Leading firms realize that to maximimize the value of their customer and product portfolios, it is essential to understand the value created by each portfolio member. Cost-to-serve analytics and reporting is the means to accomplish this, eliminating expensive, departmental ad hoc efforts and creating a single source for all channel, product and customer profitability and analytics. This white paper details how to implement an institutionalized solution using a layered, separation of concerns architectural approach to ensure that your cost-to-serve solution is robust, maintainable, reusable and adaptable.
Equazion provides business analytics that empower our customers to improve their return on net assets. Our solutions identify profit-improvement opportunities across the different customer and product dimensions from a 360° perspective. For more information: www.equazion.com
Cost to serve (CTS) is a business model that calculates the overhead costs required to service each customer based on their activities. It provides an aggregate analysis of each customer's cost profile to determine their true profitability. Companies use CTS to model price leakages and specific costs related to serving customers. Costs are tracked as they are incurred during manufacturing and sales. CTS also uses Pareto analysis to identify the top causes that need addressing to resolve most problems and focus management on high impact risks.
Meaning & Definition
Objectives of Cost Accounting
Advantages of Cost Accounting
Difference between Cost Accounting and Financial Accounting
Cost concepts and classifications
Elements of cost
This document defines and provides examples of various types of costs that are important in cost accounting. It discusses cost, costing, cost accounting, and cost accountancy. It then classifies costs into different categories based on their nature, elements, behavior, controllability, function, and normality. Finally, it defines and gives examples of opportunity cost, sunk cost, production cost, period cost, relevant cost, and irrelevant cost.
The document presents a taxonomy of different types of costs that are relevant to inductive learning but often ignored in machine learning literature. It identifies costs of misclassification, tests, the teacher, intervention, unwanted achievements, computation, cases, and human-computer interaction. Constant and conditional forms of each cost type are discussed. The taxonomy is intended to organize the literature and inspire further research on cost-sensitive learning approaches.
This document discusses responsibility accounting. It defines responsibility accounting as a system that collects planned and actual accounting information for responsibility centers. Responsibility centers are organizational units for which a manager is responsible for costs, revenues, or investment funds. There are four main types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Responsibility accounting improves decision making, speed, and motivation by assigning accountability to managers of responsibility centers.
Saimun Hossain presented on management accounting concepts to Professor Fahmida Ahmed. The presentation discussed CVP analysis, including its concept as a planning process used by management to predict costs, sales, and profits under different volumes. It also covered the objectives and assumptions of CVP analysis, such as classifying expenses as variable or fixed and assuming linear cost-volume relationships. CVP analysis is significant for business organizations as it helps managers make strategic decisions through tools like break-even analysis and profit analysis.
A proposed model of balance score cards for enterprise governanceAlexander Decker
This document proposes a model for a balanced scorecard approach to enterprise governance. It begins by defining enterprise governance and discussing existing governance frameworks. It then reviews balanced scorecards, which use financial and non-financial metrics across four perspectives - financial, customer, internal processes, and learning and growth. The document suggests that a balanced scorecard could provide a framework to evaluate an enterprise's governance across conformance with standards and policies, as well as performance and strategic objectives. It proposes testing a model that applies the balanced scorecard approach to comprehensively assess an enterprise's governance arrangements and outcomes.
Equazion provides business analytics that empower our customers to improve their return on net assets. Our solutions identify profit-improvement opportunities across the different customer and product dimensions from a 360° perspective. For more information: www.equazion.com
Cost to serve (CTS) is a business model that calculates the overhead costs required to service each customer based on their activities. It provides an aggregate analysis of each customer's cost profile to determine their true profitability. Companies use CTS to model price leakages and specific costs related to serving customers. Costs are tracked as they are incurred during manufacturing and sales. CTS also uses Pareto analysis to identify the top causes that need addressing to resolve most problems and focus management on high impact risks.
Meaning & Definition
Objectives of Cost Accounting
Advantages of Cost Accounting
Difference between Cost Accounting and Financial Accounting
Cost concepts and classifications
Elements of cost
This document defines and provides examples of various types of costs that are important in cost accounting. It discusses cost, costing, cost accounting, and cost accountancy. It then classifies costs into different categories based on their nature, elements, behavior, controllability, function, and normality. Finally, it defines and gives examples of opportunity cost, sunk cost, production cost, period cost, relevant cost, and irrelevant cost.
The document presents a taxonomy of different types of costs that are relevant to inductive learning but often ignored in machine learning literature. It identifies costs of misclassification, tests, the teacher, intervention, unwanted achievements, computation, cases, and human-computer interaction. Constant and conditional forms of each cost type are discussed. The taxonomy is intended to organize the literature and inspire further research on cost-sensitive learning approaches.
This document discusses responsibility accounting. It defines responsibility accounting as a system that collects planned and actual accounting information for responsibility centers. Responsibility centers are organizational units for which a manager is responsible for costs, revenues, or investment funds. There are four main types of responsibility centers: cost centers, revenue centers, profit centers, and investment centers. Responsibility accounting improves decision making, speed, and motivation by assigning accountability to managers of responsibility centers.
Saimun Hossain presented on management accounting concepts to Professor Fahmida Ahmed. The presentation discussed CVP analysis, including its concept as a planning process used by management to predict costs, sales, and profits under different volumes. It also covered the objectives and assumptions of CVP analysis, such as classifying expenses as variable or fixed and assuming linear cost-volume relationships. CVP analysis is significant for business organizations as it helps managers make strategic decisions through tools like break-even analysis and profit analysis.
