Supply chain costing must improve, new survey suggests

Date Posted: 15/02/2018 Category:
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Supply chain costing must improve, new survey suggests

Date Posted: 15/02/2018 Category:

Supply chain managers around the world urgently need to improve their costing accuracy, a new study has found. Most agreed that the benefits of improving their costing system would outweigh the cost of the investment required.

44% of supply chain managers polled said that a lack of operational data prevented them from utilising current costing information. They claimed that when costs are reported in solely financial terms it is harder to get an accurate picture of the true situation.

Other barriers to accurate spend analytics included inadequate technology and software, cited by 39% of respondents. 30% said that accounting and finance personnel were resistant to changing the way they worked in order to incorporate more appropriate practices.

The survey was carried out by the Institute of Management Accountants (IMA) alongside the association for supply chain management APICS (formerly the American Production & Inventory Control Society).

Three main causes for inadequate costing information reaching supply chain professionals were identified. It was found that many organisations relied on external financial reporting systems that used oversimplified costing methods. Similarly, outdated costing models were still used by many accountants. The accounting and finance sector as a whole was also found to be resistant to change without pressure being applied by managers to produce more accurate and relevant data.

The study goes on to suggest ways that costing systems can be improved, including strengthening relationships between supply chain managers and finance departments. The report also called for greater IT infrastructure and for management to demand updated costing processes.

“Supply chain professionals rely on cost information when making decisions, but have indicated a need for that information to be more accurate and effective,” APICS CEO Abe Eshkenazi said. “This report highlights the necessity for supply chain and finance departments to work more closely and adopt costing practices that are progressive and focused on informing internal decisions.”

Steve Trainor

Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.

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