Developing a Distribution Pricing Model for the Case Company
Ketola, Samu (2017)
Metropolia Ammattikorkeakoulu
2017
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201705188938
https://urn.fi/URN:NBN:fi:amk-201705188938
Tiivistelmä
This Master’s Thesis aims to develop a new distribution pricing model for the case company. The company has outsourced its distribution to several distribution contractors, which get paid through the company’s distribution pricing model. The fact that the payment to the contractors that are operating in different areas and with different vehicle types, is based on the same pricing model, brings a great challenge to the equality and transparency of the pricing model. Therefore, this study aimed to revise the current pricing model with the view to possibly change into a better one.
This study, conducted as a single case study, is based on a large scale worktime measurement, key stakeholders interviews and literature review of best practice on the pricing models used in logistics. The study revealed that the current pricing model and system have got to the end of their lifecycle, and it proposes a new simplified pricing model, which is tailor-made for the case company, and aimed to be taken into use.
The new pricing model is based on the fit of the relevant elements from the three commonly known pricing models. First, the elements for fixed costs and actual transactions came from the activity-based costing model. Second, the new model got time-drivers from the time-driven activity-based costing model. Third, quality was included into the model, based on the learnings from the performance-based logistics.
The validation and testing phase of the study shows that the new model can capture the complexity of the activities on a sufficient level, without losing the transparency and cost efficiency. Therefore, next steps towards the implementation of the model relate to the suggested improvements to the route planning and starting the system development to support the calculation of the monthly payments for the distribution contractors.
As the distribution takes a major part of the company’s logistics costs and makes a visible part of the logistics activities for the customers, the importance of the pricing model should not be underestimated. The proposed pricing model can improve the quality of the activities, without losing the cost efficiency.
This study, conducted as a single case study, is based on a large scale worktime measurement, key stakeholders interviews and literature review of best practice on the pricing models used in logistics. The study revealed that the current pricing model and system have got to the end of their lifecycle, and it proposes a new simplified pricing model, which is tailor-made for the case company, and aimed to be taken into use.
The new pricing model is based on the fit of the relevant elements from the three commonly known pricing models. First, the elements for fixed costs and actual transactions came from the activity-based costing model. Second, the new model got time-drivers from the time-driven activity-based costing model. Third, quality was included into the model, based on the learnings from the performance-based logistics.
The validation and testing phase of the study shows that the new model can capture the complexity of the activities on a sufficient level, without losing the transparency and cost efficiency. Therefore, next steps towards the implementation of the model relate to the suggested improvements to the route planning and starting the system development to support the calculation of the monthly payments for the distribution contractors.
As the distribution takes a major part of the company’s logistics costs and makes a visible part of the logistics activities for the customers, the importance of the pricing model should not be underestimated. The proposed pricing model can improve the quality of the activities, without losing the cost efficiency.