% ROI 100 Profit / Capital employed
The term ‘investment’ is used because capital employed is equivalent to the money invested in the business. ROI can also be seen as the outcome of profitability and asset utilisation:
% ROI 100 Profit Sales
Sales Capital employed
Let us look at the detail behind each of these ratios, and the way they fit in with each other. Figure 3.1 gives a family tree of the way return on investment is made up. Let us look at the potential for improving each from a point of view of man-aging the supply chain better.