presented by: s.m.tabatabaee nasab. cost focus successful supply chain organization is shifting...

Presented by:S.M.Tabatabaee Nasab

Cost focusSuccessful supply chain organization is

shifting from a single firm cost focus on inventories , facilities , and transportation to a multi-enterprise focus on cycle time compression , systemwide cost reduction, and improved value for end customers.

(Langley & holocomb, 1992)

Three paths to economic success: the micro viewMargin managementAsset managementFinancial management

Margin managementMargin management is concerned with the

revenue streams from sales, less the cost of goods and services provided by suppliers and less the firm’s selling and other operating expenses.

Margin management focuses on net profit divided by sales

Net profit margin

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Asset managementAsset management is concerned with the

investment made to produce the revenues of the company.

The productivity of these asset is an important managerial concern.

Asset turnover

/+ +

+

Financial managementFinancial management is concerned with the

source of funds used to conduct the business .Because the cost of capital and associated

risks vary by source of funding, financial management is focused on achieving balance between debt and equity to provide an acceptable amount of financial risk and leverage to achieve targeted returns on equity.

Financial managementBalance sheet

assetsliabilities

equity

Total assetsTotal liabilities & Equity

LEVERAGE

Total Assets/ Equity

The du pont modelF.Donaldson Brown created this useful

model in 1914.The du pont model is a reliable tool to aid

supply chain managers in determining the outcome of project ideas.

(cavinato,1989)

The du pont model

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Total equity=20$Inventory cost= 25%

Base case

Total equity=20$Inventory cost= 25%

new case

Financial focus of the supply chain executivesExpense controlCapital budgetingCash flow generation

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