Supply Management Performance and Cash Conversion Cycle

Abstract

The purpose of this study is to explore the relationship between dimensions of supply management performance and the components of cash conversion cycle. Although previous literature investigated the link between supply management performance and financial performance, the relationship between supply management performance and liquidity of the firms, which can be assessed by cash conversion cycle, has been largely overlooked. The proposed model and hypotheses were tested by using data from small and medium size enterprises (SMEs) operating in Greece. Support was found for the relationship between supply management performance and cash conversion cycle. The results of our investigation will help supply management professionals not only to achieve a clear understanding of the importance of financial measures of cash flow in relation to supply management performance but also to pay more attention on the contribution of supply management practices on ratios derived from balance sheets and profit and loss statements.