Identifying Which Customers Not to Serve!

Many companies don’t yet optimize their Total Delivered Cost (TDC) in their Supply Chain. Total Delivered Cost is the real measure of how much money it takes for a company to manufacture and deliver a product.  TDC gives you more accurate information than COGS, by giving you more details, and is based on the actual flow through your supply chain.  TDC has become a critical metric in guiding supply chain planning decisions. Businesses that understand and optimize their TDC make more money.

A single product does not reap the same gross profit—otherwise known as margin—for different customers. Each customer and product combination result in different costs and margins. The full aggregated cost of product delivered, or Total Delivered Cost help companies make smarter decisions:

Do you know the actual TDC to all your ship-to locations?

The good news is that with the availability of big data, it is now easier to accurately calculate and leverage TDC in your supply chain decision making. Whether you are looking to improve the way you supply your customers, determine the location of a new plant, or simply want to understand the cost- drivers of your supply chain, we encourage you to take a scientific and objective approach to understand your true total delivered costs. For more information, please review Profit Point’s approach on TDC contained in our eBook.

 

About Jim Piermarini

Jim has extensive experience in the chemical industry, including ten years working in a plant and twenty additional years working with businesses to improve their supply chains.

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