Efficiency, Resiliency, and Value Addition in Supply Chain Networks Restricted; Files & ToC
Agrawal, Deepak (Spring 2025)
Abstract
I examine value creation in supply chain from the network perspective using a set of three papers.
In the first paper, we find that inventory productivity reduces for the firms located upstream in the supply chain and increases for highly connected and central firms. Firms with high inventory productivity show high equity valuations and abnormal returns, with both valuations and abnormal returns amplified for upstream, less connected, and less central firms. Moreover, the difference in valuations and abnormal returns between the best and worst performing firms is greater upstream, suggesting that financial markets offer outsized rewards for improving inventory productivity to upstream firms. Therefore, the information about firm’s position within the network is a valuable predictor of its inventory productivity and financial performance. For operations managers and firm executives, our results highlight strong incentives for the improvement of inventory productivity upstream in the supply network. For investors, we show that supply network position data can sharpen inventory-based arbitrage opportunities.
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In the second paper, we investigate the operational efficiency and resiliency in the global supply network through the spatial analysis approach. Traditionally, diversification is considered a tool for risk mitigation. However, we find that diversification not only mitigate the risk but also enhances operational efficiency. We find a U-shaped relationship between the diversification (both upstream and downstream) and variance of IT and inverted U-shaped relationship between customer diversification and IT. For managers, our results suggest optimal diversification for dual benefits.
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In the third paper, we study a popular concept “Value Chain Smile (VCS)” that recommends firm move upstream or downstream as extreme positions add the most value in supply chain. We examine the evidence of VCS curves in modern supply networks and whether there are alternatives to moving the position. Echoing prior literature, the results are mixed, but we highlight heterogeneity across industries and measures. To explain this puzzle, we recognize that firms generally belong to multiple value chains and therefore we follow an approach that focuses on local value chains and characterize value creation in these local networks, as opposed to the "global" one. We provide conclusive evidence on VCS and that firms can elevate themselves through innovation and marketing, consistent with the prediction of Stan Shih.
Table of Contents
This table of contents is under embargo until 22 May 2031
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File download under embargo until 22 May 2031 | 2025-04-19 00:40:27 -0400 | File download under embargo until 22 May 2031 |
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