Operations Costs Per Order Model

Situation

A direct-to-consumer (D2C) condiment startup in the United States was trying to better understand the operations costs per order.  

 

Challenge

A D2C condiment startup was selling its products via various e-commerce channels with low profit margins. The client needed to better understand the critical cost drivers and was also looking for a cost-per-order model to support in the decision making behind setting the price points for the e-commerce channels.  

 

Action Steps

Rene conducted a comprehensive total-cost and cost-per-order analysis, including ingredients, co-manufacturing, packaging material, storage, pick & pack, fulfillment, and e-commerce sales channel fees. 

He then developed a cost-per-order model that could easily be used for various SKUs and pack sizes and identified main cost drivers and cost saving opportunities. 

 

Results

The assessment revealed that a re-design of the packaging would result in significant cost savings of more than 30%. 

The client was provided with a cost-per-order model for various SKUs and pack sizes with targeted profit margins.  

LogiChain Solutions, LLC

San Francisco, CA

info@logichainsolutions.com

Tel: 415 795 2269

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