Logistics costing supply logistics cost is the factors associated with the acquisition, storage, movement, and disposition of goods. An important area of investigation is the various problems and decisions the cost management method is designed for. The supply chain can have input but we are not the primary driver in these kinds of decisions. Activity based supply chain costing provides a cooperative framework for cost management in supply chains. Finally, cost is not the only element of a supply chains. Todays organizations, operating in an increasingly competitive conditions, are characterized by a network of relationships with suppliers and customers. The supply chain career path combines traditional costing methods with a focus on longterm sustainability of the organization and relationships with employees, supplies, vendors, customers and. A manufacturing cost and supply chain analysis of sic power electronics applicable to mediumvoltage motor drives kelsey horowitz, timothy remo, and samantha reese. Thus, the key resources, being a source of competitive advantage, are located not only within the organization but are part of network relationships.
Supply chain management, cost management, advanced management accounting, case. Developing financial analyses of the costs and benefits of. Value chain costing analysis as an approach to evaluate. For the purpose of this paper we discern three different perspectives on costing, namely. The primary purpose of a costing version is to contain cost records about items, cost categories, and calculation formulas for indirect costs.
Costing methods for supply chain management pdf book. The paper describes a suggested model for measuring scc. This perspective takes vendors, suppliers and end customers into consideration. The primary purpose of a costing version is to contain cost records about. It describes key methods that can be used in practice to implement management accounting practices that facilitate effective supply chain management. Profits for your company can rocket upward if you achieve sufficient savings in supply chain costs. Where standard costing is used its limitations are not always fully understood with users often treating it as a science rather than an art. Developing an integrated supply chain costing approach for.
The ability to assess costing or cost difference in supply chain expectations is clearly lacking by the partners to. Improving value to the customer, by offering better products and services. Organizational settings in supply chain costing springerlink. Logistics cost management from the supply chain perspective. Customers and consumers are increasingly value driven and consequently less brand or supplier loyal. A micro costing approach was used which included all fixed and variable costs in the supply chain. You dont need to be a corporate giant to save big on supply chain costs. Other dimensions must be considered and balanced when designing the supply chain, including. A manufacturing cost and supply chain analysis of sic. Costing methods for supply chain management anna surowiec, phd agh university of science and technology, faculty of management, poland abstract.
With organizations being spread out so far and wide, any event that disrupts the supply chain can be catastrophic to operationscosting time, money, and sometimes livesand put critical. This article is carried from the perspective of the supply. From this broad standpoint, the air force does not know its total supply chain cost. Supply chain management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers. A supply chain strategy for the aviation industry by. Supply chain target costing may serve either as a cooperative, i. Lca 2 or focus only on organisational aspects of the value chain supply chain management, supply chain costing 3.
Supply chain cost reduction manage demand uncertainty in a product repair return flow markus artman, max lonn and sofia nilsson department of technology management and economics division of logistics and transportation chalmers university of technology abstract managing an aftermarket supply chain is associated with high levels of complexity. All books are in clear copy here, and all files are secure so dont worry about it. In many cases, the traditional accounting data used to support strategic decisions reflect inaccurate supply chain costs. Instruments description of the method, model, or concept of abc application in various supply. Within supply chain management, the reduction of costs is a frequently cited objective. The key supply chain challenge of cost reduction supply chain costs often represent a considerable percentage of the sales price of a good or service. Annual international interdisciplinary conference, aiic costing methods for supply chain management anna surowiec 0 0 agh university of science and technology, faculty of management, poland todays organizations, operating in an increasingly competitive conditions, are characterized by a network of relationships with suppliers and customers. Get complete tracking of and visibility into costs associated with your materials as well as flexible management of trade between internal parties. This paper presents two concepts for supply chain costing. Pdf supply chain management and activitybased costing. A practical application of supply chain management principles.
The traditional method of cost accounting refers to the allocation of manufacturing overhead costs to the products manufactured. Pdf cost management in supply chains different research. Value chain analysis can be broken down into a three sequential steps. Once a decision is made, it is not usually reconsidered for years. In order to reduce costs a company needs to know how to measure supply chain cost scc. It describes key methods that can be used in practice to implement management. Apr 09, 2016 the key supply chain challenge of cost reduction supply chain costs often represent a considerable percentage of the sales price of a good or service. Students can earn only one management degree in a single career path. Annual international interdisciplinary conference, aiic costing methods for supply chain management anna surowiec 0 0 agh university of science and technology, faculty of. Different costing techniques emerged as alternatives to traditional accounting methods in which indirect costs e. The use of activity based costing abc for the supply chain is becoming quite common and replaces the traditional method of cost allocation system with a more accurate cost assigning. Finally, cost is not the only element of a supply chains performance, as well discuss later.
If net profit on sales is 5%, for example, a reduction in supply chain costs from 9% to 4% or from 12% to 7% will double net profits. What costing methods do you use to track total costs. Research on controlling supply chain logistics costs based on acivitybased costing zhou chaoyang1, jiang ying2 1 school of management, wuhan university of technology, wuhan, p. This paper is concerned with scc and how measurements of scc are and can be used in industry. Supply chain cost management and valuebased pricing continued deflationary trends in many markets around the world are creating greater pressure for cost reduction in order that margins. Abc improves the allocation of overhead costs to activities, processes, products, services and customers. Read online costing methods for supply chain management book pdf free download link book now. The air force has struggled to completely understand the costs associated with its operations.
