What Is a Delivery Price?

Distribution Cost is the sum of the fees paid during the distribution process. According to the distribution process and distribution links, the distribution cost is actually the entire process including distribution transportation costs, sorting costs, assembly and distribution processing costs. The distribution cost accounting is a multi-link calculation, which is the integration of various distribution links or activities. The cost accounting of each link of distribution has its own characteristics. For example, the cost accounting of circulation processing and the accounting of distribution and transportation expenses are significantly different, and the objects and units of cost calculation are different.

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Distribution is the activity of distributing and distributing goods at the logistics base according to the user's order requirements, and delivering the matched goods to the receiver. It is a collection of a series of activities such as distribution processing, sorting, picking, sorting, distribution, assembly, and transportation. Only through distribution can logistics activities be finally realized. Moreover, distribution activities increase the value of products, and it also helps to improve the competitiveness of enterprises. However, there is a price to complete distribution activities, that is, distribution costs. The management of distribution is to find a balance between the goal of distribution, that is, to meet a certain level of customer service and the cost of distribution: to maximize the customer service level at a certain distribution cost, or to minimize the cost of distribution at a certain level of customer service. This article focuses on five strategies to minimize distribution costs at a certain level of customer service.

Distribution costs strengthen planning

In the distribution activities, temporary distribution, urgent distribution or unplanned anytime distribution will greatly increase the distribution costs. Due to poor planning in advance, the temporary assembly failed to consider the correct assembly method and the appropriate transportation route. When the delivery deadline was approaching, a special car had to be arranged for single-line delivery, which caused the vehicle to be under-loaded and had more mileage. Emergency delivery often only requires delivery on time, and it is too late to carefully arrange the vehicle assembly and distribution routes, which results in waste of load and mileage. In order to maintain service levels, emergency delivery cannot be refused. However, if carefully checked and there is room for adjustment, emergency distribution can also be included in the plan. Delivery at any time does not make planned arrangements for order requirements, one delivery at a time. Although this can ensure the quality of service, it cannot guarantee the rationality of the equipment and the route, and it will cause a lot of waste.

In order to make a strong delivery plan, a delivery declaration system needs to be formulated. The so-called delivery declaration system is an order application system for retail stores. The basic principle to solve this problem is: on the premise of minimizing the inventory of the retail store and minimizing the loss of the out-of-stock, the order of each retail store is relatively concentrated. According to the characteristics of the product, a corresponding distribution declaration system should be formulated.

(1) For fresh goods, regular quantitative declaration and regular quantitative delivery shall be implemented to ensure the freshness of the goods. Retail stores generally declare once a day, and the quantity of goods shall be controlled within the day when all sales are completed. For products that are subject to regular quantitative declaration, after the quantity of the goods is determined, the branch does not need to declare it except for special circumstances. Delivery by the distribution center on a daily basis based on the rations of the retail store.

(2) For ordinary goods, periodic declaration and periodic delivery shall be implemented, which means that the retail store regularly orders from the distribution center, and the order quantity is the estimated demand between the two orders. The advantages of implementing regular declarations are: First, the demand for goods from various retail stores is relatively concentrated. The retail store also issues an order application at the same time, and the distribution center sorts and summarizes the order form according to the product to complete the distribution. Second, the retail store does not have to frequently check the inventory of each product, reducing the workload. 3. Retail stores sell goods to many individual consumers, with many uncertainties. With regular declaration, the retail store only needs to forecast the demand within a short period of the order cycle, which reduces the business risk. Retail stores regularly issue order applications, and delivery centers regularly deliver. The time interval for delivery is the same as the time interval for ordering, for example, ordering every seven days and delivering goods every seven days. The key issue is how to determine a reasonable time interval. The time is too long, and there must be a lot of shipments each time. This will undoubtedly disperse the inventory in the distribution center to the retail store reserve; the time is too short, and each time the goods are scattered, it will increase the difficulty of distribution and the number of times of distribution. A reasonable time interval should enable the retail store to keep less inventory and not to be out of stock on the premise that the retail store orders are concentrated. In actual operation, it should be determined through data analysis and experience.

Distribution cost determination route

Whether the distribution route is reasonable or not has a great impact on the speed, cost, and benefit of distribution. Therefore, it is an important task to determine a reasonable distribution route using scientific methods. The determination of distribution routes can adopt various mathematical methods and empirical methods developed and evolved based on mathematical methods. Regardless of the method used, certain constraints must be met.

General distribution, the constraints are:

(1) Meet all retail stores' requirements for product variety, specifications, and quantity.

(2) Meet the requirements of retail stores for the time range of goods arrival.

(3) Distribution within the time allowed by the traffic management department.

(4) The amount of goods in each production route does not exceed the vehicle volume and load capacity restrictions.

(5) Distribution within the range allowed by the existing capacity of the distribution center.