Logistics cost control in food processing enterprises based on TD-ABC

Abstract

In order to improve the logistics operation of food processing enterprises and control the logistics cost, this paper starts from the analysis of the logistics operation process and characteristics of enterprises, analyzes the logistics cost classification and composition of food processing enterprises, puts forward the basic process of applying TD-ABC to control the logistics cost, constructs the logistics cost accounting model of food processing enterprises based on TD-ABC, and puts forward relevant logistics cost control methods including the design of logistics cost control system, the determination of logistics cost control points and specific implementation steps. The typical food processing enterprises are selected for the empirical study of logistics cost accounting and controlling. By comparing the cost accounting results of TD-ABC and ABC, the result shows that TD-ABC (Time-Driven Activity-Based Costing) method can accurately grasp the logistics cost composition, identify inefficient logistics operations and non-value-added operations, and analyze the efficiency of various logistics departments, verify the feasibility and effectiveness of logistics cost accounting model and control method system, and provide some advice for logistics cost control and logistics process transformation of food processing enterprises.

Keywords

Food processing enterprises TD-ABC logistics cost control logistics cost accounting

1. Introduction

1.1 Background

Food enterprises are closely related to our lives. The output value of European food industry accounts for 2% of GDP. According to the statistical data of Chinese food industry association, Chinese food manufacturing industry grows by 5.3% in 2019 comparing with other industrial. COVID-19 outbroke around the world in 2020 has had a huge impact on the global economy. According to IMF, the global economy might shrink by 4.4% in 2020, while in the first three quarters of 2020, the economy in China has grown by 0.7%. Chinese economic growth rate has slowed down significantly, which has affected the purchasing power of consumers. Specially in food industry, the problem of food enterprises survival has aroused the concern of the society.

As food enterprises belong to labor-intensive industries, they have low technology content in production, warehousing, distribution and other links, and some sectors are generally controlled manually such as logistics warehousing and distribution links. Therefore, the logistics operation efficiency is low while the cost is high, and there are problems such as incomplete scope of cost statistics, imperfect cost control system, lack of cost control methods and so on. There is a certain gap in logistics cost control of food processing enterprises among China and developed countries [1]. Consequently, the study of logistics cost control method has certain theoretical and practical significance to reduce the total logistics cost of food processing enterprises and their industries.

1.2 Literature review

After implementing the reform and opening-up policy for 40 years, the improvement of economy not only enables the Chinese people have a better material life, but also changes their living style. They have stricter requirements for food safety and timeliness. Based on this background, food logistics, as a popular research direction, are concerned by many scholars.

Zhu and Zhu pointed out that establishing and improving the agricultural industrial chain organization can boost suburban agricultural industry [2]. In order to keep the fresh and safety of food product, it is essential to utilize cold chain logistics. Accordingly Di et al. proposed that food cold-chain logistics is a kind of special logistics which requires a lot of refrigeration equipment or facilities and he advocated the whole related party including government, trade association, relevant college and university, third-party logistics enterprise and food producer should play a role in this development [3]. With further researches, Xiong realized that backward logistics facilities, lack of cold chain standards and expensive logistics cost limit the development of Chinese cold chain logistics for agricultural product [4]. Liu et al. advised that building an agricultural product cold chain logistic system which is based on supply chain management can coordinate the interests among agricultural production materials suppliers, farmers, agricultural operators and consumers [5]. Lai et al. invested the willingness to use food chain logistics in Changle district and concluded that cold chain logistics industry still has promotion space [6]. Tang pointed out that many problems like poor rural road conditions, insufficient special vehicles and low utilization rate of electronic information exist in Chinese agricultural product logistics [7].

Chen et al. researched the coordination mechanism of members in supply chain on the basis of the customers’ choice behavior of product with different freshness and taste and it is a way to strengthen the comprehensive international competitiveness of Chinese food industry [8]. Yalunina proposed a modular approach to reduce the costs of logistics services in the activity of the food processing industry [9]. Li and Li suggested reducing the cost of fresh cold chain logistics by cost multimodal transportation, new retail trend, talented staffs, government supervision and policy support [10]. Wang et al. considered that application of Internet 5G and things technology can improve logistics processes, system and practice [11]. Liu and Wang discussed the operating risks existing in cold chain logistics outsourcing of fresh food enterprises through establishing an evolutionary game model [12]. Li et al. used kernel density estimation (KDE), spatial autocorrelation analysis (SAA), and spatial error model (SEM) to illustrate that the spatial distribution of cold storage in China is unbalanced [13]. Li et al. Established a green fresh food logistics with Heterogeneous fleet vehicle route problem (GFLHF-VRP) model to reduce the cost of fresh food logistics [14].

With the practice of many enterprises and the research of scholars, the role of Activity-Based Costing in reducing the logistics cost of enterprises is more and more concerned in academia. The guiding ideology of activity-based costing is: “Cost object consumes activity, activity consumes resource” [15]. Activity based costing treats direct cost and indirect cost (including period cost) as the cost of product (service) consuming activity equally, which widens the scope of cost calculation and makes the calculated product (service) cost more accurate and real.

Sittivangkul and Laosiritaworn took vegetable industry as an example, and calculated logistics cost by using a case study from vegetables processing organization with ABC method and finally eliminated hidden costs to adjust price [16]. Themido et al. suggested that the ABC method can simultaneously reflect the flow of orders and products along the logistic chain and capture the costs at a level of desegregation in order to enable the analysis of profit by type of client, market segment and distribution channel [17]. Suttishe et al. made use of activity-based cost model and computer simulation to solve traffic jam at border and lots of trucks waiting for custom processes, and it provided an access way to identify useless activity in transportation and reduce transportation cost [18]. Sternad determined the cost structure of different types of transport vehicles and the changes of fixed and variable costs in the case of different mileage with using ABC costing methods [19]. Ziyadin et al. created a method for classifying logistics services based on the use of ABC analysis to improve companies’ competitiveness [20].

To sum up, the research on the logistics cost control method and implementation of food processing enterprises is not enough, and there is less research in combining the logistics process characteristics, cost composition and logistics cost control method of food processing enterprises with practical application [21].

Comparing with other similar works, this paper contributes time driven activity-based costing method to help company managers to detect and control their cost more scientifically and targeted. Moreover, TD-ABC uses how much time spent in each activity as the basis of collecting costs, which is relatively novel with other ABC method.

On the basis of studying the current situation of logistics cost control of food processing enterprises, this paper studies the characteristics of logistics operation and the occurrence of logistics cost, analyzes the occurrence process of logistics cost and measures its cost, constructs the logistics cost control model of food processing enterprises based on time driven activity-based costing, and constructs the logistics cost accounting control system of food processing enterprises, research the feasibility of logistics cost accounting and control in food processing enterprises empirically Using “time driven activity-based costing” to control the logistics cost of food processing enterprises and dividing the value-added and non value-added activities of the empirical enterprises,can provide the basis for enterprises to control logistics cost and optimize logistics process.

2. Logistics cost problems of food processing enterprises

Logistics costs of food processing enterprise mostly occur in the storage, distribution, transportation, and the logistics activity process mainly include “production, product into warehouse, product in stock, product out of warehouse, and product in transportation”. Specifically, the logistics activities include production logistics activity, product into warehouse logistics activity, product in stock management logistics activity, product out of warehouse logistics activity, and logistics activities those are after out of warehouse like distribution, transportation, etc. are included. Product in stock management activity include stocktaking at the end and beginning of each month.