A proposed model of balance score cards for enterprise governanceAlexander Decker
This document proposes a model for a balanced scorecard approach to enterprise governance. It begins by defining enterprise governance and discussing existing governance frameworks. It then reviews balanced scorecards, which use financial and non-financial metrics across four perspectives - financial, customer, internal processes, and learning and growth. The document suggests that a balanced scorecard could provide a framework to evaluate an enterprise's governance across conformance with standards and policies, as well as performance and strategic objectives. It proposes testing a model that applies the balanced scorecard approach to comprehensively assess an enterprise's governance arrangements and outcomes.
AN EVALUATION OF THE TRADITIONAL HISTORICAL COST BASIS OF ACCOUNTING IN PROVI...ECTIJ
This study is an evaluation of the traditional historical cost basis of accounting in providing value relevance of accounting information relevant for decision making. a case for TelOne (Pvt) Ltd; Econet Wireless Zimbabwe Limited and Telecel Zimbabwe Limited. The main research question was, what are the strengths and weaknesses of the traditional historical cost basis of accounting in providing value relevance of accounting information relevant for decision making in the Telecommunication sector? Mixed approach was used in the study. The study sample size was 100 participants drawn from a population of 600. The questionnaire was used to collect data. The major finding was that, historic cost accounting has some noticeable weaknesses of failing to adequately disclose intellectual capital causing it to be viewed as a method that provide inadequate information to stakeholders to enable them to make informed business decisions. The study recommended, fair value accounting method which recognizes intangible assets hence enhance value relevance of accounting information to users.
This document discusses value chain analysis, which was first proposed by Michael Porter in 1985. It involves identifying a firm's primary and support activities that add value to its products or services and analyzing them to reduce costs or increase differentiation. The key stages of value chain analysis for strategic cost management are identifying activities, establishing their costs and importance, comparing costs, identifying cost drivers, and finding opportunities to reduce costs or improve value through internal and external linkages. This allows firms to assess their competitive positioning and strategically improve quality, reduce time and costs, and increase benefits for both the firm and partners in the value chain.
Learn how your company can benefit from the Cost to Serve Initiative. Sonum has successfully implemented Cost to Serve Models in several countries using Acorn Systems software.
Unit 3 logistics costs lscm (18 pages)logistics management Suzana Vaidya
- The document discusses logistics costs and the principles of logistics costing. It notes that traditional accounting systems do not fully capture customer costs or the impacts of logistics decisions across functions.
- It advocates for total cost analysis and identifying the incremental costs of logistics activities and missions to understand true costs. This involves analyzing costs across the order to collection cycle and identifying which costs are avoidable for specific customers or segments.
- Mission costing is presented as a useful concept, with missions cutting across functions to achieve customer service goals. This allows determining the total system cost of meeting mission objectives.
This document discusses cost control and cost reduction in managerial economics. It defines cost control as monitoring and regulating expenditure, and involves setting targets, measuring actual performance, analyzing variances, and taking corrective action. Cost reduction aims to eliminate unnecessary costs to improve profitability. Key aspects of cost control include planning, communication, motivation, appraisal, and decision-making. Common cost control techniques are budgetary control, standard costing, inventory control, ratio analysis, and variance analysis.
A commercial refrigeration manufacturer was losing sales to smaller competitors due to long lead times. An analysis found that while customer orders were unique, 30 of 330 compressor models and similar standard components accounted for 90% of usage. By stocking popular standard components, the company could reduce lead times for those orders and offer customers price and lead time advantages. This shift simplified operations by focusing on standard component products and freed resources to better serve customized orders. Implementing activity-based management to identify and improve high-volume activities improved service, costs, and competitiveness.
Accounting for the non accountant - unit 3CTDLearning
This document discusses different costing methods that can help management make better decisions. It explains that a costing system establishes the costs of activities and products based on past and estimated future costs. This allows a firm to understand profitability, compare actual vs estimated costs, and set appropriate prices. The document outlines different types of costs like direct, indirect, fixed and variable costs. It also explains methods for allocating indirect costs through apportionment and absorption costing using predetermined overhead rates. Marginal costing is also discussed as providing better information for planning by treating fixed costs as period costs.
Activity-based costing (ABC) assigns overhead costs to products and services based on their use of resources such as machine hours or labor hours. It was developed to more accurately assign indirect costs than traditional costing methods. ABC identifies activities performed in an organization and assigns costs to these activities using cost drivers. The costs of activities are then assigned to products or services based on their use of each activity. This provides managers with more accurate product costs to make better-informed decisions.
Strategic cost management is a program that businesses use to regularly identify and analyze cost drivers to lower costs and maximize value. It allows businesses to not only lower costs but gain a competitive advantage. Strategic cost management involves creating a strategic plan, prioritizing operations, and ensuring efficient use of resources. Once implemented, it brings transparency to costs and allows managers to make timely cost decisions. It can also show which customers are most or least profitable. The framework includes core functions, value-adding activities, and support activities. Effective strategic cost management requires support from top management, integrated information systems, and cross-functional teams.
This document outlines 10 simple points to help companies save money by improving purchasing efficiency. It suggests auditing material usage, scrap reimbursement rates, manufacturing processes, secondary costs, purchased components, equipment costs, duplicate costs, excess labor, profits, and packaging/freight costs. Careful review of a supplier's cost model against actual production could help identify cost savings opportunities through reduced waste. In the example given, potential savings of 11.4% of identified cost reductions could be achieved from lowering overhead and margins.
