Supply chain efficiency and relation with the firm performance: a study of the food processing sector in India

Abstract

Purpose This study investigates the supply chain efficiency of selected companies in the Indian food processing sector. Additionally, it explores the relationship between supply chain efficiency and firm performance. Design/methodology/approach To determine the supply chain efficiency, the study uses supply chain efficiency measures, such as supply chain length, inefficiency ratio and working capital productivity. Secondary data were collected from the Center for Monitoring Indian Economy (CMIE) Prowess database for the years 2011–2017. Various return measures, such as Return on Net Worth (RONW), Return on Total Assets (ROTA) and Return on Capital Employed (ROCE), were used to measure firm performance. Collected data were analyzed to investigate the relationship between supply chain efficiency and firm performance. Findings Findings of the study reveal the prevalence of inefficient supply chains in the context of the selected companies. There is a significant negative correlation between supply chain efficiency and firm performance. RONW has a significant negative correlation with the length of supply chain as well as supply chain inefficiency. Research limitations/implications This study expands the limited existing research perspective; the study helps to understand the supply chain efficiency and firm performance. Originality/value This is an original piece of work and provides valuable insight into the relationship between supply chain efficiency and firm performance.