Supply Chain Cost Model in Integrated Approach

Abstract

'Supply chain management’ emerged as a concept when benefits of collaboration within and beyond the capacities of individual organizations were witnessed. It was found that the collaborative efforts in reducing total supply chain costs were effective in a fragmented supply chain. The challenge in supply chain cost analysis is posed in interface costs where multiple organizations are involved in occurring costs. Many of the overhead costs in a supply chain are interface costs impacted by the business process of upstream or downstream stakeholders as well as their own. Difficulty in developing a cost model pertaining to overhead costs leads to challenges in developing a supply chain cost model. The paper proposes a metric-based supply chain cost model using activity-based costing to help understand how each activity impacts total supply chain costs, followed by a case study. A supply chain coordinator needs to understand not only the whole supply chain costs but also the costs of primary processes, many of which are interdependent. The paper contributes to the knowledge of construction supply chain management in that a supply chain cost model using activity-based costing is presented.