A Simulation-Based TDABC Model to Manage Supply Chain Costing: A Case Study

Effective management of supply chain costing is crucial for decision-making during times of disruption. It provides accurate cost indicators, enabling organizations to adapt to the risks of disruptions and mitigate their adverse effects. The supply chain costing literature has shown that traditional cost accounting approaches are inadequate in addressing the dynamic and complex nature of supply chain performance and the nonlinear behavior of the involved processes. Consequently, this paper presents a simulation-based supply chain costing framework that integrates discrete event simulation and time-driven activity-based costing to explore the dynamics of management accounting tools in a real context with all their complexities and interdependencies. The framework will be applied to the logistics function of an automotive supply chain to demonstrate the applicability of a static versus a dynamic time-driven activity-based costing model. The suitability of the models is based on their ability to reflect the real operational performance of the supply chain and suggest ways to improve it.