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Cost Drivers and Performance Parameters
Factors that directly influence costs in the supply chain and their corresponding performance measures.
Implications
The relationship between key cost drivers and the performance metrics of a business, used to understand how changes in costs impact overall business performance and profitability.
Example
Example: A manufacturing firm analyzes how labor costs (a cost driver) impact production efficiency and product quality (performance parameters), helping to optimize workforce management.
Related Terms
Different from simple cost analysis, this approach links cost drivers to specific performance outcomes, providing a more integrated view of cost management and business performance.
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