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Your Cost to Serve is a Loss to Profit

Whatever you sell in your business, the objective is to generate profit, so the last thing you want to hear is that some of your customers or products might actually deliver no profit at all, right? What about if you knew that every time you sell a specific product, or deliver an order to a specific customer, your business actually loses money?

If you don’t analyse your cost to serve, that could be precisely what’s happening in your sales operation, and you wouldn’t even know.

Time to pack up and go home then?

The good news is that you don’t need to do that. However, you do need 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.

Chat to our cost to serve consultants located in Sydney, Melbourne, Brisbane, Perth, Thailand and Vietnam today.

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. 

Do You Have a Gut Feeling About Cost-to-Serve?

  • Some of your customers, products, and services generate higher expenses than others
  • Higher cost to serve equates to lower profit margins
  • Maybe you know this, but it’s not so easy to distinguish which customers, products, or services have a higher cost-to-serve
  • It takes time, money, and effort to identify high cost-to-serve customers/services/products
  • You can save substantial sums of money through cost-to-serve analysis, whether your company’s turnover is $200 million or $30 billion

Stop Profit Leakage and Improve Your Margins

  • A simple, spreadsheet-based analysis can help you identify some high cost-to-serve products, customers, and services
  • A more comprehensive analysis will present greater savings opportunities, but drains time, money, and resources from your business
  • That opportune moment to perform a cost-to-serve analysis might never present itself—and meanwhile, your business is leaking profits
  • Logistics Bureau can assist you to improve profit margins by:
    • Identifying your products, services, and customers with a high cost to serve
    • 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)

Companies that Trust Us

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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

Act Now to Reduce Cost-to-Serve and See Increased Profits

A short FREE consultative call with one of our experts is a simple and affordable first step to reducing cost-to-serve. During the call we’ll:

  1. Review your current situation.
  2. Identify the main issue causing the problem.
  3. Develop a 3-step action plan for you to attack the problem.
  4. Leave you with a clear picture of your strategy and positive actions to resolve the issue.

Book your call now.

If you’d prefer to talk about engaging us for a more comprehensive cost-to-serve reduction project, please drop an email to [email protected] or call us at the number of our office nearest to you.

Where You’ve Seen Us

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Start Making ALL of Your Customers and Products Profitable

Talk to one of our cost to service consultants today. It’s your first step to guaranteed results. Fill out the form and we’ll get back to you soon to discuss your needs. Alternatively, you can email us at [email protected] or call +61 (2) 8212 9775 to speak to sales directly.