Most companies know the total cost of their warehousing & distribution operations. Some know their total supply chain costs from point of origin to end user. However, when it comes to commercial decision making, the majority of companies often view supply chain costs as either a simple percentage of the total amount or a cost per unit. Relatively few know the supply chain costs in sufficient detail to enable detailed decision making.
Cost to serve modelling is designed to enable decision making on a range of issues including pricing, investment, minimum order sizes, discount structures etc.
The typical questions that cost to serve modelling can answer includes:
Cost to Serve Modelling by Davies & Robson takes all the relevant costs within the supply chain to analyse them at storage unit and order level. Costs can include:
Once costs have been determined at the lowest unit of storage and activity, they can then be used to cost a particular product or traffic flow. This level of detailed analysis enables a deep understanding of the costs within the Business upon which commercial and operational decisions can be made.
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