OpsDog KPI Reports

Distribution Expense as a
Percentage of COGS
Benchmarks, Definition & Measurement Details

M P L E A
SA & D AT
E N T
CO NT

2017 Edition www.opsdog.com info@opsdog.com 844.650.2888

Distribution Expense as a Percentage of COGS
Definition & Measurement Details

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 this KPI be measured? How is this KPI calculated?

Distribution Expense as a Percentage of COGS measures the portion of Two values are used to calculate this KPI: (1) the total distribution
costs attributed to distribution of goods vs. the direct costs incurred to

T E N T
expense incurred by the company, and (2) the total cost of goods sold

CON
produce those goods. A high value for this KPI may suggest small order (COGS) during the same measurement period. Distribution expenses

tails!
sizes, excessive equipment maintenance costs, ineffective inventory should include management activities, receiving and warehousing

G E D e n t De
RID
management, costly vendor selection, poor materials handling, expensive inbound deliveries, monitoring product availability, picking and shipping
as u r e m
AB ition & Me
warehouse facilities, overstaffed Distribution functions or slow shipment/ products for delivery, inventory storage, and shipping/transportation. Do

F u ll De
delivery cycle times. Companies that incur high distribution costs may fin not include procurement expenses in this calculation. COGS includes the

se to V i e w
pass those expenses on to customers in the form of shipping charges, cost of the materials used in creating the good along with the direct labor
Purcha
which may cause customer dissatisfaction. Companies can reduce
their distribution expenses by consolidating customer orders, setting
costs used to produce the good. Do not include indirect expenses such
as distribution costs and sales force costs in the denominator.
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.

Related KPIs Formula

Distribution Expense as a Percentage of Total Revenue, Distribution Cost (Total Distribution Expense / Total Cost of Goods Sold) * 100
per Unit Shipped

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Distribution Expense as a Percentage of COGS
Benchmarks & Characteristics of High Performers

Distribution Expense as a Percentage of COGS

(Total Distribution Expense / Total Cost of Goods Sold) * 100

XX Characteristics of High Performers

XX
• KPIs are well-defined, tracked and tied to
XX performance reviews
• Robust self-service options for customer
XX

NT
(online FAQs, etc.)
XX

N T E • Agents cross-trained to handle and resolve

CO
multiple call types

P L E i n g Da ta!
SAM h m a r k • KPIs are well-defined, tracked and tied to

tual Benc
XX agent performance reviews
w Ac
XX

r c h a s e t o Vie Avg (XX)

XX Pu
XX
Sample Size: XX
XX XX KPI Type: XX
XX XX
Unit: XX
XX Is High or Low Best?: XX
High Performers Low Performers

How to read this chart: This chart summarizes the performance gaps between high (Top 5%), mid
(Median) and low (Bottom 5%) performers for this Key Performance Indicator (KPI). For example, the
column labeled “Top 5%” represents a company that outperformed 95% of the peer group observed
for this metric.

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