Purchasing and Supply Chain Management Costing

The Air Force has struggled to completely understand the costs associated with its operations. The issue of understanding cost is complex, involving many perspectives, methods and techniques. When examined from a broad standpoint, total supply chain costs can include a firm's costs plus upstream and downstream costs. This perspective takes vendors, suppliers and end customers into consideration. From this broad standpoint, the Air Force does not know its total supply chain cost. Since the Air Force's supply chain is too broad to be a focus of this study, a smaller segment was chosen for a closer look. Specifically, air cargo carriers were selected as a type of commercial organization that could be sufficiently similar to the Air Force in some respects and possibly offer information to address the investigative questions. The purpose of this research is to determine what costing issues exist in the air cargo arena and what costing methods or techniques are utilized to address those issues. Air cargo carriers were contacted and a telephone interview was administered to strategic key informants.

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