The Relationship between Supply Chain Fit and Financial Performance of Manufacturing Firms in the UAE
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Date
2014-04
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The British University in Dubai (BUiD)
Abstract
Inventory Management is the key part of any organization’s supply chain and it plays a critical role in the supply chain’s efficiency, effectiveness, responsiveness, decisions, and success. The relationship between the firms’ supply chain management and financial performance has been discussed and debated for a long time, many researches have been conducted to evaluate the exact impact of supply chain effectiveness on financial performance and it remains speculative. In a recent study by Stephen M. Wagner, Pan Theo Gosse-Ruken, Feryal Erhun has created a quantified link between supply chain fit and financial performance by investigating 259 manufacturing companies in US and Europe. We have tried to test the same with manufacturing firms of the United Arab Emirates (UAE) belonging to various industrial sectors. We have collected the data from 50 companies to establish that there also exists a link between the two variables between manufacturing concerns in the UAE. Our study supports the hypothesis that supply chain fit has a positive relationship with financial performance of manufacturing firms in the UAE; also, we have seen that companies with a positive supply chain misfit have a higher Return on Assets (ROA) compared with companies with a negative supply chain misfit. Our R-Squared value that represents the fit of our linear model is 45.1% that means 45.1% of variability is explained by the variables included in the model and the remainder of the variability can be explained by variables not included in the variable. Additionally, this research includes discussions of the best practices and strategies of the supply chains, recommendations, and suggestions.
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inventory management, supply chain management, supply chain fit, triple –a supply chain, financial performance, financial bottom-line, Return on Asset (ROA)