Tuesday, 19 August 2014

What is the Total Cost Approach to Logistics?

Intrafunctional logistics focuses on the coordination of the inbound logistics and material management as well as cost efficient distribution while supporting the customer service’s goals. All of these activities are coordinated in many different ways and often logistics managers use the total cost approach to find the most cost effective solutions.

The total cost approach is generated the idea that all activities that are found within the moving and storing of goods and products need to be thought of as a whole, their total cost. It uses cost trade-offs, when logistics expenses may increase in one area while decreasing in others.

The main objective is to find the lowest cost options that will still provide the support for the customer services goals. When this approach is used in the decision making process it’s known as the total logistics concept.

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