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Supply Chain Management Competency and Firm Financial Success
Abstract
Supply chain management (SCM) plays a major role in creating (or destroying) shareholder value by influencing the three major drivers of firm financial performance: revenue, operating costs, and working capital. Yet, the relationship between SCM competency and firm financial performance is not well-established. Drawing on the resource-based view of the firm, this study assesses this relationship using Delphi-style opinion data from AMR Research’s Supply Chain Top 25 rankings to assess SCM competency and Altman’s (1968)Z-score statistic as the measure of financial success. The study findings show that firms recognized by industry experts for SCM competency have significantly higher Z-scores than their close competitors and industry averages.
... The increasing global nature of production and distribution means that supply chain management is vital not only for a firm's profitability but also for a firm's relationship to a broad range of stakeholders, including workers, communities and consumers around the world (Freeman et al., 2004;Hutchins and Sutherland, 2008). The ability to improve financial performance and profitability through supply chain management initiatives has been demonstrated to benefit organizational shareholders (D'avanzo et al., 2003;Ellinger et al., 2011Ellinger et al., , 2012Losbichler et al., 2008;Singh, 2021). Unfortunately, this pressure can also encourage firms to avoid regulation, cut labor costs and increase price competition among suppliers (Locke et al., 2013). ...
... And indeed there is a strong empirical relationship between SCM capability, firm financial performance and shareholder value (Christopher and Ryals, 1999;Daugherty et al., 1998;Lambert and Burduroglu, 2000). The relationship between SCM and profitability is perhaps not surprising given that effective SCM is typically evaluated in terms of resulting financial metrics and shareholder value (Ellinger et al., 2011). These coercive pressures exerted externally by shareholders and internally through top management have inextricably linked supply chain efficiency with financial performance. ...
... The rankings identify organizations who are leaders within the field of SCM and highlight the importance of the supply chain function for corporate executives and the investment community (Aronow et al., 2015). The Gartner Top 25 list is the foremost source for identifying supply chain competency (Ellinger et al., 2011). Thus, prior research has used the Gartner Top 25 Supply Chain list to identify firms to examine in relation to financial performance (Ellinger et al., 2011;Hong and Najmi, 2020), customer satisfaction (Ellinger et al., 2012), sustainability (Bîzoi, 2016), and supplier relationships (Schwieterman et al., 2020). ...
This study analyzes whether firms face a tradeoff in responding to pressures of shareholders versus stakeholders in their quest for supply chain management excellence. Are firms that are recognized and rewarded for their supply chain management practices less likely than other firms to have a strong record in community relations, product qualities, employee relations, environmental sustainability and diversity measures? To answer this question, the study utilizes event study, OLS regression and panel data analyses of firms receiving a Gartner Supply Chain Top 25 ranking and a comparative sample of these same firms in non-ranked years. The findings indicate that shareholders react positively to a Gartner ranking, suggesting that ranked firms receive significant incentives to pursue recognition. Additionally, positive stakeholder practices are significantly stronger for firms ranked versus those not ranked. These findings suggest that firms can successfully navigate the pressures congruent with both shareholder and stakeholder priorities through supply chain excellence.
... Quantitative studies use primary data collected via surveys or secondary data gathered from annual reports or commercial databases (see Shi and Yu, 2013, for an in-depth review). Large-scale surveys evaluated through structural equation modeling (Tracey et al., 2005;Li et al., 2006) indicate the existence of positive relationships between distinct SCM capabilities as well as competitive advantage and financial success (Ellinger et al., 2011). Such studies may however show weaknesses such as low response rates or they may omit industry differences (Shi and Yu, 2013). ...
... Gaur et al., 2005;Brandenburg and Seuring, 2011;Brandenburg, 2016) or company groups (see, e.g. Ellinger et al., 2011Ellinger et al., , 2012. While these papers substantiate the positive impact of operational SC performance on financial success, they do not provide cross-industry comparisons. ...
... More specifically, SCM affects sales revenue and cost of goods sold (COGS), which drive profitability by, for instance, managing customer-service levels or improving factory productivity (Lambert and Pohlen, 2001). Furthermore, SCM ensures efficient utilization of NWC (Ellinger et al., 2011), which includes accounts receivable and total inventories net of accounts payable (Hofmann and Kotzab, 2010). Exemplary measures of NWC optimization include improving forecasting accuracy to reduce safety stocks, collecting accounts receivable more quickly, and delaying accounts payable (Lambert and Pohlen, 2001). ...
Managers often use financial metrics based on internal accounting data to gauge firm performance. In this paper, we analyze firm value and related levers of operational supply chain (SC) performance from a financial market perspective. This allows us to study the contributions of profitability (earns) and asset utilization (turns) as the two major drivers of firm value. For this purpose, we apply data envelopment analysis to a large-scale longitudinal dataset of listed US companies (2007–2015) that covers 13 manufacturing industries. In so doing, we shed light on the implications of the 2008/2009 financial crisis for operational SC performance. Our findings can be summarized as follows: First, earns and turns are negatively correlated from an internal accounting-based viewpoint that distinguishes ‘high earns/low turns’ from ‘low earns/high turns’ industries. Second, manufacturing companies mostly tend to be less efficient in translating earns as opposed to turns into firm value. Finally, we observe declining efficacy of approaches to value-based supply chain management in manufacturing industries since 2007 (the last year before the financial crisis). General firm value appreciation in the stock markets overcompensated for this decline until 2015.
... In recent years, consensus has emerged that competition in the market has shifted from firm against firm to supply chain against supply chain [7][8][9][10]. Therefore, supply chain management (SCM) has greatly increased in importance and with supply chains, today is seen as a potential source of competitive advantage [11][12][13]. Many studies have shown that excellent SCM practices generate an increase in financial performance [11,[13][14][15][16][17]. ...
... Therefore, supply chain management (SCM) has greatly increased in importance and with supply chains, today is seen as a potential source of competitive advantage [11][12][13]. Many studies have shown that excellent SCM practices generate an increase in financial performance [11,[13][14][15][16][17]. However, although many researchers have come to comparable conclusions, each study was carried out in different ways and analyzed financial performance with different measures [10]. ...
... However, although many researchers have come to comparable conclusions, each study was carried out in different ways and analyzed financial performance with different measures [10]. Although one group of researchers used accounting-based measures [11,13,16], another group used market-based measures [18], or a combination of both [14,17]. While most of these studies tried to differentiate between more and less successful firms, some investigations used established rankings. ...
Studies have shown that leading supply chain companies are associated with significantly higher company financial ratios than competitors. In contrast, little research has focused on the financial performance of the affiliated suppliers and customers of such supply chain leader (SCL) companies. Thus, the central purpose of this paper is to determine, from a financial perspective, whether suppliers and customers benefit or lose by participating in a SCL network (so called “financial spillover effects”). Companies that were ranked in the Gartner Supply Chain Top 25 were selected as SCLs. For each selected firm, the five largest suppliers and customers were identified and compared with a control sample from the same industry. In order to elaborate on existing insights into the (financial) outcome of supply chain relationships, we applied an explorative approach with abductive reasoning, while comparing the secondary data for 224 SCL supplier (56 firms) and 168 SCL customer (42 firms) firm-years with 1940 (485 firms) and 1544 (386 firms) control firm-years, respectively. The following insights are made: First, the superior financial performance of SCLs was confirmed. Second, the financial performance of suppliers and customers showed superior liquidity and activity ratios but inferior profitability ratios. Third, suppliers showed much more significant results than customers.
... Hendricks and Singhal [5] established that hitches associated with supply chains give rise to financial issues that impact return on assets, return on sales and operating income. Ellinger [6] applied the Delphi Technique to investigate the supply chain management competency and success of the firm. The data was top 25 supply chains according to AMRresearch. ...
... Significant positive influence 6 Kiongera et al. [19] Sugar manufacturing firms in Western Kenya A positive correlation between logistic outsourcing and the performance of sugar firms was realized. ...
The global role of outbound logistics in supply chain processes and supply chain distribution cannot be overemphasized. Reviewed literature has shown that empirical tests have been done in relation to outbound logistics and profitability. However, minimal research work has been done on establishing the link between outbound logistics and profitability, particularly among sugar manufacturing companies in Kenya. Semi-systematic review was utilized using secondary data.. The literature reviewed in this study was in regard to sugar manufacturing firms in Kenya published between 2011-2021. The philosophy guiding this study was positivism which is a deductive approach. The review established a significant positive influence of outbound logistics on the profitability of the firms. Evidence links the profitability of sugar manufacturing companies in Kenya and outbound logistics. It was recommended that the firms enhance their focus on outbound logistics in order for their profitability to continue to improve. Researchers can increase activity on this subject and context.
... Corporations have realised the importance of SCSs and appreciate the distinctive competitive advantages that a well-managed supply chain brings (Stevens and Johnson, 2016). SCSs assist in creating or destroying shareholder value due to its influence on financial results (Ellinger et al., 2011). Managers need to identify the SCSs that create the most value for investors (Losbichler et al., 2008). ...
