Supply chain ratios

The product of these two ratios is the supply chain ratio. 

Financial statements were explained in detail in Chapter 3, providing a foundation to understand ratio analysis. This chapter will introduce many of the common financial performance ratios that executives and analysts use. In addition, the chapter will explain how to compute ratios, what information the ratios offer for decision making, and how to consider multiple factors that are critical to fully understanding the ratios. In subsequent chapters, how operations and supply chain ratios affect and influence financial ratios will be examined. Operations ratios, after all, are used to ensure that financial performance meets the e q)ectations of creditors, investors, and executives. Ultimately, these ratios provide information about an organization s financial health and ability to continue operations. 

From the consumer s perspective, cost is an important characteristic of the food and the best buy is the product that is considered to have the best ratio of quality and price. So consumers should welcome any measure that will improve quality at no extra cost or reduce the cost at no reduction in quality. In principle, using a CCP-based system at the level of a supply chain is supposed to do just that, since it will ensure that the controls are taking place at the steps where they can be implemented most effectively, thus eliminating superfluous double or triple testing of the same thing, or unnecessary waste when food is discarded because its safety is uncertain. 

Finally, if the registrant can prove that all risks are under control and the substance can be safely manufactured and used, the corresponding initial exposure scenario is defined as the final exposure scenario. In the end, the final exposure scenario is communicated within the framework of extended safety data sheets in order to ensure the safe use of the substance down the supply chain (Caveat The legal text of REACH usually refers to the term exposure scenario while in reality speaking of the final exposure scenario.) By contrast, if the registrant fails to lower the risk characterization ratio below 1, despite the aforementioned refinements and modifications, he must prevent the use of the substance under circumstances where the risks are not controlled. 

Likewise, the Bullwhip Effect generated at each step can be defined as the ratio of the variance in orders sent to the upper node of the supply chain, and the variance in orders received from the bottom node of the supply chain. 

Maintaining a constant agreed ratio of defects or losses—quality of service (QoS)—in a supply chain is often tricky. The problem gets further... 

P D ratio According to the APICS Dictionary, lOtb edition, P is the manufacturing lead-time. D is the customer required delivery time. If the ratio exceeds 1.0, the customer order will be delayed or production will start as a result of a forecast (make-to-stock). The demand-driven supply chain approach argues that different segments of the supply chain can be driven by either forecasts or actual demand. In general, actual demand is more desirable than forecasts. In this book, we use cycle time to refer to processes for manufacture and distribution and lead-time as a market-driven requirement for delivery. 

In order to evaluate the supply chain performance and to identify strategies for dealing with late deliveries, a set of experiments are conducted. A full factorial design of experiments is constructed for three experimental factors and one policy variable (Table 13.2). The experimental factors are (1) a level of delivery xmcertainty (2) spot market premium and (3) a ratio between the spot market premium and the late delivery penalty. The policy variable is the expected delivery lateness threshold 8 at which the purchasing at the spot market is triggered. 

Harmonization of internal objectives with superior the supply chain initiatives utilization and strategic conform ratio of minimizing costs and maximizing flexibility High performance level (degrees of service and quality) for the end customer... 

Supply chain level Number Main asset Ratio investments/ annual turnover Operational decision on Flexibility of decisions... 

Which of them has the best offer It is not an easy decision. This dilemma will be defused by the fact that some enterprises will take system leadership and offer all relevant supply chain services from a single source, thereby guaranteeing an excellent cost-benefit ratio. 

Taking into account the above to assess the effective functioning of the entire supply chain can be a criterion of the degree of utilization of both its components and the whole system. The degree of use of the whole supply chain can be assessed as the ratio of the total time required for the transition of ordered materials for production through the supply chain in relation supplier-company to a maximum total duration of stay of vehicles in the chain. 

Measures from the first level approach to supply chain management in order to assess, and the relevant parameters from the second and third contain more specific and detailed criteria for the categories and components processes. Indicators of the level of the first SSC (2006) divided into five operational criteria, of which three, reliability, flexibility and speed of response, are directed to the attributes of the client, and the other two, expenses and assets are used to measure inside the company. Each of these measures is further divided into small ratios at lower levels. 

Based on these optimal distribution plans, the demand fulfillments for each customer were determined by computing the ratio of the total amount shipped to a customer from all sources to that customer s estimated demand. Besides confirming the supply chain design decisions already made, important outcomes for strategic investment and business tactical plans were obtained regarding the optimal levels of demand fulfillment, location and size of required facility expansions, relocation of production lines, intercompany cross-sourcing, and distribution to strategies. The results of each scenario will be discussed in detail in the next sections. 

Let us look at the detail behind each of these ratios, and the way they fit in with each other. Figure 3.1 gives a family tree of the way return on investment is made up. Let us look at the potential for improving each from a point of view of managing the supply chain better. 

Any tactical decision in the supply chain (five are shown) influences these ratios either positively or negatively. As a result, we can predict the impact of tactical supply chain decisions on financial performance. Equally, we can use the model to predict the impact of top down decisions (for example cut working capital, or increase sales through promotions ) on supply chain positives and negatives. 

The role of transportation is even more significant in global supply chains. According to the BTS, the U.S. freight transportation network carried export and import merchandise worth more than 2.2 trillion in 2004, an increase of 168 percent from 822 bilUon in 1990. During the same period, the ratio of exports from and imports into the United States to the GDP increased from 12 percent to 21 percent. 

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