Cost is the most traditional measure of process performance. The total cost to perform the process group “manage logistics and warehousing” per $1,000 revenue includes the costs for four key processes: provide logistics governance, plan inbound material flow, operate warehousing, and operate outbound transportation. Within each process, the following cost categories should be included: personnel, systems, overhead, outsourced, freight (to operate outbound transportation), and other costs.
Calculation: Total cost to perform the process group "manage logistics and warehousing" / (Total business entity revenue * .001)
APQC’s Open Standards Benchmarking data in logistics reveals a substantial difference between top and bottom performers (and even the median) with respect to the total cost of logistics and warehousing (Figure 1). Bottom performers spend six times more for this process group than top performers. For organizations with $2 billion in revenue annually, this cost difference is more than $120 million.
Organizations can identify areas ripe for cost reduction through process mapping to pinpoint bottlenecks, redundancies, needless handoffs, lack of important process documentation, and opportunities to streamline and standardize activities.