Production Planning & Control

The Management of Operations

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/tppc20

Digitalization of supply chains in Industry 4.0

environment of manufacturing organizations:
conceptualization, scale development & validation

Ruchi Mishra, Rajesh Kr Singh & Angappa Gunasekaran

To cite this article: Ruchi Mishra, Rajesh Kr Singh & Angappa Gunasekaran (2023):
Digitalization of supply chains in Industry 4.0 environment of manufacturing organizations:
conceptualization, scale development & validation, Production Planning & Control, DOI:
10.1080/09537287.2023.2172622

To link to this article: https://doi.org/10.1080/09537287.2023.2172622

Published online: 14 Feb 2023.

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PRODUCTION PLANNING & CONTROL
https://doi.org/10.1080/09537287.2023.2172622

Digitalization of supply chains in Industry 4.0 environment of manufacturing

organizations: conceptualization, scale development & validation
Ruchi Mishraa, Rajesh Kr Singhb and Angappa Gunasekaranc
a
Production Operations Management & QT, Institute of Rural Management Anand (IRMA), Anand, Gujarat, India; bOperations Management
Area, Management Development Institute (MDI), Gurgaon, India; cOperations Management Area, School of Business Administration, Penn
State Harrisburg, Middletown, PA, USA

ABSTRACT ARTICLE HISTORY

Digitalization of the supply chain represents using several advanced digital technologies to support Received 17 October 2021
and synchronize organizational interactions by making services more valuable, accessible, and afford- Accepted 16 January 2023
able for customer satisfaction. Given the growing significance of supply chain digitalization, develop-
KEYWORDS
ing a valid and reliable instrument to assess the level of digitalization of supply chain practices is
Industry 4.0; digital
imperative. However, no systematic and scientific study has been carried out to develop such an technologies; scale
instrument. This study aims to conceptualize, develop, and validate a multifaceted scale for assessing development; survey;
the digitalization practices in the supply chain. Data for the study are collected from 246 organizations, information technology;
and measurement scales are evaluated and validated using structural equation modelling. Using com- structural equation
peting model strategy, five alternate competing models are developed and tested to identify the best modelling
fitting parsimonious model. Following the well-established procedure of instrument development, the
study confirms the existence of four dimensions of digitalization practices, namely sourcing digitaliza-
tion, operations digitalization, distribution network digitalization and digitalized strategic planning
with adequate levels of reliability, convergent validity, discriminant validity and nomological validity.
The study theoretically conceptualizes and operationalizes digitalization associated with Industry 4.0 as
a multi-dimensional construct tapping its four key dimensions. The findings contribute to the existing
literature by offering an understanding of the multi-dimensional scale of digitalization practices, which
will be highly valuable for future research on the digitalization of the supply chain in the industry 4.0
environment.

1. Introduction constant, agile and effective outcome’. The primary strength

With the emergence of Industry 4.0 paradigm (Aamer and
Sahara 2021; Horv
ath and Szabo
2019), the supply chain of
every firm is strongly relying on smart technologies to bring
transparency, integration and control to different supply
chain processes (Wamba and Queiroz 2020). Digitalization in
business organizations implies the application of digital tech-
nologies to transform an organization’s business model
(Zangiacomi et al. 2017), and it offers opportunities to
enhance its value creation, altering the way business is car-
ried out (Truant, Broccardo, and Dana 2021). The supply
chain in industry 4.0 is characterized by digitalization sup-
ported by several advanced digital technologies like Internet
of things (IoT), cyber-physical systems (CPs), blockchain, big
data, and cloud computing (Aamer and Sahara 2021; Yang,
Fu, and Zhang 2021). Bu €yu €zkan and Go
€ ko €çer (2018) defined
digitalized supply chain as ‘an intelligent best-fit techno-
logical system that is based on the capability of massive
data disposal and excellent cooperation and communication
for digital hardware, software and networks to support and
synchronize interactions between organizations by making
services more valuable, accessible and affordable with the
of the novel digital technologies lies in their massive impact
on diverse aspects of supply chain activities that are majorly
influenced by the quantity and quality of data (Bag et al.
2021; Pfohl, Yahsi, and Kurnaz 2017). Digitalization in the
supply chain can provide unprecedented benefits to the sup-
ply chains, such as automation, better visibility, coordination
and collaboration among supply chain networks (Cezarino
et al. 2019; AI & Society 2018; Wee et al. 2016).
Given the strategic benefits of Industry 4.0-driven digital
technologies in transforming operations and supply
chain (Anthony Jnr and Abbas Petersen 2020; Coronado-
Mondragon 2020; Kamble, Gunasekaran, and Arha 2019;
Lorentz et al. 2021), a comprehensive conceptualization of
digitalization practices is utmost importance. However, des-
pite the considerable number of published papers, the con-
cept of digitalization in the supply chain remains ill-defined
(Calabrese et al. 2020). Literature is still short of unlocking
the potential of the digitalized supply chain in Industry 4.0
paradigm (Chauhan and Singh 2019; Zouari, Ruel, and Viale
2020), and piecemeal studies are available to address the
comprehensive concept of digitalization practices in the

CONTACT Ruchi Mishra ruchimishra@irma.ac.in Production Operations Management & QT, Institute of Rural Management Anand (IRMA), Anand, Gujarat
388001, India
ß 2023 Informa UK Limited, trading as Taylor & Francis Group
2 R. MISHRA ET AL.
supply chain (Agrawal, Narain, and Ullah 2019; Marcon et al.
2019). The lack of a specific measurement scale for digitaliza-
tion practices in the supply chain leaves an important know-
ledge gap and opens the opportunity for a meaningful and
much-needed investigation to assess the level of digitaliza-
tion practices in a more generalizable setting. Further, most
studies only focus on the western perspective and lack a
conceptualized and systematic investigation to advance our
understanding of digitalization practices in a more global
setting (Chiarini, Belvedere, and Grando 2020; Papadopoulos
et al. 2021).
Along this line, this study addresses the call from the sup-
ply chain community for investigation of the digitalization
practices in the Industry 4.0 environment to serve as a the-
ory in operations management in general and in the context
of a supply chain in particular (Bu €yu €zkan and Go
€ ko €çer 2018;
Chauhan and Singh 2019). In general, developing psycho-
metric measurement scales for emerging concepts is essen-
tial to foster robust research and expand the body of
knowledge in the supply chain field in Industry 4.0 (Zhu,
Sarkis, and Lai 2008). The digitalization of supply chain prac-
tices for Industry 4.0 is unarguably in its infancy (Bienhaus
and Haddud 2018; Garay-Rondero et al. 2019; Lorentz et al.
2021), both theoretically and practically. Given the academic
(theoretical) and practical significance of the instrument for
assessing the level of digitalization, this study addresses
these three research questions:
RQ1. What are the dimensions of digitalization in supply chain for
the industry 4.0 environment?
RQ2. How do we measure different dimensions of digitalization
of supply chain for the industry 4.0 environment?
RQ3. How to develop a valid and reliable scale for digitalization
of the supply chain in an Industry 4.0 environment?
Thus, this study aims to specify the dimensionality of the
digitalization construct in the supply chain and validate
them from practitioners’ perspectives. The study contributes
to the operations and supply chain literature in three distinct
ways. First, the study focuses on conceptualizing, developing,
and measuring the level of digitalization practices in the sup-
ply chain for Industry 4.0 environment to understand them
at the aggregate level. A comprehensive analysis of digital-
ization practices is still lacking in the literature. This study
facilitates an understanding of different facets of digitaliza-
tion of supply chains in the Industry 4.0 environment.
Therefore, the frontier of knowledge about digitalization can
be extended by developing and validating an instrument
that can measure emerging theories related to digitalization
practices. Second, developing the digitalization scale in the
supply chain will be a catalyst for advancing research and
extending its application in other service organizations.
Theoretically, valuable and empirically tested measurement
scales can effectively advance theory within the field of digit-
alization. Also, the instrument encourages cooperative
research efforts by ‘allowing other researchers in the stream
to apply this tested instrument across heterogeneous set-
tings and times’ and also by bringing ‘greater clarity to the
formulation and interpretation of research questions’ (Straub
1989). Third, the instrument can be employed as a diagnostic
tool for assessing Industry 4.0-enabled digitalization in
organizations. Developing a reliable and valid scale can
benefit firms in assessing digitalization practices. Firms can
apply the scale for continuous improvement and benchmark-
ing activities to deploy digitalization practices.
The remaining part of this paper is organized as follows:
Literature review of supply chain digitalization is presented
in Section 2. Section 3 delineates the methodology applied
in this study to conceptualize and develop a scale for digital-
ization practices, and Section 4 describes the sample and
data collection method used in this study. Data analysis and
results of the study are presented in Section 5 followed by
discussion & implications in Section 6. Section 7 presents
conclusion and limitations of this research and suggests a
direction for future research.
2. Theoretical foundation
Digitalization of the supply chain has become the prerequis-
ite for firms to compete in the Industry 4.0 environment.
This section presents a review of the digitalization of supply
chain in the Industry 4.0 environment and then discusses
digitalization practices in the supply chain. We then highlight
the need to develop a validated digitalization scale in the
literature.
2.1. Digitalization of supply chain in Industry 4.0
environment
Industry 4.0 is an emerging topic in the supply chain litera-
ture that refers to the digitalization process through several
technologies and systems (Seyedghorban et al. 2019).
Digitalization implies using information and communication
technologies such as big data analytics (BDA), IoT, cloud
computing, blockchains and the development of information
standards for interoperability (Cearley and Panetta 2016).
Novel digital technologies such as IoT, big data, cloud com-
puting, and blockchain play a key role in Industry 4.0 and
are considered game-changers, particularly for the supply
chain (Hahn 2020). These technologies are also responsible
for building up digital supply chains, cloud manufacturing
and intelligent manufacturing (Brad, Murar, and Brad 2018;
Ivanov, Dolgui, and Sokolov 2019; Yang, Fu, and Zhang
2021). Raab and Griffin-Cryan (2011) suggested that the
digital supply chain can facilitate widespread availability of
information and encourage collaboration and communication
across digital platforms, eventually improving reliability, agil-
ity, and effectiveness (Calabrese et al. 2020). Thus, the ubi-
quitous availability of data is the centre of digital supply
chains (Lorentz et al. 2021).
Many studies have emphasized that the digital supply
chain in the Industry 4.0 environment can revolutionize the
way processes take place in the supply chain (Brunetti et al.
2020; Ivanov, Dolgui, and Sokolov 2019). Bu €yu €zkan and
€ ko
Goۍer (2018) suggested that a digital supply chain is an
agile, customer-driven, and productive way to promote dif-
ferent forms of returns for organizations and to leverage

