Logistics Cost and

Service 2014

The Establish Davis Database

Brief History/Description
Since 1974 Establish Davis Database contains logistics costs
(transportation, warehousing, customer service/order entry,
administration, and inventory carrying costs) and service
performance levels for many industries/groups.
The submissions are annually summarized to track logistics
costs and service performance levels and trends.

Why Companies Benchmark?

To identify opportunities and trends (cost and service
performance drivers) in their logistics costs.
To know where to focus next to improve companys logistics
network from the prospective of cost and service.

The Establish Davis Database

Participants confidential reports include:

Cost comparison by general industry group, product value,

weight range and sales revenue.

The Establish Davis Database

Annually, we summarize the data, track it over time, and report the
results.
Logistics Cost as a Percent of Sales

% of Sales
Cost As a Percent of Sales

10

9.34%

Technology Advances
4

Shift to Offshore
Manufacturing

Domestic
Manufacturing

0
1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

2014

Establish Davis Database - Average Company

2014 - Key Findings

Logistics costs for the average company in the database are

9.34 percent of sales and $69.74 per hundredweight shipped.
Logistics costs increased by 11 percent from 2013 to 2014.
Transportation cost is driving the increase.
Companies with higher product values continue to have lower
logistics costs.
Smaller companies continue to have higher logistics costs.
Service performance levels have improved this year.

The Establish Davis Database - Average Company

2014 Logistics Costs

Cost
% of Sales

$/CWT

Transportation

4.43%

$36.42

Warehousing

1.99%

$16.16

Customer Service

0.41%

$1.92

Administration

0.30%

$1.15

Inventory Carrying

2.22%

$14.09

Total Logistics Costs

9.34%

$69.74

Cost as a Percent of Sales (9.34%)

Customer Service/
Order Entry
4%

Administration
3%

Inventory Carrying
24%

Warehousing
21%

Transportation
47%

Cost per Hundredweight (CWT $69.74)

Customer Service/
Order Entry
3%
Warehousing
23%

($1.92)

Administration
2%

Inventory Carrying
20%

($1.15)

($14.09)

($16.16)

Transportation
52%
($36.42)

Cost as a Percent of Sales

Customer Service/
Order Entry
4%
Warehousing
21%

Administration
3%

Inventory Carrying
24%

Cost per Hundredweight

Transportation
47%

Customer Service/
Order Entry
3%
Warehousing
23%

Administration
2%
Inventory Carrying
20%

Transportation
52%

The Establish Davis Database - Average Company

2014 Logistics Costs

Cost as
% of Sales
Transportation

4.43%

Warehousing

1.99%

Customer Service

0.41%

Administration

0.30%

Inventory Carrying

2.22%

Total Logistics Costs

9.34%

Cost as a Percent of Sales Over Time

Cost as a Percent of Sales

0
2002

2003

Transportation

2004

2005

2006

Warehousing

2007

2008

2009

Customer Service

2010

2011

Administration

2012

2013

2014

Inventory Carrying

03
07

Cost as a Percent of Sales Over Time

10

10

10

Cost as a Percent of Sales

10

2004
2008

2005
2006
20032007
2004 2008
2005
2009
20012002
2010
2002
2011
2003
2004

ce Administration
Warehousing

Customer
Service
Inventory
Transportation
Carrying

2009
2010
2011
2006
2007
2008
2009
2010
2011
2012
2013
2014
2005
2001
2006
2002
2007
2003 2008
2004 2009
20052001
2010
2006
2011
2007
2002
2003 2008200

