Pandemic turned into pandemonium: the effect on supply chains and the role of accounting information

Ajantha Velayutham, Asheq Razaur Rahman, Anil Narayan and Michael Wang

Accounting, Auditing & Accountability Journal, 2021, vol. 34, issue 6, 1404-1415

Abstract: Purpose - The purpose of this study is to examine the disruptive effects of COVID-19 on supply chains and question the role of accounting information in managing these supply chains in the face of such disruptive effects. Design/methodology/approach - The study first explains the effects of COVID-19 on the supply chains of business entities. It then explains the role of accounting information in supply chain management, questions accounting information's ability to play such a role, and makes recommendations for better accounting disclosures and accounting research for supply chains of firms. To illustrate the salient points, a case study of Fisher and Paykel Healthcare is conducted. It identifies the risks and uncertainties of supply chains exposed by COVID-19 disruptions to businesses. Findings - COVID-19 has affected Fisher and Paykel Healthcare from both the supply-side (upstream) and demand-side (downstream) perspectives. On the supply side, it has disrupted the supply of raw materials used in the manufacture of respiratory devices and the costs of importing such materials. On the demand side, it has disrupted market logistics and customer demand. This has subsequently affected production. Such disruptions can be overcome through the dissemination of appropriate accounting information for the different stages of the supply chain to the managers. Such accounting information can also be useful to external stakeholders for minimizing their risks. Originality/value - The study attempts to create an awareness of the supply chain uncertainties faced by managers and stakeholders arising from exogenous shocks, such as a pandemic, and how these uncertainties can be mitigated by aligning accounting information flows with the supply chain activity flows. The observations made in this paper are at a conceptual level and, therefore, can be applied to any industry.

Keywords: COVID-19; Pandemic; Supply chain; Supply chain management; Management accounting; Accounting disclosures (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:aaajpp:aaaj-08-2020-4800

DOI: 10.1108/AAAJ-08-2020-4800

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