diverse approaches with evolving techniques such as IoT,
data analytics, cloud computing and blockchain. Industry 4.0
uses emerging digital technologies to make the supply chain
more agile, customize and responsive to customers’ needs
(Antonopoulou and Begkos 2020; Szalavetz 2019a).
Leveraging information technology, resource utilization, and
inventory management help organizations develop a com-
petitive advantage (Zangiacomi et al. 2017). Information and
communication technology (ICT) is essential to identify tools
that can be implemented at the various process levels and
the network to enhance and support supply chain manage-
ment competency and specify which competencies are
necessary to manage ICT services (Hennelly et al. 2019;
Ivanov and Dolgui 2020). ICT tools facilitate knowledge for-
malization for the organization and improve the supply chain
network.
Recent development in communication technologies,
cloud services, robotics and sensors has transformed the
physical manufacturing facility into the virtual world of inter-
net applications (Lundberg, Quist, and Magnusson 2018).
Novel technologies facilitate customer-driven manufacturing,
flexibility, and sustainability. Industry 4.0-enabled digital
technologies enable organizations to improve customer rela-
tionships, develop visibility across operations and bring more
agility and flexibility to the supply chain (Agrawal, Narain,
and Ullah 2019). It improves efficiency and suggests new
options to produce better goods and deliver customer ser-
vice (Papadopoulos et al. 2021). Digital transformation
demands an in-depth understanding of customers’ needs
and experiences throughout the product life cycle and
focuses on managing supply chain core operations
(Seyedghorban et al. 2019). The application of digital tech-
nologies mitigates the risk of demand volatility across the
geographically dispersed supply chain (Baryannis et al. 2019).
To stay competitive, take advantage of the opportunities,
and become leaders in the Industry 4.0 era, organizations
need to integrate novel technologies into their supply chain
(B€uy€
uko €zkan and Go€çer 2018; Lorentz et al. 2021).
2.2. Digitalization practices in the supply chain
Digitalization of supply chain practices is one of the promin-
ent characteristics of industry 4.0 (Bienhaus and Haddud
2018; Calış Duman and Akdemir 2021; Hahn 2020). To com-
pete in the digitally advanced Industry 4.0 environment,
most of the best performing organizations have developed
excellence in their supply chains to compete against each
other’s supply chain using several advanced technologies
such as autonomous robotics, sensors, cloud computing,
additive manufacturing, agent-based systems, IoT and big
data in their supply chain (Brunetti et al. 2020; Buer et al.
2020; Luthra et al. 2018; Queiroz et al. 2019). Digital technol-
ogies transform and bring efficacy to the process and facili-
tate efficient coordination and management of complex
supply chain activities. From a technology-centric perspec-
tive, Loonam et al. (2018) suggested three approaches for
digitization: integration of systems across the organization,
PRODUCTION PLANNING & CONTROL 3
ability to analyze data, and development of cross-platforms
around customer social and mobile tools.
Several consulting and business entities published their
report on the role of digitalization of supply chain practices
in Industry 4.0 environment (Hanifan, Sharma, and Newberry
2014; Mussomeli, Gish, and Laaper 2016). However, the litera-
ture lacks relevant contributions with an exclusive focus on
digitalized sourcing and procurement practices (Lorentz et al.
2021; Srai and Lorentz 2019). The focus of a few studies is
limited to the process of suppliers’ evaluation (Chauhan and
Singh 2019). Digitalization in sourcing refers to applying
digital technologies, such as mobile applications, big data,
and cloud computing to make the procurement process effi-
cient. Some of the activities involved in the digitalization of
sourcing practices include maintaining the procurement
intranet website, forming service level agreements with sup-
pliers, stakeholder satisfaction surveys, frequent project
reviews, identification, and implementation of improvement
opportunities (Bienhaus and Haddud 2018; Lundberg, Quist,
and Magnusson 2018). Bag et al. (2020) emphasized the
importance of digitalization in procurement practices as it
provides opportunities for excellence in remanufacturing
operations. Their study explained the importance of digital-
ization for procurement 4.0 by emphasizing significant
resources, including talent, technology, and management
resources. In addition, studies reported the applications of
digital technology in sourcing or procurement areas, such as
the use of ERP, e-procurement, e-tendering and e-tendering
(De Boer, Harink, and Heijboer 2002; Johnson et al. 2007).
The potential areas for digitalization in the sourcing context
include managing transactions, collaboration, coordination
and control, assessing suppliers’ capability, and managing
relationships with suppliers (Srai and Lorentz 2019).
Digitalization of operations practices refers to performing
production through digital sensors and IoT technology.
Digital disruptions transform mass production at a large scale
to micro-scale production at diverse locations (Srai and
Lorentz 2019). New emerging digital technologies offer intel-
ligent products that facilitate self-learning and autonomous
decision-making based on advanced algorithms (Zangiacomi
et al. 2020). It incorporates various activities, from sales fore-
casting to production, through diverse technologies, such as
big data, IoT, and additive manufacturing. Thus, digitalization
of operations can be defined as ‘using digital data and tech-
nology to automate data handling and optimize processes’
(Buer, Fragapane, and Strandhagen 2018, 1036). It refers to
autonomous data collection, analysis, and interconnectivity
between products, processes, and people. The usages of
digital technologies such as IoT, big data analytics and vir-
tualization technologies, artificial intelligence, cloud comput-
ing, additive manufacturing in operations, and the digital
reinvention of business are expected to transform supply
chain activities and improve organizational performance
(Szalavetz 2019b). Studies indicate that cyber-physical pro-
duction systems are industrial production systems monitored,
controlled, coordinated, and connected by advanced digital
technologies. A cyber-physical production system generates
massive amounts of data that can be accessed, monitored,
4 R. MISHRA ET AL.
and processed in real-time through big data analytics.
Digitalized operational practices minimize complexity,
improve operational excellence, optimize resource usage,
and enhance the productivity of functional activities
(Colledani et al. 2014).
The application of digital technologies has emerged
slowly in the logistics function compared to other functions
in the supply chain (Chauhan and Singh 2019). In logistics,
digital platforms have become significantly important, allow-
ing small organizations to expand their reach and compete
with the other established players (Mussomeli, Gish, and
Laaper 2016). Digitalization in logistics can overcome ineffi-
ciency and improve productivity by cutting down energy
consumption and emissions (Weinelt 2016). Similarly, auto-
mated identification technologies, such as RFID, Barcode, and
sensors, are used as standard identification technology that
offers faster and secure access control (Aamer and Sahara
2021) and provides data to help intelligent services that
might be used for logistics, quality audits and manufacturing
organizations (Chauhan and Singh 2019).The use of technolo-
gies such as cloud computing will facilitate a novel platform-
based business model that will eventually increase logistics
efficiency (Agrifoglio et al. 2017).
Using automated guided vehicles (AGVs) facilitates the
movement of materials from one location to another in the
warehouse. Further, there is a high expectation for a broad
practice of automated planning and control systems. It is
expected that automated planning and control systems and
novel platform-based business models will emerge in the
logistics industry (Hanifan, Sharma, and Newberry 2014).
Kucukaltan et al. (2020) summarized the impact of industry
4.0 technologies on the logistics industry, and the possible
influence of these technologies was assessed from the oper-
ational, financial, and human resource perspectives. From the
operational perspective, their study explored a set of practi-
ces that may influence logistics operations, like the use of
automated identification technology, the practice of auto-
mated planning and control systems, wide usage of novel
platform-based business models, personalized delivery
through drones and substantial structural changes using 3D
printing and digitalized products. Digital technologies help
generate readings of goods conditions, improve traceability,
and improve the supply chain’s transparency to ensure prod-
uct quality (Ivanov, Dolgui, and Sokolov 2019). Advanced
technologies are used to make the warehouse adaptive and
flexible and offer product visibility (Aamer and Sahara 2021).
Organizations can manage warehouses efficiently and moni-
tor stock levels continuously using sensors or other digital
technologies.
Further, digitalization makes it possible to recognize the
purchasing trends and future demand for goods and services
in advance to predict the future demand for products
(Bu€yu €zkan and Go
€ ko €çer 2018). IoT facilitates real-time data
integration in warehouses and enables digital connectivity of
physical and digital systems to offer massive data storage
and greater visibility (Xu, Xu, and Li 2018). The synchronized
information minimizes the handling process, minimizes
human intervention, and reduces operating expenses
(Kamble, Gunasekaran, and Arha 2019). Digitalization in
inventory management refers to managing inventory
through real-time visibility of inventory flow. Sensors and
RFID tags with cloud-based systems can provide remote
positioning methods and GPS (indoor/outdoor) based sys-
tems, thereby facilitating firms in monitoring and controlling
the products’ movement throughout the supply chain,
thereby minimizing the possibility of stockout situations (Bag
et al. 2021; Mart
ınez-Caro, Cegarra-Navarro, and Alfonso-Ruiz
2020). Further, the digital supply chain supports a lean sup-
ply chain and helps in minimizing wastages through
improved real-time information sharing and data capturing
techniques (Mussomeli, Gish, and Laaper 2016). RFID tags in
warehouses enable the large volume of inventory to move
quickly, smoothly and efficiently, prevent technical failure,
enhance device reliability, reduce equipment failure, and
improve customer satisfaction (Rafael et al. 2020; Upadhyay
2020; Yang, Fu, and Zhang 2021). RFID tags further help
eliminate the problem of inventory shrinkage, enhance
inventory accuracy and out of stocks, improve shelf replen-
ishment and minimize inventory misplacement (Aamer and
Sahara 2021; Tu, Lim, and Yang 2018).
2.3. Scale for digitalization of supply chain – a
research gap
The digitalization practices through the proliferation of
technological development fall within the boundary of
Industry 4.0. With the growing popularity of the Industry 4.0
paradigm, digitalization in the supply chain has been among
the leading concerns for practitioners and academicians
(Ivanov and Dolgui 2020), but the studies addressing the
digitalization concept in the supply chain is fragmented and
inconclusive (B€ uy€
uko €zkan and Go €çer 2018; Garay-Rondero
et al. 2019; Zekhnini et al. 2020). One of the main limitations
of the earlier studies is that majority of them appeared in
consulting reports and addressed the digitalization concepts,
its potential benefits and challenges in implementation
(Bu€yu €zkan and Go
€ ko €çer 2018). Another limitation of existing
research is its lack of insight into the digitalization practices
across the supply chain in the Industry 4.0 environment
(Zekhnini et al. 2020; Zouari, Ruel, and Viale 2020).
Furthermore, studies lack insights into the application of
digitalization initiatives across different supply chain activ-
ities. Since Industry 4.0 heavily relies on emerging technolo-
gies; therefore, understanding the digitalization practices
across the supply chain is inevitable to impact supply chain
activities significantly
Moreover, a comprehensive and widely recognized theor-
etical framework for assessing digitalization practices in
Industry 4.0 have yet to be developed (Chauhan and Singh
2019; Zouari, Ruel, and Viale 2020). Without a reliable and
well-validated scale, it is difficult to adequately assess the
digitalization practices across the supply chain or compare
the level of digitalization practices of one supply chain with
another and understand the performance implications of
digitalization practices. Therefore, the study aims to under-
stand the nature of digitalization practices in Industry 4.0

