57
The costs of satisfying customer demand can be significant and yet, surprisingly,
they are not always fully understood by organisations. One reason for this is that
traditional accounting systems tend to be focused around understanding product
costs rather than customer costs. Whilst logistics costs will vary by company and
by industry, across the economy as a whole the total cost of logistics as a propor-
tion of gross domestic product is estimated to be close to 10 per cent in the US
1
and in other countries costs of similar magnitudes will be encountered.
However, logistics activity does not just generate cost, it also generates revenue
through the provision of availability – thus it is important to understand the profit
impact of logistics and supply chain decisions. At the same time logistics activity
requires resources in the form of fixed capital and working capital and so there are
financial issues to be considered when supply chain strategies are devised
.
Measuring logistics
costs and performance
3
Logistics and the bottom line
Logistics and shareholder value
Logistics cost analysis
The concept of total cost analysis
Principles of logistics costing
Customer profitability analysis
Direct product profitability
Cost drivers and activity-based costing
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