SUPPLY CHAIN STRATEGY

E d w a r d H . F r a z e l l e , P h . D . maximizing financial performance and include the impact of the decision on revenue, expense and capital. (This is amajor departure from most supply chain philosophies tools and metrics which typically only consider the impact of decisions on expenses or operational performance indicators.) Examples of RightChain™ objective functions include minimizing Total Logistics Cost (TLC), maximizing Supply Chain Value Added™ (SCVA), and maximizing Gross Margin Return on Inventory (GMROI). Figures 19 and 20 show these objective functions in action in screenshots from our RightBuys™ Sourcing Optimization System and our RightModes™ Mode Optimization System. There will be a much more comprehensive explanation of these objective functions in the RightScores™ Module on Supply Chain Performance, Cost and Value Measures. | 47

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