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The Relationship between Supply Chain Fit and Return on Assets of the Firm

Author

Listed:
  • Khan, Muhammad Hamza
  • Khan, Muhammad Hassan
  • Maqsood, Muhammad Nawaz
  • Rehman, Khaliq Ur

Abstract

The decisive point of financial encroachment of supply chain management has been an ongoing interest. Forming on the operations strategy literature, this study examines the links between the supply chain fit (i.e. strategic consistency between the product ‘supply and demand uncertainty and emphasizing on supply chain Structure/design) and financial performance of the firm. We define firms with supply chain fit as firms where the products’ supply and demand uncertainty and supply chain responsiveness perfectly match the outcome. The data supports the hypothesis that supply chain fit is positively linked with financial performance of the firm. Contrary to it, supply chain misfit (negative misfit and positive misfit) has a negative relation with firm’s performance. Negative misfit is defined as firms that designed their supply chains to support responsiveness while the products’ supply and demand is quite certain and the products are predictable. Positive misfit is defined as firms that designed their supply chains to support efficiency while the products’ supply and demand is rather uncertain and the products are unpredictable.

Suggested Citation

  • Khan, Muhammad Hamza & Khan, Muhammad Hassan & Maqsood, Muhammad Nawaz & Rehman, Khaliq Ur, 2012. "The Relationship between Supply Chain Fit and Return on Assets of the Firm," MPRA Paper 53195, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:53195
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    References listed on IDEAS

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    3. Yossi Aviv, 2001. "The Effect of Collaborative Forecasting on Supply Chain Performance," Management Science, INFORMS, vol. 47(10), pages 1326-1343, October.
    4. Theodore H. Clark & Janice H. Hammond, 1997. "Reengineering Channel Reordering Processes To Improve Total Supply‐Chain Performance," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 248-265, September.
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    More about this item

    Keywords

    SCM; Supply fit. Return on Assets;

    JEL classification:

    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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