referred to as total landed cost, is the sum of costs related to performance and administration of each of these areas of work Unfortunately, recent research suggests that few organizations have the ability to actually capture the information required to measure total cost This occurs because different orientations toward which of the areas identified above actually constitute integrated logistics, or because of the lack of readily available data. Nevertheless, at senior management levels of responsibility this total cost should be monitored closely. It is also important to monitor cost data for each of the individual functions so that appropriate diagnosis and control can take place. The functional cost data may be further fine-tuned and measured for individual activities such as order picking and order loading in the warehouse function.
It is also common to monitor and report cost data as a percentage of sales or as a cost per unit of volume. For example, transportation cost is frequently expensed as a percentage of dollar sales volume and as the number of dollars spent per order delivered. Warehouse cost may also be reported as a percentage of sales and cost of individual activities reported such as the picking cost per item or loading cost per order. Such measures, when compared to historical levels or performance standards, provide critical information regarding the potential need to take corrective action. When considering the number of different specific logistics activities , ranging from entering an order to picking an item to unloading a delivery vehicle, and the number of different ways in which volume can be measured, ranging from sales dollars to number of orders to pounds of product, a rather lengthy list of possible cost metrics could be generated. The key is for logistics executives to identify the most appropriate metrics for their organization and consistently apply them over time to control and direct the activities
referred to as total landed cost, is the sum of costs related to performance and administration of each of these areas of work Unfortunately, recent research suggests that few organizations have the ability to actually capture the information required to measure total cost This occurs because different orientations toward which of the areas identified above actually constitute integrated logistics, or because of the lack of readily available data. Nevertheless, at senior management levels of responsibility this total cost should be monitored closely. It is also important to monitor cost data for each of the individual functions so that appropriate diagnosis and control can take place. The functional cost data may be further fine-tuned and measured for individual activities such as order picking and order loading in the warehouse function. It is also common to monitor and report cost data as a percentage of sales or as a cost per unit of volume. For example, transportation cost is frequently expensed as a percentage of dollar sales volume and as the number of dollars spent per order delivered. Warehouse cost may also be reported as a percentage of sales and cost of individual activities reported such as the picking cost per item or loading cost per order. Such measures, when compared to historical levels or performance standards, provide critical information regarding the potential need to take corrective action. When considering the number of different specific logistics activities , ranging from entering an order to picking an item to unloading a delivery vehicle, and the number of different ways in which volume can be measured, ranging from sales dollars to number of orders to pounds of product, a rather lengthy list of possible cost metrics could be generated. The key is for logistics executives to identify the most appropriate metrics for their organization and consistently apply them over time to control and direct the activities
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