CHAPTER 3 Strategic and Financial Logistics

© Portions Argee Logistics and Pearson Education, Inc. publishing as Prentice Hall

Learning Objectives
• To appreciate how logistics can influence an organization’s strategic financial outcomes • To review basic financial terminology

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Learning Objectives
• To understand how the Strategic Profit Model can demonstrate the financial impact of logistics activities • To become aware of some of the more common measures of logistics performance

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Strategic and Financial Logistics Key Terms • Assets • Asset turnover • Balanced scorecard (BSC) • Balance sheet • Cost …show more content…

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Effect of Decisions on ROA

Source: JJ Coyle et al The Management of Business Logistics

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Comparison of Logistics Alternatives

Typical Company Stats

Source: JJ Coyle et al The Management of Business Logistics

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Logistics Connections to Net Profit Margin
• Net Profit Margin = net profit/sales • Multiple ways in which net profit margin can be influenced by managerial decisions • Relevant categories include:
– Sales – Cost of goods sold – Total expenses

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Logistics Connections to Asset Turnover
• Asset turnover= total sales/total assets • Inventory is the most relevant logistics asset • Logistics decisions can influence speed at which invoices are paid – accounts receivable

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Balanced Scorecard
• Balance scorecard (BSC) is a strategic planning and performance management system used in industry, government, and nonprofit organizations.

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Balanced Scorecard
• Management should evaluate their businesses from four perspectives
– – – – Customers Internal