Distribution Expense as a Percentage of COGS

Benchmarking Report

Distribution Expense as a Percentage of COGS

This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Distribution Expense as a Percentage of COGS. Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.


What is Distribution Expense as a Percentage of COGS?

Total distribution expense incurred by the company divided by the total cost of goods sold (COGS) over the same time period, as a percentage.

Why should Distribution Expense as a Percentage of COGS be measured?

Distribution Expense as a Percentage of COGS measures the portion of costs attributed to distribution of goods vs. the direct costs incurred to produce those goods. A high value for this KPI may suggest small order sizes, excessive equipment maintenance costs, ineffective inventory management, costly vendor selection, poor materials handling, expensive warehouse facilities, overstaffed Distribution functions or slow shipment/delivery cycle times. Companies that incur high distribution costs may pass those expenses on to customers in the form of shipping charges, which may cause customer dissatisfaction. Companies can reduce their distribution expenses by consolidating customer orders, setting productivity goals, optimizing packaging materials for different types of shipments, minimizing order errors, etc. While a low value is typically desired for this KPI, excessively low numbers may also suggest that there are inefficient controls in place for managing the direct materials and labor costs of produced goods.


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Frequently Asked Questions

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