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Logistics costs: definition & important aspects for buyers
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Logistics costs in a nutshell:
Logistics costs include all expenses for transportation, storage, handling and administrative processes in the supply chain. The systematic recording and optimization of these costs is essential for purchasing, as they often account for 10-15% of total procurement costs and offer considerable savings potential.
Example: A medium-sized company reduces its annual logistics costs by 15% from 450,000 euros to 382,500 euros by consolidating supplier locations and optimizing transport routes, whereby the main savings are achieved by reducing transport trips from daily to twice weekly.
Contents
Introduction to logistics cost controlling
What are logistics costs?
Logistics costs include all expenses incurred in connection with the planning, control and implementation of material, goods and information flows. These include costs for transportation, warehousing, handling, packaging and information processing. They are a major component of a company's total costs and have a significant influence on its competitiveness on the market.
Core elements of logistics costs
Importance of logistics costs in purchasing
In purchasing, logistics costs play a decisive role in the overall evaluation of suppliers and offers. Companies can achieve considerable savings through targeted analysis and optimization of these costs. A deep understanding of logistics costs enables purchasers to adopt better negotiating positions, make supply chains more efficient and thus increase the company's competitiveness.
Total cost analysis taking logistics costs into account
The total cost analysis allows purchasers to take into account all logistics costs incurred in addition to the pure purchase price. This allows the most economically sensible procurement decision to be made, taking all cost factors into account.
Calculation example
Initial situation:
A company needs 10,000 units of a product. There are two offers:
Offer A: Supplier from Germany
- Unit price: € 5.00
- Transportation costs: 1.000 €
- Delivery time: 1 week
Offer B: Supplier from China
- Unit price: € 4.50
- Transportation costs: €5,000
- Customs duties and taxes: € 2,000
- Delivery time: 5 weeks
Calculation of total costs:
Total costs Offer A:
(unit price x quantity) + transportation costs
(5,00 € x 10.000) + 1.000 € = 51.000 €
Total costs Offer B:
(unit price x quantity) + transportation costs + customs duties and taxes + storage costs
(4,50 € x 10.000) + 5.000 € + 2.000 € + ?
= 45.000 € + 5.000 € + 2.000 € + ?
In order to calculate the storage costs due to the longer delivery time, we assume:
- Storage cost rate: 1% of the value of the goods per month
- Additional storage period compared to offer A: 4 weeks (5 weeks vs. 1 week)
Storage costs:
Value of goods x storage cost rate x (additional storage period in months)
45,000 € x 1% x (4/4) = 450 €
Total costs offer B incl. storage costs:
45.000 € + 5.000 € + 2.000 € + 450 € = 52.450 €
Comparison:
Total costs of offer A: € 51,000
Total costs for offer B: € 52,450
Result:
Although offer B offers a lower unit price, higher transportation, customs and storage costs lead to higher total costs. Therefore, offer A with a total cost of €51,000 is more economical than offer B with €52,450.
Evaluation and strategic findings
✓ Critical success factors
→ Holistic cost analysis: integration of all relevant cost factors such as transportation, storage and customs duties in the decision-making process
→ Process optimization: systematic analysis and improvement of logistics processes to reduce costs
→ Digital tools: Use of modern software for precise total cost calculations and scenario analyses
⚠ Challenges
→ Complexity management: difficulty in identifying and quantifying all hidden costs
→ Dynamic markets: Volatile transportation and energy costs make long-term calculations difficult
→ Data quality: availability and reliability of cost data from various sources
Future trends and strategic implications:
"The integration of logistics costs into purchasing decisions is being revolutionized by new technologies and methods."
→ AI-supported forecasting models for logistics costs
→ Automated total cost optimization in real time
→ Sustainability aspects in the cost assessment
→ Increased importance of regional supply chains
◆ Strategic recommendations for action
→ Implementation of a systematic total cost of ownership (TCO) approach
→ Development of logistics expertise in strategic purchasing
→ Development of flexible sourcing strategies to minimize risk
Conclusion on the optimization of logistics costs
Logistics costs are a decisive factor for the competitiveness of companies and must be considered holistically when making procurement decisions. Focusing solely on purchase prices is not enough - only by analyzing all cost components such as transport, storage and customs duties is it possible to make well-founded strategic decisions. Digital tools and systematic process optimization enable companies to manage their logistics costs effectively and achieve sustainable savings. The key to success lies in the continuous adaptation of procurement strategies to changing market conditions and new technological possibilities.
