Beta 1

Title Cost-to-Serve in Novozymes
Author Shilikhin, Arseny (Copenhagen University College of Engineering, IHK)
Supervisor Siegumfeldt, Karin
Raagaard, Søren
Institution Ingeniørhøjskolen i København, IHK, DK-2750 Ballerup, Denmark
Thesis level Bachelor thesis
Education Diplomingeniør, Eksport
Education Bachelor of Engineering
Publication date 2011-05
Abstract The objective of this Global Business Engineering thesis is to develop a model for the
allocation of Novozymes A/S expenses related to serving the company’s customers in Europe,
the Middle East and Africa (EMEA). The current approach to cost allocation does not fully
reflect the complexity of the order handling process. Therefore, the method of Activity-Based
Costing, developed by Robert Kaplan and Robin Cooper, has been applied to create an
alternative Cost-to-Serve model believed to provide greater transparency than the current
model in the expenditure connected with serving customers.
The empirical data in this project consists of primary data compiled on the one hand during
face-to-face interviews with two employees whose daily task is order handling in Novozymes
and on the other of secondary sales data extracted from the company’s IT system. It was
conceived as an analytical tool according to the principles of multidimensional database design
and On-Line Analytical Processing (OLAP), designed to try out the model in practice.
The analysis of Cost-to-Serve has revealed that 70% of the Novozymes customers in EMEA,
i.e. primarily small and medium-sized customers, generate only 16% of the revenue but
consume more than one half of the resources set aside for serving customers. Moreover, it has
been demonstrated that the cost of serving customers mainly is intimately related to customer
buying behaviour.
In order to provide the highest possible service value for the customer at the smallest possible
cost, it has been suggested to transfer unprofitable customers to distributors, influence
customer buying behaviour and, finally, differentiate product pricing.
Pages 69
Keywords Activity-Based Costing OLAP Cost-to-Serve
External partner Ledere og medarbejdere i private virksomheder
Admin Creation date: 2011-05-17    Update date: 2012-11-22    Source: ihk    ID: ihk-9795053    Original MXD