Developing a service costing system and an application for logistics companies

Service companies, including those in logistics, constitute the biggest portion of the world's economy. One of the main characteristics of logistics companies is the complexity of their operations and the difficulty in determining proper costing of their services. The portion of overhead cost in logistics is high and yet accurate distribution to different services is critical in relation to competitive pricing. In the paper, a generic framework that combines several costing strategies, such as activity-based costing, target costing, kaizen costing and process modeling, is proposed in order to reach better costing decisions. In addition, a case study is presented, showing the application of activity-based costing, along with target costing and process modeling. The preliminary results obtained from the case have shown that significant potential exists in applying modern costing approaches to logistics companies. © 2006 ISAM