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Logistics costs

Logistics costs

For most manufacturers, distributors, and retailers, logistics comprise a major proportion of total overhead costs.

The Research conducted by Herbert W. Davis and presented at the annual conference of the Council of Logistics Management in 2001 showed that logistics-related costs make up 7-16 % of a company's total revenue, or up to 45 % of total sales, general and administrative expenses.

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The proportion of logistics expenses continues to rise as a result of growing supply chain complexity, changing client `order` profiles, and customer service requirements.

As noted in a presentation at the Council of Logistics Management conference: "The cost of logistics is usually much larger than both upper management and operations people expect. When results are presented, the first reaction is skepticism, the second reaction is wonder and review, the third reaction is concern and interest".

 The percent distribution into logistics costs components in the USA as related to sales (2002)

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Source: Herbert W. Davis Logistics Cost and Service 2002

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