“Cost-to-serve”: a transportation cost allocation per delivery point approach.

Nowadays, freight groupage is a common practice, since it represents an effective method for achieving cost savings in collecting or delivering large product varieties in low quantities, by consolidating multiple consignments into one large transport load. Studying problems related to freight groupage is certainly a complex task, since it is influenced by many variables. Costs, for instance, are frequently linked to unplanned operational decisions made by operators on a daily basis, due to the constant presence of unscheduled requests or order changes. In this context, costs are difficult to control and manage. Authors propose a new approach for estimating costs, performances and resource utilizations by presenting a computation method capable of calculating transportation costs per delivery point. Cost allocation is achieved through a method of computation easily applicable to real world contests. Model results may also lead to create a dynamic system, enabling operators to be aware of the effects of their activity in real time. This way, they are constantly alerted and supported in their activities and in real-time decision making, gradually becoming aware of situations capable of creating additional costs and bad service. Thus, the model may both quantitatively assess the effects of the adopted transportation decisions and support in solving daily routing problems. Moreover, applying this approach, companies have major opportunities to improve margins and design new efficient distribution strategies.