The problems in the logistics cost control of food processing enterprises are as follows:

(1)
The statistics method of logistics cost is simple and the scope of statistics is incomplete. The logistics cost report only counts the transportation costs paid to the external.
(2)
There is lacking of reasonable and effective method to calculate logistics cost. Most enterprises choose to analyze the logistics cost through the existing financial data, a few enterprises use the annual sales of enterprises to estimate the logistics cost. The accounting method of logistics cost is simple, the rate of accuracy and timeliness is not high.
(3)
Effective integration of logistics information is lack off. Food processing enterprises pay attention to the input of information system but lack of effective integration of logistics information and data.
(4)
There is lacking of practical logistics cost report. The existing logistics cost report of food processing enterprises is not quite practical, or the content of logistics cost report is not comprehensive.

3. Logistics cost control in food processing enterprises by TD-ABC method

3.1 Composition of logistics costs of food processing enterprises

The logistics cost of food processing enterprise refers to the monetary sum expended in materialized and living labor occurred in food products’ space transfer and storage activities in enterprises. That is, the food processing enterprise logistics costs mainly consist of the sum of labor, material and financial expenditures in the transportation, packing, loading and unloading, storage, distribution, logistics information and management of logistics activities.

Figure 1.

Classification and composition of logistics cost of food processing enterprises.

According to relevant national standards and logistics activities, the logistics cost components of food processing enterprises are classified based on three standards: logistics cost items, cost scope, and payment type. As shown in Fig. 1, the cost items on the left are classified according to payment mode. Right cost items are classified according to the composition of logistics cost items, where inventory-related costs include working capital occupation cost, inventory risk cost and inventory insurance cost. The cost items below are classified according to the logistics cost scope. Logistics costs are mainly concentrated in the food processing enterprises’ storage, distribution, transportation and other departments.

3.2 The operation flow of logistics cost control TD-ABC method

Time-Driven Activity-Based Costing (TD-ABC, Time-Driven Activity-Based Costing) is based on the characteristics of different enterprises of different industries and resource consumption etc. The cost is decomposed into different assignments and specific operations. Taking time as the basis of allocating resources costs, the management researchers estimate unit actual cost of each activity and unit operation actual time needed, then calculate the unit cost of different activities.

It can turn a wide range of working procedure cost into an easy implementation and promotion of simple method, avoiding difficult problems of activity-based costing method in the process of implementation. That is the reason why this method is chosen.

Using TD-ABC method, logistics cost can be divided into two parts: time cost and activity cost.

3.2.1 Specific steps for food processing enterprises to implement TD-ABC

(1)
Determine the operation center (namely the resource repository)

Determine the work items in the logistics process of food processing enterprises and the identify the main logistics department as the operation center, for example, the operation centers are divided into warehousing logistics department, order processing department, sales logistics department etc.
(2)
Determine activity-based cost items

The activity-based cost items of logistics service are determined according to the divided activities.
(3)
Calculate the TD-ABC logistics cost

3.2.2 The steps of using TD-ABC to calculate logistics cost

(1)
Identify resources and divide it into direct and indirect resources

Logistics resources refer to the cost that support logistics operations and sources of related expenses, and they are also the costs and expense items that occur in logistics activities of an enterprise during a certain period, or the price for performing logistics operation cost, usually include labor cost, packaging cost, energy consumption, logistics facilities acquisition fee, logistics project capital occupation cost etc.
(2)
Estimate effective working time

Combined with practical experience, the logistics manager can effectively estimate the actual time consumption in different stages and operation states of logistics, in other words, the effective working time.
(3)
Calculate productivity cost per unit of time

First, calculate the standard cost per unit of productive time. Secondly, the time quota of each logistics operation is determined, among which the time quota of logistics activities is used to reflect the time consumption of each logistics operation involved in the enterprise logistics process. Finally, productivity cost per unit of time $=$ the standard cost per unit of productively $\times$ the time quota of logistics operations.
(4)
According to different time drivers identified, collect the time cost and activity cost consumed by each specific time logistics activity and allocate them to products (or logistics services).
(5)
Allocate the direct logistics cost to the final product (or logistics service) together with the indirect logistics cost allocated according to unit time productive cost and time cost driver rate, and issue the cost report of related logistics cost.

3.3 The logistics cost accounting model of food processing enterprises based on TD-ABC

3.3.1 Determine the model

The basic equation of TD-ABC method is: the cost of resources supplied $=$ the cost of resources used $+$ the cost of excess production capacity.

3.3.2 Accounting steps

(1)
Determine the operation center, namely the resource repository
(2)
Estimate the cost of each repository, divide direct resource cost and indirect resource cost. Assuming that the total resource cost supplied by the logistics activities of food processing enterprises is RC, the resource cost of the used logistics activities is URC, the direct cost of the used logistics activities resources is DURC, the indirect cost of the used logistics activities resources is IURC, and the cost of excess production capacity is UNURC, then:

$\displaystyle\textit{RC}=\textit{URC}+\textit{UNURC}$ (1) $\displaystyle\textit{RC}=\textit{DURC}+\textit{IURC}+\textit{UNURC}$ (2)
(3)
Estimate the actual capacity of providing resources by each resource repository. That is the ratio of the total output of the operation to logistics resources, which is mean how much the actual logistics resources play the role of logistics services. Enterprise managers and department heads estimate the actual capacity utilization rate and effective working time of each department based on experience. Assuming that NE is the number of employees, ND is the number of working days per month, DH is the number of working hours per day, and ECU is the effective capacity utilization rate of resource repository, then EWT is effective working minutes of each department:

$\displaystyle\textit{EWT}=\textit{NE}\times\textit{ND}\times\textit{DH}\times 6% 0\times\textit{ECU}$ (3)
(4)
Calculate the unit resource capacity cost for each resource repository Supposing that the food processing enterprise has $p$ items of cost object (product or logistics service) logistics business and $m$ items of logistics operation in the accounting period, and consumes $s$ kinds of resources in total. The food processing enterprise of No. $i$ ( $i=$ 1, 2, 3 $\ldots$ , $p$ ) logistics business unit direct operating cost is:

$\displaystyle\textit{UDOC}_{i}=\frac{\sum_{r=1}^{s}\textit{DVC}_{ir}}{\textit{% TQ}_{i}}$ (4)

In the equation:

$\textit{TQ}_{i}$ means No. $i\left({i=1,2,\ldots,p}\right)$ ’s quantity of logistics business;

$\textit{DVC}_{ir}$ represents the direct variable costs of No. $r\left({r=1,2,\ldots,s}\right)$ resource consumed by No. $i\left({i=1,2,\ldots,p}\right)$ logistics business

$\textit{UDOC}_{i}$ represents unit direct operating cost of No. $i\left({i=1,2,\ldots,p}\right)$ item logistics business.

Standard productivity operation per unit of No. $j\left({j=1,2,\ldots,m}\right)$ in the enterprise:

$\displaystyle\textit{AUTC}_{j}=\frac{\sum_{j=1}^{m}\sum_{r=1}^{s}\textit{CR}_{% ir}}{\textit{ETAT}_{j}\cdot\textit{TER}_{j}}$ (5)

In the equation:

$\textit{TCA}_{ij}$ represents the number of No. $j\left({j=1,2,\ldots,m}\right)$ logistics activity consumed by No. $i$ logistics business;

$\textit{CR}_{jr}$ represents the cost of No. $r$ ( $r=$ 1, 2, 3, $\ldots,s$ ) resource consumed by No. $j$ logistics business;

$\textit{TER}_{j}$ represents the effective utilization rate of the production capacity of No. $j$ logistics activity estimated by the manager;

$\textit{ETAT}_{j}$ represents the total amount of ideal production capacity for the No. $j$ activity.

