Organizational Settings in Supply Chain Costing

Abstract

SummaryCost management in supply chains currently focuses on the functional level, i.e. the management of activities and transactions causing costs. The institutional level, i.e. the management of the decision makers, is equally crucial for the application of cost management in the supply chain, as its success depends upon the interactions between both the functional and institutional level. This paper presents two concepts for supply chain costing. Activity based supply chain costing provides a cooperative framework for cost management in supply chains. Supply chain target costing may serve either as a cooperative, i.e. trust-based, or a confrontative, i.e. power-based framework. The developed concepts are illustrated with an example from the textile industry.