MKTG 372 Chapter 3 Notes
MKTG 372 Chapter 3 Notes MKTG 372
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This 2 page Class Notes was uploaded by Savannah Baron on Saturday February 13, 2016. The Class Notes belongs to MKTG 372 at University of Mississippi taught by Dr. David Gligor in Spring 2016. Since its upload, it has received 36 views. For similar materials see Supply Chain Management in Marketing at University of Mississippi.
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Date Created: 02/13/16
Chapter 3—Supply Chain Drivers and Metrics I. Financial Measures of Performance From a shareholder perspective, ROE (return on equity) is the main measure of a firm’s performance ROA (return on assets) measures the return earned on each dollar invested by the firm in assets o Can be written as the product of 2 ratios—profit margin and asset turnover o Most important when measuring supply chain management An important ratio that defines financial leverage is accounts payable turnover (APT) o COGS/Accts. Payable o Key components of asset turnover are accts receivable turnover, inventory turnover, and property, plant, and equipment turnover Inventory turnover is most important for logistics o COGS/Inventories o How fast you’re rotating your inventory o Want high inventory turnover Cash-to-cash cycle roughly measures the average amount of time from when cash enters the process as cost to when it returns as collected revenue o C2C = - Weeks Payable (1/APT) + Weeks in Inventory (1/INVT) + Weeks Receivable (1/ART) o Measures from the moment you make a payment to a supplier, to the time you sell to a customer (the moment you pay cash, to the moment you receive cash) o A lack of cash leads to bankruptcy Must benchmark your ratios with companies in the same industry 2 measures not part of financial statements: o Markdowns: discounts required to convince customers to buy excess inventory o Lost sales: represent customer sales that did not materialize because of the absence of products the customer wanted to buy Can only forecast what lost sales might be if inventory is waiting to be replenished II. Drivers of Supply Chain Performance Facilities o The physical locations in the supply chain network where product is stored, assembled, or fabricated Inventory o All raw materials, work in process, and finished goods within a supply chain Transportation o Moving inventory from point to point in the supply chain
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