How Collaborative Costing Creates Transparency in Supply Chains

As supply chain practitioners, we talk about the importance of transparency in supply chains. However, when using buzz words and phrases, we do not always have universal alignment on the meaning of and expectations from achieving an end goal. What is a transparent supply chain? And how does a transparent supply chain behave?

One of the main facets of a transparent supply chain is real time visibility into costing and the breakup of each element that makes up total unit costing. Additionally, understanding the origin of every cost component, and its routing into the place of assembly is helpful for added visibility. In working with hundreds of companies that have used our supply chain platform, we see that equipping customers and their vendors with a collaborative costing application helps to provide information on cost components and origins, thereby creating more transparent supply chains. 

1. Have vendors interact on costing with customers and other participants 

The process of receiving costs from suppliers and vendors has not changed much in decades. A product spec sheet is sent on email or via whatsapp, and the vendor returns a final cost on text or email. Brands do not know much about individual components that go into the making of the final product, nor do they know the breakdown of costs across those components. Designing a collaborative portal where vendors enter the final unit costs, as well as costs per component provides much needed visibility to the brand purchasing the products. 

Read more here on some of the best practices on digitizing the costing process.  

2. Intuitive communication and collaboration are key to promoting smart costing 

Many supply chain applications have focused on building functionality deep assets like purchase orders, inventory and warehouse systems and design sheets. However, supporting these digital assets with well designed communication and collaboration hubs greatly increases the ROI from adoption of these digital assets. Cost sheets for example are not valuable as static assets – allowing comments, chats, files, approvals, and rejections across the lifecycle of the creation of a cost sheet greatly improves the value and visibility from a cost sheet when accompanied by the supporting narrative.

3. Minimize data entry – connect materials and origin information for sustainable, transparent supply chains

It is difficult to accomplish the goal of additional information and added transparency if the requirement comes with mountains of data entry. Linking cost sheets to the materials, product and vendor databases helps directly feed information into cost sheets. Beyond eliminating barriers of usage, this also ensures consistency of costs and numbers on the cost sheet.

 You can read more on the benefits of connected data sets here.

For more at the intersection of platforms, technology and supply chain please visit www.suuchi.com and www.supplychainsunday.com