LOGISTICS COSTS - WHAT SHOULD BE CONSIDERED?
Current as of: 05.10.2022
The supply chain is a key part of any company's operations. How it is designed makes a difference in the profitability of the entire project. After all, carrying out various logistics processes is inevitably associated with incurring many costs. A meticulous, multifaceted analysis can help reduce them significantly. What exactly are logistics costs and what is worth paying attention to when organizing the flow of goods in a company?
Logistics costs - what are they and what do they matter?
Logistics costs can apply to any process carried out within the logistics system. One of the more accurate definitions of this concept was proposed by Czeslaw Skowronek, an economist and author of numerous publications in this field. According to him, logistics costs are "the consumption, expressed in money, of living labor, means and objects of labor, financial expenses and other negative effects of extraordinary events that are caused by the movement of material goods within the enterprise and between enterprises, as well as the maintenance of inventory."
The importance of logistics costs can be seen by analyzing their formation and impact on the overall costs of running a business. Seeing an opportunity to reduce them while maintaining high efficiency is an opportunity to grow the company and generate more revenue for the business. A properly planned logistical arrangement avoids the inclusion of unnecessary steps in the process of delivering goods or services to the customer, thereby saving the time and money needed for implementation.
Types of logistics costs
Logistics costs can be divided according to their various characteristics. Among other things, the following structural cross sections can be distinguished:
1. Costs by type, including:
- material costs (consumption of materials or energy, depreciation of fixed assets, but also tasks performed by external services);
- intangible costs (labor and wage costs, fees, including those arising from tax liability, relating to capital commitment);
- other costs.
2. Cross-section by core areas of logistics, which includes:
- physical flow costs of supplies (relating to material consumption or transportation and related expenses);
- information process costs (concerning information processes in logistics operations or depreciation of computer equipment);
- inventory management costs (Inventory holding, creation and depletion costs).
3. Cross section by flow phases and cost sites, which includes:
- procurement phase costs (transportation, procurement, warehousing or inspection costs);
- production phase costs (costs associated with the supply of production materials, costs of inventory used in the process of producing goods);
- distribution phase costs (concerning the use of warehouses, distribution of goods in the market or movement of goods).
How can a courier company help reduce logistics costs?
In order to reduce the cost of logistics processes and streamline the process, companies often choose to use professional partners. For a large proportion of entities, such a step is a necessity - the scale at which they operate makes it impossible for them to address a particular stage of the supply chain on their own. Among others, modern courier companies, such as DHL eCommerce, come to their aid. Handling parcel or pallet shipments, the carriers have been helping businesses for years to deliver a wide variety of goods, deliver the ordered products to customers and contractors both at home and abroad.
Do you want to find out what your company's parcel shipping costs will be? Use our form to get started: https://samoofertowanie.dhlparcel.pl/
Signing a contract with a courier company allows you to get preferential terms for the services provided, including a reduced price for a single shipment. The broad reach of the major carriers means that they are able to deliver shipped goods to customers in any part of the country in a very short period of time - often as early as the next business day. Modern infrastructure, tailored means of transport and qualified personnel at the disposal of leaders in the courier industry allow you not to worry about the safety of shipments entrusted into their hands.