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

Muhammad Hamza Khan, Muhammad Hassan Khan, Muhammad Nawaz Maqsood and Khaliq Ur Rehman

MPRA Paper from University Library of Munich, Germany

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.

Keywords: SCM; Supply fit. Return on Assets (search for similar items in EconPapers)
JEL-codes: M11 (search for similar items in EconPapers)
Date: 2012-08
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Published in International Journal of Management & Organizational Studies 1.2(2012): pp. 54-60

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