Supply Chain Management Costing and Profitability

Learning Objectives

• To identify why there is pressure on supply chain trading partners to collaborate rather than be adversarial.
• To identify why customers are the source of shareholder wealth creation for suppliers. 
• To know how to measure and manage supplier, product, channel, and customer profitability.
• To know why as differentiation from product advantages is reduced or neutralized due to commoditization, service level differentiation matters, and the customer relationship grows in importance as a competitive advantage.
• To identify how to shift the mindset from growing sales to growing profitable sales and to view customers as investments like in a stock portfolio to seek higher ROIs – return on customers (ROC).
• To evaluate how to consider influencing a company’s suppliers suppliers and customers – second tiers and above.

Course Description

Attention logistics and supply chain managers! Are you looking to create financial value and gain a competitive advantage for your company?

Logistics and supply chain managers have increasingly realized that the greatest potential to create financial value lies not within a single firm but across all the trading partner enterprises comprising a supply chain, particularly at the interface between trading partners. At the boundaries of their firm – with their suppliers and customers – is where companies can identify mutually beneficial cost savings initiatives plus new and greater opportunities to reduce costs from core processes and to provide higher service levels to their customers. Organizations need to measure the costs and profit margins of products, service lines, channels, and customers to manage them.

Supply chain profitability and cost measurement have been frequently identified as a source of value creation and competitiveness. It involves the collection, expense assignment, and analysis of profit margins and cost information across all of the work activities comprising a supply chain to identify opportunities to obtain a competitive advantage through a combination of reduced costs or improved performance. Although managerial accounting practices and systems exist, few companies have completed the journey of inter-organizational supply chain profit management. 

Major topics included: 

• What is Enterprise Performance Management?
• Why trading partner collaboration is needed.
• Managerial accounting for supply chain management.
• Stages of SCM partner collaboration to attain trust.
• Overcoming resistance to change. Getting buy-in.

Join our upcoming Accounting CPE Webinar to learn about inter-organizational supply chain profit management. This advanced form of managerial accounting enables you to have a profit and loss (P&L) report for each of your customers, including profit margins for products, SKUs, services, distribution channels, and costs-to-serve customers. This information also provides the “drivers” for each type of cost.

Analytics with improved forecasting and reduced uncertainty are also playing a role in reducing excess inventory and cycle-time buffers as costly insurance to assure reliable on-time deliveries without stock-outs.

This presentation is based on the book “Supply Chain Costing and Performance Management” that I co-authored published by John Wiley & Sons. The book is a result of a research study to examine the application of supply chain profit and costing measurement methods in multiple industries and international settings. Here is a link to the book: Supply Chain Costing and Performance Management, 2nd Edition | Wiley 

Overview

• Drowning in Data and starving for information

  7 mins
• Why share financial data with the "Enemy"?

  15 mins
• Multiple-Stage cost flowing

  23 mins
• Balancing levels of accuracy with effort

  33 mins
• A Shift the CFO's emphasis

  43 mins