Every company should pay specific attention to supply chain management because it contributes to a smooth and successful overall performance. Supply chains consist of many aspects, which makes it challenging to assess whether they are useful. That is why various metrics can be used to evaluate the efficiency of these phenomena. As for Boston Beer Company, both soft and core metrics are suitable to identify the strengths and weaknesses of the company’s supply chain management.
Soft metrics allow to the analysis of a general state of supply chain management. Among them, collaboration with supply chain partners and even competitors deserves specific attention. This indicator demonstrates whether a firm can overcome existing difficulties in cooperation. Risk management methods stand for the second soft metric to be considered. Effective supply chain management focuses on developing many ways to handle and minimize possible risks and their consequences. In the modern world, information is said to be the most valuable asset. That is why companies should take appropriate measures to protect their data. As for supply chain management, its effectiveness becomes higher if helpful cybersecurity systems accompany it.
In addition to that, core metrics also can be used to evaluate supply chain management. On the one hand, it is reasonable to pay attention to the average days of inventory. This indicator shows how many days it takes for a company to turn its stock into sales. It is calculated by dividing 365 (the number of days in a year) by inventory turnover. As for the latter metric, it demonstrates how many times a company’s inventory cycles per year. To find it, one should divide the cost of goods sold by average inventory.
At present, it is necessary to apply the metrics above to evaluate the effectiveness of the Boston Beer Company’s supply chain management. Thus, there is no evidence that Boston Beer Company cooperates in the given sphere with one of 7,000 rival breweries.1 At the same time, the company considers many risk factors that can be material for them in the future, which means that ways to overcome them.2 What is more, the company heavily relies on complex information systems that are designed to contribute to both better supply chain management and cyber safety.3
Furthermore, the core metrics can provide more detailed information on the phenomenon under consideration. Applying the data from balance sheets and statement of comprehensive income of the company, one can calculate that inventory turnover is 7.99.4 It means that the company’s turnover cycles almost eight times per year. The obtained information makes it possible to calculate the value of the average days of inventory. It accounts for 45.68 days, meaning that it takes this period for Boston Beer Company to convert its stock into sales.
In conclusion, various metrics of supply chain management have been identified and assessed. As for the soft ones, two of three indicators point out that Boston Beer Company can impress with a decent level of this management. What is more, the absence of cooperation with rivals is not the most crucial weakness as to supply chain management. The core metrics demonstrate that the phenomenon under consideration is of a decent level because the inventory rate of 7.99 and average days of inventory of 45.68 are adequate indicators for a brewery company. Thus, both core and soft metrics prove that Boston Beer Company has decent supply chain management.
Bibliography
United States Securities and Exchange Commission. The Boston Beer Company, Inc. 2019.
Footnotes
- United States Securities and Exchange Commission, The Boston Beer Company, Inc. (2019), 14.
- United States Securities and Exchange Commission, The Boston Beer Company, 14.
- United States Securities and Exchange Commission, 21.
- United States Securities and Exchange Commission, 40–41.