Niko Jokinen 

Invoicing of storage costs for ready-to-deliver 
goods in case of delayed pick-up from the 

customer 

Encouraging collection of finished goods 

 

 

 

 

 

 

 
  

Vaasa 2024 

School of Technology and Innovations  
Master’s thesis in Industrial Management  

Programme of Industrial Management 



2 

UNIVERSITY OF VAASA 
School of Technology and Innovations  
Author:    Niko Jokinen 
Title of the Thesis:  Invoicing of storage costs for ready-to-deliver goods in case of 
delayed pick-up from the customer : Encouraging collection of finished goods 
Degree:    Master of Science in Economics and Business Administration 
Programme:   Industrial Management 
Supervisor:   Rayko Toshev 
Year:    2024 Pages: 110 

ABSTRACT: 
The research investigates the integration of invoicing for storage costs of ready-to-deliver goods 
when customer pick-up is delayed, focusing on its impact on operational business processes. 
The theoretical framework is based on contract management theories and supply chain 
practices while exploring how contracts and invoicing can improve operational efficiency and 
customer relationships. This integration is seen as a factor in reducing the risks associated with 
delayed delivery of products. 
 
The objective of the study is to examine the critical factors for successfully integrating storage 
cost invoicing into business processes and to assess its organizational implications and provide 
recommendations for middle management. These research questions are intended to increase 
understanding of the logistical and financial implications of introducing such invoicing methods 
and to provide the case study company with practical insights to improve its current operations 
and cost management. 
 
The study uses a simple mixed methods approach, using both qualitative and quantitative 
methods to investigate the key factors to consider when integrating contract and storage cost 
invoicing into business operations and the implications of integrating the two for the business 
process. The qualitative method is implemented in the form of a comprehensive literature 
review, which provides the framework for the study based on numerous prior and peer-
reviewed academic references. The quantitative method studies more the implications for the 
organization based on order and product data collected over a five-year period from a case 
company's ERP system. The compiled database consists just under a hundred thousand units, 
which constitutes a representative sample of the population, and is used statistically to analyse 
the potential impact that this work can contribute to improving operational performance. The 
results show that the key factors for contract integration are clear contract guidelines, legality, 
definition of responsibilities and communication, while the key factors for storage cost invoicing 
are operational and financial monitoring, resource planning and alignment of responsibilities 
and consequences. In addition, the implications for business processes show that more than a 
fifth of the sample is delayed due to customer pick-ups, which is equivalent to almost a quarter 
of the value of manufacturing production highlighting the importance of this study while 
providing additional revenue streams. 
 
To address these practical concerns, the study proposes strategies to improve business 
efficiency and customer responsibility through appropriate invoicing mechanisms. These results 
contribute to both the academic literature and practical applications by providing a model for 
improving inventory management, reducing additional costs due to delays, and aligning business 
processes with contractual responsibilities. The research provides a framework for further 
improvements in inventory cost management, in particular how organizations balance 
operational efficiency and customer service. 
 

KEYWORDS: Storage costs, ready-to-deliver, delayed pick-up, contract management, storage 
cost invoicing 



3 

 
VAASAN YLIOPISTO 
Tekniikan ja innovaatiojohtamisen akateeminen yksikkö 
Tekijä:    Niko Jokinen 
Tutkielman nimi:  Invoicing of storage costs for ready-to-deliver goods in case of 
delayed pick-up from the customer : Encouraging collection of finished goods 
Tutkinto:    Kauppatieteiden maisteri 
Oppiaine:   Tuotantotalous 
Työn ohjaaja:   Rayko Toshev 
Valmistumisvuosi:  2024 Sivumäärä: 110 

ABSTRAKTI: 
Tutkimuksessa tutkitaan toimitusvalmiiden tavaroiden varastointikustannusten laskutuksen 
integrointia, kun asiakkaan nouto viivästyy, ja keskitytään sen vaikutukseen 
liiketoimintaprosesseihin. Teoreettinen viitekehys perustuu sopimusten hallinnan teorioihin ja 
toimitusketjun käytäntöihin, ja samalla tutkitaan, miten sopimukset ja laskutus voivat parantaa 
toiminnan tehokkuutta ja asiakassuhteita. Tätä integrointia pidetään tekijänä, joka vähentää 
tuotteiden viivästyneeseen toimitukseen liittyviä riskejä. 
 
Tutkimuksen tavoitteena on tarkastella kriittisiä tekijöitä, jotka liittyvät varastointikustannusten 
laskutuksen onnistuneeseen integrointiin liiketoimintaprosesseihin, ja arvioida sen 
organisatorisia vaikutuksia ja antaa suosituksia keskijohdolle. Näiden tutkimuskysymysten 
tarkoituksena on lisätä ymmärrystä tällaisten laskutusmenetelmien käyttöönoton logistisista ja 
taloudellisista vaikutuksista ja antaa case-yritykselle käytännön näkemyksiä sen nykyisten 
toimintojen ja kustannustenhallinnan parantamiseksi. 
 
Tutkimuksessa käytetään yksinkertaista sekamenetelmää, jossa käytetään sekä kvalitatiivisia 
että kvantitatiivisia menetelmiä tutkimaan keskeisiä tekijöitä, jotka on otettava huomioon in-
tegroitaessa sopimus- ja varastointikustannusten laskutusta liiketoimintaan, sekä näiden kah-
den yhdistämisen vaikutuksia liiketoimintaprosessiin. Kvalitatiivinen menetelmä toteutetaan 
kirjallisuuskatsauksen muodossa, joka muodostaa tutkimuksen kehyksen lukuisille ajankohtais-
ten ja vertaisarvioitujen akateemisten lähteiden avulla. Kvantitatiivisella menetelmällä tutkitaan 
enemmän organisaatioon kohdistuvia vaikutuksia, jotka perustuvat case-yrityksen ERP-järjestel-
mästä viiden vuoden ajalta kerättyihin tilaus- ja tuotetietoihin. Kootussa tietokannassa on muu-
tama vähän alle satatuhatta yksikköä, mikä muodostaa edustavan otoksen perusjoukosta, ja sitä 
käytetään tilastollisesti analysoimaan mahdollisia vaikutuksia, joita tämä työ voi edistää opera-
tiivisen suorituskyvyn parantamisessa. Tulokset osoittavat, että sopimusten integroinnin avain-
tekijöitä ovat selkeät sopimusohjeet, laillisuus, vastuiden määrittely ja kommunikointi, kun taas 
varastointikustannusten laskutuksen avaintekijöitä ovat toiminnallinen ja taloudellinen seu-
ranta, resurssien suunnittelu sekä vastuiden ja seurausten yhdenmukaistaminen. Lisäksi vaiku-
tukset liiketoimintaprosesseihin osoittavat, että yli viidennes otoksesta viivästyy asiakkaiden 
noutojen vuoksi, mikä vastaa lähes neljäsosaa valmistustuotannon arvosta. 
 
Näiden käytännön ongelmien ratkaisemiseksi tutkimuksessa ehdotetaan strategioita 
liiketoiminnan tehokkuuden ja asiakkaiden vastuuvelvollisuuden parantamiseksi 
asianmukaisten laskutusmekanismien avulla. Tulokset edistävät sekä akateemista kirjallisuutta 
että käytännön sovelluksia tarjoamalla mallin, jolla voidaan parantaa varastonhallintaa, 
vähentää viivästyksistä aiheutuvia lisäkustannuksia ja sovittaa liiketoimintaprosessit yhteen 
sopimusvelvoitteiden kanssa. Tutkimus tarjoaa puitteet varastokustannusten hallinnan 
parantamiselle edelleen, erityisesti sille, miten organisaatiot tasapainottavat toiminnan 
tehokkuutta ja asiakaspalvelua. 
 

AVAINSANAT: Varastointikustannukset, toimitusvalmius, viivästynyt nouto, sopimusten 
hallinta, varastointikustannusten laskutus 



4 

Contents 

1 Introduction 9 

1.1 Background and theoretical framework 9 

1.2 Methodology Virhe. Kirjanmerkkiä ei ole määritetty. 

1.3 Research objectives, questions and limitations 18 

1.4 Case company 20 

1.5 Structure of the research 21 

2 Literature review 22 

2.1 Logistics and supply chain management 22 

2.2 Storage cost management in manufacturing 27 

2.2.1 Inventory management strategies 28 

2.2.2 Cost drivers in storage management 30 

2.2.3 Financial implications of delayed pick-ups 33 

2.2.4 The impact of finished goods on operational efficiency 37 

2.3 Theoretical Framework on contract management 39 

2.3.1 Contractual conditions 39 

2.3.2 Contract integration into business processes 41 

2.3.3 Operational and financial implications for business processes 45 

2.4 Future of MTO inventory management 48 

3 Methodology 50 

3.1 Methodological approach 50 

3.2 Data collection and delimitation 52 

3.3 Data analysis method 54 

3.4 Validity and reliability 60 

4 Results and discussion 61 

4.1 Integrating contract and storage cost invoicing 61 

4.1.1 Key factors for the integration of contract and storage cost invoicing 61 

4.1.2 Analysis and summary of results 64 

4.2 Implications for business processes of storage cost invoicing integration 66 



5 

4.2.1 Impact of storage cost invoicing 66 

4.2.2 Data visualization 68 

4.2.3 Analysis and summary of results 75 

5 Conclusions 85 

5.1 Main findings and results 85 

5.2 Theoretical implications 90 

5.3 Managerial implications 91 

5.4 Limitations and future research 93 

References 95 

Appendices 109 

Appendix 1. Table of closed orders from May 2019 to May 2024 109 

Appendix 2. Power BI dashboard 110 

  



6 

Figures 
 
Figure 1. Scientific framework of the research. 12 

Figure 2. Visualization of the research gap. 14 

Figure 3. Saunder’s research onion. 15 

Figure 4. Inventory management and its subcategories. 29 

Figure 5. Cost drivers in storage management. 32 

Figure 6. FCA, FOB and CPT. 34 

Figure 7. Fishbone diagram of financial and indirect implications of delayed pick-ups. 37 

