What Is Supply Chain Cost as % of Sales?

This ratio shows how efficiently a business converts revenue into delivered product. With the default inputs, a company with $1,000,000 in sales carries $750,000 of supply chain cost ($600,000 COGS, $100,000 logistics, $50,000 inventory holding), so supply chain consumes 75.0% of revenue and leaves a 25.0% gross margin.

Breaking the ratio into its components reveals where the money goes: COGS at 60.0% of sales is the largest lever, logistics at 10.0% is the second, and inventory holding at 5.0% is the most controllable. Benchmarking each component against industry peers helps prioritize improvement projects.

Interpreting the Result

A falling cost-to-sales ratio signals improving operational efficiency; a rising one can indicate freight inflation, waste, or bloated inventory. Track the ratio monthly and drill into the component that deviates from your baseline.