What are the costs of logistics

Logistics cost is the logistics system for the realization of the transfer of goods in space and time and a variety of expenses incurred in the monetary performance, logistics costs accounted for the proportion of commodity sales from 10% to 40%. As logistics activities with the product characteristics, industry characteristics and changes in the form of its cost performance also varies greatly. Internationally there is no standard logistics cost calculation method, countries according to their own characteristics of logistics costs using different methods of statistics and analysis. The more popular methods are based on logistics function calculation method and activity-based calculation method:

Function-based calculation method will be summarized in the following formula for logistics costs.

Logistics Cost (Logistics Cost) = Transportation Cost (Transportation Cost) + Inventory Carrying Cost (Inventory Carrying Cost) + Logistics Administration Cost (Logistics Administration Cost)

Logistics activities. The breakdown of logistics activities makes it easy to identify the specific location of the cost, but from the management point of view, that is, to distinguish the logistics function, but also in line with the financial control structure of business management method is generally accepted. This approach divides logistics costs into transportation costs, warehousing costs, inventory costs, capital costs, management costs and information costs.

Activity-based logistics cost method is to decompose logistics costs in accordance with different logistics activities, and then calculate the sum of the activities that is the total cost of logistics, based on the cost of logistics activities can be decomposed into the following items: 1, ordering costs; 2, order processing and information costs; 3, transportation costs; 4, packaging costs; 5, handling costs; 6, inbound and outbound costs; 7, storage costs; 8, interest on funds tied up in inventory. 8, interest on funds tied up in inventory; 9, loss of goods; 10, sorting costs; 11, distribution costs; 12, logistics center management costs; 13, and other out-of-stock losses due to delays in delivery, and so on.

It is worth proposing that there is a backward law between logistics costs - between logistics functions, a cut in the cost of one function will increase the cost of another function. Because the various costs are interrelated, the overall optimal cost must be considered. The purpose of the logistics cost study is to extract all the logistics costs mixed into other cost accounts, so that people can clearly see the latent logistics costs in order to find feasible ways to reduce costs.

1, transportation costs

In all logistics costs, the highest rate is the transportation costs, usually transportation costs account for more than 40% of the total cost of logistics, therefore, in the total cost analysis, the most important thing is to strictly control the expenditure in the transportation, to strengthen the economic accounting of transportation. Transportation costs can be determined according to the freight bill, but also from the enterprise fleet transport related accounting accounts to approve. The key to controlling the transportation costs of the logistics center is to develop a thorough and feasible transportation planning for the entire transportation rationalization to avoid wasting capacity, manpower and related capital.

2, warehousing costs

Warehousing costs include all costs incurred due to changes in the number of warehousing facilities and for warehousing operations. Separation of warehousing costs and inventory costs is conducive to the identification of problems and develop a reasonable response. Most warehousing costs do not vary with changes in inventory levels, but with the size of storage and mode of operation. Warehouse costs can be divided into: 1. warehouse rent (space costs), 2. equipment maintenance costs, 3. labor costs, 4. management costs. Sometimes, warehousing costs are very irrationally categorized into inventory costs.

3, inventory costs

Inventory costs include only those costs that vary with the volume of inventory. We analyze the inventory cost specifically into the following three categories: inventory management costs, capital costs, inventory risk costs.

Inventory management costs: inventory management costs include taxes and insurance paid to hold inventory, including ordering costs incurred to obtain inventory. Insurance is to guarantee the value of a certain product at a specific time, and currently we do not charge tax on holding inventory.

Cost of capital invested in inventory: logistics centers hold inventory used in the capital is the main body constituting the cost of capital invested in inventory, the company's opportunity cost of capital is the average expected value of the return on investment in other businesses. For different periods into and out of the logistics center for the value of inventory can be accounted for in different ways, the current accounting in the use of the following methods to calculate the cost of inventory: first-in-first-out method, LIFO method, the weighted average method, the moving average method, the planning cost method, the gross margin method, the retail price method, etc. Regardless of the method used by enterprises to calculate the cost of inventory, there is one thing is certain: that is, the more inventory, the more all of the inventory of the funds The more inventory you have, the higher the capital cost of the entire inventory, and the more you invest in inventory, which is an integral part of your marketing strategy.

Inventory risk cost: There are four types of inventory risk cost, including damage cost, theft cost, obsolescence cost, and cost of change of location.

The level of logistics costs is directly related to the profitability of the logistics center and customer value. Therefore, how to carry out the cost control of the logistics center is to determine the success or failure of the logistics center business operations of an important role in the decision. From the history of the development of logistics management, reduce logistics costs is the initial starting point, is still the main reason for people to adopt modern logistics technology and management tools. Logistics cost management and transportation management, inventory management, distribution management and other functional management is different, it runs through the whole process of logistics management, involving people, equipment and technology, capital, materials and other factors of production. Mastery of logistics cost analysis and control methods, is the rational organization of logistics, decision-making analysis of logistics systems at all levels of the basis.

In the whole process of logistics, always condense the consumption of physical labor and live labor. The consumption of physical labor for the transfer of logistics products in the value of the means of production, live labor consumption is divided into two parts, one part of the value created by the workers for their own labor, that is, the part of the wages of the workers; the other part of the workers for the social value of labor, that is, the value of the enterprise to pay the taxes and profits created by the enterprise. Which in the flow of goods in the process of consumption of part of the value of the means of production and the wage part of the staff constitute the total cost of logistics