How to Find the Right Supply Chain Strategy? An Analysis of Contingency Variables

Abstract

Contingency variables are characteristics of the business environment that influence the competitive priorities supply chains should pursue for maximizing profits. But which contingency variables should managers focus on when developing a supply chain strategy? On the one hand, if important variables are omitted, the selected strategy may fail to fulfill the needs of the business environment. On the other hand, considering irrelevant variables unnecessarily complicates the strategy formation process, hence preventing well‐suited strategies from being found. As a first step toward resolving this trade‐off, our study analyzes the effects hypothesized to be underlying a set of frequently cited contingency variables referred to as “DWV3” (product lifecycle Duration, delivery time Window, demand Variability, demand Volume, product Variety) as well as contribution margins. We test the hypotheses on archival data from a leading chemical manufacturer using multilevel regression. Our findings indicate that demand variability, the delivery time window, and contribution margins are important for strategy development because they indicate to what extent companies should invest in market mediation. Volume, variety, and lifecycle duration are less important for this purpose, but may instead be used for analyzing the causes of demand variability.

Getting the most from E-commerce in the context of omnichannel strategies

“…Furthermore, the value density of the product (i.e. unit value/volume or weight) is traditionally used in logistics to assess the impact of transportation costs on sales profitability (von Falkenhausen et al, 2019;Gevaers et al, 2011;Lovell et al, 2005;Cooper, 1993).…”

“…Such an achievement becomes a must when companies deliver goods with a low value density, i.e. with a low unit value and a high volume/weight (Cooper, 1993;Gevaers et al, 2011;Lovell et al, 2005;Von Falkenhausen et al, 2019). This discussion is leading scholars and managers to think about the kind of logistic service that can be offered under reasonable conditions of efficiency, while still providing the client with good levels of speed, dependability, and availability of products for digital purchases.…”

Absorptive capacity and disaster immunity: the mediating role of information quality and change management capability

“…Studies have investigated various resilience approaches used to avoid or minimize the damages brought on by natural disasters. Such approaches include cultivating redundant supply sources (Silbermayr and Minner, 2014), maintaining reserve inventory (Morrice et al, 2016), developing a business/ disaster recovery plan (Sahebjamnia et al, 2018;Karakasidis, 1997) that includes contingencies in supply chain strategy (Von Falkenhausen et al, 2019) and strategic partnering (Ojha et al, 2014). In particular, Ojha et al (2013) found support for a positive relationship between financial performance and logistical business continuity planning mediated by DI.…”

The impact of product variety on fill rate, inventory and sales performance in the consumer goods industry

“…The increase in the product variety tends to produce a negative impact on the level of services (Closs et al , 2010; Falkenhausen et al , 2019), setup times (Er and MacCarthy, 2006) and operational costs (Thonemann and Bradley, 2002), as the internal, organizational and structural complexities of the supply chain increase and thereby decrease operational performance (Bozarth et al , 2009). On the other hand, some authors claim that it is possible to increase variety without affecting the fill rate.…”