Supply chain cost map

The figure shows fhe cosfs of activities in each of the three companies. Because it adjusts for infernal fransfers, it provides a more accurate picture than the composite supply chain cost we calculated previously. Our cost structures enable us to differentiate between internal and external cost at each level. For example. Process contributes 5% to total costs 30% is material, 70% is internal cost. So, for every 1 in sales of the supply chain s product. Process contributes 3.5% in internal cost and buys 1.5% in material. In this case, it is a commodity material. 

The mapping approach lends itself to expansion to other supply chain partners. For example, 25% of supply chain cost is contracted to others through High Tech. The supply chain team may expand the map to include one or more of these other suppliers. 

We can also place activity costs at Old Line in perspective. The map shows the activity costs we calculated. A display over all activities in the supply chain will also focus on operations improvements in any of the three companies. 

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The map of the supply chain in Figure 27.3 will aid the introduction of another concept related to supply chain cost visibility and its effect on clarity in decision making. This concept is the theory of constraints, or TOC. TOC is the product of thinking by Eliyahu Goldratt, Jeff Cox, and Robert Fox. - Goldratt and Cox make the important observation that, in... 

Table 25.7 shows each partner s cost structure and the composite supply chain cost structure. The composite is based on the percentage of total cost each partner contributes. Such a presentation is an example of Level II (multicompany) accounting on the vertical axis of our progression map (Figure 25.1). To gain a product cost, the composite must be adjusted for transfers among the supply chain companies. An example of this adjustment using this data is presented later. 

In essence, 35% of the published articles addressing instruments and methods of supply chain control deal with business metrics, 20% with the balanced scorecard and 16% with supply chain costing. Further methods are supply chain target costing and process mapping (Bacher, 2004 106). Publications by Neely et al. (1995) and Neely (2005) focusing on supply chain performance management and measurement confiim this statement... 

Process mapping Supply chain management Supply chain map Acquisition costs Possession costs Application costs Inspection costs Internal/external failure costs... 

This chapter focuses on supply chain structure and ownership, one of the Cs in the supply chain framework. The chain structure is the backbone or the pipeline through which information and material flow in the supply chain. It is the process map of a supply chain that typically crosses many independent company boundaries. Once a supply chain map is generated, the location of entities, as well as ownership, and the connections to the rest of the supply chain architecture influence the observed lead times, costs, incentives, and thus performance, of the supply chain. 

The final position, the upper right-hand corner in Figure 27.1, in our progression map is applying ABC to product costing. Combining these concepts, as stated, has been our goal. What is new about the supply chain is that we must go beyond the immediate boundaries of the company... 

Applying the concepts described above paves the way for mapping costs in the supply chain. This provides a high-level view of where costs are incurred to pursue cost reduction and avoid chasing visible, but unimportant, cost components. If the supply chain supports multiple products,... 

In our discussion of cost visibility, we mapped activity costs for our example three-company supply chain (refer to Figure 27.3). A start to implementing the demand-driven supply chain is to repeat the process... 

The reasons for supply chain excellence and reference points for projects dedicated to that end usually include process costs, incurred both in a single company (38% of respondents declared that they referred to company-wide cost data when making decisions) and in the entire supply chain (39% of respondents apply cost controlling in the supply chain). The data presented indicate the growing importance of control functions in supply chains. Maps of processes, both internal and... 

Company-wide cost data Company process maps Cost controlling in the entire supply chain... 

A systematic analysis is needed to optimize biomass value added ecologically and economically. First, the operational stages of a t5 ical supply chain are analyzed. Then, select factors that influence auf direct and indirect supply and logistics costs are mapped. 

Supply chain management with the transparent mapping of all processes, knowledge of the process costs, including overhead and time requirements has the prerequisites for initiating and supporting the implementation of the virtual enterprise. 

In our discussion of cost visibility, we mapped activity costs for our example three-company supply chain (refer to Chapter 25). A start to implementing the demand-driven supply chain is to repeat the process, tracking lead time instead of cost. This map will identify supply chain delays and how to select the best approaches for implementing the demand-driven supply chain. Figure 26.7 displays the same supply chain with our companies. Process, Old Line, and High Tech, using time as a metric. 

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