The document discusses strategic cost management, cost reduction, and value engineering. It defines strategic cost management as using cost information to develop superior strategies. It describes cost reduction as permanently lowering unit costs without compromising quality or suitability. Value engineering is defined as systematically analyzing functions to explore ways to improve performance and increase the value of products and services.
This document discusses improving supply chain performance by linking it to the balanced scorecard. It outlines current supply chain measures and perspectives in the balanced scorecard. It then proposes linking the two by identifying performance measures that align the internal, financial, innovation/learning, and customer perspectives of the balanced scorecard with goals like unit cost reduction, time reduction, waste reduction, and flexible response in the supply chain. Aligning key performance indicators across these perspectives can help optimize supply chain performance.
This document discusses cost allocation methods and frameworks. It provides 4 types of cost objectives: service departments, producing departments, products/services, and customers. It describes direct and indirect costs and how they are allocated using cost drivers. It also discusses the direct and step-down methods for allocating service department costs and reciprocal services. Finally, it covers allocating costs associated with customers to determine customer profitability.
This document discusses different concepts of cost accounting including costs related to income measurement, profit planning, control, and decision making. It defines key costing terms like product costs, period costs, fixed costs, variable costs, relevant and irrelevant costs, incremental and differential costs, opportunity costs, and imputed costs. The overall purpose is to explain how costs are classified and used for different accounting and business objectives.
The document discusses responsibility accounting and management control systems. It defines responsibility centers as areas that outputs or inputs and expenses are measured, such as revenue centers, expense centers, and profit centers. Responsibility accounting conveys cost information to managers of responsibility centers. It also discusses factors that influence pricing decisions, such as costs, competitors, and demand. Pricing methods like cost-plus pricing and transfer pricing between divisions are explained.
- Ties Only Limited has experienced strong sales growth in its first two quarters, increasing from $420,000 to $680,000. However, its gross profit margin declined from 52% to 50%.
- While the company reported losses over $188,000, many of the costs it incurred like website development and launch marketing are one-time startup costs that will not continue in the future.
- The decline in gross profit margin is a potential concern that needs investigation, but overall the financial performance is not as bad as it initially appears given that the company is still in its early startup phase.
The document discusses variance analysis, relevant costing, and cost-volume-profit analysis. It defines a variance as the difference between a budgeted or standard cost and an actual cost. Variance analysis identifies reasons for deviations from budgets. Relevant costing considers only incremental and avoidable costs for decision making. Cost-volume-profit analysis examines how operating profit is affected by variable costs, fixed costs, sales price, and sales volume or mix. Contribution margin is sales minus variable costs and shows how much each sale contributes to covering fixed costs.
Cost Reduction Strategies for Small Businesses & StartupsSGI Consultants
Running out of money is the most common cause for small businesses closing down, its not that they did not make a profit, its that they ran out of cash.
Reducing costs should be a priority for all businesses.
Total Cost Management (TCM) is a systematic approach to understand all costs of an organization to control, reduce, and eliminate costs. It uses tools like activity-based costing and target costing. TCM follows the PDCA (plan-do-check-act) cycle throughout a project's life cycle from ideation to termination. The PDCA cycle involves planning activities, executing them, measuring performance, and taking actions to improve performance. TCM was developed by AACE International, a nonprofit association for cost engineering professionals, to integrate cost management into project portfolio, program, and project management.
This document discusses a study on cost-to-serve practices in the financial services industry. It analyzes survey responses from over 70 organizations across 22 countries. The study finds that organizations with better cost-to-income ratios tend to have a customer-centric strategy and clearer understanding of costs, particularly for production, distribution, and customer services. Understanding customer service costs seems to most strongly differentiate higher and lower performing large organizations. The study also found some regional differences, with Scandinavian organizations generally scoring better in key areas.
Activity Based Working (ABW) presentation at CIO Strategy Summit Feb 2013Ed Cortis
This document discusses activity based working (ABW), an office concept where employees do not have assigned desks and can work from various spaces tailored to different tasks. It provides examples of workstation, collaboration, and private space types in an ABW office. Benefits cited include increased collaboration, productivity, and reduced costs. Common challenges are changing mindsets and managing noise levels. The document concludes that ABW is best suited to knowledge workers and requires strong leadership and wireless technology support to be effective.
AN EVALUATION OF THE TRADITIONAL HISTORICAL COST BASIS OF ACCOUNTING IN PROVI...ECTIJ
This study is an evaluation of the traditional historical cost basis of accounting in providing value relevance of accounting information relevant for decision making. a case for TelOne (Pvt) Ltd; Econet Wireless Zimbabwe Limited and Telecel Zimbabwe Limited. The main research question was, what are the strengths and weaknesses of the traditional historical cost basis of accounting in providing value relevance of accounting information relevant for decision making in the Telecommunication sector? Mixed approach was used in the study. The study sample size was 100 participants drawn from a population of 600. The questionnaire was used to collect data. The major finding was that, historic cost accounting has some noticeable weaknesses of failing to adequately disclose intellectual capital causing it to be viewed as a method that provide inadequate information to stakeholders to enable them to make informed business decisions. The study recommended, fair value accounting method which recognizes intangible assets hence enhance value relevance of accounting information to users.
This document discusses value chain analysis, which was first proposed by Michael Porter in 1985. It involves identifying a firm's primary and support activities that add value to its products or services and analyzing them to reduce costs or increase differentiation. The key stages of value chain analysis for strategic cost management are identifying activities, establishing their costs and importance, comparing costs, identifying cost drivers, and finding opportunities to reduce costs or improve value through internal and external linkages. This allows firms to assess their competitive positioning and strategically improve quality, reduce time and costs, and increase benefits for both the firm and partners in the value chain.