and integrate their various dimensions to form a reliable and
well-validated measurement scale. Using a structured and
rigorous validation process, the study develops a compre-
hensive measurement instrument that can be used in future
studies and may generate substantive theories (Zhu, Sarkis,
and Lai 2008). More specifically, the findings can offer a
means for assessing the degree of employment of digitaliza-
tion practices in organizations’ supply chains in the industry
4.0 environment.
3. Methodology
This study has followed a well-acknowledged and widely
used scale development procedure based on initial item gen-
eration, item refinement & purification, dimensionality deter-
mination and, reliability assessment, and construct validation
(Chahal, Gupta, and Lonial 2018; Churchill, 1979; Lee,
Cheung, and Chan 2015; Mishra 2020; Moon, Yi, and Ngai
2012). The procedure used in the study is presented in
Figure 1 and delineated in this section.
3.1. Generation of items of digitalization practices
The goal of this stage is to identify content that can be poten-
tially relevant to four dimensions of digitalization practices in
the supply chain. In the first step, relevant literature and con-
sulting reports were reviewed to understand digitalization
practices used across supply chains (Berger and Frey 2016).
After that, items for the different dimensions of digitalization
practices were derived through focus group interviews of
practitioners working in manufacturing organizations
(Delamere, Wankel, and Hinch 2001).
3.1.1. Literature review
A thorough review of the literature was carried out using a
keyword such as ‘digitalization practices’, ‘digitalized practi-
ces’, ‘digital technologies’, ‘digital supply chain’, ‘Industry 4.0’
from several databases. Initially, a preliminary keyword search
was carried out in the Scopus database. Scopus is the world’s
most peer-reviewed database (Dangelico and Pontrandolfo
2015) that involves 20,000 periodicals from more than 5000
publishers and boasts more than 49 million registered users
(de Sousa Jabbour et al. 2018). An initial keyword search
gave us a broad range of studies that dealt with the applica-
tion, challenges, and adoption practices of several technolo-
gies, such as blockchain, IoT, big data, and cloud computing
in manufacturing organizations. Therefore, to narrow down
the results, a combination of keywords with digitalization,
including ‘digitalization practices and supply chain practices’,
‘digitalization and sourcing practices’, ‘digitalization and
logistics practices’, ‘digitalization and Industry 4.0’, ‘digital
supply chain and Industry 4.0’ were used to extract articles
from the Scopus database. Each of these papers was thor-
oughly evaluated to understand the digitalization concept,
diverse types of digital technologies and application of these
digital technologies in the firms’ supply chain.
PRODUCTION PLANNING & CONTROL 5
Since the number of papers extracted from the Scopus
database was few, other databases such as Web-of-Science,
ProQuest, and Ebsco were also referred. Further, considering
the nascent and largely unexplored nature of the field, con-
sulting reports were also reviewed to understand a set of
digitalization practices applied in the supply chain of manu-
facturing organizations. Through extensive research, a set of
40 items were derived from the journal articles from different
databases and consulting reports. However, following the
guidelines of Hinkin (2016) and Worthington and Whittaker
(2006), two criteria were applied to finalize the item list for
the scale development procedure. First, a set of items should
be clear, concise, distinct, and clearly articulated so that data
reduction techniques can provide a stable set of underlying
factors and minimize the potential source of error variance.
Second, items having overlapping content and not directly
reflecting the scale’s purpose have been dropped. Following
these two criteria, 14 items that have primarily overlapping
content (for e.g. tracking technology and RFID, predictive
models and data analytical tools) and not directly related to
objective of the study (e.g. practices related to service organ-
izations) were dropped. For example, items ‘digital solution
for multi-location tracking’ and ‘single central repository of
inventory information and track items by serial numbers,
barcodes, stock-keeping units’ and item ‘All inventory infor-
mation are stored with our centralized IT-based system sig-
nify the same thing’.
Similarly, an item representing service digitalization has
been dropped. For example, an item representing ‘creation
of digital centres with global customer support to allow inte-
gration of customer-facing technology’ has been dropped.
Moreover, two researchers were involved in the item screen-
ing process. Therefore, the item generation process has been
carefully carried out to overcome potential bias. Thus, an ini-
tial list of 26 digitalization practices that are unambiguous,
concise, distinct and directly relevant to scale’s purpose has
been used for further analysis (Aamer and Sahara 2021;
Bechtsis et al., 2017; Bienhaus and Haddud 2018; Colicchia,
Creazza, and Menachof 2019; Garay-Rondero et al. 2019;
Gillani et al. 2020; Ivanov, Dolgui, and Sokolov 2019a;
Schneckenberg et al. 2021)
3.1.2. Focus group study
The focus group study was carried out with an aim to
explore a set of digitalization practices used in manufactur-
ing organizations. Therefore, senior & middle management
practitioners from manufacturing organizations in India were
contacted to conduct a focus group study. To ensure only
valid and relevant participation of focus group participants,
the following criteria were applied:

Participants should have exposure (knowledge) to emerg-
ing digital technologies

Participants should be the users of any or all emerging
digital technologies

Participants should be an integral part of the digitaliza-
tion process in their organization
6 R. MISHRA ET AL.

Stage-1 Literature Review

Item Generation (Digitalisation and Supply Chain Literature, Consulting
Reports)
- Initial item list = 40 items, Total number of items
after screening 26
Item Generation
Stage-2 Focus Group Interview
Item Generation (With 14 Practitioners)
- Total number of 28 items

Stage-3 Expert Review

Face Validity (With two professors of operations management, one
Assessment professor of survey research and two experts from
and Initial Purification industry)
- Total number of 25 items

Stage-4 Expert Review

Content Assessment (With 7 Practitioners)
and Initial Purification - Total number of 24 items
Item Refinement
& Purification Stage-5 Expert Review
Content Validity (With 2 Professor and 6 Practitioners)
Assessment - Total number of 23 items and their four underlying
and Initial Purification dimensions

Stage-6 Pilot Study

Scale refinement and (With 32 practitioners)
Item Purification - Total number of 23 items and their four underlying
dimensions

Stage-7 Exploratory Factor Analysis

Dimensionality Scale refinement and - Exploration of dimensions of digitalisation
Determination Item Purification practices

Stage-8 Confirmatory Factor Analysis

Scale refinement and - Development and assessment of measurement
Item Purification model for each construct
- Development and evaluation of an overall
measurement model

Stage-9 Competing Model Strategy

Reliability Assessment of - Development and assessment of alternative
Determination and competing models competing models
Construct - Finalisation of a best-fitting parsimonious model
Validation
Stage-10 Scale Validity and Reliability assessment
Reliability & Validity - Composite Reliability Computation
Assessment - Average Variance Extracted Computation
- Convergent Validity Assessment
- Discriminant Validity Assessment
- Nomological Validity Assessment

Figure 1. Scale development process.

