Detailed Cost Segregation for Effective CTS Analysis PPT

This PPT slide, part of the 25-slide Cost-to-Serve (CTS) Analysis PowerPoint presentation, presents an overview of Cost-to-Serve (CTS) Analysis, emphasizing the necessity for detailed cost definitions at the individual product or customer level. It begins by defining the typical practice of cost reporting, which often aggregates costs over time or by truckload. This generalization can obscure the true cost dynamics associated with specific products or customers. The slide argues that for effective CTS Analysis, a more granular approach is essential, despite the inherent complexity and labor involved in segregating these costs.

The description section outlines the challenges faced by supply chain executives when attempting to break down costs. It highlights that traditional cost definitions often include fixed or variable components, complicating the analysis. The slide stresses that accurate measurement is crucial for CTS Analysis and requires advanced analytical capabilities. An example from the biofuel sector illustrates the need for precise calculations, detailing the costs associated with producing and transporting a gallon of fuel. This example serves to ground the theoretical aspects of the analysis in practical application.

Furthermore, the slide introduces a formula for calculating profit related to a specific product for a customer. It lays out a straightforward equation that incorporates various cost components, reinforcing the importance of understanding cost structures in order to optimize profitability. The overall message is clear: effective CTS Analysis demands a rigorous approach to cost segregation, which can ultimately lead to better decision-making and enhanced financial performance.

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Costing Supply Chain