TABLE OF CONTENTS William Grey, Kaan Katircioglu, Dailun Shi, Sugato Bagchi, Guillermo Gallego, Mark Adelhelm, Dave Seybold, and Stavros Stefanis
Faced with heightened competition and a weak economy, companies are spending far more time developing business cases to justify their supply chain initiatives. Executives, consultants, software vendors, and project leaders alike have turned to return on investment (ROI) analysis as their tool of choice. But is this newfound interest in financial analysis paying off? Or is it just creating more confusion and sometimes driving poor investment choices? When it comes to analyzing supply chain initiatives, ROI analysis often falls short.
IBM Research, in collaboration with IBM Global Services, has developed a new approach for rationalizing supply chain investments. By taking ROI to the next level, it helps you make better decisions and extract greater value from your supply chain.
[1]Reprinted with permission of Supply Chain Management Review, Copyright 2003, Reed Business Information.
When properly applied, ROI analysis is a powerful tool. And greater management attention to quantifying business impact certainly leads to more intelligent supply chain investments. However, ROI analysis is especially difficult to apply when analyzing supply chain improvements. Projected supply chain benefits, such as reductions in inventory carrying costs or logistics expenses, are notoriously difficult to quantify. Although the "hard" benefits reported in a typical ROI analysis may appear authoritative, they often rely heavily on assumptions about the impact of anticipated operational improvements. In many cases, these assumptions represent little more than educated...