Here, case study research forms a suitable approach, as it represents the intersection of theory, structures and events gubrium, 1988 and attempts to ground theoretical concepts with reality stuart et al. Logistics cost control must be effective only when it adapts the support of. Costing methods for supply chain management pdf paperity. Working with product costing in various supply chain environments.
Although using time as a measure can be an effective approach to increasing value in the supply chain there is limited understanding of the relationship between time and cost across supply chains. Download costing methods for supply chain management book pdf free download link or read online here in pdf. The desk reference of statistical quality methods, second edition mark l. This article is carried from the perspective of the supply chain logistics company under the control of costs, and analyzes the cost of controlabout logistics companies from global and local. Technology, as well as merchandising innovation, have caused some massive shifts in. The issue of understanding cost is complex, involving many perspectives, methods and techniques. Applying activitybased costing in a supply chain environment. Supply chain costing a conceptual framework springerlink. Supply chain cost management and valuebased pricing continued deflationary trends in many markets around the world are creating greater pressure for cost reduction in order that margins can be maintained.
Supply chain costing three cost levels need to be analyzed. Value chain cost management deloitte cis consultants have broad experience in the design of cost accounting and management systems from diagnostics of the existing system and the development of a concept to assistance in the implementation of automated solutions for transaction accounting, data processing, and reporting. This research explores the applications of managerial costing techniques, and how they can be used to improve the. Therefore, a new approach for lcc is suggested using the life cycle assessment lca method as the fundamental basis a system model with energy and mass flow balances of all upstream processes enhanced with economic aspects. These seven areas offer significant savings opportunities for companies of all sizes and across all industries. Hence, value chain analysis should cover the whole value system in. Standard costing is sometimes overused as a decision making tool. Costing techniques are cost down tools hughes et al. Analysis of the returns showed that an investment in.
However, the tools to implement effective supply chain management are sparse. Power of one of the partners frequently rises to the fore as the driving force in a set of supply chain relationships. Costing methods for supply chain management semantic scholar. Organisations focus on reducing costs in their supply chains to increase net income. Many companies are moving away from using standard costing as their primary tool for pricing or global supply chain sourcing decisions. Thus the presented activitybased costing for supply chain management framework has to be proven by empirical research. Here, case study research forms a suitable approach, as it represents the. Since the air forces supply chain is too broad to be a focus of this study, a smaller segment was chosen for a closer look. Activitybased cost accounting abc january, 2011 scrc sme a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate. Abstract traditional intrafirm cost accounting tools are not appropriate in the context of supply chain management. The supply chain management discipline suggests that information sharing is paramount when attempting to achieve cost reductions and quality improvements. Value chain cost management deloitte cis operations. The goal of the research was to report on best practices in supply chain cost.
Cost management along the supply chain methodological. This article focuses on the potential role that management accounting information can play in supply chain management. The supply chain career path combines traditional costing methods with a focus on longterm sustainability of the organization and relationships with employees, supplies, vendors, customers and the public. Costing the supply chain for delivery of act and rdts in. Suggestions and comments by users are welcome to help improve the manual. Costing the supply chain for delivery of act and rdts in the. Proactive cost management proactive cost management is a market oriented, anticipatory system. Analysis of the returns showed that an investment in one of their supply chain top 25 including companies such as nokia, apple, tesco, the cocacola company, and. Abstract supply chains, as well as individual organisations have two sources of competitive advantage, value and costs. Jan, 2011 activitybased cost accounting abc january, 2011 scrc sme a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products or other bases, such as customers, markets, or projects. Pdf supply chain management and cost management are among the top. A costing version can serve one or more purposes, depending on the data that the costing version contains. Yet, no concepts have been presented so far, that allow assessing the total costs in a supply chain. Costing methods for supply chain management surowiec.
Logistics cost management models and their usability for. Get comprehensive visibility and management of material flows, warehouse work, and product costs across the supply chain with inventory management cloud. Working with product costing in various supply chain. Activitybased cost accounting abc scm supply chain. This paper provides a framework for supply chain costing in three steps. This implies that the companies involved are intertwined in a complex relationship network, and that an element of. In cost management, an approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to or absorbed into each unit of production. Logistics costing supply chain management notes and case study.
The key supply chain challenge of cost reduction logistics. The most important task of managers is to achieve supply chain cost efficiency. Understanding your value chain, and how china fits into it, can lead to tremendous tax savings. Different costing techniques emerged as alternatives to traditional accounting methods in which. Research on controlling supply chain logistics costs based. Pohlen, issues in supply chain costing, international journal of logistics management, vol 7, no 1, 1996, pp. Management accountings supply chain costing techniques. This article provides information about costing versions, how to maintain them, and the types of data that you can include in them. Costing methods are changed with great deliberation when there is a major shift in economic conditions think hyperinflation or when implementing or updating an erp. A microcosting approach was used which included all fixed and variable costs in the supply chain. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Cost driver cost drivers addressed by the abc approach. Activity based costing in the supply chain logistics.
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