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Problem

A key goal in logistical management is to find the optimum balance of logistical cost and customer service that yields optimal profits. Explain.

Step-by-step solution

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Step 1/3

A dilemma that arises before various companies is to determine the cost of providing logistic services by the company. The companies should be in a position to determine the impact of the services provided by them onto the customers.

Step 2/3

In most of the industries there are various forms of supply chain services such as next-day delivery, specialized labelling and customized handling. In delivering such types of services companies often incur an extra cost.

In most of the cases companies do not track the cost of providing these extra services and the impact of providing these services on the customer’s profitability.

Step 3/3

In order to measure this problem many companies are using the cost-to-service analytics. Many companies are using such analytics in order to measure the effect of providing additional services on the company’s profitability

Thus, the data obtained through the use of analytics has been used by the companies is shared with vendors and suppliers in order to change the system and make the process of delivering services more profitable to the companies.