Cost to Serve

Cost to Serve is the practice of understanding supply chain profitability. This is achieved by determining the true costs associated with servicing your customers, products, and vendors. Traditionally, this has been complex to do because it requires an integrated view of costs at each stage of the supply chain, and then converting these costs into fact-based views to unravel the complexity of multiple supply chains and channels to market. Working with Spend Optics & Magic Orange, you can produce accurate and repeatable Cost to Serve information, so that businesses can re-position customers, products and services, and re-calibrate how they are served to improve overall margin.

 Activity Based Costing

Activity-Based Costing (ABC) is an accounting methodology which came into existence to track the true cost of an item or service, by recognizing both the direct and indirect costs needed to produce the item or service. Originally intended for the manufacturing sector, ABC has grown into a methodology also used by services companies to expand their cost accounting capabilities. ABC helps you recognize the relationship between costs, activities and products, and through this relationship, assigns indirect costs to products far less arbitrarily than traditional methods. Spend Optics can help you model and assign direct and overhead costs to products or customers for an unlimited number of activities, using the most appropriate drivers.