Model of Value-Based Management in a Multi-Hub Large-Scale Logistics Network

Abstract

Purpose:The dynamic growth of multi-channel sales (including e-commerce) causes a mass flow of cargo in supply networks and large-scale transport and logistics processes in complex multi-hub structures of logistics networks in Europe. One of the key objectives of the effective management of processes and cargo flows in complex structures of logistics networks is an increase in profitability of customer and shipment delivery. Design/Methodology/Approach: In the presented value-based management (VBM) model, multi-factor price lists for logistics services and taxation weight of shipment are the basis for revenue modelling by logistic operators, as well as their multi-criteria conditions for qualifying rates and add-on factors. On the other hand, transport and logistics processes implemented in supply chains and multi-hub network, create a complex cost environment. Findings: Dynamically and segmentally planned process loads in logistics networks according to the changing needs of customers, create complex and variable structures of direct and indirect costs of logistics operators. The allocation of costs in multi-hub logistics networks is determined by dynamic changes in the flow of cargo, through the settlement keys of resources costs used in the processes of the logistics network. Customer service quality indicators established by logistics operators are mapped to operational norms in the final settlement model. The key factor in using the value-based management model by enterprises is achieving the required operational and price competitiveness on the market of transport and logistics services with the assumed profitability of customers and services. Originality/Value: The results of the presented model analysis of the profitability of customers as well as the efficiency of processes in the logistics network influence managerial decisions shaping the appraisal of shipment contracts with customers. The VBM model presented in the article was used to verify the real costs and profitability of corporate customers in large scale multi-hub logistics network, taking into account analysis of the share and allocation of shipment flows, transport options in supply chains, as well as process routes and resource consumption.