chapter  8
10 Pages

Revisiting and Refining Lee’s ‘Triple-A Supply Chain’

ByJohn Gattorna

Supply chain management is a critical capability in companies, as it is one of the most powerful dimensions of competitive advantage an organization can utilize in the market place. This chapter examines the 'know-how' in terms of developing a coherent pricing approach which is aligned with the main supply chain configurations. It presents the number of best-practice pricing management frameworks to illustrate how this can be applied in the context of supply chain alignment strategies. It is important to identify and quantify the various cost-to-serve elements for the different supply chain types, to understand the impact on customer profitability and subsequently how pricing strategies should be reconfigured. One useful tool or helping to map out the various supply chain cost-to-serve elements is the customer offerings chain map. Once the cost-to-serve elements are established, it is paramount that these are quantified, allocated and tied to sales transaction through an advanced profitability model such as the Pocket Margin Waterfall Model.