Supply Chain Management and Business Performance The VASC Model

Against this current trend of low growth and high uncertainty, business directors must work with their shareholders to set strategic objectives and define business models.

The great number of possible strategies makes this type of management very complex, and the actual deployment of strategic choices is often limited by a lack of overall coherence within the organization.

This problem calls for an appropriate and renewed response. In strategic management today, a closer, permanent dialogue is needed between operational and financial performance.

Based on a supply chain approach, the Value Added Supply Chain (VASC) model focuses on driving operational performance, but aims to achieve a greater and more dynamic integration between these two dimensions of the company's value creation.

Claude Fiore, Aix-Marseille University, France.

Laurent Livolsi, Aix-Marseille University, France.

Pascal Querro, Aix-Marseille University, France.

Contents

Acknowledgments ix

Foreword xi

Introduction   xv

Chapter 1. Managing Performance: Objectives and Managers’ Needs    1

1.1. Towards greater organizational agility  2

1.1.1. Some basic trends and their impacts on businesses  3

1.1.2. The evolution of business models: some examples from different sectors.   10

1.1.3. Divergences, but above all, major trends in performance management   38

1.2. Needs and objectives of the CEO and the Board  45

1.2.1. The objectives of the CEO and the Board  46

1.2.2. Needs in terms of information quality and responsiveness   55

1.3. Financial directors’ needs and objectives 58

1.3.1. The involvement of a Chief Financial Officer (CFO) in the strategic process: from business model to business plan  60

1.3.2. Optimizing the business’ finance structure  66

1.3.3. New objectives in financial strategies 70

1.4. Supply chain management and operations management  81

1.4.1. Supply chain management: definition and positioning 81

1.4.2. Objectives that require a transverse approach 88

1.5. Conclusion  97

Chapter 2. Management Techniques and Tools  99

2.1. Tools for managers  100

2.1.1. Tools for measuring the creation of value  100

2.1.2. Tools for managing the value chain or the strategy deployment chain   105

2.2. Tools at the disposal of CFOs  116

2.2.1. The difficult reconciliation of time horizons  117

2.2.2. The importance of management control as

a support for financial steering  127

2.3. The supply chain manager’s tools   142

2.3.1. Repository of good practices    142

2.3.2. Organizational models adapted to transversal management    150

2.3.3. Tools for operational steering and their connection with financial steering    158

2.3.4. New tools for more financial objectives   166

2.4. Conclusion  174

Chapter 3. New Ways to Steer Supply Chain Performance 177

3.1. Supply chain management through improvement of operational performance    184

3.1.1. Performance steering and the value creation process 184

3.1.2. Value tree (modeling financial equations)  187

3.1.3. The link between business indicators and financial strategy 191

3.1.4. Supply chain business model    198

3.1.5. From business model to steering supply chain value creation  200

3.2. Impacts of operational performance on financial management  202

3.2.1. The interrelations between changes in cost structure and EBITDA   204

3.2.2. The interrelations between changes in depreciation periods and cash flow    208

3.2.3. The interrelations between changes in stock levels and WCR  210

3.2.4. The cohesion of financing the supply chain business  211

3.3. Organization of the VASC model    213

3.3.1. A representation of the organization in terms of supply chain  214

3.3.2. An approach to steering the VASC model  220

3.4. Conclusion  225

Conclusion 229

Bibliography   235

Index   245

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