Question

A supply chain has the following information:

	Supplier	Factory	Wholesale	Retailer
Inventory in days*	30	90	40	20
Accounts receivable in days	20	45	30	40
Accounts payable in days	30	45	60	37
Sourcing unit cost	$5	$20	$55	$70
Added unit cost	$10	$25	$10	$30
Sales unit price	$20	$55	$70	$110
On-time delivery (%)	85	95	75	95

^*This is also the throughput time in days.

Which entities in the supply chain have the worst performance in terms of throughput time, cash-to-cash, added unit cost, and on-time delivery?

	Supply Chain Entity Throughput Rank Cash-to Cash Rank Added Unit Cost Rank On-Time Deliver Rank Supplier Factory Wholesaler Retailer

Answer 1

Throughput time is the time taken by a company to put products in the hands of their customer. Lower throughput times are desirable.

Entity	Throughput time	Rank
Supplier	30	2
Factory	90	4
Wholesaler	40	3
Retailer	20	1

The worst performer is the factory.

Cash to cash cycle time = Receivable Days + Inventory Days - Payable Days. The lower cash to cash cycle time the better.

Entity	Cash to cash cycle time	Rank
Supplier	30+20-30 =20	2
Factory	45+90-45 = 90	4
Wholesaler	30+40-60 = 10	1
Retailer	40+20-37 = 23	3

The worst performer is the factory.

Added Unit cost is the cost of delivering/producing one more unit. Lower Added Unit costs are desirable.

Entity	Added unit cost	Rank
Supplier	10	1
Factory	25	2
Wholesaler	10	1
Retailer	30	3

The worst performer is the retailer.

On-time delivery % = On-time Units / Total Units.

Higher On-time delivery % is desirable.

Entity	Added unit cost	Rank
Supplier	85	2
Factory	95	1
Wholesaler	75	3
Retailer	95	1

The worst performer is the wholesaler.