A service‐costing framework for logistics companies and a case study

Abstract

PurposeThe purpose of this paper is to provide a service‐costing framework for logistics companies that are providing land transportation via trucks.Design/methodology/approachSeveral costing methodologies are combined around activity‐based costing and process modeling and a framework is developed. The developed framework is applied to a logistics company to track its service costs.FindingsAfter the case study is completed, it is concluded that the proposed framework can be very useful for the company in determining their true service costs. Moreover, the service costs of the company become more apparent to them. Results of the costing information were also found very useful to initiate effective process improvement plans.Research limitations/implicationsIn order to execute the model effectively companies need to keep a record of the relevant costing data systematically, otherwise it is not possible to get satisfactory results.Practical implicationsOne of the main difficulties for land transportation companies is to determine and evaluate the true costs of their operations. The proposed framework and case study can be useful for companies in developing their costing systems.Originality/valueThe proposed framework presents how different costing approaches can be integrated to provide effective costing solutions. In the literature it is not possible to find many case studies for the application of modern costing approaches for logistics companies. The present paper fills a gap in the literature by presenting a case study for costing logistics services via modern costing approaches.