TransWest, Ltd.
ABC/M with Activity Analyzer at TransWest, Ltd.
Transwest is an SME specialized in transport and storage of deep frozen food. By integrating those two services, the firm is able to offer suitable solutions to diverse supply chain needs with its customers: to build up stocks to cover peak periods (e.g. ice cream sector); delivering abroad out of buffer stocks (e.g. potato products); storage of raw materials with supply to different product units (e.g. vegetables).
Decision support
It is common in this sector to deliver smaller but more frequent loadings instead of the previous full loadings. This enormously increases complexity: each order requires another mix of logistic activities. The numerous possible combinations of transport and storage hinder a traditional cost price system to calculate sensible information. ABC is therefore extremely practical to make an analysis of activities offered to a wide range of services or customers.
Firstly the cost analysis should provide information which helps you to decide which strategic alternative is best: segmentation, outsourcing, price-setting, cost savings,
Activity Analyzer
Activity Analyzer was introduced as a tool to specify the many relations and interactions between activities, costs and cost objects. Previously a structure was drawn up, which illustrates the main activities of TransWest. For practical reasons not the individual rides were taken as cost objects but the different kinds of rides. Per customer was looked into how many units (rides) of each kind of ride were carried out. Also at that level client specific costs were added.
Activity Analyzer allows you to adjust the drawn-up model until a user-friendly system is reached. The results of cost allocation can be analyzed by means of one of the various standard reports. After a first analysis, it is remarkable that there exist huge differences in return using a traditional calculation system (full cost) or an ABC system. This difference is mainly noticeable with the more complex rides. The next logic step is to analyze the activities, which generate these costs and actually solve the problems (e.g. by eliminating a number of steps in order processing).
Practical utility of the system
The system is regularly fed by new data forthcoming from analytical bookkeeping. The results are compared to previous periods and, if necessary, actions are undertaken. Activity Analyzer is not only used to analyze strategic options in TransWest but also to attempt practical actions at the logistic activities level.
Decision support
It is common in this sector to deliver smaller but more frequent loadings instead of the previous full loadings. This enormously increases complexity: each order requires another mix of logistic activities. The numerous possible combinations of transport and storage hinder a traditional cost price system to calculate sensible information. ABC is therefore extremely practical to make an analysis of activities offered to a wide range of services or customers.
Firstly the cost analysis should provide information which helps you to decide which strategic alternative is best: segmentation, outsourcing, price-setting, cost savings,
Activity Analyzer
Activity Analyzer was introduced as a tool to specify the many relations and interactions between activities, costs and cost objects. Previously a structure was drawn up, which illustrates the main activities of TransWest. For practical reasons not the individual rides were taken as cost objects but the different kinds of rides. Per customer was looked into how many units (rides) of each kind of ride were carried out. Also at that level client specific costs were added.
Activity Analyzer allows you to adjust the drawn-up model until a user-friendly system is reached. The results of cost allocation can be analyzed by means of one of the various standard reports. After a first analysis, it is remarkable that there exist huge differences in return using a traditional calculation system (full cost) or an ABC system. This difference is mainly noticeable with the more complex rides. The next logic step is to analyze the activities, which generate these costs and actually solve the problems (e.g. by eliminating a number of steps in order processing).
Practical utility of the system
The system is regularly fed by new data forthcoming from analytical bookkeeping. The results are compared to previous periods and, if necessary, actions are undertaken. Activity Analyzer is not only used to analyze strategic options in TransWest but also to attempt practical actions at the logistic activities level.
Lead Software, Inc. One Tiffany Pointe, Suite 100 Bloomingdale, Illinois 60108
Tel. 630-351-5155 Fax. 630-351-2526 Email. sales@leadsoftware.com
Tel. 630-351-5155 Fax. 630-351-2526 Email. sales@leadsoftware.com