Figure 8. Contract evaluation framework. 44 

Figure 9. Cause-and-effect relationship of contract integration. 46 

Figure 10. Implications of contract and stock cost invoicing. 48 

Figure 11. Methodological approach of the study. 51 

Figure 12. Data collection and delimitation process. 54 

Figure 13. Overall process of dataset collection and analysis. 59 

Figure 14. Main data dashboard. 70 

Figure 15. Sum of order quantity by incoterms. 71 

Figure 16. Sum of order quantity by over two weeks. 71 

Figure 17. Sum of condition value by over two weeks. 72 

Figure 18. Sum of order quantity by year and over two weeks. 73 

Figure 19. Concluded data by incoterms and over two weeks. 73 

Figure 20. Sum of order quantity by incoterms. 74 

Figure 21. Sum of condition value by incoterms. 75 

Figure 22. Sum of order quantity by over 2 weeks with incoterms. 79 

Figure 23. Sum of condition value by over 2 weeks with incoterms. 80 

Figure 24. Order quantity by over 2 weeks compared to the total quantity. 82 

Figure 25. Order value by over 2 weeks compared to the total quantity. 83 

Figure 26. Key factors and implications of integration. 88 

 
 

  



7 

Tables 
 
Table 1. Main topics of the scientific framework. 13 

Table 2. Definition evolution of logistics and supply chain. 23 

Table 3. The key variables of the data collection. 56 

Table 4. The calculated variables of data processing. 59 

 
  



8 

Abbreviations 
 
CPT       Carriage Paid To 
ERP       Enterprise Resource Planning 
FCA       Free Carrier 
FOB       Free on Board 
JIT       Just-In-Time 
MTO       Make-to-order 
MTS       Make-to-stock 
PGI       Post Goods Issue  
SCM       Supply Chain Management  



9 

1 Introduction 

The timely pick-up of ready-to-deliver goods is crucial for maintaining efficient 

warehouse operations and minimizing storage costs. In a situation where customers 

delay their pick-up, businesses often face the challenge of invoicing these additional 

storage expenses, mainly as there is no system or procedure established for this specific 

purpose. The prior literature has focused much on inventory models with a penalty cost 

for delivery lateness and a nonlinear cost model to minimize total inventory operation 

costs whilst being unable to tackle the issue of late pick-ups on ready-to-delivery goods 

that are not due to the manufacturer. 

 

In this first part of the study, a general introduction to the topic and research gaps are 

provided. The introduction is divided into five subsections which, after the background 

and theoretical framework, present the objectives, questions and limitations of the study. 

The third subsection provides a general overview of the methodology used in the 

research, the collection of empirical data and its analysis. The fourth section presents 

the case company for which this study is being conducted and the last section presents 

the overall structure of the thesis. 

 

1.1 Background and theoretical framework 

In today's global manufacturing and supply chain, Gholami et al. (2023) list that 

operational efficiency, cost optimization and customer service excellence are 

increasingly important factors in competitiveness. Manufacturing and distribution 

companies, according to Hossain et al. (2017), are progressively adopting systematic 

approaches to inventory management to effectively manage customer demand while 

minimizing logistics and storage costs. Market trends show an increasing trend on 

automated, customer-responsible logistics for ready-to-deliver goods and delays in 

customer pick-up present challenges for suppliers (Miguel et al., 2022; Juan and Li, 2023). 

Efficient inventory management and timely dispatch of goods are not only to ensure 



10 

smooth internal operations but also to maintain competitive cost structures and 

customer satisfaction. 

 

Storage cost management has its role in manufacturing operations, and Khakdaman et 

al. (2015) describe that it affects both efficiency and profitability, especially in make-to-

stock (MTS) and make-to-order (MTO) production environments.  They continue that in 

MTS environments, where products are manufactured in advance of future demand, 

efficient storage practices help control inventory levels and inventory holding costs. In 

MTO environments, where products are manufactured only after receiving customer 

orders, the focus is on minimizing the storage of finished goods in order to match 

production with customer requirements (Chen et al., 2014; Dohale et al., 2019). 

Khakdaman et al. (2015) describe that balancing these approaches requires 

understanding demand variations, optimizing storage capacity and introducing efficient 

storage management solutions.  

 

Contract management is part of effective storage cost invoicing management in industry 

and logistics, as highlighted for instance by Feng et al. (2013) and Aboolian et al. (2021). 

Feng et al. (2013) provide a further insight while highlighting that it involves establishing, 

negotiating and executing contract terms that define the responsibilities of both parties 

for handling goods. Well-structured contracts can mitigate misunderstandings and 

ensure that all costs associated with storage, including those due to delays or extended 

storage periods, are clearly identified and agreed upon. Kapsali et al. (2019) discuss that 

effective contract management provides a framework for dealing with situations such as 

customer delays where responsibilities and financial implications need to be clearly 

shared. They continue that contract management supports transparency and 

accountability in the cost allocation process by defining terms and conditions related to 

storage fees, penalties and invoicing procedures. 

 

Storage cost invoicing is a supply chain management practice that provides a fair method 

of charging for the costs associated with the storage of goods. Di Giannatale and 



11 

Passarelli (2018) describe it involves charging for storage services when goods are stored 

for long periods of time. According to Cheng (2010), this practice helps to manage costs 

and maintain transparency in business relationships. The author continues that by 

creating a clear framework for dealing with storage costs, it reduces potential 

misunderstandings between stakeholders. Invoicing storage costs can encourage timely 

pick-ups and transfer of goods which contributes to overall supply chain efficiency.  

 

The scientific framework of this study focuses on storage cost management in 

manufacturing, contract management and storage cost invoicing. Bulula et al. (2020) 

describe that storage cost management focuses on strategies and practices to minimize 

the costs associated with storage, handling and space utilization of inventory in a 

manufacturing environment. Through effective storage cost management, 

manufacturers can reduce overhead costs and improve overall operational efficiency by 

maintaining optimal inventory levels and managing space effectively (Hoque, 2011). 

Integrating these practices into contract management, which defines the responsibilities, 

expectations, and potential consequences for both manufacturers and customers, is 

essential for establishing clear contractual agreements on storage duration and terms 

under which additional costs can be applied (Kapsali et al., 2019; Hossain et al., 2017). 

When invoicing for storage costs, invoicing conditions should be specified in the 

contracts to ensure that extended storage costs are applied in a fair and transparent 

manner. By including specific terms for storage costs in contracts, organisations can 

ensure that customers are aware of their responsibilities regarding timely pick-up and 

the financial impact of delayed pick-ups (Davis and Vogt, 2019). Brunaud et al., (2018) 

point out that the use of delivery terms further clarifies these responsibilities by 

specifying the transfer of risks and costs at different steps in the logistics process. The 

framework for the research is presented below in figure 1, with storage cost 

management in manufacturing as a macro factor and contract management and storage 

cost invoicing as micro factors. 

 



12 

 

Figure 1. Scientific framework of the research. 

 

The scientific framework of this study builds on recent academic research and 

professional literature on the topics mentioned above to provide a coherent framework 

of storage cost invoicing within the context of contract and storage cost management in 

a manufacturing environment. The main ideas of the applied scientific framework are 

presented in table 1 below. 

  



13 

Table 1. Main topics of the scientific framework. 

Storage cost management in manufacturing 

Storage cost management in manufacturing can be described as a method of 

minimizing the costs associated with storing, handling and optimizing inventory space, 

which in make-to-stock (MTS) systems, it aims to control inventory levels and storage 

costs, while in make-to-order (MTO) systems it minimizes storage by closely matching 

production with customer demand (Khakdaman et al., 2015; Chen et al., 2014; Bulula 

et al., 2020). 

Contract management 

Contract management in industry and logistics is the process of defining, negotiating 

and executing contractual terms that outline the responsibilities of both parties for 

handling goods and ensure clear accountability for costs, including storage fees, 

additional costs and invoicing in the event of delays or extended storage periods (Feng 

et al., 2013; Aboolian et al., 2021; Kapsali et al., 2019; Davis and Vogt, 2019). 

Storage cost invoicing 

Storage cost invoicing is a process whereby storage services are charged when goods 

are in storage for extended periods of time, promoting transparency and encouraging 

timely pick-ups to improve supply chain efficiency (Di Giannatale and Passarelli, 2018; 

Cheng, 2010; Davis and Vogt, 2019). 

 

This research addresses the research gap in storage cost management by analysing how 

a streamlined invoicing framework for storage costs and contract management can 

improve operational efficiency and financial performance in manufacturing company. 

Feng et al. (2013) identify the lack of scenario-based optimization in MTO supply chains 

which this study addresses by analysing the cost of delayed pick-up and proposes 

contract-based strategy to mitigate storage costs. Kapsali et al. (2019) discuss combining 

contractual conditions for optimal performance which this study explores by matching 

specific delivery terms with storage cost invoicing to improve on-time pickups. Davis and 

Vogt (2021) propose further research on the impact of delivery terms on efficiency which 

this study investigates with data collected under specific delivery terms. Also, this study 



14 

provides a framework for inventory cost management that combines operational, 

financial and contractual considerations, responding to the need identified by Pfaff et al. 

(2004) to improve the synergy between financial and operational management of the 

supply chain. This study contributes to a recognised research gap by presenting an 

empirical analysis on how contractual management could improve organizational 

processes in an MTO environment. The research gap is visualized in the figure 2 below: 

 

 

Figure 2. Visualization of the research gap. 

 



15 

1.2 Methodological approach 

One of the key frameworks for constructing research methodology is Saunders' research 

onion, as proposed by Saunders (2023). The author continues that the research onion 

provides a detailed description of the steps involved in creating an effective research 

design and guides researchers step-by-step through the different layers that need to be 

addressed. Starting with the furthest layer and working inwards, the onion helps to 

structure the whole research process from philosophy to data collection. The Saunder’s 

research onion is shown in the figure 3 below: 

 

 

Figure 3. Saunder’s research onion (Saunders, 2023). 

