Assignment task: An assessment of the supply chain is critical to the success of an organization. Supply chain management is the coordination of all entities involved in the creation and distribution of a product. When properly managed, the supply chain should be able to efficiently create products and deliver them to customers. A company is more likely to engage in supply chain management after it has created significant efficiency improvements within its own boundaries, and realizes that it must coordinate its activities with its business partners in order to wring further improvements from the system. The following are issues where management uses accounting information for decision-making:
- Partner selection. The company engaging in supply chain management must evaluate suppliers and distributors to determine which ones mesh best with its concept of a supply chain that can deliver goods to customers at the right price, quality, and delivery specifications.
- Forecasting system. There should be a shared forecasting system in place that breaks down customer demand information into the component parts needed by each member of the supply chain. This system not only shares forecasting information with them but also provides real-time updates as the forecast inevitably changes.
- Tax efficiency. Because of differences in local tax rates, a supply chain can be configured to recognize income in the lowest-tax regions and avoid them in high-tax regions.
What kind of accounting information can be used to make these assessments? Does management need to incorporate accounting information with external information for the assessment? If so, where will this information come from?