Cost to serve

Cost to serve

Cost to Serve is a process-driven accountancy tool to calculate the profitability of a customer account, based on the actual business activities and overhead costs incurred to service that customer.[1]
In the context of supply chain management it can be used to analyse how costs are consumed throughout the supply chain. It shows that each product and customer demands different activities and has a different cost profile. The product and customer profiles are often illustrated using a Pareto analysis curve which highlights those that contribute most to the company's profit and those that erode it.
Unlike Activity Based Costing (ABC), Cost to Serve is not resource-intensive and focuses on aggregate analyses around a blend of cost drivers.

It gives an integrated view of costs at each stage of the supply chain providing a fact-based view to unravel the complexity of multiple supply chains and channels to market. It enables a focus on both long-term decisions and the prioritisation of short-term actions. Businesses are able to reposition customers and services, and how they are served to improve overall margin.

Contents

See also

Notes

Cost-to-Serve is a registered trademark for LCP Consulting Ltd

References

  1. ^ "IGD Glossary - Cost-to-Serve". IGD. http://supplychainanalysis.igd.com/index.asp?id=20&rid=1&glosinitial=c. Retrieved 2009-09-09. 
  • Christopher, M (2005), ‘Logistics and Supply Chain Management’, 3rd edition, Financial Times/Prentice Hall
  • - LCP Consulting Ltd
  • - Cost to Serve Articles
  • Braithwaite, Samakh (1998), 'The Cost-to-Serve Method', The International Journal Of Logistics Management, Volume 9 Issue 1 p69-84, ISSN 0957-4093

Further reading

  • Guerreiro, Bio, Merschmann (2008), 'Cost-to-serve measurement and customer profitability analysis', The International Journal Of Logistics Management, Volume 19 Issue 3 p389-407, ISSN 0957-4093
  • Australian Food & Grocery Council / Focus Information Logistics - 'A Guide to using cost to serve to enable effective customer engagement' [1]

Wikimedia Foundation. 2010.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Cost of conflict — is a tool which attempts to calculate the price of conflict to the human race. The idea is to examine this cost, not only in terms of the deaths and casualties and the economic costs borne by the people involved, but also the social,… …   Wikipedia

  • Cost of living in Namibia — The cost of living in Namibia is very high.[1] [2] Namibia imports about 50% of its cereal requirements. Many other items used in daily life also need to be imported. High transportation costs make prices very high. Monopoly in some business… …   Wikipedia

  • Weighted average cost of capital — The weighted average cost of capital (WACC) is the rate that a company is expected to pay to finance its assets. WACC is the minimum return that a company must earn on existing asset base to satisfy its creditors, owners, and other providers of… …   Wikipedia

  • Help at Any Cost — Infobox Book name = Help at Any Cost title orig = translator = image caption = Book cover author = Maia Szalavitz illustrator = cover artist = country = United States language = English series = subject = Tough love, Behaviorism genre = Non… …   Wikipedia

  • Director of Cost Assessment and Program Evaluation — The Director of Cost Assessment and Program Evaluation (CAPE) is a principal staff assistant and advisor to the Secretary and Deputy Secretary of Defense in the Office of the Secretary of Defense. The postholder, as chartered under United States… …   Wikipedia

  • Average Cost —   The total cost of production divided by the total quantity produced.   ***   The revenue requirement of a utility divided by the utility s sales. Average cost typically includes the costs of existing power plants, transmission, and distribution …   Energy terms

  • Free cost — Free Free (fr[=e]), a. [Compar. {Freer} ( [ e]r); superl. {Freest} ( [e^]st).] [OE. fre, freo, AS. fre[ o], fr[=i]; akin to D. vrij, OS. & OHG. fr[=i], G. frei, Icel. fr[=i], Sw. & Dan. fri, Goth. freis, and also to Skr. prija beloved, dear, fr.… …   The Collaborative International Dictionary of English

  • Standard cost — A cost established as a target, usually for *budgetary or motivational purposes. *Variances from standard costs are analyzed as either *favorable or *unfavorable. Standard costs also serve to simplify record keeping, as they require only periodic …   Auditor's dictionary

  • National Broadband Network — The National Broadband Network (NBN) is a national wholesale only, open access data network under development in Australia. Up to one gigabit per second connections are sold to retail service providers (RSP), who then sell Internet access and… …   Wikipedia

  • Dormitory — A typical American university and college dormitory room A dormitory, often shortened to dorm, in the United States is a residence hall consisting of sleeping quarters or entire buildings primarily providing sleeping and residential quarters for… …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”