9 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Design 9

9 – 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 1. Supply Chain Design Total costs Supply chain performance New supply chain efficiency curve with changes in design and execution Inefficient supply chain operations Area of improved operations Figure 9.1 – Supply Chain Efficiency Curve Improve perform- ance Reduce costs

9 – 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Home customers Home customers Commercial customers Commercial customers Flowers-on-Demand florist Packaging Flowers: Local/International Arrangement materials FedEx delivery service Local delivery service Internet service Maintenance services Supply Chains (Service Company) Figure 9.2 – Supply Chain for a Florist (service company)

9 – 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. East CoastWest CoastEast EuropeWest Europe Retail USAIreland Distribution centers Manufacturer Ireland Assembly GermanyMexicoUSA Tier 1 Major subassemblies GermanyMexicoUSAChina Tier 2Components Supply Chains (Manufacturing Company) PolandUSACanadaAustraliaMalaysia Tier 3 Raw materials Figure 9.2 – Supply Chain for a Manufacturing Firm

9 – 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Types of Inventory Figure 9.5 – Inventory at Successive Stocking Points

9 – 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 6.Return on assets (ROA) Increase ROA with higher net income and fewer total assets Total assets Achieve the same or better performance with fewer assets 5.Working capital Reduce working capital by reducing inventory investment, lead times, and backlogs Fixed assets Reduce the number of warehouses through improved supply chain design Net income Improve profits with greater revenue and lower costs Measures of Supply Chain Performance 1.Total revenue Increase sales through better customer service 2.Cost of goods sold Reduce costs of transportation and purchased materials 3.Operating expenses Reduce fixed expenses by reducing overhead associated with supply chain operations 4.Net cash flows Improve positive cash flows by reducing lead times and backlogs Inventory Increase inventory turnover Figure 9.8 –How Supply Chain Decisions Can Affect ROA