This video is brought to you by Logistics Bureau - Management Consultants, who reduce costs and improve service for organisations Worldwide. If you need any assistance on any of the topics on this channel, just visit us at: www.logisticsbureau.com/
@@gokula.m7641 Yes it can be. Depends a lot on the product, transport distances, temperature (like frozen). But often transport is the largest cost, and the easiest one to reduce too! The other 2 largest ones are often Warehousing and Inventory Holding Cost. I just checked on our Supply Chain benchmarking data. It varies a bit by industry of course.
Great video! Just a quick question - when you say 'profitability of an order' or 'profitability of a customer', how do you arrive at it? An order might contain different items - so how do you find an individual item's cost-to-serve from that order? Or do you even look at that while arriving at profitability of an order? Likewise, a customer might do multiple orders. How do you then calculate the profitability of that customer?
I work out the cost to serve by unit, by SKU. This is usually important as different SKUs have different sizes and weights. This attracts different costs in storage and distribution. So you can work out the gross margin, and then peel way that margin with each cost element to arrive at a net margin.
My piece of the onion makes me want to cry I just took over a small special order warehouse, they only use half of their capacity for shipping and receiving, another 30% for about ten years worth of returned and damaged goods and 20% for things they have no other place for. What makes it worse is we have more storage containers than we have space for.
@@supplychainsecrets I am their plan. They stole me out of the service industry to make order out of chaos. Actually that's how I found your channel, looking to learn something about supply chains so I can rework my little corner of the world. Looking forward to seeing more great content from your channel!
Sounds like a great opportunity. You can only make things better. You might enjoy Paul Akers channel. He embraced Toyota Production System methodoogies and simplified it into a Lean process to improve his manufacturing and warehouse operations for his company FastCap. The companies he features on his channel will blow your mind. So many ideas to improve the 'how.' The peeling of the onion will give you the why. Looking at cost to serve can definitely make you cry.
Hi Sir, I've an informal meeting with one of the logistics managers in my company as I'm interested in transferring department (currently in the IT division) what do you recommend I say or read up on so I can "impress" him? Have been watching some of your videos and I can say it has been very helpful. Pls continue with the videos!
This video is brought to you by Logistics Bureau - Management Consultants, who reduce costs and improve service for organisations Worldwide.
If you need any assistance on any of the topics on this channel, just visit us at: www.logisticsbureau.com/
Have you thought about your Supply Chain in this way before? Which layer of the Onion do you think has the highest costs?
Until I saw this, I didn't think about this way..I think the transport layer is the expensive one . Is that correct?
@@gokula.m7641 Yes it can be. Depends a lot on the product, transport distances, temperature (like frozen). But often transport is the largest cost, and the easiest one to reduce too! The other 2 largest ones are often Warehousing and Inventory Holding Cost. I just checked on our Supply Chain benchmarking data. It varies a bit by industry of course.
Great video! Just a quick question - when you say 'profitability of an order' or 'profitability of a customer', how do you arrive at it?
An order might contain different items - so how do you find an individual item's cost-to-serve from that order? Or do you even look at that while arriving at profitability of an order?
Likewise, a customer might do multiple orders. How do you then calculate the profitability of that customer?
I work out the cost to serve by unit, by SKU. This is usually important as different SKUs have different sizes and weights. This attracts different costs in storage and distribution. So you can work out the gross margin, and then peel way that margin with each cost element to arrive at a net margin.
Very well explained sir.👍😎
Glad you liked it.
My piece of the onion makes me want to cry
I just took over a small special order warehouse, they only use half of their capacity for shipping and receiving, another 30% for about ten years worth of returned and damaged goods and 20% for things they have no other place for.
What makes it worse is we have more storage containers than we have space for.
Wow, that does not sound good. Is there any plan to improve things?
@@supplychainsecrets I am their plan.
They stole me out of the service industry to make order out of chaos.
Actually that's how I found your channel, looking to learn something about supply chains so I can rework my little corner of the world.
Looking forward to seeing more great content from your channel!
@@marcschaeffer1584 LOL. I'm sure you are doing a great job there!
Sounds like a great opportunity. You can only make things better. You might enjoy Paul Akers channel. He embraced Toyota Production System methodoogies and simplified it into a Lean process to improve his manufacturing and warehouse operations for his company FastCap. The companies he features on his channel will blow your mind. So many ideas to improve the 'how.'
The peeling of the onion will give you the why. Looking at cost to serve can definitely make you cry.
@@socalslk thanks I'll look it up!
Hi Sir, I've an informal meeting with one of the logistics managers in my company as I'm interested in transferring department (currently in the IT division) what do you recommend I say or read up on so I can "impress" him? Have been watching some of your videos and I can say it has been very helpful. Pls continue with the videos!
What type of role are you looking for? Which function? Focus on learning more about that.
I can call this as "benchmarking with an onion"
Great term.........