 

The research onion comprises six primary layers, as illustrated in figure 3. The outermost 

layer is the research philosophy, which according to Saunders (2023) forms the 

foundation of the study by defining the perspective on reality, the sources of knowledge, 

and the role of values in the research. The author continues that this layer helps 



16 

researchers establish their worldview, which influences all decisions later in the research 

process. Common philosophies include positivism, interpretivism, critical realism, 

postmodernism and pragmatism. This thesis adopts a pragmatist philosophy, recognising 

that both qualitative and quantitative approaches can provide valuable insights into 

research questions. 

 

Next comes the approach to developing the theory, which is influenced by the 

philosophy chosen. Saunders (2023) list that researchers may use deduction, which 

starts from existing theories to develop and test hypotheses, induction, which builds 

theories from observations, or abduction, which moves between induction and 

deduction to produce the best possible explanation of the observed phenomenon. The 

author describes the deductive approach as suitable for testing existing theories, while 

the inductive approach is better suited to developing new theories from data. Induction 

is often used when an unexpected finding encourages further research. In this study, the 

abductive approach is used because it allows flexible movement between existing 

theories and empirical findings which is needed for understanding the complex nature 

of storage cost invoicing. 

 

The third layer of the Saunders research onion is the methodological choice which 

determines whether the research will use mono-method quantitative, mono-method 

qualitative, multi-method quantitative, multi-method qualitative, mixed method simple 

or mixed method complex. This layer is relevant because it defines the overall research 

design and how the data will be collected and analysed to answer the research questions. 

Saunders (2023) describes several types of methodological choices. These include mono-

method quantitative or mono-method qualitative, which focuses on a single data 

collection and analysis approach. Multi-method quantitative or multi-method 

qualitative combines multiple forms of either quantitative or qualitative methods. Mixed 

method integrates both quantitative and qualitative techniques. Mixed methods can be 

further categorized into simple or complex depending on the level of integration 

between the two approaches. In this study, a simple mixed method is used, combining 



17 

both qualitative and quantitative methods to provide a comprehensive understanding of 

the research problem. The qualitative part includes a literature review to explore 

contextual factors while the quantitative part includes an empirical data analysis using a 

case study company's information system. This combination allows for a richer and more 

sophisticated analysis of the research questions, taking advantage of the strengths of 

both qualitative and quantitative approaches to improve the reliability and depth of the 

research findings. 

 

The fourth layer deals with the research strategy, which refers to how data will be 

gathered and analysed. Strategies may include experiments, surveys, case studies, 

ethnography, action research, grounded theory, archival research and narrative inquiry. 

As Saunders (2023) points out, the choice of strategy depends on the research question, 

objectives and available resources. For example, experiments are often used to explore 

cause and effect relationships, while case studies provide in-depth insights into specific 

contexts. The choice of strategy should be in line with the overall methodological 

approach. This study uses a case study strategy, focusing on a case study company, to 

provide in-depth insights into the implementation of storage cost invoicing mechanisms. 

 

The next layer addresses time horizons, determining whether the study will be cross-

sectional or longitudinal. Saunders (2023) emphasises that a cross-sectional study 

collects data at a specific point in time, which makes it suitable for studies that aim to 

obtain a snapshot of a particular occurrence. On the other hand Saunders (2023) 

continues, a longitudinal study involves collecting data over a longer period of time to 

identify changes and trends, making it useful for understanding the dynamics of a 

phenomenon over time. This research uses cross-sectional analysis the data is collected 

once over the last five years.  

 

The final innermost layer includes techniques and procedures for data collection and 

analysis. These include selecting sampling methods, designing questionnaires, 

conducting interviews and analysing the data collected. Saunders (2023) suggests that 



18 

the choice of techniques and procedures is influenced by the previous layers of the 

research design to ensure that data collection is aligned with the research philosophy, 

approach and strategy. Techniques may include the collection of primary data, such as 

interviews or surveys, or the analysis of secondary data, such as the review of existing 

documents or datasets. In this study, data was collected from the information system of 

a case study company, focusing on actual orders, in order to understand the impact of 

invoicing for inventory costs. The size of the sample is a little bit less than hundred 

thousand units which constitutes a representative sample of the population of the 

dataset. Data analysis included both statistical methods to examine quantitative data 

and thematic analysis to analyse qualitative data.  

 

1.3 Research objectives, questions and limitations 

The main objective of this study is to examine the integration of storage cost invoicing 

into business processes in cases where customers delay the pick-up of ready-to-deliver 

goods. This study explores the contractual and operational aspects necessary for 

establishing an effective inventory cost invoicing mechanism, offering a detailed 

overview of the critical elements that facilitate smooth integration. The study also seeks 

to understand the organizational implications of such integration, with a particular focus 

on its impact on operational efficiency, financial management and customer relations. 

Further, this study aims to provide practical insights and recommendations for the case 

study company and to provide a framework to support both operational and strategic 

decision-making in relation to storage cost invoicing. To reach this objective and tackle 

an important industrial relevant subject, the research in this study is guided by two main 

research questions: 

 

RQ1: What are the key factors that need to be considered in integrating the contract and 

implementation of storage cost invoicing into a business process? 

 

RQ2: What are the implications of integrating the contract and implementation of 

storage cost invoicing into a business process? 



19 

The first research question focuses on the various key factors that need to be taken into 

account when integrating the contract and the related invoicing of storage costs into the 

company's processes. Understanding these factors is crucial for ensuring efficient and 

effective implementation of the new process. The answer to this question is mainly 

covered in the literature review section, which reviews academic literature, empirical 

studies, and case studies related to the topic. The main aim of the case company is to 

understand the current state-of-the-art knowledge in the literature relevant to this topic, 

therefore being the most preferable approach to this question. The literature review is 

based on the relevant and prior literature, which is peer-reviewed. Various databases 

such as Business Source Premier, Emerald Journals, IEEE Xplore, Sage Journals Online, 

Science Direct (Elsevier), Scopus, Google Scholar and ABI Inform have been used to 

search for quality studies while ensuring relevance to the topic through the abstract 

screening process. By examining the existing literature, the study aims to identify best 

practices, potential challenges, and opportunities for improvement in the integration 

process. Furthermore, the second research question is answered by first analyzing the 

relevant information in the literature while combining this knowledge with empirical 

data analysis, for which data is collected from the case company. 

 

Like other studies, this study also has a few limitations that require attention. The topic 

of this study is limited to the evaluation of the final storage of finished industrial products 

from the perspective of a manufacturing company. It excludes topics related to energy 

storage, indirect orders and service-centred organizations. In the empirical part, the 

calculation of storage costs has been based on a formula provided by a case company to 

cover the costs of extended storage. This formula, while suitable for the case company, 

may not be universally applicable to all manufacturing contexts. In order to limit the data 

collection and increase the validity, delivery terms are excluded from the data sample, 

where the manufacturing company is fully responsible for the delivery arrangements. 

This exclusion may limit the generalizability of the findings, as different delivery terms 

can significantly impact storage costs and inventory management strategies. The 

empirical analysis identifies the profitability of the different delivery terms, the 



20 

performance of the company, and the estimation of the realised sales profit, but these 

are excluded from the analysis of this study. While these factors can influence storage 

costs indirectly, their direct impact on storage costs is not explicitly examined in this 

study. 

 

1.4 Case company  

The case company chosen for this study is a multinational manufacturing company 

specialising in highly customised products, tailored to meet specific customer 

requirements. The company's product range includes products of different sizes and 

types that can be further customised according to pre-defined conditions. These 

conditions not only enhance the uniqueness of each product but also allow customers 

to express their preferences in a way that aligns with their specific needs and 

expectations. Further, these conditions can be directly related to the product or to the 

delivery terms, which customers can modify and change according to their needs at any 

point in the process. This type of flexibility is a key selling point for the company, as it 

empowers customers to have greater control over their orders, fostering stronger 

relationships and loyalty. Although these pre-defined conditions are optional for the 

customer, they are commonly included in most of the company's products and orders, 

adding complexity to the company's production and operational processes. Because the 

company makes fully customised products, it works in a MTO manner which requires 

careful attention to ensure efficiency, customer satisfaction and to balance operational 

resilience. This operational model not only demands precision in manufacturing but also 

demands a robust communication strategy with customers to manage expectations 

effectively. 

 

In the current situation, the case company has a gap in its operational processes, as there 

is no formal way of invoicing customers for extended storage. The lack of a mechanism 

for invoicing storage costs exposes the company to extended storage situations, where 

customers whose projects may be delayed or whose demand for products is prolonged 

take advantage of free storage. This situation creates a financial stress on the company, 



21 

as it incurs costs associated with storing these products in without any corresponding 

revenue. Since the company has no financial interest in encouraging timely pick-ups, the 

case company continues to handle the storing of the finished products in ideal storage 

conditions without compensation. This not only affects potential cash flow but also ties 

up valuable warehouse space that could be utilized for other projects or inventory. 

Integrating a system of invoicing storage costs into the company's operations would 

solve this problem by motivating customers to pick up their products more quickly. In 

addition, once the products are delivered, the company would be able to record sales 

and recognize revenue thereby improving its financial and operational efficiency. By 

implementing such a system, the case company could enhance its overall profitability 

while also streamlining its inventory management processes. This study focuses on 

addressing this highly relevant gap and examines the impact that the introduction of 

inventory cost invoicing would have on the company's processes. 

 

1.5 Structure of the research 

This thesis is structured in five main chapters as follows. The first chapter introduces the 

research topic and provides background information and an introduction to the recent 

scientific literature relevant to the study. It also includes a description of the case study, 

defines the research questions and highlights the limitations of the study. The second 

chapter provides a comprehensive literature review, organised into three main sections 

based on the theoretical framework, and a subchapter on identifying research gaps. The 

third chapter presents in detail the methodological approach applied and focuses on the 

data collection and analysis techniques used throughout the study. The fourth chapter 

presents and discusses the empirical findings of the study, including the results of the 

data analysis. Finally, chapter five presents conclusions, provides an outline of practical 

applications for business management, discusses limitations, evaluates the results and 

makes recommendations for the future research. 



