations
with higher level of supply chain agility will be more responsive and
able to more consistently meet the quantity and delivery requirements
of their customers.
Agility requires speed, which can be attained at the expense of
higher costs and loss of efficiency. An organization may decide to invest
in excess capacity or significantly higher safety stocks to reduce lead
times and meet market demand. On the contrary, evidence also points
towards organizations achieving a better cost structure through im-
plementing agile practices (Eckstein et al., 2015). For example, me-
chanisms used to aid agility may rely on early signal detection,
proactive forecasting, information sharing, and quick adjustment in
material flows. An agile supply chain is proactive and enables supply
chain partners to preemptively address issues that can have a detri-
mental impact. In such cases, supply chain partners are able to engage
in cost avoidance (Sambamurthy et al., 2003). Supply chain agility is
built through processes that require effective communication and
sharing of information (Lu and Ramamurthy, 2011). Such processes can
lead to waste reduction through value chain analysis and an efficient
transaction infrastructure that supports buyer supplier collaboration.
Thus, we argue that supply chain agility will exert a positive influence
on both delivery performance and cost reduction.
H1a:. Supply chain agility is positively associated with delivery
performance.
H1b:. Supply chain agility is positively associated with cost
reduction.
3.2. Performance effects of product modularity
In theory, product modularity can create the opportunity to develop
multiple product configurations, offer customization, as well as elon-
gate the product life cycle (Sanchez, 2000). In a distributed production
structure, product modularity provides the organization with the ability
to develop component combinations that are unique and in line with
the needs of the market (Jacobs et al., 2007). It is an effective way to
respond to the structural shifts where large mass markets are being
transformed into smaller niche markets demanding higher product
variety. Product modularity enables the organization to enhance pro-
duct variety, address variations in demand, and do it in a shorter time
span (Novak and Eppinger, 2001). Improvement in delivery perfor-
mance can be attributed to elements associated with a modular product
architecture such as parallel manufacturing of modules and improved
component availability due to ability to swap components across pro-
duct types. Loosely coupled components reduce uncertainty in the
production process and improve the ability to meet demands of the
customers (Fixson, 2005).
Prior studies show that product modularity can directly reduce costs
(Jacobs et al., 2007). To achieve these benefits, an organization has to
streamline processes across the supply chain. Engagement at the design
stage supported by parallel development processes is critical in at-
taining the benefits of component swapping. Reusability across product
types offers the scale benefit. Cost reduction can be attained through
economies of scale resulting from low component variety. Further, part
rationalization and use of common components allow inventory to be
lowered through risk pooling, thus resulting in lower costs. Thus, we
argue:
H2a:. Product modularity is positively associated with delivery
performance.
H2b:. Product modularity is positively associated with cost
reduction.
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Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx
3.3. Performance effects of co-specialization ~ Supply chain agility and
product modularity
Traditionally, decisions related to product architecture and supply
chain architecture have been viewed as unrelated (Ballou et al., 2000).
Integrating the two functions requires a major shift in ways organiza-
tions manage these areas. Modular product architecture requires that
an organization design its supply chain to handle market shifts in a
geographical dispersed production system (Fine, 2005). Thus, it is im-
portant to understand the co-specialization relationship between pro-
duct modularity and supply chain agility and how it relates to organi-
zational performance. Is relationship moderating or mediating?
According to Barron and Kenny (1986), a moderator influences the
strength of the relationship between variables, while a mediator ex-
plains how or why an effect occurs. A mediating variable is a me-
chanism that provides insights on why the relationship between two
variables exists, and aligns well with the co-specialization perspective
discussed earlier. For example, nimbleness and collaboration require-
ments associated with a modular product architecture can be effectively
met through agile processes and practices. So, supply chain agility
provides insights on why product modularity influences firm perfor-
mance. In other words, the combination of the two architectures offer
superior returns as compared to when each architecture is used in in-
solation. Based on this logic, we propose that supply chain agility is a
mediator because it constitutes the mechanisms through which we are
able to better explain the relationship between product modularity and
firm performance.
Mass customization increases the complexity of the production
process because the organization has to manage a large number of
unique product configurations (Duray et al., 2000). Organizations are
managing demand diversity through either producing variations of the
same model or by creating functionality bundles that target market
segments through different models. The diversity in the ordering stream
associated with modular product architecture can be better managed
through component rationalization, slack, or agile processes. In other
words, an organization's inability to correctly forecast product config-
urations may require excess inventory or nimbleness. Therefore, an
organization with high product modularity requires quick sense, com-
prehend, and respond processes to stay aligned with market demand
(Ellram et al., 2007).
Building further on that argument, Salvador et al. (2002) suggest
that a modular product architecture requires that the organization work
with its suppliers in real time with extremely short lead times, while
delaying assembly of the final product as much as possible. Effective
communication requires development of a common language and quick
information exchange (Galvin and Morkel, 2001). An agile supply chain
structure enables the organization to meet the demands placed by the
modular product architecture by operating on a tight production
schedule and reducing the negative effects of diversity in product
combinations. The speed with which an organization can sense, com-
prehend, and respond to shifts in the ordering stream enables it to
consistently meet customer demand. Internally, the organization is also
able to better manage procurement and inventory because agile pro-
cesses reduce the need for slack resources through faster decision
making.
Personal computer is a modular product, which opens the options
for interchangeable parts. In order to balance demand and supply in
real time, it is critical that the supply chain has the ability to handle
unplanned events. Disruptions like the floods in Thailand that impacted
the supply of hard drives can be addressed through agility in supply
network management (Wegner, 2016). Supply chain agility provides
the ability to effectively address such challenges through quick re-
