Predictive analytics for supply chain collaboration, risk management and financial performance in small to medium enterprises

Abstract

Small to medium enterprises in emerging markets such as South Africa are continuously embracing supply chain management practices. This has been prompted by the ever-increasing importance of supply chain management as a tool for increasing business competitiveness and success. The purpose of this study was to investigate the connection between supply chain collaboration, supply chain risk management and financial performance in SMEs. Using a quantitative research approach, a survey questionnaire was administered to 243 managers and owners of SMEs in Gauteng Province, South Africa. Application of the Structural Equation Modelling approach to test hypotheses revealed two streams of observations: (1) two supply chain collaboration dimensions, namely supplier trust and supplier communication, predicted supply chain risk management, and (2) supply chain risk management predicted financial performance. These results demonstrate the importance of supply chain collaboration as a tool for improving both risk management practices and financial performance in SME supply chains. The theoretical and practical implications of the results are discussed.