Cost to Serve

What is Cost to Serve?

Customer satisfaction is the biggest driver of success for supply chain businesses. But with all the focus laid on fulfilling customer expectations, profitability should not be overlooked. Cost to Serve (CTS) is an analysis that calculates the profitability of products, customers, and routes to market, and provides a fact-based focus for decision making on service mix and operational changes for each customer that a business caters to.

Logistics costs often make up a big part of the overall Cost to Serve for supply chains. By performing a Cost-to-Serve analysis, it is possible to understand what it truly costs to deliver an item or service to a customer, and make well-informed decisions to reduce the CTS.

Objectives of Cost-to-Serve Analysis

• To identify high and low cost to serve customers
• To align distribution channels effectively to minimize the cost to serve.
• To reduce logistical costs of operations
• To improve supply chain efficiencies and customer experience with profitability

How Locus helps businesses lower logistical costs

End-to-end route optimization | Automated logistics planning | Complete supply chain visibility | Data analytics and insights | Network optimization and consulting