what is cost to serve if you're working in supply chain you really need to know
and I'm going to explain to you what it is right now but if you're wondering
where we are we're in Sydney Olympic Park another really cool
Sydney venue but let's get into Cost to Serve
Hi this is Rob O'Byrne from supply chain secrets and the topic today is cost to
serve it's something that I'm passionate about that I teach everybody about and
why look I think it's probably the secret sauce to supply chain management
if you really understand cost of serve analysis you're going to be an absolute
hero in managing the supply chain and look it's a really simple concept I'm
going to explain it very simply in this short video and now I'll put a link to a
longer video which gets into some of the technical details
okay so think about
delivering products in fact think about delivering water and if you're a water
company you might be selling these in individual bottles in retailers or whatever
You might be
selling them in big packs and you might be sell them in the pallet load I don't have a
pallet with me but the water is just an example okay think of different products
that you could be selling and moving through your supply chain and they might
be moving through that supply chain it's individual products or tax or pallets or
truckloads understanding the cost to serve will enable you to understand the
true cost of delivering those products to customers and the customers might be
retail stores or warehouses for retail stores whatever it doesn't matter
the concept is we need to
track through your supply chain cost of delivering that cost of delivering that
and do you think the costs vary they do but not hugely and this is the secret
sauce because if you think about the cost for processing an order for one
item you've got the order processing cost someone's got to go into the
warehouse and they are going find it, pick it, pack it dispatch it and
then the cost of doing exactly the same
thing for them for the pack of water this isn't much more in terms of the
processing cost now you're thinking hang on the delivery cost it's a little bit
high because it's a slightly larger bigger product but in the scheme of
things end to end it isn't that much more really smart supply chain people
understand the cost of servicing all their different customer types all their
different product types and through their different channels just
and not many businesses do this well just imagine if you knew for every
single product exactly how much it cost to get it from to the supply point to
the customer through the different channels maybe you're going through
distributors going direct to retailers you're going direct to homes really well
at relevant these days imagine if you could identify the true cost of each of
those deliveries for each type of product for each type of customer for
each distribution channel that opens up a huge opportunity to really understand
those costs and improve profitability and hey if you're working for a
government department or a not-for-profit it's equally as important
because it allows you to understand your costs and to work within your budgets so
that very simply is costs to serve analysis it's identifying at a really
detailed level exactly the cost of distribution for different products to
different customers through different channels that's it I'll stick a link to
another video where we can show you that a little bit more detail but this is the
secret sauce now just to make sure that you don't miss out on some of those more
detailed videos do hit the subscribe button down below
these videos come out every week generally on a Wednesday and if you have
any questions about cross to serve just put the comments and put your comments
below and I'll try and get to as many of those as possible let us ask you a
simple question if you're into supply chain management do you actually
understand your Cost to Serve or comment below