The sum of the costs of each activity related to logistics management, such as order fulfillment, distribution, inventory management, and sales. Logistic cost includes a broader range of costs than physical distribution cost. It is essential to optimize, rather than minimize, logistics costs by conducting a trade-off analysis.
Published in Chapter:
Cost Management of Logistics and Supply Chain Costs
Hiroyuki Nakajima (Meisei University, Japan)
Copyright: © 2022
|Pages: 21
DOI: 10.4018/978-1-7998-9800-9.ch002
Abstract
In order for a supply chain to thrive, it must be evaluated from a financial perspective. In particular, supply chain profits and profitability are important performance measures. However, since it is very difficult to evaluate the profit side of the supply chain, this chapter focuses on the cost management of logistics and supply chain costs. The premise of supply chain cost management is that each company participating in the supply chain is able to manage logistics costs appropriately. Therefore, the authors discuss the management of logistics costs by utilizing management accounting methods such as activity-based costing, total cost of ownership, and life cycle cost. Then, after clarifying what exactly is meant by supply chain costs, supply chain cost management is discussed. The management of costs incurred across multiple companies is much more difficult than the cost management of a single company, and the issues that must be overcome are clarified. Finally, directions for future research are presented.