Cost modeling in logistics using time‐driven ABC

Abstract

Purpose -The purpose of this paper is to describe the experiences of a wholesaler with time-driven activity-based costing (TDABC). Three research questions are addressed: How are complex logistics operations modeled by TDABC? Does TDABC provide more accurate cost information than activity-based costing (ABC)? How is TDABC cost information used? Design/methodology/approach -Case study research was performed at a Belgian wholesaler. Interviews were conducted. The cost and activity database was analyzed.Findings -This case study illustrates that there are logistics operations that cannot be modeled using a single cost driver, as is done with ABC. TDABC uses time equations to estimate the time spent on each activity. The results herein show how the time equations can capture the different complexities, by including different terms or interaction terms in the time equations. The database analysis clearly demonstrates that TDABC provided more accurate cost information than ABC at this case company. ABC oversimplified 64 percent of the activities, and misallocated 55 percent of all indirect costs. Research limitations/implications -This study is one of the first, investigating the experiences with TDABC. The results are derived from analyzing all activities, at a single case company. Practical implications -The study illustrates the technique of TDABC and provides a real company example of time equations in logistics. The users declared the TDABC model very useful for profitability reporting and profit management. The time drivers provided insight into the causes of excessive distribution and logistics costs. Originality/value -This paper complements current discussion on cost drivers and subtasks and logistics costing.

The Importance of Systems for Controlling Logistics Costs in the Supply Chain: A Case Study from the Slovenian Automotive Industry

“…The first group of authors focused on the development of managerial methods for systemic costs management. The foundations of the modern study of costs were built by Kaplan, Cooper, Atkinson [9] with the Activity-based Costing Method, which several studies on logistics are later based on, and which different authors [10][11][12][13][14][15][16][17] developed for the purpose of controlling costs across the various segments of a company's logistics operations. In a wider study, Ellstrom [18] analysed logistics cost management methods and their usability for purchasing.…”

Improving Library Management by Using Cost Analysis Tools: A Case Study for Cataloguing Processes

“…For this case study, qualitative interview data with quantitative data analysis were combined following the six steps presented by Everaert, Bruggeman, Sarens, Anderson and Levant (2008) to calculate the cost of activities through the TDABC model. These steps illustrated in Table 1 are described in detail by Siguenza-Guzman et al (2014).…”

“…students hired to perform secondary activities), equipment, and technology. Conversely, examples of indirect costs included stationery, electricity, support, telephone, training, and other items used to perform an activity (Vazakidis & Karagiannis, 2009 (Everaert et al, 2008).…”

Application of the TDABC model in the logistics process using different capacity cost rates

“…It can be found some references in the literature linking Activity Based Costing (ABC) systems and logistics costs (e.g. Baykasoglu & Kaplanoglu, 2008;Dalci, Tanis & Kosan, 2010;Everaert, Bruggeman, Sarens, Anderson & Levant, 2008;Fernie, Freathy & Tan, 2001;Goldsby & Closs, 2000;Pernot, Roodhooft & Van den Abbeele, 2007). But there is a need for more and better applications of costing systems in the logistics context.…”