The Issues with Women
Essay by review • December 31, 2010 • Essay • 300 Words (2 Pages) • 1,141 Views
First of all, this book doesn't give the pleasure of good reading. C'mon, what kind of pleasure do you expect from a 500 pages book with very small fonts?
I would like to review on pages 183-189 regarding case at Kanthal. It said that according to ABC calculation, Kanthal has found that customer #199 records loss, unfortunately customer #199 is in the top three in terms of sales volume. If ABC is really a good tool, then Kanthal should fire customer #199. But Kanthal didn't do that. They don't believe in ABC?
Customer #199 implemented JIT and they've got substantial improvement in productivity and efficiency. With JIT concept they place order to Kanthal in small quantity and frequent orders. According to ABC, this makes the cost for Order-to-cash activities at Kanthal is quite high, so that it eats the margin.
The funny thing, the book said JIT is appropriate in Japan, not in Sweden. Don't they look at automotive industry around the world that successfully implement JIT?
So what's the solution described in the book? The solution is to cut the cost of order-to-cash activities by using electronic B2B concept. And it claims that customer #199 turns to be profitable for Kanthal after that. So simple and...so wrong!
Maybe ABC calculation shows that result is good at Customer #199 level. But still, the company bottom line remains the same. Do they cut sales persons' salary? No. Do they fire a sales person who handle customer #199? No. Do they reduce transportation cost? No.
Probably by using B2B, there's small fraction of cost saving on order processing activities, but it won't be significant enough to increase the net profit for the company.
If B2B does reduce the cost of order processing cost significantly, why they don't use it for all customers?
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