ABC Logistics is a Toronto-based logistics company with customers in 5 key Southern Ontario markets, London, Kitchener, Milton, Downtown Toronto and Scarborough. The CFO has just presented the companys financial report based on their SAP ERP system data.

In addition, he is recommending that given customer trends in the nearby Scarborough Market they should focus on capturing the growth in this market and probably drop the London market given its distance away from the Toronto base.

Build a Cost-To-Serve Analysis Table to compare each customer, using the additional Supply Chain operational data that has been sourced from ABCs WMS, TMS and Order Management System and answer the following questions.

1. Which MARKET LOCATION is the WORST PERFORMING Net Profit MARKET LOCATION?
2. Should ABC Logistics abandon the London Market? Provide data and supporting reasons to for your answer
3. Should ABC Expand into the Scarborough Market? Provide data and supporting reasons for your answer

ASSUMPTIONS

1. Delivery Cost = $1.00 per pallet per KM
2. Ordering Cost
   1. $250 per Electronic order
   2. $500 per manual order

Gross Sales Customer Location Distance (KM) # Orders Order Process Discount Rate Value Customer 1 Kitchener 100 250 Electronic $ 1,250,000 5% London 200 1,125,000 8% Customer 2 Customer 3 8 990,000 10% Toronto Scarborough Milton 10 Customer 4 Customer 5 1,035,000 30 835,000 Kitchener 100 225 Electronic 198 Manual 207 Manual 167 Electronic 178 Manual 301 Electronic 245 Electronic 189 Electronic 180 Manual Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 $ $ $ $ $ $ $ $ $ 200 London Toronto Scarborough Milton 8 7% 11% 5% 8% 11% 8% 5% 890,000 1,505,000 1,225,000 945,000 900,000 10 30 Returns Costs Pallets Customer Location Product Costs Handling Cost/Pallet SG&A Costs (% of Gross Sales) Processed (% of Gross Sales) 7% 7% 60 625,000 337,500 65 Kitchener London Toronto Scarborough Milton 9% 9% 15% 7% 100 10% 125 5% 100 15% Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 $ $ $ $ $ $ $ $ $ $ 1000 $ 500 $ 12500 $ 15000 $ 750 $ 500 $ 5000 $ 10000 $ 10000 $ 1100 $ Kitchener 70 594,000 621,000 417,500 445,000 602,000 367,500 472,500 540,000 6% 100 7% 7% 4% 5% 10% 10% 10% 45 London Toronto Scarborough Milton 15% 130 16% 125 18% ABC Logistics - Income Statement TABLE 1 2,140 9,100 Total Orders Total Pallets Processed Gross Sales Volume (GSV) $ Trade Terms (Discount) - TT $ NET Sales Volume (TO) $ Supply Chain Costs (SCC) $ COGS $ Total Operating Costs $ Gross Profit (GP) $ Gross Profit Margin (GPM) SG&A & Order Costs $ Net Profit (NP) $ Net Profit Margin (NPM) 10,700,000 836,050 9,863,950 2,104,300 5,022,000 7,126,300 2,737,650 26% 1,941,400 796,250 7% Gross Sales Customer Location Distance (KM) # Orders Order Process Discount Rate Value Customer 1 Kitchener 100 250 Electronic $ 1,250,000 5% London 200 1,125,000 8% Customer 2 Customer 3 8 990,000 10% Toronto Scarborough Milton 10 Customer 4 Customer 5 1,035,000 30 835,000 Kitchener 100 225 Electronic 198 Manual 207 Manual 167 Electronic 178 Manual 301 Electronic 245 Electronic 189 Electronic 180 Manual Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 $ $ $ $ $ $ $ $ $ 200 London Toronto Scarborough Milton 8 7% 11% 5% 8% 11% 8% 5% 890,000 1,505,000 1,225,000 945,000 900,000 10 30 Returns Costs Pallets Customer Location Product Costs Handling Cost/Pallet SG&A Costs (% of Gross Sales) Processed (% of Gross Sales) 7% 7% 60 625,000 337,500 65 Kitchener London Toronto Scarborough Milton 9% 9% 15% 7% 100 10% 125 5% 100 15% Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Customer 8 Customer 9 Customer 10 $ $ $ $ $ $ $ $ $ $ 1000 $ 500 $ 12500 $ 15000 $ 750 $ 500 $ 5000 $ 10000 $ 10000 $ 1100 $ Kitchener 70 594,000 621,000 417,500 445,000 602,000 367,500 472,500 540,000 6% 100 7% 7% 4% 5% 10% 10% 10% 45 London Toronto Scarborough Milton 15% 130 16% 125 18% ABC Logistics - Income Statement TABLE 1 2,140 9,100 Total Orders Total Pallets Processed Gross Sales Volume (GSV) $ Trade Terms (Discount) - TT $ NET Sales Volume (TO) $ Supply Chain Costs (SCC) $ COGS $ Total Operating Costs $ Gross Profit (GP) $ Gross Profit Margin (GPM) SG&A & Order Costs $ Net Profit (NP) $ Net Profit Margin (NPM) 10,700,000 836,050 9,863,950 2,104,300 5,022,000 7,126,300 2,737,650 26% 1,941,400 796,250 7%