... The literature review implies that all approaches to performance strive for competitive business survival and growth which are appraised using financial performance measures, because all intangibles, environmental and social factors incurred associated financial benefits and cost implications for supply chains (Zubairu et al., 2018). Financial performance is closely related to supply chain effectiveness and important SCSs, such as sourcing strategy, technology, system integration and external relationships play important roles in enhancing financial results (Kauppi et al., 2018), which are measurable using revenue, cost and working capital (Zhong et al., 2018;Shi and Yu, 2013;Ellinger et al., 2011). Other studies argue that assets utilisation should be included as a financial performance measure taking into consideration all the dimensions of economic value added, revenue, cost, working capital and assets utilisation (Elgazzar et al., 2012;Hahn and Kuhn, 2012). ...
Purpose
The purpose of this study is to identify and evaluate supply chain strategies (SCSs) that drive financial performance to guide practitioners, especially in liquefied natural gas (LNG) networks, to review and adopt SCSs that drive competitiveness and value creation for investors.
Design/methodology/approach
Analytical hierarchy process (AHP) was deployed to prioritise SCSs according to their relative impact on financial performance in LNG networks. Interviews with experts were analysed using template analysis to establish latent drivers of financial performance specific to LNG networks.
Findings
Results support the significant role of SCSs in improving financial performance. Although findings prioritised collaborative strategy as the most important driver of financial performance in LNG networks, to fully optimise financial outcomes, all the SCSs should be implemented across LNG networks as no single strategy in isolation is a standalone driver of financial performance.
Practical implications
The AHP model provides a novel ranking for SCSs and measures to guide decision-makers. LNG practitioners may exploit the results to make informed decisions.
Originality/value
The study extends previous literature by proposing a framework and a new LNG empirical model that facilitates understanding of how SCSs contribute positively to financial performance and support practitioners in making strategic supply chain decisions.
... The study extends the understanding of expectancy theory with the assumption that the supervisors have access to employee instrumentality and valance factors. Expectations from the managers have increased, as the transitioning from managers to coach is on the rise (Clutterbuck, 2008;Ellinger et al., 2011;Suiryan, 2013). As a coach, a manager asks questions rather than providing answers because without knowing what employees expect and what they want, it becomes difficult for the coach to understand how motivated they are (Chillakuri, 2018;Schroth, 2019). ...
... As a coach, the manager develops leadership competencies that will enable a team to perform more effectively. The literature on coaching confirms a positive correlation between coaching and retaining employees (Ellinger et al., 2011;Wheeler, 2011;Theeboom and van Vianen, 2014). In addition, coaching helps the supervisor identify, develop, and, if required, advise the team member to take up a different job that suits the candidate skills and interests, thus focusing on the overall career development. ...
The purpose of this research is to examine Generation Z’s unmet expectations and work-related boredom and its impact on their intention to quit. The study investigates the moderating role of the supervisor support in the relationship between work-related boredom and intention to quit. This research advances the understanding of the adverse effects of employees' unmet expectations and work-related boredom. Generation Z joins the organizations with unrealistic expectations of work that, in turn, promote lower levels of commitment and higher turnover, and therefore warrants more research. Data were collected from 336 Generation Z respondents working in the information technology industry. The data were analyzed using least square regressions and bootstrapping techniques. The findings confirm that supervisor support moderates the relationship between work-related boredom and employees’ intention to quit such that if the degree of supervisor support is higher, then the relation is weaker. HRM practitioners need to be candid in explaining the job description and job specifications during the interview; more importantly, organizations need to address the expectations even before they are hired. The findings indicate that high supervisor support buffers the adverse effects of unmet expectations and work-related boredom. The study suggests that coaching could be an effective tool to support Generation Z’s aspirations and well-being in the workplace. Therefore, organizations should make coaching a key element in the organization’s culture and part of a manager's job.
... Although managerial competence has been studied extensively in the extant literature (Manxhari et al., 2017, Chong, 2008, 2013, it can be seen that the topic in the context of L&SCM is still evolving with different models and approaches of competencies required for logistics and supply chain managers in various contexts. This is rather interesting, noting research evidence which shows that L&SCM competence has a substantial effect on business performance and financial competitiveness (Fl€ othmann et al., 2018a, b, Ellinger et al., 2011, Aquino and Draper, 2008, Bowersox et al., 2000, and executive engagement plays an important role in enhancing firm's competitive advantage through supply chain competencies and capabilities (Birou and Van Hoek, 2022). Therefore, further research is required to map out the competency profile of logistics and supply chain managers given the contingent change drivers in the new era. ...
Purpose
The new era of supply chain management is characterised by key change drivers, e.g. Industry 4.0, and post-COVID-19 VUCA (volatility, uncertainty, complexity and ambiguity) business environment, in addition to the rising requirements for sustainability, responsiveness and customer centrism. An important and topical question in this context is what supply chain managerial competence logistics managers need to possess in order to enhance their individual performance in the new era. This question is addressed in this paper, which also explores the nexus of supply chain managerial competence expectation and possession upon which human resource development strategies are proposed accordingly.
Design/methodology/approach
The survey research design is adopted to empirically examine logistics managers’ supply chain managerial competence in the new era, and the forward-backward translation process was strictly followed. Data were collected through a survey conducted with owners or managers of Vietnamese firms whose business is in the logistics and related business areas, and 269 valid responses were used for analysis.
Findings
Results indicated that the proposed profile of four groups (foundation, core, specialist and technology-IT) and 38 competencies are valid and important to the individual performance of logistics managers in the context of Vietnam, which supports the tenet that logistics managers in the new era need to have a well-rounded profile of competencies, including those derived from contemporary change drivers. It was also found that the foundation competency group is perceived as more important than others, which is context specific given the current logistics development in Vietnam. Besides, it was also revealed that respondents in this research currently possess those competencies at a level which is lower than their perceived importance. An Importance-Possession (IPM) Matrix of Competency Development was mapped accordingly.
Research limitations/implications
The generalisation of this study would require further empirical examination from similar studies in other contexts, i.e. in other manufacturing and service sectors as well as in other developing and developed countries where logistics development is at different stages.
Practical implications
This research provides insights into the current competency profile of logistics managers in Vietnam, which can assist senior management with human resources development in their firms. Specifically, it is essential that Vietnamese logistics firms focus on providing education and training opportunities, both internally and externally, to enhance the level of possession of all competencies whose gaps between perceived importance and possession are the largest across the groups, especially those in the Maintaining Sustainably and Growing quadrants of the IPM.
Originality/value
Firstly, this research introduces an improvised framework of logistics managers’ supply chain managerial competence adopting the contingency approach, contributing to expanding the body of knowledge on how the competency profile of logistics managers should be developed. Secondly, the IPM matrix of competencies introduced in this research can be used as both the conceptual and managerial tool to classify and prioritise competencies for various purposes, e.g. education, training and policy implementation based on the nexus of supply chain competence expectation and possession.
... Existing research suggests a direct relation between SCCs and an organization's performance. According to the DRBV, developing unique SCCs through integrating supply chain processes allows supply chain partners to gain a competitive edge (Ellinger et al., 2011). SCCs increase sales and market share by delivering customers faster. ...
We used a dynamic resource-based view (DRBV) to examine how Industry 4.0 technologies (I4.0) affect business performance. We also examined whether the relationship between I4.0 and firm performance is sequentially mediated via digital supply chain platforms and supply chain capabilities. We used the PLS-SEM technique to analyze the data. After analyzing data collected from 348 logistics and supply chain managers, we found that adopting I4.0 leads to improved operational performance and digital supply chain platforms (DSCPs). However, I4.0 does not enhance competitive firm performance. DSCPs boost operational and competitive firm performance. Further, supply chain capabilities also boost operational and competitive firm performance. In mediation analyses, DSCPs partially mediate the I4.0 and operational performance relationship. Sequential mediation analyses demonstrate that the I4.0 impact on operational and competitive firm performance is mediated via digital supply chain platforms and supply chain capabilities. Lastly, operational performance boosts competitive performance. The firms should focus on digital supply chain platforms and capabilities, as mere adoption of I4.0 does not lead to competitive performance in the GCC context. The findings of this study have theoretical and practical implications.
... Finally, the resulting Z-score was analyzed. In line with prior research, we consider a firm to be financially sound if its Z-score is greater than 2.67 and financially distressed if the Z-score is less than 1.81 [81,82]. ...
Financial distress is detrimental to both companies and the development of economic society. The emergence of digital transformation provides a potentially prominent pathway for companies to address financial distress. Drawing on the dynamic capability view, this study explored the effects of digital transformation on firms’ financial distress and how this relationship may be contingent on the life cycle. Our hypotheses were empirically examined using a large panel dataset of Chinese-listed manufacturing firms and applied a hierarchical linear model with multiple high-dimensional fixed effects. The results indicate that digital transformation significantly alleviates financial distress. Moreover, the life cycle has a moderating effect on this relationship. Specifically, the mitigating effect of digital transformation on financial distress is stronger during the growth stage but weaker during the declining stage. Finally, the findings provide important theoretical contributions to the literature on digital transformation and corporate finance and offer managers valuable practical implications to mitigate financial distress.
... The following are major contributions to existing literature: First, this paper offers new insights into the impact of supply chain network centrality on M&As. Previous research in corporate finance has extensively studied the direct effects of supply chain dynamics on firm performance, including customer loyalty [20], technology integration [21], organizational resilience [22], profitability [23], and operational efficiency [24]. However, our study uniquely focuses on how the centrality of firms within supply chain networks influences their M&A behavior, utilizing social network analysis to evaluate supply chain centrality. ...
