With a global market share exceeding 30 per cent, the Höganäs Group
currently holds the position as the world's largest producer of iron powder
and high-alloyed metal powders. The Höganäs Group is currently present in
fourteen countries where local business range from sales companies to fully
equipped production facilities. Good economic growth has brought an
expansion of the global production capacity which has entailed changes in
the logistics structure. As a consequence, the Logistics Department is
lacking a holistic overview of the logistics performance. The purpose of
this study is to obtain an improved overview regarding costs and flows
related to logistics in order to increase the utilization of the global
production capacity. Moreover, the aim is also to use this information for
internal and external comparison, i.e. benchmarking, through which
improvement potentials can be highlighted. Consequently, the objective is
to map logistics costs and flows in order to compile a cost model through
which the above aims could be realized.
The central features of this study comprised the gathering and distribution
of cost data. The initial analysis results in a structure containing three
cost levels through which the identification of relevant data is
systematically approached. Theories suggest that activity based costing
provides fair means to allocate costs with respect to how resources are
consumed. Logistics costs at each level are identified and categorized with
respect to five different activities: Order handling, Planning, Inventory &
Dispatch, Transport, and ERP-system. Empirical research provides the
continuous analysis with the means to allocate all costs to cost objects,
i.e. subsidiaries. The mapping results in a general cost model where the
cost of logistics, expressed per ton of iron powder, is accounted for at
each subsidiary and its respective market. In order to employ the model for
comparison purposes, a benchmarking concept based on theories balanced with
the authors obtained insight regarding the Höganäs Group, is provided.
It is concluded that the cost model is valid and reliable enough to be used
as a basis for decision making regarding the utilization of the Höganäs
Group's global production capacity. The cost model specifies the total cost
for each logistics activity and for all subsidiaries, and aim to highlight
cost variations within the Höganäs Group: information that could be used in
order for the Logistics Department to plan the global production with
respect to the total cost of logistics. Also, along with the benchmarking
con...