Participants for the focus group interviews were selected Table 1. Sample characteristics of focus group (N ¼ 14).
using purposive heterogeneous sampling from National Particulars No.
Capital Region, India. Only 14 out of 26 participants agreed Gender Male 12
to participate in focus group discussion and were invited for Female 2
Domain Supply chain 4
focus group discussion held at their firm’s premise during Production 1
November 2020 (Table 1). Using an inductive approach, two Maintenance 1
Research & development 2
focus group interviews were carried out to understand the Information technology 4
participants’ opinions about the digitalization practices used Product development 2
in their organization. The objective, process, guidelines and Experience 5–8 Years 6
8–10 Years 5
potential usages of findings of focus group interviews were More than 10 Years 3
explained to participants (Krueger 2014; Mishra, Pundir, and Education Bachelors 9
L. 2016). Two researchers participated in group discussions, Masters 5

where one acted as a moderator (author), and another
author served as a facilitator. The Focus group discussion fol-
lowed the guidelines given by Krueger (2014). Each focus
group lasted for approximately 90 minutes. Participants were
asked to answer questions related to supply chain in
Industry 4.0, including: ‘Does your firm apply Industry 4.0
enabling digital technologies in the supply chain’, ‘Where
can a firm apply technologies in the supply chain? What are
the functional areas where a firm can deploy digital technol-
ogies to compete in Industry 4.0 environment’, ‘What type of
digital technologies can be used in the supply chain’, ‘Do
you think the deployment of Industry 4.0 technologies in the
supply chain can improve performance’. Responses were
recorded, and analysis was carried out. Using the qualitative
clustering methods, text that shares similar patterns or char-
acteristics were grouped together and then conceptualized.
Further, findings of focus group discussions were matched
with the literature findings. A list of 28 items of digitalization
practices and their underlying four dimensions, namely oper-
ations digitalization, sourcing digitalization, distribution net-
work digitalization and digitalized strategic planning, were
derived from the findings of the focus group studies. These
28 items also include those items that were identified
through the literature review as well. The findings of the
focus group interviews were shared with participants to
know their opinion about any information (particularly item)
that was missed out by participants or were not appropri-
ately covered under suitable dimension. Participants agreed
with the interpretation of the findings of the focus group
interviews.
3.2. Item review and sorting
Item review and reduction were carried out in two subse-
quent stages. In the first stage, a list of 28 items was scru-
tinized by an expert panel comprising five members (two
professors of operations management, one professor of sur-
vey research and two experts from industry). The expert
panel members had an experience of over 10 years in their
functional domains. Members of the expert panel carefully
reviewed the developed items and assessed the extent to
which each item measure represents their underlying con-
struct. The rephrasing of ambiguous items, deletion of
redundant items, and modification of existing items took
place, and only items with good face validity were retained
for the data analysis (Lee, Cheung, and Chan 2015; Mishra
2020). Also, the nomenclature of the underlying dimensions
of digitalization practices was modified. In this process, 3
items were dropped. Only items with good face validity
were retained for the data analysis (Hardesty and Bearden
2004), leading to 25 items under four dimensions of digital-
ization practices: sourcing digitalization, operations digital-
ization, distribution network digitalization and digitalized
strategic planning. A list of 25 items was given to 7 indus-
try practitioners, and they were requested to place these
items under four different dimensions of digitalization. An
item was kept when there was a consensus of at least
70% of experts in the item assignment process (DeVellis
PRODUCTION PLANNING & CONTROL 7
2016); thereby, 24 items were finalized for the next round
of refinement. In the next step, these 24 items were given
to a new expert panel comprising 8 members (Two profes-
sors from operations management and six practitioners). All
of these members had a work experience of 5 years and
above. Further, they were given construct definitions, and
they were requested to assign these 24 items to distinct
constructs. Expert panel I and expert panel II were different
from each other. Items were retained based on the extent
of their accurate representation of the underlying dimen-
sions by a minimum 70% of the experts (DeVellis 2016);
thereby, a list of 23 items was finalized for data collection
(Table 2).
3.3. Questionnaire development and pilot test
A questionnaire was developed with a pool of 23 statements
using a 7-point Likert scale (ranging from 1 ¼ strongly dis-
agree to 7 ¼ strongly agree). 7-point Likert scale was pre-
ferred over the 5-point Likert scale as it offers a larger
spectrum of choices and independence to the participants to
pick the ‘exact’ response than to choose some ‘nearby’ or
‘close’ option (Joshi et al. 2015), thereby reduces the role of
ambiguity in the answers. Also, 7-point Likert scales are more
sensitive and robust than 5 -point Likert scales (Finstad 2010;
Oaster 2016; Preston and Colman 2000) and are widely used
in operations and supply chain literature.
Before conducting a large-scale postal survey, a pilot sur-
vey was conducted (Chahal, Gupta, and Lonial 2018), and a
questionnaire was administered to 32 supply chain practi-
tioners using a purposive sample. All 32 practitioners have
worked in supply chain management for the last 5 years.
These participants were asked to indicate their view on each
questionnaire item and suggest their opinion on the items’
meaningfulness, wording, formatting, and content. The prac-
titioners pointed out no concern regarding the developed
questionnaire, and the reliability of the initial 32 responses
was found to be 0.875. Thus, a questionnaire was considered
appropriate for data collection.
4. Sample and data collection
After finalizing the questionnaire, an online survey is carried
out to collect data from the industry to validate the digital-
ization scale. The respondents of the study are supply chain,
manufacturing, design, logistics, research & development
practitioners from diverse manufacturing organizations in
India and are selected using purposive and snowball sam-
pling. Purposive sampling is preferred over simple random
sampling as it identifies and captures individuals or groups
of individuals that are directly suited for examining the phe-
nomenon of interest (Morse and Field 1995; Palinkas et al.
2015). The target respondents of this study possess the fol-
lowing characteristics. First, they are the actual technology
user and have knowledge and experience in using emerging
digital technology in their supply chain. Second, they have
been part of the existing organization for more than 3 years.
Thus, they are aware of the various practices used in their
8 R. MISHRA ET AL.

Table 2. Items used for survey research.

Proposed dimension
Sourcing Digitalization
Operations Digitalization
Distribution Network
Digitalization
Digitalized Strategic
Planning
Notation Items used to measure digitalization practices Reference
V1 The procurement decisions are based on system data analysis Bienhaus and Haddud (2018), Lorentz
et al. (2021)
V2 The purchase orders are placed directly through ERP systems based Garay-Rondero et al. (2019)
on the requirement
V3 Cross-functional teams are formed to integrate various digital Colicchia, Creazza, and Menachof
solutions in procurement practices (2019)
V4 Centrally controlled systems facilitate the production stores to keep Ivanov, Dolgui, and Sokolov (2019)
a check on inventory as per production planning
V5 We have smart work procedures (real-time online monitoring and Kamble, Gunasekaran, and Arha
control) to manage various operations (2019)
V6 Data is stored and analyzed in the cloud/ common drive to make Schneckenberg et al. (2021)
the necessary information accessible anywhere, anytime
V7 My organization uses the industrial internet of things Kamble, Gunasekaran, and Arha
(2019)
V8 My organization uses big data analytics Kamble, Gunasekaran, and Arha
(2019), Ivanov, Dolgui, and
Sokolov (2019)
V9 My organization uses additive manufacturing Ivanov, Dolgui, and Sokolov (2019),
Priyadarshini et al. (2022)
V10 My organization uses e-Kanban for routing messages to external Kamble, Gunasekaran, and Arha
suppliers to provide real-time visibility into the entire supply (2019)
chain
V11 My organization has technological integration between product Gillani et al. (2020)
development and manufacturing through computer-aided
manufacturing (CAM)
V12 My organization has technological integration between product Gillani et al. (2020)
development and manufacturing through product lifecycle
management
V13 My organization uses the latest tracking and tracking technologies Aamer and Sahara (2021) Sahoo et al.
(RFID/Blockchain) for logistics and warehousing operations (2022)
V14 My organization engages in dynamic inventory and replenishment Hanifan, Sharma, and Newberry
planning based on real-time visibility across the extended supply (2014)
chain
V15 My organization uses automated guided vehicles (AGVs) for moving Bechtsis et al. (2017)
materials in the warehouse
V16 My organization uses a digitally enabled global shipping platform to Wang and Sarkis (2021)
match individual shipping demand with unique logistics
capabilities
V17 My organization uses Industry 4.0-based analytics techniques Islam et al. (2020)
(machine learning/artificial intelligence) to consolidate deliveries
for last-mile delivery
V18 My organization uses dynamic route planning based on real-time Hanifan, Sharma, and Newberry
analytics (2014)
V19 My organization uses digital solutions for multi-location tracking Ivanov, Dolgui, and Sokolov (2019);
Nandi et al. (2021)
V20 My organization uses an automated replenishment system to create Srai and Lorentz (2019)
and send purchase orders for frequent reorders
V21 My organization uses digitalized solutions to differentiate between Focus group study
fast-moving products and slow-moving products
V22 My organization uses Industry 4.0 technologies (BDA/machine Garay-Rondero et al. (2019)
learning) to predict the demand for products already in the run
V23 My organization uses sophisticated digital solutions to measure Ivanov, Dolgui, and Sokolov (2019)
several matrices for assessing inventory level and performance

