Context :

A logistics company sought to strengthen its competitiveness by optimizing service delivery costs. Existing reports, built on broad allocation keys, could not pinpoint low-value activities or provide an objective view of cost-to-serve by customer, site, and route. Amid price pressure, volume volatility, and rising spend on energy, fuel, and subcontracting, management needed sharper operational and financial visibility to steer contract margins, secure Service Level Agreements (SLAs), and inform pricing decisions. A patchwork of heterogeneous indicators and weak cost traceability made trade-offs difficult, particularly between upstream transport and last-mile distribution, warehousing, and order fulfillment.

Approach :

We deployed Activity-Based Costing (ABC) to develop a granular map of transport, warehousing, and order-management activities—spanning receiving, pick/pack, dispatch, and returns.

• ABC modeling: We defined the relevant cost drivers—labor hours, square meters and pallet-days, kilometers and stops, handling time, and outsourced services—then assigned costs to activities and traced them through to services, customers, and sites. This created a transparent, reconciled view of cost-to-serve across the network.

• Integrated reporting: We embedded dynamic dashboards within the existing ERP/BI landscape to visualize costs by activity, service, and customer, including cost per order/line/pallet, cost per kilometer/stop, and contract-level margins. The solution enabled drill-down from P&L to operational drivers and supported scenario analysis.

• Change adoption: We led cross-functional workshops with Operations, Finance, and Commercial teams, trained users on the new indicators, and instituted management routines so teams could act on the insights. This ensured rapid adoption, consistent governance, and measurable impact on pricing, routing, and capacity decisions.

Results :

The ABC review reduced operational costs by 12% by eliminating redundant activities, simplifying flows, and optimizing inefficient routes, without compromising service levels.

The company renegotiated low-margin contracts on a solid fact base, aligned price schedules to the true cost-to-serve by segment, and reallocated capacity toward more contributive customers and services, lifting overall profitability by 8% over twelve months.

Greater transparency improved client relationships through clearer pricing and strengthened internal collaboration across Operations, Finance, and Commercial.

The business now benefits from a single source of truth for costs, scenario-simulation capability to inform commercial decisions, and a performance governance cadence that sustains gains beyond the first budget cycle.