Warehousing
Administration

Transportation
Customer
InventoryService
Carrying

Warehousing
Administration Transportation
Customer
InventoryService
Carrying

Warehou
Admini

The Establish Davis Database - Average Company

2014 Logistics Costs

Cost
$/CWT
Transportation

$36.42

Warehousing

$16.16

Customer Service

$1.92

Administration

$1.15

Inventory Carrying

$14.09

Total Logistics Costs

$69.74

Cost per Hundredweight Over Time

$50

Cost per Hundredweight

$40

$30

$20

$10

$0
2002

2003

Transportation

2004

2005

Warehousing

2006

2007

2008

Customer Service

2009

2010

2011

Administration

2012

2013

2014

Inventory Carrying

03
07

Cost per Hundredweight Over Time

$100

10

10

$80

$60

$40

$20

$0

Cost per Hundredweight

10

2004
2008

20042008
2005
2005
2006
2007
2009
2001 2002
2010
20022003
2011
2003
2004

ce Administration
Warehousing

Customer
Service
Inventory
Transportation
Carrying

0
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2009
2010
2011
2005
2001
2006
2002
2007
2003 2008
2004 2009
2005
2010
20062002
2011
20072003 2008200
2001

Warehousing
Administration

Transportation
Customer
InventoryService
Carrying

Warehousing
Administration Transportation
Customer
InventoryService
Carrying

Warehou
Admini

Company Size
Smaller companies continue to have higher logistics
costs.

Cost as a Percent of Sales

12.88
12

10.08
10

7.40
8

4.49

0
<$100

$100 - $500

$500 - $2,000

Annual Sales ($ MM)

>$2,000

Product Value
Companies with higher product values continue to have
lower logistics costs.

Cost as a Percent of Sales

11.72
12.00

10.64

10.00

6.46

8.00

4.49

6.00

4.00

2.00

0.00

<$5

$5 - $10

$10 - $20

Product Value in $/Pound

>$20

Customer Service Levels

2014 Measurements
Total order cycle time - 6 days
Product Availability (Shipped Complete)

Orders
Lines
Units

92%
93%
93%

Average Performance Reported

FULL DATABASE
Total Cycle Time

02

03

04

05

06

07

08

09

10

11

12

13

10

11

88

85

91

88

84

83

90

91

92

93

85

84

92

(% Lines)

95

91

94

92

89

93

92

94

95

95

96

95

93

(% Units)

93

93

91

94

90

94

94

95

95

95

94

91

93

(Days)

Product Availability (% Orders)

14

What are companies doing to control/reduce costs?

LOGISTICS NETWORKS

LOGISTICS NETWORKS

Identifying the correct number of warehouses/DCs to reduce

transportation costs and improve service performance levels.
Reconfiguring networks as a result of:

Acquired/merged organizations.

Shifts in the manufacturing and customer base.

Changes in customer service requirements.

TRANSPORTATION
(47% of the Logistics Spend)

TRANSPORTATION
Mitigating carrier increases by renegotiating agreements.

Reevaluating ordering patterns to identify customer order

minimums.
Reevaluating ordering patterns to identify consolidation, pool
point, and cross dock opportunities.
Shipping intermodal/rail instead of truckload.
Separating embedded transportation costs from the landed cost

of materials/inventory from sources, to:

Identify, evaluate and control costs.

Leverage additional volumes.

Acquiring/upgrading transportation management systems (TMS)

to maximize control and cost reduction opportunities.

WAREHOUSING
(21% of the Logistics Spend)

WAREHOUSING

Redesigning warehouses to increase storage capacity and

improve efficiency.
Evaluating warehouse processes and procedures to identify
opportunities.
Acquiring new and used material handling equipment to improve

efficiency.
Evaluating the services of third party providers (3PL).
Adding/upgrading standalone and SaaS (software as a service)
Warehouse Management Systems (WMSs).

INVENTORY

(24% of the Logistics Spend)

INVENTORY

Improving the forecasting/inventory planning processes.

Reducing the safety stock requirements by reducing the number
of warehouses.
Reducing inventory carrying costs and warehousing space
requirements by:

Disposing of excess and obsolete inventory.

Re-profiling inventory by location.

CUSTOMER SERVICE
(4% of the Logistics Spend)

CUSTOMER SERVICE

Migrating to automated attendants

Outsourcing the functional activities
Encouraging on-line order entry, tracking, etc.

ADMINISTRATION
(3% of the Logistics Spend)

Thank you

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