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Free Articles From The Current Issue
Glimmers of hopeLogistics costs plunged dramatically last year as the economy contracted. Preliminary data for 2010 show that a recovery is under way, but shippers still face a host of challenges.
Don't breathe a sigh of relief just yet
Despite the recovery, companies are likely to pressure supply chain managers to cut costs even further.
A bright future... together
We must move beyond the typical approach of "state the problem and talk about the frustrations."
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Identifying critical costs in the supply chain
On October 21, 1993, the Wall Street Journal published an article by the don of business management, the late Dr. Peter F. Drucker, titled "The Five Deadly Business Sins." One of the deadly sins Dr. Drucker mentions is "cost-driven pricing." According to him, "the only thing that works is price-driven costing. Most American and practically all European companies arrive at their prices by adding up costs and then putting a profit margin on top." He then adds: "If Toyota and Nissan succeed in pushing the German luxury automakers out of the U.S. market, it will be the result of their using price-led costing. To be sure, to start out with price and then whittle down costs is more work initially. But in the end, it is much less work than to start out wrong and then spend loss-making years bringing costs into line—let alone far cheaper than losing a market." Amen! I couldn't agree with you more, Dr. Drucker....
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