Cost to Serve
The Cost to Serve template shows what it costs to serve each customer and what margin is left after it. It is built on the Common Finance Model, so it works from whichever ERPs feed the project, and it includes everything Enterprise Profitability builds.
How It Works
Section titled “How It Works”- Operating expense is pooled by entity, period and the department it is booked to.
- Each pool takes the activity and driver that your activity map names for its department.
- Each customer’s drivers come from the project’s invoiced sales lines.
- Each pool is split to customers by its driver, within entity and period.
A pool whose driver has no positive value for that entity and period passes through with no customer, so the split always adds up to the pool.
The Activity Map
Section titled “The Activity Map”The activity map is the table cts_activity_map. It is yours to edit, and the model never writes to it. Each row gives a department an activity and a driver.
| Column | What it holds |
|---|---|
department |
A department code, or * for every department not listed. |
activity |
The name of the activity, such as Warehousing. |
driver |
What to split that department’s cost by (see below). |
| Driver | Splits cost by |
|---|---|
orders |
Each customer’s number of orders (distinct invoices). |
lines |
Invoice lines. |
quantity |
Units handled. A return is handled too, so it counts by its size. |
revenue |
Net revenue, with credit memos netted. |
The sample data ships with departments SALES, SERVICE and OPS, and a * row for the rest. Change them to your own departments and activities, then click Apply changes on the Foundation tab.
What You Get
Section titled “What You Get”| Output | Holds |
|---|---|
cts_by_customer |
By entity, period, customer and activity: the cost to serve, and the customer’s revenue, cost of goods sold, gross margin, net margin after cost to serve and orders. |
cts_per_order |
Cost to serve per order. |
cts_tie_out |
The ledger’s operating expense against the cost spread to customers, by entity and period. The difference is 0 when nothing was lost or counted twice. |
Metrics for the assistant and dashboards: Cost to Serve, Net margin after CTS, Orders and CTS per order, by entity, customer or activity. Cost with the activity Unmapped, or with no customer, is operating expense that no activity or driver could place.
Start a Project
Section titled “Start a Project”-
In Analyze, open Projects and click New Project.
-
Under Start from, choose Cost to Serve (template). Tick Start with sample data to see a worked example first.
-
Connect your ERPs and run Load. See Get Started With Data Foundation.
-
Edit the activity map for your departments and click Apply changes.
Save your activity map with the project by using Actions > Save as my template…. See Save as My Template.