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Transportation
Industry:
Performance Measurement and
Activity Based Costing
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| | Client: |
| A
transportation company with twenty rail-to-truck, truck-to-rail merchandise transfer
terminals within the U.S.
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| | Problem: | | With
no uniform processes, accounting practice, staffing policy, or physical plant,
the client had no definitive cost structure. Therefore, the business had a revenue
base with no profit / loss measurement. Each terminal had a combination of one,
two or three transfer products and services.
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| | Approach: | | Perform
site surveys to establish performance standards for each process. Develop volume
data, scheduled arrival and departure constraints, cross-dock connection staff
functions and sizing, equipment inventories, and customer requirements. Apply
Activity-Based Costing principles to assign expenses to each task. Divide terminals
into small, medium, and large categories to apply staffing and equipment standards.
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| | Results:
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Client accepted
performance standards for application at all terminals. Costing data
was used to develop standard “start of trip” and “end of trip” costs
for each type of movement. These costs were accepted by the client
and became the basis for ranking terminal effectiveness. Data collected
during this study convinced the client that opportunities for improvement
existed at other locations in the network. |
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