Managing the Millennials: Some Approaches
Who are the Millennials and Why are they so Important ? The Millennials or the generation of youngsters born between 1980 and 1995 and so called because of they came of age in the New Millennium is now either entering the workforce or are already part of it. This means that organizations, governments, and managers […]
Role of External Consultants in Business Continuity Management
In previous articles, we have discussed how risk management teams and the management can help in planning for contingencies. In this article, we look at the role that external consultants can play in formulating and shaping a company’s business continuity planning. For starters, the biggest advantage that external consultants have over in house risk management […]
Supply Chain Network and Technology
The entire concept of business philosophy has moved away from traditional model to being more customer oriented, driven by demand and based on collaborative and joint operational strategies across global markets. Supply Chain Networks have in recent times evolved from simple sequential and linear process networks to highly dynamic processes that call for information and […]
Complexity Created by Technology Needs to be Managed
Incompatibility Creates Problems Developments in IT have created more problems than solutions because of the “incompatibility” among the various parts of the supply chain. Information becomes knowledge only when the means to process it is in place and the process does not “distort” the message. Like garbled voices coming over crackling phones in yesteryears, unless […]
Approach to Exports and International Marketing Business Model
Today every individual entrepreneur owned businesses as well as Corporates have changed the way they look at their vision and business planning. Companies how ever big or small are no longer operating in domestic markets alone, for they have at their disposal the entire global market which is just waiting to be captured. The globalization […]
Warehousing Costing methods vary with the business models. While some warehouses using common shared facilities may be worked up based on transaction costs, dedicated and stand alone facilities would be on a different costing model.
In this section, we shall go through the cost elements of a warehouse project briefly.
Warehouse Cost elements are primarily divided into Fixed Costs, Variable Costs and Overheads.
This cost element is included if the land and building are provided by the 3PL and not the buyer.
Incase the land and building is acquired by the 3PL, the cost of land and building may be amortized over the life of the building or as per industry standards (average 10-12 years) and proportionate monthly costs can be added. One needs to ensure that the costs are realistic and nearer to market rates for rentals.
Incase the land and building is rented by the 3PL, the cost of monthly rental along with the cost of funds for security deposit may be added to the costs.
All costs would be worked out for the term of contract period with annual escalations considered annually.
Cost of acquisition of all infrastructure including racks, MHE, Charging equipment, dock levelers and any other equipment including office equipment are itemized and amortized over the contract period or over the shelf life of the equipment as the case may be, to arrive at monthly cost of infrastructure.
IT infrastructure consists of the cost of Hardware & Cost of Software. Hardware covers all servers, desktops, printers, laptops, RF Equipment and any other IT related hardware.
Software application costs include cost of WMS based on one-time fee or individual number of user license, cost of other soft wares including mailing system and any operations related soft wares.
IT Costs are amortized over two or three years depending upon statutory audit guidelines.
Detailed manpower costing will include the cost of Management Staff, Operating staff, in-house operatives and outsourced operatives like labor, MHE Drivers, etc. Outsourced security staff costs are also added under this item heading.
In case of in-house staff, detailed calculations based on cost to the company is worked out including staff benefit, insurance, bonus, training costs, uniform, etc. along with proposed incremental cost over the number of years as per contract period.
Outsourced staff costs are also tabulated for the contract period including annual escalations.
Utilities are not fixed costs. They are monthly variable costs. The items in this category are the costs towards office and communication expenses including telephones, the internet, etc., stationary and consumables both for office and shop floor items like tapes, packing materials, etc., cost of electricity, water, fuel, etc.
Costs of office support, cost of insurance and third party liabilities and travel costs, etc. including any other statutory costs, deposits are covered here.
Cost of management time is estimated and included here. Alternatively, a percentage of corporate or regional office cost overhead is loaded.
Cost of money or interest cost on working capital for three months can be included.
Management fee can be added as a percentage of total cost or a fixed amount.
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