Supply Chains: A Manager's Guide

A High Stakes Game

Why does getting the supply chain right have such a big impact on success? Because the stakes are so high: Holding and moving merchandise is a very expensive proposition. Collectively, U.S. companies spend a trillion dollars a year on their supply chains, just under 10% of the nation's GDP. About a third of this cost is for holding inventory and the rest is for moving it around, with a bit of change left over for administration. As large as these figures may seem, they used to be substantially higher, totaling about 15% of GDP at the beginning of the 1980s. Deregulation of the transportation industry coupled with inventory reductions brought the total down to 10% by the early 1990s, and it has remained stable at that level ...