The Financial Performance Effects of IT-Based Supply Chain Management Systems in Manufacturing Firms.

Journal of Operations Management, Vol. 25, No. 4, pp. 806-824, June 2007

Posted: 29 Jun 2009

See all articles by Bruce Dehning

Bruce Dehning

Chapman University - The George L. Argyros School of Business & Economics

Robert W. Zmud

affiliation not provided to SSRN

Vernon J. Richardson

University of Arkansas at Fayetteville

Date Written: June 1, 2007

Abstract

This paper examines the financial benefits of information technology investments around newly adopted IT-based supply chain management (SCM) systems by 123 manufacturing firms over the period 1994-2000. We form hypotheses using the value chain to specify the expected financial impact of SCM systems. By examining the change in financial performance pre- and post-adoption controlling for industry median changes in performance, we find that SCM systems increase gross margin, inventory turnover, market share, return on sales, and reduce selling, general, and administrative expenses. We also provide a model showing how process improvements around supply chain initiatives combine to improve overall performance. Finally, we show that contextual effects such as firms in the high-tech industry and the scope of the supply chain implementation have dramatic effects on the overall financial performance resulting from supply chain implementations.

Keywords: Information technology, Supply chain management, Firm performance, Value chain, Manufacturing

JEL Classification: M15, M41, O14

Suggested Citation

Dehning, Bruce and Zmud, Robert W. and Richardson, Vernon J., The Financial Performance Effects of IT-Based Supply Chain Management Systems in Manufacturing Firms. (June 1, 2007). Journal of Operations Management, Vol. 25, No. 4, pp. 806-824, June 2007, Available at SSRN: https://ssrn.com/abstract=1304469

Bruce Dehning (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

Robert W. Zmud

affiliation not provided to SSRN ( email )

Vernon J. Richardson

University of Arkansas at Fayetteville ( email )

401 WCOB
Fayetteville, AR 72701
United States

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