Team 2_03 Chap 5

Supply chain impact on return on assets supply chain

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Unformatted text preview: ets Supply Chain Effectiveness Supply Chain Efficiency Asset deployment and utilization Effectiveness of supply chain service impacts the level of revenue and efficiency affects total costs. Level of Inventory determines the assets, or capital, devoted to inventory. Order-to-Cash cycle affects the time required to receive payment from a sale, impacting accounts receivable and cash assets. Supply Chain Impacts on the Balance Sheet Supply Chain Decisions and ROA Channel Structure Management Order Management Inventory Management Transportation Management Financial Statement The supply chain costs include transportation, warehousing, and inventory carrying cost on the Income Statement Financial Impacts of Supply Chain Reducing ◦ Costs EX: Making a 10% reduction in transportation costs Decreases operating costs Increases Net Income Increases Profit Margin and ROA Financial Impact of Supply Chain Strategic Profit Model (SPM) Model which makes the same calculations that were made in the spreadsheet analysis to determine cost reduction Asset Turnover – Ratio of sales to total assets and indicates how the organization is utilizing its assets in relation to sales See Figures 5.14-5.1; Pages 161-163 Financial Impact of Supply Chain Return on Equity (ROE) Indicates the return the stockholders are realizing on their equity in the organization See Figure 5.18; Page 165 Service Failure Implications On-Time Deliveries: 95% of orders are delivered when promised Order Fill Rates: 97% of orders are filled correctly RECAP: • Good metrics are… • What kind of metrics are there? • • Resolve revenue – cost issues with good SCM decisions Good SCM results in saved money; Bad SCM results in a headache Question Which of the following is not an aspect of a good performance metric? A. Uses economies of effort B. Facilitates trust C. Is qualitative D. Easy to understand Question When measuring time in the performance of process it is an important indicator in measuring? A. Efficiency B. Effectiveness C. Transportation D. Distribution Question Which decision can be made in all 4 strategic supply chain areas to increase ROA? A. Use of outsourcing B. Optimize mode mix C. Improve information D. Minimize safety stock Question What is the ratio of sales to total assets? A. Sales Ratio B. Asset Turnover Ratio C. Net Loss Ratio D. Liability Ratio Question ESSAY: In 2 to 3 detailed sentences, explain the difference between a metric and an index. Global Prestige Members: Alex Eberhardt Mallori Grambeau Clayton Peeples Stephen Peters...
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