What is the role of categorization of logistics costs for cost control in enterprises?

On the basis of activities, logistics costs can be categorized into three major items: direct costs, indirect costs and daily costs.

1) Direct costs: costs incurred directly to accomplish logistics work. For example, the direct costs of transportation, warehousing, raw material management, and certain aspects of order processing and inventory are able to be extracted from traditional costs.

2) Indirect costs (similar to manufacturing costs in accounting): costs incurred indirectly to accomplish logistics work. It is more difficult to isolate because costs associated with indirect factors often involve the apportionment of fixed capital. The determination of overhead is often determined by managerial judgment, and overhead is generally allocated on the basis of average cost per piece.

3) Day-to-day costs (similar to overhead in accounting, etc.): All organizational units of a business bear a considerable amount of costs, such as those required for lighting and heating in various facilities.

Significance: Finding an effective way to measure the cost of logistics activities can provide a more sobering understanding of logistics costs, but most accounting methods produce averages that hide the true cost of performing a particular activity or hide the cost of providing a unique service to a particular customer, and such algorithms are often bearded and do not differentiate between different costs, with the result that they often leave companies The result is that companies are often unable to recognize the essence of logistics costs and thus strengthen their management of logistics costs.

This activity-based cost, this calculation method can help companies straighten out their thinking, clarify the source of logistics costs, recognize the essence of logistics costs, strengthen the management of logistics costs, and effectively control costs.