configuration of the supply sources and adjustment of internal opera-
tional processes (Desai et al., 2001). Thus, modular product archi-
tecture aided by an agile supply chain assists in improving efficiency of
procurement processes and meeting the needs of the market in terms of
K.A. Saeed et al.
Table 3
Sample profile.
Position Percentage Sales (Millions)
President / VP 15% 50 & Less
Director 16% 51–250
Manager 63% 251–750
751 & Above
Missing 9% Missing
desired quantities, product mix, or delivery time requirements (Ellram
et al., 2007). Thus, we propose that supply chain agility is the me-
chanism that helps us explain the relationship between product mod-
ularity and firm performance, which leads to H3a and H3b.
H3a:. Supply chain agility will positively mediate the relationship
between product modularity and delivery performance.
H3b:. Supply chain agility will positively mediate the relationship
between product modularity and cost reduction.
4. Research methodology
We used multiple empirical methods to test our research model and
its underlying relationships. Initially, we conducted a focus group to get
preliminary feedback on the survey items and gain insights on the
concept of supply chain agility and its performance implications. Six
participants from different industries were invited to attend the focus
group. These individuals held mid to high-level positions in their or-
ganizations and were working in the supply chain area. The participants
were asked to provide a definition of supply chain agility, review de-
finitions developed by the research team and sort the survey items, and
engage in an open discussion on the concept of supply chain agility,
which included feedback on the survey items and the questionnaire.
The definitions and the questionnaire were refined based on the feed-
back from the focus group.
After refinement of the items, a q-sort was conducted with six Ph.D.
students in the area of operations management and management in-
formation systems. The participants were provided with definitions of
supply chain agility dimensions along with a random list of measure-
ment items. The participants were asked to categorize the items into the
scope areas. The results of the q-sort showed that correct categorization
of items occurred at the rate of 80% for supplier network, 93% for
operations, and 94% for external environment. Some modifications
were made to the questionnaire based on the results of the q-sort ex-
ercise. Preliminary testing of the questionnaire was done by distributing
it to the board members of the Kansas Manufacturers Network. Eight
board members agreed to take part in the pilot testing. They were re-
quested to get the questionnaire completed by an individual in their
company who was responsible for supply chain management. The re-
sponses from the pilot testing were used to further refine and finalize
the questionnaire and the measurement items. We followed the
guidelines in terms of questionnaire design outlined in Podsakoff et al.
(2003) to control for common method bias that may result from si-
tuations in which predictor and criterion variables are obtained from
the same source.
We purchased the list of participants who attended the Association
for Operations Management International Conference and Exposition
(APICS). The list included contact information on 2543 participants.
Records where there were no job designation, records related to service
companies, records for which the post office could not confirm address
validity, and duplicate records, were deleted. A total of 1078 unique US
based firms resulting from this data cleaning were retained, and which
constituted the sample frame. We mailed to these firms a letter ex-
plaining the objective of the study, along with the questionnaire. Each
firm that returned the completed questionnaire was promised a
6
Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx
Percentage Employee Percentage
27% 100 & Less 22%
24% 101–1000 41%
25% 1001–5000 18%
11% 5000 & Above 16%
13% Missing 3%
customized benchmark report that compared their responses with the
responses of the sample. Additionally, the letter also contained a link to
a website where the respondents could complete that questionnaire
online if they preferred. A reminder postcard was mailed after three
weeks of the initial mailing. A total of 103 responses were received
through this effort, thereby giving us a response rate of 9.6%. Multiple
follow ups may have helped increase the response rate, but we could
only undertake a single mailing of the questionnaire and a reminder
card due to this stipulation being mandated in the contract when we
purchased the mailing list. It must be noted that this response rate is
consistent with other studies in the field (Banker et al., 2006; Ray et al.,
2005). Diverse sets of industries were represented in our sample, with
nearly 50 percent of the respondents coming from the industrial pro-
ducts, electronics, and aerospace sectors (see Table 3). We conducted
analysis to test for difference in variables across industries and found no
statistical differences in responses.
Non-response bias was evaluated by comparing respondents with a
random sample of non-respondents for the number of employees. The
same variable was also used to compare early and late respondents. The
results showed that the firms were not significantly different from each
other based on number of employees. The assessment of the respondent
profile in Table 3 shows that a majority of the respondents were middle
managers. Finally, the responding firms were fairly well distributed
across the scale in terms of sales and number of employees, and were
thus considered representative of the manufacturing firms we intended
to represent in our sample.
4.1. Construct validity
We conducted exploratory factor analysis (EFA) and confirmatory
factor analysis (CFA) to evaluate the validity of the constructs as both
approaches can be used jointly for scale development (Agarwal and
Prasad, 1998). Initially, three EFAs were conducted separately, one
each for sensing, comprehending, and responding. The items under
each of these dimensions were related to events in the domain of sup-
plier network, operations, and external environment. For example, the
first factor analysis was done for sensing with fourteen items, among
which five were related to supplier network, five reflected operations,
and four were measuring external environment. The factor analysis was
an iterative process, and some items were dropped from the constructs
due to poor loading or cross loading. In all, a total of three items were
dropped, one each from supplier network, operations, and external
environment. The results of the final iteration show that items separate
into three constructs for each factor analysis capturing supply network,
operations, and external environment across sensing, comprehending,
and responding. Also, items have high loadings on constructs they
should represent, providing evidence of uni-dimensionality (Table 4).
We used the CALIS procedure in SAS to conduct confirmatory factor
analysis (CFA). Initially, three separate measurement model were ex-
amined for sensing, comprehending, and responding. The final mea-
surement model posited supply chain agility as a higher order factor
constituting sensing, comprehending, and responding as sub-dimen-
sions. The results show that in all cases, the item loadings, composite
reliability, and average variance extracted are within the range of
prescribed limits (Sharma, 1996).
K.A. Saeed et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

