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Text comes from the book: “Supply Chain Management: How to Survive in the 21st Century with Networked Thinking” (2015), published by FAZ Verlag, reprinted with the kind permission of the publisher.

Here writes for you:

langmann_erwinErwin Langmann is a risk management consultant with a focus on transport, logistics and supply chain management. Erwin Langmann began his career in 1982 with a well-known insurance broker. This was followed by the establishment and development of the transport division for the Gerling Group. In addition to the development of the division, he was mainly responsible for broker and customer support. Most recently, Langmann was the transport division manager for the Austrian branch of the ACE European Group, where he was primarily responsible for international business. He works as a business trainer in the fields of logistics and SCM and, together with management consultant Ernst Kurzmann, wrote the book “Supply Chain Management. How you survive with networked thinking in the 21st century ”written by FAZ-Verlag.

Supply Chain Management - networked thinking: money costs and alternative costs in sales

In many industries joint actions are carried out between producers and traders. In the gastronomy and the industry, for example, events are organized.


sales partnerships

For example, a beverage manufacturer supports gastronomy when larger events are organized. Frequently, an on-site sales representative of the beverage manufacturer will be there to discuss and plan the event together with the restaurateur.

So also in this example: A summer festival of the restaurateur is on the program. The vendor expects vigorous support from the vendor, as well as a vendor's involvement in the joint project, since both can benefit.

Profit maximization? Wrong!

The seller wants to provide the customer with his possibilities for the summer festival under the arms and at minimal costs.

A profit-maximizing behavior is not possible with the classical 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.

It can not specify the cost of unused opportunities in the classical form.

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

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 can not be emphasized enough that the news vendor model (newspaper boy model) is an absolute quantum leap in the development of valuation methods in supply chain management and therefore can not be overestimated and classified.

With this model, the breakthrough has succeeded in calculating the costs of unused opportunities and then making optimal management decisions.

computing Games

Is the collaboration between catering and suppliers now 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 Euro (valued at production costs). Usually, the hectoliter is sold to the host with a net selling price of 60 Euro.

For his part, he can earn a net sales price (without taxes) of 120 Euro at the summer party. The seller and the landlord expect sales of about 130 hectoliters.

A milkmaid calculation

“A milkmaid bill,” cheers the seller internally, “I only have to provide 30 hectoliters free of charge. That only costs me 600 euros (production costs per hectoliter times free hecto liters).

However, the landlord has a monetary advantage of 1800 euros (net selling price per hectoliter times free hectoliters). This is a win-win game for both of us. At the next big event with the landlord, I'll get it back in quickly. ” The seller is happy. The innkeeper should be too. 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 traps of thought in the world of the economy and targeted numerous professional groups that were only able to assess the visible; in many cases her thoughts were not thought through.

Win-win or zero-sum game?

Maybe almost 200 years later, we have a mistake in 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 normal selling price of the manufacturer to the restaurateurs minus the promotional price. Consequently, the calculation looks as follows:

  • 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 escaped DB of 1200 Euro (these are the alternative costs that do not appear in cost accounting).
  • Visible costs and non-visible costs add up to 1800 Euro.

Books on the topic

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