Tuesday, 10 June 2014

Logistics Total Cost Approach – Part One

Customers have to be satisfied at any cost. As the customer service is now an essential part of business it is essential that costing are carefully evaluated in your logistics departments. When using the total cost approach in logistics it’s necessary to use two accounting systems. One is the Financial Accounting System and the other is the Managerial Accounting System.

The Financial Accounting system is used in order to create the necessary reports such as the cash flow statements along with the balance sheets and investments. The managerial accounting system focuses more on the internal needs of the company. One of the methods that are used is the Logistics accounting system as this system is able to assist managers with their planning and implementing the logistics system. All of the information gathered can then be used to budget the logistics and discover where resources need to be allocated.

Financial accounting statements are standardised, but the logistics accounting systems are not. This is a different that is essential as often the information that is used differs between managers and companies. The system is more flexible so that users are able to analyse the decisions that are made based upon the logistics costing.

Tomorrow we will look at the logistics total cost approach in further detail to ensure customers remain satisfied and business is able to boom.

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