Training on Logistics Costing, Pricing, and Profitability Analysis

Module 1: Foundations of Logistics Costing

• Direct vs. indirect costs, fixed vs. variable costs, and semi-variable costs.

• Cost allocation challenges in logistics operations.

• Traditional costing vs. activity-based costing (ABC).

• Case Study/Hands-on Exercise: Analyze a sample logistics profit and loss statement, identify cost categories, and discuss the limitations of traditional allocation methods.

Module 2: Transportation Costing Models

• Decomposing transportation costs: line haul, fuel, accessorials, and detention.

• Lane-level costing: fixed route costs vs. variable costs.

• Costing for LTL, FTL, intermodal, and parcel.

• Case Study/Hands-on Exercise: Calculate the true cost per mile and cost per shipment for a portfolio of lanes, incorporating all direct and indirect transportation costs.

Module 3: Warehousing Costing and Activity-Based Models

• Identifying warehousing activities: receiving, putaway, storage, picking, packing, shipping.

• Assigning costs to activities: labor, equipment, space, and overhead.

• Developing activity rates (e.g., cost per pick line, cost per pallet stored).

• Case Study/Hands-on Exercise: Build a simplified activity-based costing model for a warehouse, calculating activity rates and applying them to a sample set of customer orders.

Module 4: Inventory Carrying Cost Analysis

• Components of inventory carrying cost: capital cost, storage cost, obsolescence, and insurance.

• Calculating the true cost of holding inventory.

• Impact of inventory policies on overall logistics cost.

• Case Study/Hands-on Exercise: Calculate the inventory carrying cost for a portfolio of SKUs, using company financial data to determine the capital cost percentage.

Module 5: Cost-to-Serve (CTS) Modeling

• Defining cost-to-serve: direct and indirect costs attributable to a customer or product.

• Building a cost-to-serve framework: mapping activities to customers.

• Segmenting customers by cost-to-serve and profitability.

• Case Study/Hands-on Exercise: Develop a cost-to-serve model for five customer segments, allocating transportation, warehousing, and inventory costs based on service-level drivers.

Module 6: Customer and Product Profitability Analysis

• Using CTS models to calculate customer profitability.

• Product profitability analysis: considering volume, handling complexity, and storage requirements.

• Identifying unprofitable customers or products for remediation.

• Case Study/Hands-on Exercise: Analyze customer profitability for a sample portfolio, identifying high-cost-to-serve, low-margin customers, and develop a strategy for improvement.

Module 7: Pricing Strategies and Rate Negotiation

• Cost-plus vs. value-based pricing in logistics.

• Developing rate cards and pricing models for logistics services.

• Using cost data to strengthen negotiation positions with customers or carriers.

• Case Study/Hands-on Exercise: Using CTS data, develop a pricing recommendation for a new customer proposal, balancing competitive pricing with profitability targets.

Module 8: Network Profitability and Optimization

• Analyzing profitability by lane, mode, and facility.

• Identifying loss-making network segments for optimization.

• Modeling network changes to improve overall profitability.

• Case Study/Hands-on Exercise: Analyze network profitability by lane, identify lanes with negative contribution margins, and model the impact of consolidating shipments or changing carriers.

Module 9: Budgeting, Forecasting, and Variance Analysis

• Developing logistics budgets based on activity-based drivers.

• Forecasting logistics costs under volume and rate scenarios.

• Variance analysis: comparing actual costs to budget and identifying root causes.

• Case Study/Hands-on Exercise: Perform a variance analysis for a logistics cost center, identifying favorable and unfavorable variances and investigating potential drivers.

Module 10: Advanced Analytics and Technology for Logistics Costing

• Using technology for real-time cost visibility.

• Integration of costing models with ERP and TMS data.

• Predictive costing for new business opportunities.

• Case Study/Hands-on Exercise: Design a logistics cost dashboard that provides real-time visibility into cost-per-order, cost-per-mile, and customer profitability for operational decision-makers.