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First Page

84

Last Page

99

Abstract

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.

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