LOGISTICS COSTS MANAGEMENT
Logistics consists of activities that facilitate the movement of goods from supply to
demand. As many such activities require the use of ports, port authorities have taken a
particular interest in the various port activities involved in logistics. Performance indicators
of logistics activities measure the performance of a logistics system and evaluate its
efficiency level. As such, performance indicators can be used in improving logistics systems
within a particular firm or throughout a national economy. The major reason for measuring
logistics performance is to reduce operating costs. Measuring operating costs helps to
identify whether and where to make operational changes to control expenses and identify
areas for improved assets. Although logistics performance indicators can be evaluated in
various ways, depending on the purpose, in general they fall into one of two categories:
1.costs indicators, which indicate costs consumed in carrying out logistics activities, and
2. service indicators, which indicate the results of logistics activities.
Since business competitiveness can be enhanced through cost reductions and service
improvements in logistics activities, it is important that companies and governments be
competent in measuring logistics related performance.
ITEMS INCLUDED IN VEHICLE OPEARTION COSTS
The Vehicle operating cost factor is classified as the cost of materials, labour costs,
and expenses. Cost of materials includes the cost of fuel, miscellaneous oils, tires, tubes, etc.
Labour costs include drivers and maintenance technicians. Expenses are divided into direct
expenses, meaning those expenses necessary in order to operate a vehicle, and indirect
costs. Direct expenses include maintenance costs, insurance costs and depreciation.
Indirect costs include workers compensation, welfare expenses and public taxes.
LOGISTICS INFORMATION COSTS
Logistics information costs include the cost of handling and managing information for
the entire logistics activities. These costs are obtained by multiplying the ratio of
information cost in sales by the annual sales in the respective industry.
ADMINITRATIVE COSTS
Administrative costs include all costs used to support logistics activities. These costs
are obtained by multiplying administration costs as a percentage of overall sales by the
annual sales figure for the respective industry.