Essentials of Supply Chain Triangle
Balancing Service, Cost & Cash might be the essence of supply chain management.
Many companies launch inventory reduction programs. A common reason is to generate cash. Cash that can be used for new investments, to pay back loans, or to pay cash dividends to shareholders.
When launching a reduction program, companies should be aware that inventory, as a part of Cash, should always be balanced with Cost and Service.
The balancing of these three might be the essence of supply chain management. That’s why Bram Desmet called the corresponding triangle the Supply Chain Triangle.
In difficult times we badly need alignment in the triangle. It’s the only way out. However, as we’ve seen there’s limited incentive to create alignment when times are good. It’s a dangerous catch 22.
As an investor, I will judge you by the “bang-for-the-buck”
In his first book titled ‘Supply Chain Strategy and Financial Metrics. The Supply Chain Triangle of Service, Cost and Cash’, Prof. dr. Bram uses financial metrics to provide insights into how supply chain, strategy, and finance are interlinked. Via his supply chain triangle concept, in which service, cost, and cash form the three sides, Bram succeeds in capturing the balancing act companies are faced with today.
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The Supply Chain Triangle