< Back to Logistics Glossary

What Is Avoidable Cost or Cost Avoidance?

Understand how Avoidable Cost fits into the supply chain

In logistics, an avoidable cost is the cost of an activity that can be avoided if that activity is not performed, resulting in a monetary savings. Avoidable costs are typically variable costs, while most fixed costs are unavoidable. Avoidable costs can include things such as labor costs or packaging. As an example, within a warehouse, organizational tools such as racks, are unavoidable. However, upgrading to the high-end, most expensive racking solutions is an avoidable cost when general, less-expensive racks would work.