TABLE OF CONTENTS Although many definitions can be offered to explain the essence of supply chain management (SCM), the financial view of the subject centers on creating a balance between profitability and asset utilization. While most industries continue to experience downward pressure on margins, the tactical contribution of SCM to profitability must focus on reducing costs in all processes and activities. As noted in the introductory chapters of this book and referred to throughout the treatise, SCM must also contribute to a company's return on assets. Far from being a revolutionary idea, organizations have focused on these variables since the introduction of the DuPont formula in the early years of the 20th century. The only difference now is that companies must execute the formula in a much more cluttered, international landscape.
Given the intense nature of competition in global markets, it should come as no surprise that companies have devised several ways to not only reduce costs but also take assets out of their operating equation. The discussion on outsourcing is testament to this phenomenon, and it seems that there is no end to managers' creativity in getting assets off their books. Inventory management is of special concern to international companies and focuses on not only finished goods but also raw materials and work in process. The balance of this chapter is dedicated to an analysis of several operating models, each of which seeks to create a balance between the needs of the market and the goal of minimizing inventory levels.
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