How to Compare Actual Landed Costs
New systems “synch up” physical and financial supply chains with sourcing activities, providing visibility into costs as they occur and showing how they build with physical supply chain flows.
October 28, 2010
Global sourcing has become an essential element of enterprise strategies to reduce the cost of acquiring, building and selling products. Yet, extending supply lines overseas raises complex new commercial and operational challenges. These efforts expose the enterprise to an entirely new universe of investments, costs, partners, liabilities, resource acquisition issues, and management needs.
The result is that sourcing initiatives often do not deliver projected cost savings and profits, because the risks and costs of longer, more complex cross-border supply chains were not properly understood, tracked and managed.
This paper will expose the hidden pitfalls that organizations can encounter when they move sourcing and supply operations overseas and will examine historic practices for identifying and understanding the total costs and lead times required to bring products to market in this extended supply chain model. The paper will explore the weaknesses and shortfalls of these historic approaches, why they are ineffective, and why in some cases they are actually counterproductive — particularly in today’s Internet-connected, security-conscious, demand-driven world.
The paper will also present a discussion of “next generation” global cost control methodologies and systems. This section will identify the key enablers that underpin these systems, will make a qualitative and quantitative assessment of opportunities to gain from dynamic, real-time global cost control practices, and will explain the fundamental technology architecture and differentiators that set these new systems apart from past solutions.
Finally, the paper will present “before” and “after” scenarios comparing historic landed cost practices with dynamic global cost control methodologies. The paper will conclude with a review of historical lessons learned and some thoughts on path to value utilizing today’s advanced, Internet-based, network oriented global cost control systems.
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