Int. J. Services and Operations Management, Vol. 10, No. 1, 2011 13 Copyright © 2011 Inderscience Enterprises Ltd. What is the right cash conversion cycle for your supply chain? Pan Theo Grosse-Ruyken, Stephan M. Wagner* and Ruben Jönke Department of Management, Technology, and Economics, Swiss Federal Institute of Technology Zurich, Scheuchzerstrasse 7, 8092 Zurich, Switzerland Fax: +41 44 632 1526 E-mail: ptgrosse-ruyken@ethz.ch E-mail: stwagner@ethz.ch E-mail: rjoenke@ethz.ch *Corresponding author Abstract: Supply chain finance is undergoing a transformation. Supply chains are often so tightly coupled that the domino effect of suboptimal working capital management can lead to financial glitches at a single supplier and even bankruptcy. Thus, each working capital management decision should consider every upstream and downstream partner within the supply chain. The cash conversion cycle (CCC) is therefore an excellent measure of a firm’s performance. Results indicate a significant negative relationship between the CCC and return on capital employed (ROCE). We argue that the optimal level of CCC for responsive supply chains must be assessed holistically, and conclude that the right working capital management depends on the business model, its specific supply chain design configurations, and risk aspects within the supply chain. Keywords: supply chain management; working capital management; supply chain finance; cash conversion cycle; CCC; firm performance. Reference to this paper should be made as follows: Grosse-Ruyken, P.T., Wagner, S.M. and Jönke, R. (2011) ‘What is the right cash conversion cycle for your supply chain?’, Int. J. Services and Operations Management, Vol. 10, No. 1, pp.13–29. Biographical notes: Pan Theo Grosse-Ruyken is a Post-Doctoral Researcher at the Chair of Logistics Management at the Swiss Federal Institute of Technology Zurich. He obtained his PhD from the WHU – Otto Beisheim School of Management and studied at the University Witten/Herdecke, Harvard University, European Business School, and California State University. During his PhD studies, he was a Visiting Scholar in the Department of Management Science and Engineering at Stanford University. While working for Dresdner Kleinwort Wasserstein in Frankfurt and Singapore and then for Siemens in Jakarta, he gained practical insights into investment banking, industrial management, and risk management. His research interests include supply chain strategy, logistics, and procurement. Stephan M. Wagner is a Professor and the Kuehne Foundation-sponsored Chair of Logistics Management at the Swiss Federal Institute of Technology Zurich. For ten years he was the Head of Supply Chain Management for a Swiss-based technology group and Senior Manager for an international top-management