The more you know, the better your decisions. The more you know, the more targeted your attention. In any organization, it is always about the money so knowing more means understanding the money. That means costing. Costing can be your friend or your enemy. Poor costing means decisions based upon something other than the truth, poor costing can actually result in poor decisions.

In theory, costing is simple. In fact, good costing is not easy – the devil is in the detail. We have learned to hide the detail in what we call “overhead”. But overhead is the enemy of good costing.

To make costing your friend, you need to know:

-- What to collect – To understand what you want to collect, we need to understand why we want to collect it.

-- Where to collect – Where we collect information can affect its value.

-- Why timing counts – History is interesting, but the sooner the better

-- How to collect costing data – Many different techniques exist, balance between the cost of collection, accuracy and the value of the information.

-- How to use raw data to develop costs – Blending actual cost and activity based cost often leads to more accuracy, and minimizing “overhead” from your costing picture.

In future entries, we will explore each of these topics and strive to make supply chain costing your friend.