Table 4 Table 6
Factor analysis. Confirmatory factor analysis ~ Supply chain agility.

Sensing Comprehending Responding Construct / GOF Indicators Loading Composite AVE

measures Reliability
Items 1 2 3 1 2 3 1 2 3
Supply Chain Sensing: 0.99
Supplier Network 1 0.56 0.37 0.30 0.69 0.36 0.24 0.69 0.46 0.06 Agility
Supplier Network 2 0.90 0.13 0.17 0.81 −0.01 0.20 0.83 0.10 0.36 Supplier Network 0.77 0.80 0.57
Supplier Network 3 0.86 0.16 0.12 0.81 0.17 0.12 0.87 0.09 0.11 Operations 0.82
Supplier Network 4 0.56 0.51 0.01 0.75 0.33 0.01 0.62 0.39 0.05 GFI: 0.94 External 0.67
Operations 1 0.21 0.76 0.23 0.47 0.60 0.25 0.14 0.78 0.22 Environment
Operations 2 0.16 0.74 0.29 0.02 0.77 0.23 0.24 0.69 0.24 AGFI: 0.81 Comprehending: 0.92
Operations 3 0.27 0.81 0.20 0.27 0.83 0.20 0.18 0.81 0.14 RMR: 0.06 Supplier Network 0.72 0.79 0.56
Operations 4 0.30 0.77 0.25 0.28 0.76 0.26 0.21 0.81 0.27 RMSEA: 0.11 Operations 0.85
External 0.27 0.44 0.51 0.22 0.27 0.78 0.19 0.25 0.82 CFI: 0.97 External 0.66
Environment 1 Environment
External 0.11 0.10 0.89 0.26 0.18 0.80 0.24 0.12 0.85 NFI: 0.93 Responding: 0.88
Environment 2 Supplier Network 0.61 0.72 0.45
External 0.11 0.21 0.86 0.01 0.24 0.82 0.01 0.32 0.77 Operations 0.73
Environment 3 External 0.67
Environment

