A Strategic Perspective of Cost
ABSTRACT
One main purpose of operating a company is to maximize the benefit. Thus, cost down becomes a focus task of professionals who are striving to achieve this goal. To succeed in achieving this end, the sticking point is to reduce the cost of production, which is embodied in the quality of value creation and business running. With the level of the cost, eva luation of an enterprise is clear. For all firms, the choice is critical of which activities to perform internally and which to outsource. Cost structure determines largely a firm’s market share and its market position.
Good customer service does not necessarily need a strong financial back up. A well-established customer service can enhance customer retention and help to increase sales and profits. An increasing number of companies are paying more attention to the quality of servicing their customers. For sustained profitability, any firm must be explicit about how it will compete. Competitive advantage in the marketplace derives from providing better customer value for equivalent cost, or delivering equivalent customer value for lower cost. Here, one seeks to achieve both cost leadership and superior customer value, or customer service in another word.
This paper presents a strategic perspective of cost. As is known to all, competition among enterprises is fierce, and this is “Natural selection and survival of the fittest.” The keystone lies in seeking the balance between cost and customer service level in supply chain management, including analysis of transportation cost and inventory policies. Furthermore, Taguchi's Loss Function theory is employed here to illustrate the relationship between cost and customer service level.
Key words: Cost; Customer service level; Taguchi Loss Function; Transport strategy; Inventory strategy
成本的战略分析
摘 要
企业生产经营的目的是追求利润最大化，要追求利润最大化必须最大限度地降低成本，而降低成本的关键点是降低生产成本，生产成本是企业经济运行质量的集中反映，成本的高低反映企业经营管理的好坏，是企业整体素质的综合表现。正如对于企业成本而言，选择自主生产经营管理或是外包经营，是个决定性问题。成本信息，在很大程度上决定了企业所占市场份额的多少与所处层次。
良好的客户服务水平，并不需要雄厚的资金保障。一种优异的客户服务水平策略，能够提高客户忠诚度，也有益于企业销售量与利润的提升。在当今社会，人们不难发现，企业越来越注重客户的服务质量了。为了长期盈利，企业必须了解自己的竞争力，从而能够在同一成本水平上提供更高水平的服务；或是以更低的成本，为顾客提供同等水平的服务。这样做，是为了追求既在成本上，又在服务价值上取得双重效益，进而增加企业盈利和降低成本。
该论文旨在进行成本策略分析。众所周知，企业间的竞争，其激烈程度，乃是“物竞天择，适者生存”。该篇章主要从供应链管理的角度，在运输成本和仓储策略分析上，寻求成本与客户服务水平之间的平衡。另外，本文将借助太古奇函数的分析，明确成本与服务水平的具体关系。
关键词：成本，客户服务水平，太古奇损失函数，运输策略，库存策略
Contents
Abstract in English………………………………………………………Ⅱ
Abstract in Chinese………………………………………………………Ⅲ
1. Introduction……………………………………………………………1
1.1 What Is a Strategy…………………………………………………….1
1.2 Definition of Cost……………………………………………………. 2
1.3 Definition of Customer Service Level………………………………2
2. Balance between Cost and Customer Service Level……………4
2.1 Notes Related to Cost…………………………………………………4
2.1.1 Total Cost of Acquisition………………………………………4
2.1.2 Total Cost of Ownership……………………………………….5
2.1.3 Cost Overrun…………………………………………………5
2.1.4 Cost Curve……………………………………………………5
2.2 Notes Related to Customer Service Level……………………………6
2.2.1 Lead Time…………………………………………………….6
2.2.2 Faults…………………………………………………………7
2.2.3 Customer Service Quality…………………………………….7
2.2.4 Cost of Service……………………………………………….8
2.2.5 Customer Complaints………………………………………….8
2.2.6 Customer Satisfaction………………………………………….9
2.3 Taguchi’s Loss Function Theory…………………………………….10
2.3.1 Definition……………………………………………………10
2.3.2 Loss Function……………………………………………….10
2.3.3 Application………………………………………………….12
2.3.4 Concluding Comments……………………………………….12
3. Transport Fundamentals and Decisions………………………….14
3.1 Service Choices and Their Characteristics…………………………14
3.1.1 Price…………………………………………………………14
3.1.2 Transit Time and Variability………………………………….15
3.1.3 Loss and Damage…………………………………………….15
3.2 Transport cost characteristics………………………………………16
3.2.1 Variable and Fixed Cost………………………………………16
3.2.2 Common and Joint Costs……………………………………16
3.3 Transport Service Selection………………………………………….17
3.3.1 Basic Cost Trade-off………………………………………….18
3.3.2 Competitive Considerations………………………………….18
4. Inventory Strategy…………………………………………………20
4.1 Nature of Forecasting………………………………………………20
4.1.1 Spatial versus Temporal Demand…………………………….21
4.1.2 Lumpy versus Regular Demand…………………………….21
4.1.3 Derived versus Independent Demand……………………….21
4.2 Storage System Functions………………………………………….22
4.2.1 Holding ………………………………………………………22
4.2.2 Consolidation ……………………………………………….22
4.2.3 Break-Bulk …………………………………………………23
4.2.4 Mixing ……………………………………………………….23
5. Conclusion………………………………………………………………24
Bibliography……………………………………………………………….25
Acknowledgement……………………………………………………….27
Table of Figures
Figure 2.1……………………………………………………………………4
Figure 2.2………………………………………………………………….11
