In the grand picture of enterprise operations, logistics costs are like an iceberg hidden under the sea level, which seems to occupy only a small part, but in fact has a profound and critical impact on the overall operation of the enterprise. Whether it is manufacturing, retail, or service industry, the level of logistics costs is directly related to the operational efficiency and profitability of enterprises.
From the perspective of operational efficiency, efficient logistics operations can ensure the timely supply of raw materials to the production process, avoid production stagnation caused by shortages, and ensure that finished products are delivered to customers quickly and accurately, improving customer satisfaction. Once there is a problem in the logistics link, such as transportation delays, warehouse management chaos, etc., it will be like dominoes, triggering a series of chain reactions, resulting in the entire operation process being blocked and the efficiency greatly reduced.
In terms of profitability, the reduction of logistics costs directly means the expansion of profit margins. When companies can effectively control logistics costs, such as reducing transportation costs and reducing the costs caused by inventory overstocking, the profit obtained from each product sold will increase accordingly. Conversely, if logistics costs remain high, even if the product price is high, it may be eaten up by high logistics costs, resulting in a decline in corporate profitability.
Therefore, if you want to reduce the cost and increase the efficiency of logistics, you must first understand the composition of logistics costs, which is like a doctor treating a disease, only by first clarifying the cause of the disease, can the right medicine be prescribed.
Logistics cost is not a single expenditure, but a complex system composed of multiple parts, mainly covering transportation costs, storage costs, labor costs, packaging costs, operation and management costs, and insurance costs. Let's dive into the specifics of each cost.
Transit costs
Transportation costs account for a significant share of logistics costs and are the costs incurred in moving goods from one location to another. It is mainly composed of fuel costs, vehicle purchase and depreciation costs, drivers' wages, tolls, vehicle maintenance costs and other elements. In the case of long-distance road transport, for example, fuel costs are usually the largest expense, and fluctuations in oil prices have a direct impact on transportation costs. The cost of purchase and depreciation depends on the type of vehicle, its price, and its useful life. Driver wages include not only the basic salary, but also overtime pay, allowances, and more. In addition, toll rates vary from region to region, which can also have an impact on transportation costs.
Warehousing costs
Warehousing cost refers to the expenses incurred in the process of storage of goods, mainly including warehouse leasing, equipment purchase, goods storage, inventory and other expenses. The cost of leasing a warehouse is affected by factors such as the location of the warehouse, the size of the area, and the term of the lease. In the core areas of first-tier cities, warehouse rents tend to be higher. The equipment purchase cost involves the purchase of storage equipment such as shelves, forklifts, and pallets. The cost of cargo storage includes the daily maintenance of the goods, temperature and humidity control, etc. Inventory counting fees are the costs incurred to conduct periodic counts to ensure that inventory quantities are accurate.
Labor costs
Labor cost is the sum of various expenses paid by logistics companies for employees, including employee wages, benefits, training costs, etc. The logistics industry involves a wide range of positions, such as transport drivers, warehouse managers, sorters, customer service personnel, etc., and the salary level for each position varies depending on the region, experience, and skill requirements. In addition to the basic salary, enterprises also need to pay social insurance, housing provident fund and other welfare expenses for employees, as well as carry out various training activities to improve the professional skills and work efficiency of employees, which constitute part of the labor cost.
Packaging costs
Packaging costs are the expenses incurred for packaging to protect the goods and facilitate transportation and sale, including packaging materials and labor costs. There are various options for packaging materials, such as cartons, wooden boxes, plastic films, foam boards, etc., and the prices of different materials vary greatly. For some fragile or high-value goods, higher-cost protective packaging materials may be required. In addition, the labor costs required in the packaging process, such as the wages of the packaging workers, overtime pay, etc., also form part of the packaging cost.
Operational management costs
Operation and management costs are the expenses incurred by logistics enterprises in the process of daily operation and management, including office expenses, water and electricity expenses, communication expenses, travel expenses, equipment depreciation costs, etc. Office expenses include the purchase of office supplies, office space leasing and other expenses. Utilities are a necessary expense to keep warehouses and office space running. Communication costs are used to ensure communication between the company and external customers. Travel expenses are the expenses of transportation, accommodation and other expenses incurred by employees on business trips due to business needs. Equipment depreciation expense is mainly for office equipment and logistics equipment, and the value of equipment gradually decreases with the increase of use time, and this part of the loss will also be included in the operation and management costs.
The cost of insurance
The cost of insurance is the cost paid to deal with the risks of loss, damage, loss and other risks that may occur in the logistics process. There are many uncertainties in the logistics process, such as traffic accidents, natural disasters, theft, etc., which can lead to damage to goods. In order to reduce the risk loss of enterprises, logistics companies usually purchase cargo transportation insurance and warehousing insurance. The cost of insurance depends on factors such as the value of the goods, the route of transportation, the mode of transportation, and the terms of the insurance.