The model fit indexes were also found to be within the acceptable Table 7
guidelines (see Tables 5, 6). The results from the two-step process, in- Factor analysis.
cluding exploratory factor analysis and confirmatory factor analysis,
Constructs 1 2 3 4
provide strong evidence in support of the adequacy of the measurement
approach for supply chain agility. The list of measurement items is Product Modularity 1 0.76 0.27 −0.03 0.24
provided in Appendix A and an explanation of the validation process is Product Modularity 2 0.86 0.04 0.22 0.07
provided in Appendix B. As a final step, another exploratory factor Sensing 0.19 0.87 0.16 0.16
Comprehending 0.13 0.93 0.15 0.16
analysis was conducted on the aggregate items for sensing, compre- Responding 0.19 0.84 0.19 0.15
hending, and responding, along with items for product modularity, Delivery Performance 1 0.28 0.26 0.47 0.46
delivery performance, and cost reduction. Table 7 shows that the items Delivery Performance 2 0.06 0.12 0.95 0.03
adequately loaded on four separate constructs representing supply Cost Reduction 1 0.15 0.08 0.06 0.81
Cost Reduction 2 0.14 0.15 0.08 0.89
chain agility, product modularity, delivery performance, and cost re-
Cost Reduction 3 0.24 0.23 0.21 0.63
duction. Items for constructs other than supply chain agility were taken

Table 5
Confirmatory factor analysis ~ Dimensions of Supply chain agility.

Construct / GOF measures Indicators Loading Composite reliability AVE

Sensing Shifts in supply markets 0.60 0.81 0.53

GFI: 0.88 Need to locate suppliers with required expertise 0.84
AGFI: 0.78 Need to identify new sources of supply 0.85
RMR: 0.09 Disruptions in supply of material (components) 0.56
RMSEA: 0.10 Changes in delivery schedules for orders 0.76 0.86 0.60
CFI: 0.82 Changes in capacity requirements 0.70
NFI: 0.88 Disruptions in operational processes 0.82
Changes in operational plans and schedules 0.81
Changes in economic conditions 0.59 0.78 0.54
Moves of our competitors 0.75
Changes in government regulation 0.85
Comprehending Shifts in supply markets 0.79 0.83 0.54
Need to locate suppliers with required expertise 0.67
GFI: 0.90 Need to identify new sources of supply 0.76
AGFI: 0.84 Disruptions in supply of material (components) 0.72
RMR: 0.08 Changes in delivery schedules for orders 0.74
RMSEA: 0.08 Changes in capacity requirements 0.64
CFI: 0.95 Disruptions in operational processes 0.85
NFI: 0.93 Changes in operational plans and schedules 0.81 0.85 0.58
Changes in economic conditions 0.80 0.80 0.57
Moves of our competitors 0.78
Changes in government regulation 0.69
Responding Shifts in supply markets 0.75 0.84 0.56
Need to locate suppliers with required expertise 0.84
GFI: 0.88 Need to identify new sources of supply 0.76
AGFI: 0.80 Disruptions in supply of material (components) 0.64
RMR: 0.07 Changes in delivery schedules for orders 0.74 0.83 0.61
RMSEA: 0.10 Changes in capacity requirements 0.71
CFI: 0.92 Disruptions in operational processes 0.76
NFI: 0.89 Changes in operational plans and schedules 0.87
Changes in economic conditions 0.84 0.83 0.62
Moves of our competitors 0.80
Changes in government regulation 0.71