Mergers and acquisitions (M&As) are key drivers for resource integration and the operational efficiency of enterprises. Companies that hold central positions within supply chains may leverage their strategic location to reduce information asymmetry, enhancing their ability to engage in sustainable activities. However, research on the role of supply chain network centrality in M&A decisions remains underexplored. This study aims to empirically examine whether and how centrality in supply chain networks enhances the likelihood and success of M&A activities, contributing to both theory and practice in corporate strategy. In particular, we construct a novel measure of firm centrality within the supply chain and utilize panel data from Chinese A-share listed companies spanning 2008 to 2021. Our findings reveal that the central position of supply chain networks promotes the probability and frequency of mergers and acquisitions. Mechanism analysis reveals that gaining information advantages and relieving financial constraints are two key channels through which the supply chain network promotes mergers and acquisitions. Furthermore, the effects are more pronounced for firms with non-state ownership, with closer proximity to customers or suppliers, with higher operational risk, and with growth and decline phases. A series of robustness tests support these results, including alternative measures, alternative estimating methods, and sub-sample tests. Moreover, central supply chain companies exhibit better long-term financial performance following mergers and acquisitions. This paper enriches our understanding of the roles of supply chain networks in firms’ mergers and acquisitions and holds important practical implications for companies seeking to achieve sustainable and long-term development.
... Numerous scholarly publications across several study fields have been published in the academic literature, aiming to explore the financial implications of SCM through the utilization of various research designs [2,[65][66][67]. Most of these studies found a positive relationship between SCM and FP. ...
Business sectors face disruptive challenges such as cash flow problems in finance and material flow problems in supply chain and logistics processes in today’s rapidly evolving and uncertain environment. Given these challenges, effective management of resource and material flows by managers has become increasingly complex. Supply chain management is crucial for businesses to sustain competitive market positioning. This study distinctively explores the interplay between supply chain management and the financial performance of manufacturing companies, highlighting the increasingly dynamic and competitive global markets. It scrutinizes the moderating roles of supply chain agility and flexibility in this relationship, offering diverse analytical perspectives. The research methodology involved surveying white-collar employees within these companies. Factor analysis was employed to affirm the scale’s validity, and the Hayes model 3 method was utilized to test hypotheses. Our research uncovered intricate interactions between supply chain management, agility, and resilience, underscoring their collective impact on financial performance. The thesis that supply chain management has a substantial impact on financial performance was corroborated by the study’s results. The study also emphasizes the moderating impact of supply chain agility in the relationship between financial performance and supply chain management. The results of the study that supply chain resilience moderates the moderating effect of supply chain agility indicate that the interaction between supply chain resilience and supply chain agility may affect the relationship between supply chain management and financial performance if supply chain resilience enhances the resilience of organizations to external challenges. These insights suggest organizations must integrate agility, management, and resilience considerations in their supply chains to optimize performance. This study contributes a novel viewpoint to the literature, providing strategic guidance for managerial decision making.
... A relationship manager (RM) in the banking industry is part of the sales team tasked with building and maintaining relationships with clients/customers. RMs possess various tasks, one of which is to offer financial products to potential customers [3]. The banking industry plays a vital role in supporting national economic growth. ...
This study aims to analyze the effect of supply chain agility, which consists of speed, responsiveness, flexibility, and competence, on the profitability of PT. Bank Negara Indonesia. This study applies a quantitative approach using Structural Equation Modeling. The data used in this study was primary data obtained from the results of a questionnaire. Respondents in this study were 189 respondents who are permanent employees who have worked for a minimum of one year and a minimum education of Diploma 3. The study’s results indicate a positive and significant effect between supply chain speed, flexibility, and competence on the profitability of PT. Bank Negara Indonesia. While supply chain responsiveness has no effect on the profitability of PT. Bank Negara Indonesia.
... It is well-established that supply chain management (SCM) is a strategic core competence creating competitive advantage and positive financial outcomes in established firms (e.g. Ellinger et al. 2011;Gligor et al. 2020;Wagner, Grosse-Ruyken, and Erhun 2012). Likewise, functioning supply chains and supply chain relationships are success factors and often critical bottlenecks for new venture growth (Hasan 2019;Song et al. 2008;Wagner 2021). ...
We build on dynamic capability (DC) theory and apply inductive case study research to shed light on how new venture manufacturing firms develop and nurture supply chain (SC) capabilities. Our findings discern SC capabilities related to dimensions of DCs (sense, integrate, develop, reconfigure) and show how these SC capabilities evolve throughout new venture life cycle stages. We find that SC capabilities steadily substitute improvisation and imitation. Our study also reveals that SC capabilities serve as dual-purpose capabilities with an operational as well as a dynamic role. On the one hand, they are needed to operate the supply chain and enable the development and reconfiguration of the internal resource base. On the other hand, they allow for the sensing and integration of external resources and create new or update and modify existing SC capabilities. New venture firms can benefit from our study by mimicking the development of the different SC capabilities.
... Logistics, including the major function of transport, is a basic requirement for global trade, ultimately representing a critical enabler of worldwide growth and corporate success [1]. The logistics sector plays a vital role in the economy, which contributes 7% to the total GDP and employs more than 11 million people in the EU-27 [2]. ...
The logistics and transport industry is currently facing the major challenge of having a global shortage of skilled workers. To address this challenge, this paper evaluates the application of gamification in combination with augmented reality (AR) as a new approach to attract the interest of people of all ages to the logistics sector. The aim of the paper is to determine whether a gamified AR-based application called Logistify is a feasible approach to make logistics jobs more attractive. We used a qualitative approach in three phases by collecting and analysing data from different perspectives of players, teachers, instructors, and programmers about the application: (1) analysing game characteristics with programmers and workshops instructors, (2) collecting feedback from players and teachers, and (3) evaluating game scores. The evaluation shows that gamification in combination with augmented reality is a promising tool to attract people to the logistics sector and to change their perception of logistics professions. It can be concluded that the gamified AR approach is capable of increasing interest in jobs in a particular sector.
... Few researchers have observed that human resource factors could improve the effectiveness of SCM practices (e.g. Gowen et al., 2006;Ellinger et al., 2011;Ding et al., 2015). However, attaining these capabilities requires employees to be flexible in their roles, have a broad set of skills, adapt to reorganization and work in boundary-spanning responsibilities (Othman and Ghani, 2008). ...
Purpose-Human resource management (HRM) is struggling to cope with the increasingly volatile demand for skilled resources in the logistics and supply chain sector. Thus, this study discovers the possible integration of HRM and supply chain management (SCM) practices for improved supply chain performance. The purpose of this study is to explore the effect of intra HRM-SCM and joint HRM-SCM decisions on the performance of the supply chain. Design/methodology/approach-An intra HRM-SCM and joint HRM-SCM model is developed following an empirical study. Survey data collected from 109 supply chain managers from Indian logistics firms are used to test the developed hypotheses. Structural equation modeling is used to analyze and validate the model. Findings-The results suggest that supply chain performance is significantly influenced by joint HRM-SCM, compared to intra HRM-SCM practices, especially under volatile demand environments. Training and development, recruitment and selection, and performance management affect joint HRM-SCM significantly compared to the other three factors identified. Moreover, HRM and SCM show strong correlation and mutual support in identifying and fulfilling the demand of the logistics and supply chain sector. Practical implications-With a growing trend toward globalization and digitalization, a joint HRM-SCM model will help businesses make robust and informed decisions for improved supply chain performance. Originality/value-An empirical relationship between joint HRM-SCM, intra HRM-SCM, supply chain inhibitors and supply chain performance is established in this study. Although some part of this relationship may already exist, the study provides robust evidence to support this complex, collaborative relationship.
... Despite these other contributions, this Altman tool is commonly accepted to anticipate financial failures and bankruptcy risk in various industry sectors or companies within the same supply chain [33][34][35]. ...
This paper fills the gap in the financial perspective of supply chain performance measurement, related to the lack of a bankruptcy probability indicator, and proposes a predictor which is the eighth-model of the Altman Z-Score Logistic Regression. Furthermore, a bankruptcy probability ranking is established for the companies’ supply chains, according to the industry to which they belong. Moreover, the values are set to establish three categories of companies according to predictor. The probability of bankruptcy is analysed and studied for the supply chain of different industries. The building industry is revealed to have the highest probability of bankruptcy.
... The measurement of operational performance, typically centred on manufacturing and logistics processes such as order cycles, asset management and stock turnover, is well documented -for example, see Beamon (1999) and Gunasekaran et al. (2004). Other research has attempted to link supply chain management to overall strategy and firm performance -for example, see Frohlich and Westbrook (2001) on the relationship between supply chain integration strategies and performance, Johnson and Templar (2011) for an empirical analysis of the impact of supply chain strategy on cash generation and asset efficiency, and Ellinger et al. (2011) for an analysis of the relationship between supply chain management and firm performance. ...
... Various studies have established a link between SCP and a firm's overall monetary value. The leading firms in the industry with robust supply chain management have enhanced financial performance (Ellinger et al., 2011;Johnson & Templar, 2011;Hofmann & Locker, 2009). ...
The competitive nature of the pharmaceutical industry necessitates that its multifaceted supply-chain be cost-efficient and profitable. This paper aims to ascertain the critical supply-chain financial indicators influencing pharmaceutical-supply-chain (PSC) performance, revealing its unique features and assessing these indicators’ effect on profitability.
