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Cost to Serve Assessment

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This major pallet network had an established structure for internal cost allocation between network members, covering inbound movements, trunking, handling and customer delivery.

Problems had arisen over costs and operating difficulties within the M25. A factually based cost structure was needed which would maintain the overall commercial position and be supported by members, in and out of London.

SCALA collated cost and operational data and interviewed Members, both in and out of London, to establish a clear understanding of problems, costs and productivity achievable.

Principal difficulties within London were costs, Congestion Charge, the Low Emission Zone and the inbound/outbound pallet balance. SCALA reviewed the impacts of operating within London including costs, wages, property values, Congestion Charges and inbound/outbound pallet balancing. However, problems in rural areas and particularly Scotland were also identified and quantified.

New cost structures were developed which also rationalised some pre-existing short term changes, and the proposals resolved the issues by:

- Being based on reliable data and quantifying and defining the solution
- Being understandable to members
- Providing a clear basis for all current and future pricing