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Together ABM data and VCA facilitate discussions and the making of fact-based decisions Many managers are unwilling to take any actions until presented with the facts Open-book sharing of cost and pro t data, based on nancial transparency, may be the catalyst needed to foster genuine seller-buyer collaboration Many companies do not adequately understand how much of their cost structure is a consequence of the collective demands on work triggered by their suppliers and customers Costs measure effects In uencing a customer or supplier to behave differently to lessen the organization s employee workload is too often overlooked as a possibility to reduce costs Trading partners in a value chain are now realizing that as each optimizes its own internal processes and policies, some of the impact ripples externally, causing potentially higher costs to partners and thus suboptimizing the entire value chain Costs are being shifted, not eliminated.



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In short, with the increased codependency of commercial relationships, achieving improved service levels and ef ciency needs to be switched from inward-focused, inside-the-four-walls costreduction programs to collaborative management with supplier-facing and customer-facing initiatives With VCA, a company can integrate both the supply and demand sides of its value chain, enabling cost analysis encompassing both inbound and outbound effects Unfortunately, many businesses mistrust their own cost data Most companies operate with a resigned acceptance that their cost accounting data is a bunch of ctitious lies but we all agree to it Understanding true and actual costs is not the whole solution, but it is a big part of the solution to increase inter rm trust along the value chain and better manage the entire chain s costs and pro t margins.

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INDEX Closed-loop activity-based planning/budgeting, 138 Closed system, 102 Clustering, 123, 255 Collaboration, see Collaborative management implementation, 68 69 importance of, 24 25, 39, 176 177, 179 180, 192 193 seller-and-buyer, 70 Collaborative management, 181 183, 187, 192 Command-and-control management, 44 45, 72 Commissions, 119 120 Communication: customer interaction channels, 160 162 with customers, 156, 165 with feedback, 24, 39, 72 importance of, 23 24, 28, 69, 81 motivational, 70 71 real-time, 161 seller/buyer interface, 183 184 targets of, 29 value chain management, 183, 188 Comparison shopping, 181, 195 Compensation issues, 74 Competition, 130, 142 Competitive advantage, 152, 200 Complexity, 91 92 Composite margin, 126 Con ict, 2 4, 271 Consistency, in customer service, 157 158 Constraints, focus on, 2 4 Consumer Goods Technology/AMR Research Tech Trends Report, 176 Consumption-based activity drivers, 124 Consumption rates, 138 Content of strategy, 65 66 Continuous improvement programs, 110, 181, 194 196 Continuous process improvement, 116 Contract budget, 132 Contributing KPIs, 63 Cooper, Robin, 35 Core business processes, 145 146, 148 149 Corrective action, 64 65 Cost accounting, 87, 91 92, 114, 117, 144, 192, 210 212 Cost allocations, see Cost accounting; Cost assignment signi cance of, 92 93 traditional, 106 two-stage model, 106 types of, 88

How can suppliers recover any of the power they are losing to buyers due to the Internet I just described three ways of collaborative management The common theme is that information technology is the ace in the hole for suppliers VCA and ABM will inevitably be part of the suppliers solution to regain power Supply and value chain intelligence hits at the heart of the core competencies of solutions provided by software vendors offering business intelligence (BI) functionality: data access and management; transforming data; monitoring, reporting and diagnostics; award-winning analytics; and costing capabilities across the extended value chain all on a exible, scalable platform..

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