Supply Chain Network Redesign: A Technical Note on Optimising Financial Performance
In: Decision sciences, Band 50, Heft 6, S. 1319-1353
ISSN: 1540-5915
ABSTRACTSupply chain network (SCN) redesign is a strategic decision that requires the consideration of several important financial aspects. A review of the supply chain network design (SCND) literature shows that most of the provided solutions lack the measurement and incorporation of the company's financial performance. This study extends the SCN redesign model, introduced by Jahani et al. (2018), in order to allow financial performance optimization instead of profit maximization. The model uses essential accounts existing in the basic financial statements of an SCN company to delineate how the strategic financial considerations can influence the network structure and its operational flows. It ascertains the future financial position of the company, as well as the optimal levels of loans and the proportion of available cash required for financing the new design. We examine the applicability of the model by consolidating financial data with the case study used in Jahani et al. (2018). We evaluate the resulting financial ratios of the new model with existing ratios aimed at representing the reliability of the model and introducing future targets. This study offers several managerial insights. For instance, consideration of inventory values as a current asset in designing an SCN leads to a realistic design aligned with financial statements that are also reportable to creditors and investors.