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TRANSPORTATION INDUSTRY:
Performance Measurement and Activity Based Costing |
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Client: |
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A
transportation company with twenty rail-to-truck, truck-to-rail merchandise
transfer terminals within the U.S. |
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Problem: |
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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: |
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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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