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APICS, IMA release report on supply chain management

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The new report offers solution to widespread costing failures

APICS, the premier professional association for supply chain management and IMA (Institute of Management Accountants), the association of accountants and financial professionals in business, published the findings of a joint research report, ‘Working Together to Enhance Supply Chain Management with Better Costing Practices.’

For this report, APICS and IMA surveyed upper management supply chain professionals to assess the impact of issues relating to costing systems and practices. The report uncovers common barriers to creating useful costing systems and presents a solution that more closely aligns the supply chain and accounting and finance business units.

“Supply chain professionals rely on cost information when making decisions, but have indicated a need for that information to be more accurate and effective,” said, Abe Eshkenazi, CEO, APICS. “This report highlights the necessity for supply chain and finance departments to work more closely and adopt costing practices that are progressive and focused on informing internal decisions.”

The survey is part of an initiative by IMA’s Strategic Cost Management Task Force to improve costing practices by gathering feedback from professionals who use costing information.

“From the supply chain perspective, an effective managerial costing system has clear value. It enables better make-or-buy decisions, defines landed versus delivery costs and determines the realistic cost of holding inventory,” said, Raef Lawson, Vice President of Research and Policy, IMA.

Costing information also plays a critical role in sales and operations planning. Among those surveyed, supply chain managers agreed, on average, that the benefits of improving their costing systems exceed the investment.

When asked what prevents them from utilising current costing information, 44 per cent of supply chain managers cited a lack of operational data. Instead, costing information is often reported in exclusively financial terms, making it more difficult to leverage. According to respondents, the secondary and tertiary barriers to useful costing information are inadequate technology and software (39 per cent) and a resistance to change by accounting and finance personnel (30 per cent).

The report details various steps supply chain professionals can take to improve costing systems within their organisations. One strategy presented is for supply chain managers to strengthen their relationship with accounting and finance to foster greater information flow between the two departments. Other solutions call for greater IT infrastructure and increased demand from top-level management for updated costing practices.

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