Supply Chain Management and Management Accounting: A Case Study of Activity-Based Costing

Abstract

The role of management accounting in supply chain management (SCM) is discussed and a case study of an Activity-Based Costing (ABC) model to support SCM decisions is given. The logistics literature relating to cooperation within supply chains is reviewed. SCM is discussed using a typology of four forms of SCM: physical integration, information integration, control integration and infrastructure integration. It is argued that management accounting plays an as yet undefined role in SCM, and it is specifically focused on ABC. A case study is provided of a supply chain in the pharmaceutical industry, where an ABC model was developed to calculate the consequences of changing activities in a supply chain, and two examples of calculations made for infrastructure and control integration are given. Finally, it is commented that using accounting measures can be important, but is not sufficient for the success of SCM.