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Cost

The cost associated with generating revenue or performing a process; the costs of performing the work. Cost has four dimensions:

  • Fixed Costs = Costs that remain the same despite volume of activities performed, or products or services produced or sold. Fixed costs typically require more time, effort and/or risk to add or remove, and behave like stair-step costs
  • Variable Costs = Costs that vary proportionally with volume of activities performed, or products or services produced or sold. Variable costs behave linearily
  • Economies of Scale = Cost advantages from increase of overall volumes
  • Economies of Scope = Cost advantages from increase of scope of operations; Consider shared services

The following metrics have been identified as strategic and diagnostic metrics for Cost:

Strategic

Diagnostic)

IDName
CO1Supply Chain Costs
IDName
CO11Cost of Goods Sold
IDName
CO111Direct Material Costs
CO112Direct Labor Costs
IDName
CO12Distribution Costs
IDName
CO121Order Management Cost
CO122Storage Costs
CO123Handling Costs
CO124Transportation Costs
CO125Export/Import Duties
IDName
CO13Other Operational Expenses

Compare also to other performance Attributes: Adaptability, Asset Efficiency, Dependability, Responsiveness, Sustainability.

Notes

Aggregation of costs may result in Mixed Costs = Costs that behave partially like fixed costs and partially like variable costs.

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Hierarchy

IDNameLevelx
COCost0CO
CO1Supply Chain Costs1CO1
Cost 40000 0 Performance, Attribute, Metric, Cost, Expense, COGS, Distribution Cost The cost associated with generating revenue or performing a process; the costs of performing the work