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Impacts of supply chain management on company value: benchmarking companies from the fast moving consumer goods industry

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Logistics Research

Abstract

The research question addressed is to which extent supply chain management (SCM) creates value from cost and working capital. The paper provides an empirical evaluation including insights on important criteria for value creation. In a secondary data analysis, 10 leading fast moving consumer goods (FMCG) companies are benchmarked regarding the value created from cost of goods sold (COGS) and working capital within the time horizon 2003–2008. The study applies benchmarking methodology and a discounted cash flow (DCF) based model for quantifying value contributions. It is shown that SCM is realized in a value-adding way with different emphasis on COGS or working capital. Monetarily working capital components (trade payables, trade receivables) have a high relevance for value creation. Continuous improvements and long lasting developments of value drivers are more appropriate for value creation than alternating improvements and deteriorations. Timing aspects of value driver developments have to be considered for value creation. The value of the paper stems from empirical comparison of value created by working capital and COGS and from evidence of important criteria for value creation. Further analysis based on cost components as well as benchmarking with different or extended content, such as fixed asset performance or cross-industry benchmarking, leave room for future research.

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Notes

  1. Overall development in this context is defined as the change of the figure of 2008 compared to the figure of 2003.

  2. The top 5 sales firms are CPA, HEN, KMB, PRG, and UNI (see column sales 2003 of Table 8).

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Acknowledgments

The authors would like to thank the reviewers for their constructive comments and suggestions that contributed to the improvement of this paper.

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Authors and Affiliations

  1. Department of International Management, University of Kassel, 37213, Witzenhausen, Germany

    Marcus Brandenburg & Stefan Seuring

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  1. Marcus Brandenburg
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Correspondence to Marcus Brandenburg.

Appendix

Appendix

See Tables 11 and 12

Table 11 Acronyms and parameters used in this paper
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Table 12 WACC for each company of the benchmarking group
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Brandenburg, M., Seuring, S. Impacts of supply chain management on company value: benchmarking companies from the fast moving consumer goods industry. Logist. Res. 3, 233–248 (2011). https://doi.org/10.1007/s12159-011-0056-7

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