THE COST, THE MODEL AND THE LOGISTICS ~ A Cost Measurement System at Volvo Logistics Corporation

Abstract

The changing prerequisites in the business environment today, forces companies to focus increasingly on inbound and outbound flows of goods and services in a cost-effective manner.

The information concerning the financial resources plays an important role since it is used to plan, evaluate and control the daily businesses processes. This research project deals with modelling methodology, concerning conceptual model building. The model created is a cost measurement system of logistics services, at Volvo Logistics Corporation Inbound division (VLCI).

The creation of the model is based on the Activity Based Costing concept and has taken place parallel with knowledge building of VLCI and their processes. The model itself has been created using spreadsheet software. The model is adaptive and can easily be adjusted to organisational changes. An Activity Based Costing system enables allocation of costs to processes and cost objects that consume organisational resources.

The model can identify where and how resources and cost are consumed both at process and cost object level. Further the model can be used to obtain financial information that has the potential to benefit VLCI in their managerial decisions concerning, e.g. pricing and evaluation of customers and logistics solutions.