Supply Chain Concentration of Manufacturing Companies and Its Impact to Financial Performance: Basis for Action Plan

Abstract

This study examined the impact of supply chain concentration on the financial performance and resilience of manufacturing companies in Chongqing. The respondents primarily consisted of staff from six manufacturing companies, including finance professionals, business leaders in supply chain management, and related personnel. The research considered a wide range of factors, including business diversity, years in operation, product types, scope of operation, and the number of employees, to explore their intricate relationships and their potential influence on supply chain concentration. The comprehensive analysis of profitability, liquidity, efficiency, and stability parameters indicated a consensus that supply chain concentration plays a significant role in positively influencing the financial performance, operational efficiency, and overall resilience of manufacturing companies. These findings underscored the multifaceted benefits of supply chain concentration in the manufacturing sector. However, the analysis of risk exposure and vulnerability to disruptions parameters highlighted another consensus that supply chain concentration in manufacturing firms also introduced amplified strategic and operational risks. This emphasized the importance of adopting a balanced approach that combines the efficiency benefits of concentration with robust risk management strategies to ensure resilience and minimize the financial impact of disruptions. To address the implications of supply chain concentration, a proposed action plan outlined three strategies for enhancing the financial performance of manufacturing firms: Supply Chain Diversification Strategy, Financial Performance Assessment, and Supply Chain Risk Mitigation Strategy. Each strategy spanned a six-month timeline and required specific resources and processes to achieve their respective goals.