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Economic Value Added (EVA)

To better value the success of an enterprise towards generating long-term value to its shareholders than the traditional financial measures, EVA was introduced by Stern, Stewart & Co. It measures the return on capital vs. the cost of capital of the company. Some companies are starting to use measures like EVA within their executive evaluations. EVA can be used to measure an enterprise's value-added contributions within a supply chain. However, while useful for assessing higher-level executive contributions and long-term shareholder value, EVA metrics are less useful for measuring detailed supply chain performance.

The other two measures discussed in detail later are Balanced Scorecard and SCOR Model.

Sources of Risk⁸

The nature of the risks that are faced by a company and how these will not fall equally across a corporation's portfolio of sources, products and customers is discussed below.

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8 Alan Braithwaite, "The Supply Chain Risks Of Global Sourcing", http://www.lcp-consulting.com, 2003.

* Contributed by -
Krishnakanth K. K. & Pankaj Ghai,
PGP Students.
IIM Lucknow.