Supply chain partner cost structure

TABLE 27.7 Supply Chain Partner Cost Structure and Composite (%)... 

The JPL managers faced a situation similar to what supply chain partners now encounter. That is, how do you measure supply chain cost Table 25.12 describes some of the structural problems encountered and the consequences. To put everyone on a common basis, JPL developed a common cost model. Its purpose was to eliminate these differences when evaluating the underlying technology needed to produce solar cell systems. The model, called SAMIS for Standard Assembly Line Industry Simulation, used a structure that s adaptable for supply chain cost modeling. Figure 25.7 is a simplified structure of the SAMIS model. 

As consumers of ERP systems, manufacturers and their trading partners face the risk of being stranded when their systems do not interoperate. The lack of interoperability in manufacturing supply chains can create significant costs (Brunnermeier and Meutin 1999), tmd those costs tend to be hidden. More accurate cost structures must be developed for information goods, particulady for buy-configure-build software applications. Unlike off-the-shelf software applications, ERP systems are more like traditional assets, in the business sense, with capital costs and ongoing operational costs. 

Table 27.7 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 III (multicompany) accounting on the vertical axis in Figure 27.1. To gain a product cost, the composite must be adjusted for transfers... 

It is paramount that before embarking on an e-supply chain programme companies understand their supply chain priorities and the structure of Internet-enabled linkages with key suppliers and partners. The real benefits of an e-supply chain and the cost of implementing and maintaining it must be properly evaluated before taking a big leap into the e-supply chain. 

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