The Supply Chain Triangle

Get the balance right between service, cost and cash

Over the past decade, supply chain management has matured from a relatively unknown concept into a fully fledged discipline. Nowadays, the supply chain triangle should be an integral part of an organization’s strategy, since a successful balance benefits the overall business goals.

In his book titled ‘Supply Chain Strategy and Financial Metrics. The Supply Chain Triangle of Service, Cost and Cash’, Prof. dr. Bram uses financial metrics to provide insights into how supply chain, strategy and finance are interlinked. Via his supply chain triangle concept, in which service, cost and cash form the three sides, Bram succeeds in capturing the balancing act companies are faced with today – the challenge of providing extra services to customers without excessively increasing cost and cash, for example, or making a strategic decision to not serve all customers equally.

 

Step by step and using clear practical examples, Bram’s book explains how to optimize the three sides of the triangle. Many organizations still have a functional focus: Sales is primarily focused on service, Operations delves into cost and Finance concerns itself with the capital employed. According to Bram, the key to success lies in better managing the big picture based on the Return On Capital Employed (ROCE).

The book also introduces you to the strategic model by Treacy & Wiersema, who conducted research into what drives success. According to them, it’s clear that companies who consistently outperform their competitors have chosen to focus on one of three defined leadership values: product leadership, customer intimacy or operational excellence (focusing on low costs). Furthermore, market leaders are extremely disciplined in executing the strategy of their choice. Besides that, the book draws on the strategic model by Crawford & Matthews which takes five value drivers into consideration: price, access, service, product and experience.

 

Throughout his book, Bram alternates the theory with practical examples. For instance, he takes you on a benchmarking journey, with concrete, real-life cases from the likes of Barco and Casio. He also provides you with guidance for building a KPI dashboard based around the supply chain triangle and for implementing strategy-driven supply chain management in your own organization.

With his supply chain triangle concept and this book explaining that concept based on a mix of theoretical models and case studies, Bram has laid the foundation for an evolution in strategic thinking related to business and supply chain management.

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