Logistics Cost

Determine and clarify the logistics cost.

Logistics cost

Logistics cost usually differently defined by different company. But, in general logistic is defined as the process of the management of goods that across all over the countries and also across the world. The company create a good path of their goods into supply chain or transport path which the use repeatedly to get a goods shipped to customers.

Transportation cost

Transportation cost is known as all the expenditure that involved in the movement of product, assets or something that needs the changes of one point to a different place that commonly passed to the customers.

Efficiency of movement products is depending on the effectiveness of the transportation operation on that company.

That is includes all the cost in warehouse management such as rental, employees’ salaries and utilities, and also opportunity and inventory cost in financial cost which is related to perishability, shrinkage and insurance.

Oppositeness, the storage space cost which provided by third party logistics provider area allocated as inventory carrying cost because this cost are usually are charged based on the quantity of the goods.

Holding cost

Holding cost is the costs that are related with storing inventories that have not sale yet. This cost is one of the element costs of total inventory, with ordering cost and shortage cost. Moreover, damaged or rejected goods, storage space cost are also classified as holding cost.

In term of the view in theoretical point, to determine holding cost is easy because the component of holding cost consist of cost of capital to finance inventory, cost of storage and handling the inventory and cost of risk such as insurance, pilferage, obsolesce and others.

Labor cost

Labor cost is defined as the cost of total of all the salaries paid to the employees. This is consists of the cost of employees benefits also payroll taxes that paid by an employer. This cost is separated into direct and indirect overhead

Hence, be a source of competitive advantage is the key resources which is not only located within the organization but it is also a part of relationship of network. Besides, the responsibility of the manager in supply chain management is to maintaining high rise elasticity and to achieve efficiency cost of supply chain. One of the key factors in term of to ensure the efficiency of financial management is the effectiveness of cost control.

The commonly brought up of supply chain management’s goals is a cost reduction. Besides, with reducing cost, it is forcing companies to point on increased attention on the relationship with another party in supply chain. It makes the both which is customer and supplier can improve the profitability and