TABLE OF CONTENTS When multiple building blocks are cascaded end-to-end to extend the network from the upstream zone through the midstream zone to the downstream zone, there are many seller buyer pairs throughout the network. The network is designed around the location of trading partners physical inventories and cash inventories. The material wants to flow downstream from inventory location to inventory location, to the end-customer. The cash wants to flow upstream from bank account to bank account, to the raw material supplier. This end-to-end exchange of physical goods for cash is governed by interlocking order-to-delivery-to-cash cycles. Increasing the order-to-delivery-to-cash velocity improves the competitiveness of the network design.
Velocity is a measure of the time it takes to go completely through one closed-loop cycle. A closed-loop cycle is defined as a set of process steps that must be completed to connect information flow with material flow and to connect information flow with cash flow. The following two velocity measures are useful in gauging the competitiveness of a network design:
Network order-to-delivery-to-cash velocity Measures the time per cycle, from the start of an end-customer order until the last payment is made to a raw materials supplier.
Trading partner order-to-delivery-to-cash velocity Measures the time per cycle from the start of a buyer s order to the trading partner until the last payment to a seller is made by the trading partner. This includes a transfer of product from the seller s inventory to the buyer s inventory and a transfer of cash from...
