Types of logistics costs
| Types of logistics costs |
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| See also |
Types of logistics costs depends on various supply logistics tasks performed within the company. Each task performed in the logistic system incur cost. Strict cost calculation in the logistics systems allows to distinguish them from the overall costs of the company.
Main types of logistics cost
- direct costs (transport, storage, inventory, handling, communications) and indirect costs,
- fixed and variable costs,
- the cost of supply, production and distribution,
- tangible and intangible costs,
- the cost of the development of logistics and projects recommended by the logistics,
- strictly logistics costs.
Logistics costs are expressed in money the consumption of human labour, resources and objects of labour, financial expenses and other negative effects of events. They are caused by the flow of material goods in the enterprise and between enterprises, as well as during maintaining inventories.
Stage of production and logistics cost type
Logistics costs arise in the following stages of production:
- acquisition of materials, intermediates and other products from suppliers,
- storage of materials and waste,
- external and internal transport,
- production planning,
- storage of semi-finished products,
- storage of finished products,
- transfer of finished products to customers.
According to the criterion of variability we can be on fixed and variable. To fixed costs include, among others, depreciation costs of storage, transportation, cash outflows from taxes and fees. Variable costs are labour costs, costs of involved capital, consumption of materials and fuels. Cost calculation allows to identify the threshold of profitability. Thus it is possible to determine the type and nature of the relationship between these logistics costs and overall company's performance.
Strategic segmentation and logistics costs
For the purposes of strategic management we distinguish between the analysis of separate market segments:
- operating costs of transport - freight forwarding and movement,
- the cost of maintenance and operation of the warehouse,
- cost of maintaining the inventory,
- costs of unavailability – depletion of stocks and costs of inefficient operation,
- administrative costs.
Logistics costs reflect the consumption of enterprise assets, caused by the planned and unplanned events, implementation and control of technological processes involving moving various materials in time and space.
References
- Arvis, J. F., Raballand, G., & Marteau, J. F. (2007). The cost of being landlocked: logistics costs and supply chain reliability. World Bank Policy Research Working Paper, (4258).
- Blumenfeld, D. E., Burns, L. D., Daganzo, C. F., Frick, M. C., & Hall, R. W. (1987). Reducing logistics costs at General Motors. Interfaces, 17(1), 26-47.
- Havenga, J. (2010). Logistics costs in South Africa–The case for macroeconomic measurement. South African Journal of Economics, 78(4), 460-476.
- Saldanha, J. P., Tyworth, J. E., Swan, P. F., & Russell, D. M. (2009). Cutting logistics costs with ocean carrier selection. Journal of Business Logistics, 30(2), 175-195.