7
K.A. Saeed et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

from prior studies (Duray, 2000; Stank et al., 2001–2002; Tu et al., Figs. 4 and 5), the relationship between product modularity, delivery
2004). performance, and cost reduction weakens a little and remains sig-
nificant. Thus, the results show only partial mediation and provide
partial support for H3a and H3b. The goodness of fit indices for the
5. Results
mediation model show the improvement over the direct model, sug-
gesting that the mediation model fits the data better. An alternative
We used structural equation modeling (SEM) to evaluate the re-
specification of the model was also tested in which product modularity
search model and the associated hypotheses. “Firm size (number of
was modeled as the mediator. The results for the alternative model
employees) and use of postponement strategy (the question we asked
show that the link between product modularity and supply chain agility
was if the firm was using or not using postponement approach) were
was significant. However, the links between product modularity and
included in the model as control variables (Salvador et al., 2002).
the performance variables were non-significant, ruling out the alter-
Postponement is a supply chain practice in which an activity related to
native specification of the model.
product manufacturing or assembly is moved downstream in the supply
Recent studies suggest that additional analysis be performed in
chain. It can be used as an alternative or in conjunction with modular
order to validate mediation through formal testing (Iacobucci et al.,
product architecture and supply chain agility, and has been shown to
2007). Sobel test is recommended to assess the significance for the in-
influence organizational performance in prior studies (Boone et al.,
direct path (product modularity to supply chain agility to delivery
2007). Thus, including the use of postponement in the research model
performance) (Baron and Kenny, 1986; Sobel, 1982). The results of the
improves model precision. Similarly, the performance implications of
Sobel test show that the indirect path is positive and significant for
firm size are tied to benefits associated with access to resources. Its
delivery performance (z-value = 2.25, p-value < 0.05) and cost re-
inclusion in the model helps in extracting the associated variance.
duction (z-value = 1.93, p-value < 0.10). The last test we conducted
The assessment based on Mahalanobis distance highlighted one
was the bootstrapping approach suggested by Preacher and Hayes
observation as an outlier, which was subsequently dropped from the
(2004). They argue that the Sobel test assumes that the indirect effect
data used for the analysis. The descriptive statistics and correlations
follows a normal distribution, an assumption that has been challenged
among the variables are reported in Table 8. We analyzed four varia-
because it significantly reduces the power of the test. Prior studies
tions of the research model (see Figs. 2–5). First, we modeled the direct
suggest that the distribution of a product term (indirect effect) is po-
relationship between supply chain agility and delivery performance,
sitively skewed, and using a test based on the normal distribution as-
and product modularity and delivery performance (see Fig. 2). The
sumption can adversely impact the power of the test (Bollen and Stine,
results show a significant relationship between supply chain agility and
1990; Mackinnon et al., 2002). The bootstrapping approach generates
delivery performance (0.51, p-value < 0.00), thus supporting H1a. The
estimates for the indirect effects and standard errors based on random
relationship between product modularity and delivery performance was
samples from the data. These estimates can then be used to develop
also found to be significant (0.43, p-value < 0.05) thereby supporting
95% and 99% confidence intervals for the population values of the
H2a. The second model assesses the same structure but in the context of
indirect effect. If zero is not included between the lower bound and the
cost reduction. The results show a significant relationship between
upper bound of the confidence intervals, it supports the assertion that
supply chain agility and cost reduction (0.36, p-value < 0.05) sup-
the indirect effect is significantly different than zero (Preacher and
porting H1b. Product modularity and cost reduction had a positive and
Hayes, 2004). We ran the bootstrapping approach using 5000 random
significant relationship (0.33, p-value < 0.05) supporting H2b. The
samples. The results show that the lower and upper limit for 95%
comparison across the two models shows that a higher percentage of
confidence interval did not include zero for both models, validating
variance was explained in delivery performance (46%) than cost re-
partial mediation. The point estimate for the indirect paths were 0.12
duction (31%). The direct relationships between firm size and post-
(delivery performance) and 0.08 (cost reduction) respectively.
ponement with the performance variables were found to be non-sig-
Additional assessment was conducted to test the validity of the re-
nificant. The goodness of fit indices for both models were adequate,
sults. We used the approach suggested by MacCallum et al. (2006) and
indicating that the data fit the models well. Finally, we also tested re-
the procedure outlined by Preacher and Coffman (2006) to ascertain
vised models by including an industry variable, and the results show
the adequacy of the sample size to achieve a 0.80 level of statistical
that it was not significant.
power. At the alpha level of 0.05, we set the null RMSEA (ideal fit) at
The third and fourth models added the link between product mod-
0.05 and the alternative fit (inadequate fit) at 0.10, 0.09 and 0.08. The
ularity and supply chain agility (see Figs. 4 and 5). H3a and H3b, which
minimum sample size needed to achieve a power of 0.80 computed to
argue for mediation, were tested based on Baron and Kenny (1986),
168, 109, and 77 respectively. Further, given the sample size of the
Sobel test, and the bootstrapping approach suggested by Preacher and
study, the statistical power at alpha (0.05), null RMSEA (ideal fit) at
Hayes (2004). The analysis shows that the direct relationships between
0.05 and alternative fit RMSEA set at 0.10 and 0.09 computes to 0.92
product modularity, supply chain agility, delivery performance, and
and 0.77 respectively. We also conducted power computations for as-
cost reduction are significant, meeting the first two criteria in Baron
sessing the difference between the nested models based on RMSEA
and Kenny (1986). Subsequently, when the path between product
(MacCallum et al., 2006; Preacher and Coffman, 2006). The statistical
modularity and supply chain agility is included in the models (see

