Opinion: Top 4 Supply Chain Drivers of Shareholder Value

| 01/01/2013 | Reply

2d24a4aThe supply chain is a flow of materials, information and money through a network of suppliers, manufacturers, distributors and customers.

Companies with an excellent supply chain have the right product in the right place, at the right price, at the right time, and in the right condition.

Excellence in supply chain management is a combination of operational effectiveness and added value performance. Each participating enterprise must skillfully manage all the functions involved in fulfilling its stage of the extended supply chain. The more skilled they become, the better able they are to increase customer loyalty, win market share and improve cash flows for themselves and their business partners.

The top four criteria:

  1. A clear strategy for the entire supply chain that is focused on market opportunities and customer service needs.
  2. An integrated and nimble organization structure and processes that enable the supply chain to operate as a synchronized entity.
  3. Reliable information that easily utilizes integrated technology to support effective supply chain planning, execution and decision-making.
  4. Effective performance management of all supply chain operations to achieve top-line revenue growth, optimum asset utilization and bottom-line profitability.

Stronger players create shareholder value by harnessing their supply chains to reduce the cost of goods sold. A lower cost of goods sold will expand margins and increase earnings, EBITDA and/or cash flow—all of which are used to calculate shareholder value.

Many companies collaborate with outsourced solutions providers to reduce risks and costs. In addition, they are often able to leverage flexible infrastructure, a more global footprint, and even gain access to new channels.

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Category: Opinion, Research, The Americas

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