< Back to Logistics Glossary

What Is Cost-to-Serve?

Understand how Cost-to-Serve fits into the supply chain

Cost-to-serve is very customer specific and refers to the chain of activities and related associated costs required to get a company's products or services into their customers' stores and onto the shelves. This includes order taking and processing, picking, transporting, invoicing and freighting the order, arranging promotions by sales reps, processing credits and merchandising the product. Cost-to-serve takes into account the portion of a route that truly is dedicated to that customer, as opposed to cost-per-stop which takes the total expense and divides it evenly by the number of stops.