The significance of these costs that occur as a result of servicing customers can
be profound in terms of how logistics strategies should be developed. Firstly,
customer profitability analysis will often reveal a proportion of customers who
make a negative contribution, as in Figure below. The reason for this is very
simply that the costs of servicing a customer can vary considerably – even
between two customers who may make equivalent purchases from us.
Consider the last 15% of customers in the Figure above. How should the suppliers of such firms respond to this condition?