22 

2 Literature review 

This literature review introduces the main topics and recent scientific studies related to 

logistics and supply chain management, the storage costs in the manufacturing industry, 

the integration of contract and storage cost invoicing and their implications for business 

processes. The focus of the literature used is on peer-reviewed literature, which includes 

academic articles as well as empirical and case studies. The literature review in this 

section uses both current and recent literature. The section is divided into three main 

sections on storage costs in production, theoretical framework in contract management, 

and identification of research gaps which together provide a qualitative framework for 

the study. 

 

2.1 Logistics and supply chain management 

Logistics and supply chain management (SCM) are essential components in the 

operational framework of businesses, which further influences efficiency and 

effectiveness in delivering products and services (Cooper et al., 1997). At the core, 

logistics involve, for example, the phases of planning, implementation, and control of 

the flow and storage of goods and related information from the point of origin to the 

point of consumption (Cayhun and Keser, 2020). Logistics provides a foundational 

framework for planning and coordinating the efficient flow of products and information 

within a business, while the definition has been evolving (see table 2) throughout history 

from military operations to business activities (Lummus et al., 2001). The common 

understanding of logistics is that it is not just a synonym for supply chain management, 

it is a subset of it (Cooper et al., 1997). Nowadays, in the commercial context, logistics 

term is associated with a focus on the physical movement of goods, including 

transportation, warehousing, and inventory management. Moreover, it is seen as a 

tactical function aimed at ensuring the efficient flow of products from suppliers to 

customers (Burda, 2015; Cayhun and Keser, 2020) while in today’s dynamic business 

environment, it is becoming a strategic function greater than a simple transportation 

management (Adeniran et al., 2024).  



23 

Building upon the foundation of logistics, supply chain management extends this 

concept by promoting collaboration and integration between various entities involved 

in the supply chain, including suppliers, customers and the organization itself 

(Christopher, 2016: 1-26). Like logistics, the conceptual understanding and definition of 

the supply chain (see table 2) has been evolving hand-in-hand with academic and 

industrial attention (Lummus et al., 2001). Conversely, supply chains cover the entire 

network of organizations involved in the creation and delivery of a product, ranging from 

raw material suppliers to end consumers. Both logistics and supply chain management 

significantly impact a company’s cost-efficiency, responsiveness, resilience and 

sustainability within a globalized economic landscape (Richey et al., 2022; Rathor et al., 

2022). Through the digitalization and development of digital technologies, supply chain 

management is undergoing changes where big data analytics and AI can be adapted to 

many activities, for instance even monitoring customer behaviour (Adeniran et al., 2024; 

Maheshwari et al., 2021). 

 

Table 2. Definition evolution of logistics and supply chain. Adapted from Lummus et al. 
(2001), Rathor et al. (2022) and Burda (2015). 

Logistics Supply Chain 

Author Description  Author Description  

Luttwak (1971) 

Logistics involves planning, 

calculating, and physically 

executing the supply of 

equipment and supplies to 

armed forces, aiming to 

optimize quantities and 

minimize shortages and 

overstocking. 

Ellram and 

Cooper (1993) 

Supply chain management 

is an integrated philosophy 

for managing the entire 

flow of a distribution 

channel from supplier to 

customer. 



24 

Cavinato 

(1982) 

Logistics manages the 

inbound and outbound 

flow of materials, parts, 

supplies, and finished 

goods, integrating pur-

chasing, transportation, 

and storage across pre-

production, in-production, 

and post-production 

channels 

The Supply-

Chain Council 

(1997) 

Supply chain management 

encompasses the planning, 

sourcing, manufacturing, 

and delivery processes, 

including managing supply 

and demand, sourcing raw 

materials, manufacturing, 

warehousing, order 

management, distribution, 

and customer delivery. 

Simpson and 

Weiner (1989) 

Logistics is the art of 

moving and quartering 

troops in a military context. 

Lummus and 

Alber (1997) 

Supply chain management 

involves managing the 

network of entities, 

including suppliers, 

manufacturers, distrib-

utors, and customers, 

through which materials 

flow. 

Cox et al. 

(1998) 

Logistics encompasses the 

management of material 

and product acquisition, 

production, and 

distribution in industry and 

the movement of 

personnel in the military 

Monczka and 

Morgan (1997) 

Integrated supply chain 

management focuses on 

managing all processes 

necessary to deliver value 

to the external customer in 

a horizontal manner. 



25 

Council of 

Logistics 

Management, 

CLM (1998) 

Logistics is the process of 

planning, implementing, 

and controlling the efficient 

and effective flow and 

storage of goods, services, 

and related information 

from origin to 

consumption, meeting 

customer requirements 

and considering inbound, 

outbound, internal, exter-

nal, and return movements 

Lummus and 

Vokurka (1999) 

Supply chain management 

involves all activities from 

raw material sourcing to 

customer delivery, 

including manufacturing, 

warehousing, order 

management, distribution, 

and information systems 

for monitoring these 

activities. 

Burda (2015) 

Logistics is a management 

tool that coordinates the 

flow of materials from 

suppliers to customers. It 

involves planning, 

implementing, and 

controlling the efficient, 

effective flow and storage 

of goods and related 

information. By 

coordinating supply and 

demand in terms of time 

and place, logistics aims to 

improve customer 

satisfaction while 

minimizing costs. 

Rathor et al. 

(2022) 

Supply chains are networks 

that facilitate the 

movement of goods from 

suppliers to customers. 

They involve various 

entities like buyers, 

producers, and 

transportation modes. 

Supply chain management 

focuses on controlling the 

flow of materials and 

finished goods throughout 

this network. 

 



26 

Enterprise Resource Planning (ERP) and SCM have gained increasing popularity across 

diverse industries while enhancing corporate cross-functions and reducing transaction 

costs (Tarn et al. 2002). ERP is a software system that integrates and manages a firm's 

core business processes such as customer relationship management, order processing, 

and resource allocation, using a single database (Gupta et al., 2018). ERP systems consist 

of modules tailored to specific departmental functions, such as manufacturing, human 

resources, and finance (Ullah et al., 2017; Hasan et al., 2017) while by integrating internal 

and external processes, ERP systems enable firms to improve efficiency, reduce costs, 

and make informed decisions (Njihia and Mwirigi, 2014; Ullah et al., 2017). It has been 

discovered that ERP tools can support supply chain integration and minimize total supply 

chain system cost, but still, it may require a multi-level framework for policy coordination 

(Kelle and Akbulut, 2005). Contrarily, ERP and SCM have been seen as prominent 

operational aids for organizations while study by Shatat and Udin (2012) shows that ERP 

system components positively and significantly improve supply chain management 

performance in Malaysian manufacturing companies, but workflow management does 

not show a significant relationship. However, on the other hand, it is also noticed that 

ERP systems offer some potential for enhancing future supply chain effectiveness, as 

they may struggle to adapt to evolving requirements and integrate complex, multi-

enterprise networks (Akkermans et al., 2003). 

 

Implementing ERP systems empowers companies to adopt an extended enterprise 

business model, thereby enhancing value creation across the entire supply chain. To 

further reach optimal levels of supply chain efficiencies, companies must exchange 

substantial amounts of planning and operational data, which may contain information 

from annual contracts and regular progress reports to real-time delivery and billing data 

(Kelle and Akbulut, 2005). The integration of ERP and SCM systems has gained significant 

popularity, further fostering cross-functional collaboration within organizations and 

possibly leading to significant reductions in transaction costs. Additionally, ERP systems 

have demonstrated their efficacy in streamlining business financial operations by 

reducing costs and accelerating transaction times (Ahmad et al., 2021). 



27 

As manufacturing companies worldwide have gone through a change, ERP systems offer 

a highly integrated solution to an organization's information system requirements, 

thereby capturing interest across diverse functional domains. For instance, it has been 

found that in the automotive industry, the SAP ERP system has enabled advanced 

customer logistic services, improving supply chain quality, costs, and timeliness through 

Just-in-Time (JIT) methods (Lorenc and Szkoda, 2015). JIT philosophy, developed by 

Taiichi Ohno, focuses on the principle of delivering raw materials and producing products 

precisely when required, minimizing inventory levels of raw materials, work-in-process, 

and finished goods. This approach further reduces inventory costs and exposes possible 

inefficiencies, for instance, poor maintenance, inspection, and backlogs, within the 

manufacturing cycle (Vuppalapati et al., 1995). The main goal of JIT is to eradicate waste 

throughout the entire supply chain through continuous improvement (Frazier et al., 

1988; Ufua et al., 2022). Maintaining inventory levels can increase product costs and 

reduce profitability across industries, which has led companies to seek to control stock 

levels to minimize costs and maximize profits whilst being an important part of supply 

chain management (Singh et al., 2012). Likewise, for organizations, regardless of the 

production philosophy, it is important to control, plan, and optimize both storage and 

supply chain activities to aim for positive firm performance (Mahajan et al., 2024). 

 

2.2 Storage cost management in manufacturing 

Effective inventory management strategies play a key role in the management of ready-

to-deliver goods and their storage cost for manufacturing companies. As production 

processes advance, customer demands develop and businesses need to adapt by 

optimizing their inventory practices. This section analyses various strategies that support 

the efficient handling of ready-to-deliver goods, focusing on aspects such as different 

inventory management strategies, cost drivers in storage management, financial and 

operational implications of delayed pick-ups. 