Learn how your company can benefit from the Cost to Serve Initiative. Sonum has successfully implemented Cost to Serve Models in several countries using Acorn Systems software.
Unit 3 logistics costs lscm (18 pages)logistics management Suzana Vaidya
- The document discusses logistics costs and the principles of logistics costing. It notes that traditional accounting systems do not fully capture customer costs or the impacts of logistics decisions across functions.
- It advocates for total cost analysis and identifying the incremental costs of logistics activities and missions to understand true costs. This involves analyzing costs across the order to collection cycle and identifying which costs are avoidable for specific customers or segments.
- Mission costing is presented as a useful concept, with missions cutting across functions to achieve customer service goals. This allows determining the total system cost of meeting mission objectives.
This document discusses cost control and cost reduction in managerial economics. It defines cost control as monitoring and regulating expenditure, and involves setting targets, measuring actual performance, analyzing variances, and taking corrective action. Cost reduction aims to eliminate unnecessary costs to improve profitability. Key aspects of cost control include planning, communication, motivation, appraisal, and decision-making. Common cost control techniques are budgetary control, standard costing, inventory control, ratio analysis, and variance analysis.
A commercial refrigeration manufacturer was losing sales to smaller competitors due to long lead times. An analysis found that while customer orders were unique, 30 of 330 compressor models and similar standard components accounted for 90% of usage. By stocking popular standard components, the company could reduce lead times for those orders and offer customers price and lead time advantages. This shift simplified operations by focusing on standard component products and freed resources to better serve customized orders. Implementing activity-based management to identify and improve high-volume activities improved service, costs, and competitiveness.
Accounting for the non accountant - unit 3CTDLearning
This document discusses different costing methods that can help management make better decisions. It explains that a costing system establishes the costs of activities and products based on past and estimated future costs. This allows a firm to understand profitability, compare actual vs estimated costs, and set appropriate prices. The document outlines different types of costs like direct, indirect, fixed and variable costs. It also explains methods for allocating indirect costs through apportionment and absorption costing using predetermined overhead rates. Marginal costing is also discussed as providing better information for planning by treating fixed costs as period costs.
Activity-based costing (ABC) assigns overhead costs to products and services based on their use of resources such as machine hours or labor hours. It was developed to more accurately assign indirect costs than traditional costing methods. ABC identifies activities performed in an organization and assigns costs to these activities using cost drivers. The costs of activities are then assigned to products or services based on their use of each activity. This provides managers with more accurate product costs to make better-informed decisions.
Strategic cost management is a program that businesses use to regularly identify and analyze cost drivers to lower costs and maximize value. It allows businesses to not only lower costs but gain a competitive advantage. Strategic cost management involves creating a strategic plan, prioritizing operations, and ensuring efficient use of resources. Once implemented, it brings transparency to costs and allows managers to make timely cost decisions. It can also show which customers are most or least profitable. The framework includes core functions, value-adding activities, and support activities. Effective strategic cost management requires support from top management, integrated information systems, and cross-functional teams.
This document outlines 10 simple points to help companies save money by improving purchasing efficiency. It suggests auditing material usage, scrap reimbursement rates, manufacturing processes, secondary costs, purchased components, equipment costs, duplicate costs, excess labor, profits, and packaging/freight costs. Careful review of a supplier's cost model against actual production could help identify cost savings opportunities through reduced waste. In the example given, potential savings of 11.4% of identified cost reductions could be achieved from lowering overhead and margins.
The document discusses strategic cost management, cost reduction, and value engineering. It defines strategic cost management as using cost information to develop superior strategies. It describes cost reduction as permanently lowering unit costs without compromising quality or suitability. Value engineering is defined as systematically analyzing functions to explore ways to improve performance and increase the value of products and services.
This document discusses improving supply chain performance by linking it to the balanced scorecard. It outlines current supply chain measures and perspectives in the balanced scorecard. It then proposes linking the two by identifying performance measures that align the internal, financial, innovation/learning, and customer perspectives of the balanced scorecard with goals like unit cost reduction, time reduction, waste reduction, and flexible response in the supply chain. Aligning key performance indicators across these perspectives can help optimize supply chain performance.
This document discusses cost allocation methods and frameworks. It provides 4 types of cost objectives: service departments, producing departments, products/services, and customers. It describes direct and indirect costs and how they are allocated using cost drivers. It also discusses the direct and step-down methods for allocating service department costs and reciprocal services. Finally, it covers allocating costs associated with customers to determine customer profitability.
This document discusses different concepts of cost accounting including costs related to income measurement, profit planning, control, and decision making. It defines key costing terms like product costs, period costs, fixed costs, variable costs, relevant and irrelevant costs, incremental and differential costs, opportunity costs, and imputed costs. The overall purpose is to explain how costs are classified and used for different accounting and business objectives.
The document discusses responsibility accounting and management control systems. It defines responsibility centers as areas that outputs or inputs and expenses are measured, such as revenue centers, expense centers, and profit centers. Responsibility accounting conveys cost information to managers of responsibility centers. It also discusses factors that influence pricing decisions, such as costs, competitors, and demand. Pricing methods like cost-plus pricing and transfer pricing between divisions are explained.
- Ties Only Limited has experienced strong sales growth in its first two quarters, increasing from $420,000 to $680,000. However, its gross profit margin declined from 52% to 50%.
