(577i) Enhancing Supply Chain Network Design by Considering Financial Analysis Issues

One of the challenges for the new millennium in the chemical industry (and not only) are the development of new products to achieve value growth, the optimization of the Supply Chain (SC) to achieve value preservation, and the improvement of the global life cycle to maintain living viability. Financial analysis constitutes the major measure of the profitability, the solvency, the liquidity, the stability and, thus, the viability of an enterprise or a project.

Financial analysts usually employ techniques such as 'funds flow analysis' and financial ratios to understand the problems and opportunities inherent in an investment or financing decision. Afterwards, their reports are usually presented to the Chief Financial Officer (CFO) as one of their main yardsticks in making business strategic decisions.

Despite being the chain of the most expensive resource, the financial chain is the less planned (e.g., budgeted), and the less supported by literature and Advance Planning Software (APS) computer-aided programs. Nowadays, useful SC models and APS will be only those that are capable of preserving the firms' liquidity while providing a quick and optimal response to orders, through the optimization of delivery dates and price?time trade-off solutions. In SC design-planning literature can be found some important contributions considering cash flow and budget management.^1,2 However, the SC design literature neglects the consideration of financial ratios despite the fact that constitutes a crucial part of the enterprise financial analysis.

In the current work, financial analysis aspects are taken into account in the optimization of supply chain network design problems. Several financial ratios addressing different economic enterprise aspects have been examined and incorporated into the problem representation. Illustrative SC design-planning examples will be presented in order to shed light on the special characteristics and the benefits of this strategy.

To end up with, our belief is that financial analysis issues have to be taken into account during the SC design-planning optimization procedure in order to generate and propose strong financial standing projects increasing the possibility of their acceptance from the CFO while reducing the probability of the company's financial analysts disapproval (with the latter being a frequent fact now days).

References

[1] G. Guillén-Gosálbez; Badell, M.; Espuña, A.; Puigjaner L., Computers & Chemical Engineering, Volume 30, 2006, Pages 421-436.

[2] Laínez, J. M. ; G. Guillén-Gosálbez; Badell, M.; Espuña, A.; Puigjaner L., Computer Aided Chemical Engineering, Volume 24, 2007, Pages 721-726.

Acknowledgements

Financial support received from the Spanish Ministry of Education and Science (FPU grants) and Generalitat de Catalunya (FI grants) is fully appreciated. Besides, financial support from PRISM-MRTN-CT-2004-512233 and DPI2006-05673 projects is gratefully acknowledged.