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Controlling cost-to-serve to maximise profitability

Pushing the right levers

Controlling cost-to-serve to maximise profitability

If knowing where supply chain costs build up is important, understanding how to then control them to make most profit is vital.

The levers either improve information flow to enhance planning, make best use of resources and minimise non-value added tasks, or they relate to shaping the retail proposition strategy and market differentiation.


Cost to serve Levers

‘Improved information flow’ levers to manage cost impacts include:

Supplier relationship management and collaboration

To make sure all involved – often third parties – are working towards the same goals through shared KPIs, benefit sharing models, vendor-managed inventory and co-opetition.

Inventory management and centralisation

To create cost efficiencies by improving stock allocation and inventory holding, sell through and consolidation optimisation, warehouse locations and logistics routes.

Data integrity management

To support accurate decision making by reducing supply chain errors and delays due to relabelling/repackaging on inbound deliveries, reducing invoice/shopping errors and improving warehouse/store resource planning.

System integration

To reduce silos and enable retailers to eliminate unexpected inbound deliveries, plan for peak, manage stock outages and measure end-to-end performance.

Internal collaboration

To enable departments to better understand their impact on the efficiency of other areas and net margin plus establish common KPIs.


Proposition strategy

‘Proposition strategy’ levers include:

Service promise and proposition management

To understand the competition and your customers’ priorities – avoiding high costs associated with being ‘all things to all customers’.

Peak management

To have full sight of the cost and margin implications of peak sales events, including working with third parties to cover them.

Investment in infrastructure

To reduce costs by creating process efficiencies – for example, through consolidation, warehousing, automation and RFID etc. plus optimised transport and logistics routes.


Our cost-to-serve findings

Cost to serve sales up

Sales up? Yet margin down?

Understanding cost-to-serve to boost profitability

Cost to serve rising to the challenge

Rising to the challenge

Unpicking the complexities of managing cost-to-serve

Closing in on the cost to serve

Closing in on cost-to-serve

Knowing where expenditure is building

Cost to serve levers

Pushing the right levers

Controlling cost-to-serve to maximise profitability

Cost to serve tools

Tools that deliver impact

Using GS1 standards to manage and reduce cost-to-serve

Cost to serve downloads

Cost-to-serve resources

Read our full report and test your own numbers in our ready reckoner tool


 
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Our findings

Download the whitepaper

White paper

Check out the full report of the cost-to-serve programme

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