The Role of Industry 4.0 on Supply Chain Cost and Supply Chain Flexibility

Abstract

PurposeIndustry 4.0 accelerates the performance of supply chains, in particular, the reduction in supply chain cost (SCC) and improvement in supply chain flexibility (SCF). The aim of this study is to examine the role of Industry 4.0 on SCC and SCF, using network theory to explain the interrelationships.Design/methodology/approachData were collected from 182 manufacturing firms in Turkey. The partial least square structural equation modelling (PLS-SEM) was employed in testing the research hypotheses.FindingsThe results showed that Industry 4.0 positively affects SCC; however, no direct relationship was found between Industry 4.0 and SCF. Moreover, SCC was found to have a positive impact on SCF, while SCC was found to mediate the relationship between Industry 4.0 and SCF. An additional finding was that customer integration (CI) moderates the relationship between Industry 4.0 and SCC; however, CI does not moderate the relationship between Industry 4.0 and SCF.Practical implicationsThe research validates the role of Industry 4.0 on supply chain processes and thus provides valuable insights into supply chain practitioners and decision-makers interested in Industry 4.0 for supply chain management.Originality/valueIn view of the limited number of studies, this study empirically contributes to the literature on the relationships among Industry 4.0, SCC, SCF and CI.