This paper measures the PSC performance of 55 public-limited Indian pharmaceutical firms, including multinational enterprises, integrating supply-chain financial variables and SCOR KPIs through a ten-year timeline. The critical supply-chain-performance indicators (SCPIs) are identified from the measured set through factor analysis. A panel data random effect model is developed, linking these critical SCPIs and profitability to understand their significant influence on profitability.
This paper has evidenced the existence of three critical SCPIs, revealing working capital efficiency, material flow efficiency and investment efficiency. It has also proved the significant influence of these SCPIs on firms’ profitability and has brought out the importance of material flow efficiency in terms of inventory and distribution efficiency as a leading contributing factor for profitability.
This paper contributes to finding key PSC performance features and their vital role in pharmaceutical firms’ profitability. Supply-chain managers can enhance PSC’s specific performance areas to be cost-efficient and can increase the firm’s profitability.
... Few researchers have observed that human resource factors could improve the effectiveness of SCM practices (e.g., Gowen et al., 2006;Ellinger et al., 2011;Ding et al., 2015). However, attaining these capabilities requires employees to be flexible in their roles, have a broad set of skills, adapt to reorganization, and work in boundary-spanning responsibilities (Othman and Ghani, 2008). ...
Purpose
Human resource management (HRM) is struggling to cope with the increasingly volatile demand for skilled resources in the logistics and supply chain sector. Thus, this study discovers the possible integration of HRM and supply chain management (SCM) practices for improved supply chain performance. The purpose of this study is to explore the effect of intra HRM–SCM and joint HRM–SCM decisions on the performance of the supply chain.
Design/methodology/approach
An intra HRM–SCM and joint HRM–SCM model is developed following an empirical study. Survey data collected from 109 supply chain managers from Indian logistics firms are used to test the developed hypotheses. Structural equation modeling is used to analyze and validate the model.
Findings
The results suggest that supply chain performance is significantly influenced by joint HRM–SCM, compared to intra HRM–SCM practices, especially under volatile demand environments. Training and development, recruitment and selection, and performance management affect joint HRM–SCM significantly compared to the other three factors identified. Moreover, HRM and SCM show strong correlation and mutual support in identifying and fulfilling the demand of the logistics and supply chain sector.
Practical implications
With a growing trend toward globalization and digitalization, a joint HRM–SCM model will help businesses make robust and informed decisions for improved supply chain performance.
Originality/value
An empirical relationship between joint HRM–SCM, intra HRM–SCM, supply chain inhibitors and supply chain performance is established in this study. Although some part of this relationship may already exist, the study provides robust evidence to support this complex, collaborative relationship.
... Companies that have the right strategy and can adapt to each function activity in the organization and are unique in serving consumer demand, then these consumers will provide more value to the company so that what is targeted in the company can be fulfilled, namely improving company performance (Davis et al., 1997). According to Rahmasari (2011) andEllinger et al. (2011) previous research, competitive advantage has a significant effect on company performance and according to research by Suharto (2013) and Tewal (2010) it shows that there is a significant positive influence between competitive strategy and company performance. Based on the description, the following hypothesis can be taken: ...
Dry Port, a supply chain company, strives to bring its workers up to speed in the current VUCA world. The study explores the degree to which ambidexterity affects agility, which can impact organizational effectiveness. The structural equation model with multilevel simulation used to test the research hypothesis. The study indicates that ambidexterity is an influential factor to agility, and that ambidexterity is also an impactful factor to agility and organizational effectiveness. Furthermore, there is also evidence that the power of agility contributes to greater organizational effectiveness, and also that ambidexterity has an impact on organizational effectiveness through workforce agility. To achieve organizational effectiveness in dry port business, mobile devices and social network technology are functional enablers of ambidextrous activities that can allow staff to be agile in handling dry port business tasks.
... The finance manager has to determine sources of funds which will create the optimum capital arrangement. The critical thing to be considered here is the balance of various sources in the overall capital mix of the firm, in such a way that it helps in maximizing compagnies' profitability (See Ellinger et al. 2011). Payment delay help in increasing the return on equity, but it will also enhance the risk (Ho, Ouyang, and Su 2008;Lashgari, Taleizadeh, and Sadjadi 2018). ...
In today’s business world, financial constraints are one of the most important reasons for supply chain failures. In such an environment, supply and demand mismatch, lack of cash flow, and inventory shortage lead to poor financial performance. This study proposes a framework to develop a system dynamics model of multi-echelon supply chains called the ‘SSB model’, with financial attributes and ordering policies to explore how payment delays affect financial performance. The SSB model was tested in grocery distribution in Morocco using system dynamics. From this study, the authors have identified how payment delays affect supply chain surplus, cash in hand, and supply chain coordination. Moreover, the study addresses how payment delays influence the financial performance of the entire supply chain. Practitioners and researchers can refer to this study to make better decisions in supply chain transactions.
... Croxton et al. (2020) investigate the consistently relevant issue of supply chain relationship management in "Do Supply Chain Exemplars Have More or Less Dependent Suppliers?" Supported by extant literature in relationship management (see Ellinger et al. 2011;Krause and Ellram 2014), the authors examine whether buying firms benefit from supplier dependency. Examining 3,000 supplier relationships, the authors develop a portfoliolevel measure (see Tokman et al., 2007) of buyer-supplier dependence, taking into consideration both the pros and cons of dependence. ...
... The final core leg of supply chain activities belong to distribution in terms of packaging, warehousing, inventory and logistics (Ciliberti, Pontrandolfo, & Scozzi, 2008). The right distribution approach ensures the longevity and financial success of the firm (Ellinger et al., 2011). After sales services belong to customer relationship and their management in terms of different demands and requirements and meeting them on time with minimum variation (Ahn & Sohn, 2009;Forza & Salvador, 2008). ...
The purpose of this study is to explore the effect of lean practices on performance measures in the automotive industry and identify the lean criteria that can have significant impact on automotive supply chain. The identified lean practices can serve as a template to enhance the performance of a supply chain. The present study offers a multi-criteria decision-making approach to identify the effective performance practices in automotive lean supply chain. The decision-making trial and evaluation laboratory (DEMATEL) was applied on a matrix of observed values and the actual effect of proposed practices was observed. Further it was confirmed with the help of fuzzy- Vlsekriterijumska Optimizacija I Kompromisno Resenje (VIKOR; that means multicriteria optimization and compromise solution, with pronunciation). The criteria which had the most impact are proposed for achieving the future goals of leanness. It was found that among the lean criteria considered, quality management, information management and customer management practices influence the key performance measures more than others. Although DEMATEL and fuzzy-VIKOR were applied for situation leading to setting up of priorities of factors that considered affecting automotive manufacturer, the proposed methodology can be applied in diverse industrial settings. The present study may help decision-makers to device the appropriate strategy in identifying major practices that influence the lean supply chain.
... In summary, we can say that many research papers have empirically assessed the positive influences of supply chain efficiency on firm performance and financial success (e.g. Brandenburg, 2016;Ellinger et al., 2012;Ellinger et al., 2011). In addition, supply chain efficiency is one of the key performance factors that can play a significant role in the development of the supply chain and create competitive advantages (Nikfarjam et al., 2015). ...
Purpose
The purpose of this study is to examine the impacts of different forecasting methods (judgmental, quantitative and mixed forecasting) on firms' supply chains and competitive performance.
Design/methodology/approach
Working with three groups of manufacturing companies, we explore the consequences of judgmental, quantitative and mixed forecasting methods on firms' competitive performance in supply chains. The validity of constructs and path relationships was examined using structural equation modeling (SEM).
Findings
Our findings indicate that supply chain efficiency influences both cost reduction and customer satisfaction. In addition, the three dimensions of supply chain performance are shown to be direct antecedents of competitive performance. Our empirical results reveal that although all studied forecasting methods meaningfully influence supply chain performance, the mixed method, compared to the other two methods, has greater capabilities to enhance supply chain performance.
Originality/value
This research provides originality and insight into supply chain practices through forecasting methods to improve competitive performance
... Interdepartmental cooperation and integration is vital for constructing purchasing strategies convergent to the organization interests (Narasimhan & Das, 2001;González-Benito, 2007;Stank et al., 2011;Driedonks et al., 2014;Swink & Schoenherr, 2015). Still regarding the relationship of supply chain areas with the other organizational cells, it is fundamental for it to be well positioned in the company's hierarchy, influencing relevant decisions and integrated to the strategic planning process (Reck & Long, 1988;Pearson & Gritzmacher, 1990;Heckmann et al., 2003;Brandmeier & Rupp, 2010;Ellinger et al., 2011). ...
Abstract: Supplier selection processes generally evaluate several criteria in order to fulfill a demand. But, what if
the demand itself could be rethought, spreading the possibilities of acquisition? What are the impacts in cost and
utility of buying objectives instead of pre-determined materials? This work tries to expand this discussion with
a mathematical programming approach to selecting suppliers with demand relaxation. The requirements for the
framework development and application in purchasing departments are also pointed out. Its adoption in association
with combinatorial auctions concepts in a hypothetical but realistic context suggests a high potential to cost reduction
with no significant utility decrease.
Keywords: Supplier selection; Purchasing; Demand relaxation.
... Research has shown a positive relationship between financial performance in terms of working capital, revenue and operating costs of the firm with supply chain management (SCM) capability. Industry renowned firms with capable SCM have better financial performance (Ellinger et al., 2011). ...
