The traditional view of supply chain management was that it helped reduce a company's costs but had little to do with the revenue side of the business.
More recently, with the rise of companies such as Dell Computer and Wal-Mart, it was suspected that it may also have an impact on a company's market share, profits and market capitalisation. However, this was mere conjecture.
A recent study by Accenture conducted in collaboration with top business schools Standford in the United States and INSEAD in France has ended all speculation.
Based on data from more than 600 Global 300 companies, 'A global study of supply chain leadership and its impact on business performance' found conclusive evidence of a correlation between companies' financial success and the depth and sophistication of their supply chains.
'The study showed that companies in Asia and around the world which transform their supply chain operations can expect to be substantially rewarded through their financial performance,' says Robert Easton, managing partner supply chain Asia Pacific, Accenture.
'It is the first study to establish a proven connection between performance and shareholder value growth. Supply chain leaders [companies with frequent inventory turns, low cost of goods sold as a per cent of revenue, and high return on assets] were shown to have a market capitalisation compound annual growth rate between 7 and 26 percentage points higher than their industry averages.
'By contrast, those at the other end of the spectrum trailed the industry growth rate by up to 5 percentage points.'