Ch. 15: Supply Chain Finance >>>The Connection

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Ch. 15 Supply Chain Finance gtgtgtThe Connection

• Landed costs (Production Transportation costs)
  of products impacts a buyers decision to
  purchase a sellers product thus affecting both
  sales and profitability.
• Supply chain alternatives enable optimization of
  the corporate goal of profit maximization.
• Inventory minimization is a direct result of the
  competing needs for capital and the difficulty
  many firms have in raising capital.
• Various cost levels of customer service must be
  analyzed to find the most profitable level.
• Sales, cost, and profit drive the goals of top
  management and supply chain managers should
  convert cost savings into sales and profit
  increases.

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The Supply Chain Financial Impact

• Stockholder return major financial objective
• Net worth (Assets Liabilities), must consider
  absolute and relative size of the profit in
  relation to stockholders net worth or net
  investment
• Return on assets (ROA) used as a benchmark of
  asset utilization
• Channel structure may consider outsourcing as a
  way to improve ROA.
• Channel inventories may consider minimizing
  inventory as a way to improve ROA.
• Order management reduces costs and improves
  sales, both of which improve the ROA.
• Transit time reductions here improve sales and
  reduce inventories, thereby improving ROA.

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Figure 15-1 Supply Chain Impact on Return on
Assets
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Figure 15-2 Supply Chain Decisions and ROA
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Figure 15-10 Supply Chain Service Failure
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On the LineHard Sell

• The benefits of logistics management are evident,
  but it remains a hard sell to convince senior
  management that logistics is vital to a companys
  financial performance and therefore deserves
  continued investment.
• Creating value, reducing costs, increasing both
  asset utilization and economic profit, and
  enabling growth are ways to sell logistics.