Total cost to manage order processing, acquire materials, manage inventory, and manage supply chain finance, planning, and IT costs as represented as a percent of revenue. Accurate assignment of IT-related cost is challenging. It can be done using activity-based costing methods, or more traditional-based approaches. Allocation based on user counts, transaction counts, or departmental headcounts are reasonable approaches. The emphasis should be on capturing all costs, whether incurred in the entity completing the survey or in a supporting organization on behalf of the entity. Reasonable estimates founded in data were accepted as means to assess overall performance. All estimates reflected fully-burdened actuals inclusive of salary, benefits, space and facilities, and general and administrative allocations.
Calculation: [Order Management Costs + Material Acquisition Costs + Inventory Carrying Costs + Supply-Chain Related Finance and Planning Costs + Total Supply Chain-Related IT Costs]/[Total Product Revenue]
(Please see individual component categories for component detail and calculations.).