organizations. Third, the target respondents are middle and
senior management practitioners within their respective
organizations, with job titles such as plant manager,
manager-supply chain, general manager, and vice president-
supply chain. The selection of firms from diverse manufactur-
ing industries is based on the following consideration. First,
firms are the actual user (adopters) of any industry 4.0 ena-
bling digital technologies, such as big data, blockchain, cloud
computing, IoT in their supply chain. Second, the study’s
objective is to propose a generic instrument that can be
applied across multiple industries; therefore, selecting firms
from diverse industries is appropriate. Third, while digitaliza-
tion is ubiquitous in manufacturing organizations, the
Industry 4.0-driven digitalization process is still evolving in
Indian manufacturing organizations and is not widely used
by Indian organizations (Bag et al. 2020; Kamble,
Gunasekaran, and Arha 2019). Therefore, selecting firms from
a wide range of industries is rational to fulfil the sample size
requirement of this survey research.
Initially, 1200 a stratified random sample of manufacturing
firms were approached. However, only 640 respondents ini-
tially showed a willingness to participate in the survey and
were administered a survey questionnaire. After a series of
follow-ups, 246 usable and valid responses are received.
Table 3 presents the profiles of the participants and their
organizations.
 PRODUCTION PLANNING & CONTROL 9

Table 3. Sample characteristics of the study.

Particular
Industry broad classification NAICS code No. of responses Particular No. of responses
Apparel manufacturing 315 21 Ownership of the firm
Chemical industry 325 18 Joint venture 17
Communication equipment manufacturing 334290 16 Private domestic player 81
Computer and peripheral equipment manufacturing 334100 7 Private foreign player 58
Computer and electronics products 334 17 PSU 4
Computer terminal and other computer peripheral equipment 334118 6 Public limited 86
manufacturing
Electronic equipment manufacturing 33531 17 Age of firm
Food manufacturing 311 17 Less than 5 years 22
Household appliances 423620 23 5–10 Years 13
Machine manufacturing 333 37 10–15 Years 14
Motor vehicle manufacturing 3361 16 15–20 Years 16
Motor vehicle part manufacturing 3363 13 More than 20 years 181
Semiconductor and other electronic component manufacturing 33441 10
Others (pharma, plastic, rubber, steel, fertilizer, ventilation air 28
conditioning, etc.)
Informants job title Number of employee
AGM/DGM/GM 26 Up to 1000 65
Assistant Manager/Deputy Manager 131 1000–5000 33
CEO/President/Vice President/COO/Owner 11 5000–10,000 23
Engineer 72 More than 10,000 125
Consultant/Senior Consultant 6

5. Data analysis and results
This section presents the procedure used to control biases
and their assessment, the results of a detailed scale valid-
ation process, including exploratory factor analysis, confirma-
tory factor analysis and the comparison of alternative
competing models for identifying and confirming the best-
fitting final measurement model.
5.1. Bias control procedure & assessment
Non-response bias is assessed by comparing the profile of
early respondents with the late respondents (Armstrong and
Overton 1977). Further, a random sample of non-respondents
is contacted through telephonic contact after sending a cou-
ple of request mails. Generally, non-respondents did not
respond as their organizations do not respond to the survey
without taking formal permission from the human resource
department (Stephan, 1958; Armstrong and Overton 1977).
To minimize the chances of common method bias (CMB), the
response anonymity is maintained during the data collection
phase by allowing respondents’ names to be anonymous
and assuring them that there is no right and wrong answer
(Podsakoff et al. 2003). They must fill up the questionnaire
honestly. The CMB is controlled by carefully constructing
questionnaire items, defining unfamiliar terms, and eliminat-
ing confusing words (Mishra et al. 2022; Podsakoff et al.
2003). Harman’s single-factor and common latent factor anal-
yses (CLF) are conducted to assess the common method bias
(Mishra 2020). Also, The result of Harman’s single factor test
indicates that a single accounted for less than 50% variance
in the model, and also CLF analysis suggests that the differ-
ence between standardized regression models without CLF
and with CLF was found to be less than 0.2 (Podsakoff et al.
2003). The most considerable difference in the values of
standardized regression weights of both models is 0.167, less
than 0.2. Thus, it can be concluded that CMB is not evident
in the data set.
5.2. Reliability analysis
Churchill (1979) reported that an essential step in establish-
ing the psychometric characteristics of a scale is assessing its
reliability. We have calculated item-to-total correlation and
Cronbach’s a coefficient to measure the internal consistency
of digitalization scales (Nunnally & Bernstein, 1994). All the
item-to-total correlations are found >0.3. The value of
Cronbach’s a shows an excellent internal consistency (0.936),
well above the recommended 0.70. Thus, there is no need to
modify the scale at this stage (Nunnally 1978).
5.3. Exploratory factor analysis
Exploratory factor analysis (EFA) is conducted to assess the
appropriateness of 23 items for explaining the four dimen-
sions of digitalization practices. Principal component analysis
with Varimax rotation is applied using SPSS 21.0. All commu-
nalities are found to be greater than 0.6 except for two
items, namely ‘use of e-Kanban for routing messages to
external suppliers (V10) (0.25)’ and ‘Use of computer-aided
manufacturing to technologically integrate product develop-
ment and manufacturing (V11) (0.20).’ Therefore, these two
items have been deleted. After that, EFA on the remaining
21 items has been applied. Consistent with our anticipations,
four dimensions emerged from the analysis. An item having
a factor-loading below 0.5 and the cross-loaded items on
more than one factor are considered for removal (Hair, Black,
and Babin 2009). Three items are cross loaded on more than
one construct, namely ‘usage of Industrial Internet of
Things(V7)’, ‘dynamic inventory and replenishment planning
across the extended supply chain (V14)’, and ‘Industry 4.0
technologies to predict the demand for products(V22)’.
10 R. MISHRA ET AL.

Therefore, these items have been dropped, and EFA has
been applied to the remaining18 items. The result shows a
solution of four constructs representing 18 items. Kaiser–
Meyer–Olkin (KMO) has been found to be 0.92, and Bartlett’s
test of sphericity’ 2828.48 (p < 0.000) represents the merits of
the correlation matrix. The four factors account for a total
variance of 70.62%, and the value of Cronbach’s alpha ranges
from 0.81 to 0.93, above the recommended threshold value
0.6 (Nunnally & Bernstein, 1994). The results of the explora-
tory factor analysis and factor loadings are presented in
Tables 4 and 5, respectively.
measurement model covering all the four dimensions of sup-
ply chain digitalization is developed, and measurement prop-
erties are assessed. Fit indices for the measurement model
demonstrate excellent fit (kdf ¼ 1.98, CFI ¼ 0.95, TLI ¼ 00.94,
2
NFI¼ 0.91, RMSEA ¼ 0.06, SRMR ¼ 0.05, GFI ¼ 0.90, AIC ¼
339.87, CAIC ¼ 529.10) and standardized factor loading of all
the items are found to be greater than 0.6, thereby satisfying
the model fit criteria of the overall measurement model of
digitalization practices (Byrne 2016; Hair, Black, and Babin
2009).

5.5. Assessment of competing models

5.4. Confirmatory factor analysis
Confirmatory factor analysis (CFA) is carried out to validate
the initial factor structure derived from EFA using AMOS 26.0
software (Byrne 2016; Hair, Black, and Babin 2009). CFA
include 18 items and its underlying four dimensions derived
by EFA as an input. Using the rotated component matrix
from EFA as input, a measurement model is developed, and
model fit has been assessed by assessing the goodness of fit
indices. CFA is conducted in two distinct phases: first meas-
urement model for each construct is developed; after that,
an overall measurement model covering all the dimensions
of supply chain digitalization is developed, and measurement
properties are assessed (Mishra 2020). The measurement
properties of each measurement model demonstrate a satis-
factory model fit (Table 6). In the second step, a
A competing model strategy is used to identify the best fit
model through developing, assessing and comparing several
alternative models (Hair, Black, and Babin 2009). The compet-
ing model strategy is widely used to identify the best fitting
and parsimonious model for scale development (Lee,
Cheung, and Chan 2015; Mishra 2020; Moon, Yi, and Ngai
2012). Following Xia and Lee (2005) recommendations, five
alternative competing models are proposed, and their fit
indices are assessed and compared (Figure 2). Model 1 indi-
cates a null model; model 2 represents a model in which all
measurement items are loaded onto a single first-order fac-
tor of digitalization practices. Model 3 represents a model in
which all measurement items are loaded onto four uncorre-
lated first-order factors; model 4 represents a correlated four-
dimensional first-order model of supply chain digitalization.

Table 4. Exploratory factor analysis results.