The enterprise unit activity cost of No. $j\left({j=1,2,\ldots,m}\right)$ activity, namely the cost driver rate $\textit{PAC}_{j}$ is:

$\displaystyle\textit{PAC}_{j}=\textit{AUTC}_{j}\cdot\textit{AT}_{j}$ (6)

In the equation:

$\textit{AT}_{j}$ represents the unit estimated time of the $j$ -th logistics activity.
(5)
Gather the time consumed by logistics activities at each specific time based on different time drivers. In the logistics activities of food processing enterprises, the time consumed by the same operation under different distribution volume is different. In order to solve the problem of different time consumption in different situations, a basic time equation is set up to reflect the time spent in different situations.

Supposing that in the logistics activities of food processing enterprises. The unit estimated consumed time of No. $j\left({j=1,2,\ldots,m}\right)$ is expressed as $t_{0}$ , time driver 1 is expressed as $D_{1}$ , time driver 2 is expressed as $D_{2}$ , time driver $k$ is expressed as $D_{k}$ , thus driver $D_{k}$ is:

$\displaystyle D_{k}=\left\{\begin{array}[]{cl}1&\textit{driver}k\textit{occur}% \\ 0&\textit{driver}k\textit{is not occurd}\\ \end{array}\right.\quad k=1,2,\ldots,q$ (7)

Supposing that the number of time drivers required to complete activity $j\left({j=1,2,\ldots,m}\right)$ is $Qt_{k}$ represents the unit activity estimated variable time of driver $k$ when the $D_{1},D_{2},\ldots,D_{k-1},D_{k+1}$ , $\ldots,D_{q}$ remains unchanged, then the unit estimated time $AT_{j}$ of item $j\left({j=1,2,\ldots,m}\right)$ logistics activity is:

$\displaystyle\textit{AT}_{j}=\sum_{k=1}^{n}\textit{AT}_{jk}$ (8) $\displaystyle\textit{AT}_{jk}=t_{0}+t_{1}\cdot D_{1}+t_{2}\cdot D_{2}+\ldots+t% _{k}\cdot D_{k}$ (9)

Therefore, the unit indirect operating cost of item $i\left({i=1,2,\ldots,p}\right)$ logistics business of food processing enterprise is:

$\displaystyle\textit{UIOC}=\frac{\sum_{j=1}^{m}\textit{AUTC}_{j}\cdot\textit{% AT}_{j}\cdot\textit{TCA}_{ij}}{\textit{TQ}_{i}}$ (10)
(6)
Considering the capital occupation cost, supposing that the logistics business of food processing enterprises should occupy a certain capital cost, the unit capital cost of the $i$ -th logistics business of food processing enterprises is:

$\displaystyle\textit{UTCC}_{i}=\frac{\textit{LCE}_{i}\cdot\textit{CCR}^{t}}{% \textit{TQ}_{i}}$ (11)

In the formula:

$\textit{LCE}_{i}$ represents the amount of capital occupied by No. $i\left({i=1,2,\ldots,p}\right)$ logistics activity;

$\textit{CCR}^{t}$ represents the capital cost rate, generally calculated by the annual interest on bank loans.
(7)
Calculate the cost of logistics activities used by food enterprises. The unit operating cost of $i-text{th}\left({i=1,2,\ldots,p}\right)$ logistics business of food processing enterprise is as follows:

$\displaystyle\textit{UTOC}_{i}=\frac{\left({\sum_{r=1}^{s}\textit{DVC}_{ir}+% \sum_{j=1}^{m}\textit{AUTC}_{j}\cdot\textit{AT}_{j}\cdot\textit{TCA}_{ij}}% \right)}{\textit{TQ}_{i}}$ (12)

The sum of unit cost of No. $i\left({i=1,2,\ldots,p}\right)$ logistics business in food processing enterprise is:

$\displaystyle\textit{UROC}_{i}=\frac{\left({\sum_{r=1}^{s}\textit{DVC}_{ir}+% \sum_{j=1}^{m}\textit{AUTC}_{j}\cdot\textit{AT}_{j}\cdot\textit{TCA}_{ij}+% \textit{LCE}_{i}\cdot\textit{CCR}^{t}}\right)}{\textit{TQ}_{i}}$ (13)

The integrated logistics costs of logistics activities used by food processing enterprises are:

$\displaystyle\textit{URC}=\sum_{i=1}^{p}\sum_{r=1}^{s}\textit{DVC}_{ir}+\sum_{% i=1}^{p}\sum_{j=1}^{m}\textit{AUTC}_{j}\cdot\textit{AT}_{j}\cdot\textit{TCA}_{% ij}+\sum_{i=1}^{p}\textit{LCE}_{i}\cdot\textit{CCR}^{t}$ (14)

3.4 Logistics cost control method based on TD-ABC for food processing enterprises

3.4.1 Design of logistics cost control system

The cost factors involved in the logistics process are reasonably set up and regulated. Finally, through the post-analysis, the optimized logistics process is found out, and the logistics cost of food processing enterprises is controlled from the overall point of view. In the process of logistics cost control, it is necessary to explore the influence of each cost factor on total logistics cost control and control it pointedly, and then logistics links that need to be improved and optimized in logistics cost control are found out to improve logistics management and improve logistics service level.

3.4.2 Determination of logistics cost control point

Different enterprises in the food processing enterprise group have different acceptance of logistics cost change, and after the use of the TD-ABC to calculate the logistics cost of each cycle, enterprises can not determine whether cost control should be carried out or which department should be controlled according to the value of total cost. In order to find out the reasons for the increase of logistics cost more accurately, the corresponding methods of controlling logistics cost are worked out by seeking the time point and the breakthrough point of logistics cost control.

(1)
Determination of logistics cost control time points

According to the change of logistics cost data monthly, judging when to make logistics cost control decision and plan is helpful to maximize the overall economic benefit of the enterprise. The steps of controlling time point are determined as follows:

1)
Assume that one month is an accounting cycle of logistics cost, and the quality of logistics cost control has a certain impact on the change of profits. Because logistics costs affect the profits of enterprises, there is the following relationship:

First of all, set the standard logistics cost of $i$ -th operation center:

$\displaystyle C_{yi}=Q_{i}\left({C_{vi}+C_{fi}}\right)$ (15)

In the formula:

$C_{yi}$ represents the standard logistics cost of No. $i\left({i=1,2,3,\ldots,n}\right)$ logistics repository.

$Q_{i}$ represents the number of operations in No. $i$ of the logistics repository, $\left({i=1,2,3,\ldots,n}\right)$

$C_{vi}$ represents the standard variable cost of the $i$ -th logistics repository, among them, $\left({i=1,2,3,\ldots,n}\right)$

$C_{fi}$ represents the standard fixed cost of the $i$ -th logistics repository, among them, $(i=1,2,3$ , $\ldots,n)$

Secondly, the objective cost is assumed:

$\displaystyle C_{t}^{\prime}=\sum_{i=1}^{n}\eta_{si}\textit{RC}_{ti}$ (16)

In the formula:

$C_{t}^{\prime}$ represents the target logistics cost for $t$ month.

$\eta_{si}$ represents that the logistics cost of the $i$ -th logistics resource repository accounted for the proportion of the total logistics cost, $s=t-1$

$\textit{RC}_{ti}$ represents the cost of $i$ -th logistics repository (namely activity center) for the month of $t\left({i=1,2,3,\ldots,n}\right)$ ,.

