The influence of macro-economic circumstances on the financial benefits of competent supply chain management

Purpose: the purpose of this research is to identify whether macro-economic circumstances modify the financial benefits of supply chain management competency. Methodology: A conceptual model was built and three hypotheses were formulated based on relevant literature. Supply chain management competency is assessed using the Gartner Supply Chain Top 25 Lists from 2008 to 2017. The influence of macro-economic variables on the Altman Z-scores of these firms and their competitors were assessed using multiple linear regression modelling. Findings: GDP growth and long-term interest rates were found to modify the financial benefits of competent supply chain management. The Altman Z-scores of firms appearing on the Gartner Supply Chain Top 25 lists are less sensitive to GDP growth, except for firms in sectors that are inherently sensitive to business cycles. On the other hand, the Altman Z-scores of firms on the Gartner Supply Chain Top 25 are more sensitive to long-term interest rates than their competitors. Practical implications: The findings indicates that the benefits as a result from competent supply chain management is also expressed in decreased sensitivity of a firms’ financial situation to business cycles. On the other hand, competent supply chain management increases the sensitivity of the firms’ financial performance to long-term interest rates. Originality: To the authors’ best knowledge, this is the first study conducted on the effects of the macro-economic climate on the financial benefits of competent supply chain management. Further research: While some possible explanations are suggested in this research, further research can be conducted to find explanations for the decreased sensitivity to GDP growth and increased sensitivity to long-term interest rates for firms that practice competent supply chain management. Furthermore, qualitative research can be conducted in order to assess where supply chain management competency is originated and to connect these findings with the firms’ financial performance and sensitivity to the macro-economic climate