Distribution Network Digitalized Strategic Operations Digitalization Sourcing Digitalization
Threshold value Digitalization (DNDIG) Planning (DIGSP) (OPDIG) (SODIG)
KMO ¼ 0.92, Bartlett’s test of sphericity ¼ 2828.48 (p < 0.000), total variance extracted ¼ 70.62%, No. of factors extracted ¼ 4
Reliability >0:7 0.86 0.93 0.86 0.81
Communality >0:6 0.58–0.76 0.82–0.85 0.51–0.81 0.64–0.70
Factor loading >0:5 0.66–0.83 0.80–0.84 0.51–0.80 0.65–0.76
Eigen value 8.52 1.55 1.39 1.25
Cumulative variance (%) 47 55.95 63.69 70.62

Table 5. Rotated component matrix.

Components
Distribution Network Digitalization (DNDIG) Digitalized Strategic Planning (DIGSP) Operations Digitalization (OPDIG) Sourcing Digitalization (SODIG)
V16 0.833 0.128 0.134 0.181
V15 0.735 0.111 0.260 0.129
V13 0.698 0.313 0.293
V18 0.697 0.279 0.231 0.219
V17 0.663 0.214 0.299
V19 0.843 0.217 0.235
V21 0.276 0.831 0.216 0.192
V23 0.280 0.808 0.234 0.177
V20 0.329 0.804 0.200 0.210
V8 0.338 0.195 0.795 0.164
V5 0.240 0.754
V9 0.245 0.189 0.739 0.259
V12 0.358 0.270 0.705 0.249
V6 0.299 0.515 0.381
V2 0.166 0.202 0.756
V1 0.190 0.245 0.225 0.747
V4 0.200 0.278 0.735
V3 0.367 0.269 0.652
Extraction method: principal component analysis.
Rotation method: Varimax with Kaiser normalization.
Rotation converged in 6 iterations.
 PRODUCTION PLANNING & CONTROL 11

Table 6. Measurement properties of digitalization constructs.

Distribution Network Digitalized Strategic Operations Digitalization Sourcing Digitalization
Threshold value Digitalization (DNDIG) Planning (DIGSP) (OPDIG) (SODIG)
k2
df <3 1.65 0.29 0.13 1.01
CFI >0:90 0.99 1 1 1
TLI >0:90 0.98 1 1 1
NFI >0:90 0.98 0.99 0.99 0.99
RMSEA <0.10 0.05 0.00 0.00 0.01
SRMR <0.10 0.02 0.004 0.005 0.01
GFI >0:90 0.99 0.99 0.99 0.99
AIC Smaller is better 28.24 16.58 20.63 18.03
CAIC Smaller is better 73.30 52.63 65.69 54.07
Standardized factor >0:7 0.78 (V13), 0.64 (V5)
loading 0.73 (V15), 0.81 (V19), 0.62 (V6) 0.80 (V1),
0.80 (V16), 0.89 (V20) 0.87 (V8) 0.66 (V2),
0.69 (V17), 0.90 (V21) 0.80 (V9) 0.73 (V3)
0.77 (V18) 0.88 (V23) 0.88 (V12) 0.71 (V4)
Composite reliability >0:6 0.87 0.93 0.88 0.82
Average variance >0:5 0.57 0.77 0.59 0.53
extracted
Fornell and Larcker (1981); Hair, Black, and Babin (2009), Byrne (2016).

Model 5 represents a second-order factor of digitalization
practices onto which four dimensions of digitalization practi-
ces are loaded.
Fit indices of five competing models are presented in
Table 7. Fit indices of Model 1, Model 2 and Model 3 have
not satisfied the minimum threshold criteria. Among five
alternative models, model 4 (correlated first-order model)
and model 5 (second-order model) demonstrate satisfactory
fit, while model 5 statistically fits better in terms of parsi-
mony. AIC and CAIC values of model 5 (second-order model)
are found to be lower than their values in model 4 (corre-
lated first-order model). Thus, model-5 (second-order model)
suggests that supply chain digitalization is a multi-dimen-
sional concept that includes sourcing digitalization, opera-
tions digitalization, distribution network digitalization and
digitalized strategic planning. These multiple factors and
their measurement items should be included in future stud-
ies to arrive at a more comprehensive picture of firms’ digit-
alization practices.
5.6. Reliability & validity
5.6.1. Reliability
Cronbach’s a coefficients and composite reliability (CR) are
used to assess the reliability of the four-dimensional con-
struct (Hair, Black, and Babin 2009; Nunnally & Bernstein,
1994). The Cronbach’s a coefficients’ values are above the
threshold value of 0.70 for four dimensions (Table 4)
(Nunnally & Bernstein, 1994). Similarly, CR values range from
0.82 to 0.92, higher than a minimum of 0.700 (Table 7)
(Fornell and Larcker 1981). Therefore, the observed data set
reflects a high level of reliability.
5.6.2. Content validity
Using Nunnally(1978) guidelines, content validity is estab-
lished using representative items from an extensive literature
survey and following the scientific method of instrument
construction. During the scale development process, items
are thoroughly reviewed by practitioners and academicians
from the field of operations management and survey
research (Churchill 1979; Moon, Yi, and Ngai 2012). Content
validity is established by reviewing the items by seven or
more experts (Devon et al. 2007). Further, responses are eval-
uated regarding clarity of the wordings, meaningfulness, and
formatting (layout and style); accordingly, scale items have
been modified.
5.6.3. Convergent validity
Convergent validity is assessed to ensure whether all item
measures represent respective factors (Hair, Black, and Babin
2009; Malhotra and Dash 2010). It measures how item meas-
ures of the constructs are correlated to one another
(Nunnally & Bernstein, 1994). Construct validity is assessed
using CR, standardized factor loading, and average variance
extracted (AVE)(Hair, Black, and Babin 2009). The value of CR,
standardized factor loading and average variance extracted
are found to be above the recommended value of 0.7, 0.6
and 0.5, respectively (Table 7) (Hair, Black, and Babin 2009).
Thus, CR values are found in the range of 0.817–0.928, and
AVE values are found in the acceptable range of 0.528 to
0.765. Similarly, the values of standardized factor loading are
also found in the acceptable range of 0.62 to 0.90. Hence,
the convergent validity requirement is satisfied from the
data set.
5.6.4. Discriminant validity
Discriminant validity refers to how the item measures of one
construct differ from those of other constructs (Hair, Black,
and Babin 2009; Malhotra and Dash 2010). Discriminant val-
idity is examined using AVE and MSV (maximum shared vari-
ance). The dataset is considered free from discriminant
validity issues if the value of AVE is higher than MSV and the
squared root of AVE is higher than the correlations between
inter-item constructs (Hair, Black, and Babin 2009; Malhotra
and Dash 2010). It is reflected in Table 8 that the four dimen-
sions of the scale met discriminant validity criteria. Therefore,
the dataset is found to be free from discriminant validity.
12 R. MISHRA ET AL.

Figure 2. Competing models.

5.6.5. Nomological validity assessed to determine the predictive/nomological validity

Nomological validity of the developed scale is assessed to (Abou-Foul, Ruiz-Alba, and Soares 2020).
ensure its usefulness and effectiveness (Hair, Black, and The construct ‘operational performance’ is assessed using
Babin 2009). The positive relationship between supply chain five items: throughput time, product quality, process flexibil-
digitalization and organizations’ operational performance is ity, process time, and production cost per unit adopted from
 PRODUCTION PLANNING & CONTROL 13

Table 7. Model fit indices of alternative models.

Fit Indices Threshold value Model 1 Model 2 Model 3 Model 4 Model 5
k2
df <3 6.907 4.747 1.984 1.959
CFI >0:90 1.000 0.711 0.817 0.954 0.954
TLI >0:90 0.672 0.792 0.945 0.947
NFI >0:90 1.000 0.680 0.780 0.912 0.912
RMSEA <0.10 0.271 0.155 0.124 0.063 0.063
SRMR <0.10 0.092 0.339 0.049 0.049
GFI >0:90 1.000 0.634 0.759 0.90 0.899
AIC Smaller is better 342.000 1004.412 712.783 339.874 336.69
CAIC Smaller is better 1112.412 1166.604 874.975 529.098 516.90
Fornell and Larcker (1981); Hair, Black, and Babin (2009).

Table 8. Measures of model validity.

Distribution Network Digitalized Strategic Operations Sourcing
CR AVE MSV Digitalization Planning Digitalization Digitalization
Distribution Network Digitalization 0.867 0.566 0.503 [0.753]#
Digitalized Strategic Planning 0.928 0.765 0.423 0.651 [0.874]#
Operations Digitalization 0.876 0.591 0.503 0.709 0.629 [0.769]#
Sourcing Digitalization 0.817 0.528 0.457 0.645 0.610 0.676 [0.727]#
#The number within [] signifies the square root of AVE; significance of correlations at p < 0:001.

