Discuss how logistics decisions affect net profit margin in an organization with examples
Functionally, the net profit margin is net profit divided by sales and looking at net profit and
sales as revealed on the income statement indicates multiple ways of influencing the net profit
margin through managerial decisions. For logistics managers, the most important categories to
consider are sales, the cost of goods sold and overall expenses.
• Sales is the total amount of all the goods or services that a company provides to its consumers
for a given period. The primary impact on sales from logistics operations will be by enhancing
customer service. For example, one logistics decision that an e-commerce company could make
would be to grant their customers overnight delivery at no cost. While this type of decision
would need to consider the cost implications of delivering this level of service, the move would
be expected to have a positive impact on customer relationships and sales.
• One cost group is the cost of the products sold. It covers all the costs of products and labor
