It is particularly important for organizations to know and understand in detail their cost and value structures in relation to managing their own supply chains. All organizations form part of a much larger value system

that links with other suppliers and other customers locked in a single or multiple supply chain structure. For example, if your organization supplied just five customers and two of those customers accounted for a substantial proportion of business it would be very important to know cost drivers and value creators for the two major customers since following the ‘Pareto’ concept. It is essential for managers to focus their activities on the areas where there is high risk or high returns.