MANAGEMENT Association Supply Chain Performance Operating Between Glitches and

Abstract

This paper empirically documents the association between supply chain glitches and operating performance. The results are based on a sample of 885 glitches announced by publicly traded firms. In the year leading up to the announcement, the control-adjusted mean percent changes in operating income, return on sales, and return on assets for the sample firms are -107%, -114%, and -92%, respectively. During this same period, the control-adjusted changes in the level of return on sales and return on assets are -13.78% and -2.32%, respectively. Relative to controls, firms that experience glitches report on average 6.92% lower sales growth, 10.66% higher growth in cost, and 13.88% higher growth in inventories. It is found that it does not matter who caused the glitch, what the reason was for the glitch, or what industry a firm belongs to - glitches are associated with negative operating performance across the board.