$n$ represents the number of activity centers, (namely resource repository).
2)
The total cost of t month $C_{t}$ is calculated by using the TD-ABC to obtain the cost difference $\Delta C_{t}=C_{t}-C_{t}^{\prime}$ . However, the actual situation of different food processing enterprises is also different and the range of cost difference that managers can bear is also different. An index $\lambda$ is set to determine whether to control, this index reflects the actual logistics costs and the total profits of the enterprise in the month.

$\displaystyle\lambda=\frac{\Delta\textit{RC}}{R_{t}}=\frac{(\textit{RC}_{t}-% \sum_{i=1}^{n}\eta_{si}\textit{RC}_{ti}/\mu_{ti})_{t}}{R_{t}}$ (17) $\displaystyle R_{t}=L_{t}+C_{t}$ (18)

In the formula:

$R_{t}$ represents the total revenue of the enterprise in $t$ month.

$\textit{RC}_{t}$ represents total logistics cost in $t$ month.

$L_{t}$ represents total profit in $t$ month.

$\mu_{ti}$ represents the effective utilization of $i$ -th logistics resources in $t$ month, among them, $\left({i=1,2,3,\ldots,n}\right)$

Suppose a food processing enterprise sets an evaluation index $\lambda_{0}$ , then begins to control when the $\lambda>\lambda_{0}$ , until the $\lambda\leqslant\lambda_{0}$

Figure 2.
Time points controlled by a food processing enterprise.

As shown in Fig. 2.

(2)
Identification of the breakthrough points for logistics cost control

After determining the control time point, the cost items should be overall analyzed to find out the key logistics activity items that affects the logistics cost control, which can help the food processing enterprises to control the logistics cost in time and effectively. The monthly $\eta_{ti}$ and $\textit{RC}_{ti}$ , statistics are calculated from historical financial data and the following matrix below is obtained:

$\displaystyle\eta_{ti}=\left[{{\begin{array}[]{cccc}{\eta_{11}}　&{\eta_{12}}% &\ldots&{\eta_{1i}}\\ {\eta_{21}}&{\eta_{22}}&\ldots&{\eta_{2i}}\\ \vdots&\vdots&\ddots&\vdots\\ {\eta_{t1}}&{\eta_{t2}}&\cdots&{\eta_{ti}}\\ \end{array}}}\right]$ (19) $\displaystyle\frac{\textit{RC}_{ti}}{\mu_{ti}}=\left[{{\begin{array}[]{cccc}{% \frac{\textit{RC}_{11}}{\mu_{11}}}&{\frac{\textit{RC}_{12}}{\mu_{12}}}&\ldots&% {\frac{\textit{RC}_{1i}}{\mu_{1i}}}\\ {\frac{\textit{RC}_{21}}{\mu_{21}}}&{\frac{\textit{RC}_{22}}{\mu_{21}}}&\ldots% &{\frac{\textit{RC}_{2i}}{\mu_{2i}}}\\ \vdots&\vdots&\ddots&\vdots\\ {\frac{\textit{RC}_{t1}}{\mu_{t1}}}&{\frac{\textit{RC}_{t2}}{\mu_{t2}}}&\ldots% &{\frac{\textit{RC}_{ti}}{\mu_{ti}}}\\ \end{array}}}\right]$ (20)

1)
Compare and analyze logistics cost data in the month: each column in the corresponding matrix of the change of numerical value is needed to be observed, and when the $\textit{RC}_{ti}$ becomes larger, the cost of the corresponding logistics business $i$ is controlled.
2)
Compare and analyze the logistics cost data of each month of the enterprise: the $\eta_{ti}$ in each row should be arranged from small to large according to the order of value, and the order of cost arrangement of the $t$ month resource repository is obtained. Large cost scale should be controlled on focus.
3)
Comprehensive analysis of enterprise logistics costs: combined with 3.19 and 3.20, the change of each value is analyzed. When the $\eta_{ti}$ becomes larger and $\textit{RC}_{ti}$ becomes smaller, it shows that the percentage of logistics cost of the $i$ -th resource repository in $t$ month becomes larger, but the logistics cost of the resource repository becomes smaller, then the total cost must become smaller. That is, $i$ -th resource repository logistics activity in $t$ month is more reasonable. Cost control has achieved some results, and it can continue to implement the control; When the $\eta_{ti}$ becomes smaller and $\textit{RC}_{ti}$ becomes larger at the same time, Then it shows that the proportion of logistics cost becomes smaller, but the cost of resource repository becomes larger, then the total cost must become larger. Thus, there are problems in the logistics activity of the $i$ -th resource repository in $t$ month. Reasonable measures should be taken in time to control the cost of the $i$ -th resource repository.

3.4.3 Logistics activity cost control implementation

(1)
Set standard activity costs and target costs

Whether the logistics activities of food processing enterprises can bring benefits to enterprises depends on value-added operations. The goal of logistics control is to reduce the costs caused by value-added operations and to avoid the costs of non-value-added activities at the same time. Therefore, it is necessary to continuously improve the standard cost of value-added operations to meet customer needs as much as possible and reduce or maintain the logistics costs of enterprises. Suppose ZBQ represents the standard number of value-added logistics activities, BVC is the standard unit variable cost, BFC represents the standard unit fixed cost. Then the value-added logistics activity cost ZBC standard calculation formula is:

$\displaystyle\textit{ZBC}=\textit{ZBQ}\times\left({\textit{BVC}+\textit{BFC}}\right)$ (21)

Non-value-added logistics activities can not bring positive benefits to enterprises, so the ideal standard cost should be 0. Assuming that RQ represents the number of actual logistics operations, the formula for calculating the standard cost BFC of non-value-added logistics activities is:

$\displaystyle\textit{FBC}=\left({\textit{ZBQ}-\textit{RQ}}\right)\times\textit% {BFC}$ (22)

According to the reasonable standard established by the food processing enterprise, they can compare their own logistics with the advanced logistics activity index of large food processing enterprises when analyzing the logistics cost information and controlling the logistics cost to find problematic activities and take measures to improve the activity, improve their own logistics cost control benchmark continuously, and make real-time adjustment of their target costs.
(2)
Performance appraisal and variance analysis

After the actual logistics activity cost statistics is completed, it is compared with the target cost of the month and the previous period, and the causes of the cost difference are comprehensively analyzed and found out. Compared with the previous logistics operation mode, whether the existing operation will reduce the cost and increase the benefit needs feasible performance evaluation system to guide the continuous improvement of the logistics cost control mode.
(3)
Determining whether logistics activity is a value-added activity

After performance evaluation, value-added and non-value-added activities are distinguished, which provides the basis for further optimization of operations and improvement of logistics processes. Non-value-added activities are operations that can be avoided or reduced without affecting the quality of customer service. Value-added logistics activities are the key activities of food processing enterprises’ logistics activities, which can save resources and bring profits for food processing enterprises.
(4)
Activity optimization and process improvement

On the basis of difference analysis, performance evaluation, judgment of operation nature, logistics activities are optimized or various logistics activities from the level of logistics activity are redesigned and organized which make logistics cost control develop to the best condition. In addition, considering that logistics operations are interrelated and multiple activities operated by multiple logistics departments are involved, the staff of each department need to take effort and cooperate actively.

