Activity-based costing (ABC) is a method that assigns costs to products and services based on the resources they consume. Here's why ABC directly reflects logistics performance:
* Cost Allocation: ABC assigns costs to specific logistics activities (e.g., warehousing, transportation, order processing) rather than spreading costs evenly across all products.
* Performance Measurement: By linking costs to specific activities, ABC provides insights into the efficiency and performance of each logistics function.
* Cost Drivers: Identifying cost drivers helps in understanding the factors that influence logistics costs, enabling better decision-making and process improvements.
* Detailed Analysis: ABC allows for a more granular analysis of logistics costs, highlighting areas where performance can be improved to reduce costs.
References:
* Cooper, R., & Kaplan, R. S. (1991). The Design of Cost Management Systems. Prentice Hall.
* Drury, C. (2013). Management and Cost Accounting. Cengage Learning.