The automobile industry is broadly categorized into three segments—commercial vehicles, passenger vehicles and two/three-wheelers. The automobile supply chain is complex, as this includes raw material suppliers, component manufacturers, sub assemblers, final assemblers, different distribution channels, networks and end consumers. This demands a robust supply chain that can integrate all these links for cost efficiency and profitability. The objectives of this article are to find segmental differences in the supply chain performance of the Indian automobile industry and to quantify the impact of supply chain performance on the overall profitability of the firms across the segments.
This article measures the performance of the supply chain of Indian automobile industry segments integrating supply chain financial metrics and supply chain operations reference key performance indicators (SCOR KPIs) through a 10-year timeline. The results are compared across segments to identify unique performance features, if any, using ANOVA. A panel data fixed effect model (least square dummy variable [LSDV]) is constructed to establish the relationship between supply chain performance and profitability and to understand whether the identified supply chain performance variables have any significant impact on profitability across the segments.
This article has evidenced that though the supply chain of two/three-wheelers segment is performing better in fixed asset and inventory turnover it is more impacted by distribution inefficiency. The supply chain of the commercial-vehicles segment is impacted more by excess fixed assets, distribution inefficiency and poor inventory turnover. Although inventory turnover of passenger-vehicles segment is better than that of the commercial vehicles, the supply chain fixed assets remain a concern for this segment. Across the industry segments, the profitability of the segment is more impacted by poor distribution efficiency compared to fixed assets and inventory turnover.
This article contributes towards finding key segmental supply chain performance features of the Indian automobile industry and building a panel data fixed effect model by integrating supply chain performance indicators with the profitability of the firms across the segments. This model can contribute towards effective decision-making in the automobile supply chain.
... Based on this function, Altman (1968) classifies 95% (31 of the bankrupt firms and 32 of the ongoing firms) of his sample correctly while a cut-off value has to be estimated for this classification (Altman 1968): The higher the Z-Score of a firm, the lower its risk of bankruptcy (for Altman's sample firms with a Z-Score higher than 2.99 clearly fell into the "non-bankrupt" sector). Although the emerging coefficients of X1 to X5 are sample specific estimates, the "classic" coefficients are widely used in research and practice (Agarwal and Taffler 2007;Randall et al. 2006;Swamidass 2007;Ellinger et al. 2011;Steinker et al. 2016). In contrast, and in order to avoid any shortcomings we apply Altman's procedure to our data in order to re-estimate the coefficients and generate sample specific Z-Scores. ...
Vertical disintegration in manufacturing industries has been an increasing trend since the 1990s in many countries. According to a prevailing management paradigm of focusing on core competencies, firms should have vertically disintegrated (i.e. outsourced non-core competencies) to achieve cost savings, enhance competitiveness and improve firm performance. In line with this management paradigm, most empirical studies therefore hypothesized a negative linear relationship between the degree of vertical integration and firm performance, expecting performance to rise when vertical integration decreases.
In contrast to previous studies, finding mixed results, we assume an inverted u‑shaped relationship, theoretically based on transaction cost economics and the resource-based view of the firm, and by considering advantages and disadvantages of vertical integration, with an optimal level of vertical integration, where firms with a too low degree of vertical integration could achieve higher performance by vertical integration, while firms with too broad vertical integration could achieve higher performance by vertical disintegration.
With respect to our data based on a sample of 434 German manufacturing firms between 1993 and 2013 we find a decreasing trend of vertical integration over time. Applying multiple regression analysis, our findings suggest a positive, but diminishing relationship between the degree of vertical integration and financial performance. These two findings describe a paradox of vertical disintegration. The decreasing trend mainly emerges because lower performing firms outsourced their activities significantly whereas high performing firms do not show such a development. Overall, our results indicate that German manufacturing firms might have gone too far in in their vertical disintegration strategy by following a management paradigm which needs much more critical reflection.
... Research has shown positive relationship between financial performance in terms of working capital [inventory, account receivables (AR) and account payables (AP)], revenue and operating costs of the firm with supply chain management capability. Industry renowned firms with capable supply chain management has better financial performance (Ellinger et al., 2011). ...
Purpose
Pharmaceutical industry involves highly specialized business processes where strong research and development focus along with market differentiation and localization are the deciders of success. This has led to evolution of segments and complexities in supply chain. This paper aims to focus on segmental differences in supply chain performance of Indian Pharmaceutical firms.
Design/methodology/approach
This paper measures supply chain performance of select segmental players of the pharmaceutical industry using financial metrics and supply chain operations reference (SCOR) key performance indicators through a five-year timeline. The best performance results are compared across the segments to identify unique performance features, if any. The sample results are validated through hypothesis testing methodology.
Findings
This paper has evidenced that the innovators segment is performing better in cash-to-cash cycle time and supply chain working capital productivity, whereas generics segment is doing better in distribution cost efficiency and total cost to serve aspects.
Research limitations/implications
The paper is based on historical financial data of firms and measures the firm focused supply chain performance. The results may not be generalized in a global context but serve as a motivator for other researchers to take similar studies. The paper may further be analyzed with primary data of the firms to understand the segmental difference in customer focus supply chain performance measures.
Practical implications
This paper has brought out important segmental supply chain performance features of the Indian pharmaceutical firms and identified segment-specific problems by integrating SCOR KPIs and financial metrics.
Originality/value
This paper has integrated both SCOR KPIs and financial metrics to provide unique insights on segmental differences in the performance behavior of pharmaceutical supply chain.
This chapter establishes the foundational concepts of Supply Chain Risk Management (SCRM), focusing on risks arising from natural disasters. It clarifies the distinctions between risk and uncertainty, emphasising their critical roles in supply chain disruptions. The chapter explores both upside and downside risks, integrating perspectives from decision theory and finance, while addressing the debate between objective and subjective risk assessments. Positioned within the broader field of Supply Chain Management, this chapter traces the evolution of SCRM from firm-level concerns to a holistic, supply chain-wide approach. By providing a detailed typology of supply chain risks and disruptions, it offers essential insights for understanding the impact of disasters on firm performance, setting the stage for deeper exploration in subsequent chapters.
The timing of managing capital flow and logistics within supply chains typically encompasses three scenarios: capital flow synchronizing with, lagging behind, and preceding logistics, which are commonly observed in practice. However, very few papers have addressed the research questions such as why these orders happen in supply chains and which scenario would be better for a supply chain. To fill this gap, we use an economic order quantity setting and take a game-theoretical approach to answer these questions for a two-echelon push supply chain consisting of a supplier and a retailer across the above three scenarios. Our study yields the following results. First, if the retailer’s unit opportunity gain is small and the trade credit period is large, the retailer prefers the scenario of capital flow synchronizing with logistics, and otherwise, the scenario of capital flow lagging behind logistics. Second, it is better for the supplier to make capital flow precede logistics if the supplier’s unit opportunity gain is relatively large, capital flow lag behind logistics if the supplier’s unit opportunity gain, opportunity cost, and the retailer’s unit stock-holding cost, opportunity gain are small, and the trade credit period is large, or the value of the supplier’s unit opportunity gain is relatively middle, and otherwise, capital flow synchronize with logistics. Last, the scenario that capital flow precedes logistics is better for the whole supply chain if the supplier’s unit opportunity gain is sufficiently large; otherwise, it is not the case.
This study investigates how supply chain characteristics influence a rival firm's response to a focal firm's product preannouncements from a competitive dynamics perspective. Indeed, many firms recognize that it is critical to leverage their supply chains to gain a competitive advantage. We propose that common suppliers enhance a rival firm's awareness of the focal firm's credibility, reducing competitive responses. In addition, a rival firm's strong supplier inventory performance will motivate rivals to respond more aggressively, while the rival's supply–chain partnerships enhance its capability to react to the focal firm. Using panel data from S&P 1500 firms between 2007 and 2015, our findings provide support for our hypotheses, illustrating that supply chain characteristics can significantly influence a rival firm's responses to the focal firm's preannouncements. This research contributes to the competitive dynamics and supply chain management literature by highlighting the strategic role of supply chain characteristics in interfirm competition, offering practical insights for managers on leveraging supply chain resources to effectively navigate competitive threats.
Supply chain finance (SCF) stems from supply chain management (SCM), where firms deploy various approaches (e.g., inventory management and working capital management) to maximize firm performance. Firms utilize working capital management (WCM) to optimize their operating cash to create firm value. This study focuses on how firms could deploy the WCM approach through receivables, inventories, and payables to maximize long-term and short-term firm performance. It is worth noting that the components in WCM serve different roles in firm performance where shareholders value shorter receivable periods to avoid customer default risk, but firms could benefit from long receivable periods for short-term operation performance. In addition, governments from various countries implemented different policies to reduce adverse economic impacts of the pandemic. The sample includes publicly listed manufacturing companies in the United States, the United Kingdom, Singapore, and Australia where different levels of government response have been observed. By using Ordinal Least Squares (OLS) regression analysis and adopting government policy as moderator, the results show that the government actions during the pandemic serve as the mitigating effect in the manufacturing supply chain. The analyses also show that the government policies implemented have successfully supported supply chain resilience during pandemic, especially to loss-making firms from decreased firm value.
