To read this content please select one of the options below:

Cost modeling in logistics using time‐driven ABC: Experiences from a wholesaler

Patricia Everaert (Ghent University, Ghent, Belgium)
Werner Bruggeman (Ghent University, Ghent, Belgium)
Gerrit Sarens (Université Catholique de Louvain, Louvain‐la‐Neuve, Belgium University of Antwerp, Antwerp, Belgium)
Steven R. Anderson (Acorn Systems, Houston, Texas, USA)
Yves Levant (Université des Sciences et Technologies de Lille, Villeneuve d'Ascq, France)

International Journal of Physical Distribution & Logistics Management

ISSN: 0960-0035

Article publication date: 11 April 2008




The purpose of this paper is to describe the experiences of a wholesaler with time‐driven activity‐based costing (TDABC). Three research questions are addressed: How are complex logistics operations modeled by TDABC? Does TDABC provide more accurate cost information than activity‐based costing (ABC)? How is TDABC cost information used?


Case study research was performed at a Belgian wholesaler. Interviews were conducted. The cost and activity database was analyzed.


This case study illustrates that there are logistics operations that cannot be modeled using a single cost driver, as is done with ABC. TDABC uses time equations to estimate the time spent on each activity. The results herein show how the time equations can capture the different complexities, by including different terms or interaction terms in the time equations. The database analysis clearly demonstrates that TDABC provided more accurate cost information than ABC at this case company. ABC oversimplified 64 percent of the activities, and misallocated 55 percent of all indirect costs.

Research limitations/implications

This study is one of the first, investigating the experiences with TDABC. The results are derived from analyzing all activities, at a single case company.

Practical implications

The study illustrates the technique of TDABC and provides a real company example of time equations in logistics. The users declared the TDABC model very useful for profitability reporting and profit management. The time drivers provided insight into the causes of excessive distribution and logistics costs.


This paper complements current discussion on cost drivers and subtasks and logistics costing.



Everaert, P., Bruggeman, W., Sarens, G., Anderson, S.R. and Levant, Y. (2008), "Cost modeling in logistics using time‐driven ABC: Experiences from a wholesaler", International Journal of Physical Distribution & Logistics Management, Vol. 38 No. 3, pp. 172-191.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

Related articles