Logistics cost and performance can be calculated using a variety of metrics, including key performance indicators (KPIs) and financial ratios. Here are some common methods used to calculate logistics cost and performance:
1. Total Logistics Cost: This method involves calculating the total cost of logistics operations, including inbound, outbound, reverse, and warehousing costs. The total logistics cost can be expressed as a percentage of revenue or as a dollar amount per unit of product.
2. Order Cycle Time: This metric measures the time it takes to fulfill an order, from the time the order is placed to the time it is delivered to the customer. A shorter order cycle time indicates better logistics performance.
3. Perfect Order Fulfillment: This metric measures the percentage of orders that are fulfilled correctly and delivered on time. A higher perfect order fulfillment rate indicates better logistics performance.
4. Inventory Turnover: This metric measures how many times inventory is sold and replaced over a given period. A higher inventory turnover indicates more efficient logistics operations.
5. Gross Margin Return on Investment (GMROI): This financial ratio measures the profitability of logistics operations by comparing the gross margin generated by sales to the investment in inventory. A higher GMROI indicates better logistics performance.
6. Cost per Unit: This metric calculates the cost of logistics operations per unit of product shipped. A lower cost per unit indicates more efficient logistics operations.
By using these metrics, logistics companies can assess their performance and identify areas for improvement. They can also benchmark their performance against industry standards to gauge their competitiveness and make strategic decisions about their logistics operations. Genex Logistics has more information about "Logistics Cost Meaning".
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