Demand Chain Economics

We identify disproportionate costs in your supply chain and recommend strategies to positively impact margin. With our help, you will understand how your decisions affect your bottom line.

Grocery store shelf
We take a financial approach to supply chain issues.

A Financial Lens on Supply Chain Decisions

Most supply chain analyses stop at operational metrics — cost per unit, on-time delivery, inventory turns. Demand chain economics goes further. It connects supply chain activities to the financial outcomes they drive: gross margin, cost-to-serve, and profitability at the customer and product level.

This approach reveals what standard cost accounting hides. Two customers placing identical orders can have radically different true costs to serve. A product line that looks profitable on the income statement may be destroying margin once you account for the supply chain activities it requires. Demand chain economics makes those hidden costs visible — and actionable.

Our Approach

  • Supply chain activity-based costing — We map the actual activities your supply chain performs (picking, packing, transporting, storing) and assign costs to each activity based on what drives them, not arbitrary overhead allocations.
  • Customer and product-level costing — We develop the supply chain cost-to-serve down to the individual customer and SKU, giving you a true view of where you are making and losing money.
  • Total cost approach — We evaluate supply chain decisions — sourcing changes, network moves, service policy changes — in terms of their total cost impact, not just the line item being optimized.
  • Margin impact modeling — Before recommending a supply chain change, we model its effect on your gross margin so leadership can make decisions with financial confidence.

Sample Issues We Help Solve

  • What areas of the supply chain are driving disproportionate costs?
  • When considering distribution costs, which customers provide the most margin — or are unprofitable to serve?
  • By making supply chain policy changes that impact the customer, what effect will this have on my bottom line?
  • How can I integrate customer activities and product-level information with supply chain activities to develop strategies that positively impact margin?
  • Which product lines should we continue to distribute directly versus through a third party, based on true supply chain cost?

Why It Matters

Supply chain leaders who understand their cost-to-serve make better decisions about customer segmentation, service policy, pricing, and network design. Without this visibility, cost-reduction initiatives often cut the wrong things — optimizing one line item while creating larger costs elsewhere. Demand chain economics gives your organization the financial foundation to make supply chain trade-offs with clarity.