Root Cause — Clarity

This chapter addresses “clarity” as a root cause for under-performing supply chains. By clarity, we are principally talking about costs and related measures of performance. Measuring costs in complex organizations has become a challenge for many. When it comes to the supply chain, problems only compound. The obscurity of costs that exists at the company level only worsens when gauging how costs are spread among supply chain partners. This chapter describes the role we see for applying the principles of activity-based costing in supply chains. As Doug Hicks notes, ABC is our best choice for capturing the “laws of nature.”