The document discusses time driven activity based costing (TDABC), a method for calculating the actual costs of logistic activities based on time studies and measurements. It provides examples of calculating order picking costs based on theoretical estimates versus actual recorded times. Implementing a TDABC model gives visibility into costs per activity and customer profitability. The model can be adapted if tariff structures or costs change by developing it with changeable dimensions. Contact information is provided for questions.

1. TIME DRIVEN ACTIVITY
BASED COSTING
Else Kuipers
Business Intelligence Consultant
/
Business Analyst - Evangelist
with a great passion for :
- Supply Chain
- Human Resource
- Finance
- General Business Analytics
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SUPPLY CHAIN MANAGEMENT :
CONTINUOUS IMPROVEMENT PERFORMANCE MANAGEMENT STRATE

2. CONTENT
1. Define your costing model.
2. Are your customers profitable enough ?
3. How to know your customer(s) profitability ?
4. Which figures you need to know to implement a TDABC-model ?
5. Advantages of implementing a TDABC-model.
6. Example : - orderpicking 24 hours orders.
7. We can do better with calculating the actuals.
8. What would happen when the tariff-structure or tariffs change ?
9. Contact us.
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3. 1. DEFINE YOUR COSTING
MODEL
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4. 2. ARE YOUR CUSTOMERS
PROFITABLE ENOUGH ?
- What’s the profitability of your customers ?
- Which logistic activity is the most profitable ?
- Which customer isn’t profitable at all ?
- Which storage-zone in your warehouse is the most
profitable ?
- Which ordertype is the most profitable, which isn’t
profitable at all ?
- …
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5. 3. HOW TO KNOW YOUR
CUSTOMER(S) PROFITABILITY ?
- Implementing a Time Driven Activity Based Costing Model
(abbreviation : TDABC)
What does it mean ?
- per logistic activity : calculation of the total handling costs
- full costing and direct costing (you can’t analyze where the
profitability isn’t as
expected)
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6. 4. WHICH FIGURES YOU NEED TO
KNOW TO IMPLEMENT A TDABC-
MODEL ?
- Measuring the logistic processes
- Analyzing the logistic processes
- Time-study to know the average time you need to finish a
certain logistic activity
- Total units per logistic activity
- Salary cost per logistic activity (theoretical approach 
average)
- Formula :
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7. 5. ADVANTAGES OF
IMPLEMENTING A TDABC-MODEL
- A TDABC-Model gives you a detailed overview of all
your logistic
handling costs
per activity. It is the foundation for a customer P&L.
- It gives the possibility to act and to improve directly.
Via SCM Analytics 
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8. 6. EXAMPLE : - ORDERPICKING 24
HOURS ORDERS.
Theoretical :
- 500 cases to pick for the 24 hours orders.
- According to a time study we need 3 seconds to pick 1
case
- Salary cost per hour : € 33,00
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500 * 3 * (€ 33,00/3600) = € 13,75

9. 7. WE CAN DO BETTER WITH
CALCULATING THE ACTUALS. (1)
Actuals :
- 500 cases to pick for the 24 hours orders.
- According to a time registration system (per activity) we
needed
1753 seconds to pick the 500 cases ((1753/500)3,506
seconds per case)
- Salary cost per hour : € 31,42 (based on near real-time
measurements)
500 * 3,506 * (€ 31,42/3600) = € 15,30
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10. 7. WE CAN DO BETTER WITH
CALCULATING THE ACTUALS. (2)
- If you haven’t a Time registration system per activity, there are still
other
possibilities to calculate the actuals, namely :
- time will depend of the time study measurements
or
- we take a calculated % of the total pickingtime needed to finish all
the picking
activities.
or
- …
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11. 8. WHAT WOULD HAPPEN WHEN
THE TARIFF-STRUCTURES OR
TARIFFS CHANGE ?
- We develop an application where the tariff-structures and
tariffs are seen as
changeable dimensions, so we create the possibility to change
your structure or
tariffs without extra intervention of a consultant.
Advantages of this solution : - forecasting is possible without
our intervention
- possibility to implement a new
customer without
extra implementationcosts.
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12. 9. CONTACT US
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: else.kuipers@icloud.com
: +32 478 88 76 62
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CISCPM-group ( ) : ciscpm
Wordpress : https://elsekuipers.wordpress.com/