Developing a Foundational Understanding of Strategic Supply Chain Cost Management

This chapter discusses the need to establish the importance of supply chain costing and supply chain decisions. It emphasizes the need for a common understanding of the environment in which the firm operates and where the firm is currently positioned strategically, operationally, and within the supply chain. Quantifying the size of the supply chain costs an organization or supply chain process incurs is one approach to selling skeptical managers on the importance of measuring and managing supply chain costs. Every organization and supply chain decision maker is positioned within a supply chain structure, is influenced by dynamic environmental factors, makes strategic and operational product and service choices, and selects or uses production processes. Strategic and production decisions that affect current and future supply chain costs are made at many levels in the firm. Strategic positioning encompasses the selection of the firm's target markets or customers and its place in the overall supply chain.