Table 8
Correlation table.

Constructs Average SD 1 2 3 4 5 6 7

Product Modularity 4.20 1.41 0.61

Sensing 4.48 1.03 0.36** 0.88
Comprehending 4.69 0.98 0.32** 0.86** 0.87
Responding 4.49 1.01 0.36** 0.71** 0.81** 0.87
Delivery Performance 4.42 1.37 0.35** 0.38** 0.40** 0.41** 0.48
Cost Reduction 4.65 1.20 0.39** 0.38** 0.36** 0.37** 0.39** 0.78
Employees (Log) 6.29 1.98 −0.07 −0.02 −0.02 0.04 0.01 0.17 –
Postponement 0.25 0.44 0.08 0.04 0.02 0.09 0.04 0.21* 0.05

** Correlation is significant at the 0.01 level (2-tailed).

8
K.A. Saeed et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

Firm Size Postponement

Supply Chain 0.51* 0.03

Agility 0.08

Delivery
Performance
R-squared: 0.46

Product
Modularity 0.43*
Goodness of Fit Indices
Chi. Sq. = 0.01 (p-value)
GFI = 0.90
AGFI = 0.78
RMR = 0.14
RMSEA = 0.11
CFI = 0.93
NFI = 0.88

Fig. 2. Results for the Direct Model (Delivery Performance).

power of the test for evaluating the difference between the base model
and the mediated model came out to be 0.99 for both models (re-
sponsiveness and cost reduction). We recognize that a higher sample
size would have been even better to further strengthen the model re-
sults, but our sample falls within the recommended range and the re-
sults of statistical power testing are adequate.
6. Discussion
Organizations want to be fast in exploiting market opportunities,
but at the same time offer enough product options to capture a vast
market. Literature in the purchasing and supply chain management
areas can benefit from the results of our study in better understanding
how to effectively manage this challenge. The results show that making
appropriate architectural choices in the supply chain and the product
domains, two choices that complement each other, can lead to better
responsiveness and higher efficiency.
The study offers three important contributions for research and
practice. First, our conceptualization of supply chain agility suggests
that apart from sensing and responding as the two concepts that have
been discussed in earlier literature, comprehending is an equally im-
portant concept and hence must be included. Once a key trend or event
is identified, focus shifts towards understanding its implications and
conducting root cause assessment. At that stage, the organization makes
an effort to comprehend the likely impact of the events and the relative
effectiveness of the response options. Thus, supply chain agility infuses
a layer of intelligence in the system through processes that judge the
relevance of the events and assist in the selection of the right response.
To illustrate the above-mentioned point, organizations can develop
the ability to sense relevant events. However, the ability to respond
may be constrained by an organization's inability to correctly compre-
hend how the organization may be impacted and what response option
holds better promise. Dell provides a good case in point.
Commoditization of the PC (personal computer) and lower prices pre-
sented significant challenges to the company. Dell could have decided
to compete on cost. This would have required lowering prices and re-
configuring supply chain processes and relationships for efficiency.
Rather than addressing the challenges by lowering its prices and com-
peting on cost, Dell made an effort to comprehend the nature of the
challenge and what responses may offer the best value. It decided to
shift from a supply chain model based on a single supply chain stream
to a structure based on customer segmentation (Biederman, 2012). The
new structure required a reconfiguration of supply chain practices such
that they were tailored differently for different customer segments /
channels. This approach required cost and profitability analysis at the
segment level. So, rather than using one monolithic supply chain
stream, it decided to configure supply chains for customer segments to
deliver what the segment valued. This example highlights the im-
portance of comprehending the implications of the signals to guide
actions that yield the desired result. Additionally, our proposed con-
ceptualization of supply chain agility captures both the visibility and
velocity perspectives to provide a more comprehensive approach than
what is currently available in the literature. Managers who are strug-
gling to gauge the level of supply chain agility at their organization can
use the proposed measurement approach and also use it as a bench-
marking tool over time.

