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Identify Profit Leaks with a Cost To Serve Study

Identify and Fix the Profit Leaks in Your Supply Chain with the help of our Cost to Serve Consultants.

Companies that Trust Us

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What are your Reporting Systems Missing?

TRADITIONAL REPORTING SYSTEMS TELL YOU…

Most traditional reporting systems report sales/financial data in aggregate. ie. We sold $400M of product x. Our warehousing costs were y. Our transport costs were z.

TRADITIONAL REPORTING SYSTEMS DON’T TELL YOU…

Most traditional reporting systems don’t tell you what the the warehousing and transport costs for specific customers and products are.

A COST TO SERVE ANALYSIS TELLS YOU…

A role of our Cost to Serve Consultants is to run tests that tell you exactly the exact profitability of each customer and each product. Then, when profit leaks are identified they recommend steps to reduce costs and increase profitability.

Signs Your Cost-to-Serve Needs Attention

If your company’s turnover is between $200 Million or $30 Billion a Cost to Serve Analysis can save you from 7 to 14%.

Here are the most common indicators that a Cost to Serve Analysis will save you money.

High Expenses

Some of your customers, products, and services generate higher expenses than others but you don’t know why.

Lower Profits

When profit margins lower, it’s time to identify exactly where cost to serve has increases increased.

Lack of Clarity

If it’s not which customers, products, or services have a higher cost-to-serve obtaining that data allows you to take steps to reduce costs.

Lack of Time

It takes time, money, and effort to identify high cost-to-serve customers/ services/ products so if management has been busy with other tasks savings are probably hiding in plain sight.

A Customer or Product Could be Unprofitable and you Don’t Know it!

Perhaps it’s time to get a handle on your cost to serve, target the customers and products that cost you the most, and start taking steps to make them more profitable.

For 30 years our cost to serve consultants located in Sydney, Melbourne, Brisbane, Perth, Thailand and Vietnam have been diagnosing the cost to serve on Supply Chains in all major industries.

Our cost to serve consulting assignments have ranged across the world and include countries such as Argentina, Australia, Brazil, Cambodia, China, Egypt, Fiji, Hong Kong, Indonesia, Japan, Korea, Laos, Malaysia, Mongolia, New Zealand, Papua New Guinea, Philippines, Singapore, Thailand, United Arab Emirates, United Kingdom, United States & Vietnam.

To find out the true cost to serve of each of your customers and products…

Click the button to book a call with one of our Cost to Serve Consultants.

Stop Profit Leakage and Improve Your Margins

The perfect moment to perform a cost-to-serve analysis might never present itself – and meanwhile, your business is leaking profits!

We can help you reduce costs and improve profit margins by:

  • Using a quick simple, spreadsheet-based analysis to help you identify some high cost-to-serve products, customers, and services.
  • Undertaking a more comprehensive analysis that will present greater savings opportunities.
  • Helping you to realign distribution channels to minimise cost to serve
  • Helping you to realign service policies to maximise your profits
  • Setting you up with appropriate software applications to analyse and monitor cost-to-serve (we are vendor agnostic)

Cost to Serve Case Studies

Rising Distribution Costs Impacting Profitability

A global market leader with continued growth was experiencing a rapid decline in profitability in specific regions. We conducted a cost to serve audit, which paved the way for improved product pricing and profitability.

Our approach was to undertake a cost to serve analysis of all customers and products. We identified the high-cost products, processes & customers and built a cost-to-serve calculator to assist sales staff when generating quotes.

Project Results

  • Improved allocation of customers to stock locations.
  • Increased knowledge of cost to serve within the sales team.
  • Redesign of some distribution channels.
  • Overall reduction in Logistics costs of 8%.
High Logistics Costs as % of Sales
A market-leading global healthcare organization was under pressure from its head office to reduce cost. We performed a cost to serve audit, using the results to identify improvements to profitability and pricing.

Through analysis of all the organisation’s customers, products, and channels, our audit highlighted high-cost processes, products, and customers with a high cost to serve. Subsequently, we developed a cost and profit profile of all customers and products.

Project Results

  • Improved understanding of Logistics costs.
  • Improved understanding of customer and product cost drivers.
  • Redesign of some distribution channels and MOQs.
  • Logistics cost savings of over 10% achieved.
Unidentified Profit Leaks
A supplier to a major national retailer, with rapid sales growth across all channels, faced the concern that one major customer was negatively impacting profitability.

Logistics Bureau built an online profitability analysis tool, enabling the client to slice and dice data relating to the customer and the supplied products. The analysis established profitability right down to the level of individual orders.

Project Results

  • Improved visibility enabled small changes in the handling and dispatch of orders.
  • Warehouse/customer allocations were reconfigured for optimal network performance.
  • Logistics costs were reduced significantly.
  • Major customers returned a profit increase of 4%.

We Wrote the Book on Cost to Serve – Literally!

At Logistics Bureau, our cost-to-serve credentials speak for themselves. We’ve been specialising in helping business get to grips with this often-poorly-understood supply chain issue since 1997. Over the course of hundreds of projects, we have:

  • Conducted cost to serve audits across 25 countries
  • Helped businesses from $20 million to $20 billion plug massive profit leaks
  • Taught hundreds of client-staff how to monitor and manage cost-to-serve issues
  • Developed online analytics tools to help businesses quantify cost to serve gaps
  • Guided clients onto a sustainable path to greater profit certainty

It All Starts With a 15-Minute Call

We’re here to help you improve your supply chain or cost to serve.

If you’re curious about exactly how we could help, you want get a better understanding of the principles of Supply Chain or just run your ideas for cost realignment by us…

You’re welcome to join us in a short call to discuss your needs and the options available.

On that call we typically:

  1. Review your current situation.
  2. Identify the main issue(s) to address.
  3. Determine the possible ways in which we can help if you choose to engage us.
  4. Discuss next steps for working together

Where You’ve Seen Us

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Let’s Build You a Cost to Serve Analysis

If you’re looking for the quickest ways to reduce costs and increase profitability…

Fill in the quick form to chat with a Logistics Bureau Cost to Serve Consultant

You can also call us at +61 (2) 8212 9775 or send an email to [email protected]

Talk soon!

Rob O’Byrne

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