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Integration of the supply chain offers many opportunities to improve customer service and eliminate unnecessary costs. However, many firms lack the capability to determine the cost of moving product to market and where potential savings may exist. Supply chain costing provides an approach for measuring the cost of activities spanning the entire channel. Using cost information to evaluate channel performance has strategic implications regarding the composition and structure, evaluation of performance, and the allocation of benefits within the supply chain. Possessing the capability to improve customer value while targeting opportunities for cost reduction opens new frontiers for supply chain management.
LaLonde et al. (Mon,) studied this question.