CHAPTER 2

How Does a Business Plan the Supply Chain?

 

Introduction to Supply Chain Planning

A business can be profitable—with a strong return on investments—yet still might not consistently generate cash. It is cash—not earnings—that reduces debt, and a business without sufficient cash will ultimately go bankrupt. Management’s principal focus should be on growing a business’s profits and cash flow as a primary driver for creating shareholder value, as seen in the chart (Figure 2.1).

 

images

Figure 2.1 Shareholder value added

Freed-up cash can be used for the following:

 

Increasing growth opportunities

Expansions into adjacent and other industries ...

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