SUPPLY CHAIN SERVICE STRATEGY

E d w a r d H . F r a z e l l e , P h . D .

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Large Chemical Company Customer Business Valuation One of our clients is a global chemical company. As chemists and chemical engineers, they were unfamiliar with the fiscal logistics of supply chain management. When their CFO became alarmed by a sudden downturn in their profitability, we were asked to assess the supply chain’s role in the downturn. As we often find, our client hadmade no distinction in their service offering across their customer base. They were over-serving many customers who took advantage of their one-size-fits-all approach to supply chain service strategy. For example, many customers negligently delayed receiving shipments and/or canceled orders well after their inventory had been produced. Using EBIT and shipping volumes (Figure 3.10) we developed a formal and distinct stratification of their customer base and subsequently tailored their supply chain service strategy.

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