 



28 

2.2.1 Inventory management strategies 

Inventory management strategies have evolved from traditional practices to advanced 

data driven models that prioritize cost-effectiveness and quality of service. Routroy and 

Kodali (2005) describe that the strategies were originally based on holding large 

inventories to reduce risk factors, often leading to the tying up of excess capital, limited 

storage space and problems such as obsolescence and shrinkage. As supply chain 

practices have been evolving, different stock reducing strategies and data collection 

methods have become more common, allowing organizations to refine inventory levels 

through supply chain and real-time information. The application of data, as Feng (2019) 

mentions algorithms and technological integrations, have further improved inventory 

management by enhancing decision making and resource allocation across the supply 

chain, which according to Routroy and Kodal (2005) improve both operational efficiency 

and customer service. These developments highlight a wider trend towards integrated 

systems designed to reduce costs while efficiently meeting customer demand and 

achieving competitive advantage (Mahajan et al. 2024). 

 

In manufacturing, inventory management strategies can be divided into two main 

categories: material and component inventory and finished goods inventory. Material 

and component inventories include the raw materials, sub-assemblies and parts 

required for production processes (Kim et al., 2022). Effective management of these 

stocks is essential to maintain a steady flow of production and minimize possible 

production downtime. Here, it should be remembered that the production department 

is responsible for coordinating the combination of raw materials, the firm's resources, 

and machinery to create products and services (Ahmad et al., 2021). 

 

Pathak et al. (2024) describe that inventory management can be divided into materials 

and components and into finished goods. The finished goods inventory consists of 

finished products awaiting delivery to customers. This category of finished goods 

inventory management can be divided for two business models: make-to-stock (MTS) 

inventory management and make-to-order (MTO) inventory management (Dohale et al., 



29 

2019). Dohale et al. (2019) further describe that in MTS, the finished products are 

stocked in the end inventory and aims to satisfy the demand of customers. They continue 

that MTO inventory management is consumer demand driven thus products are 

manufactured in response to orders placed by the customers. With MTO methods, often 

referred to as the pull method, orders trigger production, which is characterized by 

longer lead times, minimal storage costs and high ability of customization.  

 

To classify stocks according to production stages, companies must also adopt specific 

methods and techniques to improve stock control. One of the most used approaches is 

JIT inventory management (Vuppalapati et al., 1995) which ultimately aims to reduce 

wastage by taking goods only when they are needed in the production process, thus 

minimizing inventory costs (Ufua et al., 2022; Tortorella et al., 2021). JIT is beneficial in 

lean manufacturing environments where efficiency and waste reductions are a priority. 

Bond et al. (2019) highlight that the success of JIT depends heavily on reliable suppliers 

and accurate demand forecasting. Any disruption in the supply chain can lead to 

production delays which is why organizations should have supply chain management 

strategies. The breakdown of the inventory management is defined below in figure 4: 

 

 

Figure 4. Inventory management and its subcategories. 

 



30 

One way to improve the efficiency of the inventory management process is to use 

technological advances such as enterprise resource planning (ERP) systems. Faccio and 

Gamberi (2021) highlight the role of ERPs in integrating inventory management with 

other business processes such as sales, procurement and production. Feng (2019) 

describes that ERPs provide real-time data and analytics that enable manufacturing 

companies to plan the production, monitor inventory levels and follow the overall 

process from registering the order to dispatching the products. Feng (2019) continues 

that the modular design of ERP systems ensures that they can be customized to the 

specific needs of an organization whether MTS or MTO. ERP systems reduce 

inefficiencies and improve the overall responsiveness of the supply chain by providing 

an overall view of the inventory and enabling better coordination between different 

departments (Faccio and Gamberi, 2021). 

 

Lean inventory management practices, such as those related to total quality 

management and six sigma, have an effect on optimizing inventory strategies. Tortorella 

et al. (2021) highlight that lean practices focus on reducing excess inventory improving 

production processes and improving quality. De Vries and van der Laan (2020) mention 

that by integrating lean principles into inventory management, manufacturing 

companies can minimize wastage, improve flow of the processes and improve product 

quality while maintaining sufficient inventory levels to meet customer demand. They 

continue that as well lean practices are particularly effective in MTO environments 

where customized production requires flexibility and accurate monitoring of inventory 

levels. Continuous improvement tools, according to Tortorella et al. (2021), such as 

Kaizen further support inventory optimization by encouraging regular evaluation and 

refinement of inventory processes. 

 

2.2.2 Cost drivers in storage management 

Understanding the cost drivers associated with storage management is essential to 

optimize the total cost of storing goods that are ready for delivery. Several studies 

highlight that the key cost factors for inventory management are storage costs, 



31 

transportation costs and administrative costs associated with inventory management 

(Hoque, 2011; Bulula et al., 2020). Storage costs, which include storage space, insurance, 

spoilage and expiry costs, are often the most significant cost components (Hoque, 2011). 

For example, Bulula et al. (2020) found that storage space accounted for a significant 

share (20%) of the total cost of storing finished goods highlighting the critical importance 

of efficient space utilization in minimizing storage costs. This is also supported by Alrjoub 

and Ahmad (2017), who find that optimizing storage levels through robust management 

systems can significantly reduce storage costs and improve financial performance. These 

findings highlight the importance of implementing cost-effective storage strategies that 

consider different cost drivers, especially in manufacturing environments where delays 

in customer pick-ups can increase storage-related costs. 

 

Transport costs are another important factor in managing inventory. According to Hoque 

(2011), transportation costs, including fuel and logistics costs, are among the critical 

factors that can affect inventory costs, especially in integrated supply chains where 

inventory must be moved or redistributed frequently. Bulula et al (2020) identify 

transport costs as a significant cost factor, accounting for 21% of total costs in their study 

of finished goods storage and distribution. The authors highlight the need for effective 

supply chain management to minimize these costs. Integrating warehouse management 

with ERP systems can further improve cost-effectiveness by streamlining logistics 

operations and improving the visibility of warehouses (Feng, 2019). By applying model 

data and providing real-time insights, ERPs help organizations reduce transportation-

related costs and improve the overall efficiency of inventory management practices. 

 

Administrative and management costs also a one part to determine the total cost of 

storage management. Costs associated with personnel, receiving and dispatching and 

program management are often cited as important factors in the overall cost structure 

(Bulula et al., 2020). Peiqiang (2018) highlights the role of customized financial 

management systems in reducing these administrative costs by improving financial 

controls, data accuracy and operational efficiency. Integrating such systems with existing 



32 

ERP systems facilitates more accurate monitoring of inventory and related costs, thereby 

improving strategic planning and decision-making capabilities. Continuous evaluation 

and adaptation of these systems is necessary to adapt to changing business 

environments and technological advances, which can further reduce administrative 

overheads and improve the overall management of inventory costs (Peiqiang, 2018; 

Feng, 2019). The cost drivers in storage management are visualized in the following 

hierarchy diagram figure 5: 

 

 

Figure 5. Cost drivers in storage management. 

 

The introduction of advanced inventory management practices can have a significant 

impact on the cost dynamics of inventory management. Bah et al. (2023) argue that 

efficient inventory management systems, that focus on optimizing inventory cycle times, 

can positively affect profitability by minimizing costs associated with holding and 

maintaining inventory. Advanced systems that leverage data analytics and automation 

technologies enable companies to maintain optimal inventory levels and reduce excess 

inventory which lowers maintenance costs and improving overall cost-effectiveness 

(Alrjoub and Ahmad 2017). Mahajan et al. (2024) caution that while inventory cycle rate 

optimization is important for managing inventory costs, it may not always correlate 

directly with overall company performance which suggests that companies need to 

adopt an approach that balances cost management with wider strategic objectives.  



33 

2.2.3 Financial implications of delayed pick-ups 

Incoterms are standardised delivery terms and trade rules developed by the 

International Chamber of Commerce to streamline international trade by clearly defining 

responsibilities, costs and risks between buyers and sellers as explained by Baena Rojas 

et al. (2024). The key purpose of incoterms is to create a common language for 

international trade and ensure that both parties clearly understand their roles and 

responsibilities, which López et al. (2024) describe, helps to reduce potential 

disagreements that may arise during cross-border transactions. Baena Rojas et al. (2024) 

continue that these rules specify which party is responsible for the different stages of 

the transport process, such as transportation, insurance and handling, and are divided 

into categories that progressively increase the level of seller responsibility, ranging from 

minimum responsibilities in group E to maximum responsibilities in group D. The 

categorization allows firms to choose terms that match their logistical capabilities and 

risk tolerance, enabling strategic alignment in international trade. López et al. (2024) 

note that incoterms are updated approximately every ten years to reflect changes in 

global trade practices and the latest revision is incoterms 2020 which introduced 

updated terminology and rules to reflect modern logistical needs.  

 

This study focuses mainly on the incoterms CPT (Carriage Paid To), FCA (Free Carrier) and 

FOB (Free on Board), as these are the only incoterms used by the case company when 

customers are responsible for arranging transport at some point in the process. The 

choice of these incoterms matters because they clearly define the sharing of costs and 

risks between customers and manufactures and influence the management of financial 

and operational risks in the supply chain (Davis and Vogt, 2021). According to CPT, the 

manufacturer is responsible for the transportation costs to the destination specified by 

the customer but the risk is transferred when the goods are handed over to the original 

carrier, often leading to confusion between cost and risk responsibilities (Davis & Vogt, 

2022). Similarly, FCA provides that the manufacturer’s responsibility ends when the 

goods are handed over to the designated carrier, offering flexibility and better risk 

management, especially in multimodal transport (Stojanovic and Ivetic, 2020). FOB used 



34 

in sea freight transport transfers the risk once the goods are loaded onto the vessel, 

according to Davis and Vogt (2022), making it less suitable for container transport, where 

risk transfer can present complex problems. Each of these terms affects the assignment 

of responsibility, and their incorrect use can introduce hidden risks related to insurance, 

responsibility and costs (Davis & Vogt, 2021). Therefore, focusing on these specific 

incoterms allows the study to focus on scenarios where the customer is responsible for 

the transport and to provide evidence on how these responsibilities affect operational 

performance and financial results in international trade, as Stojanovic and Ivetic (2020) 

argue. By understanding the specific requirements and potential pitfalls associated with 

CPT, FCA and FOB, this study aims to evaluate how the accurate application of incoterms 

can improve logistics performance and help to ensure risk and cost sharing and 

coordination of logistics objectives (Davis & Vogt, 2022; Stojanovic & Ivetic, 2020). CPT, 

FCA and FOB are shown in the figure 6 below: 

 

 

Figure 6. FCA, FOB and CPT. 

