Risk management and firm performance: the moderating role of supplier integration

Abstract

Purpose The purpose of this paper is to scrutinize the performance effects of supply chain risk management (SCRM). Besides financial performance, two aspects of operational performance are examined: operational efficiency and flexibility. Moreover, the authors explore the moderating role of supplier integration in the relationship between SCRM and operational performance. Design/methodology/approach A survey-based methodology was adopted. Based on the data from an international survey, this study applied the structural equation modeling and latent moderated structural equations approach to test the hypotheses. Findings The results indicate that SCRM positively influences both operational efficiency and flexibility, and has an indirect effect on financial performance. In addition, supplier integration enhances the impact of SCRM on operational flexibility, but does not moderate the relationship between SCRM and operational efficiency. Originality/value This study extends the existing literature by providing a comprehensive analysis of the performance effects of SCRM. It also provides managerial insights on both risk management and supplier integration.

The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners

“…For instance, inventory turnover, collaboration with production efficiency, and accuracy of delivery can increase sales and profit [25]. Shou et al [24] also found a moderate positive relationship in inventory turnover between production flexibility and return on sales. Green et al [27] showed that decreasing inventory levels can help firms win more market share and sales volumes.…”

“…Delivery refers to a performance measure that the ability to deliver products to customers [8]. Flexibility is "a measure of a firm's ability to respond to market demands by switching from one product to another through coordinated policies and actions" [24]. The operational cost, which is always associated with operational efficiency, emphasizes cost savings and increasing profits [8].…”

“…For example, with an advanced configuration system and an elaborate modular architecture, BMW can produce and deliver its customized cars in only twelve days at a competitive cost position [9]. Cost was an important dimension in prior operation management studies [8,24,44] and is used to measure operational efficiency [9,45]. Operational efficiency refers to a firm's ability for cost and time saving, while cost-based efficiency consists of quality costs, engineering costs, and manufacturing costs, and time-based efficiency is associated with the speed to deliver products [9].…”

“…For example, a famous Chinese mobile phone company, Xiaomi, is widely criticized for its products' long time for delivery (always takes several months). In addition to responding to market demands and adapting to customized requirements [24], operational delivery requires firms to deliver orders in a specified time or faster than their competitors [8]. Indicators, such as the lead time [44,[50][51][52], on-time delivery rate [25,44,51] and after service [51], are widely used to measure operational delivery.…”

Risk management of manufacturing multinational corporations: the moderating effects of international asset dispersion and supply chain integration

“…On the other hand, our results show no significant relationship between SCRM practices and operational efficiency. This might be ascribed to the fact that SCRM practices require extra investment in buffering strategies such as excess inventories, backup suppliers, preventive maintenance and extra capabilities (Shou et al , 2018a), which further increases manufacturing cost and decreases operational efficiency.…”