End-to-End Supply Chain Analysis

In this chapter, we examine selected analytic techniques and methods that facilitate logistics management and decision-making across the supply chain. We begin by reviewing a framework that a firm can employ to organize all of the performance metrics which it maintains to monitor and manage its supply chain. Next, we illustrate several measures used to evaluate the cash flow of a firm from the beginning to the end of its own supply chain. We then review the powerful analytic tool called activity-based costing (ABC). This methodology allows firms to understand accurately their true costs to serve their customers, to produce individual products, and to deliver products to customers. We then illustrate how the ABC models of a firm’s supply chain operations facilitate the development by a supplier of individual profit and loss statements for each of its customers. Finally, we explore several additional concepts and techniques that play an important role in logistics management including economies of scale, per unit and percentage of sales cost measures, measures such as total annual cases shipped which are often used as “proxies” for total warehouse activity and output per year, and risk management.