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Looking at Cost Drivers

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Most supply chain managers spend a lot of their time looking for ways to reduce costs. But one of the big challenges with supply chains is that things are often interconnected, so making a change in one area to lower costs can cause a change somewhere else that actually increases the cost. That’s not to say that you shouldn’t look for cost-savings opportunities, but you need to understand how the system works to ensure that you aren’t creating new problems in the process.

Four decision areas drive most of the costs in any supply chain, and I describe them in the following sections. Thinking about all these items together can help you find true opportunities for savings.

Supply Chain Management For Dummies

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