As warehouse operations become increasingly complex, traditional reporting methods based on averages, delayed data, and disconnected systems no longer provide an accurate view of customer profitability.

This is according to new research, Cost-to-Serve: A Stepping Stone to Improve Profitability,  from Easy Metrics, which found that while labor represents 50–70% of warehousing costs, only 25% of respondents actively manage warehouse labor, and just 31% of those organizations consider their Cost-to-Serve capabilities mature or maturing.

“The warehouse has become one of the largest drivers of operational cost, yet many organizations still lack the visibility needed to understand what it truly costs to serve customers,” said Lora Cecere, founder of Supply Chain Insights, and author of the report.

“Organizations that connect labor management, operational data, and financial outcomes are better positioned to improve profitability while maintaining customer service in an increasingly variable operating environment.”

Among the study’s key findings:

• Only 25% of organizations actively manage warehouse labor.
• Data use, cross-functional alignment, and business speed ranked as respondents’ top operational challenges.
• Many organizations continue to rely on labor information that is one to two days old, limiting their ability to respond to changing operational conditions.
• Trust in warehouse labor data remains a significant barrier to broader Cost-to-Serve adoption.
• Organizations that mature beyond labor productivity metrics toward customer-level Cost-to-Serve analysis improve organizational alignment, responsiveness, and profitability.

The report introduces a Cost-to-Serve maturity model that outlines how organizations progress from basic labor productivity reporting to proactive customer profitability analysis. Rather than positioning Cost-to-Serve as simply another financial metric, the research identifies it as a cross-functional business capability built on labor management, trusted operational data, and continuous process improvement.

“Operations leaders have long understood that productivity alone doesn’t explain profitability,” said Dan Keto, president and CTO of Easy Metrics. “This research reinforces that Cost-to-Serve begins with understanding labor at a much deeper level. When organizations connect operational performance with financial outcomes, they gain the visibility needed to make faster, more informed decisions.”

The report also concludes that organizations should prioritize foundational capabilities — including labor management, data quality, reduced data latency, and organizational alignment — before pursuing advanced artificial intelligence initiatives. While respondents identified AI as a promising opportunity, the research found that readiness depends on first establishing trusted operational data.