Based on Value Chain Logistics Cost Control

[Abstract] This paper analyzes the current situation of logistics on the basis of cost control, combined with the value chain theory, based on the value chain for logistics cost control put forward some ideas and views.

[Keywords:] logistics cost control; the value chain; logistics value chain decomposition

Logistics is the consumer from the production line of the end of the effective mobility to consumers a wide range of activities, including the raw materials from the supply source to effectively move to the production line starting point of the activity. In the logistics process, in order to provide the service to be occupied, spend some living labor, and materialized labor. These activities materialized labor, labor and monetary performance, that is called logistics costs. In the past people are more confined to their own organizations, logistics activities, and less from the overall perspective of the entire value chain planning logistics activities. According to "bucket theory", any member of the value chain efficiency and reduce logistics and costs rise, will affect the competitiveness of the entire value chain, value chain ultimately harm the interests of each company.


First, the status of logistics cost control

According to the calculation of China's logistics authority, the national logistics cost for each one percentage point, to 1 300 billion can add social and economic benefits, therefore, how to reduce a huge logistics costs, and tap the third profit source of great significance to China's enterprises . from our current situation of logistics cost, the following problems.

(A) of the total logistics costs high
Other countries from the National Bureau of Statistics released the data, ministries, 1991, the total cost of logistics in China is equivalent to 24% of GDP in 2003, this ratio reduced to 21.4%, 18.3% in 2006. Compared with China, the United States logistics and other developed countries the proportion of about 10% of GDP, a number of moderately developed countries such as South Korea has only 16% of GDP. can be seen from the total point of view, although the total cost of logistics in recent years, the proportion of GDP, continued to narrow, however, Compared with foreign countries, China's overall logistics level is still significantly lagging behind.

(B) of the great space of logistics cost reduction
Logistics as a system, mainly by the packaging, transportation, handling, storage, distribution and other aspects of processing and information processing structure, which strengthen the logistics system for enterprise management, reduce the cost of each link, thereby enhancing the competitiveness of enterprises, improve the efficiency provided huge space. According to Statistics, the direct product cost in the total cost of China's enterprises only account for 10% of the total cost of logistics costs by 40%. Therefore, in the logistics business process largely determines the cost of reducing the cost of business competitive advantages and core strength, the face of fierce market competition, the enterprise to improve efficiency of the maximum potential profit source.

(C) the concept of total logistics cost control weak
Because of logistics costs exist between the various elements of "effective anti-back effect", so the overall cost of logistics must be considered the best, but often only interested in our company's warehousing and transportation costs directly, without considering the rest of inventory holding costs and administrative costs of logistics, cost control, which affect the logistics of systematic and reasonable.

(D) cost control methods are backward Logistics
Now, the cost of logistics enterprises distributed computing and control. This has brought management problems: on the one hand, logistics, financial accounting system in the absence of a separate project, all costs are listed in the fee column, Thus, the more difficult for a variety of logistics costs incurred by an enterprise to make a clear and comprehensive calculation and analysis. In general logistics cost, logistics departments completely unable to control the cost of many, thereby increasing the difficulty of the logistics cost management. The other , the enterprises can not be compared to the logistics cost analysis, can not come to the logistics industry average cost. due to lack of basis for comparison with each other, and therefore can not be the true measure of the relative logistics performance of the enterprise.


Second, the value chain theory and the decomposition of the logistics value chain

(A) of the value chain theory
1985 Michael E. Porter in the "" Competition advantage>> in the value chain concept is proposed. He believes that the process of value creation can be decomposed into a series of distinct but interrelated consecutive complete value-added activities that constitute the "value chain." is essentially the business activities to make the process of increasing product value, business processes to form a value added chain.

Value chain theory is the emphasis on the value of the value chain activities for the management of objects to maximize the value added as management, information technology as a management tool to an advanced management theory, in the decades after the election continued to deepen and extended and applied to business management practices. the substance of value chain management is an integrated management ideas and methods, which focus on the enterprise value chain, cooperation between people of different enterprises, financial, material and integrate such factors as market so that the value of the entire value chain has been improved. It is the management of strategic management and tactical combination. business is no longer just concerned with their own, but also by its exposure to which the interests of the entire value chain integration and development.