4. Empirical research

4.1 The process of a food processing enterprises’ logistics cost

4.1.1 Logistics cost process analysis in supply stage

A food processing enterprises mainly has three processing factories A1, A2, A3. In the supply and production stage, after inspection, cleaning and other pre-processes, the raw materials are entered into the assembly line for processing and production, and deliver out of the warehouse with unified packaging. The logistics costs incurred consist of such as raw materials transportation costs, product packaging costs, etc. These costs are directly included in the production costs of company’s product and are not reflected in detail.

4.1.2 Internal logistics cost process

After products are manufactured, A food processing company stores their products in the distribution center warehouses a1, a2, and a3. According to the logistics costs occurred by food processing companies of payment characters, they are classified into material costs, labor costs, water and electricity costs, etc., which can be directly extracted from the corporate financial data. The basic situation of each storage center is summarized in Table 1, which shows that at this stage, the logistics costs of this company are mainly the storage cost of the product in the warehousing, the capital occupation cost of the warehouse, the inventory management cost and other logistics costs occurred in the warehousing department.

Table 1
A basic status of annual warehousing of food processing enterprise

Name	Area	Rent (yuan/month)	Construction costs (yuan)	Depreciation period	Staffing	Total cost (yuan)
a1 warehouse	1100 m ${}^{2}$	5000	0	10	10	39590
a2 warehouse	500 m ${}^{2}$	0	502800	10	8	29385
a3 warehouse	900 m ${}^{2}$	0	765000	10	13	45167.5

4.1.3 Process analysis of logistics cost in the sales stage

The sales logistics costs of A food processing companies are: Firstly, according to the payment characters, the company’s self-operated transportation and distribution of goods logistics costs can be classified into labor costs, fixed assets depreciation fee, vehicle maintenance fees, Vehicle and vessel usage tax, insurance, maintenance and repair costs, road and bridge fees, fuel costs, various fines and other costs. Sorting out financial data and warehouse receipts and self-operated transportation costs are shown as Table 2.

Table 2
Annual self-operated costs for enterprises

Departure	Annual transportation volume (pieces)	Destination	Annual transportation fee (yuan)
A2 factory	35183	a1 warehouse	365903
A3 factory	20104	a1 warehouse	211092

The second is the logistics cost of products outsourced to third-party logistics company. The number can be extracted directly from the corporate financial statements and the transaction statements with various logistics companies. The annual sales process logistics costs paid to the third-party logistics companies are 21 552 532 yuan, accounting for 11.8% of the total sales.

4.1.4 Process analysis of logistics cost in the recovery stage

The logistics activities in the recovery stage mainly are those recycling logistics activities generated in the purchase, production, packaging, and sales. They mainly occur in departments like production, purchasing, customer service, and warehousing department, but the proportion of occurrence is relatively small. The reason of that is the products’ value is not high.

4.1.5 Process analysis of logistics cost in waste stage

The logistics activities in the waste stage mainly are those waste logistics activities generated in the purchase, production, packaging, storage and transportation. They mainly occur in departments like purchase, production, warehousing and transportation departments. Those logistics costs are mainly loss and expenditure. Most of them are directly included in the production cost of the product, and it is impossible to obtain detailed and accurate logistics cost loss. A small part of these costs goes directly to the sales cost or management cost of the product, and the remaining part of the waste logistics cost is undertaken by the customers.

4.2 Application of logistics cost accounting model of a food processing enterprises

4.2.1 Application of TD-ABC logistics cost accounting

TD-ABC is used to calculate the logistics costs of enterprises, and the following simplifications and assumptions are made:

(1)
All data are rounded on the basis of the real financial data of the enterprise and the statistical data of the logistics department.
(2)
Because the logistics cost of the procurement and production stage is relatively low compared with the overall logistics cost of the enterprise. It is difficult to accurately count, so it is not considered.
(3)
The order quantity and order volume in October are relatively average, and the logistics cost data in October is selected as the basis for relevant analysis.
(4)
The cost categories and activity centers of logistics activities are adjusted simply.

Step 1:
Determine the logistics activity center (resource repository)

The three main logistics-related departments of the enterprise are used as resource repositories (also called activity centers) for logistics activities, namely, order processing department, warehousing management department, and sales logistics department. The warehousing management department includes 3 sub-activity centers, namely A1, A2, and A3 warehouses. The sales logistics department, that is, the transportation department, includes 2 sub-activity centers, which are the self-operated logistics department and the outsourced logistics department.
Step 2:
Determine the cost item

Division of specific activities and sub-activities and determination of the product’s operation cost items are shown in Table 3.

Table 3
Worksheet and time drivers

Activity center and activities Sub-activity Time driver

Order Processing Input basic order information The number of orders

processing customer orders Create customer profile New customers or not

department Prepare urgent order Urgent orders or not

Fill in the confirmation letter Whether it is necessary to confirm the letter

Answer customers inquiry Answer customer telephone inquiries The number of customer telephone inquiries

Answer customer network inquiries The number of customer inquiries network

Warehouse Warehousing Distribution point Number of receipts

management inspection Input cargo information Number of receipts

department Cargo inspection The number of products each time the receipt

Return of goods Return or not

Document signature Number of receipts

Warehouse prepare for unloading Number of receipts

unloading and placement Unloading storage The number of product sub-operations per receipt

Goods maintenance Goods maintenance Maintenance times

and inventory Goods inventory Number of counts

Ready for shipment Print shipping order Shipment preparation times

Forklift driven to the warehouse location Shipment preparation times

Loading goods to pallets The number of products each time the shipment is prepared

Ship to truck Number of pallets prepared for each shipment

Packaging The number of pallets to be packaged during each shipment preparation

Audit signature Shipment preparation times

Transportation Transportation Self-operated transportation Transport times

management Outsourced transportation Number of departures

department Vehicle scheduling Received an application of using the car Vehicle scheduling times

Develop and implement a car dispatch plan Vehicle scheduling times

Vehicle repair and maintenance Check vehicle breakdown or accident Number of vehicle maintenance

Report to superior Number of vehicle maintenance

Maintenance vehicle Number of vehicle maintenance

Regularly maintain the vehicle Number of vehicle maintenance

Step 3:
TD-ABC logistics cost calculation

A:
Division of direct and indirect logistics resources

In enterprise logistics activities, labor costs and material costs that can be directly traced back to the cost of the order is quite diminished, while the costs paid to third-party logistics companies are much more. Thus, assuming that they are calculated as direct logistics costs and not allocated as indirect costs.
B:
Determination of the effective working hours of each department

Managers who are familiar with the business estimate the actual working time involved in TD-ABC and the unit working time of various operations. The effective working hours of the company are shown in Table 4.

Table 4
Effective working hours

Activity center

The ratio of effective

production capacity being

equivalent to theoretical capacity

Effective working hours per month

Order processing department 80% 8 $\times$ 22 $\times$ 8 $\times$ 60 $\times$ 80% $=$ 67584 mins

Warehousing department

A1 warehouse 65% 10 $\times$ 22 $\times$ 8 $\times$ 60 $\times$ 65% $=$ 68640 mins

A2 warehouse 75% 8 $\times$ 22 $\times$ 8 $\times$ 60 $\times$ 75% $=$ 63360 mins

A3 warehouse 75% 13 $\times$ 22 $\times$ 8 $\times$ 60 $\times$ 75% $=$ 102960 mins

Self-operated transportation department 60% 10 $\times$ 22 $\times$ 8 $\times$ 60 $\times$ 60% $=$ 63360 mins

C:
Calculate the production cost per unit time.

Firstly, calculate the cost of each unit standard production time. The cost of the unit standard production time $=$ the total cost of an activity center $\div$ the effective working time of the month. The cost calculation process of unit standard production time is shown in Table 5.

