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Supply Chain ROI Needs Good Research

Nov 4, 2007
About three years or less is always calculated when any company talks about ROI. When anyone attempts to look at the ROI for the supply chain there will be major factors to look at. The first factor will be about cost savings, as you will have to know in what ways you will be implementing any new methods to do the same.

From the upper management to a proposal, any increase in productivity has to be measured. Then there has to be the increase in revenue. It is always a good thing to keep the revenue source in mind. How the bottom line can be increased should always be measured. You can look at the immediate ROI, by looking at how to cut costs.

Future savings must also be kept in mind when we are talking about ROI. Though there is a hard truth that you will have to know, it is a fact. It is not so easy to look at the ROI from a supply chain as quick as you can. The fact and expectations will be very different. It is a bit more complicated that it actually looks.

Even the implementation of the structure is extremely hard, and thus it would take time to see good results. The hype that six months will get you a good return of investment will be all false. There are many unrealistic expectations set by the organization about how the supply chain would fare. As it is fact that one year at least goes by with the completion, ROI will have to be looked at, with a longer view.

The expectations should be realistic, and this will be in regard to the benefits as well as the time to implement the project. You will need a practical guide to monitor and measure logistic operations, to find out how much the project will return after investment. There should be business applications for modeling, forecasting and planning.

Applications that are used to measure relationships with customers, and also how to optimize them, should be considered to look at ROI in a supply chain. Business services and products will also be measured and then looked at to optimize, when you need analytical applications related to the operations.

There will be a lot of activities, which are monitored as well as analyzed. This will include warehousing, inventory, order management, material management with logistics and manufacturing. What you adjust to the operations will then be monitored, and this will be based on analysis guides.

The operations and analytics link with the measurement, which will be ongoing, is the secret to maximizing the ROI. A good amount of time as well as partnership is required to be looking at the profits in a good way. Good functionality will have to be gotten through giving customers what they need, and the relationship should be on a long term.

Efficiency will also be accounted for when it comes to the rate of the ROI. Spending too much is also not going to help initially.
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