- While the company reported losses over $188,000, many of the costs it incurred like website development and launch marketing are one-time startup costs that will not continue in the future.
- The decline in gross profit margin is a potential concern that needs investigation, but overall the financial performance is not as bad as it initially appears given that the company is still in its early startup phase.
The document discusses variance analysis, relevant costing, and cost-volume-profit analysis. It defines a variance as the difference between a budgeted or standard cost and an actual cost. Variance analysis identifies reasons for deviations from budgets. Relevant costing considers only incremental and avoidable costs for decision making. Cost-volume-profit analysis examines how operating profit is affected by variable costs, fixed costs, sales price, and sales volume or mix. Contribution margin is sales minus variable costs and shows how much each sale contributes to covering fixed costs.
Cost Reduction Strategies for Small Businesses & StartupsSGI Consultants
Running out of money is the most common cause for small businesses closing down, its not that they did not make a profit, its that they ran out of cash.
Reducing costs should be a priority for all businesses.
Total Cost Management (TCM) is a systematic approach to understand all costs of an organization to control, reduce, and eliminate costs. It uses tools like activity-based costing and target costing. TCM follows the PDCA (plan-do-check-act) cycle throughout a project's life cycle from ideation to termination. The PDCA cycle involves planning activities, executing them, measuring performance, and taking actions to improve performance. TCM was developed by AACE International, a nonprofit association for cost engineering professionals, to integrate cost management into project portfolio, program, and project management.
This document discusses a study on cost-to-serve practices in the financial services industry. It analyzes survey responses from over 70 organizations across 22 countries. The study finds that organizations with better cost-to-income ratios tend to have a customer-centric strategy and clearer understanding of costs, particularly for production, distribution, and customer services. Understanding customer service costs seems to most strongly differentiate higher and lower performing large organizations. The study also found some regional differences, with Scandinavian organizations generally scoring better in key areas.
Activity Based Working (ABW) presentation at CIO Strategy Summit Feb 2013Ed Cortis
This document discusses activity based working (ABW), an office concept where employees do not have assigned desks and can work from various spaces tailored to different tasks. It provides examples of workstation, collaboration, and private space types in an ABW office. Benefits cited include increased collaboration, productivity, and reduced costs. Common challenges are changing mindsets and managing noise levels. The document concludes that ABW is best suited to knowledge workers and requires strong leadership and wireless technology support to be effective.
Gain insight into the drivers of profitability across your enterprise. Understand how Acorn's profitability and cost management software easily allocates costs to specific products and customers. This software is compatible with all mobile browsers.
This slide deck is part of a recorded Senturus webinar, "Business Solutions: Profitability Analysis.” To view the free recording of this entire presentation and download the slide deck, visit www.senturus.com
Senturus, a business analytics consulting firm, has a resource library with hundreds of free recorded webinars, trainings, demos and unbiased product reviews. Take a look and share them with your colleagues and friends: http://www.senturus.com/resources/.
Cost To Serve in Your Warehouse: 5 Things You Should KnowEasyMetrics
If you jump through hoops for your customers, the conversations might sound like this:
"Sure, we can put a rush on that"
"Yes we can do value-added services"
"Did you get the free inventory our sales team sent?"
How do you know these are profitable customers? Get control of your warehouse labor costs by knowing Cost to Serve. Big Data has made it easier than ever to capture 100% of your labor spend. You'll finally be able to make management decisions based on current and constantly updated information.
Cost to serve tells you:
-Which customers are making / losing you money
-Which products are making / losing you money
-Which processes are making / losing you money
-Which service costs are killing you, and which aren’t
Learn the 5 essential things about Cost To Serve and how it will transform your warehouse workforce.
Data Science is the new black! However, becoming a data scientist requires knowledges in various areas. This slide discuss what one should learn to become a data scientist.
The document summarizes an AWS presentation about the AWS Cloud Center for Service (C2S) region. It discusses how C2S is different by providing business-level support for every account and restricting access to only virtual private clouds. It also outlines the services available in the standard AWS regions and C2S region, showing that C2S has fewer services initially but more will be added over time. The presentation demonstrates AWS' rapid pace of innovation in cloud services and features since 2006.
This document describes a student project to develop a prototype file transfer application called Chuck that uses QR codes. The project aims to address the need for easy file transfers between multiple devices. The document outlines the design and development process, including interaction design, technical design of the transmission schema and application, prototype assessment through user testing, iteration of the prototype based on feedback, and evaluation of the effectiveness and future work. Key aspects of the project include creating mockups, building an Android prototype, evaluating it with participants, and improving the prototype based on results.
IDC (sponsored by COLT Telecom): High Quality Network: A Prerequisite for Uni...Alessandro Vigilante
This white paper examines the demand for unified communications (UC) solutions from both IT managers and end users in Germany. There are discrepancies between what IT managers see as important UC applications and what end users actually use. While IT managers ranked applications like mobile voice and video conferencing as important, end users prefer established IT-based communications like email, calendaring, and contact management. The survey also found that a high-quality network is essential for reliable UC. IT managers should consider end user preferences to maximize adoption of UC solutions and return on investment.
This document provides a roadmap for implementing a successful identity management project. It outlines conducting a needs analysis to identify problems with the existing user access administration. Key areas to examine include user productivity, excessive administration costs, inconsistent user data, user service issues, and security vulnerabilities. The roadmap then covers determining technology requirements, organizing the project team, selecting an identity management product, implementing the system through project management best practices, and ongoing administration and reporting after rollout.