 



35 

Delays in pick-ups in supply chains have financial effects, especially when contractual 

commitments and risk-sharing are not clearly defined. Delays can significantly increase 

storage costs, disrupt the flow of cash and create additional risks for both customers and 

manufacturing companies. Davis and Vogt (2021) highlight the hidden risks associated 

with the incorrect application of incoterms where the incorrect allocation of 

responsibilities for transportation, insurance and risk transfer can lead to costly delays 

and disagreements over responsibility. For example, incorrect use of FCA or FOB  terms 

can lead to misunderstandings about when risk is transferred from manufacturing 

company to customer, leaving companies vulnerable to unexpected storage costs and 

legal responsibilities (Davis and Vogt, 2021; Stojanovic and Ivetic; 2022). In addition, 

incorrect application of incoterms, such as CPT, creates additional complexity because 

risk may shift earlier than responsibility for transportation costs, increasing the 

additional costs of delayed recoveries (Davis and Vogt, 2022). Proper understanding and 

strategic application of these terms of trade are important to reducing these financial 

risks. Failure to follow these terms of trade can increase storage costs, damage to goods, 

and operational inefficiencies, highlighting the need for more formal training and risk 

management strategies in incoterms and warehouse invoice management (Davis and 

Vogt, 2021). 

 

Delayed collections of goods ready for delivery have a financial impact on organizations, 

as they can directly affect operational efficiency, cost control and overall financial 

performance. According to Juan and Li (2023), supply chain delays, including those 

caused by delayed customer deliveries, can significantly increase costs and reduce 

profitability by disrupting the flow of goods and extending inventory holding times. This 

inefficiency leads to increased storage costs, which ties up capital that could otherwise 

be directed to more productive uses. This view is further supported by Arslan and Yildiz 

(2022) as the authors show that supply chain disruptions, such as delayed pick-ups, 

cause immediate and significant negative reactions in the stock market, indicating that 

investors are concerned about the financial stability and operational performance of the 

company. These studies highlight the critical importance of implementing effective risk 



36 

management and disruption management strategies to reduce the financial risks 

associated with delays in customer pick-ups. 

 

The financial impact of delayed pick-ups is also affected by the use of penalty costs and 

invoicing methods designed to control and recover costs. Hossain et al (2017) suggest 

that the application of penalty costs for late deliveries or delayed pick-ups can be an 

effective strategy to improve system reliability and encourage timely deliveries. In the 

context of invoicing for storage costs, such invoiced additional costs not only help cover 

the additional costs of delayed storage, but also help prevent customers from being late 

in the future. This is in line with Quan-bin (2009), who finds that a well-implemented 

invoice management system can make it easier to better monitor inventory levels, sales 

transactions and purchase orders, and so improve financial management processes. 

Integrating these systems into existing business processes allows companies to 

effectively manage the financial costs of delayed pick-ups and improve their overall 

financial performance by recovering some of the costs associated with extended storage 

lead times. 

 

Delayed pick-ups also have indirect financial impacts as it affects the flexibility of the 

supply chain and requires more robust risk management practices. Juan and Li (2023) 

suggest that supply chain delays, including delays caused by late pick-ups, require 

improved resilience strategies to maintain financial stability. This may require the 

implementation of proactive actions such as diversifying suppliers, improving forecasting 

accuracy and developing backup plans. Arslan and Yildiz (2022) highlight the importance 

of such practices and find that companies with strong supply chain resilience are more 

resilient to financial disruptions and maintain the trust of investors. As a result, the 

financial consequences of delayed pick-ups go beyond the direct costs to wider strategic 

concerns, such as maintaining supply chain resilience and tolerating long-term financial 

risk. These implications are defined in the figure 7 below: 

 



37 

 

Figure 7. Fishbone diagram of financial and indirect implications of delayed pick-ups. 

 

2.2.4 The impact of finished goods on operational efficiency 

Insufficient storage capacity, either due to limited space or outdated logistics systems, 

acts as a bottleneck in both manufacturing and distribution environments, as noted in 

studies by Mapanga (2024) and Kizil (2010). Kizil (2010) highlights that efficient storage 

allocation is essential in manufacturing production to avoid bottlenecks and ensure that 

space supports new production needs. Groten and Gallego-García (2021) describe when 

products take up storage space originally intended for temporary use, these spaces may 

become semi-permanent storage areas, leading to a loss of operational flow. They 

continue that the semi-permanence of temporary storage areas disrupts the planned 

movement of materials and goods throughout the production process, causing delays 

and reducing the company's responsiveness to customer orders. Gallego-García et al. 

(2021) show that delays in distribution increase the reliance on these temporary storage 

spaces and reduce the continuous flow of operations.  

 

Poor inventory management of finished goods waiting for pick-up disrupts production 

scheduling and affects overall efficiency by delaying production schedules and reducing 

responsiveness to critical orders. Groten and Gallego-García (2021) discuss how 



38 

inefficient production optimization can reduce schedule flexibility leading to critical 

orders not being completed. In addition, as Kizil (2010) notes, poor inventory allocation 

can prevent the on-time fulfilment of more critical orders, affecting production priorities 

and impacting customer satisfaction. More coordination is needed for the management 

of delayed goods when delays in pick-ups increase which increases the need for 

monitoring and slows workflow (Groten and Gallego-García, 2021). Abdollahpour and 

Rezaian (2017) highlight that manufacturing capacity combined with disruptions in 

logistics decreases operational efficiency by requiring additional resources to monitor 

and manage delayed inventory. Such disruptions often lead to a MTS production 

scenario although the production operating model is MTO, as described by Abdollahpour 

and Rezaian (2017), where limited storage capacity leads to an inventory build-up that 

eventually disrupts production flow. They further highlight that these restrictions create 

bottlenecks in the combination of MTO and MTS models forcing manufacturers to 

postpone new orders until inventory space becomes available. 

 

Gallego-García et al. (2021) highlight that delays require logistics management efforts as 

maintaining accurate inventory levels and ensuring efficient handling increases 

operational activities. As Mapanga (2024) points out, this challenge is complicated by 

skills gaps in logistics planning, with supply chain management skills playing a key role in 

reducing handling complications and maintaining operational consistency. The 

implementation of optimized warehouse allocation, as Kizil (2010) suggests, can reduce 

logistical demands streamlining the entire warehousing process. However, if such 

optimizations are not applied efficiently, temporary storage requires additional logistical 

coordination, as Sharma et al. (2020) point out, which increases the need for accurate 

inventory management to handle products in a limited space. Abdollahpour and Rezaian 

(2017) further highlight the logistical challenges associated with manufacturing where 

production flow demands require careful management to avoid interruptions. Moreover, 

the effects of these operational inefficiencies reach further than internal processes, 

Chen et al. (2012) describe affecting directly key performance indicators. They continue 

to discuss how performance indicators of reliability have a multiplier effect on overall 



39 

supply chain performance which delayed pick-ups have affect on. Similarly, Dai et al. 

(2016) show how strategic contracting methods, such as incentive-based contracts, 

improve performance and enhance supply chain stability suggesting that clear contract 

terms can align the interests of manufacturers and customers and thereby improve 

overall supply reliability. 

 

2.3 Theoretical Framework on contract management 

2.3.1 Contractual conditions 

The contractual conditions should be considered in the order process when an order is 

being placed between a customer and a company. A good contract should clearly define 

the roles, responsibilities and conditions under which additional costs, such as storage 

charges, will be incurred and invoiced. Kapsali et al. (2019) suggest that combining 

relationship and associative terms in contracts can significantly improve operational 

performance by promoting benefits, flexibility and long-term cooperation between the 

parties. They continue that relational contract, that emphasize cooperation and trust, 

can be particularly useful in situations where pick-up delays are common, as they 

promote a cooperative approach to resolve disagreements and additional cost 

management. Traditional contractual conditions, which are more restricted and formal, 

may not be as effective in this context because they do not take advantage the potential 

for cooperation needed to adapt to unforeseen delays (Kapsali et al., 2019). This is in line 

with the findings of Grâu-Panțureac (2023) that contracts should provide a framework 

for dealing with unforeseen situations, ensuring clarity of commitments and reducing 

risks through well-defined legal contracts. Therefore, a strategic combination of 

relationship conditions promoting cooperation and formal conditions defining legal 

responsibilities can create a robust contractual framework. 

 

The storage costs of ready-to-deliver goods can be divided into fixed and dynamic factors, 

both of which have an financial impact on delayed pick-ups. Fixed costs are incurred 

regardless of the amount of inventory to be stored, such as rental fees for warehouse 



40 

space or wages for warehouse staff, as highlighted by Melega et al. (2025). For example, 

a company that stores products in a third party warehouse will incur fixed costs related 

to for example the maintenance of the products and the facilities. Dynamic costs vary 

with the activity of the warehouse, including handling and transfer costs incurred when 

moving goods to and from the warehouse, which vary with the frequency and volume 

of these transfers (Melega et al., 2025). Fan and Wang (2018) further emphasize the 

importance of considering both fixed and variable costs, noting that storage costs can 

also be optimized by dynamically adjusting storage space based on changes in demand. 

From a contractual perspective, costs could be structured on a product-by-product basis, 

with a fixed charge for each product stored, combined with time based charges such as 

weekly storage fees. Belderbos et al. (2017) describe that this kind of approach could 

ensure that both fixed general costs and variable handling costs are covered and 

provides transparency and predictability in the invoicing of delayed collections. A well-

defined contract can clearly define costs, ensuring that customers are aware of their 

financial responsibilities bringing operating costs in line with contractual terms. 

