COVID-19: Rethink Cost Rationalization for Supply Chain

Updated: 7 days ago


Effective supply chain management requires target costing to understand value stream and value engineering better. Not with standing its name, target costing centres on customer requirements. Cost is viewed as an end result, and as an economic umbrella; customer requirements are viewed as binding competitive constraints. All supply chains contain three core elements; Suppliers; Producers; and Customers. Whatever the composition, the parts of a supply chain must operate in a coordinated manner. The goal of the coordinated efforts among the elements of the supply chain is to achieve operational excellence that results in superior customer value and satisfaction.


The most glaring weaknesses of traditional cost management information for managing supply chains is the treatment of customers: except for cost, customers’ perceptions of value and customer requirements are ignored. Suppliers, manufacturing methods, and distribution channels should all be selected based on their impact on unit cost.


Compared to the traditional cost approach, target costing offers substantially better information for the supply chain management. It's cost information is more accurate, it is capable of supporting and monitoring the supply chain strategy, and it partially integrates customer requirements into the analytical procedures used to establish the value of an activity.


Target costing is a process for ensuring that a product launched with specified functionality, quality, and sales price can be produced at a life-cycle cost that generates the desired level of profitability. Though partially masked by variation in its implementations, the targeting costing process has a general structure.


In the outbreak of COVD-19, companies must adopt the target costing system. This costing system is suitable where customer requirements are dynamic. Particularly, value-based target costing process is recommended for the supply chain, regardless of the level of agility in the chain.


Presented By,

Azhar Qadri

BE, PE, CDDP, CSCM, CSCA,CSCP, CSSC


The opinions expressed in this article are those of the author.


Discover how the CSSC Certification Program is Transforming the Careers of Supply Chain Professionals, and assisting organizations transform their supply chains into value chains.


Take advantage of this opportunity to put your company out front, and not only have a well-qualified workforce, but also a workforce that will enjoy their work as they will not only know what they are doing, but perhaps more importantly why they are doing it.

CSSC, Certified Stores & Stock Controller and CPIA, Certified Production and Inventory Analyst


Connecting Minds & Inspire Learning

Take advantage of the FREE Resources available at BicaraSupplyChain. Due to Coronavirus Covid19 and highly stressful conditions we can keep sharing knowledge and advice to solve problems is the most crucial for the future of charities.


Be better prepared for when the world returns to "normal". LEARN from SupplyChain Experts to pick up the pieces after the dust has settled. We broadcast every week and all year around the most up-to-date series of podcasts.

BicaraSupplyChain

3 views0 comments

WORLD HEADQUARTERS

VCARE Academy Inc.

154 Bestview Drive Toronto,

M2M2Y3, Ontario, Canada

OUR ASSOCIATIONS 

OCC-Logo-color.png

Supply Chain Podcast Platform

Bicarasupplychain.com

Listen Bicara Supply Chain Podcasts on your favorite Platform >

Bicara Podcast_2. Spotify .jpg
Bicara Podcast_5. Apple Podcasts
Bicara Podcast_7. Castbox.jpg
Bicara Podcast_1. Anchor.jpg
Bicara Podcast_3. Stitcher.jpg
Bicara Podcast_8. Overcast.jpg
Bicara Podcast_4. Google Podcasts.jpg
Bicara Podcast_6. Breaker.jpg
Bicara Podcast_10. RadioPublic .jpg

FOLLOW US ON SOCIAL MEDIA

  • LinkedIn
  • Facebook
  • Twitter
  • YouTube

Copyrights © 2020 VCARE Academy Inc. - All Rights Reserved | Developed by Artxel Technologies