Supply chain management - networked thinking: money costs & alternative costs in sales

In many Industries joint campaigns between manufacturers and retailers are carried out. Events are often organized in the catering and supplying industry, for example.

sales partnerships

A beverage manufacturer supports the catering industry, if larger
events are organised. A sales representative from the beverage manufacturer then often comes to the site to discuss the event with the restaurateur and to to plan.

This is also the case in this example: A restaurateur's summer festival is on
on the program. The innkeeper expects from Seller did-
strong support, calls for the common Projects also one
Involvement by the supplier, because after all, both can
benefit.

Profit maximization? Wrong!

The books on the subject (advertising)

The seller, in turn, would like to customers with his
Helping out opportunities for the summer party and that too
minimal own Costs.

A profit maximizing one Behavior is not possible with classic cost accounting. It is also completely irrelevant whether the cost accounting

• as process cost accounting,
• as cover contribution calculation (DB invoice),
• as a step-by-step fixed cost contribution calculation (fixed cost DB),
• as a partial cost calculation or
• as an overhead costing.

In the classic form, it cannot cover the costs
indicate the opportunities used.

Accuracy where there is none!

Even worse, the classic cost calculation simulates exactness where management and the entrepreneur can not be found. On the contrary:

The classical cost calculation leads us astray, if we are - mistakenly - convinced that it can show us the relevant costs in management decisions!

Alternative costs are missing

Discounts for your success (advertising)!

The classic cost calculation can not specify future-oriented values; it is, on the one hand, past-oriented and, on the other hand, it can not identify alternative costs.

In our case, the alternative costs consist of possible subsistence costs or possible overstock costs.

The newspaper boy model

It cannot be stressed enough that the news-vendor model
(newsboy model) represents an absolute quantum leap in the further development of assessment methods in supply chain management and therefore cannot be valued and classified highly enough.

With this model, the breakthrough has been achieved
Calculate the costs of unused opportunities and build on them
make optimal management decisions.

computing Games

Is the cooperation between catering and suppliers a win-win situation or a zero-sum game for both? The host needs a large amount of his drink. One hectolitre costs the manufacturer 20 euros (valued at manufacturing costs). Usually will
the hectolitre with a net selling price of 60 euros to the landlord
sold.

For his part, he can set a net sales price (without Taxes)
of 120 euros at the summer festival. The seller and the landlord
expect sales of around 130 hectoliters.

A milkmaid calculation

“A milkmaid bill”, the salesman cheers inwardly, “me
only has to provide 30 hectoliters free of charge. That costs me
only 600 euros (manufacturing costs per hectolitre times the free hectare
liter).

However, the landlord has a monetary benefit of 1800 euros
(Net selling price per hectolitre multiplied by the free hectolitre). That is a
Win-win game for both of us. At the next major event with
I'll get that from the landlord fast back in." The seller is happy.
So should the innkeeper. Or?

You see what you do not see

At the beginning of the 19th century, the French economist Frederik Bastiat dedicated his life to clarifying economic myths in works such as the “parable of the broken window” or the “petition of the candle makers”.

He called his work "What you see and what you don't see." In it he devoted himself to the thought traps in the Welt of Economy and targeted numerous professional groups that only
were able to evaluate the visible; in many cases her thoughts were not thought through to the end.

Win-win or zero-sum game?

Maybe we will have another one almost 200 years later
Do wrong thinking? Let's take a closer look!

The landlord actually saved 1800 Euros because he got 30 hectoliters provided free of charge by the manufacturer, which he would otherwise have had to pay for the full purchase price. But what about the manufacturer?

The bill without host

It has to bear not only its production costs of 20 Euro per hectolitre, but also the loss of the contribution margin (DB) of 40 Euro per hectolitre.

The lost DB is the manufacturer's normal selling price to the restaurateur minus the promotional price. Consequently sees the on account like this:

• Visible manufacturing costs according to the cost calculation of 600 Euro (these are the money costs, which also appear in the cost calculation).
• Invisible costs in the form of lost DB of 1200 euros
  (these are the alternative costs that are not included in the cost accounting
  seem).
• Visible costs and invisible costs result in total
  Euro 1800.

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