Title: Structuring and quantifying the value contribution of supply chain initiatives

Authors: Erik Hofmann; Philip Wessely

Addresses: Chair of Logistics Management, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland ' A.T. Kearney (International) AG, Weberstrasse 4, 8004 Zurich, Switzerland

Abstract: Since the implementation of supply chain initiatives (SCI) requires specific investments in technology, material, organisation and staff, an assessment of the economic viability of the inter-organisational cooperation is necessary in advance. The paper addresses the financial interface by providing a structured approach for the determination of an SCI's value contribution measured by the EVA. The paper is based upon explorative research. Thanks to an integrated extrapolation method, the approach is transferable analogously to all supply chain players affected by the SCI. A numerical example from the food and beverage industry illustrates our findings. The setting of the quantification approach extrapolates the calculation value of each supply chain partner separately since an SCI can be rolled out to a specific group of suppliers and customers individually. The quantification approach allows the determination of the value generated by an SCI under consideration of the individual integration of several supply chain partners within the network of suppliers and customers. It supports management's decision-making in the forefront of a possible implementation.

Keywords: logistics; supply chain performance; performance measurement; value creation; supply chain management; SCM; economic value added; economic viability; inter-organisational cooperation; food and drink industry; decision making.

DOI: 10.1504/IJMDM.2013.056454

International Journal of Management and Decision Making, 2013 Vol.12 No.3, pp.286 - 311

Received: 30 Apr 2012
Accepted: 22 May 2013
Published online: 24 Jul 2014 *

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