Table 5
Cost of per unit standard production time

Activity center Total cost of activity center (1) Effective working hours per month (2) Cost of per unit standard production time (3) $=$ (1) $\div\left(2\right)$

Order processing department 18611 67584 0.2754 yuan/min

Warehousing department

A1 39590 68640 0.5768 yuan/min

A2 29385 63360 0.4638 yuan/min

A3 45167.5 102960 0.4388 yuan/min

Self-operated transportation department 46963 63360 0.7412 yuan/min

The second is determining the time quota for various logistics activities.

Order processing department: the activity time of the order department is shown as Table 6.

Table 6
Schedule of order processing department

Activity Sub-activity Urban customer orders Rural customer orders Equation of time

Order processing Number of ordinary orders 2270 14870 10

Number of urgent orders $D_{1}$ 280 2380 10 $+$ 10 $D_{1}$

Number of new customer orders $D_{2}$ 36 378 10 $+$ 8 $D_{2}$

Number of return orders $D_{3}$ 40 280 10 $+$ 30 $D_{3}$

Customer inquiry Telephone inquiry 2960 11250 5

Internet inquiry $D_{4}$ 432 17190 5 $+$ 3 $D_{4}$

Order processing department completion time 6018 46348

Table 7
Schedule of each activity of warehousing department

Warehouse Logistics Equation Frequency Total time (minutes)

name activities of time Urban customers Rural customers Urban customers Rural customers

A1 warehouse Prepare 15 $+$ 10 $D_{5}$ 227 (16) 5675 (240)

Acceptance 20 40 800

Transport 5 12154 2025

A2 warehouse Prepare 15 $+$ 15 $D_{6}$ 672 (60) 16800 (900)

Acceptance 20 $+$ 5 $D_{7}$ 30 86 750 2150

Transport 5 49950 8325

A3 warehouse Prepare 15 $+$ 15 $D_{6}$ 822 (73) 24660 (1095)

Acceptance 20 $+$ 10 $D_{8}$ 26 72 780 2160

Transport 5 60826 10137

Warehousing department: The time required for each activity in the warehousing department is shown in Table 7. The preparation activity column indicates the stocking quantity of ordinary orders, and the stocking quantity of urgent orders is indicated in the brackets.

Transportation department: statistics of self-transport logistics costs (local customer orders) time is 48 000 minutes.

Finally, calculate the production capacity cost per unit time of each logistics department based on the following formula, which is shown as Table 8, where:

Production cost per unit time $=$ cost per unit of standard production time $\times$ time quota for each logistics activity.
D:
According to the different time drivers identified, the activity costs of each department are collected and the time cost consumed by logistics activities at each specific time is measured, and then they are allocated according to orders belonging to urban customers or orders from rural customers. The situation is shown in Table 8.
E:
The direct logistics costs of clients outside the city, that is, the costs paid to third-party logistics with the calculated logistics time cost and activity cost, are allocated to the customers in the city and customers outside the city according to the determined time driver cost. The distribution is shown in Table 8.

Table 8
Activity costs of out-of-city and urban clients

Department Unit time cost Urban clients Out-of-city clients Total Total

name (yuan) Elapsed time (minutes) Cost-sharing (yuan) Elapsed time (minutes) Cost-sharing (yuan) operating time (minutes) cost (yuan)

Order processing 0.2754 6018 1657 46348 12764 52366 14421

Transport

Self-operated logistics 0.7412 48000 35578 48000 35578

Outsourcing logistics 1524049 1524049

Warehouse

A1 warehouse 0.5768 8740 5041 8740 5041

A2 warehouse 0.4638 750 348 28175 13068 28925 13416

A3 warehouse 0.4388 780 342 38052 16697 38832 17039

Total cost 42966 1566578 1609544

Total time consumed 176863

Total supply 365904 1704333

Unused amount 189041 94789

4.2.2 Comparative analysis of TD-ABC and ABC

Activity center and activities	Sub-activity	Time driver
Order	Processing	Input basic order information	The number of orders
processing	customer orders	Create customer profile	New customers or not
department		Prepare urgent order	Urgent orders or not
		Fill in the confirmation letter	Whether it is necessary to confirm the letter
	Answer customers inquiry	Answer customer telephone inquiries	The number of customer telephone inquiries
		Answer customer network inquiries	The number of customer inquiries network
Warehouse	Warehousing	Distribution point	Number of receipts
management	inspection	Input cargo information	Number of receipts
department		Cargo inspection	The number of products each time the receipt
		Return of goods	Return or not
		Document signature	Number of receipts
	Warehouse	prepare for unloading	Number of receipts
	unloading and placement	Unloading storage	The number of product sub-operations per receipt
	Goods maintenance	Goods maintenance	Maintenance times
	and inventory	Goods inventory	Number of counts
	Ready for shipment	Print shipping order	Shipment preparation times
		Forklift driven to the warehouse location	Shipment preparation times
		Loading goods to pallets	The number of products each time the shipment is prepared
		Ship to truck	Number of pallets prepared for each shipment
		Packaging	The number of pallets to be packaged during each shipment preparation
		Audit signature	Shipment preparation times
Transportation	Transportation	Self-operated transportation	Transport times
management		Outsourced transportation	Number of departures
department	Vehicle scheduling	Received an application of using the car	Vehicle scheduling times
		Develop and implement a car dispatch plan	Vehicle scheduling times
	Vehicle repair and maintenance	Check vehicle breakdown or accident	Number of vehicle maintenance
		Report to superior	Number of vehicle maintenance
		Maintenance vehicle	Number of vehicle maintenance
		Regularly maintain the vehicle	Number of vehicle maintenance

Activity center	Total cost of activity center (1)	Effective working hours per month (2)	Cost of per unit standard production time (3) $=$ (1) $\div\left(2\right)$
Order processing department	18611	67584	0.2754 yuan/min
Warehousing department
A1	39590	68640	0.5768 yuan/min
A2	29385	63360	0.4638 yuan/min
A3	45167.5	102960	0.4388 yuan/min
Self-operated transportation department	46963	63360	0.7412 yuan/min

Activity	Sub-activity	Urban customer orders	Rural customer orders	Equation of time
Order processing	Number of ordinary orders	2270	14870	10
	Number of urgent orders $D_{1}$	280	2380	10 $+$ 10 $D_{1}$
	Number of new customer orders $D_{2}$	36	378	10 $+$ 8 $D_{2}$
	Number of return orders $D_{3}$	40	280	10 $+$ 30 $D_{3}$
Customer inquiry	Telephone inquiry	2960	11250	5
	Internet inquiry $D_{4}$	432	17190	5 $+$ 3 $D_{4}$
Order processing department completion time	6018	46348

Warehouse	Logistics	Equation	Frequency	Total time (minutes)
A1 warehouse	Prepare	15 $+$ 10 $D_{5}$	227 (16)		5675 (240)
	Acceptance	20	40		800
	Transport	5	12154		2025
A2 warehouse	Prepare	15 $+$ 15 $D_{6}$		672 (60)		16800 (900)
	Acceptance	20 $+$ 5 $D_{7}$	30	86	750	2150
	Transport	5		49950		8325
A3 warehouse	Prepare	15 $+$ 15 $D_{6}$		822 (73)		24660 (1095)
	Acceptance	20 $+$ 10 $D_{8}$	26	72	780	2160
	Transport	5		60826		10137

Department	Unit time cost	Urban clients	Out-of-city clients	Total	Total
Order processing	0.2754	6018	1657	46348	12764	52366	14421
Transport
Self-operated logistics	0.7412	48000	35578			48000	35578
Outsourcing logistics					1524049		1524049
Warehouse
A1 warehouse	0.5768	8740	5041			8740	5041
A2 warehouse	0.4638	750	348	28175	13068	28925	13416
A3 warehouse	0.4388	780	342	38052	16697	38832	17039
Total cost			42966		1566578		1609544
Total time consumed						176863
Total supply						365904	1704333
Unused amount						189041	94789

The ABC method does not consider the influencing factors of time efficiency, and directly allocates indirect logistics costs according to product objects. The comparison between ABC and TD-ABC calculation results is shown in Table 9.

