Introduction
Distribution is usually the most «expensive» function of a logistics chain, but we rarely know exactly where these costs are generated. Activity-Based Costing (ABC) helps to look beyond the accounts and assign costs to each activity, leading to informed decisions.
Using the ABC approach, every step — from loading, routing, and delivery, to returns management and back-office support — is treated as a separate activity with its own cost driver. This reveals inefficiencies that would otherwise remain hidden:
- Routes with low revenue per stop
- Repeated internal movements with no added value
- Uneven resource allocation across regions or customers
ABC is not merely about cost reduction; it provides the foundation for resource reallocation, rational pricing, and data-based decision-making.
Conclusion
ABC is not an accounting exercise — it’s a management tool that drives transparency, KPI alignment, and continuous improvement.
When applied systematically, it builds a culture of efficiency and decision-making grounded in facts, not assumptions.