Digitally enabled supply chains, particularly operating in uncertain environments, have been offering emerging domains for research. The effects of Timely Information Sharing (TIS) on Financial Performance (FP) in the context of Supply Chain Finance (SCF) have been hitherto neglected, especially in the context of environments affected by uncertainty. The study contributes to the related literature by developing an integrated framework interlinked with Information Processing and Contingency theories and it facilitates the understanding of the relationships that exist among SCF, TIS using advanced technology, and FP in the context of the environments affected by uncertainty caused by unpredictable events like terrorist attacks and pandemics. To corroborate the relationships and validate the relative framework, we applied Structural Equation Modelling to the data collected from 261 firms. Our findings show that SCF significantly influences FP and that TIS plays a mediating role in enhancing FP interlinked with modern technology. The study also provides the implications of SCF and TIS in strengthening Supply Chain Management 4.0 operations affected by unprecedented circumstances that hinder FP and its viability within the supply chains’ context.
Over the years, rival companies have appropriately turned their attention towards effectively monitoring their supply chains. There is an emphasis on implementing supply chain management practices (SCMP) and promoting supply chain agility, which will lead to increased performance and competitive edge. The researchers covered SCM practices and competitive advantage under five sub-constructs while SCM agility and performance were represented by two sub-constructs. The study aimed to provide a questionnaire that is both reliable and valid, designed to measure the impact of supply chain management (SCM) practices and SCM agility on competitive advantage and firm performance within the Indian pharmaceutical industry. Data collection was done using a simple random sampling technique which gave 227 complete responses obtained from listed as well as unlisted pharmaceutical companies. The data was then statistically analysed using IBM SPSS 26 and SmartPLS 4. The resultant questionnaire instrument can be used by supply chain professionals in the pharmaceutical industry in order to conduct primary research and to derive insights that would help in crucial decision-making regarding pharmaceutical SCM with the aim of improving organizational performance.
The Internet allows for more consumer and service provider interaction as well as more access to product and service information. Therefore, online customers now have more power of influence and negotiation than those in physical stores. The Internet shifted the power balance in favor of customers by allowing them to compare items and locate alternatives without being pressured by salespeople. On the other hand, various issues have emerged with respect to supply chain performance and customer satisfaction. The goal of this study is to assess the logistical performance of online supermarkets from the perspective of their customers. It aims to improve our knowledge of customers’ expectations for the relevant service and how they view the final delivery. The Kano model is used to assess customers’ perceptions regarding the presence and absence of attributes related to supply chain service quality in the case of Greek supermarkets.
Purpose
The present manuscript assesses how firms should manage frequent supply chain disruption triggers and whether these firms should use existing supply chain competencies, develop new ones or both to mitigate any adverse consequences on financial performance.
Design/methodology/approach
Data for the study come from a survey administered to professionals in India. India was an appropriate base for the study because of its developing economy and businesses often facing SC disruptions in the marketplace.
Findings
The findings show that the negative association between the frequency of supply chain disruption triggers and financial performance is weaker when a firm utilizes supply chain exploitation competencies. Conversely, the negative association between the frequency of supply chain disruption triggers and financial performance becomes stronger when using supply chain exploration competencies. Most significantly, however, the authors show that a strategy of supply chain ambidexterity – one that combines both exploitation and exploration practices – is more beneficial in mitigating the impact of frequent disruption triggers on firm financial performance compared to the other strategies.
Originality/value
These findings contribute to the literature, extending the benefits of ambidexterity beyond domains of innovation, manufacturing flexibility, competitiveness and firm performance to include mitigation of supply chain disruptions.
The supply chain has different approaches, each of which has advantages and disadvantages. Therefore, the complexity of the systems involved in the supply chain can be best understood through analysis and modeling. In this way, insight can be gained into the interactions of the subsystems of the supply chain. Therefore, the supply chain's basic models will be described due to this issue’s importance. In the meantime, a complete description of the Supply Chain Operation Reference Model (SCOR) will be given. Then, the definition of different supply chain paradigms and approaches, including the lean approach, agile approach, Resilience (sustainable) approach, green approach, LARGe approach, and SCALE (Supply Chain Advisor Level Evaluation) approach, are discussed. Moreover, a complete description of network models in supply chain evaluation is given, which includes definitions such as the difference between supply chain network and supply chain, the structure of supply chain network (series, divergent, mixed), and how to analyze the supply chain network and Common types of supply chain network (Forward supply chain, Reverse supply chain, Closed-loop supply chain (CLSC).
Obtaining substantial financial benefits from supply chain management initiatives is of central importance to senior management. In this study we empirically investigate the impact of the basic drivers of profitability that are influenced by supply chain initiatives (i.e., revenues, costs, fixed assets and working capital) on the profitability of more than 20,000 large and mid-size European manufacturers. The existence of correlations among the basic drivers of profitability indicates that supply chain initiatives can have multiple (sometimes unintended) consequences, and points to the importance of managing and controlling all basic drivers simultaneously. In particular, our analysis reveals that despite the growing importance of supply chain management, the surveyed companies were not able to improve their operating profit margin and cash-to-cash cycle time simultaneously, resulting in their inability to increase profitability as fast as their revenues. This suggests that top-line initiatives cannot improve profitability, without effective supply chain initiatives to manage costs and assets.
Due to institutional pressures faced by companies in their business environment, this paper investigates how sustainability certification adoption affects global suppliers' competences. Using multiple case studies, managers of 20 export‐oriented firms were interviewed, and secondary data were collected and analysed through inductive content analysis. Findings show normative and mimetic pressures as central for sustainability implementation by coffee suppliers. Additionally, we found that as a result of suppliers' sustainability improvement in their own operations, during the certification adoption, new competences emerged going beyond the triple bottom line dimensions, including improvements in aspects of institutional dimension of sustainability. In contrast to previous research in supply chain sustainability that emphasises coercive pressures, this paper demonstrates the role of normative and mimetic institutional pressures in developing new supplier competences. In doing so, we draw on the role of certification adoption in influencing global suppliers and hence sustainability throughout the supply chain.
Due to shifting consumer expectations and the growth in e-commerce, companies are flush with returned product and excess inventory. Many firms have turned to secondary market channels to disposition excess goods and capture a greater percentage of their value. However, the secondary market has not gained sufficient attention from supply chain management researchers. To understand how firms are using these alternative channels of disposition, we collected and analyzed longitudinal survey data (collected in 2014 and 2017) from the United States and China. We find that US firms generally utilize secondary markets for different reasons than their Chinese counterparts and have found more success. However, while the results suggest that US secondary markets are more mature than their Chinese counterparts, the gap between the two countries appears to be narrowing.
Las empresas deben complementar el uso de los modelos matemáticos con la evaluación de la gestión organizacional relacionada a la gestión de los inventarios de una manera integral. La carencia de una adecuada herramienta que permita la evaluación cuantitativa y cualitativa de los elementos de la organización que influyen en la efectividad de la gestión del inventario; constituye el problema científico a resolver en la presente investigación.Para solucionar este problema se ha formulado como objetivo general diseñar un modelo de referencia para evaluar integralmente la situación de la gestión de los inventarios en los sistemas logísticos. Como resultado se obtuvo el Modelo de Referencia de Inventarios (MRInv), a través del cual pueda evaluarse integralmente la gestión de los inventarios y sea la base de su mejoramiento, con un análisis enfocado en los elementos y las interrelaciones entre los procesos del sistema logístico que influyen en la gestión del inventario, lo cual constituye la novedad científica. Esto se confirma con las aplicaciones en las empresas TRD-Caribe, EMSUME y EMCOMED, donde se evaluó integralmente el nivel de gestión de inventarios, posibilitando la definición de un plan de acción que de forma objetiva contribuye al proceso de mejora.
This study sought to utilize Six Sigma techniques to guide the design and selection of promotional materials and strategies to attract college students to an undergraduate Supply Chain Management major. Affinity Diagramming was used to collect and summarize students’ comments on what factors they considered when selecting a career. Pareto was used to prioritize their responses. Quality Function Deployment was used to align promotional materials and strategies to ensure that they addressed the factors identified by the students. Six unique promotional materials and strategies were identified as the most effective in attracting students to the Supply Chain Management major.
Purpose
This study aims to investigate the extent to which the presence of chief supply chain officers (CSCOs) in top management teams (TMTs) helps firms to reduce the incidence of product recalls.
Design/methodology/approach
The authors identified all recalls for the period 2010–2017 issued by publicly held firms regulated by the US Consumer Product Safety Commission. These data were subsequently combined with information on TMT composition from BoardEx and financial performance data from Compustat to create a unique data set.
Findings
The study identified a significant and negative association between CSCO presence and incidence of product recalls. The evidence also supports the conjecture that this association is stronger in larger firms, indicating that CSCOs are especially effective when operating within more complex supply chains.
Practical implications
The findings provide important insights into quality management in contemporary supply chains and indicate that assigning specific responsibility for supply chain management to a TMT member improves product reliability.
Originality/value
These findings contribute to the growing literature on the underlying causes of a product recall by identifying corporate governance antecedents of external quality failures of this kind.
The government of Karnataka has announced wine policy, as result of which many wine yards were established. Nisarga winery in Vijaypur district was one such unit. The specific objectives of the study are to estimate the growth rates in production and sale of different wines and to study per liter production cost of different wines. The primary data for the year 2017-18 was collected from the general manager of the unit. The growth rate analysis, descriptive statistics were used for the study. The Compound annual growth rate of production of Nisarga winery was 1.94 which was non-significant whereas its 1.86 for sale which was significant @ 1 per cent.