(B) decomposition of logistics value chain
Logistics value chain can be decomposed into a direct and material transfer and service activities related to basic values ​​and other relevant functional departments supporting value activities. Enterprises through the operation of the logistics providers, distributors (or retailers) and customer linked together, while their value chain will also be linked together to form a value chain system. enterprises to adopt e-commerce, through the electronic platform brings together the logistics of information flow, business flow and cash flow, then build the corresponding virtual value chain. In addition, value of the business system and the combination of virtual enterprise, through a unified logistics infrastructure development, was able to form a customer-driven value chain, value network.


Third, based on the value chain of logistics cost control

Logistics cost control is actually the optimal management of logistics processes. Logistics process is to create time and space with the value of economic activities, to achieve the greatest market value, it is necessary to ensure the best allocation of all sectors of the logistics. Logistics system is a large and complex system, to optimize its vertical and improve their overall value. To achieve operational objectives, must stand as a whole, the strategic point of view of value chain analysis. meet this need, founded on "business is the ultimate customer needs and design a collection of a series of operations, "the new concept of enterprise logistics cost control has become inevitable.

(A) the process of procurement and supply of logistics cost control
In the process of procurement and supply, logistics costs incurred include the cost of order processing, raw materials, acceptance, quality costs, handling costs, transportation costs, storage costs and labor costs. The procurement process, we must consider the cost of internal control, and suppliers also need to produce the various operations on the cost to reach a consensus to form a win-win situation. From the perspective of the value chain, suppliers of goods or raw material suppliers throughout the value chain in the logistics of the early beginning stage. choose a different supplier jobs are not the same place. According to Kaplan library platinum and the definition of the total cost of ownership, supplier selection occurred calculating the total cost of the mathematical model:
S = PQ + ΣCiDij + F
Formula, S said that the total cost of supplier selection; P said the supplier's unit selling prices; Q, said the number of purchases; Ci item that occurred in the first i operations cost driver rate; Dij that job j, the cost of consumption Cause number of i; F that the total fixed costs.

Suppliers through a comprehensive analysis of the resulting total cost, discount terms and other aspects of information delivery time, we can determine the best suppliers. Using the above formula the total cost suppliers as follows: First of all initially selected suppliers to determine the purchase and suppliers, the number of unit sales prices; and then determine the occurrence of business operations for the provider to calculate the number of cost driver rates and cost drivers; then calculated the total costs caused by suppliers; the last comprehensive analysis of all factors, the best supply of selected providers.

Specifically, the choice of suppliers and related businesses, they should consider the following key issues: to reduce transport and handling purposes, the supply of large quantities; procurement sites as close as possible away from the factory; procurement and supply of raw materials, parts standardization, facilitate the technical processing; to reduce the labor, the use of automated supply management; to supply the bearer of the task the task as much as possible; strengthen the basic work of procurement and supply activities (record) control.

(B) of the production process, the logistics cost control
In the production process, logistics costs incurred include: labor costs (working days, the number of working hours), production preparation costs; raw materials, semi-finished products and packaging items missing; workshop and cross-plant transfer freight; handling, storage and production equipment maintenance, fuel and power costs, spare parts and spare parts costs. from the perspective of the value chain, logistics cost in the production process control by the control of many areas, such as the design aspects, production processes and so on. to improve the entire value chain value should work for all of the corresponding cost analysis, and make corresponding improvements.

1. From the design point of view of logistics cost control
Traditionally, product design, logistics needs to consider, only for the protection of product packaging design. But in the actual product delivery process, can often hear the complaint: If the product volume is lower than that, you can completely fill the entire container; large amount of packaging boxes increased to 125 if, in the warehouse will be able to accommodate 10% in the other. In the past, San Jiu Wei Tai Capsule capsule and Ganmaoling either side of the box two elements on the left is the bar code the right is the production date and product lot number, and later, designers will swap their position a bit of printing. On the surface, this small change seems pointless, but in the pharmaceutical production plant workers is likely that this change is too Well, not only can improve the speed of a code to the box, but also greatly reduces scrap. Links http://www.hi138.com Research Papers Download from the design point of view of logistics cost control, means that do not affect customer demand or only a minimal impact of the premise, adjust the product's physical attributes, thereby enhancing the efficiency of the logistics phase, reduce logistics costs. Of course, to do this, personnel and logistics staff to design an effective communication mechanism between.

