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Research Article

A Study on the Effect of Supply Chain Structure by Product Strategy on Supply Chain Inventory

Moon, Seongam

Published: January 2000 · Vol. 29, No. 4 · pp. 617-642
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Abstract

This study empirically demonstrates that supply chain structure affects supply chain performance. The supply chain structural variables include the number of stages, interdependence, lead time, and the decoupling point, while supply chain performance was measured by safety stock levels across the supply chain. Measurement variables were established through operational definitions, and a survey was conducted on products (brands) in Korean industries. A total of 92 products were analyzed, primarily using regression analysis. To summarize the research findings, all supply chain structural variables had a significant effect on supply chain performance. Total safety stock increases as the number of stages increases, interdependence decreases, lead time lengthens, and the decoupling point is located further downstream (closer to the consumer). Furthermore, the product strategy variable serves as a moderating variable in the relationship between structure and performance. Notably, in the differentiation strategy product group, interdependence and the decoupling point were the important structural factors affecting safety stock levels, whereas in the cost leadership strategy product group, lead time and the number of stages were found to be more significant factors. This implies that for differentiation strategy product groups, it is important for manufacturers to receive end-consumer information more quickly and to enhance interdependence among participants in order to reduce overall inventory. Conversely, for cost leadership strategy product groups, reducing the number of stages or shortening lead time was found to be the key determinant for improving overall supply chain performance.