Purpose
The main aim of this paper is to develop a supply chain efficiency framework to improve overall business performance in the competitive era. This paper offers a critical literature review on supply chain efficiency that aims to reveal the basic research that has been carried out, the problem areas and requirements for the efficiency in the new era of the supply chain.
Design/methodology/approach
The methodology followed during this research involves beginning with a wide base of articles lying at the supply chain intersection, performance measurement topics, and then screening the list to concentrate on supply chain efficiency.
Findings
Findings show that supply chain efficiency in the modern era remains an open research field. This research contributes to the supply chain literature by clarifying the supply chain efficiency definition, defining key measurements and variables for supply chain efficiency and developing a supply chain efficiency framework to improve overall performance.
Practical implications
This study will be very useful to the scholars working in this field. The proposed framework would help researchers and academicians to understand every dimension and variable of supply chain efficiency, allowing practitioners to measure efficiency levels and identify improvement measures. This framework would also act as a comprehensive guide for future studies and business practices.
Originality/value
As there are several state-of-the-art review papers on various supply chain areas, there is a lack of literature available on supply chain efficiency studies that can provide a comprehensive framework for researchers on related literature. Thus, the present study seeks to bridge this gap in the supply chain literature. Also, this study will provide a strong basis for researchers and academicians to apply the supply chain efficiency measurement system to the dynamic supply chain.
The objective of this paper is to identify antecedents of inventory agility (i.e., the capability to quickly adapt inventories to changes in demand) upon demand shocks based on the awareness‐motivation‐capability (AMC) framework and to explore the link between inventory agility and financial performance. We introduce an empirical measure of inventory agility based on the deviation of relative inventories (i.e., inventory days) from their forecasted values. We hypothesize that firms with higher awareness, motivation, and capabilities are associated with higher inventory agility in the presence of demand shocks. We define two empirical measures for each of the three dimensions of the AMC framework in the context of inventory agility: awareness (i.e., market orientation and technology orientation), motivation (i.e., gross margin and liquidity), and capabilities (i.e., inventory management capability and resource availability). In addition, we incorporate the constraining factor model (CFM) into the AMC framework, thus allowing for complementarity among the different measures. In this view, the influence of each of the measures on inventory agility varies according to which of the measures is the constraining factor for a given firm. The 2008 financial crisis may have tested firms' inventory agility more than any other crisis since the Great Depression, as an unprecedented collapse of demand coincided with a reduction in credit availability. Therefore, for our analysis, we use firm‐level empirical data from 1263 public U.S. manufacturing firms for the 2005–2011 period. We find that firms' motivation and capabilities are key factors associated with inventory agility. Through the CFM, we show that identifying the constraining factors leads to a more refined understanding of the moderating effects of the antecedents of inventory agility. In a separate analysis, we find that inventory agility is positively associated with a number of financial performance metrics during crisis periods. We distinguish between inventory underages and overages and find that, during the crisis, they are both associated with lower financial performance. Furthermore, we find evidence that higher underages (overages) magnify the effect of overages (underages). Among other managerial insights, our findings suggest that the use of inventory reductions as a quick way to increase liquidity must be gauged against their potential impact on other aspects of financial performance.
Purpose
Supply chain management (SCM) proficiency is generally associated with superior business performance. Yet, SCM research continues to focus predominantly on the performance of individual firms, rather than on the collective performance of multiple supply chain participants as espoused by the extended enterprise (EE) concept. In response to calls for quantitative studies that examine the collective performance of multiple supply chain participants, this research study compares the combined performance of triads comprising focal firms recognized for their relative SCM proficiency and their upstream (supplier) and downstream (customer) supply chain partners with that of their close industry competitors' triads.
Design/methodology/approach
The triadic, longitudinal examination of multiple supply chain participants' collective performance utilized archival financial data of the period 2007–2017 from the Compustat database and the supply chain (SPLC) function of Bloomberg.
Findings
Findings of this study indicated that supply chain triads that included focal firms recognized for their relative SCM proficiency experienced significantly lower sales and general administrative expenses and significantly higher productivity, return on assets and profitability over time than their close industry competitors' triads. However, contrary to expectations, the performance advantages identified did not extend to revenue growth.
Research limitations/implications
Supply chain triads cannot fully represent entire supply chains or EEs. However, this study’s triadic analysis can be viewed as a practically achievable proxy for further validating the EE concept. Moreover, based on assertions that triadic studies are suitable for SCM research and on empirical studies that consistently show individual firms recognized for their relative SCM proficiency outperform competitors, the authors contend that the study’s findings appropriately corroborate the value of the EE concept.
Practical implications
Because such empirical evidence is so rare, the consistent, collective performance advantages identified in this study should be highly significant to managers.
Originality/value
Robust, longitudinal evidence that supply chain triads which include focal firms recognized for relative SCM proficiency collectively outperform their close industry competitors' triads extends generally accepted associations between SCM proficiency and business performance, suggesting that the application of extended resource-based view (ERBV) in supply chain contexts warrants further examination and further substantiates the efficacy of the EE concept.
Extant literature offers differing perspectives regarding whether buying firms benefit from having highly dependent suppliers. One view is that buyers benefit from having dependent suppliers as this provides buyers the ability to dictate terms in the relationship. An alternative perspective is that buyers are worse off from having dependent suppliers in that this dependence can lead to conditions that harm value creation. In this manuscript, supply chain management theory is extended by evaluating these differing predictions. This is accomplished by analyzing a database from Bloomberg of objective, secondary data for more than 3,000 supplier relationships for 49 firms independently recognized as possessing exemplar supply chains and 530 of these firms’ largest industry rivals based on GICS industry codes. These data are utilized to develop a portfolio‐level measure of buyer–supplier dependence that incorporates the bilateral nature of dependence. The findings indicate that, relative to their industry rivals, firms with exemplar supply chains have suppliers with a lower level of dependency. These results contribute to theory, inform management practice, and suggest avenues for future research.
Since its introduction as a concept in the 1980s, supply chain management (SCM) has undergone significant modification and expansion. A qualitative analysis of 166 unique definitions of SCM published in the literature iden-tified three major themes associated with the supply chain and SCM: (1) activities; (2) benefits; and (3) constituents/ components. Utilizing these themes, key research questions and issues within the supply chain and SCM are identified that could be examined by marketing scholars. Keywords Supply chain management (SCM) . Research opportunities . SCM components . Qualitative analysis Introduction
Supply chains are increasingly important, yet little is known about the determinants of their success and failure. Drawing on the resource-based view and research on "adhocracy," in this study we examined the effects of cultural competitiveness within supply chains on order fulfillment cycle time. The results indicate that entrepreneurship, innovativeness, and learning function as first-order indicators of a higher-order latent construct we label "cultural competitiveness" that, in turn, has a positive effect on cycle time reduction.
Most discussions and articles about supply chain metrics are, in actuality, about internal logistics performance measures. The lack of a widely accepted definition for supply chain management and the complexity associated with overlapping supply chains make the development of supply chain metrics difficult. Despite these problems, managers continue to pursue supply chain metrics as a means to increase their “line of sight” over areas they do not directly control, but have a direct impact on their company's performance. We provide a framework for developing supply chain metrics that translates performance into shareholder value. The framework focuses on managing the interfacing customer relationship management and supplier relationship management processes at each link in the supply chain. The translation of process improvements into supplier and customer profitability provides a method for developing metrics that identify opportunities for improved profitability and align objectives across all of the firms in the supply chain.
Increasingly, supply chain management is being recognized as the management of key business processes across the network of organizations that comprise the supply chain. While many have recognized the benefits of a process approach to managing the business and the supply chain, most are vague about what processes are to be considered, what sub-processes and activities are contained in each process, and how the processes interact with each other and with the traditional functional silos. In this paper, we provide strategic and operational descriptions of each of the eight supply chain processes identified by members of The Global Supply Chain Forum, as well as illustrations of the interfaces among the processes and an example of how a process approach can be implemented within an organization. Our aim is to provide managers with a framework to be used in implementing supply chain management, instructors with material useful in structuring a supply chain management course, and researchers with a set of opportunities for further development of the field.
The cash-to-cash (C2C) metric is a measurement tool which may be used to bridge the management of firms and functions in a supply chain. C2C can be used by management to improve firm liquidity position and overall firm value. Measuring C2C also offers a consistent measure across time, helps to identify the greatest leverage points and opportunities for improvement, serves as a means to set goals for improvement within the supply chain, and can help to optimize the entire supply chain, instead of sub-optimizing individual portions. In this study, the authors illustrate the calculation of cash-to-cash, investigate changes in C2C between product and service industries to identify key differences, review and discuss key leverage points of C2C, and provide insights for today's service industry managers to understand the C2C metric from both accounting and supply chain management perspectives. Data in this study can also be used for benchmarking purposes.
In order to improve performance at the operational level, more and more firms are developing explicit linkages with suppliers and with customers. While the question of “what beneficial impact do linkages with suppliers and with customers have for a firm” has been addressed in numerous studies, the equally important question of “why” this beneficial impact arises deserves further discourse and explication. This paper borrows and applies the Resource-Based View of the Firm, a theoretical perspective prevalent in the strategic management literature, to develop a conceptual framework to describe, explain, and predict the advantages of a firm's linkages with entities in its supply chain on its internal operations. The proposed framework can be used to justify decisions to develop, strengthen, and protect relationships with suppliers on the upstream side and with customers on the downstream side. The framework can also be used to evaluate practices implemented to link a firm to its suppliers and customers and to provide a decision roadmap for firms to better understand how to maximize operational performance benefits from these supply chain linkages.
