Supply chain decisions
and design metrics

A coordinated set of activities concerned with the procurement of raw materials, production of intermediate and finished products, and the
distribution of these products to customers within and external to the chain

Products

Funds

Information

Design of the supply chain network, namely, the location of plants, DCs, warehouses, and so on

Procurement of raw materials and parts from suppliers to the manufacturing plants

Management of the production and inventory of finished goods to meet customer demands

Management of the transportation and logistics network to deliver the final products to the warehouses and retailers

Managing the integrity of the supply chain network by mitigating supply chain disruptions at all levels.

Hazard risk

these are disruptions to the supply chain that arise
from large-scale events with broad geographic impacts

Operational risk

these are more commonly occurring disruptions
whose impacts are localized and resolved over a relatively short period of time.

refers to the extent to which customer needs and expectations are met, and also the extent to which the supply chain can flexibly accommodate changes in these needs and expectations.

Reliability and accuracy of fulfilling customer orders

Delivery time

Product variety

Time to process special or unique customer requests

Percentage of customer demand filled from finished goods inventory versus built to order from raw materials or component inventories

Inventory turns

Is a measure of how quickly inventory is turned
over from production to sales

Inventory turns=Annual sales/Average inventory

Days of inventory

refers to how many days of customer demand is
carried in inventory

Days of inventory= Average inventory/Daily sales

Inventory capital

refers to the total investment in inventory

Inventory capital =
N
∑IkVk
k=1
Ik = average inventory of item k
Vk = value of item k per unit
N = total number of items held in inventory

Return on assets

Refers to the ratio of company’s net income to its
total assets

Return on Assets (ROA) =Annual income ($)/Total assets ($)

Working capital

is the difference between a company’s short-term
assets and its shortterm liabilities

Cash-to-cash cycle

refers to the difference in the length of time it
takes for a company’s accounts receivable to be converted into cash inflows and the length of time it takes for the company’s accounts payable to be converted into cash outflows

Strategic Decisions

Strategic decisions deal primarily with the design of the supply chain network and the selection of partners, long term.

Network design

Production and sourcing

Information technology

Tactical Decisions

Are primarily supply chain planning decisions and
are made in a time horizon of moderate length.

Purchasing decisions

Production planning decisions

Inventory management decisions

Transportation decisions

Distribution decisions

Operational Decisions

Are short-term decisions made on a daily/ weekly basis,

Setting delivery schedules for shipments from suppliers

Setting due dates for customer orders

Generating weekly or daily production schedules

Allocating limited supply

Supply chain enablers

Organizational infrastructure

Technology

Alliances

Human resources

Supply chain drivers

Inventory

Transportation

Facilities

Suppliers

A supply chain that requires less cost input to generate the same amount of sales revenue output is more efficient, this can be measure by:

Raw materials cost

Manufacturing cost

Distribution cost

Product cycle time

Inventory levels