The document provides a 7-step process for establishing an IT costing and chargeback program. It outlines establishing a cost structure, pricing strategy, collection/reporting strategy, and continuous improvement techniques. Key steps include defining cost elements and categories, choosing cost pools, setting rates, collecting usage data, and reviewing metrics. The roles and responsibilities of the implementation team are also described.
Al-Mqbali, Leila, Big Data - Research ProjectLeila Al-Mqbali
This document provides an overview of big data and its implications. It discusses:
1. What big data is, characterized by rapidly increasing volumes, velocities, and varieties of data.
2. How analytical thinking and willingness to accept "messiness" in datasets facilitated the shift from small to big data. This introduced challenges around sampling, random errors, and systematic errors.
3. The predictive capacity of big data is limited by models and their underlying assumptions, such as overfitting, personal bias, incentives, and discerning noise from signals.
4. Big data requires new IT architectures like the "big data stack" to address changes in firm objectives and processing systems. Both benefits and challenges of big data
This document discusses moving legacy systems to cloud computing. It addresses common concerns about cloud security, flexibility, service levels, and managing cloud infrastructure. It outlines different cloud service models like Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). It also describes cloud deployment models such as private, public, hybrid and community clouds. The document provides strategies for incrementally deploying cloud services or migrating legacy applications. It highlights Tata Communications' experience in managing global networks and cloud services.
This document is a thesis project submitted by Ildefonso Montero Pérez to the University of Sevilla for the degree of PhD in Computer Engineering. The thesis aims to provide a methodological framework to obtain the core architecture of business information system families in order to maximize reuse and manage variability in process definitions across different business units of an organization. The framework is meant to address current issues where different versions of business processes are not systematically linked to the original core processes, leading to problems in maintenance and inaccurate execution of business strategies. The thesis will validate the proposed framework through a case study.
This document discusses the benefits of unified communications and collaboration (UC&C) systems. UC&C combines communication channels like voice, email, instant messaging, and video conferencing to improve collaboration. The document outlines how UC&C can reduce "communication latency" by making it easier for employees to connect with the right people at the right time. It provides examples of companies that have implemented UC&C through HP and Microsoft solutions and realized cost savings through reduced conferencing costs, simplified management, and other benefits.
This document provides an overview of capacity management processes and concepts. It discusses key ITIL processes like incident management, problem management, change management and others. It then focuses on capacity management, describing the different levels of capacity planning from business to service to component. The document outlines the key activities, roles and artifacts of a capacity management process. It also discusses concepts like capacity planning, storage capacity planning and capacity models.
This document is the table of contents for an MBA dissertation analyzing cloud computing in relation to its value and security/risk management. The dissertation will examine the benefits of cloud computing and identify associated risks. It will also explore security and risk management issues for companies adopting cloud computing and how to mitigate these risks. The dissertation will include a literature review on cloud computing's value and security challenges, a description of the data collection and analysis methodologies used, an analysis of survey results on industry professionals' views of cloud computing, and conclusions/recommendations.
LEAN OPERATIONS, Review the literature giving detailed examples of where within
industry Lean has been applied, the strategies followed when
implementing, the benefits achieved and whether there are any
lessons to be learned.
This document summarizes an impact assessment study of e-government projects in India conducted by the Center for e-Governance at the Indian Institute of Management Ahmedabad and funded by the Department of Information Technology, Government of India. The study assessed 5 e-government projects using a measurement framework developed in an earlier World Bank study. Key findings are summarized and limitations of the study are noted. The report details the methodology used, presents results of the assessment of individual projects, compares projects from the client perspective, and analyzes impact on agencies and society.
This document outlines best practices for project managers to build sustainable enterprises, including leveraging proven quality methodologies like Six Sigma and Lean to improve processes and reduce costs. It emphasizes effective knowledge management, collaborative innovation with customers, and cultivating an "innovation as a habit" mindset in project teams. Adopting these practices can help optimize processes, increase productivity, deliver more value to customers, improve customer satisfaction and loyalty, and ensure long-term business growth and sustainability.
This document provides an introductory guide to conducting a cost-benefit analysis (CBA) under the Irish Public Spending Code. It outlines the key principles and steps of CBA, including defining the project and identifying costs and benefits. The guide also covers discounting costs and benefits, analyzing options using metrics like net present value, and addressing risk and uncertainty. It aims to help public servants properly conduct and report CBAs of major public projects costing over €20 million.
Optimization of Post-Scoring Classification and Impact on Regulatory Capital ...GRATeam
This document discusses optimization of post-scoring classification and its impact on regulatory capital for low default portfolios. It begins with an introduction and overview of credit risk measurement methods such as heuristic models and statistical models. It then focuses on classification tree techniques, discussing CART, CHAID, and QUEST algorithms. The document presents a case study applying these techniques to a real retail mortgage portfolio to build multiple rating scales and analyze their impact on regulatory capital requirements. It aims to identify the best classification technique and optimal number of classes to balance regulatory requirements with opportunities to optimize risk-weighted assets.