Firm Size Postponement

Supply Chain 0.36* 0.19

Agility 0.17

Cost Reduction
R-squared: 0.31

Product Goodness of Fit Indices

Modularity 0.33* Chi. Sq. = 0.01 (p-value)
GFI = 0.89
AGFI = 0.79
RMR = 0.14
RMSEA = 0.09
CFI = 0.94
NFI = 0.88

Fig. 3. Results for the Direct Model (Cost Reduction).

9
K.A. Saeed et al.
Supply Chain 0.42*
Agility (0.19)
0.42*
Product
Modularity 0.39*
Fig. 4. Results for the Mediating Model (Delivery Performance).
The second important contribution of our study involves evaluating
the role of agile practices in aiding firm performance. Delivery perfor-
mance and cost reduction have been portrayed as competing objectives,
especially in the context of quick response strategies. The report by the
Aberdeen Group shows that organizations that are leaders in supply
chain visibility have a significantly higher on-time delivery rate as
compared to organizations that were categorized in the laggard group
(Heaney, 2013). Organizations aspiring for speed may not be inclined
to enact cost controls processes (Christopher and Peck, 2004). Our
study shows that agile practices not only improve delivery perfor-
mance, but also enable firms to reduce the cost of their procurement
processes. Anecdotal evidence suggested that firms are relying on in-
formation systems to support agile practices across the supply chain.
Technologies such as sensors and trackers provide real-time visibility
resulting in lower cost of procurement, significant savings from lower
inventory costs, and drastic reductions in stock outs (Heaney, 2013).
Thus, companies should not view responsiveness and cost reduction as
competing outcomes, but should strive to achieve both through im-
plementation of agile supply chain processes.
The third important contribution of the study is related to the out-
comes from our research models. As we had proposed earlier, com-
plementarity captures a state in which combining multiple resources
offers superior returns as compared to utilizing the resources in isola-
tion. Furthermore, the value generated by co-specialized resources is
not only a function of selection, but also how well the chosen resources
align with each other. Our study shows that product modularity has co-
specialization with supply chain agility, and aids in the organization's
ability to meet the customer's delivery demands and reduce costs as-
sociated with procurement processes. Both these strategies require that
Supply Chain 0.30*
Agility (0.19)
0.44*
Product
Modularity 0.32*
Fig. 5. Results for the Mediating Model (Cost Reduction).
10
Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx
Firm Size Postponement
0.07 0.12
Delivery
Performance
R-squared: 0.49
Goodness of Fit Indices
Chi. Sq. = 0.10 (p-value)
GFI = 0.93
AGFI = 0.84
RMR = 0.07
RMSEA = 0.07
CFI = 0.97
NFI = 0.91
an organization is agile in recognizing the shifts in demand, and is able
to respond with product specifications that align with market needs.
Product modularity leads to economies of substitution (Jacobs et al.,
2007). However, it can significantly increase product variety and re-
quire management of multiple component life cycles, thus adding to the
complexity of the product portfolio. To address these challenges, a
modular product architecture needs to be complemented with agile
supply chain practices so that the firm can achieve the desired out-
comes. Thus, the results of our study support the idea that supply chain
agility aligns well with a modular product architecture.
The nimbleness in sensing the information on what the customers
desire complements the ability to engage in parallel assembly of dif-
ferent variations of the product to enhance delivery performance.
Concurrent engineering practices and niche customization practices are
associated with a modular product architecture, but require complex
inter-firm coordination, management of components’ life cycles, agile
procurement processes, adaptive planning and forecasting systems, and
uniquely configured manufacturing systems. Reduction in cycle time
can be achieved under these conditions when a firm has put in agile
processes that enhance its vigilance to events that can have an adverse
impact. For example, agile processes can quickly alert the firm to issues
related to procurement of desired components, understand the impact
of these issues to determine the available options, and select the best
course of action. Thus, an enterprise can better leverage the opportu-
nities offered by modular product architecture if it also possesses
quicker reflexes, faster analytical ability, and informed decision-making
processes. Research in the supply chain domain is confronted with re-
commending appropriate design decisions that maximize benefits,
while controlling the negative consequences (Pashaei and Olhager,
Firm Size Postponement
0.15 0.14
Cost Reduction
R-squared: 0.32
Goodness of Fit Indices
Chi. Sq. = 0.08 (p-value)
GFI = 0.91
AGFI = 0.82
RMR = 0.08
RMSEA = 0.07
CFI = 0.97
NFI = 0.91
K.A. Saeed et al. Journal of Purchasing and Supply Management xxx (xxxx) xxx–xxx

