The effects of objective and perceived environmental uncertainty on supply chain flexibility

A highly volatile and uncertain environment has accelerated the operational speed of supply chains, with an increasing number of manufacturers implementing quicker and more flexible strategies in their supply chain management. Recognizing that greater cross-functional and cross-company efforts to increase flexibility were making a focus limited to manufacturing flexibility insufficient to deal with a more complex and turbulent environment, a growing body of literature began to look beyond the flexible factory to the flexible supply chain. Although researchers reach an agreement with a depiction of flexibility as a capability of responding to uncertainty at minimal cost, the effect of environmental uncertainty on flexibility is not consistent in different empirical studies, representing at least three perspectives: a positive effect, a negative effect, and no effect. Measuring objective environment uncertainty (OEU) and perceived environment uncertainty (PEU) separately, this study explores their effects on supply chain flexibility.