Logistics and Supply Chain Management, 6th Edition

Logistics cost analysis

After a century or more of reliance upon traditional cost accounting procedures to provide an often unreliable insight into profitability, managers are now starting to question the relevance of these methods.7 The accounting frameworks still in use by the majority of companies today rely upon arbitrary methods for the allocation of shared and indirect costs and hence frequently distort the true profitability of both products and customers. Indeed, as we shall see, these traditional accounting methods are often quite unsuited for analysing the profitability of customers and markets since they were originally devised to measure product costs.

Because logistics management is a flow-oriented concept with the objective of ...