Table 9
ABC and TD-ABC activity cost accounting results

Activity name	Shared cost
	TD-ABC		ABC
Order processing	14421		28280
A1 warehouse	5041		39590
A2 warehouse	13415	.6	29385
A3 warehouse	17039		45167.	5
Self-operated transportation	35577		46963
Outsourcing logistics	1524049		1524049
Opportunity cost	898	.5	898	.5
Unutilized production capacity	103891	.9
Total production capacity provided	1714333		1714333

Table 9 shows that both ABC and TD-ABC can calculate the cost of various activities and service contracts, help managers to manage and control costs. However, the logistics cost calculated by ABC is higher than that calculated by TD-ABC, and it cannot be seen intuitively like TD-ABC that 189041 minutes have not been effectively used by the enterprise, which leads to the direct waste of logistics costs of 103891.9 yuan. In addition, the effective use of corporate resources in October accounted for 93.9% of the total, but only 47.4% after outsourcing logistics, which shows that the waste of internal logistics resources is considerable. Further analysis shows that the effective utilization rate of logistics resources for products sold to urban customers is 42.04%, and the effective utilization rate of logistics resources for products sold to customers outside the city is 97.2%, of which the effective utilization rate of logistics resources in warehouse A1 is only 12.7 %, existing serious waste. By understanding the changes in the unit time cost of resources, in cost analysis, the actual production capacity of resources can be estimated to reflect the waste of specific departments and help the company accurately understand its logistics cost status and provide a data basis to logistics costs control. Another major advantage of TD-ABC over ABC is that companies can continuously analyze, control costs and update cost models on the basis of cost-effective management. Therefore, through the implementation of TD-ABC, managers can compare the unit logistics costs of self-operated logistics and outsourced logistics products, grasp the efficiency of logistics operations and the unutilized capacity of each cost center, and then provide effective methods for reducing the logistics costs of enterprises.

Steps of implement logistics cost control in A food processing enterprise

Logistics cost data analysis

The actual logistics resource utilization rates of each logistics department this month are calculated, of which the actual logistics resource utilization rate of the order processing department is 51%, and the actual logistics resource utilization rate of the warehousing department is 31% (A1 warehouse accounts for 12.7%, A2 warehouse accounts for 45.6%, A3 warehouse accounts for 34.7%), and the actual logistics resource utilization rate of the self-operated transportation department is 75.8%.

In view of the low efficiency of the enterprise logistics department, when controlling logistics costs, the relationship among the various logistics departments should be considered comprehensively, and the key departments that affect the overall logistics efficiency should be focused on control. Taking the difference between self-operated logistics and outsourcing logistics costs into consideration, outsourcing logistics costs are closely related to the demand of customers outside the city, and the controllable range of their costs is small. TD-ABC method can be used to calculate the relevant statistical data of logistics costs from July to December, focused on the control of the controllable logistics costs incurred within the enterprise. And then the ratio of monthly logistics cost of each internal logistics operation center to the total internal logistics cost $\eta_{ti}$ , the cost of each logistics business $RC_{ti}$ and the effective utilization rate of each logistics business $\mu_{ti}$ are counted, where $i=1,2,3,4,5$ represents the order processing department, A1 warehouse, A2 warehouse, A3 warehouse, self-operated logistics department respectively, $t=$ 7, 8, 9, 10, 11, 12 represents July to December respectively, and the following matrix is obtained according to the costing data:

$\displaystyle\eta_{ti}=\left[{{\begin{array}[]{ccccc}{0.1492}&{0.2092}&{0.1540% }&{0.2394}&{0.2482}\\ {0.1491}&{0.2092}&{0.1543}&{0.2385}&{0.2489}\\ {0.1503}&{0.2076}&{0.1537}&{0.2392}&{0.2492}\\ {0.1493}&{0.2090}&{0.1552}&{0.2385}&{0.2480}\\ {0.1465}&{0.2164}&{0.1545}&{0.2414}&{0.2411}\\ {0.1507}&{0.2193}&{0.1518}&{0.2347}&{0.2434}\\ \end{array}}}\right]$ $\displaystyle\textit{RC}_{ti}/\mu_{ti}=\left[{{\begin{array}[]{ccccc}{27979}&{% 39231}&{28882}&{44890}&{46540}\\ {28114}&{39450}&{29100}&{44982}&{46960}\\ {28320}&{39130}&{28975}&{45083.5}&{46963}\\ {28280}&{39590}&{29385}&{45167.5}&{46963}\\ {28450}&{42038}&{30014}&{46891.5}&{46840}\\ {29690}&{43200}&{29896}&{46234}&{47950}\hfill\\ \end{array}}}\right]$

Determination of logistics cost control point

* Determination of control time point

The target logistics cost occurred within the enterprise is 8% of the monthly sales of products sold to urban customers, and $\lambda_{0}$ is 0.05. Based on the sales revenue of products sold to urban customers from July to December, It is know that $R_{t}=$ (1845450 1975700 1896044 1939850 2027542 2137348) ${}^{T}$ , and the confirmed enterprise internal logistics management target cost $\frac{RC_{t}}{\mu_{t}}=$ (147636 158056 151683 155188 162203 170988) ${}^{T}$ . And then put it into the formula (3.16), $\lambda=$ (0.0216 0.0155 0.0194 0.0176 0.0134 0.0122) ${}^{T}$ is calculated.

After analysis, the company needs to improve logistics processes and logistics cost control implements in November.

* Identification of control breakthrough point

Comparative analysis of the logistics cost data of the current month: the changes in the value of each column in the corresponding matrix need to be observed. When $\textit{RC}_{ti}$ becomes larger, the cost of the corresponding logistics business should be controlled, that is, the logistics cost of the logistics center including the order department, A1 warehouse, and self-operated logistics department.

Comparative analysis of the monthly enterprise logistics cost data: the $\eta_{ti}$ in each row need to be arranged from small to large to get the cost order of the logistics business cost scale in $t$ month. The large cost scale should be focused on control. From July to December, the order of logistics business costs is: self-operated transportation department, A3 warehouse, A1 warehouse, A3 warehouse, and order processing department. Therefore, the focus of control is on the first three logistics business departments.

Comprehensive comparison of enterprise logistics cost information, when $\eta_{ti}$ increases, $\textit{RC}_{ti}$ also increases, indicating that the total logistics cost changes uniformly, and the overall logistics operation efficiency and operation level of the enterprise are relatively stable.

Therefore, the self-operated transportation department, A3 warehouse, and A1 warehouse are identified as the key control departments of logistics cost control.

