Role of Supply Chain in Maximizing Revenue and Profits (Published)
Recognizing that supply chain costs constitute a significant portion of the final product cost, organizations must strive to minimize these costs to enhance revenue and profitability. Supply chain costs fluctuate due to factors such as sourcing, transportation, and inventory management. Therefore, improving the operational efficiency of the supply chain is crucial for boosting profitability in today’s context. Supply chain operations are inherently complex, with uncertainties impacting various costs, thereby affecting return on investment and profitability. To address this, supply chain cost optimization should ensure that the supply chain is responsive, agile, and adaptable for both current and future operations. Optimizing these costs enhances operational efficiency, leading to increased revenue and profits. This article examines various supply chain cost parameters, including total operating costs, profit, revenue, logistics costs, and information sharing costs, through the lens of multi-objective optimization. It assumes a generic three- stage supply chain model comprising suppliers, manufacturers, and customer zones. A trade-off curve among the selected objective functions and relevant constraints is developed and presented. This trade-off curve aids decision- makers in understanding the impact of supply chain optimization on the selected objectives, thereby fostering enhanced profitability and revenue generation in both present and future supply chain operations.
Keywords: Revenue, Role, profits, supply chain