A company’s total logistics costs consist of various so-called logistics cost categories:

Logistics Processes and Logistics Cost Categories

A company’s total logistics costs result from the accumulation of various logistics cost categories. Based on our experience from more than 100 projects, the typical distribution of these cost categories is illustrated in the graphic below.

The largest share of logistics costs is typically represented by the freight and transport cost category, which can be further divided into various components, such as the actual freight rate or tariff rate and additional costs like fuel surcharges. These (and other) parameters are essential for creating a detailed overview of current costs across the entire logistics chain and identifying potential areas for action for further analysis.

Another important aspect when analyzing and determining logistics costs is their distribution within the company. In many cases, these costs are directly assigned to the internal “cost drivers” and the corresponding cost centers. As a result, costs are allocated to areas such as procurement, production (including external processing), and shipping.

Taking the example of the freight and transport cost category: Transport activities are often handled across all three company areas. However, these costs are usually only assigned to the respective cost centers of each area. A further breakdown into individual logistics cost categories is often not performed during cost recording, meaning that these costs are not separately visible.

In addition, invoices from logistics service providers can contain multiple positions from different logistics cost categories, such as freight rates, packaging costs, and customs fees. These invoices are often recorded only as a total amount and assigned to a cost center, meaning that the individual logistics cost categories remain hidden.

To identify the optimization potential of individual logistics cost categories, they must first be recorded separately. Once individual logistics cost categories, such as freight costs, are made transparent across all areas of the company, quickly implementable optimization opportunities (“quick wins”), such as economies of scale, can be identified.

Using our example: If different logistics service providers are used across procurement, production, and shipping, analyzing the total freight volume creates a stronger negotiating position with a potential (or even new) logistics service provider. However, additional parameters must also be considered, such as the mode of transport (sea freight, road transport, rail transport) or the type of transport (full truckload, less-than-truckload, groupage freight). Only by considering these factors can the most suitable logistics service provider (“expert”) be identified and the optimal price achieved.

The visualization of individual logistics cost categories is a core function of the Chaindson Suite, enabling the identification of quick wins (such as the example of economies of scale). In-depth analyses also reveal synergies that provide further optimization potential.

Result: Without transparency regarding total logistics costs, including the breakdown into individual logistics cost categories, it is difficult or even impossible to reliably identify optimization opportunities and develop a targeted approach for cost optimization and reduction.

→ The Chaindson Suite enables this through its three modules:
In addition to the detailed visualization of individual transports, goods flows, and associated costs within the Transport Cost Management module, the Transport Invoice Audit module provides a fast and comprehensive overview of all freight-related cost components. The Inventory Management module determines and provides current data on tied-up capital and inventory turnover. This ensures that all relevant information for identifying and evaluating optimization opportunities is available quickly and transparently.