Buer et al. (2020). Cronbach’s alpha value is found to be
0.916, and standardized factor loading is between 0.783 and
0.891. Further measurement model of the ‘operational per-
formance’ construct is developed. Fit indices, reliability and
validity of the measurement model is examined. The values
of fit indices demonstrate excellent model fit (kdf ¼ 1:225,
2
GFI¼ 0.990, CFI¼ 0.999, NFI ¼ 0.993, TLI ¼ 0.997, RMSEA ¼
0.030, SRMR¼ 0.012). Results confirm the reliability and valid-
ity of the model as Cronbach’s alpha value (0.916), CR (0.923)
and AVE (0.708) of the measurement model are found within
an acceptable range.
Consistent with prior studies (Buer, Fragapane, and
Strandhagen 2018; Calış Duman and Akdemir 2021), a struc-
tural model is developed by measuring a hypothesized posi-
tive relationship between the second-order construct of
supply chain digitalization and operational performance. The
result of the structural model indicates an acceptable level of
goodness of fit indices (kdf ¼ 1:493, GFI¼ 0.897, CFI¼ 0.971,
2
NFI ¼ 0.919, TLI ¼ 0.968, RMSEA ¼ 0.045, SRMR¼ 0.0432).
The path coefficient between digitalization practices and
operational performance is found to be statistically signifi-
cant at p < 0:001 with r2 ¼ 0:809: Therefore, the nomo-
logical validity of the developed scale of digitalization
practices is found in line with the recommendation of
Churchill (1979) and Hair, Black, and Babin (2009).
6. Discussion and implications
Industry 4.0 is transforming organizations’ supply chains
through rapid digitalization enabled by disruptive new tech-
nologies. Along this line, in this study, we first identify and
explores the dimensions of digitalization in the supply chain
through a structured literature review and focus group inter-
views approach, thereby addressing our first research ques-
tion (RQ1). After that, items measuring different dimensions
of digitalization practices were derived, refined and devel-
oped through literature review, focus group interviews and
multiple rounds of expert reviews. Based on the extensive
process, the items for measuring different dimensions of
digitalization in the Industry 4.0 environment were devel-
oped to address our second research question (RQ2).
Further, using a large-scale survey and competing model
strategy, the four distinct measurement models were com-
pared to identify a valid, reliable and most parsimonious
best-fitting model for digitalization of the supply chain in
the Industry 4.0 environment. The constructs for supply chain
digitalization utilizing a survey instrument are administered
to Indian manufacturers. The measurement scale for assess-
ing the different facets of supply chain digitalization in the
Industry 4.0 environment is examined for its reliability, valid-
ity and parsimony. This led to addressing our third research
question (RQ3).
Previous studies have primarily evaluated the significance
of Industry 4.0 and its associated novel technologies in
digital transformation (Fatorachian and Kazemi 2021;
Upadhyay 2020; Wamba and Queiroz 2020) and the barriers
and challenges related to their implementation (Lundberg,
Quist, and Magnusson 2018; Raj et al. 2020; Tu, Lim, and
Yang 2018). However, the scale for evaluating digitalization
practices associated with Industry 4.0 in the supply chain has
not been addressed in the previous studies. In this context,
this study is the first of its kind wherein the digitalization
practices have been modelled as a second-order four factors
construct from the perspective of manufacturing organiza-
tions engaged in digitalization practices. Using fragmented
findings of earlier studies and experts’ opinions, we have
developed 18 items scale for measuring the digitalization of
the supply chain in Industry 4.0 and empirically evaluated
the scale in manufacturing organizations. As a result, the
study offers validated scales to assess digitalization practices
associated with Industry 4.0 in the supply chain. The devel-
oped scale can be adopted across a wide range of industries
and geographical contexts to create and integrate sound
knowledge about digitalization practices.
The findings of this study suggest that digitalization prac-
tices in the supply chain manifest the interactions among
four distinct factors. The first factor, ‘distribution network
digitalization’, comprises five items: usage of the latest
14 R. MISHRA ET AL.
tracking technologies for logistics and warehousing, use of
automated guided vehicles for moving materials, use of glo-
bal shipping platform, Industry 4.0-based analytics techni-
ques to consolidate delivery and service of dynamic route
planning based on real-time analytics. The emergence of this
factor reinforces the prominent role of Industry 4.0-linked
digital technologies, RFID, AGV, shipping platform, and ana-
lytics techniques in product movements and is consistent with
other scholar’s discussions of varying forms of digital technolo-
gies in warehousing & distribution (Aamer and Sahara 2021;
Cichosz, Wallenburg, and Knemeyer 2020). RFID tags attached
with the products facilitate tracking in logistics and warehous-
ing operations. RFID tags in warehouses allow inventory move-
ment quickly and efficiently (Aamer and Sahara 2021). AGVs
used in warehousing help the quick and efficient movement
of a large volume of inventory. Using industry 4.0 analytics
techniques brings visibility, helps in shipment consolidation,
and assists firms in dynamic route planning based on real-time
analytics (Bechtsis et al. 2017). The second factor comprises
four items representative of digitalized strategic planning. The
items included in this study are digital solutions for multi-loca-
tion tracking, automated replenishment systems, digital solu-
tions to differentiate between fast and slow-moving products,
and sophisticated digital solutions to assess inventory level
and performance. Studies on digitalization and industry 4.0
technologies highlight the usage of digital technologies in
inventory planning. Digital technologies such as IoT, block-
chain bring transparency and improve real-time materials
identification and tracking (Wamba and Queiroz 2020; Yang,
Fu, and Zhang 2021). Integrating Industry 4.0 technologies
(BDA/machine learning) helps predict product demand. It also
helps in differentiating between fast-moving products and
slow-moving stock.
The third factor represents operations digitalization and
contains five items. The items include using smart work pro-
cedures to manage several operations, storage of data in the
cloud to make widespread availability of data, use of big
data analytics, use of additive manufacturing and techno-
logical integration between product development and manu-
facturing through product life cycle management. Industry
4.0 enabling technologies can increase real-time data analysis
and helps in managing various operations. Advanced ana-
lytics techniques such as big data analytics cloud help
uncover hidden patterns, make optimal and preventive deci-
sions, and explore other useful business information (Liu
et al. 2019; Mikalef et al. 2020). Additive manufacturing sim-
plifies the operations by engaging in decentralized produc-
tion, enables customization of components and eliminates
geographical constraints (Ivanov, Dolgui, and Sokolov 2019;
Ryan et al. 2017). Product life cycle management (PLM) opti-
mizes the production process in real-time through techno-
logical integration. PLM ensures products’ unified data,
collaborates workflows across the organization, helps to run
things smoothly, and supports efficient teamwork (Kumar
et al. 2021; Mubarak and Petraite 2020). The fourth and final
factor of the solution consists of four items that constitute
sourcing digitalization. The items of sourcing digitalization
are procurement decisions based on system data analysis,
use of ERP systems for purchase orders, cross-function teams
to integrate digital solutions, and centrally controlled sys-
tems to check inventory. Industry 4.0 enables digital technol-
ogies to streamline procurement operations, offer real-time
visibility, increase resilience and innovation and improve
productivity (Bienhaus and Haddud 2018; Lorentz et al.
2021). Intelligent devices and intelligence tools help make
procurement decisions through system data analysis and
facilitate production planning through a centralized inven-
tory control system (Ali and Aboelmaged 2021; Ivanov,
Dolgui, and Sokolov 2019; Raj et al. 2020). Enterprise
resource planning for electronically doing order placement,
creating digital invoices, and executing procurement and
payment processes are some examples of sourcing digitaliza-
tion (Lorentz et al. 2021).
6.1. Academic implications
While the digitalization of supply chain in the era of industry
4.0 is essential to make connected, smart and highly efficient
supply chain. Studies on digitalization has focused primarily on
barriers and enablers of digitalization and discussed strategies
for practitioners to facilitate digitalization. As the contempor-
ary supply chain is all about adopting and using digital tech-
nologies to make the process efficient, the study
conceptualizes, develops, and validates digitalization practices
in the supply chain of manufacturing organizations, thereby
creating a valuable contribution to the supply chain field.
First, the study conceptualizes the digitalization construct
and develops its associated measurement scales, which con-
tribute further insights into the nature and dimensionality of
the ‘digitalization concept’ with the broader theoretical areas
of the supply chain in the industry 4.0 environment. Overall,
this study provides the first known empirical investigation of
digitalization scale in the supply chain. There is a general
lack of multidimensional theoretical conceptualization or
instrumentation for measuring digitalization practices in the
supply chain. Going beyond the existing research that
focused separately on different aspects of the digital supply
chain, this instrument takes a broader perspective by focus-
ing on different digitalization practices and offers an abstract
view on digitalization in the supply chain.
Second, the comparative model strategy used in this
research indicates that the correlated four-factor first-order
model (model-4) and four-factor second-order model (model-
5) represent sound goodness of fit indices, representing a
scale of supply chain digitalization. Comparing these two
models indicates that the four-factor second-order model
(model 5) demonstrates better explanatory power and is
more parsimonious than the correlated four-factor first-order
model. Therefore, the study contributes to the research by
unearthing the digitalization of the supply chain concept in
industry 4.0. The existing literature lacks clear definitions and
valid measures of the digitalization concept in the supply
chain. In the absence of widely accepted measurements,
developing and testing theories and comparing results across
various settings is challenging. In this context, the newly
developed scale has overcome the limitations of previous

