Cowmilka is a dairy products producer. Its logistics cost centre has 65 employees and a fleet of 25 milk tankers. It is a cross-functional cost centre with administrative staff (customer service and order processors), mechanics and tanker drivers. Tanker drivers collect milk daily from farmers and deliver it to the various Cowmilka manufacturing plants. There is also a team of 10 human resource (HR) staff that oversee the health and safety training programs for all Cowmilka operations. For example, nearly all Cowmilka’s employees are required to possess up-to-date food handling, health and safety qualifications, and pass a short computer-generated health and safety test before entry is allowed onto any of Cowmilka’s operational sites.

The board has raised concerns about cost control within the logistics department. In spite of increasing the incremental rate of funding to the logistics cost centre every year, it appears it will, yet again, run into deficit before the end of this financial year.

Required

What advice can you give the board to better control the logistics cost centre’s costs?