Leverage Your Supply Chain to Increase Shareholder Value

Dec. 2, 2010
There's a direct correlation between profitable growth and a strong supply chain framework

Conventional wisdom holds that supply chain leaders typically outperform their competitors. What is not so widely known is that supply chains directly impact a company's profitable growth and increase shareholder value, according to Tompkins Associates' new paper, Leveraging the Supply Chain for Increased Shareholder Value.

"Supply chains encompass virtually the entire operations of a business," says Gene Tyndall, co-author of the paper and EVP, global supply chain services, Tompkins Associates. "As business executives examine opportunities for growth, the supply chain value framework gives them a blueprint of how supply chain decisions and operations drive the financial picture and boost shareholder value. And this increase in shareholder value is derived through achieving bottom-line operational excellence, as well as top-line revenue gains."

The supply chain value framework encompasses three main business goals: profitable growth, margin improvement and capital efficiency. These goals can be achieved through capturing new markets/customers, outperforming competitors, reducing the cost of goods sold, improving speed and productivity, as well as reducing working capital and reducing fixed assets.

Another key factor that can impact shareholder value is tax-effective supply chain management, especially on the global scale.

Jim Tompkins, CEO of Tompkins Associates and co-author of the paper, stresses the importance of integrating tax planning into the overall management of an organization's supply chain. "The financial and operational benefits are too great to ignore," Tompkins says. "Supply chain, tax and finance managers should work together to increase profitability and competitiveness."

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