studies and involves a wide range of digitalization practices
across the supply chain.
Third, the study explores specific theoretical relationships
between the diverse dimensions of digitalization practices,
including ‘sourcing digitalization’, ‘operations digitalization’,
‘distribution network digitalization’ and ‘digitalized strategic
planning’, to facilitate a theoretical understanding of the
nature and directionality of their conceptual associations.
Thus, this paper can work as a catalyst for future research.
For example, future studies can be done to examine the rela-
tionship between digitalization practices and their antece-
dents and outcomes, like economic performance, operational
performance, productivity, and efficiency. Given the growing
significance of digital technologies in the supply chain and
the paucity of research on digitalization practices, developing
the digitalization scale in the manufacturing context is
believed to be a timely and relevant contribution to the lit-
erature. It can become a steppingstone to future studies in
this field. Using the developed scale in this study, researchers
can also evaluate the same scale for other sectors.
6.2. Managerial implications
The study offers practitioners a scale of eighteen measurement
items to assess the different facets of the supply chain digital-
ization in the industry 4.0 environment. The study indicates
digitalization practices as a second-order construct showing
that supply chain digitalization is a multi-dimensional rather
than a single construct. The multi-dimensional instrument
offers comprehensive and easily administered measures and
gives insights into the measurement items of digitalization
practices and their relationships with the underlying con-
structs. First, the item measure of the construct provides pre-
cise and actionable information on digitalization practices.
Given the growing significance of digitalization in achieving
sustainable performance and competitive advantage, imple-
menting, and adopting digitalization practices is critical to suc-
cess. Thus, developing a reliable and valid measure of the
digitalization construct is timely and essential. The digitaliza-
tion scale developed in this study can be used in manufactur-
ing organizations that are going under digital transformation.
Using the developed scale, supply chain practitioners can
appreciate the usage of digital technology in the various func-
tional areas of the supply chain. Further, most of the constructs
considered in this study are generic, enabling their usage in
diverse sectoral contexts.
Further, by defining four distinct factors of digitalization
scale, the study enables practitioners to measure these fac-
tors more precisely. Without the measurement tool, it would
be difficult for practitioners to identify areas of concern and
take appropriate actions. Therefore, the developed measure-
ment scale can help in accurately implementing digitalization
in the supply chain. The four first-order and second-order
factor models serve distinct purposes for estimating and
managing digitalization in the supply chain. The second-
factor model can be used to measure and convey the overall
level of digitalization to supply chain practitioners and busi-
ness unit managers. It can also be used to plan the
PRODUCTION PLANNING & CONTROL 15
widespread implementation of digitalization practices in
the initial phase of digital transformation. At the same time,
the four-factor first-order model of digitalization can be used
to facilitate detailed assessments and communications within
each functional area. It can help identify the progress of
digital transformation in specific function areas, thus ena-
bling practitioners to implement and manage the compo-
nents or most essential aspects of digitalization in the supply
chain during the implementation phase.
Practitioners (e.g. supply chain and information technol-
ogy practitioners) can use the developed instrument to
assess the level of digitalization in the supply chain. An
instrument can be used over a successive period to evaluate
the change in the different dimensions of digitalization prac-
tices and track the overall progress in this regard. In supply
chain literature, the growing usage of technology in large
and small firms is becoming prominent; the developed scales
can be used to compare the level of adoption of digitaliza-
tion practices in small and large firms. Similarly, firms with a
high level of adoption of digitalization practices can be
tested to assess their impact on performance outcomes.
Second, conceptualizing the construct at the second-order
level allows practitioners to understand digitalization practi-
ces at a higher level of abstraction beyond individual items
and factor tiers (Zhu, Sarkis, and Lai 2008). Digitalization in
the supply chain scale includes scales related to distribution
network digitalization, digitalized strategic planning, opera-
tions digitalization and sourcing digitalization. It is recom-
mended that firm can use this comprehensive scale to share
knowledge and best practices with their supply chain
members so a long-term and competitive roadmap can be
developed and implemented. Organizations aiming at trans-
forming the supply chain through digitalization associated
with Industry 4.0 can use the instrument as a self-diagnostic
tool to recognize areas requiring specific improvement and
pinpoint those aspects that call for immediate action. At the
individual items and construct level, practitioners can con-
sider implementing digitalization practices for each individual
item and recognize areas that demand specific attention. In
contrast, evaluating the construct for supply chain digitaliza-
tion at a higher level of abstraction signifies that firms can
improve the digitalization of the supply chain by addressing
immediate requirements. Therefore, items and construct vali-
dated in this study can facilitate digital transformation in
Industry 4.0 environment.
7. Conclusion, limitations, and future research
To date, a significant number of studies have been carried
out to understand different industry 4.0 technologies. While
previous studies offer valuable insights into the barriers, ena-
blers and facilitating factors influencing the implementation
of industry 4.0 technologies, it devotes scant attention to the
attributes of digitalization practices essential in the industry
4.0 environment. Therefore, our study bridges the research
gap between theory and practice by conceptualizing, devel-
oping and validating multidimensional digitalization con-
structs in the supply chain.
16 R. MISHRA ET AL.
The study contributes theoretically and methodologically
to supply chain literature by focusing on different dimen-
sions of supply chain digitalization in the industry 4.0 envir-
onment. First, the developed scale for supply chain
digitalization fills the gap of earlier studies that lack a com-
prehensive scale for measuring digitalization in the supply
chains of manufacturing organizations. It represents the first
study emphasizing scale development in supply chain digital-
ization in industry 4.0. Second, existing studies have assessed
practitioners’ perceptions about using a particular industry
4.0 technology. In contrast, in the present study, supply
chain digitalization considers the application of overall prom-
inent industry 4.0-based technologies. Unlike previous stud-
ies that have been majorly done in the western context, it is
the first major study on digitalization practices in an emerg-
ing economy like India. The findings of this study demon-
strate that four-dimensional conceptualization is essential for
assessing digitalization practices in the supply chain. Third,
the study offers a methodological contribution by validating
digitalization practices as a second-order latent construct
using the four first-order factors as indicators of digitalization
practices. The findings support that considering digitalization
practices as a second-order construct is conceptually justified
and empirically supported. Fourth, the study can also have
social implications as the digital supply chain integrates
many facets of society. Supply chain digitalization promotes
collaboration between machines and humans that can have
a social impact on the lives of employees and the commu-
nity in terms of better working conditions, better safety,
improved labour relations, and reduced complaints and acci-
dents. Given the essential role of industry 4.0 in improving
sustainability performance, the developed scale can assess
the level of digitalization in the supply chain for transforming
customer experience, business process and business model.
7.1. Limitations and future research
The study contributes to a better understanding of the prac-
tices required for supply chain digitalization to facilitate the
transition towards Industry 4.0. However, it is not without
limitations. First, the study has been conducted by taking
samples from Indian manufacturing organizations; therefore,
future studies need to take samples from different geograph-
ical locations and/or conduct investigations in diverse cul-
tural contexts. Second, the study assesses the digitalization
practices in the supply chain of manufacturing organizations.
Future research can examine the performance implications of
these digitalization practices and their relative importance in
performance improvement. Third, the study used cross-sec-
tional data from manufacturing firms to assess the validity
and reliability of the scale items. The validation of the scale
is an ongoing process. Therefore, validity can be established
only after conducting a series of studies over the years that
can further refine and evaluate the measurement items.
Therefore, this study can be a starting point, and future work
should include a minimum of these factors to assess digital-
ization of supply chains in the Industry 4.0 Environment.
Acknowledgement
Authors would like to express sincere thanks to the Editor and reviewers
for giving constructive comments to improve the quality of this paper.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes on contributors
Ruchi Mishra is an Assistant Professor in Production
Operations Management & QT area at Institute of
Rural Management Anand (IRMA), India. She holds
her Fellow (Ph.D.) from National Institute of
Industrial Engineering (NITIE), Mumbai, India. She has
published papers in journals such as Computer &
Industrial Engineering, Annal of Operations Research,
International Journal of Logistics Management,
Journal of Cleaner Production, IEEE Transactions on
Engineering Management, International Journal of Consumer Studies,
Journal of Enterprise Information Management, and International Journal
of Retail & Distribution Management. Her major interests are in the areas
of Digitalization, Green Supply Chain Management and Supply Chain
Aspects of Omnichannel Retailing.
Dr. Rajesh Kr Singh is Professor in Operations
Management Area at Management Development
Institute (MDI), Gurgaon, India. His areas of interest
include Supply chain management, Industry 4.0,
Circular Economy. Currently, he is serving as
Associate Editor to International Journal of
Consumer Studies (Wiley) and International Journal
of Global Business and Competitiveness (Springer).
He is also on the Editorial Board of Journal of Supply
Chain Management Systems and Vision-The Journal of Business
Perspective. He has also worked as Guest Editor for special issues of
Resources, Conservation and Recycling, Sustainable Production and
Consumption, Competitiveness Review, Journal of Modelling in
Management, Administrative Sciences, Global Journal of Operations and
Strategic Sourcing etc. He has published research papers in reputed top
category international/national journals and conferences. He has pub-
lished papers in journals such as Resources, Conservation and Recycling,
Journal of Cleaner Production, Production planning and Control, Annals
of Operations Research, International Journal of Production Research,
Applied Soft Computing, Clean Technologies and Environmental Policy,
Industrial Management and Data Systems, Singapore Management
Review, International Journal of Productivity and Performance
Management, Benchmarking: An International Journal, Journal of
Modelling in Management, Competitiveness Review: An International
Business Journal.
Prof. Angappa Gunasekaran is the director of the
School of Business Administration, Penn State
Harrisburg. He has published over 300 articles in
prestigious peer-reviewed journals. Prof Gunasekaran
has held academic positions in the UK, Australia,
Finland, India, and Canada. He has presented and
published over 50 papers and articles in conferences
and at several invited leadership talks across the
globe. He is on the editorial board of several journals
and has organized numerous international workshops and conferences
in the emerging areas of Operations and Supply Chain Management.

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