Implementation of supply chain management and its impact on the value of firms

Abstract

Purpose

The purpose of this research is to examine the effect of supply chain implementation issues on firm value.

Design/methodology/approach

Using case study methodology, this paper outlines the cases of Hershey and Nike and the impact of supply chain implementation issues on these firms’ value.

Findings

Difficulties in the implementation of supply chain management software designed to maximize firm value, can result in a disruption of a firm's supply chain, causing losses for the firm and a decline in firm value; thereby creating much disappointment for the firm's shareholders. Hence, great care should be taken with the implementation of new SCM solutions.

Research limitations/implications

Future research may be directed at extending this work by examining the changes in the market values of a wide sample of client and provider firms following the implementation of new supply chain solutions.

Practical implications

When modifying a standard supply chain template to suit a customer's requirements, particular care should be used in implementation and provider firms should insist that clients follow the provider's implementation methodology. Complex SCM systems designed to track a multiplicity of product varieties, may lead to difficulties in implementation. Prior to switching to a new SCM system there should be adequate testing to see if the system meets the client's requirements. Premature switching can have disastrous consequences.

Originality/value

This research demonstrates the impact of implementation issues on the effectiveness of SCM technology.

Citation

Sridharan, U.V., Royce Caines, W. and Patterson, C.C. (2005), "Implementation of supply chain management and its impact on the value of firms", Supply Chain Management, Vol. 10 No. 4, pp. 313-318. https://doi.org/10.1108/13598540510612785