Logistics cost breakdown can be used for an initial quick assessment of your supply chain. Since each company allocates costs differently, these breakdowns should be used with care. If costs in an area are 30% or 40% more than the norm shown below, than that indicates that the area deserves a closer look. As a percent of sales, the total supply chain costs (including transport, inventory, and administration) should be in the 7% to 9% range.


One effective measure of inventory health is the percentage of existing inventory that will be consumed by the forecast, orders, and planned production in the next 30 days. This metric can account for product substitutions, and the ability to move material between one location and another.


World class supply chains operate at an inventory velocity that is in excess of 75%.