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Cost to Serve Methodology: An Architectural Approach
1. QUAN TALYS T
C O N S U L T I N G, LLC
CostͲtoͲServe Methodology
An Architectural Approach
A single source for granular channel, customer & product
profitability analytics and reporting
Dean D. Baker, Director
Quantalyst Consulting, LLC
1223 Wilshire Blvd., #282
Santa Monica, CA 90403
September 2012 rv1.03
213.401.1286 May 2012 rv1.02
dbaker@quantalyst.com November 2011 rv1.01
www.quantalyst.com April 2011 Published
2. www.quantalyst.com
CostͲtoͲServe Methodology – An Architectural Approach
Table of Contents
Executive Summary ................................................................................................................................. 2
Payback.......................................................................................................................................................... 3
The multiͲdimensional nature of costͲtoͲserve models............................................................................. 4
Additional benefits of dimensionality ........................................................................................................... 4
Resolving Confusion with the term “Dimension” ......................................................................................................................... 4
Defining Dimensions......................................................................................................................................5
Architectural Overview ............................................................................................................................ 6
Figure I – Calculation Engine and the Agnostic Data Structure ................................................................................................ 6
Separation of Concerns Benefit..................................................................................................................... 7
Additional Benefits of Architectural Approach.............................................................................................. 7
AuditͲability to Source Costs ......................................................................................................................... 7
Detail discussion of architecture .............................................................................................................. 8
Data ETL......................................................................................................................................................... 8
The Power of User Maintained Rules ......................................................................................................................... 8
Data Sources ...............................................................................................................................................................9
Figure II – Common Data Sources............................................................................................................................................ 9
The Issue of Stability ...................................................................................................................................................9
Statistics development .............................................................................................................................................10
Source Data Stability .................................................................................................................................................................. 10
Figure III – Cost Drivers Dimensional Populations ................................................................................................................. 11
Figure IV – Activity Assignment Example (Order Entry) ......................................................................................................... 12
Load of Calculation Engine........................................................................................................................................12
Calculate (empty engine)............................................................................................................................. 12
Maintain static rules .................................................................................................................................................13
Validation and Model Integrity .................................................................................................................................13
User controls.............................................................................................................................................................13
What if analysis.........................................................................................................................................................13
Essential Control Files & Stability ............................................................................................................................................... 13
Various other reporting ............................................................................................................................................14
Report..........................................................................................................................................................14
Integral Integration...................................................................................................................................................14
View Integration .......................................................................................................................................................14
StandͲalone...............................................................................................................................................................14
Conclusion............................................................................................................................................. 15
Document revision history ..................................................................................................................... 16
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Executive Summary
Leading firms realize that to maximize the performance of their customer and product portfolios, it is
essential to understand the value generated by each portfolio member. CostͲtoͲserve (CTS) is the term that
is used to indicate the resources of the firm that are consumed serving particular products and services to
specific customers. It is safe to say that all firms understand their total costs, while it is the unusual firm
that understands its granular CTS.
What prevents access to this information is that the complexity in providing it is much more than is initially
apparent. There are several sources of this complexity, these include:
1. Solving the multiͲdimensional nature of the CTS solution.
2. Developing the transactional statistics that enable the calculation of costs at the granular level.
3. Providing reporting for users that allow them to act on the results.
4. Institutionalizing the process to create ongoing value.
The resolution of these complexities is found in a comprehensive architectural approach to solving the need
for CTS reporting capability. This architectural approach is essential in that it avoids the tendency of firms
who are uninitiated in CTS implementations to focus on a “software solution”, leading to and expensive
surprise when they begin to understand the reality of the costs of implementation. By understanding this
architectural approach, one will avoid the unnecessary costs brought about by focusing on an incomplete,
or worse, unworkable software solution.
This paper documents such a bestͲpractices approach, and is the methodology that Quantalyst Consulting
has implemented in its CTS engagements. This approach has proven to result in an affordable
implementation that will:
1. Leverage existing investments in systems and people
2. Create an agnostic data structure that is independent of the choice of calculation software
3. Develop an institutionalized, maintainable process to capture ongoing value
4. Provide comprehensive auditͲability to the source costs
5. Implement a layered, separation of concerns approach that ensures the solution is:
a. Robust
b. Maintainable
c. Adaptable
d. Reusable
This technical document is structured as follows:
1. It explains where the payback is found in CTS implementations.
2. It defines the multiͲdimensional nature of CTS models including how to define the dimensions.
3. It provides an overview and benefit summary of the layered architectural approach.
4. It continues with a detailed discussion of each layer within the architectural approach.
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Payback
The increasing implementations of CTS reporting and analytics had been driven by two primary factors:
1. The continued advance in access to and affordability of computing power in terms of both
hardware and software, and;
2. The rapid and identifiable payback of the implementations.
Payback is often times measured in months, and is achieved in the following areas1:
1. Tactical gains, including:
a. Transparency of the supply chain
b. SG&A expense management
c. Peer to peer profitability analysis
d. Single source for all channel, product and customer profitability reporting & analysis
2. Strategic gains, including:
a. Brand value
b. Customer relationship value
c. Channel value
d. New product introductions
e. Warehouse and store placements
3. Operational gains, including:
a. Systems discipline
b. Systems utilization
c. Systems weaknesses identified
d. Foundation for predictive intelligence
4. Predictive
a. Correlation analysis
b. Foundation for the incorporation of big data
1
For additional detail and specific examples as to where gains are seen, how to define and calculate the
gains across a firm’s portfolio contact info@quantalyst.com. Please include a reference to ‘CTS savings’ in
the email header.
