Total Cost of Ownership (TCO): Comparing transport prices alone is misleading. That is why a free TCO calculator is now available on the trans-o-flex website. This small programme helps to calculate and compare the total logistics costs of actively and passively temperature-controlled consignments and provides starting points for the reduction of costs.
“I had long been searching for this!” A smile crosses Maria Bolsing’s face as she opens an Excel spreadsheet on her screen and explains how it works. “Using the spreadsheet, I was able to calculate the full costs for passive temperature-controlled transports of our consignments in less than an hour. This allows me to now compare the costs I incur with trans-o-flex for active temperature-controlled shipping with those that would be incurred with parcel services offering passive temperature control.” Bolsing is the managing director of a small pharmaceutical company in Hesse.* She ships an average of 20 temperature-controlled parcels a day with trans-o-flex. Nearly half of these are refrigerated consignments that must be kept at temperatures of between 2 and 8 degrees Celsius in transit. The remainder are ambient consignments, meaning they are transported at temperatures of between 15 and 25 degrees. The products shipped in this way are primarily sensitive to frost, but also cannot tolerate the frequently higher temperatures in the truck cargo area in summer.
Three years ago, Bolsing switched all her customers’ deliveries to active temperature control. “The regulatory authority also exerted some pressure on us,” admits the 47-year-old. At the time, she initially considered whether she should not simply stay with her parcel service provider and have the consignments delivered using passive temperature control. “But we shied away from the effort involved in handling insulated packaging, ice packs or dry ice, and we didn’t know exactly what else we would have to deal with. Ultimately, we accepted trans-o-flex’s offer and the seemingly higher transport prices because switching to temperature-controlled shipping was easier for us and we were able to make the switch more quickly.” However, she repeatedly receives mail from standard parcel services offering passive transports at very low prices. Bolsing then asks herself: “Should we switch after all?”
* The name was changed because the managing director wishes to remain anonymous. For the same reasons the company name of the trans-o-flex customer is not stated.
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Download the service tool free of charge
When trans-o-flex offered a TCO calculator for download on its website in February this year, Bolsing initially thought it was a publicity stunt rather than a genuine service tool for calculation of the total cost of ownership (TCO). But her curiosity had been piqued, and she downloaded the tool from the trans-o-flex website.
“When I then opened the spreadsheet, I immediately noticed that I could use it to calculate the actual costs incurred by our company very precisely, and for each cost category.” Bolsing set to work and entered her company’s actual quantities and costs into the spreadsheet. In total the spreadsheet consists of around 70 pre-filled rows, which span ten cost categories, ranging from packaging & transport through returns & reusable logistics to IT & integration.
© Andrii Yalanskyi
Calculate using market-standard or company-specific costs
“Each line contains short explanations of the individual items so that I can recognise whether that cost item applies to us at all.” Bolsing calculated for her company the total costs that would arise for passive temperature-controlled shipping in reusable boxes. “We also use reusable boxes for actively temperature-controlled transport with trans-o-flex. For environmental reasons using disposable boxes is therefore out of the question for us even where passive shipping is involved. And where the coolant is concerned, we would opt for gel packs rather than dry ice. If an item does not apply to us, I simply enter zero.”
For each individual cost item, the users of the TCO calculator can enter the cost per unit for them and how many units per year occur. The tool then automatically calculates the total value of the respective cost item, immediately adds all individual items to a total sum and divides it by the number of consignments. At a glance this therefore shows the total costs as well as the cost per parcel or consignment.
“A lot of experience and knowledge about logistics processes seems to have gone into this tool. It has also opened my eyes to cost items that I had not previously allocated to transport and logistics costs.” As an example she cites packaging qualification or lane validation. “If I use a passive system and, for instance, set up a new pharmacy, the pharmacist must learn to return the reusable box, the inlay and the logger. Every lane, i.e. every new distribution channel or new recipient, has to be trained.”
Active versus passive: lower total costs despite higher transport prices
Finally, Bolsing, who is a pharmacist herself, went on to say “We now use the tool for two things. On the one hand we actually compared the total costs and realised that, despite higher transport prices per shipment, active temperature control is actually slightly cheaper for us overall. On the other hand we now use the tool when we look at individual cost blocks of our logistics chain and consider whether and how we can reduce expenditure.”
She also has a tip for all other users when it comes to comparing total costs: “To avoid comparing apples with pears, the total cost calculation should be completed twice. Once for active and once for passive temperature control. Then you can see exactly which additional costs are incurred with which form of temperature control alongside the pure transport price.”
