DSCM404 SUPPLY CHAIN COST MANAGEMENT

Description

SESSION	FEB – MAR 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	4
COURSE CODE & NAME	DSCM404 SUPPLY CHAIN COST MANAGEMENT

 

 

Assignment Set – 1

 

 

Q1. What is Cash to Cash Cycle and why is it important? Discuss the various challenges faced in managing cash to cash cycle and what are the strategies to control it.   6+4

Ans 1.

The Cash to Cash Cycle in Supply Chain Management

Definition and Importance of Cash to Cash Cycle

The Cash to Cash (C2C) Cycle is a critical financial metric in supply chain management that measures the time gap between when a company pays for raw materials and when it receives payment for its finished goods. It reflects the number of days a company’s cash is tied up in its operations before it is converted back into liquid cash flow. Mathematically, it is calculated as: C2C = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) – Days Payable Outstanding (DPO). A shorter C2C cycle implies a more efficient supply chain with better working capital management, allowing businesses to reinvest cash more quickly and respond to market

 

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Q2. Discuss the Pros and Cons of Make, Buy and Ally Strategy with respect to sourcing decisions in Supply Chain Management. 10       

Ans 2.

Analysis of Make, Buy, and Ally Strategies in Sourcing Decisions

Sourcing Decisions in Supply Chain

Sourcing decisions are at the core of supply chain cost management and influence operational performance, flexibility, and profitability. Companies have three strategic options for sourcing: make (in-house production), buy (outsourcing from external vendors), and ally (forming strategic partnerships or joint ventures). Each strategy has its merits and drawbacks, and the choice depends on factors like core competencies, cost efficiency, capacity, market dynamics, and long-

 

 

Q3. Discuss in detail the Eight-step Process of AIM and DRIVE 10      

Ans 3.

The Eight-Step Process of AIM and DRIVE Frameworks

AIM and DRIVE in Supply Chain Costing

The AIM and DRIVE frameworks are structured approaches used in supply chain cost management and decision-making. AIM stands for Analyze, Innovate, and Manage, while DRIVE represents Define, Review, Identify, Verify, and Execute. These frameworks support continuous improvement, cost efficiency, and strategic alignment across supply chain functions. They help companies develop actionable strategies for reducing operational waste, optimizing resources, and delivering customer value while keeping costs under control.

Eight-Step Breakdown of

 

Assignment Set – 2

 

 

Q4. How can organizations effectively select key cost drivers within their supply chain and manage their overall cost structure 10       

Ans 4.

Selecting Key Cost Drivers and Managing Cost Structure in Supply Chains

Identifying Cost Drivers in the Supply Chain

Cost drivers are the underlying factors that influence the cost of activities within a supply chain. Identifying them accurately is the first step toward effective cost management. Organizations can begin by mapping their entire supply chain network and analyzing each process, from sourcing and production to distribution and returns. Key cost drivers vary depending on the industry and the nature of operations, but common ones include transportation costs, inventory holding, warehousing, order processing, labor, and procurement. Organizations often use techniques such as Activity-Based Costing (ABC) to break down operations into

 

 

Q5. Discuss the different types of Primary, Secondary and Tertiary Costs of any supply chain. What are the key challenges and considerations in implementing allocation-based systems for cost measurement within the supply chain? 7+3     

Ans 5.

Understanding Cost Types and Allocation-Based Measurement in Supply Chain

Primary, Secondary, and Tertiary Costs in Supply Chains

Supply chain costs can be categorized into three levels: primary, secondary, and tertiary costs. Primary costs are the direct costs incurred during supply chain operations, such as procurement expenses, manufacturing costs, transportation charges, and warehouse rent. These are easily identifiable and usually represent the bulk of the supply chain budget. Secondary costs are indirect yet still traceable to supply chain functions. These include costs for utilities, labor training, insurance, or administrative support that aid supply chain performance. Although they do not directly relate to product movement, they significantly impact overall efficiency. Tertiary costs are long-term or hidden costs that influence strategic decision-making. Examples

 

Q6. What are the crucial aspects of Shipping Cost calculation in Supply Chain? 10    

Ans 6.

Crucial Aspects of Shipping Cost Calculation in Supply Chain

Shipping Costs in Supply Chain

Shipping costs are a fundamental component of supply chain expenses, directly affecting pricing, profitability, and customer satisfaction. These costs encompass all expenditures related to the transportation of goods from suppliers to customers, including domestic and international logistics. In a globalized business environment, accurate calculation and management of shipping costs are critical for maintaining competitive advantage and meeting service-level