The concept of Cost to Serve has been around for many years (to my knowledge at least 20) and is an important tool in consumer packaged goods industries. Cost to Serve is a method of identifying profitability of individual products and customers. It is also used to unravel the complexity of multiple supply chains and channels to market. The analysis of the cost of each activity across the supply chain also provides data and insights to enable supply chain optimisation.
The focus of Cost to Serve is usually the in-market or post-launch costs of serving a product to a customer. Cost to Serve rarely looks at the development and launch costs of new products, which is the focus of this article. Yet product development teams can gain benefit from Cost to Serve methodology. Continue reading →
A recent post in Purchasing Insight, “What can game theory teach us about Financial Supply Chain Management?” highlights the overall financial impact of paying suppliers as late as possible. The key point is that the working capital cost to supplier usually far outweighs the savings to the customer, thereby increasing the overall cost to the supply chain. The post got me thinking about a much bigger issue: how businesses manage their supply chains – a cross-functional collaboration or a collection of functional silos? Continue reading →
Following up on some recent tweets on employee motivation and engagement, I was reacquainted with Gleicher’s Formula for Change, published by Beckhard and Harris (also known as Beckhard and Harris’s Change Equation). Although I agreed with the formula when I first saw it several years ago, I rather dismissed it as a statement of the obvious. On reflection, it is a more powerful tool in change management than I first gave it credit. Continue reading →