1.1 The Rise of Industry 4.0
Business complexity and requirements have been increasing in the manufacturing industry through intense competition, a turbulent market environment, increased demand for customised products, and shortened product life cycles. These challenges have been met with a range of production strategies, most recently with the development of Industry 4.0 .
The concept was first proposed by Kagermann et al. (referenced by Stock and Seliger 2016) and published by the German National Academy of Science and Engineering in 2013. The concepts and topics were further developed by Public Private Partnership and promoted by the Industrial Internet Consortium (Stock and Seliger 2016). Industry 3.0 focuses on process automation on an individual basis; whereas Industry 4.0 digitises and integrates end-to-end processes with its supply chain partners. It is based on smart factories, smart products and smart services through technologies including the Internet of Things (IoT) and the Internet of Services (IoS) (Lasi et al. 2014).
Industry 4.0 is a technology-based strategy introducing the concept of integrated industry (Brettel et al. 2014), relying on information which is both highly integrated and available across the entire product life cycle (Stock and Seliger 2016). Its roll-out has significant impacts on how supply chains are managed (Alicke et al. 2017). Facilitated by Information Systems (IS), Industry 4.0 relies on an information-heavy system of agility . This is because organisations with agile supply chains can better respond to uncertainties and changes since they are better able to synchronise supply with demand through high responsiveness along the supply chain and convert changes into business opportunities (Swafford et al. 2008). Such synchronisation requires integration across a firmâs internal business units as well as its external suppliers and customers (Chiang et al. 2012).
1.2 IS-Integrated Supply Chain Agility
Effective coordination of all the participant companies across the supply chain shortens product life cycle and reduces product costs (Levary 2000), as demand and supply fluctuate more rapidly than previously in the current fickle business environment. With the current view of the unit of competition as a supply network, supply chain agility is becoming a focal area (Ismail and Sharifi 2006). IS plays an important role in Supply Chain Management (SCM), as an enabler in achieving supply chain agility (Gunasekaran and Ngai 2004; Power et al. 2001; Yusuf et al. 2004), but the way IS integration improves operational performance is poorly understood (Fawcett and Magnan 2002; Mabert et al. 2003).
1.2.1 Supply Chain Agility
In order to survive in a modern business environment, enterprises have explored innovative technologies and business strategies to sustain a competitive advantage, as well as trying to build stronger relationships with suppliers and customers to improve quality and flexibility in meeting increasing requirements (Boone et al. 2007; Tse et al. 2016). The linkage of firms with their suppliers will rely more on the supply chain, especially when product manufacturing is complicated and is heavily dependent on supply chains, such as in the automotive industry . Therefore, the unit of competition is moving from individual companies to supply chains (Lambert and Cooper 2000; Quinn 1999; Venkatesan 1992).
Manufacturers face increasing customer requirements in product customisation, quality improvement and fast responsiveness (Lee 2004). To meet these, enterprises are aligning with their suppliers and customers to streamline operations in order to reduce production cost, shorten manufacturing time and lower inventory level through integrating and synchronising various operational processes (Chan and Qi 2003). Furthermore, the ability to manage market changes, in a manner that responds to customer requirements but at an acceptable cost, has been termed supply chain agility (Christopher 2000). Developing an agile supply chain is now a major focus of many leading organisations (Fisher 1997). Manufacturing firms as wide-ranging as raw materials suppliers, manufacturers and retailers may need to be involved in the process of achieving an agile supply chain. In fact, agile supply chains have gained significant attentions from both academics and practitioners in recent years (Christopher 2000; Naylor et al. 1999; Power et al. 2001).
Overall, supply chain agility requires coordination and integration across individual firm functions. Research results support the notion that integration between firms improves individual firm performance (Frohlich and Westbrook 2002; Johnson 1999; Lee et al. 1997; Sanders 2007). Sanders (2007) highlights that successful firms have close collaboration with their partners, enabling real-time information transfer across supply chains as well as coordinated inventory management. This means that products can be delivered quickly and reliably (Lee et al. 1997). Hence, Devaraj et al. (2007) conclude that the dimensions of performance related to aspects of delivery timing, cost and quality discovered by the customer have a strong relationship with supplier integration. In addition to such operational advantages, supply chain agility also improves customer responsiveness (Lee 2004) and flexibility (Goldman et al. 1995) by incorporating both (Reichhart and Holweg 2007).
1.2.2 IS Integration
A key characteristic of supply chain agility is the instant availability of information to manage an âon demandâ business operation (Auramo et al. 2005; Yusuf et al. 2004). Supply chain agility can be hampered by fragmented, incompetent IS systems (Barua et al. 2004; Ngai et al. 2011). There is evidence that lack of information sharing and sparse information prohibit supply chain coordination and lead to greater operational inefficiencies (Patnayakuni et al. 2006). Studies have shown that the development of IS, which enables information flow and coordination activities, has rapidly reshaped business processes over the last decades. Supply chain agility , founded on the various integrations between supply chain partners, has been especially affected (Christopher 2005; van Hoek and Chong 2001; Sanders 2007).
A well-integrated IS is much more than just individual physical components. It not only requires standards for the integration of data, application and processes to be implemented in order to facilitate the smooth flow of information, physical resource and financial data (Ngai et al. 2011), but also needs well-integrated SCM-related applications to enable consistent and real-time transfer of information across partners (Rai et al. 2006). Hence, data consistency and c...