Return on Assets Calculator Assignment Instructions
This assignment is based on the lecture materials outlining Supply Chain Performance and the use of the ROA Calculator. The purpose of the assignment is for students to become more familiar with how SCM performance improvements translate into value for the supply chain. As such, students will be experimenting with the ROA Calculator worksheet to see the interactions of proposed improvements and their effects on financial performance.
Situation:
The ROA Calculator "Before" worksheet presents the operating and financial performance of your supply chain company today. You are tasked with proposing three or more changes to the performance of the supply chain that will bring about a good financial Return on Assets of 12% or greater. Apply the knowledge you have obtained from the course. Propose SCM improvements that will add value and demonstrate that value in the ROA.
Your company may have some opportunities in variable costs. However, keep in mind that every senior manager knows that change the COGS by more than two or three percent is very difficult in the short run. Same for SG&A expenses, just cutting expenses does not guarantee performance. Rather, SG&A expenses are there for a reason and making changes means changing the way you do business. This needs to be explained in a reasonable way to convince the management of the company how it will add value to the supply chain.
In the area of Asset Management, it appears the company is far from performance excellence. Making substantial changes that will have a major effect on these performance measurements is possible by implementing sound strategies of high performing supply chains. Again, the specific proposals need to be reasoned and well explained.
Assignment:
1. Leave the "Before" worksheet unchanged as a basis for reference
2. Modify the "After" worksheet in the ROA Calculator to calculate changes to at least one element of each of the following performance measures in the worksheet:
2.1. Cost of Goods Sold - one or more of the elements of COGS
2.2. Expense as a Percent of Sales - one or more of the elements of SG&A overhead.
2.3. Days Inventory Outstanding
2.4. Any additional changes to the worksheet needed to implement your plan
3. For each of the changes, explain the reason for the change and how much of an improvement in the ROA was achieved by the change.
4. Prepare a written memorandum outlining each of your proposed changes and the specific impact of each on the ROA. A simple memo format is all that is needed such as follows:
To: InstructorName
From: StudentName
Date: dd/mm/yyyy
Subject: SCM Performance Improvement
Attachment:- ROA_Calculator.xlsx