Alahmari, Khalid H (2023) The Role of Time-Driven Activity-Based Costing in Integrated Supply Chain Management: An Empirical Study of Modelling Operational Costs at 4PLs. PhD thesis, Victoria University.

Abstract

Supply Chain Management (SCM) has been evolving remarkably since the 1980s as more businesses prefer to outsource their logistics activities to logistics companies. As a result, logistics companies have introduced more value-added services to satisfy their customers' needs. However, this service expansion is risky if logistics companies fail to accurately calculate costs. Previous researchers investigated the cost of logistics activities using different costing models, including the Time-Driven Activity-Based Costing (TD-ABC). However, most of these studies focus on traditional storage and transportation services and ignore the new services, such as Demand Planning and Procurement. There are three research aims for this research. First, to explore how the TD-ABC system can model the costs of integrated logistics activities in Fourth-Party Logistics (4PL) companies. Secondly, to find out how the TD-ABC system will differ from the traditional ABC system in modelling the logistics activities costs. Thirdly, to explore how the TD-ABC system can help logistics companies evaluate their customers' profitability in more depth than the profit and loss statement and the SC system report. A case-study design was used to conduct this research on a Saudi-based 4PL company. The researcher conducted six semi-structured interviews with the department managers at the case company to understand the business model, services, and customers in advance. Next, he observed the logistics operations for three months to estimate the steps and time needed to perform activities. Finally, he collected operational and financial records for Q1-2021 to develop a simulated TD-ABC system accordingly. This research shows that the TD-ABC system can accurately capture the cost of complicated and lengthy logistics activities. In addition, the TD-ABC model has been proven to be more accurate than the ABC model as it can distinguish between the costs of productive capacity and idle capacity. Finally, the TD-ABC system showed an excellent capability to be used as a tool for customer profitability analysis. In conclusion, this research should contribute to both knowledge and practice as it provides new insights on how to model the cost of new-era logistics services. A step-by-step guideline for designing a TD-ABC system in a 4PL company is presented in this research, and it can be used as a model by new researchers and practitioners. Moreover, by exploring the Open-Book Accounting (OBA) practice within the 4PL sector, this study unveils a novel perspective on cost transparency and cooperative financial relationships between logistics companies and their clients, enriching the discourse on financial management in modern logistics operations. Finally, this research introduces a new framework that synergies TD-ABC with the company’s vision. This study positions the proposed framework as a foundational idea for future studies that aim to bridge the gap between cost data and the company’s strategic goals, especially in the 4PL industry.

Search Google Scholar

Repository staff login