Cost of Goods Sold
Cost of Goods Sold (COGS) is a key business measurement that shows how much money a company spends to make or buy the products they sell. Think of it as tracking all costs directly related to getting products ready for customers - from buying raw materials to paying factory workers. Companies look for professionals who can help reduce these costs while maintaining product quality. This term is sometimes called "Cost of Sales" or "Cost of Revenue." Understanding COGS is crucial for supply chain roles because it directly impacts a company's profits and helps make decisions about pricing, supplier selection, and production methods.
Examples in Resumes
Reduced Cost of Goods Sold by 15% through improved supplier negotiations and inventory management
Analyzed COGS trends to optimize production scheduling and material purchases
Led team initiatives that decreased Cost of Sales by implementing lean manufacturing principles
Typical job title: "Supply Chain Analysts"
Also try searching for:
Where to Find Supply Chain Analysts
Professional Organizations
Online Communities
Job Resources
Example Interview Questions
Senior Level Questions
Q: How would you develop a strategy to reduce COGS while maintaining product quality?
Expected Answer: A strong answer should discuss analyzing supplier relationships, inventory management, production efficiency, and quality control measures. They should mention examples of successful cost reduction projects and how they balanced cost savings with quality standards.
Q: How do you use COGS analysis to make strategic business decisions?
Expected Answer: Look for answers that demonstrate understanding of how COGS impacts pricing strategies, supplier selection, make-or-buy decisions, and production planning. They should explain how they've used COGS data to influence business strategy.
Mid Level Questions
Q: What factors affect COGS and how do you monitor them?
Expected Answer: Candidate should identify key components like raw materials, labor, manufacturing overhead, and explain methods for tracking these costs. They should mention tools and reports used to monitor cost changes.
Q: Describe a time when you identified and reduced unnecessary costs in COGS.
Expected Answer: Look for practical examples of cost reduction through better supplier negotiation, process improvement, or waste reduction. They should explain their analysis process and the results achieved.
Junior Level Questions
Q: What is COGS and why is it important?
Expected Answer: Should explain that COGS represents direct costs of producing goods, including materials and labor, and why tracking these costs matters for business profitability and pricing decisions.
Q: What's the difference between direct and indirect costs in COGS?
Expected Answer: Should be able to explain that direct costs (like materials and production labor) are included in COGS, while indirect costs (like marketing and office expenses) are not.
Experience Level Indicators
Junior (0-2 years)
- Basic cost tracking and reporting
- Understanding of inventory management
- Knowledge of basic supply chain concepts
- Familiarity with Excel and cost analysis
Mid (2-5 years)
- Cost reduction project management
- Supplier relationship management
- Process improvement implementation
- Advanced data analysis and reporting
Senior (5+ years)
- Strategic cost management
- Supply chain optimization
- Team leadership and project direction
- Business strategy development
Red Flags to Watch For
- No understanding of basic accounting principles
- Unable to explain relationship between costs and pricing
- Lack of experience with cost analysis tools
- No knowledge of inventory management concepts