2015). Our study shows that the alignment / complementarity between
the two architectural choices makes them appropriate design decisions.
7. Limitations & future research
Some limitations of the study should be noted. First, we were lim-
ited to using the variance approach in our study. A longitudinal design
could offer deeper insights, but given the challenges of large scale
longitudinal data collection, we took a more practical approach.
Second, we focused on specific representations of supply chain and
product architectures with the assumption that organizations put equal
value on both areas. Understanding the role of organizational strategy
in the interplay among architectural choices and their relative im-
portance would have provided interesting insights. Third, the scope of
the study was limited to a single choice with respect to the supply chain
and product architecture. We restricted the scope of initiatives to
manage complexity of the model, but at the expense of a more com-
prehensive model.
Future studies can address these issues and limitations. Factors like
organizational fit, common standards, supply chain practices, and inter-
functional integration can be examined with respect to supply chain
agility and its performance implications. On the product side, another
architectural decision that requires assessment is customization.
Further, it would be interesting to explore what information systems
architectures (integration, flexibility etc.) and usage profile can support
and promote agility in supply chains (Eckstein et al., 2015). At a
broader level, there is a dearth of studies that examine multiple orga-
nizational capabilities simultaneously. There is limited knowledge re-
garding why organizations choose to pursue certain capabilities, or
whether multiple capabilities are pursued at the same time. For ex-
ample, an extension of this study would be to assess integration and
agile practices jointly to evaluate if one is favored over the other, and if
so under what conditions. Furthermore, examining a contextually spe-
cific constellation of capabilities, which if developed together, can
create competitive advantage offers another interesting line of inquiry
for future studies.
In conclusion, contemporary business landscape is characterized by
extreme volatility in demand and resource availability. Sustainability in
such an environment requires execution of multiple strategies. But in
order to achieve this objective, it is important to understand how or-
ganizations can generate value through complementariness among in-
itiatives in different domain areas. Our study offers some guidance on
this issue with respect to supply chain agility and product modularity,
and provides the impetus to conduct further research on this topic.
Acknowledgements
This research was partially funded by the Kansas Manufacturers
Network.

Appendix A. Measurement items for the constructs

Construct Measurement items

Supplier Network Shifts in supply markets

Need to locate suppliers with required expertise
Need to identify new sources of supply
Disruptions in supply of material (components)
Sudden spikes in the types of material (components) requirements from suppliers*
Operations Changes in customer orders*
Changes in delivery schedules for orders
Changes in capacity requirements
Disruptions in operational processes (manufacturing, distribution, etc.)
Changes in operational plans and schedules
External Changes in business practices and product and process technologies*
Environment Changes in economic conditions
Moves of our competitors
Changes in government regulation
Product Products have been decomposed into separate modules
Modularity We can make changes on key components in the products without redesigning others
The root cause of product failure can be traced to the component that caused it*
Cost Reduction Relative to our major competitors we have reduced cost of procurement in our primary product line
Relative to our major competitors we have reduced inventory costs in our primary product line
Relative to our major competitors we have reduced warehousing costs in our primary product line
Delivery Relative to our major competitors we have increased the ability to provide the desired quantities of the products to the
Performance customer on a consistent basis
What is the average on time delivery rate (% of time)?
*Item dropped

11
K.A. Saeed et al.
Appendix B. Construct validation process
• Conceptual review of supply chain agility
Literature • Inial item creaon
review
• Industry experts with experience in supply chain
Focus
• Definion of supply chain agility and review of inial measurement items
group
• Ph.D students in operaons managment & manangment informaon systems
Q-sort • Categorizaon of items into associated concepts
process
• Supply chain experts at Kansas manufacturing network member companies
Inial • Quesonnaire compleon and review
review
• APICS member list
Empirical • Construct validity through exploratory and confirmatory factor analysis
assessment
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