case - activity based costing in supply chains · 2016. 4. 5. · • base principle: cost...
TRANSCRIPT
Case - Activity Based Costing in Supply Chains
April 18th, 2013
Supply Chain Innovations 2013, Antwerp
Presentation by Mohamed Lasgaa
2
Multidisciplinary Team
47 years Consultancy
Logistics
Construction Management & Engineering
Supply Chain Management
Supply Chain Strategy > Implementation
Transition Support
3
The Customer
• Business model: Multi Level Marketing
• No retail or store channel, but sales via networks
• Gross sales: $ 3.0 billion (2012)
• Sales network: 9.5 million distributors in ca. 90 Countries
CUSTOMER PROFILE
• Distribution activities back as core business (Back-sourcing )
• Centralization, which countries?
• Servicing a new customer type (distributor)
• Business Case - payback within 3 years
• New pricing setup
VOICE OF THE CUSTOMER
4
Forever Living’s Supply Chains PREVIOUSLY
Main challenges
• Direct shipments: no inventory point(s) between factories and country DC’s.
• Product labeling for bigger countries
• Poor demand FCST
• Long lead times
• Very low flexibility
• High inventory levels in the SC-network
• High SC-costs of CoGS
Americas EMEA APAC
5
Forever Living’s Supply Chains TODAY (IN PROGRESS)
Setup new Legal Entity (Forever Direct EU) to serve EMEA region
• Decoupling country DC’s from the factories
• Setup Outsourced EMEA-DC to replen country DC’s
• Fine distribution remains in the countries
• Improved visibility & demand FCST
• Reducing lead times
• Reducing stock levels
• Increasing flexibility
6
Forever Living’s Supply Chains NEAR FUTURE (IN PROGRESS)
• Back-sourcing of bulk Replen
• Centralization of fine distribution activities with postponement manufacturing (country specific labeling)
Setup new:
• EMEA DC
• Processes
• Logistic & IT-systems
• Organization
• Cost Pricing Model
Supply Chains Savings:
• OPEX (14%)
• Working Capital (32%)
• Cost transparency
7
Cost Pricing Model in Logistics APPLYING ACTIVITY BASED COSTING & ACTIVITY BASED MANAGEMENT
• ABC was mainly used by production companies, today also by service providing companies (i.e. Banking & Insurance, LSPs, …).
• Base principle: cost allocation of indirect costs to activities.
• Activity Based Management is Cost Management based on ABC-info for:
Cost (re)allocation
Cost reduction program
Improving product/customer profitability
Sensitivity analyses to simulate cost impact
Explaining cost implications (i.e. rush order)
Benchmarking of similar customer profiles: advice on best practices to reduce their own cost.
• Main concerns/focus areas are: Allocation of fixed/indirect costs (i.e. Mngt)
Customer changes impacting other customers
Data availability: access to and transparency of info
Level of complexity: Keep it simple
Resources
Direct Cost
Indirect Cost
Activity
Cost Drivers
Tariffs
Products
Services
Activities
Resources
8
Cost Pricing Model in Logistics
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
SNAPSHOT ACTIVITY BASED COSTING MODEL
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
9
Cost Pricing Model in Logistics SNAPSHOT ACTIVITY BASED COSTING MODEL
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
10
Cost Pricing Model in Logistics SNAPSHOT ACTIVITY BASED COSTING MODEL
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport Cost
Drivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
11
Cost Pricing Model in Logistics SNAPSHOT ACTIVITY BASED COSTING MODEL
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport CostD
rivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
Status: OK Scenario: 12/04/2013
Investment phase: 1 Line-haul SHARED
Indirect FTE Occupation: 2013 Final-Mile DIRECT
Year and Quarter: 2013 Q4
Date:Version: 4.6, 23-11-2012OK
CAPEX Orders
Parameters
FTE
OPEX
Transport Cost
Drivers
Tariffs
Volumes
Productivity
Inbound Outbound VAS
Margin & Interest
P&L
Forecast
Bulk OF
Main Menu
Cost sort Cost type Costs Cost Driver
Rent office 68.571€ Direct labor costs
Rent warehouse (bulk) 720.000€ Cases Outbound (Bulk)
Rent warehouse (OF) 342.857€ Cases Outbound (OF)
Rent warehouse (VAS) 68.571€ Eaches (Labeling+Kitting)
1.200.000€
MHE Lease costs 100.000€ Cases Outbound (Total)
100.000€
Indirect 2.066.500€ Direct labor costs
Direct 2.106.187€
4.172.687€
Equipment 462.948€
IT - Hardware 154.672€
IT- Software 324.692€
Tenant Improvement 116.000€
Start-up / Project Management 150.145€
Others 41.704€
1.250.161€
Outbound pallets 52.995€ Cases Outbound (Total)
Shipping cartons 954.513€ Parcels Outbound (OF)
Product labels 1.016.434€ Parcels Outbound (OF)
Shipping labels 30.089€ Parcels Outbound (OF)
A4-Docs (packing list & invoice) 40.199€ Parcels Outbound (OF)
2.094.230€
Inbound Documents 240.000€ Cases Outbound (Total)
Inbound Freight 260.000€ Cases Outbound (Total)
Outbound Bulk 2.303.507€
Outbound OF (Line-Haul & Last mile) 8.914.286€
Transparix license 63.978€ Parcels Outbound (OF)
11.781.771€
Conveyor (3.6% including spare parts) 88.000€ Orderlines (OF)
VAS labeling machines 3.570€ Eaches Labeled (Labeling)
IT - Hardware 21.771€ Orderlines (Total)
IT - Software 32.469€ Orderlines (Total)
Scanners 2.000€ Orderlines (Total)
Building 125.000€ Cases Outbound (Total)272.810€
HRM 85.277€ Direct labor costs
Energy 90.000€ Direct labor costs
ICT 61.505€ Direct labor costs
Supplies 20.253€ Direct labor costs
Insurance 121.307€ Direct labor costs
Others 144.825€ Direct labor costs
Holding costs -€ Cases Outbound (Total)
523.167€
Total 21.394.827€
Building
OPEX
Others
Wages
Depreciation
Logistic Consumables
Maintenance
Transport & Documentation
6%
0%
20%
6%
10%
55%
1%
2%
OPEX by cost sort
Building
MHE
Wages
Depreciation
Logistic Consumables
Transport & Documentation
Maintenance
Others
45%
13%1%
35%
6%
OPEX by cost driver
Direct labor costs
Cases Outbound (Total)
Eaches (Labeling+Kitting)
Parcels Outbound (OF)
Cases Outbound (OF)
Mohamed Lasgaa
Senior Consultant
SCM & Logistics
www.linkedin.com/in/mohamedlasgaa
www.groenewout.com
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THANK YOU VERY MUCH FOR YOUR ATTENTION
C O N S U L T I N G , E N G I N E E R I N G & O P T I M I Z A T I O N I N L O G I S T I C S N E T W O R K S