Determine whether the logistics operations center is value-added

For the company’s self-operated logistics department and the A1 warehouse that distributes goods for customers in the city, it can be stocked by outsourcing logistics or using other warehouse resources, and the logistics cost occupied by these two departments accounts for about 45% of the total logistics cost .And the single-piece transportation cost of products sold to customers in the city is 10.33 yuan, which is higher than the single-piece quotation of the third-party logistics company’s intra-city logistics transportation, and is not much different from the single-piece logistics cost of products sold outside the city. Moreover, the resource utilization rate of the A1 warehouse, which is responsible for allocating goods to customers in the city, is the lowest, only 12.7% in October. Therefore, it can be determined that the self-operated transportation department and A1 warehouse are non-value-added activities and they should be reduced or eliminated as much as possible.

The order processing department is a department that directly brings economic benefits to the enterprise, so it is a value-added activity. Warehouse A3 and warehouse A2 are the warehouses of the production factory, which are indispensable activities for the normal operation of the company’s logistics, so they are value-added operations. Outsourcing logistics is an activity that cannot bring direct benefits to the enterprise, but it can bring value to the sales and customers of the enterprise, so it is also a value-added activity.

Optimization of enterprise logistics activity process

Taking the company’s out-of-city customers and out-of-city customers as an example, in the process of comparing with the target cost, the reasons for the deviation are need to be found, and then non-value-added and value-added activities should be identified. Those non-value-added activities needed reconstruction are targeted controlled. The best benefit can be achieved by controlling cost from part to whole.

In November, the company motivated employees to improve work efficiency by formulating some rules and incentive measures like transferring a small number of employees from warehouse A1 to the order processing department to improve the service quality of the order processing department and increase orders and negotiating with customers in the city to encourage customers to place orders in advance and deliver the goods once every two days. The implementation of the employee incentive policy makes the effective production capacity of the order processing department reach 85%. The self-operated transportation department allocates 1–2 employees to help staff in A1 warehouse and A2 warehouse to stock up when the driver does not deliver the goods which makes the effective production capacity of A1 warehouse, A2 warehouse, and self-operated transportation departments increase to 70%, 80%, and 70% respectively. Due to delivery cycles change, staff redeployment, orders increased and the bottleneck of the stocking time reduced by 5 minutes at the same time. The handling time increases to 12 times goods per minute, and the transportation time to customers in the city is reduced to 43 000 minutes. According to the accounting steps of the ABC method, the improved activity cost of each department can be obtained as shown in Tables 10 and 11.

Table 10

Working hours of each department

Name	Order processing department	A1 warehouse	A2 warehouse	A3 warehouse	Self-operated transportation department
Effective working time (minutes)	89760	59136	67584	102960	73920
Expense rate per unit time (yuan/min)	0.3170	0.7109	0.4441	0.4554	0.6337

Table 11

Total logistics cost after control

	Unit time cost (yuan)	Urban customers		Customers outside the city		Total activity	Total cost
		Elapsed time (minutes)	Cost allocation (yuan)	Elapsed time (minutes)	Cost allocation (yuan)	time (minutes)	(yuan)
Order processing	0.317	6523	2067.79	42148	13360.92	48671	15428.71
Transport
Self-operated logistics	0.6337	43000	27249.1			43000	27249.10
Outsourcing logistics					1525000		1525000
Warehouse
A1 warehouse	0.7109	5120	3639.81			5120	3639.81
A2 warehouse	0.4441	650	288.67	27175	12068.42	27825	12357.08
A3 warehouse	0.4554	780	355.21	38080	17341.63	38860	17696.84
Total cost			33567.88		1567770.97		1601371.54

Logistics cost control TD-ABC can comprehensively compare various logistics cost information, which can more comprehensively integrate useful logistics cost information for enterprises. After implementing TD-ABC logistics cost control, the total logistics cost occurred in enterprises in November (including outsourcing logistics costs) is 1601371.54 yuan, which is 8172.79 yuan less than before. The effect is significant. In addition to the costs paid to third-party logistics companies, the proportion of logistics costs generated by internal logistics activities sales revenue in the current month has also dropped from 9.76% in October to 9.34% in November, so the company plans to continue to use the new logistics operating procedure

4.3 Suggestions for improving logistics cost control of a food processing enterprises

As a food processing company pays more attention to logistics costs, adopting TD-ABC method can provide enterprises with relevant information on logistics costs, so that enterprises can understand how many unused logistics resources are wasted, and carry out reconstruction of logistics activity process which make companies continue to effectively improve processes to control costs. The specific improvement suggestions are as follows:

(1)
Improve the regular reporting system of logistics costs for food processing enterprises.
(2)
Improve the efficiency of value-added operations and reduce storage costs.
(3)
Reduce or avoid non-value-added operations and increase logistics outsourcing.
(4)
Choose a logistics outsourcing company reasonably.

5. Conclusion

With the impact of the COVID-19 epidemic to the global economy, food companies will face greater challenges. In order to improve logistics operations and reduce logistics costs, the basic process of applying TD-ABC is proposed for the problems existing in the logistics cost control of food processing enterprises, and the logistics cost accounting model and method system of food processing enterprises based on TD-ABC have been constructed. Empirical implementation of A food processing enterprise logistics cost accounting and control is used to clarify low-efficiency logistics operations and non-value-added operations, analyze the efficiency of each logistics department, and verify the effectiveness of the model and method system. Due to the complexity of logistics cost accounting and control of food processing enterprises, there is a lack of correlation analysis between outsourcing logistics costs and specific sales quantities. The optimal logistics outsourcing ratio has not been analyzed yet, and further improvement is needed.

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and Li

S.Q.

, Analysis on the Status Quo, Problems and Countermeasures of Zhengzhou Fresh Cold Chain Logistics Development, 2018 4th International Conference on Innovative Development of E-commerce and Logistics, 2018.

Warehouse	Logistics	Equation	Frequency		Total time (minutes)
name	activities	of time	Urban customers	Rural customers	Urban customers	Rural customers
A1 warehouse	Prepare	15 $+$ 10 $D_{5}$	227 (16)		5675 (240)
	Acceptance	20	40		800
	Transport	5	12154		2025
A2 warehouse	Prepare	15 $+$ 15 $D_{6}$		672 (60)		16800 (900)
	Acceptance	20 $+$ 5 $D_{7}$	30	86	750	2150
	Transport	5		49950		8325
A3 warehouse	Prepare	15 $+$ 15 $D_{6}$		822 (73)		24660 (1095)
	Acceptance	20 $+$ 10 $D_{8}$	26	72	780	2160
	Transport	5		60826		10137

Logistics cost control in food processing enterprises based on TD-ABC

Abstract

Keywords

1. Introduction

1.1 Background

1.2 Literature review

2. Logistics cost problems of food processing enterprises

3.1 Composition of logistics costs of food processing enterprises

3.2.1 Specific steps for food processing enterprises to implement TD-ABC

3.3.1 Determine the model

3.3.2 Accounting steps

3.4.1 Design of logistics cost control system

3.4.2 Determination of logistics cost control point

4.1 The process of a food processing enterprises’ logistics cost

4.1.1 Logistics cost process analysis in supply stage

4.1.2 Internal logistics cost process

Table 1 A basic status of annual warehousing of food processing enterprise

Table 2 Annual self-operated costs for enterprises

4.1.5 Process analysis of logistics cost in waste stage

4.2 Application of logistics cost accounting model of a food processing enterprises

4.2.1 Application of TD-ABC logistics cost accounting

Table 9 ABC and TD-ABC activity cost accounting results

References

Table 1
A basic status of annual warehousing of food processing enterprise

Table 2
Annual self-operated costs for enterprises

Table 9
ABC and TD-ABC activity cost accounting results