2. From the production point of view of logistics cost control
There is no doubt that the way manufacturing determines the frequency of purchase, how much inventory to determine the logistics expenses. For example, in production management, based on the frequency of production of small quantities, or to focus on high-volume production, the corresponding logistics and cost are very different. in fact many of the logistics cost is in production occurred within and without good logistics support, production efficiency will be seriously affected. I believe that the following three changes from the production and management, without reducing under the premise of production efficiency to reduce logistics costs.

One is to improve the process. To improve the process means not only removing unnecessary processes, too complex or time-consuming operation, but also require managers to meet the need to transform production processes of logistics, if the resulting reduction in logistics costs than The corresponding increase in production costs, the total is worth a look. Second, standardized parts. Parts standardization is corny, but it does effectively reduce logistics costs. a printer manufacturer in the components of their products reduced from 105 After the 46, not only various types of products can use the same parts, improved product quality and maintenance of the facilities, but also to reduce the inventory of raw materials and semi-finished products. Third, the speed of production and sales to keep pace. On average, inventory costs account for 20% of the total amount of stock to 30%, so very important to maintain low levels of inventory. If the level of production can keep pace with changes in sales, the inventory will be reduced to a minimum and is stable, which Inventory management is undoubtedly good news.

Overall, logistics costs in the production process in addition to the above two basic strategies for controlling other also includes: means of production automation, regular production investment, improve labor productivity; to the lowest labor costs as a standard to determine the site; identify the scale of production, volume; rely on technology development, technology innovation and maximizing the effectiveness of the procedure; establish a sound and timely reflection of the state's accounting of production and business activities and logistics cost control system.

(C) of the sales process, the logistics cost control
The sales process occurs mainly in the logistics costs include: transportation costs; warehousing costs; order processing costs; return cost; computer information processing costs; artificial direct and indirect costs. From the sales point of view, often in order to win customer loyalty, and do everything possible to provide a variety of convenient services, but is well known that the existence of logistics costs and logistics services, anti-back effect, to improve service levels, inevitably a corresponding increase in logistics costs.

Related costs in the logistics department, sales department has a tendency to limit the provision of logistics services, with little regard the resulting costs. Therefore, the process of selling the logistics cost control means that companies providing logistics services to customers should be limited also means that sales have consciously influence and shape the customer. customers to purchase different products enterprises, enterprises of different consumption of resources. customer profitability management as shown in Figure 1.


Generally speaking, customers are usually made in many aspects of high demand, such as the discount rate, credit, delivery, etc., so often the higher cost of services, resulting in lower gross profit margin; smaller customers, the purchase of less , the total logistics costs lower, but profits are lower; the middle of customer service costs, less demanding, but also have more purchasing power, the overall logistics cost can be controlled in a more appropriate range.

Logistics costs in the sales process control, in addition to the above on the dealer or customer choice and control, it also includes the following basic control strategy: Select transportation equipment, the optimal size of inventory and best spatial arrangement in order to minimize transportation costs; reasonably determine the warehousing, logistics means to select the function of supporting complementary; reduce delivery point, and in consultation with users simplify the trading constraints; encourage users to purchase large quantities as possible; reasonable to expand the scale of transportation and warehousing; labor productivity was central to the development of personnel policies signed fixed contracts and so on.

(D) after-sales service logistics cost control process
After-sales service logistics costs in the process include: the maintenance staff; maintenance of the network and the implementation of the fee; spare parts, tools, inventory costs; technical papers published fee; use of operator training; maintenance engineer training; service information system operating fees.

In order to more effectively service the logistics cost control process, the basic strategies include the following: adjust the quantity and distribution of after-sales service network; adjust the scope and level of service; in product design stereotypes, the introduction of after-sales service forecast cost concept; focus a number of commodities, while providing services to form a service economy of scale; establish automatic diagnosis, troubleshooting, telephone, telex and other customer service systems; development of rapid formation of maintenance replacement, the maintenance man after the concentration of the bulk treatment.


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