CSCMP's Supply Chain Quarterly
Finance
March 21, 2010
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Free Articles From The Current Issue
At Kraft, cash is king
When Kraft Foods needed to cut costs and free up cash, its supply chain organization rose to the challenge. Better inventory turnover played a leading role in boosting cash flow by 20 percent.

San Diego—you need to be here!
Just about anyone who's involved in supply chain management will converge on San Diego for CSCMP's 2010 Annual Global Conference.

Germany gets top marks for international trade logistics
Germany tops the World Bank's ranking of nations' capacity to facilitate international trade logistics.

Companies struggle to build "cash culture"
Many companies that are fighting to free up cash in their supply chains have not taken the necessary steps to make that happen.

New book advises: Give both parties a stake in outsourcing
A new book says that 3PL relationships will improve when both company and supplier have a vested interest in each other's success.

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Identifying critical costs in the supply chain

Companies need to stop beating down suppliers on costs and collaborate with them to control costs for both parties, says Jimmy Anklesaria in his book, Supply Chain Cost Management: The AIM & DRIVE Process for Achieving Extraordinary Results. In this excerpt, he explains how companies can get this process going. The most important steps include understanding how suppliers price their products and identifying suppliers' critical supply chain costs.
From the Quarter 03 2008 issue

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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