 

It is helpful to specify in the contract terms and conditions the factors affecting the 

invoicing of storage costs. Di Giannatale and Passarelli (2018) suggest that there should 

be some flexibility on both sides in contracts between businesses, which could also be 

applied to a storage cost invoicing contract. Storage costs should not start as soon as 

production is completed, but customers can be given a buffer period to allow them time 

to arrange pick-up at no extra cost. This flexibility, as Miguel et al. (2022) point out, 

considers logistical variations and helps reduce potential inefficiencies caused by early 

invoicing, such as customer dissatisfaction.  

 

When looking at contract terms, the factors that should be identified are when the 

contract is in validity, for example in special cases or specific delivery terms. Sugiono et 

al. (2024) point out that in FCA terms, the customer is responsible for pick-up once the 

manufacturer has delivered the goods to the external location, and delays beyond the 

agreed collection schedule can result in additional storage costs. Bergami (2013) 



41 

describe that in FOB terms the responsibility proceeds to the customer once the goods 

have been passed to the ship, making the manufacturer responsible for any delays in 

pick-up, which may lead to storage charges at the port. The author continues that in a 

CPT contract, the manufacturer arranges delivery to a specific location, but delays in the 

customer’s pick-up after the arrival of the goods can also lead to additional costs. These 

situations highlight the importance of clearly defining in contracts when and how storage 

costs are incurred. There could be special cases in the process before pick-up, such as a 

special customer who has been promised free storage or a customer who asks order 

change. These factors should be considered when the contract is being made.  

 

Clearly defined contract terms provide a clear framework for both parties. Well designed 

contracts should specify the starting date for storage costs but should also provide 

mechanisms for flexibility and risk sharing, as highlighted by Farhad et al. (2023), who 

discuss that such contracts can provide economic signals and stability. The integration of 

option contracts into storage contracts can increase flexibility in cost management, 

allowing both parties to adapt to unexpected delays while maintaining supply chain 

management, as suggested by Cai et al. (2016). This combination of clearly defined 

responsibilities and adaptable terms ensures that storage costs are managed in a 

transparent and fair manner, reducing risk and ensuring customer compliance in case of 

delays. 

 

2.3.2 Contract integration into business processes 

The overall management of contracts should be considered to ensure that they remain 

compliant with the organization’s objectives and regulatory requirements throughout 

their lifecycle. Schuhmann and Eichhorn (2019) promote a holistic approach to contract 

management, covering all stages from contract drafting and negotiation to execution 

and monitoring. This approach ensures that the contractual terms for storage cost 

invoicing are continuously reviewed and adapted to meet changing business conditions, 

minimizing risk and optimizing performance. Effective contract management should also 

include digital tools to increase transparency and efficiency of invoicing processes 



42 

(Schuhmann and Eichhorn, 2019). This is supported by the work of Roehrich et al. (2019), 

who highlight the importance of balancing formal contract terms and relational 

management to reduce uncertainty and improve supply chain performance. Contracts 

that are carefully designed to combine both legal executability and relation-based 

elements can provide a flexible but structured approach, ensuring that all parties are 

aware of their responsibilities and minimizing potential conflicts. 

 

Integrating contracts into business processes for invoicing storage costs requires careful 

coordination of operational practices and supply chain. Lee et al. (2016) highlight that 

integrating storage cost methods of allocation into storage contracts can significantly 

improve supply chain coordination, especially in manufacturing systems with limited 

storage capacity. By aligning drivers between suppliers and customers such contracts 

ensure that storage costs and risks are shared and thereby motivating better inventory 

management and minimizing potential disruptions caused by delayed pick-ups. This 

approach, where penalties for stock losses are built into the contract, effectively models 

the performance of the integrated system and improves overall cost-effectiveness. 

Cheng (2010) notes that this level of integration included in contracts is essential to 

enhance collaboration and improve communication between supply chain stakeholders. 

Clear contract terms and trust on both sides play an important role in ensuring that both 

parties are aligned in their objectives, reducing operational risks and improving supply 

chain performance over time. 

 

Effective contract integration should use digital tools to increase the transparency and 

efficiency of invoicing processes. Penttinen et al. (2010) consider how the introduction 

of e-invoicing can streamline the exchange of information between manufacturer and 

customers making the inventory invoicing process more responsive and flexible to 

changing conditions. Electronic invoicing not only improves the accuracy of financial 

transactions, but also enables real-time updates, which are needed when invoicing for 

storage costs. Vandana and Das (2022) point out that by integrating digital invoicing into 

contract management practices, companies can more quickly adapt to changing 



43 

inventory needs while maintaining clear, auditable records that ensure both parties are 

aware of their financial commitments. Combining this digital integration with well-

structured contracts, as highlighted by Cheng (2010), ensures that storage cost invoicing 

is seamlessly integrated into wider supply chain processes, optimising both financial and 

operational outcomes. 

 

In order to fully integrate the invoicing of storage costs into business processes, it is also 

important to ensure that contracts are flexible enough to adapt to changing business 

needs and market conditions. As highlighted by Cheng (2010), the dynamic nature of 

supply chain relationships requires contracts that evolve over time and respond to new 

operational challenges and opportunities. Inflexible contracts may prevent firms from 

quickly adapting their storage strategy in response to fluctuations in demand or 

unexpected delays in customer pick-ups. By continuously reviewing and adapting 

contract terms, according to Lee et al. (2016), companies can ensure that storage cost 

invoicing methods remain aligned with their business objectives and regulatory 

requirements. The use of storage cost sharing, fixed transfer fees and digital invoicing 

tools also ensures that such methods are flexible and responsive, laying the foundation 

for long-term supply chain success (Lee et al., 2016; Penttinen et al., 2010). The 

framework of contract evaluation should be continuous improvement and the cycle is 

described in the figure 8 below: 

 



44 

 

Figure 8. Contract evaluation framework. 

 

Integrating contracts into the business processes requires a balance between formal and 

relational management to achieve both flexibility and compliance. Zacharia, Sanders and 

Fugate (2021) highlight that while formal contracts are essential to ensure compliance 

and reduce risk of uncertainty, relational governance promotes trust and adaptability, 

which are essential when managing the complexity of delayed pick-ups. This 

combination allows companies to adapt to changing operational requirements without 

reducing the contractual framework that ensures responsibility. Klein et al. (2012) 



45 

further stress that formal contracts provide the necessary resilience against 

opportunistic behaviour, such as failure to meet pick-up deadlines, by ensuring that 

contract mentioned costs are clearly defined. 

 

2.3.3 Operational and financial implications for business processes 

The integration of inventory cost invoicing into an organization's processes has a number 

of implications for both operational efficiency and financial performance. One of the 

main challenges is to ensure proper coordination between manufacturers and customers. 

Hoque (2011) highlights the importance of aligning customer and manufacturer 

objectives to minimize costs throughout the supply chain. When storage costs are 

included in contracts, this reconciliation is crucial for decision making, as it encourages 

better inventory management and ensures that both parties are accountable for delays. 

Chen and Kang (2007) add that the use of negotiation rates in contracts ensures a fair 

distribution of savings, which helps maintain long-term partnerships. A fair distribution 

of costs and savings not only optimizes financial outcomes but also strengthens 

relationships and promotes cooperation throughout the supply chain.  

 

From a wider organizational perspective, the introduction of advanced inventory 

management practices, can improve financial performance. Alrjoub and Ahmad (2017) 

show that companies with effective inventory management systems have higher 

profitability and greater operational efficiency. By integrating inventory cost accounting 

into these systems, organizations can better control inventory turnover and reduce the 

financial risks associated with delays in customer pickups. This approach also requires 

investment in advanced technologies and data management systems to ensure that 

invoicing is transparent, accurate and aligned with organizational goals. Adopting these 

ways of methods will contribute to competitiveness and profitability by streamlining 

internal processes and reducing operational inefficiencies (Alrjoub and Ahmad, 2017). 

 

One aspect of gaining better supply chain performance, financial stability and 

operational efficiency is aligning the interests of manufacturers and companies through 



46 

collaborative strategies that reduce the risks and costs associated with delayed pickups. 

Hossain et al. (2017) point out that a cooperative approach improves supply chain 

coordination and enhances performance by ensuring that both parties invest in 

minimizing delays. Chakraborty et al. (2022) propose different storage management 

models, such as vendor managed inventory, that protect the interests of customers while 

enabling distributed decision making, promoting a cooperative environment in which all 

supply chain stakeholders benefit from reduced delays and optimized inventory levels.  

The cause-and-effect relationships of the integration of the contract into the business 

are shown in the figure 9 below: 

 

 

Figure 9. Cause-and-effect relationship of contract integration. 

 

The use of option contracts, as suggested by Cai et al. (2016), can help balance the risks 

and benefits between supply chain members by integrating the invoicing of storage costs 

into business processes. Because option contracts allow for flexible invoicing and penalty 

terms, they provide a buffer to help organizations manage uncertainties related to 

storage costs. This resilience, combined with the continuous improvement of financial 

chain management practices, ensures that storage cost invoicing remain effective even 

as market conditions and supply chain dynamics evolve (Pfaff et al. 2004).  They continue 



47 

that the impact on organizational processes therefore goes beyond financial transactions 

as the integration strengthens supply chain relationships, increases operational 

transparency and ultimately leads to more flexible and adaptable business models. 

 

The market position has an effect on the strategic aspect as well as on the resilience of 

the company's operations when contracts are integrated into the business. According to 

Tufan et al. (2024), companies that manage storage costs efficiently and transparently 

can strengthen their market position because they are seen as lean, efficient and cost-

conscious partners. This can increase their attractiveness to potential partners and 

customers looking for reliable supply chain solutions. Utilizing storage cost invoicing as 

part of a broader strategy that includes investing in advanced inventory management 

systems, as noted by Anantadjaya et al. (2021), can further strengthen this market 

position. They continue that poor implementation or lack of flexibility in invoicing can 

cause companies to be seen as inflexible and difficult to work with especially in fast 

changing industries where delays may have major impacts. This recognises that a well-

executed integration of inventory cost invoicing and contracting increases operational 

performance and reduces additional costs for the company, while developing the 

robustness of the company. Therefore, the implementation of storage cost invoicing 

needs to be carefully considered and ensured that it is aligned with the company’s 

market positioning strategy and supports both operational excellence and customer 

satisfaction. These implications are shown in the figure 10 below: 

 



48 

 

Figure 10. Implications of contract and stock cost invoicing. 

