Difference between revisions of "CO1"

Latest revision as of 14:48, 10 June 2017

Supply Chain Costs is a ratio that measures the total cost a company occurs to perform the supply chain activities to plan and position resources and execute customer orders (i.e. generate revenue). Supply Chain Costs is measured as a percentage of revenue for the same period.

Calculation

where

• COGS = Annual Cost of Goods Sold
• Distribution Costs = Total annual distribution costs
• Other = Total annual other supply chain expenses (Other Operational Expenses)
• Revenue = Total annual supply chain revenue. Generally this excludes revenue from selling company or supply chain assets

Unit of measure: %

Importance

A lower percentage indicates better performance. A higher percentage indicates the company is spending more to fulfill demand and thus experience lower gross profit margins. Typically Supply Chain Costs alone don't show the full picture. Cost and Asset Efficiency metrics can be influenced by fixed assets decisions for example: Assets acquired via a short term lease are operating expenses, thus increasing costs, but improving Fixed Asset turns at the same time. Statement of Comprehensive Income

4.00

(6 votes)