Supply Chain Decentralization or Concentration: Predictive Analysis of Supply Chain Concentration and Customer Sales
College of Management, Shanghai University, Shanghai 200444, China
| Abstract: | With the development of the global economy and the intensification of market competition, supply chain management has gradually become a key factor in business success. The most common means of supply chain management is to regulate the degree of concentration of the supply chain, which can be measured by calculating the ratio of sales or purchases between a company and its suppliers to the total sales or purchases. At the same time, supply chain concentration directly affects the operational efficiency and performance of a firm. This study constructs a model to test the causal effect of supply chain concentration on firms' annual sales, and in dealing with its heterogeneity and endogeneity issues, it finds that upstream supply chain concentration is not conducive to firms' ability to improve their operational performance in the downstream segment in the current year. On the contrary, customer concentration has a positive effect on operating performance and also serves to stimulate customer sales growth when kept within reasonable limits. By conducting trend predictions of total procurement, supply chain concentration, and customer sales from 2017 to 2022, and comparing LSTM and GRU models, the results demonstrate that GRU outperforms in predictive accuracy. Considering the ongoing impact of COVID-19 on supply chain management, the study suggests that firms should shift towards a decentralized procurement strategy to mitigate operational risks and enhance performance. |
| Keywords: | Supply Chain Concentration; Customer Sales; Predictive Models; Decentralized Procurement; Business Performance |
| DOI: | 10.57237/j.wjeb.2024.02.002 |
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Received: 6 October 2024
Accepted: 9 November 2024
Published Online: 5 December 2024
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