Collier & Associates
Making Companies More Profitable
Activity-Based Costing (ABC) Activity-Based Costing (ABC) Projects Team member on a four-month implementation of Acorn Systems’ Time-driven Activity-Based Costing (TDABC) system for a janitorial supplies distributor. Approach and results include: o Developer of activity-based and pass-through algorithms used for calculating activity time, and extrapolating transactional and financial data from the company’s ERP system; o Generation of profitability profiles by cost objects (e.g. markets, channel distributors, regional warehouses, buying groups, customers, orders, product lines, products, and suppliers); o Renegotiation of a major contract with a national supplier within a four-hour meeting based on initial model results (previously, two years of negotiating without empirical data was unsuccessful); o Identification of top and bottom 10% profitable customers and products – determined that a channel partner that was about to be “fired” was the third most profitable customer; o Used model to build templates for all other distribution warehouses; o Tied all results to within 5% of financial statements; o Overall, $20 million in annualized savings identified. Project lead, designer, and developer of a Rate-based Activity-Based Costing (conventional ABC) system for a medical supplies distribution company over the course of eight months. Features and results include: o Full integration with a JD Edwards ERP system, utilizing transaction drivers to generate over 60 million records per month; o Analyzes over 60 activities across the enterprise, and calculates profitability by market, customer, salesperson, product line, product, and supplier; o Design and development of an associated multi-dimensional data warehouse that feeds the results into Sylvon’s Business Intelligence web user interface; o Initial results uncovered $5 million in annualized savings with calculated results within 4% of financial statement figures. Chartered by a medical supplies distribution client to lead, design, and develop a prototype Rate-based Activity-based Costing (ABC) system to prove whether such a system / methodology would add value. Approach and results include: o One-month ABC study including work and research by: Robert Kaplan; Gary Cokins, Douglas Hicks, and James Brimson. Review of multiple case studies, and attendance at a CAM-I consortium convention; o Study of Owen and Minor’s custom ABC system, and interviews with program directors; o Design and development of Microsoft Excel-based spreadsheet for structuring the ABC model and calculating results; o The three-month exercise uncovered $300,000 in annualized savings proving the applicability and value of ABC methodology; o Based on the results, Executive Management approved funding for the design and development of a custom ABC system. Two-year design and development effort of a Time-Driven Activity-Based (TDABC) costing system for commercial resale (which to date, has not made it to market) using the following technologies: o User interface built using Microsoft VB .Net; o Multi-dimensional data warehouse using SQL Server 2005; o Stored procedures used to extract and cleanse data from Microsoft Great Plains ERP system; o SQL Server Query Analysis used to design and develop OLAP cubes for storing, analyzing, and presenting the TDABC results. |
