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How to calculate

logistics cost correctly?

 

For some companies, I found during the audit that the calculation of logistics costs often lacks up to 60 % of the actual costs incurred. Business owners then mistakenly believe that the performance of their logistics is efficient.

Rudolf Malý, ALog.

Logistics Auditor and Vice President for Education at the Logistics Academy

Building your own logistics or outsourcing logistics processes?

What are the options?

The e-commerce market is growing year-on-year in double digits, which constantly brings new demands on the quality of logistics. However, it is not only external logistics, provided through contracted partners - carriers, but also internal, so-called intralogistics, which in most cases is handled by in-house e-shops. Only a small number of domestic e-shops use warehouse outsourcing and fulfillment, which is popular especially in the USA and our western neighbors.

How to make the right decision?

Deciding whether to build your own logistics or go outsourcing to a third party (so-called 3PL) is a complex process in which you should take into account many factors. So what to focus on before making a final decision?

As with most decision-making processes, it is first necessary to analyze the current situation well and know in detail all the processes associated with logistics.

What is necessary to know?

You should be able to answer following questions:

  • Do you know your intralogistics costs?

  • Can you say exactly how much it costs you to pick up one shipment?

  • Can you include one-off investments such as warehouse equipment or the acquisition of a storage system in these costs?

  • Can you valorize your time, the time of your managers and other employees not only in logistics?

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How to calculate logistics costs and what to include

To be able to easily calculate your logistics costs, you need to include the monthly costs associated with storage, packaging materials, labor and transportation costs.

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How to calculate the total cost for comparison

In order to compare your costs with the costs you will have in the case of fulfillment, you need to make your calculation a figure that corresponds to the parameters.

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Comparison of your own solution with outsourcing

Before you start comparing your costs with a selected outsourcing provider, it is necessary to decide whether this option is suitable for you and what are other benefits.

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"One of the most common mistakes that growing e-shops make is the very view of logistics as something that is always "arranged somehow". Logistics cannot be built on the current state. You need to think at least two years in advance. High costs and investments in warehouse equipment, software, deposits, legislation and the like are often associated with building your own logistics. If you have already completed this whole round and in 6 months you find out that you have grown so much that the current state no longer suits you again, it will be a time-consuming and financially demanding blow for you."

Konstantin Margaretis, CEO Skladon