Dickeson--Conducting Job PathologyMarch 1998
Dr. Quincy was a reactionary. He analyzed what happened, not what was to be. Let's react to job costs and examine the job bodies after the production crimes have been committed. When we multiply transaction costs by actual results, we are doing this. No predictors, just actuals converted to the common denominator of dollars.
With this usage we're prepared to do internal benchmarking. Our benchmarks are the results of all the other jobs we've done in the past. It's our own set of actuarial experience tables. Compare the actual results of job A with actual experience of all other jobs in the last year, quarter, month or whatever.
Compare job A actual results with all other jobs with similar sets of characteristics. Group the actuarial experience of jobs by customer account. Compare account group X with account group Y. Constantly ask, "Why did we make money on this one and lose on that one?" Where and what are the job differentiators? Think. Discuss. We're mining the database of experience for the gold that's in it.
Not to worry about precise accuracy of transaction costs. Get them reasonably close and then freeze 'em, lock 'em into place. We want the jobs and customers to be relative to each other and to the past, so we hold those costs as constants while actual performance supplies the variables. Use a standard cost for paper and ink. Always multiply actual performance by the same transaction values to make the jobs and the accounts directly comparable. Now we can do internal benchmarking.
Is job pathology an academic exercise? No way. We're into the art of marketing analysis. We're looking at our own experience with work and customers. We have a steering wheel to drive our marketing machine. We have to find and fulfill needs at a profit. If we don't make a profit, we don't survive.
In order to survive, we must identify and optimize our "core competence" with the objectivity of solid data. What is it we do best and worst? Why is this? Equipment? Experience? Location?
Some jobs are dogs—trash jobs—while some are pussycats. Do we try to turn dogs into pussycats? We don't; we identify and foster our "core competence" knowing which is pussycat work. We gradually eliminate the trash jobs.
Without transaction costs applied to actual performance we don't have a compass to point the path to our core competence. We have nothing but a packet of anecdotes—stories we tell from our selective memories.
If we want to enter a new market and fulfill new or different needs, we must first define those needs and all of the nuances and peculiarities. Then we must ask what it takes to develop market competence. Next follows necessary research, development and testing. All the while we watch the actual job cost results to learn the truth of our entrepreneurial effort. We must find the path to a new job competence.
Isn't this the secret of highly profitable printing companies listed in the PIA ratio studies? Profit leaders find, develop and optimize core competencies using the statistical methods of actual job cost analysis.
Next time someone asks about your job cost system, don't just respond with a comment about your job cost estimating practices. Discuss the usages of your job cost analyses, benchmarks and resulting direction of your marketing efforts.
—Roger V. Dickeson
About the Author
Roger Dickeson is a printing productivity consultant based in The Woodlands, TX. He can be reached via e-mail at email@example.com or firstname.lastname@example.org; or via fax at (281) 362-7572.