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A “how-to” guide for supply chain professionals who need accurate cost information for end-to-end processes 

With the increasing pace of globalization, supply chain professionals find that they have less and less margin for error in their decisions making. Competition is getting more intense, and, unfortunately, CFOs and accountants do not currently provide supply chain managers with the information required to make better decisions. Supply Chain Costing and Performance Management, 2nd Edition, will show you (and the executives you report to) how to understand and apply various enterprise and corporate performance management (EPM/CPM) methods related to costs and profit margins and performance measurements.  

This book is a “how-to” guide to assist supply chain managers and employee teams to obtain interenterprise cost information on supply chain processes. It provides techniques for obtaining accurate cost and performance information on the activities performed within your firm and on activities performed by trading partners. The techniques and approaches in this book were developed from supply chain costing practices implemented by leading-edge firms. You will learn how you can gain access to reasonably accurate costs and profit margins involved with suppliers, products, stock keeping units (SKUs), service-lines, channels, and customers. In addition, you will gain insight into the activity costs in end-to-end business processes, including the “drivers” for each type of cost. 

  • Learn how to access accurate cost and pricing information related to both your company and your trading partners 
  • Overcome siloed information by creating your own costing practices using proven methods drawn from leading firms 
  • Understand what drives activity costs for each step in end-to-end business processes 
  • Assess the performance of your costing activities with step-by-step measurement guidelines 
  • Make better decisions and improve performance and profitability with clearer, more transparent cost and price data 

The information in this book will empower supply chain managers with the ability to make better decisions and improve their organizations’ performance and profitability. 

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Preface
  6. About the Authors
  7. CHAPTER 1: The Supply Chain Costing Journey: Why You Need to Take It
    1. COMMONLY ACCEPTED OBSERVATIONS
    2. THE JOURNEY TO IMPLEMENTING SUPPLY CHAIN COSTING
    3. NOTES
  8. CHAPTER 2: Key Observations That Support the Development of the Book
    1. KEY FINDINGS
    2. TRUST ISSUES INFLUENCE COST INFORMATION EXCHANGE
    3. NOTES
  9. CHAPTER 3: The Nature of Supply Chain Costing
    1. NATURE OF SUPPLY CHAIN MANAGEMENT
    2. SUPPLY CHAIN COSTING FRAMEWORK
    3. SUPPLY CHAIN COSTING DEFINITION
    4. NOTES
  10. CHAPTER 4: Developing a Foundational Understanding of Strategic Supply Chain Cost Management
    1. IMPORTANCE OF SUPPLY CHAIN COSTING
    2. IDENTIFYING THE DETERMINATES OF SUPPLY CHAIN COST SYSTEMS
    3. DOCUMENTING SUPPLY CHAIN DECISIONS AND PRODUCTION PROCESSES
    4. NOTES
  11. CHAPTER 5: Why Supply Chain Cost Systems Differ from Traditional Cost Systems
    1. COST DATA NEEDS
    2. MANAGEMENT PERCEPTION OF COSTS
    3. SUPPLY CHAIN COSTING INCREASES THE COMPLEXITY OF COST SYSTEMS
    4. REASONS SUPPLY CHAIN COSTING MUST DIFFER FROM TRADITIONAL COSTING
    5. DIFFERENCES BETWEEN TRADITIONAL AND SUPPLY CHAIN COSTING
  12. CHAPTER 6: Overview of Cost Tools and Cost Classification
    1. WAYS TO THINK ABOUT SUPPLY CHAIN COSTING TOOLS
    2. COST CLASSIFICATION FOR MANY PURPOSES
    3. SUPPLY CHAIN COSTING AS A COMBINATION OF COSTING TECHNIQUES
    4. NOTES
  13. CHAPTER 7: Indirect Costs, the Influence of Cost Allocation, and the Need to Understand Activities
    1. INDIRECT COSTS AND ALLOCATION
    2. INFLUENCE OF COST ALLOCATION
    3. ACTIVITY‐BASED MANAGEMENT FUNDAMENTALS
    4. NOTES
  14. CHAPTER 8: The Need for Value Chain Analysis
    1. VALUE CHAIN ANALYSIS
    2. BASICS OF VALUE CHAIN COST ANALYSIS
    3. USING VALUE CHAIN ANALYSIS RESULTS
    4. THE VALUE OF COOPERATIVE COSTING ACROSS THE VALUE CHAIN
    5. USING COST ESTIMATION CAPABILITY ACROSS THE VALUE CHAIN
    6. NOTES
  15. CHAPTER 9: Customer and Distribution Channel Profitability Analysis
    1. THE PROBLEM WITH TRADITIONAL ACCOUNTING
    2. GOOD (LOW MAINTENANCE) VERSUS BAD (HIGH MAINTENANCE) CUSTOMERS
    3. SUPPLY CHAIN MANAGEMENT'S NEED FOR CUSTOMER PROFITABILITY INFORMATION
    4. AN APPROACH TO CUSTOMER PROFITABILITY ANALYSIS
    5. VALUE OF CUSTOMER PROFITABILITY ANALYSIS
    6. NOTES
  16. CHAPTER 10: Tools for Reducing Supply Chain Costs
    1. STANDARD COSTING
    2. ACTIVITY‐BASED COSTING (ABC)
    3. ABC FUNDAMENTALS
    4. LANDED COSTING
    5. KAIZEN COSTING
    6. NOTE
  17. CHAPTER 11: Supply Chain Cost Planning Tools
    1. BUDGETING—USING WORK ACTIVITIES
    2. TARGET COSTING
    3. CAPITAL INVESTMENT ANALYSIS
    4. CAPACITY ANALYSIS
    5. NOTES
  18. CHAPTER 12: Align Performance Measures with the Strategy
    1. LINKING COST AND PERFORMANCE
    2. LINKING SUPPLY CHAIN COSTING TO PERFORMANCE MEASUREMENT
    3. USING THE SUPPLY CHAIN COSTING FRAMEWORK TO TRANSLATE SUPPLY CHAIN PERFORMANCE INTO FINANCIAL PERFORMANCE
    4. INTEGRATING SUPPLY CHAIN COSTING INTO A BALANCED SCORECARD
    5. INTEGRATING COSTING WITH STRATEGY, CUSTOMERS, PROCESSES, MEASURES, AND SHAREHOLDERS
    6. ADDING VALUE THROUGH LINKAGES
    7. NOTES
  19. CHAPTER 13: Accept the Challenge of Improving Supply Chain Costing
    1. BEHAVIORAL CHALLENGES
    2. TECHNICAL CHALLENGES
    3. STRATEGIES SUPPLY CHAIN COST LEADERS USE FOR OVERCOMING THE CHALLENGES
    4. WHAT STILL NEEDS TO BE DONE AS THE SUPPLY CHAIN COSTING JOURNEY CONTINUES
    5. OVERALL CONCLUSIONS
    6. NOTES
  20. Appendix: Additional Process and Productivity Tools for Supply Chain Costing
    1. UNIT COSTS OF OUTPUTS AND BENCHMARKING
    2. COST OF QUALITY (COQ)
    3. TIME‐DRIVEN ACTIVITY‐BASED COSTING (TDABC)
    4. RESOURCE CONSUMPTION ACCOUNTING (RCA) AND GERMAN COST ACCOUNTING'S GPK
    5. ACCOUNTING FOR LEAN MANAGEMENT
    6. THEORY OF CONSTRAINTS THROUGHPUT ACCOUNTING
    7. NOTES
  21. Index
  22. End User License Agreement
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