CostͲToͲServe Methodology – An Architectural Approach Page 3
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The multiͲdimensional nature of costͲtoͲserve models
CostͲtoͲserve requires a multiͲdimensional solution. All CTS models require at least two dimensions
(product and customer), while most are three dimensional. The usual dimensions are:
• The customer
• The product (also used to mean service)
• The channel
The reason for this multiͲdimensionality is that costs attach at different dimensions, and when they attach,
it is not known where those incurred costs will be consumed. A common example is the costs of
transportation of a product to a distribution center
(warehouse). When the transportation cost is incurred, we Resolving Confusion with the term
only know that it is a product cost (depending on the model “Dimension”
design, we may also know that it is a channel cost, for “Dimension” is an overused term that leads to
example, Product_ABC at Channel_Chicago). Until the much confusion. When this paper uses the term
product is served to a customer, we don’t know which “dimension” we are referencing calculation
customer(s) should bear the cost. In this example, the costs dimensions. These are the intersecting
for Product_ABC at Channel_Chicago will be intersected with dimensions that CTS activities (cost pools) are
assigned, and then calculated upon.
those customers served from the Chicago channel who
purchased Product_ABC.
There are three:
x Product
Similarly, there will be customer costs that are incurred x Customer
against a customer, before we know which products to x Channel
assign the cost. An example could be outside sales expenses
(sales calls), which can be identified to the customer – prior A best practice, separation of concerns approach
to knowing which products will be served to the customer. is “empty engine”, time is not a calculating
Eventually, when those products are known, the costs at the dimension. It is, however, a reporting dimension
customer will be intersected with the actual products served (also referred to as a descriptive dimension).
Descriptive dimensions are unlimited, and can
to that particular customer.
attach to the channel, product/service or
customer.
A note on dimensionality – be cautious of extending the
dimensionality beyond three. This will introduce an Additional confusion arises as OLAP reporting
unneeded level of complexity and can be a sign of poor (where the result set ultimately resides)
design architecture. terminology also uses the word “dimension”.
Additional benefits of dimensionality
Because the CTS model is multiͲdimensional, additional benefits are provided to business decision makers.
These include views of profitability that extend beyond the customer to include (usually) channel and sku
(product) profitability. These benefits enhance business strategy such as:
1. Sku rationalization decisions. Sku rationalization programs fail many times because the efforts are
attempted without fully quantified facts. Sku rationalization decisions have to be made with not
just product profitability, but in conjunction with the combined profitability associated with the
channel and customer.
2. Channel efficiency decisions. Having the facts to manage the channels through which you serve
particular customers are an important strategic input. It gives your marketing departments the
ability to guide customer behavior to the most advantageous channels in terms of profitability.
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3. Supply chain efficiency. CTS modeling will create transparency in your supply chain in terms of the
costs of various supply decisions. Examples include the freight costs per unit of various shipping
alternatives and product staging decisions.
Defining Dimensions
The customer and the product dimensions are quite obvious, though some issues do arise in the definitions,
for example, is a customer a shipͲtoͲaddressID or a billingID? Are services products? For the most part, all
will readily agree upon what constitutes a customer and a product. If you have a delivery network, a
customer will probably be defined as a shipͲto addressID (each shipͲto consumes specific resources),
whereas in a mailͲorder house, a customer is usually defined as a billingID. And, yes, services are a distinct
product offering that is served to (consumed by) various customers.
The channel dimension can be more challenging, in part because bestͲpractices are to have consistency
across your model (to avoid unneeded complexity). Therefore, channel definitions should have global
connotations (meaning having the potential to apply to all products or customers). For example, a
marketing executive will think of customer types as channels (distributors vs. companyͲowned). Customer
types do not equate to channels, as the real question is, how are the customers served? If both the
distributors and the companyͲowned customers are served in the same manner, consuming the same
resources (order entry, warehouse, fulfillment, etc.), partitioning your customers into channels based upon
the manner in which they are segmented for marketing purposes does not assist in the costͲ toͲserve
analysis, and may create unneeded complexity. Other issues that arise in design decisions include confusing
channels with reporting requirements (partitioning by profit center) or using channel in an effort to manage
data proliferation by accumulating particular costs (assigning costs to a channel called ‘large customers’).
As you can see, defining proper channels in a CTS model is partially an art, and partially experience.
Channel definitions can make or break a CTS analysis. Following are some general rules to bear in mind:
1. Channels are global, meaning that they potentially apply to all products and all customers. For
example, a parts manufacturer may have OEM (original equipment manufacturer), aftermarket
and consumer channels. The same products may be served from any channel, and the same
customers may be served from multiple channels (a customer served both by OEM and
aftermarket).
2. Channels strongly differentiate. For example, if customers are served the same products from two
different warehouses (depending upon where the customer is located), the warehouses are likely
This ends your document preview
defined as channels. Customers served via the web or mail order are probably strongly
differentiated from those that are shippedͲto from the warehouse docks on your own trucks. Note
For the complete document, please send a request to the below address. Include a
again, that the same products and even the same customer could be served from any of these
reference to ‘CTS design’ in the email header.
channels.
3. Channels have specific and readily identifiable costs. This usually means they will have costs
If you are an individual or consultancy, please state your reason or needs for the
identified in the general ledger or their own headcount assignment or some other means of
request. The document will be sent to all qualified requestors, including, a) those with
specifically assigned costs.
a qualified corporate email; b) individuals with a LinkedIn profile employed with a
4. Channels are conscious business strategies. Where to place a distribution center, whether to serve
qualified entity, or; c) any other request at our discretion.
customers directly or through a distributor, when to use your own delivery capability or a third
party are all examples of conscious business strategy decisions that have been made in how you
dbaker@quantalyst.com
decide to serve your customers.
CostͲToͲServe Methodology – An Architectural Approach Page 5