The impact ofsupply chain risk on firm profitability

Abstract

The study explored the supply chain risks management on profitability of manufacturing companies listed on Tanzania's DSE. Sales volatility, raw materials turnover, days payables outstanding, logistics ratio and debt ratio are among the variables. Return on equity was taken as measures of profitability and was considered as dependent variables for the 12-year period between 2010 and 2021. Agency theory and swift even theory are the theories that served as the study's guiding principles. An ordinary lest squares regression model was used to undertake statistical testing of parameter estimations. Both descriptive and quantitative approaches were used in the research design. Purposive sampling was used to choose five for the study's participants from seven manufacturing listed enterprises, which was the study's target population. The secondary data, which was taken from the annual reports of the companies under study, was analysed using panel data. Stata 15 was used to analyse the data. The findings revealed that sales volatility had a significant positive impact on the profitability of the manufacturing firms at DSE; raw materials turnover and days payables outstanding had a insignificant positive impact on the profitability of the manufacturing firms at DSE; and logistics ratio had significant positive impact on the firm's profitability while debt ratio had positive impact but insignificant. The study concludes that firms should have to lower logistics expense in order to increase company profitability. The study recommends that firms maintain optimal debt levels as they rescue supply chain risks to avoid insolvency risk. Further studies can be conducted for the non-financial firms in Tanzania.