In order to receive adequate rewards for the firm's innovations and performance in logistics, managers have to measure and sell the value that is being provided to customers. Value, once determined, must be sold to customers and also to top management within the firm. There are several value metrics mentioned in the literature, ranging in financial sophistication from customer satisfaction to shareholder value including: customer satisfaction, customer value-added (CVA), total cost analysis, segment profitability analysis, strategic profit model and shareholder value. While customer satisfaction and CVA may lead to the achievement of higher shareholder value, the specific connection to changes in value for the customer or the supplier are typically not made. The other measures focus on the measurement of value in financial terms. However, financial measurements such as total cost analysis only capture part of the value created by logistics. One of the problems faced by logistics professionals over the years is that logistics has been viewed simply as a cost that needs to be reduced. Segment profitability analysis and the strategic profit model are more complete measures of the impact of logistics, but they are used to evaluate historical performance and lack measures of risk and the time value of money that are included in shareholder value.
Despite abundant information explaining the expected benefits from successful just‐in‐time (JIT) implementation, only tenuous validation of the linkage between financial performance and JIT exists. Managers act rationally in implementing JIT if they are convinced that JIT enhances firm performance. From both a cross‐sectional and longitudinal perspective, this survey study of 253 US manufacturing firms finds significant statistical relationships between measures of profitability and the degree of specific JIT practices used. The evidence provides empirical support to the premise that firms that implement and maintain JIT manufacturing systems will reap sustainable rewards as measured by improved financial performance.
There is great discussion but little consensus on the best measures of organizational performance. This book redresses this imbalance. Measuring Organizational Performance offers a framework with which to better understand the implications of selecting variables for use in both empirical studies and practice where organizational financial performance is the critical issue. © Robert B. Carton and Charles W. Hofer 2006. All rights reserved.
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In its current form, the Deming management method contains a prescriptive set of 14 points that serve as guidelines for appropriate organizational behavior and practice regarding quality management. Despite the apparent effect of these 14 points on both the industrial world and the practice of management theory around the world, there is little evidence of the role of the Deming management method in the formalization and advancement of management theory. Although its impact on management practice is clear, neither its theoretical contribution nor its theoretical base has yet to be articulated. Yes, there is a theory of quality management underlying the Deming management method, but at present, this theory is presented in the prescriptive form of these 14 points. We propose and articulate a theory of quality management to describe and explain the effects of adopting the Deming management method. This theory is based on the conceptual synthesis of Deming's writings, literature on the Deming management method, observations of practice, and, more specifically, the results of a Delphi study involving a panel of experts on the Deming management method. We trace the development of this method, position it within the context of theory, describe our theory formulation process, propose and explain an underlying theory of quality management, and offer implications for practice and further research.
With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
Supply chain management is a competitive differentiator for many types of businesses, and CEOs who neglect it may be putting their firms in jeopardy. So say Slone, the executive vice president of supply chain at OfficeMax, and two of his colleagues at the University of Tennessee. The authors identify key areas where CEOs can influence their supply chains and show them how to assess the influence they currently exert. Good SCM starts with finding the right people to lead a company's supply chain operation, from the most senior on down the ranks. CEOs need to participate in hiring a top-notch supply team that will use customer-focused metrics and best-practice benchmarking to bring about cross-functional alignment and achieve efficiencies, which the CEOs should personally review. Articulating the strategies to reach those goals - including effective use of supply chain technologies - and rewarding the employees, suppliers, and customers who make positive contributions are part and parcel of SCM success. Sales and operations planning is an essential component of SCM. A well-devised S&OP process can eliminate cross-functional disconnects and thereby reduce product complexity and obsolete inventory - two serious threats to the supply chain. This approach should also extend to business planning, promotional programs, and customer-contract negotiations, with their inherent supply chain ramifications. Even the best supply chain planning can be undermined, however, if its scope is only short-term. For example, sales strategies that don't align monthly and quarterly goals with long-term SCM objectives can lead to end-of-period surges, with potentially costly consequences for your company and its suppliers, partners, and customers. Attention to the supply chain requires attention to the long haul.
Management is on the verge of a major breakthrough in understanding how industrial company success depends on the interactions between the flows of information, materi-als, money, manpower, and capital equipment. The way these five flow systems interlock to amplify one another and to cause change and fluctuation will form the basis for antici-pating the effects of decisions, policies, organizational forms, and investment choices." (For-rester 1958, p. 37) Forrester introduced a theory of distribution management that recognized the integrated nature of organizational relationships. Because organizations are so intertwined, he argued that system dynam-ics can influence the performance of functions such as research, engineering, sales, and promotion.
Describes a comprehensive set of fact-based performance measures that can be used to describe accurately a world-class supply chain of plan, source, make and deliver activities. Aims to help companies take a broad supply-chain-process perspective by quantifying performance improvement opportunities across the entire supply chain. Includes quantitative measures such as cash-to-cash cycle time and supply chain response time, as well as qualitative analysis of best-in-class performance. Best practice benchmarks provide more insight into how to achieve world-class performance.
A resource-based approach to strategic management focuses on costly-to-copy attributes of the firm as sources of economic rents and, therefore, as the fundamental drivers of performance and competitive advantage. Interest presently exists in whether explicit acknowledgement of the resource-based view may form the kernel of a unifying paradigm for strategy research. This article addresses the degree to which a resource-based view represents a fundamentally different approach from theories used in industrial organization (10) economics. The central thesis is that, put informal terms, the resource-based approach is reaching for a theory of the firm. To determine its distinctiveness in comparison to IO, therefore, an appropriate comparison is with other theories of the firm developed within that tradition. Section I summarizes and analyzes five theories that have been significant in the historical evolution of IO. These are neoclassical theory's perfect competition model, Bain-type IO, the Schumpeterian and Chicago responses, and transaction cost theory. The first part of Section II analyzes the resource-based approach in terms of similarities to and differencesfrom these IO-related theories. The conclusion is that resource-based theory both incorporates and rejects at least one major element from each of them; thus resource-based theory reflects a strong IO heritage, but at the same time incorporates fundamental differences from any one of these theories. The second part of Section II analyzes resource-based theory as a new theory of the firm.
This research empirically examines the importance of knowledge management processes to operational and overall organizational performance (OPERF). Specifically, results indicate that a shared interpretation of knowledge among operational personnel mediates how knowledge is disseminated and used to design and implement a unified operational response to that knowledge. Further, results collected in a logistics operations (LO) context support a strong positive relationship between this knowledge management process and operational and organizational performance. Importantly, psychometric measures for organizational performance collected from managerial respondents were strongly correlated with secondary financial data for participating firms obtained from Compustat, thus supporting a link about operational performance and hard organizational performance data.
In the last few years there has emerged a strongly held view that the ultimate purpose of the firm is to maximize shareholder value, that is the long run worth of the business to its owners. Many influences clearly impact upon shareholder value, but there is a growing recognition that the supply chain strategy employed by the firm can have a significant effect. This paper examines the concept of shareholder value and the related organizational framework of Value Based Management (VBM) and explores the connections with supply chain strategy.
When Jim La Fleur took the helm at GTI, it was a company hovering on the edge of bankruptcy. By using the Altman Bankruptcy Predictor Model in an active way to set strategy, La Fleur was able to return the company to a sound balance sheet. This is a case report of a marriage of an academically developed model and a corporate strategy designed to manage a financial turnaround.
The cash-to-cash (C2C) metric has evolved as one of the first measurements bridging across the firm. Therefore, it is important for managers to understand how the C2C metric is calculated, as well as how a company should compare in its C2C performance. In this paper, we define C2C and how to calculate it. Then, we provide an analysis and summary of C2C in 2001 for 5,884 companies using median performance by industry. A typology is introduced to classify industry performance using a 2 x 2 x 2 matrix based on the three variables of the C2C metric: accounts payable, inventory, and accounts receivable. We also consider how performance has changed since 1986, identify the key drivers to this change, and describe which industries have experienced the greatest change in C2C performance. Finally, managerial implications and future research questions are offered.
The purpose of this research paper is to help managers improve their understanding of logistics costs and the accounting for those costs in order to optimize use of the total cost approach to managing logistics processes. This paper will discuss the history and evolution of logistics management and activity-based costing (ABC), the driving cost factors affecting the key logistics activities, and the use of ABC systems to help improve the allocation of logistics costs to specific cost objects. This paper also includes several important managerial implications and implementation techniques for an ABC system.
Transportation is considered an important element of logistics and supply chain success. Yet it is often ignored as a source of competitive advantage. In this study, structural equation modeling is used to examine the impact of inbound and outbound transportation performance in terms of meeting delivery schedules and providing a timely reply to inquiries on the firm's ability to achieve product variety, product quality, manufacturing cost reduction, satisfactory delivery service, and acceptable overall performance.
Logistics is critical to the fulfillment of customer demands. Top management of companies is now more closely involved in logistics decisions and the importance of the consequences of these decisions is growing. It is crucial to support these decisions with relevant financial information. Companies often lack useful tools to generate this financial information. This paper presents a logistics management accounting framework to support logistics management decisions. In this distribution cost model the benefits of Activity Based Costing with regard to the allocation of costs and the control of processes are combined with the benefits of cash flow based accounting with regard to decision support.