Activity Based Costing

1633 words 7 pages
Question- BABI- Individual Assignment submission:
You have been assigned as a leader of a cross functional team of internal consultants to your CEO and the Board for your company.
Your company is faced with dwindling profit and constant chaos due to: 1. Intense competition from local competitors 2. New entrants from China/Vietnam with very low prices 3. Increasing inventory of great products which used to be fast moving 4. Lack of coordination with supply chain decisions and customer demand from CRM 5. Customers of least profit getting maximum attention and more profitable customers defecting 6. Sales Force placing unreasonable demands coupled with production interruption 7. Lack of integrated and coordinated
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WHY LACK OF COORDINATION? 2. Supply chain decisions are based on CRM’s forecast of demand? 3. Is the CRM forecasting Demands correctly? 4. What are the current factors taken into demand forecasting? Is there any other factors that has emerged that I have to consider? 5. Is the lead time assumed is correct? Has my seller given a fixed lead time? What’s my EOQ? Should I use EOQ or FOQ or PPQ? Which would give me a better pricing & cost reduction? 6. Are the CRM using RFM Technique? Are they using some other method to arrive at Profitable customer? Should I implement a change? 7. Are the supply chain guy placing order at the rite time? Or we are having an internal delay? 8. Should they be given training or team activities on coordination? Should I shuffle the teams to improve coordination?

5. Customers of least profit getting maximum attention and more profitable customers defecting. 1. Who are the major profit contributors? Highly profitable customers / low profitable ones? Is my Profit based on the 80-20 rule? 80 % of profit from highly profitable group or the opposite? 2. What is the view of the CRM on this? Is CRM organized or its just following a lucky draw principle in giving attention to customers? 3. How can I make the existing customers more loyal, or retrieve the lost customer? 4. What are my customers interested in except my product? Do


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