Supply chain and operations financial impact

As the emphasis on supply chain and operations grows, CEOs are beginning to more commonly use supply chain phrases such as  

Another important area impacting financial performance is conflict minerals, which has been a topic of discussion for quite some time. These are minerals mined from areas of the world where armed conflict and human rights abuses occur. Recently, this topic has gained special attention. Section 1502 of the Dodd-Frank Act requires certain companies using conflict minerals in their products to disclose the source of these minerals. Even though an estimated 6,000 companies will be directly impacted by this rule, many private companies within the supply chains of those companies will also be affected. The U.S. Securities and Exchange Commission expects the cost of compliance to be substantial for all involved. For primary companies and their suppliers, initial estimates for cost of compliance are between US 3 billion and US 4 billion, with annual costs thereafter of between US 207 million and US 609 million.  

A third area of discussion that can affect financial performance is outsourcing. This includes the rights, safety, and health of workers employed by suppliers located in low cost countries. In 2012, the collapse of one Bangladesh factory and a fire in another led to more than a thousand deaths. These tragic events have resurrected the discussion around outsourcing to find the lowest-cost supplier. The backlash retailers face when it is reported that people were treated poorly or put 

Supply chains and operations functions are important for organizations. If you ask anyone in a supply chain or operations role, they will tell you that what they do each day is incredibly vital—and it is. Those in the field understand the importance of their roles and can articulate why, usually from the standpoint of operational performance. They can tell you the rate of defects, fill rates, order accuracy, inventory turns, and many other operational performance measures. After all, this is how their performance is measured. What is often missing from their explanations is how their actions directly affect the financial performance of the organization. Other than describing their key economic role in the organization as cost reduction, there is little more financial depth to the explanation. With the information and discussion provided by this book, we can change this. 

The majority of supply chain professionals perform well in their functional roles. At the same time, many of these professionals find it difficult to see the company s larger goals or to see how their actions affect other functional areas. Furthermore, supply chain professionals fail to see how their decisions or actions connect to and affect the financial goals and objectives of the firm. Pointing this out is not to degrade supply chain professionals they are measured by operational performance metrics, which, by all accounts, are plastered on most shop walls. These metrics are what they know and live by. Because the management of supply chains is critical to the long-term prosperity and sustainability of any firm, supply chain professionals who intend 

---