 

2.4 Future of MTO inventory management 

One noticeable research gap in the current literature is that there is little research on 

advanced inventory management systems, such as ERP and JIT systems, in MTO 

environments. Although the benefits of these systems are well documented in industry, 

their implementation in MTO environments, where production lead times and customer 

requirements are more volatile, has not yet been sufficiently studied. Feng (2019) 

highlights that future research needs to explore in more detail how ERP and JIT systems 

can be customized for MTO manufacturing companies to improve responsiveness and 

cost-effectiveness. This gap is especially challenging given the increasing relying on data-

driven warehousing systems in modern supply chains. Ufua et al. (2022) support this 

view and highlight the potential of ERP systems to improve operational flexibility in 

dynamic environments. While the integration of these systems has been studied in more 

traditional manufacturing environments, the unique requirements of MTOs require a 

more specialized approach that focuses on how these technologies can be customized 

to manage the complexity of customer orders and varying production schedules. Future 



49 

research should examine these systems in more detail and explore how they can be 

optimized to balance the need for customization with operational efficiency, which is 

needed to remain competitive in the MTO market. 

 

Another important gap in the current literature relates to the role of digitalization in 

managing storage costs, especially in terms of real-time monitoring, automation and 

predictive analytics. While the current literature framework briefly discusses ERP 

systems for managing inventory costs, Mahajan et al. (2024) describe that it does not 

focus enough on the wider digital tools available, such as artificial intelligence which 

could offer advanced capabilities for real-time monitoring and cost optimization. Faccio 

and Gamberi (2021) argue that digitalization, particularly in the management of 

inventory costs, offers the opportunity for change by automating the invoicing process 

and enabling predictive analytics to forecast and reduce delays. Feng (2019) further 

suggests that these digital tools can not only reduce human error but also improve the 

accuracy of decision-making by providing real-time information on inventory levels and 

storage costs. Despite the clear benefits of digitalization, there is still little research on 

its application to inventory cost management in delayed pick-up situations. Future 

research should therefore explore how these advanced technologies can be effectively 

applied to the complex real-time management of inventory costs, especially in MOT 

manufacturing industries that depend on accurate inventory control and just-in-time 

deliveries. 

 



50 

3 Methodology 

This chapter of the thesis explains in detail the methods used in the empirical part of the 

study. As the first research question is primarily addressed through a comprehensive 

literature review, this chapter focuses more on the second research question and the 

associated empirical data collection, analysis, and validity. The primary objectives are to 

identify the empirical methods, outline the research strategy adopted, explain the 

scientific framework used, and provide a thorough explanation of the data collection 

process, organizational techniques and statistical analysis methods used. Finally, the 

quality of the research is evaluated by applying the principles of validity and reliability. 

 

3.1 Methodological approach 

This study uses a research design that combines both qualitative and quantitative 

research methods, which together form a simple mixed-method approach to address 

the research questions. According to Green et al. (2002), a mixed-methods approach 

improves the research by allowing a comprehensive study of the integration of storage 

cost accounting into business processes. Research question 1 is fundamentally 

addressed through a qualitative exploratory literature review. This approach enables in-

depth understanding of the factors influencing the adoption of contract and storage cost 

invoicing. In contrast, research question 2 uses a mixed-methods strategy, combining 

both qualitative and quantitative techniques to explain the organizational effects of 

these invoicing methods. The second research question, on the other hand, employs a 

mixed-methods strategy that involves a combination of qualitative literature review and 

quantitative data analysis. The qualitative outlook provides contextual insights into 

organizational practices and perceptions. Further, the quantitative component, through 

data analysis, allows for a rigorous assessment of the financial and operational impacts 

of inventory invoicing. By applying this multi-method approach, the study is in line with 

the principles outlined by Green et al. (2002) in that it provides both in-depth qualitative 

research and quantitative evaluation to provide a comprehensive analysis of the storage 

cost invoicing process. Both research questions are defined in the following figure 11: 



51 

 

 

Figure 11. Methodological approach of the study. 

 

According to Aspers and Corte (2019), qualitative research is an iterative process that 

refines understanding by being close to the subject under study, making it well-suited 

for exploratory studies of this type. The literature review serves as the primary method 

for answering research question 1, as it provides a detailed examination of how 

contractual terms, business processes and industry standards shape the adoption of 

contract and invoicing into the system. Aspers and Corte (2019) highlight that qualitative 

research generates new and important distinctions that help researchers understand 

complex systems, such as those related to invoicing processes. Furthermore, Freeman, 

Cameron and Burrell (2024) argue that qualitative research is essential to understanding 

the lived experiences of practitioners and stakeholders. 

 

The use of simple mixed methods allows for triangulation, which increases the depth of 

the analysis by combining findings from both qualitative insights and quantitative data 

(Östlund et al., 2011). In this study, a literature review is conducted alongside data 

analysis to understand the broader implications of storage cost invoicing for operational 

efficiency, financial performance and organizational behaviour. Östlund et al. (2011) 

argue that parallel analysis, where qualitative and quantitative data are analysed 

simultaneously, can provide a comprehensive understanding of complex behaviours. 

This strategy is particularly effective in answering research question 2 as it allows to 

identify the financial effects of stock cost invoicing while exploring the complex ways in 

which these systems affect organizational processes. By using this methodology, the 

research is in line with Freeman et al. (2024), who support combining qualitative and 



52 

quantitative research to gain a more comprehensive understanding of business 

challenges, leading eventually to better informed decisions and more solid theoretical 

insights. 

 

3.2 Data collection and delimitation 

In this study, data collection was conducted using the case study company's ERP system, 

focusing on closed orders over a five-year period from May 2019 to May 2024. The ERP 

system provided complete transactional data that included only completed or partially 

delivered orders, ensuring that at least one product was delivered for each order in the 

dataset. Cancelled or deleted orders were excluded from the analysis as the scope of the 

study was limited to those that had progressed to delivery. This focus on completed 

orders allows a more detailed analysis of the invoicing mechanisms and the impact of 

storage costs in cases where delivery was delayed. By using this particular dataset, the 

study maintains a clear boundary to ensure that the results reflect the true impact of 

storage cost invoicing on completed orders, and thus provides insight into how storage 

cost management is integrated into ongoing business operations. 

 

The data extracted from the ERP system provides a detailed overview of both product 

and order-related information. Product information includes details such as the type of 

product, what it contains, and the tax-excluded net price paid by the customer. In 

addition, the order information includes details on how many products were ordered, 

delivered and how many are still to be delivered, as well as production dates such as the 

start and end dates of production. It also tracks changes made to the order and records 

when changes were made and finalized. Another essential piece of information is the 

Post Goods Issue (PGI) date, which indicates when the product officially left the factory. 

Delivery information is also included, indicating the destination of the order and the 

applicable incoterms which define the responsibilities between the company and the 

customer. This comprehensive data set ensures that all essential factors are considered 

and provides a solid basis for analysing the impact of delayed collections. 

 



53 

In terms of data delimitation, the study narrows the focus of the study by limiting the 

analysis to orders under incoterms, where the customer is responsible for arranging the 

collection of goods at some stage of the process. More specifically, these incoterms that 

were used by the case company over the five-year period from May 2019 to May 2024 

are CPT, FCA and FOB. By limiting the data to these incoterms, the study takes into 

account scenarios in which pick-up and transport arrangement delays could lead to 

storage cost invoicing. This restriction resulted in a significant reduction of 69,45% in the 

number of products analysed. 

 

The data were further delimited by excluding the quantities of products that are still 

within the company and for which the final cost of storage has not yet been realized. 

These cases are only for orders where products have been partially delivered to the 

customer. As these undelivered products are still held by the company, the storage costs 

have not yet been realized and are therefore outside the scope of this study. In addition, 

the study does not take into account internal orders with a zero price, such as warranty 

orders and prototype orders produced by the research and development department. 

These zero-price orders do not give an increase to invoiceable storage costs because they 

either serve internal purposes or are part of special arrangements not subject to normal 

invoicing processes. This delimitation ensures that the analysis focuses only on 

customer-specific orders where the invoicing of storage costs is relevant and directly 

linked to the pick-up delay. The process of data collection and delimitation is presented 

in the figure 12 below. 

 



54 

 

Figure 12. Data collection and delimitation process. 

 

3.3 Data analysis method 

The data analysis for this study starts by collecting, delimiting and reviewing the data 

from the ERP system of the case study company. This process involves a careful filtering 

of the data to include only relevant orders and exclude those that are incomplete, 

cancelled or related to internal orders that do not incur storage costs. Once the data has 

been extracted and checked for accuracy, it is compiled in an Excel spreadsheet for 

further analysis. From this table, the key data are extracted to make the structural 

analysis easier. The variables selected for analysis are order number and order line 

number, ordered quantity and open quantity, condition value, loading date and revised 

loading date, test date, actual production finish date, rework, incoterms and PGI date. 

These variables are classified and grouped into smaller items for more detailed analysis 

where necessary, allowing a more comprehensive evaluation of storage costs, delivery 

delays and the impact of contractual terms on invoicing processes. This methodology 

ensures that all relevant data are systematically collected and analysed to achieve the 

objectives of the study effectively. 



55 

The order number and order line number are used to identify each transaction in the 

dataset, ensuring that each product order can be accurately identified throughout the 

analysis. These identifiers are important for distinguishing between different 

transactions, especially when multiple products are ordered within a single order. The 

quantity ordered and open quant