This book is  a “how-to” guide to assist 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 their firm and on activities performed by other trading partner firms comprising key processes within the supply chain.  The techniques and approaches comprising the book were developed from supply chain costing practices implemented by leading-edge firms.

Readers will understand how they can have access to reasonably accurate costs and profit margins involved with suppliers, products, stock keeping units (SKUs), service-lines, channels, and customers. In addition, they will have visibility and transparency to the activity costs in the various end-to-end business processes for each of those including the “drivers” for each type of cost. This information will provide managers with insights to make better decisions to improve an organizations performance and profitability.

Gary Cokins, PhD, is the Founder of the advisory firm Analytics-Based Performance Management, LLC. He is certified in Production and Inventory Management by the American Production and Inventory Control Society and is a sought-after speaker at conferences around the world.

Terrance Pohlen, PhD, is Senior Associate Dean and Professor of Marketing, Logistics, and Operations Management at the University of North Texas.

Thomas Klammer, PhD, is Regents Professor Emeritus of the University of North Texas, Denton. He is internationally recognized for his work in capital investment decision methods and cash flow reporting.

Preface ix

About the Authors xiii

Chapter 1: The Supply Chain Costing Journey: Why You Need to Take It 1

Chapter 2: Key Observations That Support the Development of the Book 13

Chapter 3: The Nature of Supply Chain Costing 27

Chapter 4: Developing a Foundational Understanding of Strategic Supply Chain Cost Management 45

Chapter 5: Why Supply Chain Cost Systems Differ from Traditional Cost Systems 59

Chapter 6: Overview of Cost Tools and Cost Classification 75

Chapter 7: Indirect Costs, the Influence of Cost Allocation, and the Need to Understand Activities 93

Chapter 8: The Need for Value Chain Analysis 109

Chapter 9: Customer and Distribution Channel Profitability Analysis 125

Chapter 10: Tools for Reducing Supply Chain Costs 139

Chapter 11: Supply Chain Cost Planning Tools 159

Chapter 12: Align Performance Measures with the Strategy 181

Chapter 13: Accept the Challenge of Improving Supply Chain Costing 207

Appendix: Additional Process and Productivity Tools for Supply Chain Costing 231

Index 241