The concept of Supply Chain Management (SCM) is one of the emerging values in
today's business world. SCM can be defined as the optimization of a product's route, flowing
from the supplier to the manufacturer and then to the consumer and the minimization of
the related costs. It is an integrated system of activities aiming at decreasing the
inventory costs by providing the most appropriate flow of the product, minimizing the
critical decision making processes by decreasing the uncertainties in the forwarding of the
product and minimizing the planning expenditures by standardizing the ordering system. On having observed the direct effects of SCM strategies on a firms' competitive
power, both academicians and practitioners have directed their attention to this area. The
studies that are carried out in this field involve the evaluation of the outcomes of the
applied strategies. In other words, they involve the methods and techniques that are used in
the performance measurement of SCM.
SCM involves the management of flows in a chain. These flows are material
flow, information flow and money flow within a close network comprising
suppliers, manufacturers and customers. The coordination and integration of these flows within
a firm and among firms is critically important for an effectively operating supply
chain. Since the success of a firm in a supply chain depends on the total performance of
the chain, managers are now enforced to have cooperation and mutual dependency,
involving continuous and long time spanning information and risk-sharing. Within the context
of this cooperation, new performance metrics should be mentioned in order to evaluate
the performance of the supply chain as a whole. One of these new metrics is Cash to
Cash Cycle (CCC), which is calculated for any firm by subtracting the debt turnover
period from the sum of stock turnover and accounts receivable turnover periods. Hence,
one effective way of shortening the cash conversion cycle for an individual firm may be
by contracting the days of receivables and inventory outstanding and extending the days
of payables outstanding. However, some of the measures taken by a firm within a
four-tier supply chain, consisting of suppliers, manufacturers, distributors and customers in a
debt-receivable relation have zero effects on the total cash conversion cycle of the
supply chain. The aim of this study is to develop a theoretical lens by examining the
factors influencing CCC—an integral metric for the performance evaluation of supply chains. |
